dnrn^U ICam Bcl^cal ICihtatg Cornell University Library KF 695. J77 1915 V.1 A treatise on the law of mortgages of re 3 1924 018 847 503 Cornell University Library ^ The original of tiiis bool< is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924018847503 A TREATISE LAW OF MORTGAGES REAL PROPERTY BY LEONARD A.JPNES, A. B., LL B. [Harv.] AUTHOR OF LEGAL TREATISES AND LATE JUDGE OF THE COURT OF LAND REGISTRATION OP MASSACHUSETTS SEVENTH EDITION IN WHICH THE ORIGINAL TEXT IS THOROUGHLY REVISED BY THE PUBLISHERS' EDITORIAL STAFF IN THREE VOLUMES Volume I INDIANAPOLIS THE BOBBS-MERRILL COMPANY PUBLISHERS Copyright 1878, 1879, 1883, 1889, 1894 and 1904 By Leonard A. Jones Copyright 1915 The Bobbs-Merrill Company PREFACE TO THE SEVENTH EDITION The treatise of Judge Leonard A. Jones on the law of real estate mortgages, in its various editions, has been used and relied upon as authority by the bench and bar of this country for nearly forty years. The favor with which the profession has received former editions of this work may be attributed largely to the fact that Judge Jones has discussed, with the skill of a master, those subtle and perplexing questions upon which courts so often are inclined to disagree. Wher- ever he has found discord among the authorities on a given proposi- tion he has endeavored to find the fundamental principle by which these differences may be harmonized, or failing in this, he has stated what he considers to be the correct rule. Many of these opinions thus stated by him have come to be the acknowledged rule of law by their subsequent acceptance and adoption by the courts. Sufficient reason for this new edition is found in the growth of the subject in the nearly twelve years that have elapsed since the publica- tion of the sixth edition. In this enlarged edition of the work we have retained the original text, except in a few instances where the rules have been changed to conform to modern conditions. "We have added considerable to the text by way of explanatory illustrations, so as to enable the reader to see the true use which is made of the rules, and wherever the importance of the principle under discussion is sufficient to warrant it, that part of the language of the court pertinent to the point being considered is stated. This enables us to verify our conclusions, and is an aid to the busy lawyer. Other text that we have added embodies many new and important phases of the law not found in the original work. This has resulted in the addition of hundreds of new sections, which have been added and placed in their proper positions with reference to the other treat- ment of the subject. We have inquired into all the statutory regulations, and brought the citations thereto down to date. All the important late cases have been cited either in support of the original text or in support of the added new text. The law of corporate bonds and mortgages is the subject of a separate treatment by the author and is not included in this work. FROM THE PREFACE TO THE FIRST EDITION The Law of Mortgages is a subject which can not be treated alto- gether with reference to general principles. At the present time, two opposite theories of the nature of a mortgage hold about equal sway in this country, and this difference of view at the foundation of the sub- ject has naturally led to many divergences in the details of it. It is a subject, too, which legislation, directly and indirectly, largely controls. All that part of it which relates to remedies is closely connected with the systems of Civil Procedure in the several States, which are quite dissimilar. The author has endeavored to follow a natural order of arrangement in tliis treatise; and while presenting not merely the common law of the subject, but as well the modifications of that law made through statutory enactments and judicial decisions, in order to avoid confusion of statement, and to enable one who consults the book to turn with as little trouble as possible to the statement of the law upon any part of the subject for any State in the Union, he has stated in detail for each State the law upon some of the more important divisions of the subject, in which there is a want of harmony. In this way, at the same time, a fuller presentation of the law and of the authorities upon these topics has been made than would otherwise have been practicable. TABLE OF CONTENTS VOLUME ONE CHAPTEE I NATUEE OF A MOBTGAGE I. History of the Development of the Law, §§ 1-16 II. The Nature of a Mortgage in the Different States, §§ 17-59 I. History of the Development of the Law Section Page 1. Antiquity of mortgages 1 la. Mortgages used by tlie Anglo-Saxons 3 2. Vivum vadium 4 3. Vivum vadium and Welsh mortgage distinguished 5 4. Mortuum vadium 6 5. Mortgages suspended under feudalism 7 6. Growth of the doctrine of an equity of redemption 8 7. "When the doctrine was first established 1 9 8. Mortgage at law distinguished from mortgage in equity 10 9. Statute of 7 Geo. II, ch. 20 12 10. Trust arising through relationship of mortgagor and mortgagee. . 13 11. The modern common-law doctrine of mortgages 13 12. Lord Mansfield's views 15 13. Change from legal to equitable theory in United States 16 14. Incongruities in both the common-law and equitable theories. ... 17 15. Mortgage as a legal estate and as a personal lien distinguished. . 19 16. Present day mortgage defined 21 II. The Nature of a Mortgage in the Different States Section Page 17. Generally 22 18. Alabama 23 19. Arkansas 24 20. California 25 21. Colorado 26 22. Connecticut 27 23. Delaware 29 24. Florida , 29 25. Georgia 30 26. Idaho 31 27. Illinois 31 28. Indiana ; 32 29. Iowa 33 30. Kansas 34 31. Kentucky 34 32. Louisiana 35 33. Maine 3G vii vih table of contents Section Page 34. Maryland 36 35. Massachusetts .' 37 36. Michigan 38 37. Minnesota 39 38. Mississippi 40 39. Missouri 40 39a. Montana 41 40. Nebraska 42 41. Nevada 42 42. New Hampshire 42 43. New Jersey 43 43a. New Mexico '. 45 44. New York 45 45. North Carolina 46 45a. North Dakota 46 46. Ohio 47 46a. Oklahoma 47 47. Oregon 47 48. Pennsylvania 48 49. Rhode Island 49 50. South Carolina 49 50a. South Dakota 50 51. Tennessee 50 52. Texas 50 53. Utah 51 54. Vermont 51 55. Virginia ■. 51 55a. Washington 52 56. West Virginia 52 57. Wisconsin 52 58. Summary of legal and equitable theories in the different states. . 53 59. Doctrine in different sections of the United States 54 CHAPTEE II FOEM AND KEQUISITES OP A MOETGAGE I. The Form Generally, §§ 60-62 II. The Formal Parts of the Deed, §§ 63-68a III. The Condition, §§ 69-78a IV. Special Stipulations, §§ 79-80 V. Execution and Delivery, §§ 81-89 VI. Filling Blanks, Making Alterations and Reforming, §§ 90-lOla I. The Form Generally /SECTlOSr F.\GK 60. Formal requisites generally ' ^i? 61. Statutory forms ^ -■ 62. Trust deeds ■■.................[[[ 59 II. The Formal Parts of the Deed Section p^^^, 63. Parties described gg 64. Recital of consideration 64 65. Description of premiscj !!!!!!!!!!! 65 TABLE OF CONTENTS IX Section- Page 65a. Descriptions held sufficient 68 66. Insufficient description !..!..'.!!!!! 70 66a. Insufficient description — Illustrations ...'.'.......... 72 67. Habendum 73 68. Covenants 75 68a. Continuing covenants 77 III. The Condition Sectiox P^qb 69. Form and essentials of condition 77 70. Description of the debt secured 78 71. Construction of note and mortgage as one instrument 80 72. Covenant to pay debt 82 73. Interest 83 74. Rate of interest — Conflict of laws — Rates before and after ma- turity 84 75. Time of payment 86 76. Stipulations concerning default — Acceleration of maturity 87 77. Payment of taxes 89 78. Insurance 90 78a. Attorneys' fees 90 IV. Special Stipulations Section Page 79. Stipulations for partial payment and release 91 80. Mortgagor's possession 92 V. Execution and Delivery SECTioisr Page 81. Seals 93 81a. Signatures 94 82. Witnesses 95 83. Acknowledgment 96 83a. Release of homestead 97 83b. Mortgage by tenants in common 100 84. Delivery and acceptance 100 85. Subsequent acceptance — Intervening rights 103 86. Delivery for sale and assignment 104 87. Delivery in escrow 105 88. Acceptance of cestui que trust presumed 106 89. The date 107 YI. Filling BlanTcs, MaJcing Alterations, and Reforming Section Page 90. Execution in blank 108 91. Authority to fill in blanks 110 92. Irregular execution — Estoppel Ill 93. Essentials of estoppel 112 94. Material alteration 113 95. Immaterial alteration 115 96. Alteration by parol 116 97. Reformation 117 98. Who may obtain reformation 120 99. Against whom reformation may be had 121 100. Lost mortgage deeds — Equitable relief 123 101. Construction — Intention — Extrinsic evidence 123 101a. Construction — What law governs 125 X TABLE OF CONTENTS CHAPTEE III THE PARTIES TO A MORTGAGE PART I WHO MAT GIVE A MORTGAGE I. Introductory, §§ lOlb-lOSc II. Disability of Insanity, §§ 103, 103a III. Disahility of Infancy, §§ 103b-105 IV. Married Women, §§ 106-118a V. Tenants in Common of Partnersliip Real Estate, §§ 119-123 VI. Corporations, §§ 124^128 VII. Power to Mortgage, §§ 129-130a PART II WHO MAY TAKE A MORTGAGE Parties in Various Relations, §§ 131-135a I. Introductory Section Page 101b. In general 126 102. Legal capacity to mortgage 127 102a. Capacity of executors and devisees to mortgage 128 102b. Capacity of guardian to mortgage 130 102c. Generally of disabilities 132 II. Disability of Insanity Sbction Page 103. Capacity of insane persons 132 103a. Capacity of intoxicated persons 134 III. Disability of Infancy Section Page 103b. Infants — Mortgage to relieve incumbrances 135 104. Infants — Purchase-money mortgage — Avoidance — Necessaries... 136 105. Ratificatioa or disaffirmance of infant's mortgage 138 IV. Married Women Section Page 106. Common-law disabilities — Statutes 140 107. Equity doctrine 141 108. Debts charged to separate property 143 109. American rule 143 110. Reference to separate property — Notes and mortgages 144 111. Deficiency upon foreclosure 147 112. Separate estate, in equity — Power to contract under statutes. .. 148 113. Debts of husband 150 113a. Consideration for wife's mortgage 153 114. Wife in position of a surety — Exoneration 154 TABLE OF CONTENTS XI Section Page 115. Husband's authority over wife's mortgage — Extension — Litiga- tion 157 115a. Debts of third persons 158 116. Assumption of mortgage by married woman 158 116a. Execution of mortgage by attorney in fact for married woman 159 117. Alabama rule 159 117a. Georgia and Louisiana 161 118. Mississippi 162 118a. What law governs capacity 163 V. Tenants in Common of Partnership Real Estate Sectios" Page 119. Generally 163 120. Mortgage of partnership property by one partner — Notice of partnership equities 164 121. Mortgage of partnership property by one partner — Assent of other partner 166 122. Mortgage of a partner's separate property to secure partnership debt 168 122a. Mortgage to pay individual debt of partner. 168 123. Disposition of partner's separate property upon death 169 VI. Corporations Section Page 124. Implied power of corporations to mortgage 170 124a. Power to mortgage all or part of the corporate property 172 124b. Whether express power to mortgage is exhausted by single exer- cise of power 174 125. Lands not necessary for the business of a railroad 175 125a. Foreign corporations 176 126. Religious corporations 176 126a. Limitations as to amount of mortgage 177 126b. Mortgages by corporations to secure purchase-money 178 126c. Mortgage of fixtures 179 127. Powers of stockholders and directors 181 128. Use of corporate seal 183 VII. Power to Mortgage Sectiox Page 129. Power of attorney — Implied power to mortgage 184 130. Mode of exercising the power 187 130a. Joint mortgagors 188 PART II who may take a moetsagb Section ' Page 131. Capacity of mortgagees in general 188 132. Aliens 189 133. Married women 189 134. Corporations l^'' 134a. Foreign corporations 193 135. Joint mortgagees 195 135a. Partnerships — Firm name— Beneficiaries in trust deed 197 Xll TABLE OF CONTENTS CHAPTEE IV WHAT MAT BE THE SUBJECT OE A MORTGAGE I. Existing Interests in Real Property, §§ 136-148 II. Accessions to the Mortgaged Property, §§ 149-161a I. Existing Interests in Real Property Section Page 136. Interest subject to sale and assignment 198 137. Vested, contingent and future interests 201 138. Interests passed by mortgage 202 138a. Homestead subject of mortgage 204 138b. When owner estopped to deny mortgage made by a tbird person 204 139. Mortgage of a mortgage interest 205 140. Mortgage of rents and profits 206 141. Mortgage by one part owner or tenant in common 206 142. Effect of mortgage of building to include land 207 143. House moved from the land 208 144. Legal effect of removal of fixtures from the mortgaged premises 209 145. Severed and growing wood subjects of mortgages 211 146. Mortgage of improvements 211 147. When realty mortgage covers improvements subsequently made 212 148. When abstract of title part of security 212 II. Accessions to the Mortgaged Property Section Page 149. Legal and equitable view concerning after-acquired property. . . . 213 150. Products of the soil 214 151. Crops not sown ; 215 152. Railroad mortgage covering after-acquired property binding in equity '. 217 153. Rule as to after-acquired property generally 219 154. Applied to railroad companies 221 155. After-acquired property passing as an incident to the franchise 222 156. What property included by implication in a railroad mortgage. . 224 157. Rule as to after-acquired land 225 158. Prior liens on after-acquired property 227 159. Mortgage of choses in action 228 160. Mortgage of future net earnings of railroad company 228 161. Whether mortgage conveys primary corporate franchise 230 161a. Mortgage of primary franchise under legislative authority 231 CHAPTER V EQUITABLE MOETGAGES I. By Agreements and Informal Mortgages, §§ 162-171 II. By Assignments of Contracts of Purchase, §§ 173-178 III. By Deposit of Title Deeds, §§ 179-188 I. By Agreements and Informal Mortgages Section Page 162. Introductory 233 163. Agreement to mortgage ; 236 164. Parol agreements 238 TABLE OF COISTTENTS xiii Section p^^j, 164a. Agreement by purchaser at judicial sale 239 165. Agreement entered upon corporate records — Consent judgment — Conditional agreement 240 166. Defective instruments — Conveyances in trust for support and special purposes 241 167. Agreements charging specific lands 244 168. Defective or informal mortgages 245 169. Corporate mortgages executed in name of agent 247 170. Mortgage by implied trust 248 171. Assignment of rents and profits 250 II. By Assignments of Contracts of Purchase Section P^ge 172. Assignment of contract to purchase as security 251 172a. Conveyance conditioned upon payment of purchase-price 253 173. Assignment of bond to convey • 253 174. Purchaser's interest — Improvements 254 175. Assignment of partial interest 254 176. Assignment of public land certificates 254 176a. Mortgage of stock in unincorporated companies 255 177. Mortgage of public lands 255 178. Mortgages under act of legislature 257 III. By Deposit of Title Deeds Section Page 179. Deposit of title deeds — Effect generally in England and America 258 180. Doctrine in England criticized 260 181. Effect of deposit — Future advances 260 182. What deeds must be deposited 262 183. Deposit for preparation of legal mortgage 262 184. What law governs 263 185. Doctrine generally rejected in America 263 186. Doctrine applied 264 187. Written memorandum with deposit 265 188. Remedy under equitable mortgage by deposit of title deeds 266 CHAPTEE VI VENDOE'S lien by COKTEACT OE EESEEYATIOlSr Section Page 189. Lien by contract not a vendor's lien 267 190. Legal effect of title bond 269 191. Security not impaired by holder of contract 271 192. Reservation of lien in deed as creating an equitable mortgage. . 272 193. Lien reserved, a lien by contract 274 194. Reservation of lien in deed as creating mortgage 276 195. Personal liability of purchaser accepting a mortgage deed 276 196. Title imperfect until the debt is paid 277 197. Obligation of a married woman 278 198. Waiver of the lien 279 199. Order of liability of parcels sold 282 200. Account of vendor in possession 283 201. Assignment of purchase-money note or bond 283 202. Order of payment of several notes 285 203. Notice to purchaser when deed does not refer to a note 286 204. Subrogation to the lien 286 205. Statute of limitations 288 206. No obligation to exhaust personalty before resorting to realty. . 288 207. Proceedings to enforce lien 289 Xiy TABLE OF CONTENTS Section Page 208. Remedies of vendor 290 209. Tender of performance 292 210. Temporary eviction of vendee 292 211. Lien of vendor exhausted by foreclosure sale 293 212. Effect of sale of land to pass growing crops 294 213. Restraint of purchaser from impairing vendor's lien 294 CHAPTEE VII ABSOLUTE DEED AND AGREEMENT TO EECOXVEY I. When They Constitute a Mortgage in Law, §§ 241-255 II. When They Constitute a Sale or a Conditional Sale, §§ 256-281 I. When They Constitute a Mortgage in Law Section Page 241. Defeasance an essential requisite of a mortgage — Form — Parties to defeasance 296 242. Informal defeasance or agreement to reconvey 299 242a. Lease with agreement to reconvey 301 243. Objections to a separate defeasance 302 244. Absolute deed and separate defeasance — Effect at law 303 245. Deed and defeasance as part of same transaction 308 246. Contemporaneous execution and delivery — Date 310 247. Defeasance delivered in escrow 311 247a. Extrinsic evidence to connect deed and defeasance — Leading cases 312 248. Parol evidence to connect the deed and defeasance 314 249. Illegal condition in defeasance 315 250. The necessary incident of redemption 316 251. Right of redemption indefeasible 318 252. Cancelation of defeasance — Conversion of mortgage into abso- lute sale 320 253. Record of separate defeasance 322 254. Circumstances determining effect of record as notice 325 255. Notice by possession 326 II. When They Constitute a Sale or Conditional Sale Section Page 256. Effect of construction — Relative advantage to parties 327 257. Construction in equity 327 258. Intention the criterion — Attending circumstances 328 259. Intention considered in Conway v. Alexander 332 260. Evidence of intention — Existence of the debt secured 333 261. Stipulations and recitals of intention 335 262. Actual sale — Rights of parties 336 263. Character of transaction fixed in inception 338 264. Intention to secure repayment of money 339 265. Existence of the debt 342 266. Effect of absolute deed to secure a loan 348 267. Conveyance in satisfaction of debt — Agreement to reconvey.... 349 268. Agreement to reconvey in default of purchase-price — Advances secured by deed or bond to reconvey 351 269. Continuing debt and promise to pay 352 270. Grantee's option to purchase 354 TABLE OF COXTEXTS XV Sectiox p^gj, 271. Grantee's option to resell 354 272. Absence of agreement to pay debt 356 273. Interest — Payable in form of rent .',.'. 358 274. Continued possession of grantor 359 275. Inadequacy of price '.'......'... 360 276. Subsequent acts and admissions as evidence — ^Record 362 277. Parol evidence — Questions for jury 362 278. Circumstances evidencing intention — ^Relation and capacity of parties — Payment of taxes 364 278a. Effect of minor circumstances 366 279. Presumptions of construction in doubtful cases. 367 279a. Trend of decisions 369 280. Rule applied to assignments ' '.'.'.'... 370 281. Mortgage distinguished from a trust 370 CHAPTER VIII PAEOL EVIDENCE TO PEOTE AN ABSOLUTE DEED A MOETGAGE I. The Grounds Upon Which it is Admitted, §§ 282-323 II. What Facts are Considered, §§ 323a-342d I. The Grounds Upon Which it is Admitted Section Page 282. Grounds for admission in equity — Parol evidence inadmissible at law 373 283. Equitable grounds — Transfers to defraud creditors 375 284. Grounds for admission of parol evidence under English decisions 376 285. Doctrine in the United States courts 376 286. Alabama , 377 286a. Arizona 379 287. Arkansas 379 288. California 380 288a. Colorado 382 289. Connecticut 383 290. Delaware 384 290a. District of Columbia 384 291. Florida 384 292. Georgia 385 292a. Idaho 387 293. Illinois 387 294. Indiana 390 295. Iowa 391 296. Kansas 392 297. Kentucky 393 297a. Louisiana ' 394 298. Maine 395 299. Maryland 396 300. Massachusetts .' 396 301. Michigan 398 302. Minnesota 399 303. Mississippi 400 304. Missouri 401 304a. Montana 401 305. Nebraska 402 xvi table of contents Section Pagh 306. Nevada 403 307. New Hampshire 403 308. New Jersey 404 308a. New Mexico 405 309. New York 405 310. North Carolina 407 310a. North Dakota 409 311. Ohio 409 311a. Oklahoma 410 311b. Oregon 410 312. Pennsylvania 411 313. Rhode Island 413 314. South Carolina 414 314a. South Dakota 414 315. Tennessee 415 316. Texas 415 316a. Utah 417 317. Vermont 417 318. Virginia 418 318a. "Washington 419 319. "West Virginia 419 320. "Wisconsin 419 321. Review of cases 421 321a. Strict construction of rule admitting pr.rol evidence 422 322. Statute of frauds — Rule prohibiting contradiction of written in- struments 422 323. Statute of frauds — Subsequent fraudulent conduct of grantor. . . 425 II. What Facts are Considered Section Page 323a. General considerations 427 324. Intention of the parties — Conduct and declarations 428 325. Evidence of continuing debt 432 326. Satisfaction or survival of the debt — Burden of proof 434 327. Actual sale after application for loan 436 328. Continued possession of grantor 436 329. Inadequacy of price 437 330. Delay in claiming absolute title 439 331. Conveyance by third person — Debtor's right to redeem 441 332. Purchase at judicial sale for benefit of equitable owner 443 333. Assignment of a mortgage as collateral 446 334. Assignment of contract of purchase 447 335. Burden of proof — Strictness of proof 448 336. Rights of grantor — Payment prerequisite to redemption 455 337. Rights of judgment creditors 457 338. Parol waiver of defeasance by mortgagor 458 339. Grantee's rights against third persons 460 340. Once a mortgage always a mortgage 462 341. Grantee's liability for mortgaged land sold by him 464 342. Redemption in equity — Grantee's right to relief 466 342a. Bona fide purchasers from grantee 468 342b. Liability of mortgagee under absolute deed on exchange of land 469 342c. Effect of absolute deed in vesting title and right of possession — Compensation for improvements 469 342d. Redemption by grantor after conveyance by grantee to a bona fide purchaser 471 TABLE OF CONTENTS Xvii CHAPTEE IX DEBT SECURED I. Description of the Belt, §§ 343-363 II. Future Advances, §§ 364^378 III. Mortgage of Indemnity, §§ 379-387 IV. Mortgages for Support, §§ 388-395 I. Description of the Deht Section Page 343. General description of debt sufficient 472 344. Stating amount of debt secured 475 345. Debt must come fairly within terms used 477 346. Particular debts or obligations secured 479 347. Recital of antecedent debt 4S1 348. Where mortgage given for greater or less sum than actual debt 481 349. Note described in mortgage 4S2 350. Effect of variance between note and description thereof in mort- gage 483 351. Note and mortgage construed together 485 352. Identity of note and amount thereof shown by parol evidence. . . 488 352a. Parol proof of debt where mortgage is in form an absolute con- veyance 489 353. Note or bond not necessary to validity of deed of trust or mort- gage 490 354. Effect of clerical error in describing debt 492 355. Extension of lien by renewal or extension of secured debt 493 356. Several mortgages for one debt, and one mortgage for several debts 494 357. Effect of enlarging or extending debt or obligation secured 495 358. Taxes and assessments 497 359. Solicitor's fee 499 360. Lien limited to debt secured 500 361. Increasing the rate of interest 501 362. Redelivery for a new obligation 502 363.. How recorded mortgage may be made to secure further sum. . . 502 II. Future Advances Sectioit Page 364. In general 503 365. English and American doctrine compared 505 366. Statutory requirements 507 367. Degree of certainty requisite in describing future liabilities... 509 367a. Parol evidence to identify future advances 512 368. Advances made after notice of subsequent liens 512 369. Theory where mortgagee is not bound to make advancements. . . 514 370. Mortgage for obligatory advances 515 371. Hopkinson v. Rolt 517 372. Notice of subsequent liens depending on the registry acts only. . 518 373. Priority of recorded mortgage expre-^sed to cover future ad- vances 521 374. Necessity for specifying that future debts are to be secured 523 375. Form of agreement for advances 525 376. Necessity for stating amount and time for making advancements 526 377. Limitations of security must be observed 527 378. Where part only of advances have been made 528 Xviii TABLE OF CONTENTS III. Mortgage of Indemnity Section '^tSn 379. Description of the indemnity o^** 380. What description of liability sufficient 531 381. Obligation covered by an indemnity mortgage 534 382. A continuing security 534 383. When indemnity mortgage becomes a lien 536 384. How character and purpose of indemnity mortgage may be shown ^^'^ 385. Respective rights of principal creditor and surety 538 386. Release of security by indemnity mortgagee 539 387. Not after liability is fixed 540 IV. Mortgages for Support SECTioisr ■^■*^j5 388. Whether strictly mortgages 542 389. Mortgagor's right of possession implied 545 390. Alternative condition 546 391. Where the support is to be furnished 546 392. Persons who are to perform condition for support 548 393. Foreclosure 549 394. Agreement for arbitration 550 395. Redemption 551 CHAPTEK X INSUEANCB I. Insurable Interests of Mortgagor and Mortgagee, §§ 396-399 II. Insurance hy the Mortgagor for the Benefit of the Mortgagee, §§ 400-417 III. Insurance ly the Mortgagee, §§ 418-431 IV. A Mortgage is not an Alienation, §§ 422—427 I. Insurable Interests of Mortgagor and Mortgagee Section Page 396. Nature of fire insurance contract 552 397. Insurable interests 553 398. How long mortgagor's interest remains insurable 555 399. When application should state incumbrance 556 II. Insurance hy the Mortgagor for the Benefit of the Mortgagee Section Page 400. Effect of provision in mortgage for insurance in favor of mort- gagee 558 401. Where no covenant or agreement to insure 561 402. Equitable lien in favor of mortgagee 562 403. Rights of subsequent assignee of policy affected by mortgagee's lien 563 404. Mortgagee's lien valid as against mortgagor's assignee 564 405. Maine statute construed 565 406. Loss payable to the mortgagee 566 406a. Effect of saving provision in favor of mortgagee 568 406b. Interest of mortgagee is that existing at date of policy 569 407. Equivalent to assignment 570 408. Who may bring suit 571 408a. When mortgagee may maintain action in his own name 574 TABLE OF CONTENTS XIX Section Page 409. Application of insurance to mortgage debt 577 409a. Where real estate mortgagee holds chattel mortgage upon per- sonalty on premises 579 410. When debt not due 579 411. Payment of loss under policy payable to mortgagee 580 412. Agreement to assign to insurers 581 413. Effect of provision for subrogation 582 413a. Stipulations for protection of mortgagee against acts of owner 583 413b. Condition against procuring other insurance 585 414. When mortgagee may charge for insurance 586 415. Rule where condition not in form of direct covenant 587 416. Nature of liability of mortgagee charging for insurance 588 417. Return premium 588 III. Insurance iy the Mortgagee Section Page 418. General considerations 589 419. Effect of insurance of mortgagee's interest 591 420. Insurer subrogated to rights of mortgagee 593 421. King V. State Mutual Fire Insurance Co 596 IV. A Mortgage is not an Alienation Section Page 422. General rule 596 423. Effect of mortgage in form an absolute deed 598 424. Entry to foreclose 599 424a. Condition against commencement of foreclosure proceedings... 600 425. Where title becomes absolute by strict foreclosure 602 426. Alteration of ownership 602 426a. Change of title, interest or possession 603 427. Effect of conveyance subsequent to assignment of policy to mort- gagee 604 CHAPTEE XI FIXTURES I. Rules for Determining What Fixtures a Mortgage Covers, §§ 428-443 II. Machinery in Mills, §§ 444-451 III. Rolling Stock of Railways, §§ 452-452a IV. Remedies for Removal of Fixtures, §§ 453-455 I. Rules for Determining What Fixtures a Mortgage Covers Section Page 428. In general 606 429. Intention — Adaptation to use 608 429a. Criterion for determining character of fixture 611 430. Effect of enumerating fixtures in mortgage 613 431. Effect of mortgage of chattels or agreement for removal 613 431a. Character of personalty reimpressed upon chattels after annexa- tion 616 432. Hired fixtures 617 433. Buildings erected on mortgaged premises 618 433a. Fixtures in and about a house 619 434. Nursery stock 620 435. Fixtures annexed before execution of mortgage 623 XX TABLE OF CONTENTS Section Page 436. Chattels annexed after execution of mortgage 625 436a. Agreement that chattels may retain character as personalty. . . . 629 436b. Rights of vendor or mortgagee of chattels as against existing mortgage of realty 630 436c. Rights of mortgagee of realty as to chattels annexed prior to mortgage 633 436d. Effect of after-acquired property clause 634 436e. Where new fixtures replace old 635 437. Rights of equitable mortgagee to hold fixtures 636 438. Waiver of claim to fixtures by mortgagee of realty 636 439. Rights of mortgagee of realty to fixtures annexed by lessee after mortgage ' 637 440. Right of mortgagee of tenant's fixtures to remove same after surrender of lease 640 441. Removal of trade or manufacturing fixtures by tenant 640 442. Vermont rule 643 443. Statutory provisions 644 II. Machinery in Mills Sectiobt Page 444. Intention with reference to machinery in mills 645 445. Effect of subsequent chattel mortgage of machinery 650 446. Machinery furnishing motive power 653 447. Various articles of machinery 654 448. Looms in mill 656 449. Cotton looms 658 450. Machinery of a silk-mill 659 451. Machinery in iron rolling-mill 660 III. Rolling Stock of Railways Section Page 452. Rolling stock and fixtures generally 661 452a. What fixtures included under railroad mortgage 663 IV. Remedies for Removal of Fixtures Section Page 453. Remedies of mortgagee in general — Replevin 664 454. Mortgagee's remedy against mortgagor for removal of fixtures 666 455. Remedy of mortgagee out of possession 669 CHAPTEE XII EECOEDING AS AFFECTING PRIORITY I. Nature and Application of Registry Acts, §§ 456-48'i'a II. Requisites as to Execution and Achnowledgment, §§ 488-503 III. Requisites as to the Time and Manner of Recording, §§ 504-514a IV. Errors in the Record,' §§ 515-522 V. The Effect of a Record Duly Made, §§ 523-537 VI. Torrens System of Registration, §§ 537a-537g I. Nature and Application of Registry Acts Section Page 456. Statutory provisions in general 672 457. Books of record 675 table oe coxtents xsl Section Page 458. Time allowed for record — Effect of record in general 676 459. Mortgagees as bona fide purchasers — Consideration 680 460. Pre-existing debt as consideration 682 461. Extension of debt as consideration 687 462. Judgment creditors as purchasers — Priority of mortgages over judgments and attachments 688 463. Unrecorded mortgage preferred to judgment 690 464. Priority of unrecorded mortgage over subsequent judgment 693 465. Priority of judgment liens and attachments under registry laws 696 466. Knowledge of- Tmrecorded conveyance by judgment or attach- ment creditor 699 467. Purchaser at execution sale — Notice and possession, as affecting priority 701 468. Purchase-money mortgages — Priority — Joinder of wife 703 469. Contemporaneous execution of purchase-money mortgage — Ven- dor as mortgagee 706 470. Dower, homestead and judgment liens ineffective against pur- chase-money mortgages 708 471. Mortgage recorded before acquisition of title postponed to pur- chase-money mortgage 711 472. Priority of purchase-money mortgage made to third person 713 473. Deed and purchase-money mortgage as one transaction — Priority over homestead, dower, and mechanics' liens 714 473a. Priority of jpurchase-money mortgage over mechanics' liens 715 474. Necessity of record and acknowledgment between parties and their privies 716 475. Assignees and administrators of banlirupt and insolvent mort- gagors' estates 719 476. Equitable mortgages included under recording acts. ., 721 477.- Equitable mortgage for precedent debt or' present consideration 723 478. Leasehold estates included under recording acts 723 479. Record of assignments of mortgages 725 480. Record of assignment as notice to mortgagor 730 481. Effect of recording assignment — Subsequent purchasers — Actual and constructive notice 732 481a. Recording assignment— Payment of paper before maturity with- out its production 734 482. Assignee as bona fide purchaser — Notice — Rights and priorities 736 483. Priority under different assignments of same mortgage 739 484. Manner of recording an assignment — Identification of mortgage — Marginal record 740 485. Record of collateral agreement afeecting mortgage, or partial re- lease 741 486. Crops and trees included as part of realty 742 487. Mechanics' lien laws affecting priority of mortgages 743 487a. Expenses of administration upon estate of deceased mortgagor 748 II. Requisites as to Execution and Acknowledgment Section Page 488. Generally 749 489. Description of the property — Notice of defective description. . . 752 490. Apparent error in description 754 491. Signature '^^^ 491a. Omission of mortgagee's name 756 492. Requirement of seal 757 493. Manner of recording seal 758 494. Requirement of witnesses 759 495" Acknowledgment or proof 760 496 Competency of officer taking acknowledgment ibZ xxh table of contents Section Page 497. Disqualification of ofiScer by interest or relationship 764 498. Certificate of ofiicial character of ofiicer taking acknowledgment 766 499. Oflacer's certification of personal acquaintance with party mak- ing acknowledgment 766 500. Presumption of regularity from certificate of acknowledgment — Impeachment for fraud 769 501. Delivery prerequisite to effective record — Delivery through agents 774 502. Delivery after recording 777 503. When a subsequent delivery becomes operative 779 III. Requisites as to the Time and Manner of Recording Section Page 504. When record becomes operative as notice 781 505. SuflBciency of deposit for registration , 783 506. Payment of recording fees as prerequisite to valid record 785 507. Record of schedule, memorandum, or map annexed to deed 786 508. Time of recording — Indorsement — Priority between mortgages recorded same day 787 509. Time of recording — After death of mortgagor 790 510. Place of record 791 511. Special books for record of mortgages 793 512. Powers of attorney 796 513. Record of separate defeasance .' 797 514. Apparent record title 800 514a. Reinscription, in Louisiana and Mississippi 801 IV. Errors in the Record Section Page 515. Defective record as notice of contents — Clerical errors 803 516. Error chargeable to grantee and not to third persons 807 517. Error chargeable to third persons under statutes making mort- gage operative upon filing 808 518. Index not essential to record 810 519. Recorder's liability for errors 814 520. Index essential under some statutes 815 521. Correction of errors in record 818 521a. Curative statutes 818 522. Unrecorded or defectively recorded mortgage as an equitable lien 820 V. The Effect of a Record Duly Made Section Page 523. Record as constructive notice 821 524. Record as notice of the contents of a mortgage 824 525. Priority fixed by original record 828 526. Effect of destruction of record 830 526a. Destroyed records — Procedure for establishing title 831 527. Bona fide purchasers without notice of unrecorded mortgage . . . 832 528. Estoppel of mortgagor subsequently acquiring title 834 529. Mortgage recorded before grantor acquires title 836 530. Record of subsequent deeds by the mortgagor 837 531. Extent of the lien , 839 532. Extension of mortgage 839 533. Rate of interest 840 534. Mortgages executed and recorded simultaneously 841 535. Simultaneous mortgages for purchase-money 844 536. Simultaneous mortgages of which one Is for purchase-money... 845 537. English doctrine of tacking 84g TABLE OF CONTENTS XXIU VI. Torrens System of Registration Section- Page 537a. Origin and adoption of Torrens system 848 537b. Constitutionality of statutes 849 537c. General principles of registration 850 537d. Procedure for registration 851 537e. Notice and hearing — Incumbrances on title 853 537f. Decree and certificate of title and incumbrances 853 CHAPTEE XIII NOTICE AS AFFECTING PEIOEITT I. Notice as Affecting Priority under the Registry Acts, §§ 538-542 II. Actual Notice, §§ 543-559 III. Implied Notice, §§ 560-570 IV. Constructive Notice, §§ 571-583 V. Lis Pendens, §§ 583-585 VI. Possession as Notice, §§ 586-601 VII. Fraud as Affecting Priority, §§ 602-603 VIII. Negligence and Miscellaneous Matters Affecting Priority, §§ 604-609 I. Notice as Affecting Priority under the Registry Acts Section Page 538. General doctrine of notice in United States 857 539. Contrary doctrine in Arkansas, Louisiana, North Carolina and Ohio 862 540. Record of subsequent conveyances with notice 864 541. Examination of records for incumbrances against prior unre- corded conveyances 866 542. Notice of a secret trust 868 II. Actual Notice Section Page 543. Forms of notice 870 544. Actual notice defined 871 545. Actual notice implied from circumstances 874 546. Degrees of actual notice — Rumors, and sources of information 875 547. Facts and circumstances putting purchaser upon inquiry 877 548. Sufficiency of notice or ground of inquiry 881 549. Notice of owner's intention to execute mortgage 884 550. Inquiry concerning deeds not in the chain of title 885 551. Inquiry of reliable and disinterested parties 885 552. Diligence in prosecuting inquiry — Erroneous descriptions 887 553. Effect of du.e inquiry — Evidence 888 554. Burden of proof 890 555. Notice before payment of consideration 891 556. Part payment before notice — Payment by notes 893 557 Purchaser with notice from one without notice 896 558 Repurchase by grantee with notice— Revival of existing equities 899 559 Purchaser without notice from one witjj notice of prior equity. . 900 XXIV TABLE OP CONTENTS III. Implied Notice Sectioit Page 560. Notice to agents, attorneys, and trustees 902 561. Principle underlying doctrine 907 562. Notice acquired in same transaction 908 563. Duty to impart notice material to transaction 909 564. Rule when agent or attorney acts for both, parties 910 565. Rule when attorney is the mortgagor 911 566. Fraudulent concealment from principal 912 567. Relationship of husband and wife 913 568. Notice of joint owner's of co-partner's interest 914 569. Notice of partnership equities 915 570. Notice to corporations through officers and agents 916 IV. Constructive Notice Section Page 571. General principles of constructive notice 918 572. Constructive notice based upon fraud or negligence 919 573. Notice of adverse interest, without particulars 920 574. Notice from recitals in deeds 922 575. Recital of existing mortgage 926 576. Recital of credit in prior deed , 930 577. Effect of notice upon mortgaged premises sold in parcels 931 578. Notice of prior incumbrances recited In mortgage 932 579. Inquiry concerning debt secured 932 580. Reasonable diligence in inquiry 934 581. Conveyance of equity of redemption to mortgagee as notice of assignment of mortgage 935 582. Release or quitclaim of mortgagor's interest 935 V. Lis Pendens Section Page 583. Doctrine of lis pendens 937 584. Service of writ is notice 940 585. Lis pendens as affected by actual notice 942 VI. Possession as Notice Section Page 586. Possession by tenant, purchaser, or other occupant as notice... 944 587. Inquiry by purchaser concerning adverse possession 949 588. Nature of adverse claim 951 589. Possession of tenant as notice 952 590. Possession notice during continuance 954 591. Open notorious and exclusive possession 955 592. Occupation of an easement — Railways and crossings 958 593. Equivocal or temporary possession 960 594. Possession inconsistent with purchaser's title 963 595. Possession of part of the premises described in a conveyance. . . 964 596. Possession as notice of homestead rights 965 597. Continued possession of grantor as notice of rights reserved. . . 966 598. Long continued possession of grantor 969 599. Possession of mortgagor after foreclosure 970 600. Continued possession of mortgagor under unrecorded defeasance 970 601. Estoppel of occupant to rely upon possession as notice 971 VII. Fraud Affecting Priority Section Page 602. Fraudulent concealment of incumbrance 973 603. Estoppel of mortgagee by fraudulent concealment or misrepre- sentation 973 TABLE OF CONTENTS XXV VIII. Negligence and Miscellaneous Matters Ajfecting Priority Section Page 604. Negligence as evidence of fraud 977 604a. Renewal or substitution of mortgages 97S 605. Loss of priority by release or satisfaction 9SU 606. Priority between notes secured by same mortgage 983 607. Priority between unrecorded mortgages 9S5 607a. Priority between simultaneous mortgages 987 608. Agreements fixing priority 988 609. Priority between mortgages and mechanics' liens 992 CHAPTEE XIV VOID AND USDEIOUS MORTGAGES I. Void Mortgages, §§ 609a-632 II. Usury, §§ 633-663 I. Void Mortgages Sectioit Page 609a. Introductory 998 610. Consideration 999 611. Consideration prior or subsequent to the mortgage 1002 612. Want or failure of consideration — To and against whom avail- able 1003 612a. Acts of agents invalidating mortgage 1005 613. Mortgage under seal importing consideration 1006 614. When mortgage may be made by. way of gift 1007 615. Mortgage made for accommodation of another 1008 616. Estoppel to deny consideration 1009 617. Effect of illegality of consideration 1011 618. Contrary to public policy 1013 619. Who may take advantage of the illegality 1014 620. Where part of consideration legal and part illegal 1017 621. Mortgage valid in part and void in part 1018 622. Evidence — Burden of proof 1019 622a. Construction of statute declaring a mortgage void 1019 623. Mortgage for debt contracted on Sunday 1019 624. Cancelation of mortgage on ground of fraud 1021 625. Fraudulent Intent — How shown 1024 626. Mortgage obtained by duress or undue influence 1025 627. Mortgage made to hinder, delay, or defraud creditors 1030 628. Mortgage fraudulent with reference to particular persons 1034 629. Fraudulent preferences 1035 630. Who may take advantage of the fraud 1038 630a. Effect of conveyance to a trustee to pay debts 1040 631. Estoppel to deny validity 1041 632. When mortgage in fraud of creditors may not be invalidated. . 1042 II. Usury Section Page 633. Usury laws in general 1044 634. Intent to take usury 1047 635. Effect of provision for attorney's fees and damages 1051 636. Effect of agreement to pay taxes or insurance 1053 637. Exchange and premiums 1054 638. Mortgage to building and loan association 1055 639. Validity of contract to resell at an advance property purchased 1057 xxvi table of contents Section Page 640. No forfeiture though transaction usurious 1059 641. Sale of mortgage 1059 642. Bonus or commission of broker or agent 1061 642a. Where agent is general agent of lender 1062 642b. Where broker not the agent of lender 1064 643. Evidence — Burden of proof — Pleading defense 1065 644. Who may interpose defense of usury 1067 645. Estoppel to set up usury 1070 646. Usury set up after a foreclosure and sale 1071 647. Effect of usurious transactions subsequent to execution of mort- gage 1073 648. When bonus for extension a proper credit on mortgage debt. . 1074 649. When agreement for extension void under usury laws 1074 650. Validity of agreement to pay compound interest, made before interest due .' 1075 651. Validity of agreement to pay interest on interest, made after interest has become due 1078 652. Accrued interest forming principal of further mortgage — Tack- ing to first mortgage 1080 652a. Taking interest upon a loan in advance 1081 653. Interest coupons 1081 654. When mortgagee may enforce payment of interest 1083 655. Computation of interest 1083 656. General rule and exception as to construction and validity of contract 1084 657. What law governs 1085 658. Mortgage debt payable in state other than where land situated 1087 659. Contract valid where made but invalid in place of performance 1088 659a. Validity of contract made in one state and payable in another bearing highest rate payable in either 1090 660. The lex rei sitae does not control. 1090 661. What law governs as to title and enforcement of lien 1092 662. What laws govern as to form and validity of mortgage deed — • As to parties 1096 663. Pleading and proof of usury laws of foreign state 1097 TABLE OP CONTENTS yXvU VOLUME TWO CHAPTEE XV A moktgagoe's eights and liabilities I. As to Third Persons, §§ 663a-666 II. As to the Mortgagee, §§ 667-676 III. His Personal Liability to the Mortgagee, §§ 677-678a IV. After-acquired Titles and Improvements, §§ 679-683 V. Waste hy Mortgagor, §§ 684-698 I. As to Third Persons Section 663a. Introductory. 664. Mortgagor's rights in respect to the mortgaged property— In general. 665. Seizure and sale under execution of mortgagor's equity of redemp- tion. 666. Dower of mortgagor's widow in equity of redemption. II. As to the Mortgagee Section 667. General statement of rights and liabilities of mortgagor relative to possession. 668. Mortgagor's right of possession implied. 669. Right of possession as modified by statute. 670. Mortgagor's right to rents and profits. 670a. When mortgagor entitled to mining royalties. 671. When mortgagor liable for use and occupation — Damages. 672. Adverse possession by mortgagor against mortgagee. 673.- Mortgagor's remedy to recover possession after payment. 674. No ejectment against mortgagee until debt paid. 675. When trespass will not lie by mortgagor against mortgagee. 675a. Trespass by mortgagor against mortgagee in possession. 675b. Injunction by mortgagor to restrain injury to property by mortgagee. 676. Mortgagee's rights not affected by assignment of equity of redemp- tion. III. His Personal Liahility to the Mortgagee Section 677. Effect of recital of consideration to create personal liability. 678. When mortgagee must resort to property mortgaged. 678a. Mortgagor's right to have property applied to payment of debt where he has conveyed equity of redemption. IV. After-acquired Titles and Improvements Section 679. After-acquired title of mortgagor inures to mortgagee^ — Where title wrongfully acquired. 680. Acquisition of tax title by mortgagor or his grantee. 681. Improvements made by mortgagor or owner. 681a. Who entitled to compensation for mortgaged land taken under right of eminent domain. 682. Mortgagor estopped to deny his title. 683. Equitable estoppel against mortgagor — Other instances. xxviii TABLE OF CONTENTS V. Waste hy Mortgagor Section 684. Injunction against. 685. Removing timber already cut. 686. Duty of mortgagee to enjoin waste. 687. Waste or other injury by mortgagor. 688. Replevin by mortgagee for timber and fixtures removed. 689. Action for damages against third persons. 690. ' No right of action after payment. 691. Accounting by mortgagee for damages recovered. 692. Mortgagor cutting timber under license or assent from mortgagee. 693. Remedy for abuse of privilege of cutting wood and timber. 694. Firewood and timber for repairs. 695. Action against mortgagor for injury to the property. 695a. Remedy against third person for injury to property. 696. Mortgagee's remedy where he has neither possession nor right of possession. 697. Emblements. 698. Waiver of right to crops and emblements by purchaser at foreclosure sale. CHAPTBE XVI moetgagee's rights and liabilities I. The Nature of His Estate or Interest, §§ 699-706a II. His Rights Against the Mortgagor, §§ 707-721 III. His Liability to Third Persons, §§ 722-734 I. The Nature of His Estate or Interest SEOTioisr 699. Estate of mortgagee in general. 700. Mortgage treated as personal property. 701. Mortgagee's interest not subject to execution or attachment. 702. When mortgagee entitled to possession. 703. Disseisen of mortgagee. 704. Nature of joint mortgages given for separate debts. 705. When mortgagees may have partition. 706. Partition by mortgagor — How interest of mortgagee affected. 706a. Effect of mortgage by tenant in common of specific part of common property. II. His Rights Against the Mortgagor Section 707. Mortgagee entitled to whole of mortgaged premises as security. 708. On award of damages. 709. Various proceedings to which mortgagee is an essential party. 710. Mortgagee regarded a bona fide purchaser. 711. Purchase of equity of redemption by mortgagee. 712. Purchase of equity of redemption by mortgagee in possession. 713. Mortgagee acquiring title at tax-sale. 714. Where mortgagee is under obligation to pay taxes. 714a. Tax title acquired by loan company acting as mortgagee's agent. 714b. Mortgagee's right before or after foreclosure to maintain independ- ent action for reimbursement. 715. Mortgagee entitled to possession until payment. 716. Possession by mortgagee or his assignee after condition broken. 717. Where mortgagor is given right to possession by statute. table of contents xxix Section 718. Writ of entry. 718a. Writ of assistance. 719. Ejectment. 720. Forcible entry and detainer. 721. Remedies of mortgagee for injuries to land. III. His Liability to Third Persons Section 722. Effect of release as to part of premises covered by mortgage. 723. When mortgagee is affected with notice of equity of purchaser of part of mortgaged premises. 724. Effect of release of mortgage held by one person to secure a debt for which another is liable as surety. 725. Junior mortgagee's right to compel senior mortgagee to exhaust part of realty not embraced in junior mortgage. 726. Mortgage to surety a trust In favor of creditors. 727. Effect of release by mortgagee of mortgagor's personal liability. 728. Mortgagee having other security. 729. Effect of insolvency or bankruptcy of mortgagor. 730. Change of terms of prior mortgage as affecting rights of subsequent mortgagee. 731. Where the homestead is included with other realty in the mortgage. 732. Junior mortgagee's rights when senior mortgage is in the form of an absolute deed. 733. Rights and liabilities of subsequent mortgagee or grantee of portion of mortgaged premises. 734. When mortgagee may be estopped to set up his mortgage. CHAPTEE XVII pukchasee's eights and liabilities I. Purchase Subject to a Mortgage, §§ 735-739a II. Assumption of Mortgage by Purchaser, §§740-747a III. Personal Liability of Purchaser, §§ 748-770 I. Purchase Subject to a Mortgage Section 735. Necessity and importance of reference to mortgage. 736. Effect of deed without covenants. 736a. Deed to mortgagee made expressly subject to mortgage — Deed with covenants of warranty. 737. Purchaser not entitled to collateral security. 738. Liability of purchaser buying mere equity of redemption. 739. Liability after purchase of paramount title. 739a. Sufficiency of recital of mortgage to which conveyance is subject. II. Assumption of Mortgage by Purchaser Section 740. What constitutes assumption of mortgage by purchaser— Effect of payment. 740a. Identity of the mortgage assumed — Parol evidence. 740b. Trustee assuming mortgage. 741. Suretyship of mortgagor. 742. When extension discharges the mortgagor. 742a. View that relation of surety does not affect mortgagee. 743. Assumption of proportionate part of debt by purchaser. 743a. Transfer of parts of property mortgaged — Rights and liabilities of purchaser. XXX TABLE OF CONTENTS Section 743b. Conveyance of two parcels subject to mortgage covering both. 744. No right to defend against mortgage assumed. 745. When purchaser not allowed to set up usury. 746. When purchaser may contest the mortgage. 747. Purchaser at execution sale. 747a. Where second or subsequent grantee has not assumed mortgage. III. Personal Liability of Purchaser Section 748. Under deed merely subject to mortgage. 749. Liability of purchaser under agreement to pay mortgage. 750. Effect of verbal promise to assume mortgage. 751. When debt forms part of consideration — Purchaser bound to in- demnify mortgagor. 752. Effect of accepting deed — When acceptance implied. 753. Married women assuming mortgage. 754. What will avoid the purchaser's liability. 755. How mortgagee may take advantage of agreement, 755a. How liability enforced. 756. Junior mortgagee assuming payment not liable. 757. Effect of assumption in 'absolute deed which is in fact a mortgage. 758. When action allowed on promise for benefit of mortgagee. 759. Suit on promise without foreclosure. 760. Liability of grantee though grantor himself not liable. 760a. Extension of liability to successive grantees. 761. Promise expressly for mortgagee's benefit. 761a. View that mortgagee's remedy one of equity and not of law. 761b. Doctrine of the Supreme Court of the United States. 761c. States holding that mortgagee's remedy is in equity against grantee. 761d. Massachusetts rule. 762. Prevailing rule allowing action at law against purchaser. 763. When release of covenant of assumption will deprive mortgagee of benefit thereof. 763a. When covenant of assumption irrevocable. 764. Whether grantor can release purchaser. 765. Conveyance on condition that the grantee pay a mortgage. 766. Grantor's agreement to discharge a mortgage. 767. When purchaser of part of mortgaged land entitled to release. 768. The remedy of the grantor. 768a. Doctrine of covenants running with the land not applicable. 769. Contract to pay mortgage enforced before promisee has paid. 769a. Payment by grantee discharges mortgage. 770. Measure of damages in action by grantor against purchaser. CHAPTEE XVIII lessee's rights and liabilities Section 771. Mortgagor in possession entitled to rent — Assignment. 772. Entry and notice prerequisite to mortgagee's rights. 772a. Disposition of rents upon bankruptcy of mortgagor. 773. Pre-existing lease not affected by mortgage. 774. Mortgagee of leased premises entitled to rent — Possession and notice. 775. SuflSciency of entry and notice by mortgagee. 776. Validity and effect of lease by mortgagor. 777. Lease subsequent to mortgage — Attornment by lessee. 778. Attornment ineffective where mortgage is a mere lien. 779. Compensation for improvements — Misrepresentation of condition of leasehold. TABLE OF CONTENTS XXXI Section 780. EmblemeEts. 781. Lease by mortgagor valid against third persons. 782. Reservation of power to lease repugnant to naortgage. 783. Effect of redemption upon lease by mortgagee in possession. 784. Rents and profits passing under assignment by mortgagee. 785. Mortgage of leasehold estate. CHAPTER XIX ASSIGNMENT OF MORTGAGES I. Formal Assignment, §§ 786-791 II. Compelling Assignment, §§ 793-793 III. TT7to May Male an Assignment, §§ 793a-803 TV. ^Y^^at Constitutes an Assignment, §§ 804-812 V. Equitable Assignments, §§ 812a-8"32a YI. Construction and'Effect of Assignments, §§ 823-833 VII. Whether an Assignee Takes Subject io Equities, §§ 834-847 I. Formal Assignment SECTIOIf 786. Form of assignment. 787. Transfer of title by deed. 788. Consideration. 789. Disseisin of mortgagee. 790. Delivery. 790a. Description of parties — Assignment in blank. 791. Record and notice of assignment. II. Compelling Assignment Section 792. Whether assignment may be compelled on payment. 793. "When assignment may be compelled in equity. III. Who May Male an Assignment Sectio:^ 793a. Who may assign in general. 794. Joint mortgagees. 795. One of several trustees — Legatee with life interest. 796. Executor or administrator. 796a. One of several executors or administrators. 797. Foreign administrator. 798. Corporations. 799. Unincorporated associations. 800. Partnerships. 801. Agents and attorneys. 802. Mortgage of indemnity. 802a. Mortgage to secure future advances. 803. Mortgage for support. IV. What Constitutes an Assignment Section 804. Assignment of mortgage without the debt. 805. Debt included in assignment. XXSll TAELE OF CONTENTS Section 806. Delivery of mortgage without note. 807. Assignment of mortgage and delivery of note. 808. Conveyance of premises by mortgagee — Quitclaim and warranty. 809. Deed by heir of mortgagee before foreclosure. 810. Mortgage by mortgagee. 810a. Devise by mortgagee or contract purchaser. 811. Conveyance of part of the estate by mortgagee. 812. Irregular or void foreclosure sale. V. Equitable Assignments Section 812a. Equitable assignments in general. 813. Sale and delivery of securities without indorsement. 814. Discharge of mortgage after assignment of note. 815. Assignment of bond for deed. 816. Power of attorney to enforce mortgage. 817. Transfer of debt — Effect in general. 818. Legal title not transferred. 819. Title held in trust by mortgagee. 820. Transfer of debt effectual only between parties. 820a. Rule in Maine. 820b. Purchaser put upon inquiry by assignment of notes. 820c. Transfer of note after foreclosure of mortgage. 821. Assignment of part of the mortgage debt. 822. Priorities of assignees of several notes or separate debts — Distribu- tion pro rata. 822a. Priority between assignees fixed by agreement or implication. VI. Construction and Effect of Assignments Section 823. Law of place. 824. Effect of assignment and title conveyed. 824a. Implied covenants and warranties — Guaranty of payment. 825. Effect of assignment upon after-acquired title. 826. Power of sale and right to foreclose as incidents of assignment. 827. Assignment as collateral security — Effect of foreclosure. 827a. Assignment of mortgage made in fraud of creditors. 828. Assignment induced by false representations. 829. Assignment includes all securities — Insurance. 830. Guaranty of debt not included in assignment. 831. Implied covenant that assignor will not collect. 832. Usury. 833. Cancelation of assignment. VII. Whether an Assignee Takes Subject to Equities Section 834. Assignment of mortgage securing negotiable note. 835. Void consideration. 835a. Assignment of forged mortgage or note. 835b. Assignee as bona fide purchaser — Notice. 836. Assignment expressly subject to rights of mortgagor. 837. Delivery of mortgage with indorsed negotiable note — Effect of prior recorded assignment. 838. Minority rule that assignee takes subject to equities — Consideration. 839. Theory of negotiability inapplicable to mortgages. 840. General rule in United States courts. 841. Assignment of mortgage securing overdue or non-negotiable not subject to equities. TABLE CI' C0XXEX73 XXxiii Section 841a. Assignment of mortgage -without separate obligation. 842. Assignment of bonds and non-negotiable instruments subject to eq- uities — Consideration. 843. Assignment free from secret equities of third persons. 844. New York rule. 845. Rule qualified by doctrine of estoppel. 846. Assignment subject to a parol trust. 847. Equities arising after assignment. CHAPTBE XX MEKGER AND SUBROGATION I. Merger, §§ 848-873 II. Subrogation, §§ 874^885a I. Merger Section 848. General doctrine of merger at law and in equity. 849. No merger on assignment to cotenant. 850. Effect of assignment to wife of mortgagor. 851. No merger on marriage of mortgagor and mortgagee. 852. No merger when equitable estate has been extinguished. 853. When assignor is estopped to claim merger. 854. Estoppel by selling estate free of incumbrances. 855. Intention governs as to effect of payment. 856. Intention expressed. 857. Intention expressed against merger. 858. Release may operate as an assignment. 859. Effect of deed of quitclaim from mortgagee. 860. Bequest of mortgage to mortgagor. 861. Parol evidence of intention. 861a. When property sold subject to mortgage and mortgagor takes as- signment of mortgage. 862. Merger in new security or judgment. 863. Mortgage kept alive to aid a wrong or violate a trust relation. 864. Payment by one who is bound by contract to pay. 865. Effect of assignment to purchaser who has assumed and agreed to pay mortgage. 865a. When mortgage paid by purchaser of equity of redemption. 866. With reference to right of dower. 867. Payment by one who has warranted against incumbrances. 868. Effect of assignment to subsequent purchaser. 869. Effect of payment by purchaser or by volunteer. 870. Acquisition of equity of redemption by mortgagee after transfer of mortgage. 870a. No merger against pledgor. 871. Mortgagee purchasing and giving up note. 871a. Merger between successive mortgages. 872. Purchaser can not rely upon record as showing merger. 873. Whether purchase an extinguishment of equity or merger of mort- gage. II. Subrogation Section 874. When subrogation arises by operation of law. 874a. Subrogation of purchaser under void foreclosure sale. 874b. Applies generally in favor of one paying a debt for another. 2XS1T TABLE OF CONTENTS Seotiox 874c. Subrogation of stranger to interest of mortgagee. 874d. Subrogation arising by agreement. 874e. Loan on defective mortgage to discharge prior valid mortgage. 874f. Laches and negligence. 875. Marshalling assets between different creditors. 876. Test of the right of subrogation. 877. Mortgage debt paid by one not under obligation to pay it. 877a. Where rights of innocent purchasers have intervened. 878. Junior mortgagee paying prior mortgage debt. 879. Mortgagor purchasing his own mortgage, after sale of equity of re- demption, when there are two mortgages. 880. When mortgage is enforced on other property. 881. Indorser or surety paying the debt. 881a. Where surety appears to be principal debtor. 882. Whether surety subrogated to the debt as well as the security. 883. Securities given before, after, and at time of contract of suretyship. 883a. Subrogation of principal creditor to mortgage given to surety. 884. When creditor has made further advances. 885. Subrogation not lost by renewal of mortgage. 885a. Part payment of the debt. CHAPTEE XXI PAYMENT AND DISCHARGE I. Tender Before and After Default, §§ 836-903 II. Appropriation of Payments, §§ 904-912 III. Presumption and Evidence of Payment, §§ 913-918 IV. Payment by Accounting as Administrator, §§ 919-923a V. Changes in the Form of the Belt, §§ 924r-943 VI. Revivor of Mortgage, §§ 943-949a VII. Foreclosure Does Not Constitute Payment, §§ 950-955 VIII. Who May Receive Payment and Malce Discharge, §§ 956-965 IX. Discharge hy Mistalce or Fraud, §§ 966-971b X. Form and Construction of Discharge, §§ 972-988a XI. Entry of Satisfaction of Record, §§ 989-991 XII. Statutory Provisions for Entering Satisfaction of Record, 88 992-1037 Section I. Tender Before and After Default 886 887, 888 889 890, 891 892 893 894, 895, 896 897, Effect of payment before law day. When payment or performance revests title. Not enforcible before law day. Payment after condition broken. Notice of payment. Tender on or before law day — ^Effect where mortgage secures gift. Effect of tender after breach of condition. Rule that tender after maturity discharges lien. Sufficiency of tender. Who may make a tender. To whom tender must be made. Place of payment or tender. table oe contents xsxv Sectiox 898. Time of day -when tender may be made. 899. Interest ceases to run from time of tender. 900. Tender must be absolute and unconditional. 901. In what money tender may be made. 901a. Tender must cover costs. 902. Costs incurred by refusal of tender. 903. Overpayment. II. Appropriation of Payments Section 904. A matter of intention. 905. Deposit of amount of mortgage indebtedness. 906. Payments appropriated by debtor and creditor. 907. Application by law. 908. Time for appropriation. 909. What is a sufficient appropriation. 909a. Agreement between mortgagee and purchaser of portion of premises. 909b. Application of payment from sale of mortgaged property. 910. Appropriation of insurance money — Payment on collateral security. 911. Interest to be first paid. 912. Payment upon usurious mortgage. III. Presumption and Evidence of Payment Section 913. Presumption and evidence of payment in general. 914. Presumption of payment of interest. 915. Presumption of payment from lapse of time. 915a. Doctrine of equity as to stale demands. 916. Presumption from shorter period than twenty years. 917. Payment a question of fact. 918. Effect of indorsements and receipts. IV. Payment hy Accounting as Administrator Section 919. Payment by accounting as administrator. 920. Mortgagor's dealings with mortgage as administrator. 920a. Where executor or administrator is insolvent. 921. Purchase of mortgage by representative. 922. Where mortgagee is representative of mortgagor. 923. Discharge of mortgage on land devised. 923a. Bond by heir to pay the debt. V. Changes in the Form of the Debt Section 924. Effect of change in form of indebtedness or in mode or time of pay- ment. 925. New note not a discharge as to subsequent purchaser. 926. Intention generally controls. 926a. Effect on mortgage of alteration of note secured by it. 927. Effect of substitution of another note. 927a. Substitution of new mortgage. 928. Giving up of bond of defeasance. 929. Effect of further security, or new indorser on note. 930. Incorporating additional loan in new note. 931. Note for a different amount payable at a different time. 932. New note for interest. 933. Consideration of new note. XXXVl TABLE OF CONTENTS Section 934. Renewal of note for which mortgage is indemnity. 935. Dishonored check or bill of exchange. 936. Effect of merger of note in judgment or decree of foreclosure. 937. Judgment for a portion of the debt. 938. Judgment under trustee process. 939. Proceedings against mortgagor personally. 940. Effect of release of judgment. 941. Failure to charge indorser. 942. Extension of time of payment. VI. Revivor of Mortgage Section 943. In general. 944. When rights of third persons have not intervened. 945. Assignment to third person at request of mortgagor. 946. Redelivery of note. 947. Agreement to transfer paid mortgage to new debt. 948. Reissue as prejudicing intervening rights of third persons. 949. Revivor as against interest of married woman. 949a. Foreclosure opened by accepting interest. VII. Foreclosure Does Not Constitute Payment Section 950. Payment by foreclosure. 951. Effect of release of equity of redemption to mortgagee. 951a. Agreement that foreclosure may be satisfaction. 952. When foreclosure is by entry and possession. 953. Extinguishment of debt by foreclosure sale. 954. Purchase by mortgagee of equity of redemption. 955. Purchase under tax sale by mortgagor. VIII. Who May Receive Payment and Make Discharge Section 956. Who may receive payment and make discharge — In general. 956a. Whether subsequent purchaser can rely upon discharge of record. 957. Discharge by person not entitled to make. 958. When mortgage is held by two or more jointly. 959. Discharge by personal representatives, heirs, and trustees. 960. Whether foreign executor can make valid discharge. 960a. How corporation acts. 961. Who may receive payment after assignment of mortgage. 962. Authority of equitable assignee to receive payment. 963. One who holds mortgage as collateral. 964. Agency to receive payment. 964a. Evidence of agent's authority to receive payment. 964b. Illustrations of authority of agents to receive payment. 964c. Discharge by officer of state or municipality. 964d. Agent's authority to collect interest not authority to collect principal. 965. Receiver accepting payment. IX. Discharge ly Mistake or Fraud Section 966. When discharge obtained by fraud or through mistake may be can- celed. 966a. Where mortgage is delivered up through fraudulent representations of mortgagor. 966b. Consideration for release. 967. Effect of the use of fraud or forgery to obtain mortgage notes or dis- charge of mortgage. TABLE OF CONTENTS SXXVU Section 968. Mortgage obtained by fraud from mortgagor. 969. Mistake must be one of fact. 970. Discharge by mistalie or through ignorance ■when assignment 'waa intended. 971. When new mortgage substituted. 971a. No repayment from prior good-faith mortgagee. 971b. Effect of forged discharge. X. Form and Construction of Discharge Section- 972. Mode of effecting a discharge. 973. When mortgagee becomes trustee of mortgagor. 974. When discharge -without a deed may be made. 974a. Effect of gift or bequest of mortgage or debt to mortgagor. 975. Mortgage of indemnity. 976. Intention to release governs. 977. Surrender of defeasance. 978. Mortgage lien cut off by prior title. 979. Verbal agreement to release mortgage. 980. Release limited to particular person ot demand. 981. Release of part of mortgaged premises. 982. Effect of partial release as regards rights of third persons. 983. Effect of release of personal liability of mortgagor. 984. Effect of release of security to discharge the debt. 985. Effect of release upon title of person to -whom made. 986. Mortgage discharged by mortgagee receiving purchase-price at sale. 987. Release -wrongfully obtained. 988. Duty of debtor "who demands release. 988a. Suit to compel cancelation of a mortgage -which has been paid. XI. Entry of Satisfaction of Record Section 989. Form and requisites of entry — Authority to discharge. 990. Penalty for failure to discharge. 991. Tender and refusal — Defenses. XII. Statutory Provisions for Entering Satisfaction of Record Section 992. Alabama. 993. Arizona. 994. Arkansas. 995. California. 996. Colorado. 997. Connecticut. 998. Dela-ware. 999. District of Columbia. 1000. Florida. 1001. Georgia. 1002. Idaho. 1003. Illinois. 1004. Indiana. 1005. Iowa. 1006. Kansas. 1007. Kentucky. 1008. Louisiana. 1009. Maine. 1010. Maryland. 1011. Massachusetts. 1012. Michigan. 1013. Minnesota. XXXVlll TABLE OF CONTENTS Section 1014. Mississippi. 1015. Missouri. 1016. Montana. 1017. Nebraska. 1018. Nevada. 1019. New Hampshire. 1020. New Jersey. 1021. New Mexico. 1022. New York. 1023. North Carolina. 1023a. North Dakota. 1024. Ohio. 1024a. Oklahoma. 1025. Oregon. 1026. Pennsylvania. 1027. Rhode Island. 1028. South Carolina. 1028a. South Dakota. 1029. Tennessee. 1030. Texas. 1031. Utah. 1032. "Virginia. 1033. Vermont. 1034. Washington. 1035. West Virginia. 1036. Wisconsin. 1037. Wyoming. CHAPTER XXII REDEMPTION OF A M0ET6AGE I. Bedemption a Necessary Incident of a Mortgage, §§ 1038-1046 II. Circumstances Affecting Redemption, §§ 1047-1051(1 III. When Redemption May Be Made, §§ 1052-1054 IV. Who May Redeem, §§ 1055-1069 V. The Sum Payable to Effect Redemption, §§ 1070-1088 VI. Contribution to Redeem, §§ 1089-1093 VII. Actions — Pleadings and Practice on Bills to Redeem, §§ 1093- 1113 I I. Redemption a Necessary Incident of a Mortgage Section 1038. Generally. 1038a. Distinction between right of redemption and equity of redemption. 1039. Stipulations against redemption — Mortgages In form of deed abso- lute. 1040. Postponement of redemption. 1041. Limiting redemption to mortgagor. 1042. Evasion of equitable rule. 1043. Payment of additional sum by mortgagee. 1044. Collateral advantage not permissible. 1045. Agreement to release equity of redemption on default. 1046. Redemption after release of equity of redemption. TABLE OF CONTENTS Xsxix II. Circumstances Affecting Redemption Sbotioit 1047. Redemption barred by foreclosure. 1047a. Redemption after foreclosure — Continuing obligation. 1048. Failure to make interested party a party to tlie suit. 1049. Estoppel of mortgagor by bis own acts. 1050. Redemption of one of two or more mortgages. 1051. Redemption after foreclosure under statutes. 1051a. Statutory rigbt a rule of property. lOSlaa. Public corporations. 1051b. Right of possession. 1051c. Redemption extinguishes mortgage lien. 1051d. Operation and effect of redemption. III. When Redemption May Be Made Section 1052. No redemption till mortgage due. 1052a. When redemption barred. 1053. Extension of time for redemption. 1054. Irregular foreclosure. IV. Who May Redeem Section 1055. In general. 1055a. Interest must be derived through mortgagor. 1056. Conveyance of equity of redemption. 1057. Redemption after foreclosure by second mortgagee. 1058. Mortgage conditioned for support. 1059. Legal title essential. 1060. Grantor by absolute deed. 1060a. Money judgment against grantee. 1061. Assignees. 1062. Heirs and devisees. 1063. Tenant in common — Joint tenant. 1064. Junior mortgagee. 1065. Life tenant — Remainderman — Reversioner. 1066. Tenant for years. 1067. Widow — Married woman. 1068. Surety. 1069. Judgment creditor. V. The Sum Payable to Effect Redemption Section 1070. Tender or payment of amount due. 1071. Notice of payment. 1072. Redemption must be entire. 1072a. Authority of agent to accept less than entire amount. 1073. Discharge in bankruptcy. 1074. Redemption on foreclosure on part of premises. 1075. Payment of whole amount of mortgage debt. 1076. Redemption of portion of mortgaged premises. 1077. When part only of the debt is due. 1078. Default in payment of instalment. 1079. Mortgage to secure future advances. 1080. Payment of prior incumbrances — Taxes. 1080a. Compensation for improvements. 1080b. Rents and profits. 1080c. Damages. 1081. Redemption by subsequent mortgagee. Xl TABLE OF CONTENTS Section 1082. Tacking. 1083. Consolidating mortgages. 1084. Costs of previous foreclosure. 1085. Over-payment to prevent foreclosure. 1086. Assignment of mortgage on redemption. 1087. Further of assignment of mortgage on redemption. 1088. Tender. VI. Contribution to Redeem Section 1089. In general. 1090. General rule where estates of two or more are subject of one com- mon incumbrance. 1091. Sale by mortgagor of portions of mortgaged property in different parcels at different times. 1092. Sale of mortgaged premises to different persons. VII. Actions — Pleadings and Practice on Bills to Redeem Section 1093. In general. 1093a. Action to determine character of instrument. 1094. Pleading — Bill — Sufficiency. 1095. Allegation of tender. 1096. Exceptions to the rule. 1096a. Process. 1097. The parties. 1098. Proper parties plaintiff. 1099. Heirs of mortgagor. 1100. Parties defendant. 1101. Parties defendant — Heirs, devisees, executors and administrators. 1102. Parties — Redemption by junior mortgagee. 1103. Parties — Assignees. 1104. Reference to state account. 1105. Defenses. 1106. The decree. 1107. Decree should fix a time when redemption is to take place. 1108. Failure of mortgagor to pay under decree. 1108a. Opening or suspending decree by agreement. 1109. Abandonment of suit. 1110. Mortgage title not necessarily extinguished. 1111. Costs. 1112. Costs — ^Failure of tender before suit. 1113. Costs — ^Liability of mortgagee. CHAPTEE XXIII moetgagee's account I. Liability to Account, §§ 1114^1120c II. What the Mortgagee Is Chargeable With, §§ 1121-1125 III. Allowances for Repairs and Improvements, §§ 1126-1131 IV. Allowance for Compensation, §§ 1132-1133 V. Allowances for Disbursements, §§ 1134-1138 VI. Annual Rests, §§ 1139-1143 TABLE OF CONTENTS xU I. Liability to Account Section 1114. In general. 1115. Accounting a matter of equitable jurisdiction. 1116. Liability to account on redemption only. 1117. Accounting under mortgage in form an absolute deed. 1118. Accounting after foreclosure. 1118a. Right of junior mortgagee to compel an accounting. 1119. Assignees. 1120. Accounting by mortgagor. 1120a. Demand for accounting. 1120b. Sufficiency of account. 1120c. Statement of account — Reference to master. II. What the Mortgagee Is Chargeable With Section 1121. Liability of mortgagee on taking formal possession for purpose ol foreclosure. 1122. Mortgagee liable for reasonable rent. 1123. When liable for more than actual receipts. 1123a. Liability where possession is not held in recognition of mortgage. 1123b. Liability for waste. 1124. Measure of liability where no books kept. 1125. Mines. III. Allowances for Repairs and Improvements. Section 1126. The rule as to repairs. 1127. Rule as to improvements. 1128. Exception to the rule. 1129. Allowance for repairs. 1130. Intermingling of property. 1131. Accounting by mortgagee of church. IV. Allowance for Compensation Section 1132. Compensation for management of estate. 1133. Massachusetts rule. V. Allowances for Disbursements Section 1134. Taxes and assessments. 1135. Insurance premiums. 1136. Insurance collected. 1137. Prior incumbrances. 1138. Attorney's fees — Surety debts. VI. Annual Bests Section 1139. Rule for annual rests in stating account. 1140. Annual and semi-annual rests. 1141. Rate of interest. 1142. Subsequent incumbrancers. 1143. Fraud or mistake. Xlii TABLE OF CONTENTS CHAPTEE XXIV WHEN THE EIGHT TO EEDEEM IS BAEEED I. The Statute of Limitations Applies iy Analogy, §§ 1144^1151a II. When the Statute Begins to Run, §§ 1152-1161a III. What Prevents the Running of the Statute, §§ 1162-1173 I. The Statute of Limitations Applies by Analogy Section 1144. General principles. 1145. Statute in force determines time. 1146. Riglit to redeem and foreclose reciprocal. 1147. New York rule. 1148. Tennessee rule. 1149. Possession must be adverse. 1150. Married women. 1151. Successive disabilities of mortgagor. 1151a. After foreclosure and sale. II. When the Statute Begins to Run Section 1152. Mortgage relation must be terminated. 1153. As to a Welsh mortgage. 1154. Remaindermen. 1155. Effect of mortgagor retaining possession of part of premises. 1156. When cause of action accrues. 1157. Burden on mortgagor after twenty years' possession by mortgagee. 1158. Constructive possession. 1159. Possession by mortgagee after payment of debt. 1160. When junior mortgagee's right accrues. 1161. When statute begins to run after foreclosure sale. 1161a. Laches. III. What Prevents the Running of the Statute Section 1162. An acknowledgment will not be inferred from equivocal expressions. 1163. Acknowledgment after twenty years. 1164. Acknowledgment to a third person. 1165. Mortgagee's acknowledgment binding upon all who hold under him. 1166. By rendering an account. 1167. Acknowledgment by letter. 1168. Acknowledgment by assignment. 1169. By recital in deed. 1170. By foreclosure proceedings. 1171. Verbal acknowledgment. 1171a. Where mortgagee attorney for mortgagor. 1172. Effect of filing bill to redeem. 1173. Statute must be pleaded. CHAPTER XXV WHEN THE EIGHT TO ENFOECE A MORTGAGE ACCRUES Section 1174. In general. 1175. Right dependent upon events other than lapse of time. TABLE OP COL'TENTS xliii Section 1175a. Default in payment of taxes. ^■!;l^- failure to pay instalment of interest or principal iiiro S^^a'^''^ in payment of annual or semi-annual interest. iiirn o^ agreement, default may not give right to foreclose. 1179. Stipulation for promptness in payment. 1179a. Provision as to effect of default need not occur in both mortgage and deed. ^ 1179b. Demand after default. 1179c. Corporate mortgages — Default. 1180. Provision in mortgage for foreclosure on breach of condition 1181. Provisions as to effect of breach not penalties. 1182. Default at election of mortgagee. 1182a. Notice of election. 1183. Provision forfeiting credit. 1183a. Rights of mortgagor. 1184. Provisions against forfeiture. 1185. Power of court to relieve from forfeiture. 1186. Waiver of default of credit. 1186a. Tender preventing forfeiture. 1187. Foreclosure by guarantor, surety and indorsers. 1188. Effect of conditions in surety mortgage. 1189. Estoppel of mortgagee. 1190. Extension of time of payment. 1191. Extension by parol agreement. CHAPTEE XXVI WHEN THE EIGHT TO FOEECLOSB IS BAEEED Section 1192. Application of statutes of limitation to foreclosure proceedings. 1193. Periods of limitation. 1194. Presumptions of payment from lapse of time. 1195. Application of doctrine of presumption of payment. 1196. Part payment and 'new promise. 1197. Evidence to rebut presumption. 1198. Payment of interest or part of principal to extend mortgage. 1199. Payment of interest by one of numerous purchasers of mortgaged premises. 1200. Payment of taxes by owner of equity of redemption. 1201. Right of purchaser to set up statute where he assumes payment of the mortgage — Payments to toll statute. 1202. Mortgagor's grantee has no greater rights against the mortgagee than the mortgagor himself. 1203. Statute merely takes away the remedy but does not discharge the debt. 1204. Lien enforcible though debt barred. 1205. Retention of possession by mortgagee till debt is paid. 1205a. Effect of death of mortgagor. 1206. No decree for deficiency after debt is barred. 1207. Jurisdictions where mortgage lien discharged when debt barred. 1208. Bar by adverse possession by persons holding in succession to each other. 1209. Bar to action to enforce equitable lien for purchase-money. 1209a. "When statute begins to run where mortgagee has option on default of payment of interest. 1210. When statute begins to run in favor of the mortgagor — Absence from state. 1211. Possession of mortgagor presumed subordinate to mortgage. Xliv TABLE OF CONTENTS Section 1211a. "WTiat constitutes disseisin of mortgagee by mortgagor. 1212. Operation of statute where mortgagor has not been in possession, 1213. Accrual of right of action where mortgage one of indemnity. 1214. Rule where debt barred by special statute of limitations. 1214a. Bill to have mortgage canceled after mortgage barred by statute. 1214b. Plea by subsequent purchasers and third parties. 1214c. Plea by junior mortgagee. 1214d. Laches to bar foreclosure. CHAPTEE XXVII REMEDIES FOE ENFORCING A MORTGAGE I. Are Concurrent, §§ 1815-1219 II. Personal Remedy Before Foreclosure, §§ 1220-1336 III. Personal Remedy After Foreclosure, §§ 1227-1228b IV. Sale of Mortgaged Premises on Execution for Mortgage Deht, §§ 1229-1230 V. Remedy as Affected ly Banlcruptcy, §§ 1331-1236 I. Are Concurrent Section 1215. Right of mortgagee to pursue remedies concurrently or successively. 1216. Rule exception to principle against multiplicity of suits. 1217. Right to maintain creditor's bill. 1217a. Right to foreclose under instrument containing power of sale. 1218. Waiver of right to foreclose by pursuing other remedies. 1219. Payment to discharge judgment. II. Personal Remedy Before Foreclosure Section 1220. Action on note without foreclosure. 1221. No necessity that holder of mortgage wait to ascertain deficiency. 1222. Pendency of suit to foreclose as bar to action on debt. 1223. Statutes limiting right to concurrent remedies. 1224. Decree of foreclosure as bar to action on debt. 1225. Express covenant to pay. 1225a. Mortgage made by husband and wife on land of one spouse. 1225b. Option to resort to additional or collateral security. 1226. Circumstances that exclude personal remedy. III. Personal Remedy After Foreclosure Section 1227. Suit for deficiency after a sale under power. 1228. Suit at law for deficiency after sale under decree In equity. 1228a. Right to foreclose collateral mortgage for deficiency. 1228b. Right to judgment at law for balance due where foreclosure decree insufficient. TABLE OF CONTENTS xlv IV. Sale of Mortgaged Premises on Execution for Mortgage Debt Section 1229. Levy of execution on mortgaged, property for judgment on debt. 1230. Levy of execution on other property. V. Remedy as Affected hy Bankruptcy Section 1231. Effect of discharge on right to foreclose and have judgment for de- ficiency. 1231a. Effect of failure of mortgagor to schedule equity of redemption. 1232. In what court the mortgage lien may be enforced. 1233. Effect of proceedings in bankruptcy on pending suits. 1234. Effect of pendency of bankruptcy proceedings in sister state. 1235. Sale ordered by bankruptcy court subject to mortgage. 1236. Establishment of mortgagee's claim in bankruptcy court. CHAPTER XXVIII FOEECLOSUEE BT ENTET AND POSSESSION I. Nature of the Remedy, §§ 1237-1238 II. Statutory Provisions, §§ 1239-12-15 III. The Entry, §§ 1246-1257 IV. The Possession, § 1258 V. The Certificate of Witnesses, §§ 1259-1260 VI. The Certificate of the Mortgagor, § 1261 VII. When the Limitation Commences, § 1262 VIII. Record of the Certificate, § 1263 IX. Ejfect of the Foreclosure Upon the Mortgage Debt, § 1264 X. Waiver of Entry and Foreclosure, §§ 1265-1275 I. Nature of the Remedy Section 1237. Nature of remedy. 1238. Where used. II. Statutory Provisions Section 1239. Maine. 1240. Maine — ^Foreclosure by advertisement. 1241. New Hampshire — Foreclosure by entry and possession. 1242. New Hampshire — Foreclosure by mortgagee already in possession. 1243. New Hampshire— Strict compliance with statute required. 1244. Massachusetts— Method ot foreclosure by entry and possession. 1245. Rhode Island— Foreclosure by entry and possession. III. The Entry Section 1246. In general. 1247. Who should make entry. xlvi TABLE OJ? CONTENTS Section 1248. Entry by executor or administrator. 1249. Foreclosure of part or whole of mortgaged estate. 1250. Assignment of the entry. 1251. Right of second mortgagee to foreclose. 1252. Foreclosure by married woman where the husband holds equity of redemption. 1253. When mortgagee may enter. 1254. Entry on part of land mortgaged. 1255. Exhibiting mortgage deed to witnesses. 1256. Entry must be peaceable. 1257. Certificate of entry and record thereof. IV. The Possession Section 1258. Character of possession. V. The Certificate of Witnesses Section 1259. What it must state. 1260. What certificate evidence of. VI. The Certificate of the Mortgagor Section 1261. Mortgagor's certificate evidence of entry. VII. When the Limitation Commences Section 1262. Time from which limitation runs. VIII. Record of the Certificate Section 1263. Record of certificate — Purpose thereof. IX. Effect of the Foreclosure Upon the Mortgage Belt Section 1264. Operation and effect in general. X. Waiver of Entry and Foreclosure Section 1265. By express or implied agreement. 1266. Effect of assignment after entry. 1267. Who may waive entry and foreclosure. 1268. Previous purchase under power not waived by entry. 1269. Payment as waiver. 1270. Intention governs. 1271. No waiver by mortgagee's rendering account. 1272. Conditional waiver. 1273. Writ of entry no waiver. 1274. Foreclosure opened by recovery of judgment for mortgage debt. 1275. Relief in case of accident or mistake. TABLE OF CONTENTS xlvii CHAPTER XXIX FOEECLOSUEB BT WKIT OF ENTRY I. Nature of and Where Used, §§ 1276-1279 II. Who May Maintain, §§ 1280-1289 III. Against Whom the Action May Be Brought, §§ 1290-1293 IV. The Pleadings and Evidence, §§ 1293-1295 V. The Defenses, §§ 1296-1305 VI. The Conditional Judgment, §§ 1306-1316 I. Nature of and Where Used Section 1276. Nature and scope of remedy as used in Massachusetts and Maine. 1277. Procedure in Massachusetts and Maine. 1278. Nature and scope of remedy in New Hampshire. 1279. How possession obtained in Rhode Island. II. Who May Maintain Section 1280. Who may bring action in general. 1281. After assignment. 1282. After assignment as collateral. 1283. Joint mortgagees, joint assignees, and unincorporated associations. 1284. Two mortgages held by one person. 1285. Action by junior mortgagee. 1286. Homestead right. 1287. Prior entry and power of sale no objection to action for writ. 1288. Executor or administrator of mortgagee. 1289. When right of action accrues. III. Against Whom the Action May Be Brought Section 1290. Tenant or purchaser. 1291. Wife of mortgagor. 1292. Mortgagor and grantees. IV. The Pleadings and Evidence Section 1293. The declaration. 1294. Answer. 1295. Evidence. V. The Defenses Section 1296. Equitable defense — Defense by married woman. 1297. Want of consideration. 1298. Payment. 1299. Surrender obtained by fraud. 1300. Usury as a defense. 1301. Defense that no right of action has accrued. 1302. Defense as to part of premises. 1303. Purchaser subject to mortgage estopped to set up fraud in obtaining mortgage. 1304. Effect of promise not to enforce. 1305. After-acquired superior title. xlviii TABLE OF CONTENTS VI. The Conditional Judgment Section 1306. In general. 1307. Action to try title. 1308. Production of note. 1309. Amount of judgment. 1310. When condition other than payment of money. 1311. Payments made for protection of estate. 1312. Indemnity mortgage — Costs — Usurious interest. 1313. "When claims in set-off may be allowed. 1314. Joint tenants. 1315. Where no amount is found due. 1316. The judgment, with all benefit of the security and of the possession taken under It, may be assigned. CHAPTER XXX STATUTORY PKOVISl'ONS RELATING TO EORECLOSURE AND REDEMPTION Section 1317. The statutes generally. 1318. Codes of procedure. 1319. Scope of chapter. 1320. Foreclosure by special statute. 1321. What law governs — Retroactive statutes. 1322. Alabama. 1322a. Alaska. 1322b. Arizona. 1323. Arkansas. 1324. California. 1325. Colorado. 1326. Connecticut. 1328. Delaware. 1329. District of Columbia. 1330. Florida. 1331. Georgia. 1331a. Hawaii. 1332. Idaho. 1333. Illinois. 1333a. Indian Territory. 1334. Indiana. 1335. Iowa 1336. Kansas. 1337. Kentucky. 1338. Louisiana. 1339. Maine. 1340. Maryland. 1341. Massaohusetts. 1342. Michigan. 1343. Minnesota. 1344. Mississippi. 1345. Missouri. 1346. Montana. 1347. Nebraska. 1348. Nevada. 1349. New Hampshire. 1350. New Jersey. 1350a. New Mexico. 1351. New York. TABLE OF CONTENTS xlix 1352. North Carolina. 1352a. North Dakota and South Dakota. 1353. Ohio. 1353a. Oklahoma. 1354. Oregon. 1355. Pennsylvania. 1356. Rhode Island. 1367. South Carolina. 1357a. South Dakota. 1358. Tennessee. 1369. Texas. 1360. Utah. 1361. Vermont. 1362. Virginia. 1363. Washington. 1364. West Virginia. 1365. Wisconsin. 1366. Wyoming. CHAPTEE XXXI PAETIES TO AN EQUITABLE SUIT FOR FORECLOSURE I. Who Are the Proper Parties Plaintiff, §§ 1367-1393 II. Who Are the Necessary or Proper Parties Defendant, §§ 1394r-1440 III. Intervention, New Parties and Process, §§ 1441-1 442c I. Who Are the Proper Parties Plaintiff Section 1367. Parties in general. 1368. Mortgagees and parties interested in general. 1369. Joinder of plaintiffs. 1370. Real party in interest. 1371. Interest after assignment — Some interest essential. 1372. Form of assignment immaterial. 1373. Effect of absolute and formal assignment. 1374. Assignment as collateral security. 1375. Assignor interested in surplus. 1375a. Assignment pending foreclosure — Mortgage of indemnity — Garnish- ment — Foreign trustee. 1376. Assignee of mortgage without note secured. 1377. Assignee of mortgage note. 1377a. Assignee in bankruptcy of mortgagee. 1378. Holder of one of several notes secured. 1379. Partners. 1380. Sureties. 1381. Joint mortgagees. 1382. Survivor of joint mortgagees. 1383. Trustees. 1383a. Foreign receivers. 1384. Beneficiaries and trustees. 1385. Bondholders. 1386. Trustee for creditors. 1387. Executor, administrator or devisee. 1388. Necessity of joining heirs or devisees. 1389. Foreign executor or administrator. 1 table of contents Section 1390. Mortgage to executor or guardian. 1391. Holder of two or more mortgages. 1392. Public officers. 1393. Husband and wife. II. Who Are the Necessary or Proper Parties Defendant Section 1394. General principles. 1395. Effect of omission of party in interest — Junior mortgagee. 1396. Parties in interest — Default of the one having paramount title. 1396a. Parties in interest — Illustrations. 1397. Trustee and beneficiaries. 1398. Numerous beneficiaries and creditors. 1399. Trustees. 1400. Equitable interest. 1401. Remaindermen. 1402. Mortgagor a necessary party. 1403. Mortgagor retaining an interest. 1404. Mortgagor without interest not a necessary party. 1405. Mortgagor retaining partial interest — Partition. 1406. Purchaser of equity of redemption. 1406a. Tax purchasers. 1407. Purchaser assuming the mortgage debt. 1408. Intermediate purchasers. 1409. Joint tenants of equity of redemption. 1410. Objection by demurrer or answer. 1411. Purchaser pendente lite. 1412. Purchaser of equity under unrecorded deed. 1413. Tenants and occupants. 1414. Mortgagor's heirs. 1415. Heirs of purchaser. 1416. Heirs of partner. 1417. Mortgagor's heirs — Leasehold. 1418. Devisees. 1419. Legatees. 1420. Mortgagor's wife. 1421. Mortgagor's wife not joining — Purchase-money mortgage. 1422. Mortgagor's wife without dower interest. 1423. Wife's homestead right — Bankruptcy of mortgagor. 1424. Husband. 1425. Subsequent mortgagees and their assignees — Assignee of mechan- ic's lien. 1426. Subsequent mortgagee retaining interest after assignment. 1427. Assignee of note. 1428. Personal representative of junior mortgagee. 1429. Objection to want of service after default. 1430. Redemption by junior mortgagee. 1431. Redemption sole right of junior mortgagee. 1431a. Maker of note secured. 1432. Guarantor of debt secured. 1433. Collateral obligation — ^Heirs of guarantor. 1434. Indorser of note. 1435. Joint mortgagees. 1436. Judgment creditors. 1436a. General creditors. 1437. Judgment after decree. 1438. Bankrupt. 1438a. Rec&iver. 1439. Prior parties in interest. 1440. Adverse claimants. TABLE OP CONTENTS III. Intervention, New Parties and Process Section 1441. Intervention. 1442. New parties. 1442a. Substitution of parties. 1442b. Process and notice— Service by publication. 1442c. Service upon infants and guardians. lii TABLE 01" CONTENTS VOLUME THREE CHAPTEK XXXII FOEECLOSUEE BY EQUITABLE SUIT I. Jurisdiction, and the Object of the Suit, §§ 1443-1450 II. The Bill of Complaint, §§ 1451-1478 III. The Answer and Defense, §§ 1479-1515 I. Jurisdiction, and the Object of the Suit Section 1443. Jurisdiction. 1444. Venue. 1445. Litigation of questions of title. 1446. Questions of removal of buildings, not investigation of title. 1447. Improper use of remedy. 1447a. Injunction to restrain improper use of remedy. 1448. Inforcement of trust deed for creditors. 1449. Foreclosure of title bond. 1450. Tender to prevent foreclosure. II. The Bill of Complaint Section 1451. General principles. 1452. Essential requisites. 1453. Variance between allegations and proof. 1454. Allegations of execution and delivery — Copies and exbibits. 1455. Proof of execution. 1456. Allegations showing riglit to maintain bill. 1457. Assignee's title. 1458. Inclusion of several mortgages in one bill. 1459. Foreclosure for Instalment. 1460. Bill by holder of one of several mortgage notes. 1461. Prayer for decree against mortgagor and personal judgment against other maker of note. 1462. Description of mortgaged property. 1463. Omission of parts of mortgaged premises. 1464. Reformation for mistake in description. 1465. Allegations of record. 1466. Allegations of debt. 1467. Reference to determine amount of debt. 1468. Allegations of renewal of note. 1469. Proof of note. 1469a. Production of note on bond. 1470. Proof of consideration. 1471. Allegations of accrual of action. 1472. Allegations of payment by surety. 1473. Averments as to liens. 1474. Allegations that defendant's interest is subject to mortgage. 1475. Prayer for relief. 1476. Averment of essential grounds of relief. 1477. Prayer for deficiency. 1478. Prayer for amount of debt before entry of final decree. TABLE OP CONTENTS liii g III- The Answer and Defense 1479. In general. 1479a. Cross-bills. 1480. Answer generally. 1481. Denial must be explicit. 1481a. Disclaimer. 1482. Right to question title of mortgagee. 1483. Mortgagor estopped to deny his title. 1484. Estoppel of mortgagor to set up defense by reason of declarations and agreements. 1485. Defenses against assignee. 1486. Assignee for value. 1487. When assignee takes free from equities. 1488. Defense that complainant has parted with his interest. 1489. Indemnity. 1490. Defense of want of consideration. 1491. Defense of want of consideration by purchaser subject to mortgage. 1492. Defense of fraud. 1492a. Defense of fraudulent alteration. 1492b. Fraud as against mortgagor's creditors. 1493. Usury is a defense. 1494. Defense of usury waived or lost. 1495. Defense of usury where mortgage made to be sold at discount. 1496. Set-off and counterclaim. 1497. Set-off where suit brought in name of person other than real owner. 1498. Set-off where suit regarded as proceeding in rem. 1499. Set-off of illegal interest paid. 1500. Defense of outstanding paramount title. 1501. Allegations of failure of title. 1502. Failure of title where mortgagor in undisturbed possession. 1503. Cases exceptional to general rule. 1504. Covenant broken at time suit is brought. 1505. Breach by mortgagee of independent covenant. 1506. Fraud of vendor as defense to purchase-money mortgage. 1506a. Mistake as to quantity of land conveyed. 1506b. Violation of law by mortgagee as defense. 1507. Defense of mistake as against assignee. 1507a. Assumption of mortgage by grantee of mortgagor. 1508. Validity of title as condition precedent to payment of mortgage. 1509. Statute of limitations. 1510. Insanity of mortgagor. 1511. Recovery of judgment on mortgage note as defense. 1511a. Defense of liability to creditor of plaintiff In garnishee process. 1512. Defense of satisfaction of mortgage — Payment— Tender. 1513. Defense of agreement of parties subsequent to the mortgage. 1514. Defense of defective service of process. 1515. Bill of Interpleader. CHAPTER XXXIII APPOINTMENT OF A RECEIVER I. When a Receiver will he Appointed, §§ 1516-1534 II. Duties and Powers of a Receiver, §§ 1535-1537a I. When a Receiver will he Appointed Section 1516. General principles. 1517. When appointed on application of mortgagor — Grounds for appoint- ment. liv TABLE OF CONTENTS Section 1518. Appropriate under leasehold mortgages. 1519. English rule as to appointment. 1520. Rules in states where legal title vested in mortgagee. 1521. Prevailing rule — States where legal title vested in mortgagor. 1522. The appointment as affected by statutes. 1523. In behalf of a subsequent mortgagee. 1524. Consent of prior mortgagee. 1525. Right of prior mortgagee to possession until paid. 1526. Time of appointing receiver. 1526a. Notice of application. 1527. Defenses to the application. 1528. Possession of defendant must be shown. 1529. Verification. 1530. Necessity for default or maturity of debt. 1531. Appointment after decree and after appeal. 1531a. Receiver during time allowed for redemption. 1532. Necessity for showing security inadequate, and insolvency of debtor. 1533. Other grounds for appointment of receiver. 1534. Tests of adequacy of security in respect to city property. II. Duties and Powers of a Receiver Section 1535. Rights, powers, and duties of receiver in general. 1536. Receiver's claim to the rents. 1537. Discharge of receiver. 1537a. Responsibility for default of receiver. CHAPTEE XXXIV DBCEBB OF STKICT FOEECLOSUEB I. Nature and Use of this Remedy, §§ 1538-1541 II. In What States It Is Used, §§ 1542-1556 III. Pleadings and Practice, §§ 1557-1568 IV. Setting Aside and Opening the Foreclosure, §§ 1569-1570 I. Nature and Use of the Remedy Section 1538. Historical. 1539. Nature of the remedy. 1540. When remedy is proper. 1541. Land contract. II. In What States It Is Used Section 1542. Alabama. 1543. California. 1543a. Colorado. 1544. Connecticut. 1544a. Florida. 1545. Illinois. 1545a. Indiana. 1546. Iowa. 1547. Kentucky. 1547a. Massachusetts. 1547b. Michigan. tabj.e op contents iv Section 1548. Minnesota. 1549. Missouri. 1550. Nebraska. 1550a. New Jersey. 1551. New York. 1552. North Carolina. 1553. Ohio. 1553a. Pennsylvania. 1553b. Rhode Island. 1554. Tennessee. 1555. Vermont. 1555a. West Virginia. 1556. Wisconsin. III. Pleadings and Practice Section 1557. Necessity that entire debt be due. 1558. Parties. 1559. Heirs at law as parties. 1560. Pleading and practice. 1561. Judgment. 1562. Delivery of possession. 1563. Redemption. 1564. Redemption by infant heir. 1565. Time for redemption fixed in decree. 1566. Dismissal of bill to redeem. 1567. Effect of strict foreclosure. 1568. Costs. IV. Setting Aside and Opening the Foreclosure Section 1569. Opening or setting aside decrees. 1570. Effect of defective service of process. CHAPTBE XXXV DECREE OF SALE I. A Substitute for Foreclosure, §§ 1571-1573 II. Form and Requisites of the Decree, §§ 1574r-1586b III. The Conclusiveness of the Decree, §§ 1587-1589e IV. The Amount of the Decree, §§ 1590-1601 V. Costs, §§ 1602-1607 I. A Substitute for Foreclosure Section 1571. Generally. 1572. Under English chancery practice. 1573. Jurisdiction of equity independent of statute. II. Form and Requisites of the Decree Section 1574. Scope of relief granted by decree — Generally. 1575. Decree and order in terms of mortgage — Description of mortgaged premises. Ivi TABLE OP CONTENTS Section 1576. Order of sale. 1577. Decree when only part of debt or instalment of interest is due — Sale in parcels. 1577a. Decree where several mortgages on same property — Separate mort- gages on different pieces of property. 1578. Relief should conform to pleadings. 1579. Interference with interests of persons not made parties. 1580. Decree where junior mortgagee forecloses when prior mortgage not due. 1580a. Nature of decree against grantee of mortgagor. 1581. After-acquired title. 1581a. Provision for reconveyance on foreclosure of deed as mortgage. 1581b. Allowance for waste committed by mortgagor. 1581c. Damages for breach of covenant in purchase-money mortgage. 1582. Apportionment of debt among cotenants. 1583. One decree for entire debt. 1584. Death of mortgagor. 1585. Death of plaintiff. 1586. Allowance of day for payment before sale. 1586a. Amendment of decrees. 1586b. Opening or vacating decrees. III. The Conclusiveness of the Decree Section 1587. Collateral attack on decree. 1588. Parties concluded by decree directing sale. 1589. Prior and adverse rights. 1589a. Effect of decree of foreclosure of junior mortgage on senior mort- gage. 1589b. Statutes making decrees conclusive. 1589c. Acceptance of proceeds by mortgagor as concluding him. 1589d. Conclusiveness dependent on service of process. 1589e. Conflict of laws. IV. The Amount of the Decree Section 1590. Decree should fix amount of indebtedness. 1591. Inclusion of instalments not due. 1592. Collateral mortgage. 1593. Decree for full amount of principal and interest due on bond. 1594. Interest. 1595. Exchange. 1596. Insurance — Rent paid to protect estate. 1597. Taxes. 1598. Costs incurred in previous action. 1599. Disbursements in proceedings for foreclosure — Abstracts. 1600. Final judgment. 1601. Stay of proceedings on account of controversy between subsequent incumbrancers. V. Costs 1602. In general. 1603. Costs as dependent on statutes and practice of the several states. 1604. Costs where subsequent incumbrancers unnecessarily appear and answer. 1605. Costs to defendants who properly appear and answer. 1606. Attorney's fees. 1606a. Stipulation for attorney's fee as usury — Miscellaneous matters. 1606b. Expenses provided in mortgage. 1607. Costs of irregular attempts at foreclosure. TABLE OE CONTKXTS Ivii CHAPTER XXXVI FORECLOSURE SALES UNDER DECREE OF COURT I. Mode and Terms of Sale, §§ 1608-1615 II. Sale in Parcels, §§ 1616-1619 III. Order of Sale, §§ 1620-1632a IV. Conduct of Sale, §§ 1633-1636 V. Confirmation of Sale, §§ 1637-1641 VI. Enforcement of Sale Against Purchaser, §§ 1643-1651 VII. Deed and Title Conveyed, §§ 1652-1663 VIII. Delivery of Possession to Purchaser, §§ 1663-1667 IX. Setting Aside Sale, §§ 1668-1681 I. Mode and Terras of Sale Section 1608. Sale by the court through its officers. 1609. Estate and interest sold. 1610. Subsequent Incumbrances. 1611. Determination of priorities before and after sale. 1611a. Appraisement for sale. 1612. Notice of sale. 1613. Terms of sale. 1614. Deposit required. 1614a. Mortgagee purchasing at sale. 1615. Sale on credit. II. Sale in Parcels Section 1616. Sale in parcels under statute or decree. 1617. Preference of mortgagor considered. 1618. Mode of sale determined by court or officer. 1619. Sale in parcels for part of debt due. III. Order of Sale Section 1620. Sale In inverse order of alienation — Mortgagor's Interest sold first. 1621. Rule of Inverse order — Adoption and application. 1622. Rule applied to subsequent mortgages. 1623. Parts of property sold under judgment. 1624. Record and notice of subsequent deeds. 1625. Agreements charging certain parcels. 1626. Iowa and Kentucky rule — Contribution according to value. 1627. Time of valuation — Sale in parcels. 1628. Recourse to two funds. 1629. Mortgagee holding lien upon other property — Exoneration of surety. 1630. Mortgagee of two parcels securing same debt. 1630a. Mortgage by tenants in common securing debt of one — Partition. 1631. Deduction of value of parcel released before charging other portions. 1632. Homestead. 1632a. Duty of mortgagor to assert homestead right. Iviii TABLE OF CONTENTS IV. Conduct of Sale Section 1633. Presence of officer conducting sale. 1634. Adjournment. 1635. Who may purchase at foreclosure sale — Right of mortgagee. 1636. Resale for failure or refusal to comply with bid. V. Confirmation of Sale Section 1637. Sale incomplete until confirmation — Defects — Ratification. 1637a. Objections to confirmation. 1638. Discretion of court in confirmation — Notice — Order. 1639. Resale upon application of party affected by fraud, unfairness or misconduct. 1640. Reopening sale on advanced bid before confirmation. 1641. Inadequacy of price as objection to confirmation. VI. Enforcement of Sale Against Purchaser Section 1642. Purchaser a quasi party — Rights and liabilities. 1643. Attachment against purchaser — Terms of resale. 1644. Forfeiture of deposit. 1645. Defect in title — Bidder reimbursed. 1646. Defects in title prior to mortgage — Notice. 1646a. Mistake or misrepresentation. 1647. Errors in decree or proceedings. 1648. Refusal to purchase justified by defect — Reference. 1649. Taxes. 1650. Estoppel and laches. 1651. Grounds for refusal to complete sale — Formal irregularities. VII. Deed and Title Conveyed Section 1652. Deed executed to third person. 1653. Delivery of deed. 1654. Title conveyed — Intervening liens and incumbrances extinguished. 1655. Errors in deed. 1656. After-acquired title. 1657. Fixtures. 1658. Emblements. 1659. Rents and profits. 1660. Mortgagee purchasing. 1661. Rights under certificate of purchase — Ejectment. 1662. Sale unaffected by subsequent appeal. VIII. Delivery of Possession to Purchaser Section 1663. Possession delivered to purchaser. 1663a. Writ of assistance. 1664. Possession as against persons entering pending suit. 1665. Possession under paramount title — Wife's homestead right. 1666. Payment and performance by purchaser prerequisite. 1667. Summary proceedings in addition to other remedies. IX. Setting Aside Sale Section 1668. Sale set aside for fraud — Rights of third persons. 1669. Application for resale by party in interest. 1669a. Estoppel of party whose misconduct caused irregularity. table of contents ijx Section 1670. Inadequacy of price and other grounds. 1670a. Sale set aside at instance of mortgagee. 1671. Reopening sale when mortgagee purchases — Disaffirmance by mort- gagor. 1672. Neglect of officer selling — Defects and irregularities. 1673. Insufficient grounds for resale — Rights of purchaser. 1674. Laches — Irregularity ■waived by delay. 1675. Mistake, surprise or accident, as ground for resale. 1675a. Mistalte in quantity or location of land. 1676. Absence of parties from sale — Infants. 1676a. Insanity of mortgagor at time of sale. 1677. Few bidders. 1678. Invalid sale equivalent to assignment. 1679. Second foreclosure and sale — Supplemental bill. 1680. Redemption by satisfaction of prior mortgage. 1681. Effect of setting aside sale — Purchaser protected and reimbursed for improvements. CHAPTER XXXVir APPLICATION OF PEOCEEDS OF SALE I. Payment of the Mortgage Debt, §§ 1682-1683b II. Disposition of the Surplus, §§ 1684-1698 III. Priorities Between Holders of Several JVotes Secured, §§ 1699-1707 IV. Costs of Subsequent Mortgagees, § 1708 I. Payment of the Mortgage Debt Section 1682. In general 1683. Taxes and other charges paid to preserve security — Prior liens. 1683a. Application according to equitable principles. 1683b. Provisions for election as to application of proceeds in mortgage. II. Disposition of the Surplus Section 1684. Payment of surplus money into court. 1685. Appointment of master or referee to ascertain rights of claimants to surplus — Costs of proving claims. 1686. Report of referee and exceptions thereto. 1687. Lien claimants. 1688. Payment of lien in order of priority. 1688a. Rights of junior mortgagees in surplus. 1688b. Priority of creditors where fraudulent conveyance of the mortgaged premises is set aside. 1689. Simultaneous mortgages. 1690. Other claims due mortgagee. 1691. Equities of subsequent incumbrances. 1691a. Application of doctrine of marshaling securities. 1692. Prior unrecorded mortgages. 1692a. Funds collected by receiver. 1693. Dower and homestead in surplus. 1694. Inchoate right of dower. 1695. Character of surplus of sale made after death of mortgagor. ix table of contents Section 1696. Rights of lessee for years of the mortgagor. 1696a. Rights of tenant for life and remaindermen. 1696b. Participation in surplus by equitable assignee. 1696c. Proceeds where purchaser holds as mortgagee in possession. 1696d. Set-off for use and occupation. 1697. Attachment of proceeds of foreclosure sale. 1698. Surplus of sale under junior mortgage. III. Priorities Between Holders of Several Notes Secured Section 1699. Priority of maturity. 1700. Payment of notes not due. 1701. Priority of assignment. 1701a. Pro rata division. 1702. Right of parties to change order of priority. 1703. Preference in favor of note on which default is declared. 1704. Set-off against mortgage notes. 1705. Debts due different persons. 1705a. Priority as between principal and interest. 1706. Rights of sureties. 1707. Sale for instalment. IV. Costs of Subsequent Mortgagees Section 1708. In general. CHAPTEE XXXVIII JUDGMENT IN AN EQUITABLE SUIT FOR A DEFICIENCY Section 1709. Statutory provisions for deficiency judgment. 1709a. Pleadings and proceedings prerequisite to deficiency judgment 1709b. Rights of second mortgagee. 1709c. Persons liable. 1710. Third parties liable on mortgage debt. 1711. Jurisdiction of equity to decree payment of balance. 1712. Purchaser subject to debt. 1713. Assumption of mortgage by grantee. 1714. Conveyance as security. 1715. Note, bond, covenant or collateral obligation to pay. 1716. Judgment for deficiency against nonresident. 1717. Judgment against administrator of mortgagor. 1718. Personal judgment against wife of mortgagor. 1719. Judgment for parts of debt not due — Limitations. 1719a. Amount of judgment — Deduction of taxes. 1720. Lien of judgment for deficiency. 1721. Remedy against one personally liable for mortgage debt. CHAPTEE XXXIX STATUTORY PROVISIONS RELATING TO POWER OF SALE MORTGAGES AND TRUST DEEDS I. Introductory, § 1723 II. Statutory Provisions in the Several States, §§ 1723-1763a I. Introductory 1722. Necessity of power of sale in English mortgages. TABLE OF CONTENTS Ixi II. 'Statutory Provisions in the Several States Section 1723. Alabama. 1723a. Arizona. 1724. Arkansas. 1725. California. 1726. Colorado. 1727. Connecticut. 1729. Delaware. 1730. District of Columbia, 1731. Florida. 1732. Georgia. 1732a. Hawaii T. 1732b. Idaho. 1733. Illinois. 1734. Indiana. 1735. Iowa. 1736. Kansas. 1737. Kentucky. 1738. Louisiana, 1739. Maine. 1740. Maryland. 1741. Massachusetts. 1742. Michigan. 1743. Minnesota. 1744. Mississippi. 1745. Missouri. 1746. Montana. 1747. Nebraska. 1748. Nevada. 1749. New Hampshire. 1750. New Jersey. 1751. New York. 1752. North Carolina. 1752a. North Dakota. 1753. Ohio. 1754. Oregon. 1755. Pennsylvania. 1756. Rhode Island. 1757. South Carolina. 1757a. South Dakota. 1758. Tennessee. 1759. Texas. 1760. Vermont. 1761. Virginia. 1762. West Virginia. 1763. Wisconsin. 1763a. Wyoming. CHAPTEE XL POWER OF SALE MORTGAGES AND TRUST DEEDS I. The Nature and Use of Powers of Sale, §§ 1764-1772 II. The Power of Sale Is a Cumulative Remedy, §§ 1773-1776 III. Formalities in Creation of Powers, §§ 1777-1791 IV, Fevocation or Suspension of the Power, §§ 1793-1800 Ixii TABLE OF CONTENTS V. When the Exercise of the Power May Be Enjoined, §§ 1801-1820 VI. Personal Notice of Sale, §§ 1831-1826 VII. Publication of Notice, §§ 1827-1838 VIII. What the Notice Should Contain, §§ 1839-1856 IX. Sale in Parcels, §§ 1857-1860 X. Conduct of Sale, Terms, and Adjournment, §§ 1861-1875 XI. Who May Purchase at Sale, §§ 1876-1888 XII. Deed and Title, §§ 1889-1903 XIII. The Affidavit, §§ 1904:-1905 XIV. Setting Aside and Waiving Sale, §§ 1906-1922 XV. Costs and Expenses, §§ 1923-1926b XVI. The Surplus, §§ 1927-1940 I. The Nature and Use of Powers of Sale Section' 1764. In general. 1765. Validity of power. 1766. Scope of powers in mortgages used In England. 1767. When power of sale mortgages first used in United States. 1768. How far a power of sale a necessary incident of a mortgage. 1769. Deeds of trust distinguished from mortgages with power to sell. 1770. Why deed of trust preferred to mortgage. 1771. Trustee the agent of both parties. 1771a. Effect of trustee's Irregular sale and conyeyance. 1772. Where trustee claims debt secured. II. Power of Sale a Cumulative Remedy Section 1773. Power of sale a cumulative remedy. 1774. New trustee. 1774a. What laws govern enforcement of deeds of trust. 1775. Sale Is by power and not by decree where court enforces power. 1776. When debt is unliquidated. III. Formalities in Creation of Power Section 1777. Form of power. 1777a. Power conferred by married women. 1777b. Stipulating when power may be exercised. 1777c. Payment of taxes a condition. 1777d. Consent of grantor to exercise power. 1778. Form of power authorizing sale. 1779. What is a sufficient power. 1780. Acceptance of trust. 1781. Obvious error on face of power. 1782. Entry and possession under power. 1783. Foreclosure by mortgagee after he has taken rents and profits. 1784. Necessity for record of mortgage or power of sale. 1785. Who may exercise power. 1786. When power may be executed by executor or administrator of mort- gagee. 1787. Effect of assignment of mortgage with power of sale. TABLE OF CONTENTS Ixiii Section 1788. Rule applicable to assignment of deeds of trust. 1789. Equitable assignee. 1790. Power to two or more jointly. 1790a. Where power exercisable at request of beneficiary. 1791. First and second mortgagee — Mortgage of undivided lialves. IV. Revocation or Suspension of the Power Section 1792. Death of mortgagor. 1793. Effect of insanity of mortgagor after giving mortgage. 1793a. Effect of barring action on debt. 1794. Power of sale revoked by death of mortgagor. 1795. Effect of modification and extension of power. 1796. Conveyance or release of part of premises by mortgagee. 1797. Exercise of power suspended by pendency of bill to redeem. 1798. Effect of tender upon sale — Massachusetts rule. 1799. Effect of tender before sale actually made. 1800. Where mortgagor an alien enemy. V. When the Exercise of the Power May Be Enjoined Section 1801. Grounds for injunction in general. 1801a. Scope of action after equity has jurisdiction. 1802. Legitimate exercise of power. 1803. Use of power to obtain unfair advantage. 1804. Alleging grounds for injunctive relief. 1805. Evidence in support of bill. 1805a. Parties to suit. 1806. Payment or tender. 1807. Fraud as a ground for enjoining sale. 1807a. Grounds for injunction arising after making of mortgage. 1807b. Ground that mortgage was made to defraud creditors. 1807c. Insanity of mortgagor at time of execution of mortgage as ground for injunction. 1807d. Sale enjoined pending controversy as to existence of default. 1808. Usury. 1809. Unconscionable penalty. 1810. Want of notice as a ground for Injunction. 1811. Not enjoined to allow set-off. 1812. Time for contribution to redeem. 1813. When amount of debt is in dispute. 1813a. Where mortgage has been satisfied. 1814. Purchaser of land ignorant of power in mortgage. 1815. Clouding title. 1815a. Injunction pending suit throwing doubt on grantor's right to ex- ecute deed of trust. 1816. Insolvency of trustee or mortgagor as ground for injunction. 1817. Scarcity of money or business depression. 1817a. Where trust deed covers both real and personal property. 1818. Master or referee associated with mortgagee in making sale. 1819. Recovery of money paid under duress. 1820. Mortgagee's damages and costs when wrongfully enjoined. A^. Personal Notice of Sale Section 1821. When notice necessary. 1821a. Personal notice to subsequent incumbrancers. 1822. Compliance with terms of power of sale. Ixiv TAJ3LE OE CONTENTS Section 1823. Notice to persons under disability. 1823a. Notice to occupant of premises. 1824. Waiver of notice by mortgagor. 1825. Promise to give notice. 1826. Neglect to give notice ground for setting aside sale. VII. Publication of Notice Section 1827. Notice by publication in general. 1828. Lex rei sitae. 1829. Fairness required. 1830. Burden of proof as to notice. 1831. Notice published before default. 1832. Effect of assignment of mortgage after first advertisement. 1833. Change of statute as to length of notice. 1834. How long after publication sale may be 1835. Selection of newspaper. 1836. Place of publication. 1837. Posting in public places. 1838. Length of time of publication. VIII. What the Notice Should Contain Section 1839. Compliance with terms of power. 1840. Description of premises. 1841. Where distinct lots or parcels are to be sold. 1842. Short and incomplete description. 1843. Names of parties. 1844. Specifying owner of equity of redemption. 1845. Specifying time and place of sale. 1846. When mortgagee or trustee may exercise discretion in fixing time, place, and terms of sale. 1847. Sale fixed for Sunday or legal holiday. 1848. Sale at ruins of courthouse. 1849. Sale at temporary courthouse. 1849a. Sale In newly Incorporated town or county. 1850. Sale at city hall. 1851. Mistake in advertisement. 1852. EJffect of error in notice. 1853. Sale of equity of redemption. 1854. Unimportant omissions. 1855. Statement of amount due. 1856. Stating amount of first mortgage in notice of sale of second. IX. Sale in Parcels Section 1857. Sale in parcels or en masse in general. 1858. Effect of request that sale be made in parcels. 1859. Duty and discretion of mortgagee or trustee. 1860. Sale of sutflcient only to pay debt. X. Conduct of Sale, Terms, and Adjournment Section 1861. Mortgagee may act by attorney. 1862. Presence of trustee or mortgagee. 1863. Public or private sale. 1864. Terms of sale. 1865. Acquiescence of mortgagor in conduct of sale. table of contents ixv Section 1866. Payment at time of sale. 1867. Time for examination of title. 1868. Giving credit. 1869. When power does not prescribe terms of sale. 1870. Use of discretion by mortgagee. 1871. Mortgagee giving credit and assuming risk. 1872. Cash or credit. 1873. Adjournment. 1874. Notice on postponement or adjournment. 1875. No obligation to delay sale. XI. Who May Purchase at Sale Section 1876. Purchase by mortgagee. 1876a. Effect of purchase by mortgagee. 1877. When unnecessary to show fraud or unfairness in mortgagee's pur- chase. 1878. Purchase by mortgagee's solicitor. 1879. Mortgagee's agent. 1880. Purchase by trustee. 1881. Purchase by mortgagee with mortgagor's knowledge and consent. 1882. Purchase by creditor at sale made by judicial process. 1883. Purchase by mortgagee under authorization in power. 1884. Purchase by subsequent mortgagee. 1885. Waiver of right to avoid sale to mortgagee. 1886. Where property has passed into hands of bona fide purchaser. 1887. Purchase by mortgagor. 1888. Purchase by wife of mortgagor. XII. Deed and Title Section 1889. Who may execute deed to purchaser. 1890. Deed by married woman. 1891. In whose name deed may be executed. 1892. Mortgagee executing deed to himself. 1893. In New York and Alabama deed to mortgagee purchaser not neces- sary. 1894. When title vests in purchaser. 1895. Recitals in the deed. 1896. Deed made to person other than purchaser. 1897. Title of purchaser. 1897a. Taxes and mechanic's liens. 1898. Bona fide purchaser. 1899. Agreement between parties as affecting bona fides of purchaser. 1899a. Doctrine of caveat emptor. 1900. Noninquiry clause. 1901. Covenant in deed. 1902. Invalid sale may operate as assignment of mortgage. 1902a. Remedy of purchaser for obtaining possession. 1903. Remedy on failure to comply with bid. XIII. The Affidavit ad file afl&davit of sale, ive evidence of facts st£ XIV. Setting Aside and Waiving Sale Section 1904. Failure to make and file afladavit of sale. 1905. Afildavit presumptive evidence of facts stated therein. Section 1906. General considerations. 1906a. Military occupation of premises at time of sale ground for relief. Ixvi TABLE OF CONTENTS Section . 1907. Sale void or voidable for irregularity. 1908. Sale made without leave of bankrupt court. 1909. Allowing property to be sacrificed. 1910. Secret arrangement to prevent competition. 1911. Fraud and deceit. 1912. Conduct of purchaser. 1913. Purchaser with knowledge of validating circumstances. 1914. Purchase by agent without authority. 1914a. Effect of absence of competition in bids. 1915. Inadequacy of price. 1915a. Auctioneer without license. 1916. Sale waived by extending time of redemption. 1917. Promise to allow mortgagor to repurchase. 1918. Effect of suit for second instalment. 1919. Not waived by subsequent entry to foreclose. 1920. Waiver by agreement. 1920a. Ratification and estoppel. 1921. Relief in equity only. 1922. Delay. 1922a. Pleading and evidence. XV. Costs and Expenses Section 1923. Compensation to mortgagee or trustee. 1923a. Attorney's fees provided for in mortgage. 1923b. Stipulation for attorney's fee refers only to sale under power. 1924. Costs and expenses of sale where no provision made in power. 1925. Costs and expenses provided for in power. 1926. Costs and expenses where bankruptcy court orders sale. 1926a. Application of proceeds of sale. 1926b. Payment of prior liens upon the property. XVI. The Surplus Section 1927. Form of provision in power for disposal of surplus. 1928. Interest on surplus pending adjustment of adverse claims. 1929. Order in which surplus proceeds must be applied. 1930. Mortgagee entitled to notice of claims to surplus. 1931. Death of mortgagor. 1932. Insolvency or bankruptcy of mortgagor. 1933. Dower in surplus. 1934. When equity has been sold under execution or is attached. 1935. Judgment lien. 1936. When mortgage debt charged on portion of premises. 1937. When whole property sold to satisfy Instalment. 1938. Payment of whole debt on a sale for an instalment. 1939. Where several debts are secured by same mortgage. 1940. Proceedings to recover surplus. THE LAW OF MORTGAGES OF REAL PROPERTY CHAPTEE I NATUEE OF A MOETGAGB I. History of the Development of the Law, §§ 1-16 II. The Nature of a Mortgage in the Different States, §§ 17-59 I. History of the Development of the Law Se'ction SECTIo^' 1. Antiquity of mortgages. 10. Trust arising through relation- la. Mortgages used by the Anglo- ship of mortgagor and mort- Saxons. gagee. 2. Vivum vadium. 11. The modern common-law doc- 3. Vivum vadium and Welsh mort- trine of mortgages. gage distinguished. 12. Lord Mansfield's views. 4. Mortuum vadium. 13. Change from legal to equitable 5. Mortgages suspended under feu- theory in United States. dalism. 14. Incongruities in both the com- 6. Growth of the doctrine of an mon-law and equitable theo- equity of redemption. ries. 7. When the doctrine was first es- 15. Mortgage as a legal estate and tablished. as a personal lien distin- 8. Mortgage at law distinguished guished. from mortgage in equity. 16. Present day mortgage defined. 9. Statute of 7 Geo. II, ch. 20. § 1. Antiquity of mortgages. — Mortgages owe their origin more to the necessities of men in civilized life than to the creative genius of any particular individual, age, or nation. They were in no sense a subject of invention, but followed as a necessity in the wake of civilization. The necessity of credit, and the consequent sudden de- mand for money in a moment of business or commercial embarrass- ment would naturally suggest the idea of a mortgage as the quickest method of raising it, and at the same time affording to the lender a perfect security, easy of transfer, which may itself in turn render to such lender the same service that it did to the original mortgagor. 1 1 — Jones Mtg. — Vol. I. NATURE OF A MORTGAGE 2 That mortgages, or pledges in the nature of mortgages, were not unknown to the nations of antiquity may be inferred from the fol- lowing Scriptural language: "Some also there were that said, We have mortgaged our lands, vineyards and houses, that we may buy corn, because of the dearth."^ It is certain that mortgages of some nature were known among the ancient Jews, and it is believed by some writers that the practice of mortgaging lands had its origin with them.^ By the Jewish law,,, land could not be aliened beyond the next jubilee, which occurred every fifty years, and the original owner could redeem at any time during the fifty years on payment of the value to be computed from the date of redemption to the next jubilee. When the day of jubilee arrived the land reverted to the original owner discharged of the debt by operation of the law. From the Jews the idea of a mortgage seems to have passed to the Greeks and Eomans. But the Eomans were the first to make a distinction between things pledged and things mortgaged. They recognized two sorts of transfer of property as security for debts, namely, the pignus and the hypotheca. The pignus or pledge was where anything was pledged as a security for a debt, and the possession of the thing pledged passed to the creditor upon the condition that he would return it to the debtor when the debt was paid. The hypotheca was where the thing pledged was not delivered to the creditor, but remained in the possession of the debtor.* The civil law made little distinction between mortgages of real and mortgages of personal property, whether pledged or hypothecated; but the term pledge became more commonly used in reference to a chattel, so the term pignus came to signify in strictness a pledge of movable, and the word hypotheca of immovable property. The Eoman hypotheca closely corresponds with our present idea of .a mortgage.* The historians are at variance 'as to whether the idea of pledging or mortgaging real property was borrowed from the Eomans by the English. No less an authority than Littleton contends that mortgages were introduced in England less upon the model of the Eoman pignus or hypotheca, than upon the common law of conditions,^ an observa- tion which can not at least apply to the equity of redemption. It is nevertheless true that the law of feuds and tenures was decidedly op- posed to mortgages; but it is not altogether improbable that, during » Nehemiah, Chap. V, 3. ' Story's Eq. Jur. § 1005. 'See Cunaeus, pp. 11-14; Ancient ■* Siory's Eq. Jur. § 1006. Universal History, pp. 130, 131. - Litt. § 332. HISTORY or DEVELOPMENT OE LAW § la the long period of Eoman possession, some of the civil law principles were engrafted upon the common law of England. § la. Mortgages used by the Anglo-Saxons. — Very little is known concerning the nature of Anglo-Saxon real property law on the con- tinent. It seems to be admitted, however, that a right of free aliena- tion of property existed, which implied the right of mortgage or con- ditional sale. When they invaded England they found there Eoman law and Eoman authority. There can be no doubt, therefore, that the Anglo-Saxon law was most sensibly affected by Eoman influence. However this may be, it is reasonably certain that mortgages, or at least pledges of land in the nature of mortgages, were not unknown to the Anglo-Saxons in England before the Norman conquest. In at least two ancient charters the transactions are clearly enough defined to show that land was given as security for the payment of money, though as to the manner and form of the transfer, and the rights of the parties under it, very little can be made out. The most important of these cases is quoted below." It appears from this that "The translation is taken from a collection of essays of much interest published in 1876, entitled Es- says in Anglo-Saxon Law. Appen- dix, Case No. 18, p. 342. See also the Essay on Anglo-Saxon Land Law, p. 106. As a coincidence it may be mentioned that the present chapter with the following quota- tion had been written before the same charter had appeared, as illus- trating Anglo-Saxon mortgages, in the third edition of Mr. Fisher's ex- cellent treatise on Mortgages. It is to be observed that Eadgifu men- tioned in this document was queen of Edward the Elder, whose reign was from a. d. 901 to 925. "Eadgifu makes known to the archbishop and the community of Christ's Church how her land at Cooling came [to her]; that is, that her father left her land and charter as he rightfully got, and his parents left them to him. It happened that her father borrowed thirty pounds of Goda, and assigned him the land in pledge for the money, and he held it seven years. Then it happened about that time that all Kentish men were summoned to Holme on military service; so Sigh elm, her father, was unwilling to go to the war with any man's money unpaid, and gave thirty pounds to Goda, and bequeathed his land to Eadgifu, his daughter, and gave her the charter. When he had fallen in war, then Goda denied the return of the money, and refused to give up the land till some time in the sixth year. Then [her kinsman] Byrhsige Dy- rineg firmly pressed her claim, un- til the Witan, who then were, ad- judged to Eadgifu that she should cleanse her father's hand by [an oath of] as much value [namely, thirty pounds]. And she took oath to this effect at Aylesford, on the witness of all the people, and there cleansed her father in regard to the return of the money, with an oath of thirty pounds. Even then she was not al- lowed to enjoy the land until her friends obtained of King Edward that he forbade him [Goda] the land, if he wished to enjoy any [that he held from the king] ; and he so let it go. Then it happened, in course of time, that the king brought so serious charges against Goda, that he was adjudged to lose charters and land, all that he held [from the king, and his life to be in the king's hands]. The king then gave him and all his property, char- § S NATtTKE OF A MORTGAGE 4 the mortgagee was in the possession of the land, and that he doubtless had the use of the land in return for the use of the money loaned by him. Upon the payment of the loan it was his duty to render back the land to the mortgagor, and his failure to do so in this case was the occasion of litigation, commencing in the reign of Edward the Elder, extending through the reigns of yEthelstan, Edmund, Eldred, and Edwy, and finally ending in the reign of Edgar. The tribunal was the Witan, or national assembly, which was also the highest court of law in the kingdom. Prom another charter in which refer ;nce is made to a mortgage, it seems that the title to the mortgaged land, at some time and in some way not revealed, became vested absolutely in the mortgagee, who conveyed away the land. Slight as the knowledge is which these charters give us in respect to the law of the Anglo-Saxon mortgage of real property, it is of interest; for, while we find the elements of our present system of the law of real property in the customary laws of the period preceding the Norman Conquest, we may well expect to find in this source as well the beginnings of the law of mortgage as a part of that system. § 2. Vivum vadium. — At a later period, as is apparent from the Domesday, pledges of lan"d were frequent. Later still, in the time of Glanville, pledges of land had taken two distinct forms, the ters, and. lands to Eadglfu, to dis- Witan, at Hamme, near Lewes. And pose of as she would. Then said Eadgifu held the land, with the she that she durst not, for [fear of] charters, during the days of the two God, make such a return to him as kings, her sons [^thelstan and Ead- he had merited from her, and gave mund]. Then Eadred died, and Ead- up to him all his lands except two gifu was deprived of all her prop- hides at Osterland, but would not erty; and two sons of Goda (Leof- give up the charters before she stan and Leofric) took from Ead- knew how truly he would hold them gifu the two before-mentipned lands in regard to the lands. Then king at Cooling and Osterland, and said Edward died, and iEthelstan took to the child Edwy, who was then the throne. When it seemed to Goda chosen king, that they were more seasonable, he went to King ^thel- rightly theirs than hers. This then Stan, and prayed him to intercede remained so until Edgar obtained with Eadgifu for the return of his power; and he and his Witan ad- charters; and the king then did so, judged that they had been guilty of anJ she returned him all except the wicked spoliation, and they ad- eharter of Osterland; and he relin- judged and restored to her her prop- quished the charter voluntarily to erty. Then by the king's leave and her, and thanked her with humility witness, and that of all his bishops for the others. .And, further, he, [and chief men], Eadgifu took the with eleven others, gave an oath to charters, and made a gift of the land her, for born and unborn, that the to Christ's Church, [and] with her matter in dispute was forever set- own hands laid them upon the altar, tied; and this was done In the wit- as the property of the community ness of King jEthelstan and his forever." 5 HISTORY OP DEVELOPMENT OF LAW § o vivum vadium and tlie mortuiim vadium. The former denoted a pledge of land when the creditor took possession of the land under the conveyance, and held it for a certain period, during which the rents and profits received by him went toward the payment of the debt. Upon payment of the debt the debtor was entitled to have his lands back again, and might recover them by suit if not volun- tarily restored. This was apparently the form of the mortgage re- ferred to in the Anglo-Saxon charter of the tenth century already quoted; and the mortgages mentioned in Domesday seem to imply that possession of the property was in the mortgagee; and also, in the time of Glanville, the possession seems usually to have followed the security.'' The vivum vadium and also the mortuum vadium, as at first known, were determinable or base fees, with a right of reverter in the feoffor and his heirs, on the payment of a 'designated sum; but they differed in that the former gave the feoffor a continuing right to redeem, while under the latter the title to the estate and all interest in it became vested in the feoffee, in case the conditions were not punctually performed. The distinguishing characteristics of a vivum vadium were that there was no proviso in the instrument that the conveyance was to be void on payment of the debt, and there was no covenant, express or implied, for such payment.* § 3. Vivum vadium and Welsh mortgage distinguished. — This form of mortgage is like the Welsh mortgage of a later period, in so far that it contains no condition that the conveyance is to be void upon payment of the debt, as is the case with the common mortgage, but the mortgagee had the possession of the property assured to him, and received the rents and profits either in lieu of interest, or in discharge of both principal and interest. Under this form of mortgage the mortgagee had no remedy whatever. He could not sue for the debt. There was no covenant for payment, either express or implied.' He could neither compel the mortgagor to i-edeem, nor cut off his right 'See also Cortwright v. Cady, 21 A mortgage which secures a bond, N. Y. 343, 344, 78 Am. Dec. 145. note, or other personal obligation of "O'Neill v. Gray, 39 Hun (N. Y.) the mortgagor, and is conditional to 566. become void on payment, is not a 'Lawley v. Hooper, 3 Atk. 280; Welsh mortgage, or a mortgage in O'Connell V. Cummins, 2 Ir. Eq. 251; the nature of such a mortgage, Jortin v. Southeastern R. Co., 6 though it provides that the mortga- DeG. M. & G. 270, 3 Eq. Rep. 281, 1 gee .may collect the rent of the mort- Jur. (N. S.) 433, 24 L. J. ch. 343. gaged premises, and apply the same Howell v. Price, 1 P. Wms. 291; on account of the mortgage debt. Longuet v. Scawen, 1 Ves. Sen. 402. O'Neill v. Gray, 39 Hun (N. Y.) 566. § 4 ■NATURE or A MORTGAGE 6 of redemption by foreclosure. In this respect the transaction was like a conditional sale. The mortgagor could redeem at his option, and could enforce his right either at law or in equity. After full payment of the debt from the rents and profits, the mortgagor's. right to redeem would be barred, finally, by the lapse of the statutory period of limitation. This form of security is the same as one form of the Welsh mortgage, or of a mortgage in the nature of a Welsh mortgage, where the property is conveyed to the mortgagee and his heirs, to hold until out of the rents and profits he shall have received both prin- cipal and interest.^" The principal distinction between the ancient vivum vadium and the modern Welsh mortgage seems to be that, while in the former the rents were applied in satisfaction of the prin- cipal, in the latter they were received in satisfaction of the in- terest, the principal generally remaining undisturbed. § 4. Mortuum vadium. — The mortuum vadium was the designa- tion of a pledge of land of which the mortgagee did not necessarily receive the possession, or have the rents and profits in reduc- tion of the demand. In the time of Glanville this form of security was looked upon with much disfavor as a species of usury. That the creditor was liable to the penalties of usury if he received money for the use of the loan, and was considered dishon- est as well, is a suflHcient reason why this kind of security, though not prohibited, was then seldom used. The mortuum vadium spoken of by Littleton is the common-law mortgage. It had then become a conditional estate ; the condition being that upon payment of the debt at a fixed time the grantor might re-enter, but upon breach of the condition the conveyance became absolute.^^ It was at a later day that the equitable right of redemption after forfeiture became an incident of the mortgage. The nature of the transaction as a mere "Coote on Mtg. 208; Rankert v. gage, which is as much to say in Clow, 16 Tex. 9; Angier v. Master- French as mortgage, and in Latin son, 6 Cal. 61. See also O'Neill v. mortuum vadium. And it seemeth Gray, 39 Hun (N. Y.) 566; Howell that the cause why it is called mort- V. Price, Prec. Ch. 423, 477, 24 Eng. gage is, for that it is doubtful Reprint 189, 214, 1 P. Wms. 291, 2 whether the feoffor will pay at the Vern. Ch. 701, 23 Eng. Reprint 1055. day limited such sum or not; and, " Littleton's Tenures, lib. iii. ch. 5, if he doth not pay, then the land § 332. "(Of Estates upon Condition.) which is put in pledge upon condi- item: If a feoffment be made upon tion for the payment of the money such condition that if the feoffor Is taken from him forever, and so pays to the feoffee, at a certain day, dead to him upon condition.' And if forty pounds of money, that then he doth pay the money, then the the feoffor may re-enter; in this case pledge is dead as to the tenant." the feoffee is called tenant in raort- 7 HISTORY OF DEVEI.OPMENT OF LAAT § 5 security for a debt was not then regarded, but the rules applicable to other estates upon condition were enforced with all their strictness. This is illustrated in the statement of Littleton, that if the condition was that the debtor should pay a certain sum of money to the mort- gagee, no definite time being fixed for the payment, if the debtor died before making payment, a tender of payment by his heir was void, because the time within which the payment should be made was past, the condition that the debtor should pay being as much as to say that he should pay during his lifetime. But if the condition was that the payment should be made by a day certain, then, if the debtor died before that day, his heir or executor might, as his representative, tender the money within the time limited.^^ By the application of the severe rules of the common law to this form of mortgages, great injustice was done to the debtor. If the conditions of the mortgage were not punctually kept, the title passed absolutely and forever from the debtor. He had no redress what- soever, until the courts of chancery began to engraft the enlightened and equitable principles of the civil law of mortgages upon the harsh rules of the common law. These courts established the rule, that "once a mortgage, always a mortgage," and that no mortgage could be enforced without a decree of the chancellors. Finally the equity of redemption became a fixed right in every mortgagor. § 5. Mortgages suspended under feudalism. — The introduction of the feudal system into England by "William of Normandy, was a memorable epoch in the history of the English law. Such re- straints upon the free alienation of lands were imposed after the iSTorman Conquest under the feudal system then established that " Littleton's Tenures, lib. iii. ch. 5, is where a day of payment is lim- § 337. "Also, if a feoffment be made ited, and the feoffor die before the upon condition that if the feoffor day; then may the heir tender the pay a certain sum of money to the money as is aforesaid, for that the feoffee, then it shall be lawful to the time of the tender waS' not past by feoffor and his heirs to enter; in the death of the feoffor. Also it this case if the feoffor die before the seemeth that in such case, where payment made, and the heir will the feoffor dieth before the day of tender to the feoffee the money, payment, if the executors of the such tender is void, because the time feoffor tender the money to the feof- within which this ought to be done fee at the day of payment, this ten- is past. For when the condition is, der is good enough; and if the feof- that if the feoffor pay the money to fee refuse it, the heirs of the feoffor the feoffee, this is as much to say may enter. And the reason is, for as If the feoffor during his lite pay that the executors represent the per- the money to the feoffee; and when son of their testator." Followed in the feoffor dieth then the time of Alsop v. Hall, 1 Root (Conn.) 346. the tender is past. But otherwise it § 6 NATDEE OF A MORTGAGE « it is probable that mortgages were almost unknown in England for tlie next two hundred years/^ That military institution, the nature of which was such as to exclude any idea of a mortgage, soon absorbed all the real property of the kingdom. By the restrictions placed upon alienation of lands, mortgages were practically extinguished. At length the statute of quia emptores restored freedom of aliena- tion to all except the immediate tenants of the crown, and not long afterward questions relating to the nature of mortgages and the re- spective rights of the parties began to receive the attention of the courts and of Parliament.^* § 6. Growth of the doctrine of an equity of redemption. — In the latter part of the reign of Elizabeth it seems to have been an un- settled question whether an absolute forfeiture of the estate had not been incurred by a nonpayment of the debt at the day named in the condition.^^ But the right of the mortgagor to redeem after forfeiture seems to have been a recognized right in the reign of Charles I;^" although at the close of the reign of Charles II an equity ^of redemption was declared to be a mere right to recover the estate in equity after breach of the condition, and not such an estate as was entailable within the statute de donis." In this case Chief Justice Hale made the often quoted remark, "By the growth of equity on equity, the heart of the common law is eaten out, and legal settlements are destroyed." He thought the mortgagor's equity of redemption " Coote on Mtg. 5. "In the twen- subject his lands to his debts by ex- tieth year of William's reign, and on ecution of law, for, If he could, he the completion of Domesday Book, might have effected that circuit- he summoned a meeting of all the ously which he could not by direct principal landholders in London and means have accomplished. Nor, if Salisbury, and accepted from them the lands came to him by descent, a surrender of their lands, and re- could he aliene them without the granted them on performance of consent of the next collateral heir." homage and the oath of fealty. The "18 Edw. I. (a. d. 1325). mesne lords, on their sublnfeuda- "Goodall's case, 5 Rep. 96; Wade's tions, also demanded homage and case, 5 Rep. 115. fealty, and it was held the bond of "See 2 Min. Insts. 335; Co. Litt, allegiance was mutual, each being Butler's note, 204b; 2 Story Eq. Jur. hound to defend and protect the § 1014. other. From this flowed the doc- Emanuel College v. Evans, 1 Rep. trine that the tenant could not in Ch. 18. In this case, although the transfer his feud without his lord's money was not paid at the day but consent, nor the lord his seigniory afterward, it was held that the without his tenant's consent, al- mortgage term ought to be void, just though the tenants, even of the as it would have been at law on a crown, it would seem, might grant payment according to the condition, subinfeudations (i. e. to hold of "Roscarrick v. Barton, 1 Ca. in themselves, without license). It was Ch. 217. further held, the tenant could not 9 HISTORY OF DEVELOPilENT OF LAW § 7 had already been carried too far, saying : "In 14 Eichard II the Par- liament would not admit of redemption; but now there is another settled course ; as far as the line is given, man will go ; and if a hun- dred years are given, man will go so far, and we know not whither we shall go. An equity of redemption is transferable from one to another now, and yet at common law, if he that had the equity made a feoffment or levied a fine, he had extinguished his equity in law; and it hath gone far enough already, and we will go no further than precedents in the matter of equity of redemption, which hath too much favor already." Even so late as 1737 it was strenuously argued before the High Court of Chancery that an equity of redemption was not an estate in land of which a husband was entitled to be a tenant by the curtesy. It was insisted that the equity of redemption was no actual estate or interest in the wife, but only a power in her to reduce the estate into her possession again by paying off the mortgage; it was compared to the case of a proviso for a re-entry in a conveyance when no entry had ever been made, and to a condition broken when no advantage had ever been taken thereof; that the wife was never seised in fee in law, because the legal estate was out of her by virtue of the mortgage, but had only a bare possession, and was in receipt of the rents and profits ; so that the mortgagor had merely a right of action or a suit in a court of equity, in order that the estate might be reconveyed to her upon complying with the terms in the mortgage. But Lord Hardwicke declared that an equity of redemption is an estate in the land, for it may be devised, granted, or entailed with remainders, and such entail and remainders may be barred by a fine and recovery, and therefore can not be considered as a mere right only, but such an estate whereof there may be a seisin; the person, therefore, entitled to the equity of redemption is considered as the owner of the land, and a mortgage in fee is considered as personal assets. ^^ § 7. When the doctrine was first established. — The doctrine of the right of redemption had its origin in the great fountainhead of equitable doctrines — the Eoman or civil law. But it is not clearly ascertained when this doctrine was first allowed in England. Equita- ble interposition is attributed to the courts of equity ; but the doctrine of redemption was probably adopted long prior to the establishment of distinct chancery courts. Courts of equity had become fully established in their authority in " Casborne v. Scarfe, 1 Atk. 603. § 8 ^J'ATURli: OF A MORTGAGE 10 the reign of James I, and although many equitable principles now recognized in the doctrine of mortgages were not fully established till long afterward, it is probable that at this time the subject of mort- gages was so far within their jurisdiction as to enable them to relieve the mortgagor from the forfeiture of his rights through failure to pay according to the condition, and to establish the doctrine of the equity of redemption.^® "No sooner, however, was this equitable principle established than the cupidity of creditors induced them to attempt its invasion, and it was a bold but necessary decision of equity that the debtor could not, even by the most solemn engagements en- tered into at the time of the loan, preclude himself from his right to redeem; for in every other instance, probably, the rule of law,-, Modus et conventio vincunt legem, is allowed to prevail. In truth it required all the firmness and wisdom of the eminent judges who suc- cessively presided in the courts of equity to prevent this equitable jurisdiction being nullified by the artifice of the parties."-" Accordingly, "Once a mortgage always a mortgage," became one of the most important maxims in this branch of the law ; and a strict adherence to it has at all times been enforced. The parties have not been allowed to provide that the deed creating the mortgage shall at any time, or upon the happening of any event, cease to be a mort- gage, and become an absolute conveyance."^ An agreement or stipula- tion cutting oS the right of redemption has always been held to be utterly void.'" Even a subsequent release of this right by the mort- gagor has always been looked upon with suspicion, and sustained only when made for a proper consideration and without oppression on the part of .the mortgagee.^' This doctrine is deemed essential to the protection of the debtor, who, under pressing circumstances, will often submit to ruinous con- ditions, expecting or hoping to be able to pay the debt at maturity and thus prevent the condition from being enforced and his property sacrificed. § 8. Mortgage at law distinguished from mortgage in equity. A mortgage at law differs much in its nature from a mortgage in "Coote on Mtg. 21. • also Bearss v. Ford, 108 111. 16; '"Coote on Mtg. 21. See also Johnson v. Prosperity Loan &c Price V. Perrle, 2 Freem. 258; Wll- Assn., 94 111. App. 260. lett V. Winnell, 1 Vern. 488; Bowen "» Pritchard v. Elton, 38 Conn 434 V. Edwards, 1 Rep. in Ch. 222. See also Carpenter v. Carpenter 70 "Newcomb V. Bonham, 1 Vern. 7; 111. 457; Haggerty v. Brower 'l05 Coote on Mtg. 22; 2 Story Eq. Jur. Iowa 395, 75 N. "W. 321; Richmond § 1019. v. Richmond, 20 Fed. Cas. No. 11 ^' Quartermous V. Kennedy, 29 Ark. 801. See post §§ 1038-1046 544; Lee v. Evans, 8 Cal. 424. See 11 HISTORY OF DEVELOPJtEXT OF LAW § 8 equity. A mortgage being a qualified conveyance of property, whereby the owner parts with it so far as to make it a security to his creditor, and his creditor holds it in such a way that the owner ma}', by equita- bly fulfilling his obligation, have his own again, the question, what are the respective rights and titles of each, is one that lies at the foundation of the law upon this subject. Originally an estate upon condition at law, equity assumed jurisdiction to relieve the mortgagor against an absolute forfeiture upon his default in performing the condition subsequent; and for two hundred years and more a mort- gage has been one thing at law and quite another thing in equity, although the equitable view of the subject has largely encroached upon, and sometimes quite superseded, the legal, even in courts of law.-* For a number of years both law and equity courts exercised concurrent jurisdiction over mortgages, resulting in great confusion, more especially while the courts of the common law continued to be presided over by men whose early training had led them to regard the interference of the courts of equity as an offensive innovation. But in course of time the justness of the decrees of the chancellors grad- ually came to be recognized by the common-law courts and were acquiesced in by them. Courts of equity could not alter the legal effect of the forfeiture which followed a breach of the condition, and did not attempt to do so; but they regarded it as in the nature of a penalty which ought to be relieved against. They recognized the purpose of the mort- gage as merely a pledge to secure a debt, and declared it unreasona- ble that the mortgagee should, by the failure of the debtor to meet his obligation at the day appointed, be entitled to keep as his own what was intended as a pledge. ^^ At law the legal right of the mort- gagor to have his estate again was forfeited; but in equity he was allowed still to reclaim it upon payment of his debt with interest. ^ "The case of mortgages," says ceeded in giving the debtor relief. Chancellor Kent, "is one of the most The forfeiture was complete; the splendid instances in the history of mortgagee, hy the default of the our jurisprudence of the triumph of mortgagor, had become the absolute equitable principles over technical owner of the estate; it could not be rules, and the homage which those divested from him without a recon- principles have received by their veyance, and there remained no rem- adoption in the courts of law." 4 edy, short of an actual legislative Kent Com. 138. "It is difficult to enactment, without disturbing the conceive," says Mr. Coote, "had the settled landmarks of property " courts of the law been so inclined Coote on Mtg. 17. (which it does seem they were), on ^ Coote on Mtg. 19. what principle they would have pro- 8 9 NATURE OF A MORTGAGE 13 This is the equity of redemption. Prom the combined influence of these rules of law and principles of equity has come the present law of mortgages. The equitable view of a mortgage, as merely a security for the payment of a debt or the performance of some duty, is that which is at the present day so constantly presented, both in theory and practice, that it is difficult to realize that the rules of the common law in respect to it remain for the most part unaltered; that the. transaction is still a conveyance conditional upon the nonpayment of the debt on a day certain, and that upon a breach of the condi- tion the mortgagor at law is without right or remedy. The whole legal estate upon the default passes irrevocably to the mortgagee. But at this point a court of .equity allows and enforces the right of redemption; and the jurisdiction of courts of equity to give this remedy is fully recognized in courts of law. § 9. Statute of 7 Geo. II, ch. 20.— In courts of law the rigor of the doctrine, in respect to the conditional character of the mortgage, was not at all abated in England until the enactment of the statute of 7 George II, ch. 20,^" which permitted a mortgagor, when an action was brought on the bond, or ejectment on the mortgage, pending the suit, to pay to the mortgagee the mortgage money, interest, and all costs expended in any suit at law or in equity; or, in case of a refusal to accept the same, to bring such money into court where such action was pending, and the moneys so paid or brought into court were de- clared to be a satisfaction and discharge of the mortgage, and the court was required, by rule of court, to compel the mortgagee to assign, surrender, or reconvey the mortgaged premises to the mortgagor, or to such other person as he should for that purpose nominate and ap- point. "In cases strictly within the terms of this statute, the English courts of law have exercised an equitable jurisdiction to enforce re- demption on payment of the mortgage debt, after default in payment according to the condition, by compelling a reconveyance. Except in cases within this statute, the doctrine of the English courts is in accordance with the ancient common law, that at law a failure to pay at the day prescribed forfeits the estate of the mortgagor under the condition, leaving him only an equity of redemption, which chancery '"Re-enacted in New Jersey, De- §§ 2742, 2743; Davis v. Teays, 3 cember 3, 1794, Nix. Dig. (4tli ed.) Grat. (Va.) 283; Connecticut Gen 608. See also Virginia Code 1904, Stat. (1875), p. 47 13 HISTORY OF DEVELOPMENT OF LAW § 11 will lay hold of and give effect to by compelling a reconveyance on equitable terms."-' The object of this statute was to relieve the mortgagor from the delay and expense of a suit in equity for redemption, and to lessen the rights of the mortgagee. It was only applicable where the mort- gagee was not in possession and no exercise of power of sale was attempted by him.-"* The statute is strictly construed, and is not ap- plicable in any case in which the mortgagor is himself the actor. It is applicable only in the cases mentioned in the preamble and intro- ductory words of the statute, and was not intended to supplant bills for redemption which afford a more complete remedy.^' § 10. Trust arising through relationship of mortgagor and mort- gagee. — The respective claims of mortgagor and mortgagee in courts of common law and of equity afford a notable instance of the rise of a trust through the mere existence of another legal relationship.'*'* "In a court of common law, a mortgage is an ordinary conveyance following upon a contract for a sale or for a lease. The mortgagee takes the place of the mortgagor as owner of the land, and the mort- gagor that of the mortgagee as owner of the money borrowed, the subsequent repayment of the money and reconveyance of the land being regulated by what is in fact nothing else than a subsidiary contract. In a court of equity the mortgagee is recognized as hav- ing nothing more than the sort of security for his debt which is pro- vided by a conditional power of sale, and, whether he be in posses- sion of the land or not, is treated as the mere trustee of the land for the benefit of the mortgagor and his heir. The money lent descends, on the death of either of the parties, as a debt due from the one, or his executors, to the other, or his executors." § 11. The modern common-law doctrine of mortgages. — At com- mon law the legal estate vested in the mortgagee and was forfeited upon default. Equity established the right of redemption after de- fault. From these principles is derived the doctrine of mortgages as it exists at the present day, in England and in a large part of our own country. The legal title passes to the mortgagee by the "" Per Mr. Justice Depue, in Shields 496, 3 Am. Rep. 256 ; Good-title v. V. Lozear, 34 N. J. L. 496, 3 Am: Rep. No-title, 11 Moore 491 ; Hurst v. 256. Clifton, 4 Ad. & E. 809. ^Sutton V. Rawlings, 3 Exch. 407; ™Mr. Sheldon Ames, in the Sci- Dowle v. Neale, 10 W. R. 627. ence of Jurisprudence, p. 269. * Shields v. Lozear, 34 N. J. L. § 11 NATURE OF A MORTGAGE 14 deed, but the mortgagor has after default a right to redeem, which he may enforce in equity. A mortgage is one thing at law and another in equity ; in the one court it is an estate, and in the other a security only. The mortgagee has certain legal remedies and the mortgagor certain equitable remedies. These have been so adjusted that a perfectly defined system is the result. Courts of law and courts of equity mutually recognize the jurisdiction of each other over this subject. Courts of law have so far adopted the principles of equity that they allow the legal title of the holder of the mort- gage to be used only for the purpose of securing his equitable rights under it. Courts of equity allow the mortgagee, for the purpose of protecting and enforcing his lien against the mortgagor, the reme- dies of an owner; he may enter into and hold possession, and take the rents and profits in payment of his mortgage debt, and may have his action of ejectment to recover such possession, and hence is sometimes called the owner.^^ The mortgagee has something more than a mere lien ; he has a transfer of the property itself and a legal estate in it, giving him a standing at law as well as in equity.'^ His interest can be called a lien only in a loose and general sense, in con- tradistinction to an absolute and indefeasible estate.^^ In equity a mortgage of land is regarded as a mere security for a debt or obligation, which is considered as the principal thing, and the mortgage only as the accessory.^* The mortgagor continues to be the owner of the fee until after foreclosure. His equity of redemption is subject to grant or devise, and may be taken in execution; and is regarded as the real and beneficial estate tantamount to the fee at law.'' The legal title vests in the mortgagee merely for the protection =^ Clark V. Reyburn, 1 Kans. 281; »' In re Tobln's Estate, 139 Wis. Code Civ. Proc. (N. Y.) § 1498. See 494, 121 N. W. 144; Conard v. At- also Barron v. San Angelo Nat. lantic Ins. Co., 1 Pet. (U. S.) 386, Bank (Tex. Civ. App.), 138 S. W. 441; Evans v. Merriken, 8 Gill & J. 142; Ackland v. Gravener, 31 Beav. (Md.) 39. Compare Farr v. Semm- 484; Berney v. Sewell, 1 Jac. & W. ler, 24 S. Dak. 290, 123 N. W. 835. 648; Silver v. Bishop of Norwich, 3 "Timms v. Shannon, 19 Md. 296, Swanst. 113n. The action of eject- 81 Am. Dec. 632. ment against a mortgagor has been == Hannah v. Carrington, 18 Ark. abolished in New York. 5 Wait Pr. 85; Hannah v. Vensel, 19 Idaho 796 (N. Y.) 190. 116 Pac. 115; Schumann v. Sprague! =^ Willamette Woolen Mfg. Co. v. 189 111. 425, 59 N. E. 945; Barrett British Columbia Bank, 119 U. S. v. Hinckley, 124 111. 32, 14 N E 863 191, 30 L. ed. 384, 7 Sup. Ct. 187; 7 Am. St. 331; ^tna L. Ins. Co. v.' Weeks v. Baker, 152 Mass. 20, 24 N. Broecker, 166 Ind. 576, 77 N. E. 1092; E. 905; Barnard v. Eaton, 2 Cush. Hussey v. Fisher, 94 Maine 301 47 (Mass.) 294, 304; Poarch v. Duncan, Atl. 525; Timms v. Shannon 19 Md 41 Tex. Civ. App. 275, 91 S. W. 1110. 296, 81 Am. Dec. 632; Watkins v See also Datesman's Appeal, 127 Pa. Vrooman, 51 Hun 175 5 N Y S St. 348, 17 Atl. 1086. 172; Killebrew v. Hines, 104 N Car' 15 HISTORY OF DEVELOPMENT OF LAW § 12 of his interest, and in order to give him the full benefit of the security ; but for other purposes the mortgage is a mere security for the debt.'" A recital in a mortgage that the note secured is collateral to the mortgage does not change the character of the instruments or their relation to each other under the general rule as to principal and incident; and the fact that the note is indorsed by a third person makes no difference.^' As to all persons except the mortgagee and those claiming under him, it is everywhere the established modern doctrine that a mort- gagor in possession is at law, both before and after breach of the condition, the legal owner.'' This is the rule not merely in courts of equity, but in courts of law as well. Lord Mansfield, by his de- cisions upon the subject of mortgages, did much to naturalize these equitable doctrines in courts of law. In a case before the King's Bench, he said: "It is an affront to common sense to say the mort- gagor is not the real owner ;" and therefore he held that a mortgagor in possession gains a settlement, because the mortgagee, notwithstand- ing the form, has but a chattel, and the mortgage is only a security.'" Again, in construing a will, he held that whatever words were sufiicient to carry the money due on a mortgage would carry the interest in the land along with it, saying,*" "that a mortgage is a charge upon the land; and whatever would give the money will carry the estate in the land along with it, to every purpose. The estate in the land is the same thing as the money due upon it. It will be liable to debts; it will go to executors; it will pass by a will not made and executed with the solemnities required by the statute of frauds. The assignment of the debt, or forgiving it, will draw the land after it, as a consequence; nay, it would do it, though the debt were forgiven only by parol, for the right to the land would follow, notwithstanding the statute of frauds." § 12. lord Mansfield's views. — It is true that some opinions ex- pressed by Lord Mansfield would seem to lead to the conclusion that he regarded a mortgage even at law as merely a security for a debt, 182, 10 S. B. 159, 17 Am. St. 672; "Catlin v. Henton, 9 Wis. 476. Craft V. Webster, 4 Rawle (Pa.) ''See post §§ 667, 702. 242; Williams v. Beard, 1 S. Car. » The King v. St. Michael's, Doug. 309; Johnson v. Robinson, 68 Tex. 630. 399, 4 S. W. 625; Hale v. Home, 21 "Martin v. Mowlin, 2 Burr. 969, Grat. (Va.) 112. decided in 1760. '"Gabbert v. Schwartz, 69 Ind. 450; Glass v. Ellison, 9 N. H. 69. § 13 NATDRE OF A MORTGAGE 16 and not a legal conveyance.*^ "Lord Mansfield, indeed," says Mr. Coventry,*^ "appears to have entertained mistaken conceptions on this and other subjects connected with the law of mortgages. His chief error seems to have been in mixing rules of equity with rules of law, and applying the former in cases where the latter only ought to have prevailed." An unqualified adoption of some of the expressions of Lord Mansfield is inconsistent with a legal view of the nature of mort- gages ; it would lead to the conclusion that a mortgage is merely a se- curity and not an estate in the land. The English courts by universal consent have refused to adopt this conclusion ; but in this country his lead has been followed in about half of the states ; and the adoption of equitable principles by courts of law has been followed by legis- lative enactments taking from the mortgagee the right of possession, so that in these states it is the established doctrine that a mortgage confers no title or estate upon the mortgagee, but only a security. The legal theory of a mortgage has wholly given place to the equitable, according to which a mortgage is nothing more than a mere lien or security for a debt, passing no title or estate to the mortgagee, and giving him no right or claim to the possession of the property. § 13. Change from legal to equitable theory in TJnited States. — The courts of New York at an early day took the lead in this direc- tion. The first important step was to deny the legal character of the mortgagee's title prior to a breach of the condition and a taking of possession by the mortgagee in consequence.*^ Before default he was not allowed to take possession; on the contrary, the mortgagor in possession could maintain trespass against him.** But after a breach of " See also Ren v. Bulkeley, Doug, in the administration of Justice. It 292; Eaton v. Jacques, 2 Doug. 455. is a most important part of that ■■^In note to Powell on Mtg. 267, constitution that the jurisdictions n. Lord Redesdale in Shannon v. of the courts of law and equity Bradstreet, 1 Sch. & Lef. 52, speak- should be kept perfectly distinct; ing of Lord Mansfield's tendency to nothing contributes more to the due give courts of law the power of administration of justice; and, courts of equity, said: "Lord Mans- though they act in a great degree field had on his mind prejudices de- by the same rules, yet they act in rived from his familiarity with the a different manner, and their modes Scotch law, where law and equity of affording relief are different." are administered in the same courts, "Phyfe v. Riley, 15 Wend. (N. and where the distinction between Y.) 248, 30 Am. Dec. 55. them which subsists with us is not "Bryan v. Butts, 27 Barb. (N. Y.) known; and there are many things 503; Runyan v. Mersereau, 11 Johns, in his decisions which show that his (N. Y.) 534, 6 Am. Dec. 393. See mind had received a tinge on that also Kortright v. Cady, 21 N. Y. 343, subject not quite consistent with the 78 Am. Dec. 145; Kents' Com. p! Constitution of England and Ireland *155. 17 HISTORY OF DEVELOPMENT OF LAW § 14 the condition and possession taken by the mortgagee, he was regarded as invested with the legal estate.^'^ The right to take possession, even upon a breach of the condition, was iinally taken away by statute,*" and thereafter it was held that the legal title to the mortgaged prem- ises remained in the mortgagor, and that title was not affected by default in payment, or by surrender of possession to, or the taking of possession by, the mortgagee.*'' This enactment was regarded as com- pleting the change in the nature of mortgages, and removing from them the last remaining common-law attribute. And yet an examination of the cases in New York in which ques- tions in regard to the nature of mortgages are involved and dis- cussed shows considerable conflict and contradiction of views. This is especially the case with the decisions prior to the statute taking from the mortgagee the right to recover possession of the mortgaged property; and even since that statute, although in theory the legal title remains in the mortgagor until foreclosure, it has been fre- quently admitted by judges and legal writers, that for some purposes and in some cases his interest must be treated and regarded as a title for the purpose of protecting his equitable rights.*^ Where the mort- gagor's interest is regarded as the legal estate in the land, it is un- doubtedly a misnomer to call it an equity of redemption either before or after default.*" But although the term hag ceased to be an accurate description of his right in the land, it has an established place among legal terms, and doubtless will continue to be used to describe his interest even in states which have by statute changed his actual rights. But the equity of redemption must not be confounded with a right of redemption. A mortgagor has an equity of redemption until the sale, and not afterward. After sale he has a right of redemption, if the statute gives it.^" § 14. Incongruities in both the common-law and equitable theories. — There are some incongruities in both theories. Many attempts have been made to state a perfectly harmonious and consistent system of law in regard to mortgages, but complete success haS' « Bolton V. Brewster, 32 Barb. (N. '"Thomas on Mtg. 16; White v. Y.) 289. Rittenmyer, 30 Iowa 268; Hub bell v. «2 Rev. Stat. 312, § 57, enacted Moulson, 53 N. Y. 225, 13 Am. Rep. 1828. See also Becker v. McCrea, 519. 193 N. Y. 423, 86 N. E. 463, 23 L. R. " Per Earl, C, in Trimm v. Marsh, A. (N. S.) 754; Packer v. Rochester 54 N. Y. 599; Chick v. Willetts, 2 &c. R. Co., 17 N. Y. 283. Kans. 384, per Crozier, C. J. " Trim v. Marsh, 54 N. Y. 599, 13 =° See Mayer v. Farmers' Bank, 44 Am. Rep. 623. Iowa 212. 2 — Jones Mtg. — Vol. I. § 14 KATDEE OF A MORTGAGE 18 xever attended them. On the one hand, the modern common- law Yiew of mortgages, by which the mortgagee is regarded as the owner of the legal estate for the purpose of protecting and enforc- ing his rights, and the mortgagor is regarded as the legal owner as against every other person, is objected to as presenting the incon- gruous position that one person may be the legal owner for one pur- pose, and at the same time another person may be the legal owner for another purpose; that in one court the mortgagee is the legal owner, and in another the mortgagor is the legal owner; that after the legal title has passed to the mortgagee by a legal conveyance, it may be defeated by the act of the mortgagor from whom the title has passed merely by payment before forfeiture. °^ On the other hand, it has been thought that by regarding a mort- gage both at law and in equity as a mere security, a more harmonious and consistent doctrine regarding this instrument would be secured. It is admitted that this doctrine is anomalous. That a legal convey- ance does not pass a legal title is not in accordance with legal prin- ciples. °^ Moreover, it has been found that in order to secure the equitable rights of parties, the mortgagee's interest must in some cases be treated and regarded as a title. This is admitted by Mr. Justice Andrews in a comparatively recent case before the Court of Appeals of New York f^ and he mentions instances in the decisions of that state where the mortgagee's interest has been so treated and re- garded, notwithstanding the doctrine that he has a lien only. It is claimed, however, that no title in a strict sense vests in him, but only that his interest for some purposes is in the nature of a legal title. He is treated as if he had a legal title, by being protected in his possession, when he has once acquired it, until the debt is fully paid.°* The only remedy for recovering possession from him in such case is by a bill in equity to redeem,^^ as is the case where the mortgagee is regarded as holding the legal estate. In other ways also the mortgagee is treated as holding an estate. He is deemed a purchaser to the extent of his interest, and is pro- tected in his rights in the same way and to the same extent as a " White V. Rlttenmyer, 30 Iowa Minn. 499 ; Henry v. Confidence Gold 268. &c. Min. Co., 1 Nev. 619; Pettengill "White V. Rlttenmyer, 30 Iowa v. Evans, 5 N. H. 54; Den v Wright 268. 7 N. J. L. 175, 11 Am. Dec. 543;' '"Hubbell V. Moulson, 53 N. Y. 225, Chase v. Peck, 21 N. Y. 581; Harris 13 Am. Rep. 519. v. Haynes, 34 Vt. 220; Hennesy v " Mickles v. Townsend, 18 N. Y. Farrell, 20 Wis. 42. See post § 715 575. See also Bussey v. Page, 14 » Hubbell v. Moulson 53 N Y 225' Maine 132; Pace v. Chadderdon, 4 13 Am. Rep. 519. 19 HISTORY OF DEVELOPMENT OF LAW § 15 purchaser of an absolute estate. "* As an estate in him, his interest is protected against a claim of dower by the wife of the mortgagor when she has released this right in the mortgage, although she may be entitled to it in the equity of redemption. °' And so also a title acquired by the mortgagor after making the mortgage inures, by force of the covenant of warranty contained in it, to the benefit of the mortgagee.'^ § 15. Mortgage as a legal estate and as a personal lien distin- guished. — What, then, are the practical distinctions between a mort- gage regarded as a legal estate in the mortgagee, and a mortgage regarded as a mere personal lien? In what respect are the rights of both the mortgagor and the mortgagee, where the one view pre- vails, the same as they are where the other prevails; and in what respect are their rights different under the one doctrine from what they are under the other? In the first place, wherein are the two doctrines in harmony as regards the rights and interests of the mortgagor? Everywhere the mortgagor's interest in the land may be sold upon execution; his widow is entitled to dower in it; it passes as real estate by devise; it descends to his heirs at his death as real estate; it gives him a right of settlement as an owner of real estate; he is a freeholder; he may maintain a real action for the land against a stranger, and the mortgage Can not be set up as a defense. In the second place, wherein are the rights and interests of the "'See also Woodruff v. Adair, 131 Murphy, 76 Ind. 543; Morgan v. Ala. 530, 32 So. 515; Turman v. Bell, Wlckliffe, 24 Ky. L. 2104, 72 S. W. 54 Ark. 273, 15 S. W. 886, 26 Am. 1122; Johnson v. Hines, 61 Md. 122; St. 35; Bush v. Golden, 17 Conn. Burrall v. Clark, 61 Mich. 624, 28 594; Scott v. Atlas Sav. &c. Assn., N. W. 739; McLean v. Ragsdale, 31 114 Ga. 134, 39 S. B. 942; Erwin v. Miss. 701; Miller v. Farmers' Bank, Hall, 18 111. App. 315; Lehman v. 49 S. Car. 427, 27 S. E. 514, 61 Am. Hawks, 121 Ind. 541, 23 N. B. 670; St. 821; Thomson v. Thomson, 37 Koon V. Tramel, 71 Iowa 132, 32 N. Nova Scotia 242. W. 243; StraefEer v. Rodman, 146 ''Vary v. Smith, 162 Ala. 457, 50 Ky. 1, 141 S. W. 742, Ann. Cas. 1913 So. 187; Howze v. Dew, 90 Ala. 178, C, 549; Thompson v. Whitbeck, 47 7 So. 239, 24 Am. St. 783; Yerkes v. La. Ann. 49, 16 So. 570; Pierce v. Hadley, 5 Dak. 324, 40 N. W. 340, 2 Faunce, 47 Maine 507; Fair v. How- L. R. A. 363; Watklns v. Houck, 44 ard, 6 Nev. 304; Frisbey v. Thayer, Kans. 502, 24 Pac. 361; Caple v. 25 "Wend. (N. Y.) 396; James v. Switzer, 122 Mich. 636, 81 N. W. Johnson, 6 Johns. Ch. (N. Y.) 417, 560; Parsons v. Little, 66 N. H. 339, 2 Cow. (N. Y.) 246; Ledyard v. But- 20 Atl. 958; Dearing v. Jordan (Tex. ler, 9 Paige (N. Y.) 132, 37 Am. Dec. Civ. App.), 130 S. W. 876; Trust &c. 379. Co. V. Ruttan, 1 Can. S. Ct. 564. "Van Dyne v. Thayre, 19 Wend. Compare Newell v. Banking Co. (N. Y.) 162. See also Lidster v. (Ky.), 118 S. W. 267. Poole, 122 111. App. 227; Mark v. § 15 NATURE OP A MORTGAGE 20 mortgagee the same, whether regarded under the one theory or the other? Everywhere it is held that he has no such estate as can be sold on execution; his widow has no right of dower in if; upon his death the mortgage passes to his personal representatives as personal estate ; and it passes by his will as personal property. The practical distinctions between these views are these: Under the common-law view, as we may term the former, the mortgagee is entitled to immediate possession of the mortgaged property as an incident to the title when not restrained by the terms of the mort- gage; and upon default he is always entitled to the possession, and may recover it by action at law; whereas, under the equitable view, the mortgagor is entitled to possession, until foreclosure, unless per- haps he may by express contract give this right to the mortgagee. This is the great difference resulting from these different theories. In large degree resulting from these different ways of viewing the interest of the parties follow the further distinctions : that while generally, under the former view of the law, a tender or payment to defeat the mortgagee's title must be made at or before the law day, as the day of payment is termed, under the latter view a payment at any time, though after default, revests the interest in the mort- gagor; and while under the former view it is generally held that a transfer of the mortgage interest can only be made by an assign- ment or deed duly executed as conveyance, under the latter view it is held that a mere transfer of the mortgage note by indorsement or delivery passes the interest in the land as an incident of the debt. These two distinctions do not, however, necessarily and inevitably attend the different theories. In strict conformity with the theory that the mortgagee has no estate in the land, but a mere lien as security for his debt, it has been held that a conveyance by the mortgagee before foreclosure, without an assignment of the debt, is in law a nullity.^'* But this view seems to be inconsistent with the whole current of decisions supporting the doctrine that if a person sui juris, having the legal title to land, in- tentionally delivers to another a deed therefor, containing apt words of conveyance, the title at law, at least, will pass to the grantee; but for what purposes or uses the grantee will hold it, or to what extent he will be able to enforce it, will depend upon circumstances. If the mortgagee conveys the land without assigning the debt to the grantee, ""Delano v. Bennett, 90 111. 533; 231; Jackson v. Curtis 19 Johns Wilson v. Troup, 2 Cow. (N. Y.) (N. Y.) 325. 21 HISTORY OF DEVELOPMENT- OF LAW § 16 the latter would hold the legal title as trustee for the holder of the mortgage debt."" § 16. Present day mortgage defined. — How, then, may a mortgage at the present day be defined? Baron Parke, speaking of the mort- gagor, said : "He can be described only by saying he is a mortgagor.'"*^ In the same way it may be said that the most accurate and compre- hensive definition of a mortgage is that it is a mortgage. As remarked by Lord Denman, "It is very dangerous to attempt to define the pre- cise relation in which mortgagor and mortgagee stand to each other, in any other terms than those very words.""^ A definition given by Kent, and one which has been quoted, adopted, or approved in a great many cases, is that, "A mortgage is the conveyance of an estate by way of pledge for the security of a debt, and to become void on pay- ment of it.""^ A definition broad enough to cover any view of the transaction, and any form of it, can only be that it is a conveyance of land as security."'' This embraces the two things essential to con- stitute a mortgage. If more be attempted, it results in a description of some one of the many forms which a mortgage may take. In a note are given references to definitions and descriptions of mortgages by several eminent authors and judges. But to define the different kinds of mortgages, and the many different rights under them, is the service attempted by a treatise on the subject."^ «> Barrett v. Hinckley, 124 111. 32, N. Car. 153; Helfenstein's Estate, 14 N. E. 863, 7 Am. St. 331; Barnard 135 Pa. St. 293, 20 Atl. 151; Poarch V. Eaton, 2 Cush. (Mass.) 304; San- v. Duncan, 42 Tex. Civ. App. 275, 91 ger V. Bancroft, 12 Gray (Mass.) S. W. 1110; Wing v. Cooper, 37 Vt. 367; Jackson v. Willard, 4 Johns. 169; Sandusky v. Faris, 49 W. Va. (N. Y.) 40. 150, 38 S. E. 563; Parkinson v. Hig- " Litchfield v. Ready, 20 L. J. Ex. gins, 40 U. C. Q. B. 274. 51. "Williams v. Davis, 154 Ala. 422, "^ Higginbotham v. Barton, 11 Ad. 45 So. 908; Gassert v. Bogk, 7 Mont. & El. 307. 585, 19 Pac. 281 (quoting text) ; Hel- '"4 Kent Comm. 133. See also fenstein's Estate, 135 Pa. St. 293, Williams v. Davis, 154 Ala. 422, 45 20 Atl. 151; Wilson v. Fisher, 148 So. 908; Priddy v. Smith, 106 Ark. N. Car. 535, 62 S. B. 622. 79, 152 S. W. 1028, 44 L. R. A. (N. "Washburn's Real Prop. ch. 16, S.) 285; Ansonia Nat. Bank's Ap- § 1; Fisher on Mtg. (3d ed.) p. 2; peal, 58 Conn. 257, 18 Atl. 1030, 20 Coventry, in Powell on Mtg. p. 4; Atl. 394; Everett v. Buchanan, 2 Cruise, 1 Dig. of Law of Real Prop. Dak. 249, 6 N. W.. 439, 8 N. W. 31; (Am. ed.) tit. xv. ch. I. § 11; Coote Brown v. Bryan, 5 Idaho 145, 151, on Mtg. p. 1; Erskine v. Townsend, 51 Pac. 995; Eldridge v. Pierce, 90 2 Mass. 493, 3 Am. Dec. 71; Carter 111. 474, 483; Babcock v. Hoey, 11 v. Taylor, 3 Head (Tenn.) 30; Briggs Iowa 375, 385; Goddard v. Coe, 55 v. Fish, 2 D. Chip (Vt.) 100; Mont- Maine 385, 388; Gothard v. Flynn, gomery v. Bruere, 4 N. J. L. 260; 25 Miss. 58; Murray v. Walker, 31 Lund v. Lund, 1 N. H. 39, 8 Am. Dec. N. Y. 399; Cheatham v. Jones, 68 29; Mitchell v. Burnham, 44 Maine § n NATURE OF A MORTGAGE 22 II. The Nature of a Mortgage in the Different States Section 17. Generally. 18. Alabama. 19. Arkansas. 20. California. 21. Colorado 22. Connecticut. 23. Delaware. 24. Florida. 25. Georgia. 26. Idaho. 27. Illinois. 28. Indiana. 29. Iowa. 30. Kansas. 31. Kentucky. 32. Louisiana. 33. Maine. 34. Maryland. 35. Massachusetts. 36. Michigan. 37. Minnesota. 38. Mississippi. 39. Missouri. 39a. Montana. 40. Nebraska. 41. Nevada. Section 42. New Hampshire. 43. New Jersey. 43a. New Mexico. 44. New York. 45. North Carolina. 45a. North Dakota. 46. Ohio. 46a. Oklahoma. 47. Oregon. 48. Pennsylvania. 49. Rhode Island. 50. South Carolina. 50a. South Dakota. 51. Tennessee. 52. Texas. 53. Utah. 54. Vermont. 55. Virginia. 55a. Washington. 56. West Virginia. 57. Wisconsin. 58. Summary of legal and equitable theories in the different states. 59. Doctrine in different sections of the United States. § 17. Generally. — While the eommon-law doctrine of mortgages prevails in some of the states, with more or less of modification by equitable principles, in a majority, however, partly by force of stat- utes, and partly by judicial decisions, the common-law doctrine has been abrogated, and has given place to the purely equitable theory. The conflicting views of the nature of mortgages entertained at law and in equity have resulted in the just and harmonious system which is now administered in the courts of England and in most of the courts of the older states of America. In these courts a mortgage is regarded as a conveyance in fee, and this construction is thought best adapted to give to the creditor full protection in preserving and enforcing his securities, while at the same time the debtor is secured in his right to redeem. In other states, however, this system has been changed, for the most part by statute, so that a mortgage is regarded 286; Wing v. Cooper, 37 Vt. 169; Gen. Stat, of New Hampshire, 1867, ch. 122, § 1. By the Code of California, a mort- gage is defined to be "a contract, by which specific property is hypothe- cated for the performance of an act, without the necessity of a change of possession." Civil Code, § 2920; adopted also by Civil Code of Dakota 1871, § 1608. In Florida it is pro- vided that all conveyances securing the payment of money shall be deemed mortgages. Gen. Stat. 1906, § 2495. 23 IN THE DIFFERENT STATES § 18 as merely a pledge, and the rights and remedies under it are wholly equitable. There are also a few modifications of each. In examining the various questions that arise under the law of mortgages, it is often important to distinguish between the opinions of courts acting under these different views of the nature of a mort- gage. On several topics frequent reference will be made to the dis- tinguishing features of the two systems. On these topics authorities of several states having the same system will be harmonious, but will differ from those of several states in which the other system prevails. It is therefore thought best to give briefly, under the name of each state, the law there in force upon this fundamental matter of the nature of the conveyance in mortgage, as announced by the courts or enacted by statute. § 18. Alabama. — In Alabama a mortgage passes to the mortgagee, as between him and the mortgagor, the estate in the land. It confers something more than a mere security for a debt: it confers a title under which the mortgagee may take immediate possession, unless it appears by express stipulation, or necessary implication, that the mort- gagor may remain in possession until default.^ After the law day, the legal estate is absolutely vested in the mortgagee, who may forth- with maintain ejectment, and the mortgagor has nothing left but an equity of redemption.^ A conveyance by the mortgagee will pass the legal title, though the debt be not assigned.^ JSTothing but payment, or a release of the mortgage, or a reconveyance, can operate in a court of law to revest the title in the mortgagor; and it is questioned whether payment alone after the law day is sufScient.* But the pay- ment of a mortgage debt ipso facto revests the legal title in the owner of the equity of redemption.^ It is held that a partial payment after default and after the law day does not operate to divest the mort- * Stephens v. Head, 138 Ala. 455, Paulling v. Barron, 32 Ala. 9. See 35 So. 565; Toomer v. Randolph, 60 also Foster v. Carlisle, 148 Ala. 259, Ala. 356; Knox v. Easton, 38 Ala. 42 So. 441. 345; Welsh v. Phillips, 54 Ala. 309, 'Toomer v. Randolph, 60 Ala. 356; 25 Am. Rep. 679. See also Holman Welsh v. Phillips, 54 Ala. 309, 25 V. Ketchum, 153 Ala. 360, 45 So. 206; Am. Rep. 679. Marks v. Robinson, 82 Ala. 69, 2 So. * Henderson v. Murphree, 124 Ala. 292. 223, 27 So. 405; Lomb v. Pioneer "High v. Hoffman, 129 Ala. 359, Sav. &c. Co., 106 Ala. 591, 17 So. 29 So. 658; New England Mtg. Sec. 670; Barker v. Bell, 37 Ala. 354; Co. v. Clayton, 119 Ala. 361, 24 So. Powell v. Williams, 14 Ala. 476, 48 562; Fields v. Clayton, 117 Ala. 538, Am. Dec. 105. But see Union Naval 23 So. 530, 67 Am. St. 189; Lomb v. Stores Co. v. Pugh, 156 Ala. 369, 47 Pioneer Sav. &c. Co., 106 Ala. 591, So. 48. 17 So. 670; Downing v. Blair, 75 Ala. » Denman v. Payne, 152 Ala. 342, 216; Barker v. Bell, 37 Ala. 354; 44 So. 635. Code 1896, § 1067. § 19 NATURE OF A MORTGAGE 24 gagee's title. A more formal conveyance or grant seems to be re- quired.° But as against all persons other than the mortgagee and his assigns, the mortgagor is regarded as the owner of the fee, and is en- titled to the possession.^ ^fter the legal title has vested in the mortgagee by reason of the condition being broken, he may convey the premises to another, even though not in possession. The mortgagor still has an equity of re- demption ■which the courts of law will not notice, but which may be asserted and protected in equity until duly foreclosed.' § 19. Arkansas. — In Arkansas the mortgagee was, in an early case, considered as having the legal estate after condition broken, following in this respect some of the earlier cases in New York." In later cases, it is said that the legal title passes, at law, directly to the mortgagee, subject to be defeated by the performance of the conditions of the mortgage; and that the right of possession follows the legal title, unless it be expressly provided in the deed, or clearly appears to be the intention of the parties, that the mortgagor shall remain in pos- session until default.^" As between mortgagor and mortgagee, the legal estate is in the mortgagee; but as to all others, it is in the mortgagor, and may be conveyed by him subject to the mortgage.^^ Whenever the mortgagee is entitled to possession, he may acquire it by an action of ejectment. He may upon default pursue any or all of his remedies ; may bring actions for the debt, for possession, and to foreclose the equity of redemption and sell the land.^^ A mortgagee "Foster v. Carlisle, 148 Ala. 259, Ala. 354; Paulllng v. Barron, 32 Ala. 42 So. 441. 9. ' Hamilton v. Griffin, 123 Ala. 600, ' Reynolds v. Canal &c. Co., 30 26 So. 243; Turner Coal Co. v. Glover, Ark. 520; Fitzgerald v. Beebe, 7 Ark. 101 Ala. 289, 13 So. 478; Cotton v. 310, 46 Am. Dec. 285; Phyfe v. Riley, Carlisle, 85 Ala. 175, 4 So. 670, 7 15 Wend. (N. Y.) 248; Perry County Am. St. 29 ; Allen v. Kellam, 69 Ala. Bank v. Rankin, 73 Ark. 589, 84 S. 442; Scott v. Ware, 65 Ala. 174; W. 725; Danenhauer v. Dawson, 65 Denby v. Mellgrew, 58 Ala. 147; Ark. 129, 46 S. W. 131, 44 L. R. A. Knox V. Easton, 38 Ala. 345; Man- 193; Whittington v. Flint, 43 Ark! Sony V. United States Bank, 4 Ala. 504, 51 Am. Rep. 572. 733. "Terry v. Rosell, 32 Ark. 478; ^ Hayes v. Banks, 132 Ala. 354, 31 Turner v. Watkins, 31 Ark. 429 ; So. 464; High v. Hoffman, 129 Ala. Kannady v. McCarron, 18 Ark 166* 359, 29 So. 658; Fields v. Clayton, "Terry v. Rosell, 32 Ark 478 117 Ala. 538, 23 So. 530, 67 Am. St. "Vaughan v. Walton, 66 Ark. 572, 189; Lomb v. Pioneer Sav. &c. Co., 52 S. W. 437; Danenhauer v Daw- 106 Ala. 591, 17 So. 670; Downing son, 65 Ark. 129, 46 S. W. 131; Whit- V. Blair, 75 Ala. 216; Scott v. Ware, tington v. Flint, 43 Ark. 504; Rey- 65 Ala. 174; Toomer v. Randolph, 60 nolds v. Canal &c. Co., 30 Ark. 520; Ala. 356; Denby v. Mellgrew, 58 Ala. Gilchrist v. Patterson, 18 Ark. 575; 147; Welsh v. Phillips, 54 Ala. 309, Fitzgerald v. Beebe, 7 Ark 310 46 25 Am. Rep. 679; Barker v. Bell, 37 Am. Dec. 285. 25 IN THE DIFFEKEXT STATES § 20 in possession under the mortgage can not be ousted by the mortgagor in a suit for possession until the debt is paid.^^ § 20. California. — In California a mortgage does not convey the legal title for any purpose, either before or after condition broken. It is a mere security for the payment of money, and passes no estate in the land. This is the declaration of the code.^* "It was from a consideration of the character of the instrument," says Chief Justice Field," "as settled by these decisions and the modern cases generally, that we were induced to adopt the equitable doctrine as the true doc- trine; and it was from a consideration of the provisions of the statute which led us to go beyond these cases, and carry the doctrine to its legitimate and logical result, and regard the mortgage as a security under all circumstances, both at law and in equity. Mortgages, there- fore, executed before the statute, can only be treated as conveyances \yhen that character is essential to protect the just rights of the mort- gagee; mortgages since the statute are regarded at all times as mere securities, creating only a lien or incumbrance, and not passing any estate in the premises."^° It is fully settled that a mortgage does not convey the title, but onij creates a lien on the property, the title remaining in the mort- gagor subject to the Uen.^^ It is provided by statute that the mort- gagee shall not be entitled to possession unless authorized by the ex- press terms of the mortgage.^' Whatever the terms of the instru- ment, it will not be deemed a conveyance so as to entitle the mortgagee " Daniel v. Garner, 71 Ark. 484. ance, whatever its terms, so as to "Civil Code Cal. 1885, § 2927; enable the owner of the mortgage Mack V. Wetzlar, 39 Cal. 247; Kidd to recover possession, without a fore- v. Teeple, 22 Cal. 255; Dutton v. closure and sale. But prior to this Warschauer, 21 Cal. 609, 82 Am. Dec. statute a mortgage was not a con- 765; Goodenow v. Ewer, 16 Cal. 461, ditional estate which became abso- 76 Am. Dec. 540; McMillan v. Rich- lute on a breach of condition, as at ards, 9 Cal. 365, 70 Am. Dec. 655, common law. Skinner v. Buck, 29 where Mr. Justice Field examines Cal. 253. the subject at great length. See "Harp v. Calahan, 46 Cal. 222; also Booker v. Castillo, 154 Cal. 672, Carpentier v. Brenham, 40 Cal. 221; 98 Pac. 1067; Hall v. Arnott, 80 Cal. Mack v. Wetzlar, 39 Cal. 247; Jack- 348, 22 Pac. 200; Smith v. Smith, 80 son v. Lodge, 36 Cal. 28; Bludworth Cal. 323, 21 Pac. 4, 22 Pac. 186, 549; v. Lake, 33 Cal. 255; Fogarty v. Saw- Raynor v. Drew, 72 Cal. 307, 13 Pac. yer, 17 Cal. 589 ; Boggs v. Hargrave, 866; Healey v. O'Brien, 66 Cal. 517, 16 Cal. 559; HatHey v. Maier, 13 Cal. 6 Pac. 386 ; Frink v. Le Roy, 49 Cal. 13. See also Booker v. Castillo, 154 314; Harp V. Calahan, 46 Cal. 222. Cal. 672, 98 Pac. 1067. '= Dutton V. Warschauer, 21 Cal. "Civil Code, § 2927. The owner 609, 82 Am. Dec. 765. may make an independent contract '* Stat. 1851, § 260, declared a mort- for the mortgagee's possession. Fo- gage shall Hot be deemed a convey- garty v. Sawyer, 17 Cal. 589. § 21 NATURE OF A MORTGAGE 26 to obtain possession otherwise than by foreclosure and sale.^® Entry and possession by the mortgagee do not affect the nature of his in- terest. They can neither abridge nor enlarge that interest, nor con- vert what was previously a security into a seisin of the freehold.^* But if the mortgagee, after condition broken, take possession by con- sent of the mortgagor, it is presumed, in the absence of clear proof to the contrary, that he is to receive the rents and profits, and. apply them to the debts secured, and that he is to hold 'possession until the debt is paid.^^ This possessory right may be transferred by express terms, though it does not pass by an ordinary assignment.^^ Even an abso- lute deed without any defeasance, if in fact made to secure a debt, so that in equity it is a mortgage, passes no title to the grantee.^^ Of course, under this view of the nature of a mortgage, payment after default operates to discharge the lien equally with payment at the maturity of the debt.^^ Under such a deed the grantee is entitled to recover the premises in ejectment, unless the defendant in answer sets up his equities, with an offer to pay the amount of the mortgage lien, and prays that the conveyance be decreed a mortgage. ^^ But a deed of trust to secure a debt is not a mortgage requiring judicial foreclosure, but a conveyance of the legal title; and being such a conveyance, and not merely a lien or charge upon the prop- erty, it is not affected by the statute of limitations, which operates equally to bar the debt and a mortgage given to secure it; but the trustee under such deed may, after such periods of general limita- tion, proceed to sell the land.^* § 21. Colorado. — In Colorado a mortgage is considered a security only, and does not before foreclosure confer any right of entry on the mortgagee.^^ A legal title is recognized in the mortgagee only for the " Booker v. Castillo, 154 Cal. 672, Beckman v. Waters, 161 Cal. 581, 98 Pac. 1067; Skinner v. Buck, 29 119 Pac. 922; Gouts v. Winston, 153 Cal. 253; Kidd v. Teeple, 22 Cal. 255. Cal. 686, 96 Pac. 357; Adams v. Hop- "Nagle V. Macy, 9 Cal. 426. See kins (Cal.), 69 Pac. 228; Ahern v. also Keller v. Berry, 62 Cal. 488. McCarthy, 107 Cal. 382, 40 Pac. 482; ■^ Prink v. Le Roy, 49 Cal. 314; Locke v. Moulton, 96 Cal. 21, 30 Pac. Button V. Warscliauer, 21 Cal. 609, 957; Moisant v. McPhee, 92 Cal. 76, 82 Am. Dec. 765. See also Cum- 28 Pac. 46; Boughton v. Vasquez, 73 mings V. Cummings, 75 Cal. 434, 17 Cal. 325, 11 Pac. 806, 14 Pac. 885. Pac. 442. ^Johnson v. Sherman, 15 Cal. 287, '^Button V. Warschauer, 21 Cal. 76 Am. Dec. 481. See also Dutton 609, 82 Am. Dec. 765. v. Warschauer, 21 Cal. 609, 82 Am. *" Jackson v. Lodge, 36 Cal. 28. Dec. 765. Though the grantee be put in pos- ^ Pico v. Gallardo, 52 Cal. 206. session. Murdock v. Clarke, 90 Cal. *■ Grant v. Burr, 54 Cal. 298 427, 27 Pac. 275. See also Todd v. "Drake v. Root, 2 Colo. 685, per Todd, 164 Cal. 255, 128 Pac. 413; Hallett, C. J.; Fehringer v. Martin, 27 IN THE DIFFERENT STATES § 23 benefit of the holder of the mortgage debt. As against all other per- sons the mortgagor has the legal estate.^* But it seems that a mort- gagee who has acquired possession may retain it; and that he may recover the property by ejectment against third persons not holding under the mortgagor. ^'' The code now provides that .a mortgage of real property shall not be deemed a conveyance, whatever its terms, so as to enable the owner of the mortgage to recover possession of the property without foreclosure and sale; but this provision does not apply to trust deeds and mortgages with powers of sale.'"' The right of possession remains in the mortgagor until a valid sale is made.^^ § 22. Connecticut. — In Connecticut a mortgage passes the legal estate subject to be defeated by performance of the condition, and the mortgagee may maintain ejectment; but the mortgagor is to be re- garded as the owner of the property, subject to the rights of the mort- gagee to enforce payment of his debt by means of his title.^^ In form, and in legal theory, a mortgage in fee is a conveyance of the fee to the mortgagee. It is an estate in the land upon condition, to become absolute upon nonperformance of the condition. The mortgagee is the owner of the land, while the mortgagor has no legal estate therein until he performs the conditions. If he fails to do so all his right to the land is gone. In substance and effect, however, and except for a very limited purpose, the mortgage is regarded as a mere security for the performance of the duty described in the mortgage; and the mortgagor is for most purposes regarded as the sole owner of the land, as well after forfeiture as before the execution of the deed ; and the mortgagee has rather a power than an interest, the use of which is strictly limited to the collection of the debt, or en- 22 Cal. App. 634, 126 Pac. 1131; in payment of the mortgage debt, to Pueblo &c. R. Co. v. Beshoar, 8 Colo, advertise and sell the property; the 32, 5 Pac. 639; Longan v. Carpenter, right to exercise this power being 1 Colo. 205. dependent upon his possession of ^ Ranch &c. Co. v. Howell, 22 Colo, such legal title. Stephens v. Clay, App. 584, 126 Pac. 1096. 17 Colo. 489, 30 Pac. 43. »Eyster v. GaflE, 2 Colo. 228. '^ Lewis v. Hamilton, 26 Colo. 263, '"Code of Civil Procedure, 1887, 58 Pac. 196; Bent-Otero Imp. Co. v. I 261 in Laws 1887, p. 174. Trust Whitehead, 25 Colo. 354, 54 Pac. deeds given as security and mort- 1023; Belmont M. &c. Co. v. Costi- gages containing a power of sale gan, 21 Colo. 471, 42 Pac. 647. vest the legal title in the trustee. ""McKelvey v. Creevey, 72 Conn. The equity of redemption or equita- 464; Middletown Sav. Bank v. Bates, ble' title remains in the mortgagor 11 Conn. 519; Chamberlain v. or the owner. The legal title of the Thompson, 10 Conn. 243, 26 Am. trustee is supplemented by a power Dec. 390; Beach v. Clark, 6 Conn. which authorizes him, upon default 354; Rockwell v. Bradley, 2 Conn. 5. § 23 KATUKB OP A MORTGAGE 2S forcement of the duty, which the mortgage was intended to secure. ^^ In this view of the matter the equity of redemption is regarded as the land, and its owner as the owner of the land, for most purposes; while the estate in fee of the mortgagee is, except for a limited pur- pose, regarded .as personal estate and mere security.^* In accordance with this view it has been held that the estate of the mortgagor is subject to dower, descends to heirs, may be attached and set off on execution, may as real estate confer rights of settlement, is divisible and taxable as real estate, and is based upon a title suffi- cient to maintain ejectment ; while to the estate of the mortgagee none of these incidents attach, save the right to maintain ejectment.^^ When the debt is satisfied after forfeiture, if the legal title be per- mitted to remain vested in the mortgagee, he holds it in trust for the mortgagor."" The mortgage when paid is no longer an incumbrance, though it may be a cloud on the title.''^ Courts of law have adopted equitable principles as to the effect of a mortgage, holding that it is a conveyance merely by way of pledge for the debt, and that the mortgagee holds the title solely for this purpose, aside from preserving and enforcing his security."^ The mortgagor is the owner of the mortgaged land as against every one but the mort- gagee. His equity of redemption may be devised, granted, levied upon, and set off in execution. The wife of a mortgagor is entitled to dower, and the husband of a mortgagor to curtesy. A mortgagor in possession may acquire a settlement, may maintain trespass against his mortgagee, and may take the emblements, without being liable to account; and although the mortgagee has only a chattel interest, — a mere pledge for the payment of the debt, — ^yet the legal title vests in him upon the execution of the mortgage, subject to be defeated only on performance of the condition; and after condition broken, the only relief for the mortgagor is in equity."' ''New Haven Sav. Bank &c. Assn. 235; Barkhamsted v. Farmlngton, 2 V. McPartlan, 40 Conn. 90; Clinton Conn. 600; Fish v. Fish, 1 Conn 559 V. Westbrook, 38 Conn. 9; Porter v. '"Cross v. Robinson, 21 Conn. 379] Seeley, 13 Conn. 564. See also Mc- 387; Dudley v. Cad well 19 Conn Kelvey v. Creevey, 72 Conn. 464; 218; Phelps v. Sage, 2 Day (Conn.) Cook V. Bartholomew, 60 Conn. 24, 151. 22 Atl. 444, 13 L. R. A. 4521. " New Haven Savings Bank v. Mc- '^McKelvey v. Creevey, 72 Conn. Partlan, 40 Conn. 90; Clinton v 464; Downing v. Sullivan, 64 Conn. Westbrook, 38 Conn. 9; Doton v 1; Waterbury Savings Bank v. Law- Russell, 17 Conn. 146; Griswold v ler, 46 Conn. 243. Mather, 5 Conn. 435. '= McKelvey v. Creevey, 72 Conn. ™ Bates v. Coe, 10 Conn. 280. See 464; Savage v. Dooley, 28 Conn. 411, also Lacon v. Davenport 16 Conn 73 Am. Dec. 680; Swift v. Edson, 5 331. Conn. 531; Roath v. Smith, 5 Conn. "Downing v. Sullivan 64 Conn 133; Huntington v. Smith, 4 Conn. 1; Smith v. Vincent, 15 Conn. 1, 38 29 K THE diffeeekt; states § 24 § 23. Delaware. — In Delaware a mortgage, as between the mort- gagor and mortgagee, is only a security for the payment of the debt, and, so long as the mortgagor continues in possession, does not convey the legal title to the mortgagee;*" but in the meantime it is a lien of so high a nature that it is not divested by a sale of the premises on a judgment subsequently obtained against the mortgagor. Yet after breach of the condition and possession obtained by the mort- gagee, the legal title is in the mortgagee, and it is no longer in the power of the mortgagor, or any one claiming under him, to recover possession by ejectment.*^ As against every one but the mortgagee, the mortgagor in possession before foreclosure is regarded as the owTier and freeholder, with the civil and political rights belonging to that character.*^ The mortgagee may, upon breach of the condi- tion, use at the same time all the remedies the law affords against the person and the property; and he can not, without some special equity in, favor of the debtor, be restrained from proceeding at his election upon either or both his remedies.*^ What is termed the equity of redemption is, in this state, the title to the mortgaged land, with the right to redeem it from the in- cumbrance of the mortgage. The mortgagee takes by the mortgage no title to the land, but merely a lien upon it, which, upon his dying intestate, passes not to his heirs at law, but to his personal repre- sentative. A mortgage no more divests the title of the mortgagor in the mortgaged premises than does a general judgment divest the title of the defendant in land bound by the lien of such judgment.** § 24. Florida. — In Florida a mortgage is not deemed a conveyance so as to entitle the mortgagee to recover possession without a fore- closure.*^ It does not pass an estate in fee. It is a specific lien upon the property, and the mortgagor is divested of the title only by for- Am. Dec. 52; Chamberlain v. Thomp- " Cornog v. Cornog, 3 Del. Ch. 407; son, 10 Conn. 243, 26 Am. Dec. 390; Fox v. Wharton, 5 Del. Ch. 200, 225; Wakeman v. Banks, 2 Conn. 445. Grant v. Jackson &c. Co., 5 Del. Ch. «Fox V. Wharton, 5 Del. Ch. 200; 404; Cooch v. Gerry, 3 Harr. (Del.) Malsberger v. Parsons, 24 Del. 254, 280; Robinson v. Harris, 3 Harr. 75 Atl. 698. (Del.) 283, note "a"; Hall v. Tun- "Hall V. Tunnell, 1 Houst. (Del.) nell, 1 Houst. (Del.) 320; Walker v. 320; Malsberger v. Parsons, 24 Del. Farmers' Bank, 8 Houst. (Del.) 259, 254, 75 Atl. 698. 10 Atl. 94, 14 Atl. 819; Seals v. Chad- « Cooch V. Gerry, 3 Harr. (Del.) wick, 2 Pennew. (Del.) 381, 45 Atl. 280; Cornog v. Cornog, 3 Del. Ch. 718; Ellison v. Dolbey, 3 Pennew. 407, 416; Walker v. Farmers' Bank (Del.) 45, 49 Atl. 178; Malsberger (Del.), 14 Atl. 819, 10 Atl. 94, 100, v. Parsons, 24 Del. 254, 75 Atl. 698. per Salisbury, Ch. « Gen. Stat. 1906, § 2495, p. 985; « Newbold v. Newbold, 1 Del. Ch. Coe v. Finlayson, 41 Fla. 169, 26 So. 310. § 25 KATUEE OF A MORTGAGE 30 feiture of the condition and a foreclosure sale-.*^ A mere failure to comply with the conditions of the mortgage does not divest the mort- gagor of the legal title, nor vest it in the mortgagee.*' It is held, how- ever, that a deed of trust conveying land to trustees, with power - to sell and convey it in fee and apply the proceeds to the payment of certain liabilities of the grantor, is not a mortgage, but is a convey- ance which vests the legal title in the trustees.*' § 25. Georgia. — In Georgia a mortgage is a mere security for a debt, and the mortgagee can neither enter nor maintain ejectment.** All he can do is to foreclose and sell, and make his money out of the sale ; and the rents and profits belong to the mortgagor until the sale, for the reason that the title remains in him until the sheriff sells him out, and puts another in his plaee.^" "No title passes by the mortgage : it is only by foreclosure that the title is changed.'*^ It is now declared in the code that a mortgage is only a security for a debt, and passes no title.^2 But an absolute deed with a bond to reconvey passes the legal title.^^ The deed and bond do not, separately or together, indicate the crea- tion of a mere lien, but the purpose indicated is, to divest the grantor of title, and to vest title in the grantee, until the debt be paid.^* A provision that the deed shall be surrendered to the grantor and can- celed if the grantor shall pay a specified sum to the grantee by a designated time does not convert the instrument into a mortgage, if it was originally framed so as to pass title, and especially if the pay- ment by the grantor is optional and not obligatory.^^ 704; Jordan v. Sayre, 24 Fla. 1, 3 Athens Armory, 35 Ga. 344; Elfe v. So. 329. Cole, 26 Ga. 197; Ragland v. Jus- *■ Connor v. Connor, 59 Fla. 467, tlces, 10 Ga. 65; Davis v. Anderson, 52 So. 727; Coe v. Finlayson, 41 Fla. 1 Ga. 176; Seals v. Cashin, 2 Ga. Dec. 169, 26 So. 704; Seedhouse v. Brow- 76. ard, 34 Fla. 509, 16 So. 425; Jordan "Vason v. Ball, 56 Ga. 268 per V. Sayre, 29 Fla. 100, 10 So. 823; Jackson, J. Berlack v. Halle, 22 Fla. 236, 1 Am. "Burnside v. Terry, 45 Ga. 621; St. 185; McMahon v. Russell, 17 Fla. Jackson v. Carswell, 34 Ga 279 698. "Code, 1911, § 3256. "Berlack v. Halle, 22 Fla. 236, 1 ■« Groves v. Williams, 69 Ga. 614; Am. St. 185; McMahon v. Russell, Phinizy v. Clark, 62 Ga. 623; Allen 17 Fla. 698; Pasco v. Gamble, 15 Fla. v. Frost, 62 Ga. 659; Broach v. Bar- 698. field, 57 Ga. 601. See post, § 292. «Soutter V. Miller, 15 Fla. 625. "Gibson v. Hough, 60 Ga. 588- " Phillips V. Bond, 132 Ga. 413, 64 West v. Bennett, 59 Ga. 507. S. E. 456; Thomas v. Morrisett, 76 "'Pirkle v. Equitable Mtg. Co 99 Ga. 384; Carter v. Gunn, 64 Ga. 651; Ga. 524, 28 S. E. 34; McLaren v. Carter v. Hough, 60 Ga. 588; Vason Clark, 80 Ga. 423, 7 S. E. 230; Jay V. Ball, 56 Ga. 268; United States v. v. Welchel, 78 Ga. 786, 3 S. E 906 31 IN THE DliTEEENT STATES § 37 § 26. Idaho. — In Idaho, it is provided by statute that a mortgage of real property shall not be deemed . a conveyance, whatever its terms, so as to enable the owner of a mortgage to recover possession of the premises, without a foreclosure and sale."" A deed of real property, made by a debtor to his creditor, accompanied by a con- temporaneous agreement between the parties for a reconveyance of the property upon payment of the debt, constitutes a mortgage. °' § 27. Illinois. — In Illinois it was at first held, in accordance with the rulings of the English courts of common-law jurisdiction, that, as an incident to the ownership in fee by the mortgagee, he can enter be- fore condition broken or bring ejectment, unless the mortgage pro- vides that the mortgagor shall retain possession.*** But it is now the settled rule that the right of a mortgagee to main- tain ejectment against the mortgagor is confined to cases where the conditions of the mortgage have been broken, or there has been default in the payment of principal or interest.^" The legal title remains in the mortgagor, and the mortgagee has a lien only on the premises as a security for the mortgage debt."" It is held that the title of a mortgagee in fee in courts of law is regarded in the nature of a base or determinable fee."'- "While the mortgagor is the legal owner of the mortgaged premises against all persons except the mortgagee,"^ the mortgagee, as against the mort- gagor, is held to be the owner of the fee, and entitled to all the rights and remedies which the law gives to such owner. "^ The right of the mortgagor to hold possession may be implied. The permission granted to the mortgagor to hold possession until default may be implied from the terms of the mortgage, even though there is no express provision to that effect."* The right of the maker of a "Rev. Stat. § 4523; Kelley v. " Ortengren v. Rice, 104 111. App. Leachman, 2 Idaho 1112, 29 Pac. 849. 428. "Kelley v. Leachman, 2 Idaho ""Ladd v. Ladd, 252 111. 43, 96 N. 1112, 29 Pac. 849; Pritchard v. But- E. 561; McPall v. Kirkpatrick, 236 ler, 4 Idaho 518, 43 Pac. 73. 111. 281, 86 N. E. 139; Ware v. ''^Lightcap V. Bradley, 186 111. 510, Schintz, 190 III. 189, 60 N. E. 67; 58 N. B. 221; Ortengren v. Rice, 104 Lightcap v. Bradley, 186 III. 510, 58 III. App. 428. N. E. 221; Barrett v. Hinkley, 124 ™Kranz v. Uedelhofen, 193 111. 477, 111. 32, 14 N. E. 863, 7 Am. St. 331. 62 N. E. 239; Esker v. Heffernan, "'Seaman v. Bisbee, 163 111. 91, 45 159 111. 38, 41 N. B. 1113; Davis v. N. E. 208. Dale, 150 111. 239, 37 N. B. 215; Tay- ^Bradley v. Lightcap, 195 U. S. 1, lor V. Adams, 115 111. 570, 4 N. E. 49 L. ed. 65, 24 Sup. Ct. 748; Esker 837; Anderson v. Strauss, 98 111. v. Heffernan, 159 111. 38, 41 N. E. 485; Mester v. Hauser, 94 111. 433; 1113; Oldham v. Pfleger, 84 in. 102. Oldham v. Pfleger, 84 111. 102; Kil- "Kranz v. Uedelhofen, 193 111. 477, gour V. Gockley, 83 111. 109; Van- 62 N. E. 239; Carroll v. Ballance, 26 sant V. Allmon, 23 111. 30. 111. 9; Hobart v. Sanborn, 13 N. H. § 38 NATURE OF A MORTGAGE 32 trust deed to retain possession and collect the rents and profits is im- plied where the trust deed provides that upon breach of condition the maker waives all right to possession and to the income and rents of the premises."^ Upon breach of the condition, the mortgagee has the legal title,*'' and may bring liis action without giving the party in possession any notice to quit."^ The condition is broken when one or more instal- ments are due and unpaid; because, the condition being an entirety, it is invisible, and a failure to pay any part of the debt is a breach of the condition.''* The mortgagee may pursue all his remedies at the same time : he may proceed against the debtor personally ; against the property by bill in chancery for a strict foreclosure, or for a fore- closure and sale ; or, when the debt is all due, by scire facias ; and he may bring ejectment for the possession, or make peaceable entry.''' But even after condition broken, a mortgage is not an absolute out- standing title of which a stranger can take advantage to defeat a recovery, in ejectment by the mortgagor.'" Except as against the mortgagee, the mortgagor is regarded for all beneficial purposes as the owner of the land.'"^ Moreover the mortgagor or a purchaser from him is the legal owner of the mortgaged estate as against all persons except the mortgagee or his assigns, who are the legal owners for one purpose only, namely, the enforcement of the debt secured.''^ § 28. Indiana. — In Indiana the common-law doctrine, that the legal estate vests in the mortgagee, was adhered to many years, as appears by the earlier cases; but it no longer prevails. The settled doctrine in this state is that a mortgage is but a lien on the land as a security for the debt, and that the legal title remains in the mortgagor, subject to the lien of the mortgage.'^ It is merely an 226 ; Jamieson v. Bruce, 6 Gill & J. '^ Kranz v. Uedelhofen, 193 111. 477, (Md.) 74. 62 N. B. 239. == Kranz V. Uedelhofen, 193 111. 477, i* Karnes v. Lloyd, 52 111. 113; 62 N. E. 239. Erickson v. Rafferty, 79 111. 209. "'Walker V. Warner, 179 111. 16, 53 "Oldham v. Pfleger, 84 111. 102; N. E. 594, 70 Am. St. 185. Hall v. Lance, 25 111. 277. " Lightcap V. Bradley, 186 111. 510, " Barrett v. Hinckley, 124 111. 32, 58 N. E. 221; Barrett v. Hinckley, 14 N. E. 863, 7 Am. St. 331; Vallette 124 111. 32, 14 N. E. 863; Delano v. v. Bennett, 69 111. 632; Pitch v. Bennett, 90 111. 533; Harper v. Ely, Pinckard, 5 111. 69. 70 111. 581; Gibson v. Rees, 50 111. "Lightcap v. Bradley, 186 111. 510, 383; Pollock v. Maison, 41 111. 516; 58 N. E. 221; Barrett v. Hinckley, Jackson v. Warren, 32 111. 331; Nel- 124 111. 32, 14 N. E. 863; Delano v. son V. Pinegar, 30 111. 473; Carroll Bennett, 90 111. 533; Emory v. Keig- V. Ballance, 26 111. 9, 79 Am. Dec. han, 88 111. 482; Gibson v. Rees, 50 354; Vansant v. Allmon, 23 111. 30, 111. 383. 33; Delahay v. Clement, 4 111. 201. "Fletcher v. Holmes, 32 Ind. 497, 33 IN THE DIFFEEENT STATES § 23 incumbrance or security for a debt, and does not transfer the legal estate^* It is provided by statute that, in the absence of stipulations to the contrary, the mortgagor, until foreclosure, may retain posses- sion of the mortgaged estate.'^ His equity of redemption may be granted, devised, or taken in execution; and it is therefore regarded as the real and beneficial estate tantamount to the fee at law.^^ § 29. Iowa. — The interest of the mortgagee is regarded as a lien upon the land for the debt, which may, by certain proceedings, ripen into a title, or rather may divest the title of the mortgagor. Some act of the mortgagee is necessary, that he may acquire an indefeasible title which the mortgagor will not be able to defeat by redemption. The interest of the mortgagor is an estate of inheritance, which is in no way affected by the mortgage before entry and foreclosure, except by the lien created. The fact that a mortgage confers upon the mort- gagee a right of entry upon breach of the condition gives him no addi- tional right, inasmuch as the right exists under the law, without such provision.' ' It is now provided by statute that, in the absence of stip- ulations to the contrary, the mortgagor retains the legal title and the right of possession.''^ This statute applies to a conveyance absolute in terms to secure the payment of a debt.'" An absolute deed made as security for a debt conveys the legal title.^" But it has been held that where a husband and wife join in deeds conveying lands to the wife, and the grantee at the time executes a defeasance in which it is recited that he holds the husband's obligation for a certain sum, and that upon payment of the same he will reconvey the land, the transaction constitutes a 513; Grable v. McCulloh, 27 Ind. ".^tna L. Ins. Co. v. Broecker, 472; Morton v. Noble, 22 Ind. 160, 166 Ind. 576, 77 N. E. 1092. 11 Am. Rep. 7; Franci'' v. Porter, 7 "White v. Rittenmyer, 30 Iowa Ind. 213; Reasoner v. Edmundson, 5 268; Courtney v. Carr, 6 Iowa 238; Ind. 393; Baldwin v. Moroney, 173 Hall v. Savill, 3 G. Greene (Iowa) Ind. 574, 91 N. E. 3, 30 L. R. A. (N. 37, 54 Am. Dec. 485; Fitzgerald v. S.) 761; Sinclair v. Gunzenhauser, Flannagan (Iowa), 125 N. W. 995. 179 Ind. 78, 98 N. E. 37. "Code, Iowa, § 2922; Whitley v. "Fletcher v. Holmes, 32 Ind. 497; Barnett, 151 Iowa 487, 131 N. W. Grable v. McCulloh, 27 Ind. 472; 704. Morton v. Noble, 22 Ind. 160; Fran- "Harrington v. Foley, 108 Iowa cis V. Porter, 7 Ind. 213. 287, 79 N. W. 64. As to discussions " See Reed v. Ward, 51 Ind. prior to this statute, see Richards v. 215; Jones v. Thomas, 8 Blackf. Crawford, 50 Iowa 494; Burdick v. (Ind.) 428; Grimes v. Doe, 8 Blackf. Wentworth, 42 Iowa 440; Farley v. (Ind.) 371. Goocher, 11 Iowa 570. G. & H. Stat. p. 335. Prior to *'Haggerty v. Brower, 105 Iowa 1843, when this statute was passed, S95, 75 N. W. 321; In re Snyder, 138 the mortgagee could recover posses- Iowa 553, 114 N. W. 615, 19 L. R. A. sion at any time unless restrained (N. S.) 206. by the terms of the mortgage. 3 — Jones Mtg. — Vol. I. § 30 NATURE OF A MOEIGAGE 34 mortgage, differing, however, from the ordinary mortgage in that the fee in the land passes to the grantee.'^ § 30. Xansas. — In Kansas the legal estate remains in the mort- gagor after making a mortgage, and it is provided by statute that, in the absence of stipulations to the contrary, he may retain possession of the mortgaged estate.*^ "Some of the states still adhere to the com- mon-law view, more or less modified by the real nature of the trans- action; but in most of them, practically, all that remains of the old theories is their nomenclature. In this state a clear sweep has been made by statute. The common-law attributes of mortgages have been wholly set aside ; the ancient theories have been demolished ; and if we could consign to oblivion the terms and phrases — without mean- ing except in reference to those theories — with which our reflections are still embarrassed, the legal profession, on the bench and at the bar, would more readily understand and fully realize the new condition of things."** A trust deed, being merely a mortgage, is regarded as conveying no estate or title in the land, but as creating merely a lien.^* "Where a deed of trust is executed with the understanding between the parties that the title is to be transferred forever from the grantor to the grantee and his heirs or grantees, then such deed of trust is not a mortgage. But where the deed of trust is executed with the under- standing between the parties that it is a mere security for a debt, and that when the debt is paid the title shall be again placed in the grantor, such deed of trust is a mere mortgage."*^ §31. Kentucky.— In Kentucky, since the adoption of the Civil Code, a mortgage is regarded as a mere security for debt, and sub- stantially, both at law and in equity, the mortgagor is the real owner of the mortgaged property' until foreclosure.*" The mortgagee only =' Collier v. Smaltz, 149 Iowa 230, «' Chick v. "Willetts, 2 Kans. 384. 128 N. W. 396, Ann. Cas. 1912 C, See also Southern Kans. R. Co. v. 1007; Haggerty v. Brewer, 105 Iowa Sharpless, 62 Kans. 841, 62 Pac. 662; 395, 75 N. W. 321; Richards v. Craw- Hunt v. Bowman, 62 Kans. 448, 63 ford, 50 Iowa 494; Lomax v. Smyth, Pac. 747; "Waterson v. Devoe 18 50 Iowa 223; Burdick v. Wentworth, Kans. 223; Chicago K. & W r' Co 42 Iowa 440. v. Need, 2 Kans. App. 492, 496, 43 «^Gen. Stat. 1909, § 5194; Beck- Pac. 997. man v. Sikes, 35 Kans. 120, 10 Pac. «^ Lenox v. Reed, 12 Kans 223- 592; Seckler v. Delfs, 25 Kans. 159; Robblns v. Sackett, 23 Kans 301 Robbins v. Sackett, 23 Kans. 301; ^McDonald v. Kellogg, 30 Kans Watterson v. Devoe, 18 Kans. 223; 170, 2 Pac. 507. Lenox v. Reed, 12 Kans. 223; Chick "Taliaferro v. Gay 78 Ky 496" V. Willetts, 2 Kans. 384. Wooliey v. Holt, 14 Bush (Ky ) 35 IN THE DIFFEEENT STATES § 32 has a lien for his debt, and a deed of mortgage is not a conveyance of title. ^'^ The rents and profits of the mortgaged premises belong to the mortgagor until he is divested of the title, unless there is a specific pledge of them in the mortgage.'* A mortgagee in possession can not be ousted until the debt secured thereby be paid and the mort- gage satisfied.'" An agreement to bid in the land of a debtor at a judicial sale and to hold it subject to his redemption is held to constitute a mortgage, and the purchaser a mere holder of the land to secure the price bid until redemption is effeeted."" § 32. Louisiana. — In Louisiana a mortgage is a species of aliena- tion, but not a sale. It is an alienation of a right on the property, not of the property itself. The title, as well as the possession, remains in the owner."^ Default in the payment of the debt secured does not give the creditor an absolute title to the property, but only a right to have it sold and the proceeds applied to the satisfaction of his claim."^ The civil code of this state defines a mortgage as "a right granted to the creditor over the property of the debtor for the security of his debt, and gives him the power of having the property seized and sold in default of payment. Mortgage is a species of pledge, the thing mortgaged being bound for the payment of the debt, or fulfil- ment of the obligation. The conventional mortgage is a contract, by which a person binds the whole of his property, or a portion of it only, in favor of another, to secure the execution of some engagement, but without divesting himself of the possession.""^ A conventional 788; Douglass v. Cline, 12 Bush rinth Deposit Bank, 24 Ky. L. 482, (Ky.) 608. See also Bullock v. 68 S. W. 870; Parks v. Parks, 9 Ky. Grlnstead, 95 Ky. 261, 24 S. W. 867, L. 347. 15 Ky. L. 663; Mercantile Trust Co. ^Taliaferro v. Gay, 78 Ky. 496; V. South Park Residence Co., 94 Ky. McBIroy v. Barbee, 4 Ky. Opin. 165. 271, 22 S. W. 314, 15 Ky. L. 70; «»McMichael v. McMichael, 3 Ky. Sheffield v. Day, 28 Ky. L. 754, 90 S. Opin. 608. W. 545; Alderson v. Casky, 15 Ky. ""Nichols v. Marquess, 141 Ky. L. 589, 24 S. W. 629, 29 S. "W. 976; 642, 133 S. W. 562. Gossman v. Gossman, 13 Ky. L. 243, »' Miller v. Shotwell, 38 La. Ann. 15 S. W. 1057; Edrington v. Harper, 890; Duclaud v. Rousseau, 2 La. 3 J. J. Marsh. (Ky.) 354, 20 Am. Ann. 168. See also Conrad v. Pri- Dec. 145. eur, 5 Rob. (La.) 49; Marbury v. "Rissberger v. Louisville (Ky.), Colbert, 105 La. 467, 29 So. 871; 118 S. W. 319; Board of Council v. Randolph v. Stark, 51 La. Ann. 1121, Fidelity T. &c. Co., Ill Ky. 676, 64 26 So. 59. S. W. 470; Mercantile Trust Co. v. "'Duclaud v. Rousseau, 2 La. Ann. Southern Park Residence Co., 94 Ky. 168. 276, 22 S. W. 314; Clore v. Lambert, "Merrick's Rev. Civ. Code, § 3278; 78 Ky. 228; Douglass v. Cline, 12 Benjamin Succession of, 39 La. Ann. Bush (Ky.) 608; Woolley v. Holt, 612, 2 So. 187; Gates v. Gaither, 46 14 Bush (Ky.) 788; Guill v. Co- La. Ann. 286, 15 So. 50. § 33 NATURE OF A MORTGAGE 36 mortgage is one founded upon the covenants of the parties in contra- distinction to a legal mortgage.'* § 33. Maine. — In Maine a mortgage vests the mortgagee with the legal estate conditionally,'^ and it is provided by statute that he may enter before breach of the condition, when there is no agreement to the contrary. The mortgagor/^ as to every one but the mortgagee, is considered as having the legal estate, and the power of conveying it or incumbering it subject to the lien of the mortgage.'^ As between the mortgagor and the mortgagee, the mortgagee holds the legal estate in the mortgaged premises with all the incidents of ownership in fee, while the mortgagor retains an equitable right un- der a condition subsequent in the deed.'^ It is held that so long as the right of redemption exists the title can not become absolute in the mortgagee, nor can he appropriate it in the payment of his debts; and until his title is perfected the law will not so appropriate it.'' § 34. Maryland. — The mortgagee has the legal estate, and is en- titled to possession immediately upon the execution of the mortgage, unless there be some agreement of the parties to the contrary.^ Or- dinarily he may pursue all his remedies at the same time.^ He may, even before breach of condition, maintain ejectment and oust the mortgagor, unless he has waived this right by a stipulation in the mortgage.^ As to all other persons, the mortgagor is deemed the owner. He may, therefore, when the mortgage allows him to remain in possession until default, maintain ejectment against a third party " See Walmsley v. Resweber, 105 Maine 273 ; Howard v. Houghton 64 La. 522, 30 So. 5. Maine 445. '= Allen Co. v. Emerton, 108 Maine =° Covell v. DollofE, 31 Maine 104 221, 79 Atl. 905; Brastow v. Barrett, >Chelton v. Green, 65 Md 272 4 82 Maine 456, 19 Atl. 916; Ander- Atl. 271; Baltimore City Appeal son V. Robbins, 82 Maine 422, 19 Tax Ct. v. Rice, 50 Md. 302; Annap- Atl. 910, 8 L. R. A. 568; Jones v. olis &c. R. Co. v. Gantt, 39 Md. 115- Smith, 79 Maine 446, 10 Atl. 254; Sumwalt v. Tucker, 34 Md. 89; Mc- Bragdon v. Hatch, 77 Maine 433, 1 Kim v. Mason, 3 Md. Ch. 'l86; Atl. 140; Howard v. Houghton, 64 Brown v. Stewart, 1 Md. Ch. 87; Maine 445 ; Mitchell v. Burnham, 44 Leighton v. Preston, 9 Gill (Md j Maine 286; Blaney v. Bearce, 2 201; Jamieson V; Bruce, 6 Gill & J Maine 132. See post § 702. (Md.) 72, 26 Am. Dec. 557 per "Rev. Stat. 1903, ch. 92, § 2; Hus- Archer, J. sey v. Fisher, 94 Maine 301, 47 Atl. ^Wilhelm v. Lee, 2 Md. Ch. 322; 525. Brown v. Stewart, 1 Md. Ch. 87. "'Wilkins v. French, 20 Maine 'Commercial Bldg. &c. Assn. v. Ill- Robinson, 90 Md. 615, 45 Atl. 449- "'Allen Co. v. Emerton, 108 Maine Hagerstown v. Groh, 101 Md 560 221, 79 Atl. 905; Gilman v. "Wills, 66 60 Atl. 467; Brown v Stewart 1 Md. Ch. 87. 37 IN THE DIFFEEENT STATES § 35 who rests his defense entirely on possession and an outstanding title in the mortgagee.* Moreover, being tlie substantial owner, lie is en- titled to sue for damages done the estate by a third person.^ § 35. Massaclmsetts. — In Massachusetts the English characteristics of a mortgage are retained. It confers upon the mortgagee a legal es- tate and the right of possession. "The first great object of a mort- gage/' says Chief Justice Shaw," "is, in the form of a conveyance in fee, to give to the mortgagee an effectual security, by the pledge or hypothecation of real estate, for the payment of a debt, or the per- formance of some other obligation. The next is to leave to the mort- gagor, and to purchasers, creditors, and all others claiming deriva- tively through him, the full and entire control, disposition and ownership of the estate, subject only to the first purpose, that of securing the mortgagee. Hence it is that, as between mortgagor and mortgagee, the mortgage is to be regarded as a conveyance in fee; because that construction best secures him in his remedy and his ulti- mate right to the estate, and to its incidents, the rents and profits. But in all other respects, until foreclosure, when the mortgagee be- comes the absolute owner, the mortgage is deemed to be a lien or charge, subject to which the estate may be conveyed, attached, and in all other respects dealt with as the estate of the mortgagor. And all the statutes upon the subject are to be so construed; and all rules of law, whether administered in law or in equity, are to be so applied as to carry these objects into effect." And in another case the same eminent jurist says:' "Mortgaging is not such a conveying away of the estate as divests the entire title of the owner. It is a charge or incumbrance created out of that estate, and may amount to a small part only of its value. Although, as between mortgagor and mortgagee, it is a transmission of the fee, which gives the mortgagee a remedy in the form of a real action, and constitutes a legal seisin, yet to most other purposes a mortgage, before the entry of the mortgagee, is but a pledge and real lien, leaving the mortgagor to most purposes the owner."^ * George's Creek Coal &c. Co. v. ' Norcross v. Norcross, 105 Mass. Detmold, 1 Md. 225, 237. See also 265; Erskine v. Townsend, 2 Mass. Ann. Code, art. 75, § 72, p. 1667. 493, 3 Am. Dec. 71; Steel v. Steel. Morgan v. Davis, 2 Har. & M. 4 Allen (Mass.) 417; Sparhawk ». (Md.) 9. Bagg, 16 Gray (Mass.) 583; Slllo- ^ Annapolis & Elkridge R. Co. v. way v. Brown, 12 Gray (Mass.) 30; Gantt, 39 Md. 115. Hapgood v. Blood, 11 Gray (Mass.) 'Ewer V. Hobbs, 5 Met. (Mass.) 1. 400; Bradley v. Fuller, 23 Pick. 'Howard v. Robinson, 4 Cush. (Mass.) 1. See also post § 702. (Mass.) 119. § 36 NATURE OF A MORTGAGE 38 As between the parties, the mortgage is regarded as a conveyance of the fee for the protection of the rights of the mortgagee, and entitles him to immediate possession. But in all other respects, the mortgage is considered as a mere lien or security, subject to which the estate may be convej^ed, attached or dealt with as the estate of the mortgagor.' The mortgagee may, even before breach of condition, maintain eject- ment and oust the mortgagor.^" § 36. Michigan, — In Michigan no action of ejectment can be main- tained by a mortgagee, or his assigns or representatives, for the recov- ery of the mortgaged premises, u.ntil the title shall have become absolute upon a foreclosure of the mortgage.^^ Not being allowed as mortgagee to bring an ejectment suit, he is not allowed to maintain a bill for foreclosure as a proceeding auxiliary to the ejectment suit. Nor can he convert a bill in aid of ejectment proceedings into a fore- closure bill by merely substituting the ordinary prayer for foreclosure in place of the prayer originally made.^^ The mortgagee has no legal title in the land mortgaged, but only a lien for the security of the mortgage debt.^^ A mortgage in common-law form, executed prior to the statute which deprived mortgagees of the right of possession, gave the mortgagee or his assigns the right to go into the enjoyment of the lands and hold them until redeemed.^* Under the existing statute a mortgagor is entitled to recover possession from his mortgagee at any time before his rights have been foreclosed.^^ A conveyance in trust to secure an indebtedness is only a mort- gage, and does not preclude the mortgagor from claiming the title in "Norcross v. Norcross, 105 Mass. "Livingston v. Hayes, 43 Mich. 265. See also Gray v. McClellan, 129, 5 N. W. 78. 214 Mass. 92, 100 N. E. 1093; Kin- "Dawson v. Peter, 119 Mich. 274, ney v. Treasurer, 207 Mass. 368, 93 77 N. W. 997; Detroit v. Detroit Bd. N. E. 586, 35 L. R. A. (N. S.) 784, of Assessors, 91 Mich. 78, 51 N. W. Ann. Gas. 1912 A, 902; Delano v. 787, 16 L. R. A. 59; Taggart v. Smith, 206 Mass. 365, 92 N. E. 500, Sanilac County, 71 Mich. 16 38 N. 30 L. R. A. (N. S.) 474. W. 639; Byers v. Byers, 65 Mich. "Lackey v. Holbrook, 11 Mete. 598, 32 N. W. 831; Morse v. Byam, (Mass.) 458; Fay v. Cheney, 14 55 Mich. 594, 22 N. W. 54; Lee v. Pick. (Mass.) 399. Clary, 38 Mich. 223; Wagar v. Stone, "Howell's Stat, § 13206; Bowen 36 Mich. 364; Gorham v. Arnold, 22 v. Brogan, 119 Mich. 218, 77 N. W. Mich. 247; Caruthers v. Humphrey, 942, 75 Am. St. 387; Michigan Trust 12 Mich. 270. Co. V. Lansing Lumber Co., 103 "Hoffman v. Harrington, 33 Mich Mich. 392, 61 N. W. 668; Cook v. 392; Mundy v. Munroe, 1 Mich. 68; Knowles, 38 Mich. 316; Wagar v. Schwa rz v. Sears, Walk. Ch. (Mich.) Stone, 36 Mich. 364; Hoffman v. 170; Stevens v. Brown, Walk. Ch. Harrington, 33 Mich. 392; Newton (Mich.) 41. V. McKay, SO Mich. 380. >= Humphrey v. Hurd, 29 Mich. 44. 39 IN THE DIFFERENT STATES § 37 fee.^" A deed of conveyance, absolute and unconditional on its face, but intended and understood by the parties to be merely a security for a debt or obligation, is regarded in equity as a mortgage, giving to the parties the relative rights of mortgagor and mortgagee.^' § 37. Minnesota. — In Minnesota it is declared by statute that a mortgage of real property shall not be deemed a conveyance, so as to enable the owner of the mortgage to recover possession of it without a foreclosure.^* Eeferring to this statute, Chief Justice Emmet says :^^ "This, it appears to me, deprives the mortgagee of the only material advantage which remained to him from being considered the owner of the fee; and although, out of deference to the past, we may still regard him as the legal owner, he is such in theory only, having no right to interfere with the possession save by consent of the mortgagor. The effect of the change just referred to is to dissipate whatever of title he may formerly have had beyond that of a mere lien or security. And although the mortgagee may, by obtaining a strict foreclosure, eventually secure possession, and thus complete his title under the mortgage, yet, as the courts may, and in practice generally do, direct the property to be sold, even when a strict foreclosure is asked for, he is by no means certain of ever perfecting that title which the mort- gage purports to convey. And if the property, by direction of the court or otherwise, be sold to satisfy the mortgage, the purchaser, when he receives his deed, takes not the title of the mortgagee, for that is extinguished by the application of the proceeds of the sale; nor does he take simply the title of the mortgagor at the time of the sale, for that is incomplete; but he takes the title which was in the mortgagor at the time the mortgage was given, which is equivalent to both." One who is in reality a mortgagee, although the conveyance to him is in the form of an absolute deed, has no greater rights than a mort- gagee under a mortgage in the usual form, and therefore is not entitled '"Flint & Pare Marquette R. Co. »'Gen. Stat. 1913, § 8077. v. Auditor General, 41 Mich. 635, 2 "Geib v. Reynolds, 35 Minn. 331, N. W. 835. 28 N. W. 923; Busse v. Page, 32 "Ferry v. Miller, 164 Mich. 429, Minn. Ill, 19 N. W. 736, 20 N. W. 129 N. W. 721; Schmidt v. Barclay, 95; Adams v. Corriston, 7 Minn. 456. 161 Mich. 1, 125 N. W. 729; Ruch See also Rice v. St. Paul & Pac. R. v. Ruch, 159 Mich. 231, 124 N. W. Co., 24 Minn. 464; Berthold v. Fox, 52; Flynn v. Holmes, 145 Mich. 606, 13 Minn. 501, 97 Am. Dec. 243; Ber- 108 N. W. 685, 11 L. R. A. (N. S.) thold v. Holman, 12 Minn. 335, 93 209; Darling v. Darling, 123 Mich. Am. Dec. 233; Donnelly v. Simon- 307, 82 N. W. 48. But see Jeffery ton, 7 Minn. 167. V. Hursh, 42 Mich. 563, 4 N. W. 303. § 38 NATDKE OF A MORTGAGE 40 to possession of the premises if not voluntarily surrendered to him by the grantor.^" § 38. Mississippi. — In Mississippi, upon a breach of the condition of a mortgage, the legal title becomes absolute in the mortgagee, who thereupon becomes entitled to the possession of the property as an in- cident to the title.^^ The code now provides that before a sale under a mortgage, or deed of trust, the mortgagor or grantor shall be deemed the owner of the legal title of the property conveyed, except as against the mortgagee and his assigns, or the trustee, after breach of the condition of the mortgage or deed.^^ But with reference to the dual nature of a mortgage, and the rights of the mortgagee after default, the modified common-law doctrine pre- vails in this state also.^' The debt is considered as the principal, and the mortgage as an incident only. The mortgagee, notwithstanding the form of the conveyance, has but a security. The principles long established in chancery have, under the code, become naturalized in the courts of common law, so that until foreclosure the mortgagee is regarded as having a chattel interest only. Even after the mort- gagee has taken possession, the mortgaged estate is regarded as a pledge only.^* As respects third persons, and the mortgagee also until after for- feiture, the mortgagor is the owner of the legal real estate, and the mortgagee has only a security for the debt. "The legal title," says Chief Justice Simrall,^^ "may be asserted by the mortgagee, but only for the protection of his debt, and to make the security available for its payment." § 39. Missouri. — In Missouri a mortgage is only a security for a debt, and remains so even after a condition broken; but upon default in the payment of the debt the mortgagee may maintain ejectment, "•Meiglien v. King, 31 Minn. 115, Peyton, "and the equity of redemp- 16 N. W. 702. tion is unimpaired. Although the »Hill V. Robertson, 24 Miss. 368; mortgagee has a chattel interest Harmon v. Short, 8 Sm. & M. (Miss.) only, yet in order to render his 433; Buck v. Payne, 52 Miss. 271. pledge available, and give him the ■■^Miss. Code, 1906, § 2779; Car- intended benefit of his security, it penter v. Bowen, 42 Miss. 28. is considered as real property to en- ^'Buck v. Payne, 52 Miss. 271; able him to maintain ejectment for Buckley v. Daley, 45 Miss. 338; Car- the recovery of the possession of the penter v. Bowen, 42 Miss. 28; Heard land mortgaged; when contempla- V. Baird, 40 Miss. 793; Hill v. Rob- ted in every other point of view, it ertson, 24 Miss. 368. is personal property." To same ef- " Buckley v. Daley, 45 Miss. 338, feet is Carpenter v. Bowen, 42 Miss. 345. "The relation of debtor and 28, 49. creditor exists," says Chief Justice ^Buck v. Payne, 52 Miss. 271. 41 IN THE DIFFEEEXT STATES § 39a because he is then in law regarded as the owner of the estate ; but the legal title vests in him only for the purpose of protecting his debt.^" By a mortgage, or a deed of trust in the nature of a mortgage, the legal title, after condition broken, passes to the mortgagee or trustee.^' The addition of a power to sell, without Judicial proceedings to fore- close, can not avoid the legal effect of the grant. ^^ Where a mortgage debt is payable by instalments, the condition is broken by nonpayment of any one of them, and the mortgagee may thereupon enter or bring ejectment, and it is no defense to such a suit that all the instalments are not due. The authorization con- tained in a mortgage, to sell only in event that "the said notes should not be well and truly paid," should be construed to mean in case they should not be paid as they respectively become due. The mortgagee is not by such condition compelled to wait till the last note is dishon- ored before applying his remedy.^^ But although a mortgage is a conveyance in fee upon condition, it is, even after the condition is broken and the legal title has passed to the mortgagee, merely a security for the debt, and is extinguished, and the title revested, whenever the debt is paid.^" The trustee, after dishonor of the notes secured, may enter, and without sale or foreclosure may maintain his possession for the use of the beneficiary, not only against all outsiders, but against the maker of the deed himself, until the payment of the debt. It has long been established in this state that after condition broken the mortgagee may maintain ejectment.^^ § 39a. Montana. — A mortgage of real property is not deemed a conveyance, whatever its terms, so as to enable the owner of the mortgage to recover possession of the real property without fore- closure and sale.^^ A mortgagee in possession of the mortgaged prem- "> Bailey v. Winn, 101 Mo. 649, 12 « Bailey v. Winn, 101 Mo. 649, 12 S. W. 1045. See also Jackson v. S. W. 1045; Reddick v. Gressman, Johnson, 248 Mo. 680, 154 S W. 759; 49 Mo. 389; Sutton v.' Mason, 38 Mo. Siemers v. Schrader, 88 Mo. 20; 120; Walcop v. McKinney, 10 Mo. Barnett v. Timberlake, 57 Mo. 499; 229. Leather Co. v. Ins. Co., 131 Mo. App. =■" Mont. Codes Ann., § 3816 ; Muel- 701, 111 S. W. 631. ler v. Renkes, 31 Mont. 100, 77 Pac. "'Meyer v. Campbell, 12 Mo. 603. 512; Wilson v. Pickering, 28 Mont. =« Johnson y. Houston, 47 Mo. 227; 435, 72 Pac. 821; Muth v. Goddard, Woods V. iJilderbrand, 46 Mo. 284, 2 28 Mont. 237, 72 Pac. 621, 98 Am. St. Am. Rep. 513; Kennett v'. Plummer, 553; Holland v. Commissioners, 15 2S.Mo,142. Mont 460, 39 Pac. 575; First Nat. '^Reddick v. Gressman, 49 Mo. Bank v. Bell S. &c. Min. Co., 8 389. Mont. 32, 19 Pac. 403; Fee v. Swing- " Pease v. Pilot Knob Iron Co., 49 ly, 6 Mont. 596, 13 Pac. 375; Galla- Mo. 124. tin Co. v. Beattie, 3 Mont. 173. § 40 KATUEE OF A MORTGAGE 43 ises, after condition broken, and with the consent of the mortgagor is entitled to the possession until the debt is paid.'' § 40. Nebraska. — The doctrine is established that the mortgagee is not seised of the freehold, either at law or in equity, either before or after condition broken.'* The mortgage vests no title either before or after default, but merely creates a lien.'° It is a mere security in the form of a conditional conveyance, and the interest which it vests in the mortgage is not essentially different from that created by a pur- chaser's lien or an ordinary judgment.'" It is provided by statute that the mortgagor, in the absence of strpulations to the contrary, retains the legal title and right of possession," until confirmation of a foreclosure sale. A deed of trust to secure the payment of a debt, being in effect a mortgage, is held, in accordance with the general rule that a mortgage does not pass the legal title, not to vest a legal estate in the trustee." § 41. Nevada. — In Nevada the courts seem to hold the title does not pass from the mortgagor before breach of the condition.'^ It is pro- vided by statute that a mortgage of real property shall not be deemed a conveyance, whatever its terms, so as to enable the owner of the mortgage to recover possession of the land, without a foreclosure and sale.*" It seems that even a deed absolute in form amounts only to an equitable lien, and does not vest the legal title in the grantee.*^ § 42. New Hampshire. — The seisin, or possession, as well as the title, passes directly to the mortgagee unless he is restrained by the provisions of the deed; and upon a breach of the condition he is in ='Fee V. Swingly, 6 Mont. 596, 13 Broad, 52 Nebr. 490, 72 N. W. 850; Pac. 375, Connolly v. Giddlngs, 24 Nebr. 131, "* Morrill v. Skinner, 57 Ngbr. 164, 37 N. W. 939. 77 N. W. 375; Barber v. Crowell, 55 »» Hurley v. Bstes, 6 Nebr. 386; Nebr. 571, 75 N. W. 1109; McHugh "Webb v. Hoselton, 4 Nebr. 308, 19 V. Smiley, 17 Nebr. 626, 20 N. "W. Am. Rep. 638; Kyger v. Ryley, 2 296; Union Mut Life Ins. Co. v. Nebr. 20. Lovitt, 10 Nebr. 301, 4 N. W. 986; ^WMtmore v. Shiverick, 3 Nev. Hurley v. Estes, 6 Nebr. 386; Ky- 288; Hyman v. Kelly, 1 Nev. 179. ger V. Ryley, 2 Nebr. 20. "Gen. Stat. 1885, Civ. Proc. § =" Morrill v. Skinner, 57 Nebr. 164, 3284; Orr v. Ulyatt, 23 Nev. 134, 43 77 N. W. 375; Orr v. Broad, 52 Nebr. Pac. 916; "Winnemucca First Nat 497, 72 N. "W. 850; Davidson v. Cox, Bank v. Kreig, 21 Nev. 404, 32 Pac. 11 Nebr. 252, 9 N. "W. 95. 641. '"Barber v. Crowell, 55 Nebr. 571, "First Nat. Bank v. Kreig 21 75 N. W. 1109. Nev. 404, 32 Pac. 641. But see Bro- "Cobbers Ann. Stat., § 10855; phy Min. Co. v. Brophy & Dale Gold Clark V. Missouri K. &c. Trust 'Co., and Silver Min. Co., 15 Nev. 101; 59 Nebr. 53, 80 N. W. 257; Orr v. Bingham v. Thompson, 4 Nev. 224. 43 IN THE DIFFERENT STATES § 43 any case entitled to the possession. The mortgagor retains, as against the mortgagee, nothing more than a mere power to regain the fee upon the performance of a condition, and this condition is strictly a condition precedent.*^ As against all other persons the mortgagor is regarded as the owner, and may maintain a real action to recover possession. The mortgagee has the legal title merely so far as is necessary, in order to enable him to obtain the full benefit of the security, and prevent any violation of his rights under the mort- gage.^^ Whenever the mortgagee is entitled to possession he may doubt- less treat the possession of the mortgagor as a disseisin, at his election, and may at once maintain a writ of entry for the recovery of possession, without notice to quit; but until such election the pos- session of the mortgagor can not be regarded as a disseisin, but as permissive, and bearing in many respects a close analogy to strict tenancy at will or at sufferance. Until this power of election is exer- cised, the mortgagor is in with the privity and assent of the mort- gagee, and in subordination to his title ; and it is therefore held, upon the ground of such presumed assent, that the mortgagor is not liable to the mortgagee for the rents and profits while so in possession.** It has been held that where a mortgage to secure purchase-money was void, for the reason that there was only one subscribing witness, the mortgagee could not maintain a writ of entry to recover the land from his grantee.*^ § 43. New Jersey. — In New Jersey the nature of the mortgage as a conveyance of an estate to the mortgagee in fee simple, subject to be defeated by the performance of the condition, remains as it was at common law, with the modification that the mortgagee can not enter immediately as at common law, but only upon breach of the condition.*" A mortgage is merely auxiliary to the debt, and the estate of the mort- « Morse v. Whltcher, 64 N. H. 591, " Furbush v. Goodwin, 29 N. H. 15 Atl. 207; Perkins v. Eaton, 64 321; Chellis v. Stearns, 22 N. H. 312. N. H. 359, 10 Atl. 704; Fletcher v. "Rundlett v. Hodgman, 16 N. H. Chamberlin, 61 N. H. 438; Tripe v. 239. Marcy, 39 N. H. 439; Hobart v. San- •"> Wilbur v. Jones, 8 N. J. Eq. 520, born, 13 N. H. 226, 38 Am. Dec. 483; 86 Atl. 769; Devlin v. Collier, 53 N. Southerin v. Mendum, 5 N. H. 420; J. L. 422, 22 Atl. 201; Jersey City v. M'Murphy v. Minot, 4 N. H. 251; Kiernan, 50 N. J. L. 246, 13 Atl. 170; Brown v. Cram, 1 N. H. 169. Woodside v. Adams, 40 N. J. L. 417; ■"Whittemore v. Gibbs, 24 N. H. Kircher v. Schalk, 39 N. J. L. 335; 484; Great Falls Co. v. Worster, 15 Shields v. Lozear, 34 N. J. L. 496; N. H. 412; Ellison v. Daniels, 11 N. 3 Am. Rep. 256, per Depue, J.; San- H. 274; Parish v. Gilmanton, 11 N. derson v. Price, 21 N. J. L. 637. H. 293, 43 NATURE OF A MOETGAGE 44 gage is annihilated by the extinguishment of the debt secured by it, even after the day of payment named in the condition. In fact, the latter conclusion will necessarily follow whenever the mortgage is regarded, not as a common-law conveyance on condition, but as a se- curity for the debt, the legal estate being considered as subsisting only for that purpose.*^ Yet the generally received aspect in which a mort- gage is regarded is as a mere security for the debt and not an alienation.*^ The land conveyed by way of mortgage siibsists as an estate only to the extent that it is subservient to such purpose.*' In a general way it may be said that a mortgage in New Jersey has a dual character — first, it is a covenant to pay a sum of money upon an expressed consideration, and second, it is a conveyance of land to secure the debt. The first is an executory contract, and the second an executed conveyance with a defeasance, and liable to be defeated if at any time it is sought to be enforced there is nothing due upon the executory contract it was given to secure.^" "Schalk V. Kingsley, 42 N. J. L. 32; Wade v. Miller, 32 N. J. L. 296. « Shields v. Lozear, 34 N. J. L. 496, 3 Am. Rep. 256, per Depue, J., citing Osborne v. Tunis, 25 N. J. L. 633; Montgomery v. Bruere, 4 N. J. L. 260, per Southard, J., whose dis- senting opinion was adopted in the Court of Errors, 5 N. J. L. 865; Ver- ner v. Betz, 46 N. J. Eq. 256, 19 Atl. 206;McMahon v. Schoonmaker, 51 N. J. Eq. 95, 25 Atl. 946; Marshall V. Hadloy, 50 N. J. Eq. 547, 25 Atl. 325. The case of Sanderson v. Price, 21 N. J. L. 637, 646, note, is referred to by Depue, J., in Woodside v. Adams, 40 N. J. L. 417, 422, where he says that "this decision, though perhaps not satisfactory to the profession when it was promulgated, has come to be regarded as settled law; and it may now be considered the estab- lished doctrine of the courts of this state that a mortgage of lands is not a common-law conveyance on condition, but a mere security for the mortgage debt, the legal estate being considered as subsisting in the mortgagee only for that purpose. The consequence of these decisions is the separation, in legal contem- plation, of the estate of the mort- gagor from that of the mortgagee, and the recognition of an actual and distinct legal estate in each. The legal estate of the mortgagee, after breach of condition, has all the in- cidents of common-law title, for the purposes of an action of eject- ment; but its existence Is, neverthe- less, regarded as compatible with a legal estate at the same time in the mortgagor. This legal estate of the mortgagor is capable of conveyance, mortgage, or a sale under execution against him, at any time before his estate is divested by foreclosure. The cases clearly recognize the equity of redemption of a mortgagor as a legal estate, and as such it must subsist until extinguished in the manner in which legal estates are by law extinguishable. Entry on the mortgaged premises does not work an extinguishment. It merely operates to transfer the possession to the mortgagee with all the rights that actual possession confers, leav- ing the ultimate rights of the par- ties unaffected." ■" Devlin v. Collier, 53 N. J. L. 422, 22 Atl. 201, per Beasley, C. J. • '° Wilbur V. Jones, 8 N. J. Eq. 520, 86 Atl. 769; Perkins v. Trinity Real- ty Co., 69 N. J. Eq. 723, 727. 45 IN THE DIFFERENT STATES § 44 § 43a. New Mexico. — In Xew Mexico, a mortgage is not an in- terest in land, but merely a security for the payment of a debt.°^ As • between the mortgagor and mortgagee it does not convey the legal title to the mortgagee. ^^ In the absence of a stipulation to the contrary, the mortgagor of real property has the right of possession thereof.^^ The mortgagee has no interest in the land mortgaged until default in the terms of the mortgage. He can not take possession, nor interfere in its manage- ment or control, unless his security is in danger of being diminished.^* A conveyance absolute on its face, though intended merely as a security for a debt, vi^ill be treated in equity as a mortgage.^' § 44. New York. — Following the views of Lord Mansfield, the courts of l^ew York from the first regarded a mortgage as merely a security of a personal nature upon the land of the mortgagor, who re- tained the legal title, at least until possession taken.^^ But prior to the Revised Statutes of 1828, the title of the mortgagee must in fact have been something not very different from the legal estate, for, unless prevented by the terms of the mortgage, he had the right to recover possession of the property by ejectment, and after default he could so recover it at any time.°^ This right was taken away then, and, so far as possession before foreclosure is concerned, his only right is to retain possession when he has once obtained it by the mortgagor's consent or without force.^^ But after default in payment of the debt secured or other breach of condition, he is entitled to possession, and "Alexander v. Cleland, 13 N. Max. N; Y. 88; Trimm v. Marsh, 54 N. Y. 524, 86 Pac. 425; Palmer v. Albu- 599, 13 Am. Rep. 623; Merritt v. querque (N. Mex.), 142 Pac. 929. Bartholick, 36 N. Y. 44; Power v. " Stearns-Roger Mfg. Co. v. Aztec Lester, 23 N. Y. 527; Kartright v. Gold Min. &c. Co., 14 N. Mex. 300, Cady 21 N. Y. 343; Packer v. Ro- 327, 93 Pac. 706; Comp. Laws 1897, chaster &c. R. Co., 17 N. Y. 283; §§ 2220, 2226. Bryan v. Butts, 27 Barb. (N. Y.) ==Comp. Laws 1884, § 1593. 503; Calkins v. Calkins, 3 Barb. (N. =* Stearns-Roger Mfg. Co. v. Aztec Y.) 305; "Waters v. Stewart, 1 Gold. Min. &c. Co., 14 N. Mex. 300, Gaines Cas. (N. Y.) 47, per Kent, 93 Pac. 706. J.; Jackson v. Bronson, 19 Johns. == Palmer v. Albuquerque (N. (N. Y.) 325; Stanard v. Eldridge, Mex.), 142 Pac. 929. 16 Johns. (N. Y.) 254; Runyan v. =''In re Kellogg, 113 Fed. 120; Mersereau, 11 Johns. (N. Y.) 534, Becker v. McCrea, 193 N. Y. 423, 86 6 Am. Dec. 393; Jackson v. Willard, N. E. 463, 23 L. R. A. (N. S.) 754; 4 Johns. (N. Y.) 41; Bell v. Mayor, Barson v. Mulligan, 191 N. Y. 306, 10 Paige (N. Y.) 49; Astor v. Hoyt, 84 N. E. 75, 16 L. R. A. (N. S.) 151; 5 Wend. (N. Y.) 603, 2 Paige (N. Lynch v. Pfeiffer, 110 N. Y. 33, 17 Y.) 68; In re Krupper, 141 App. N. E. 402; Barry v. Hamburg-Bre- Div. 54, 125 N. Y. S. 878. men P. Ins. Co., 110 N. Y. 1, 17 N. "'Jackson v. Dubois, 4 Johns. (N. E. 405; Shriver v. Shriver, 86 N. Y. Y.) 216. 575; Union College v. Wheeler, 61 ^ =^'2 Rev. Stat. 312, § 57; Waring § 45 NATURE OP A MORTGAGE 46 may enter peaceably or by means Ox a judgment in ejectment.^* It is said that he does not, however, acquire any estate from his pos- session."" §45. North Carolina. — In North Carolina upon the execution of a mortgage the mortgagor becomes the equitable, and the mortgagee the legal, owner, and this relative situation remains until the mort- gage is redeemed or foreclosed."^ Until the day of redemption is passed, the mortgagor has no special equity, but he may pay the money according to the proviso, and avoid the conveyance at law; and this privilege is termed his legal right of redemption."^ After the special day of payment has passed, the mortgagor still has an equity of redemption until there is a foreclosure, and this right is regarded as a continuance of the old estate; and so long as he is permitted to remain in possession, he is considered to hold by virtue of his ownership, and is not accountable for the rents and profits of the mortgaged lands. If the mortgagor be allowed to remain in pos- session for a long period by the acquiescence and implied approval of the mortgagee, he is not a trespasser; and although he may not be a tenant, he is a permissive occupant, and as such is entitled to a reason- able demand to terminate the implied license before an action can be brought to recover possession."^ The mortgagee, after forfeiture, may recover the land in an action at law by virtue of his title as mortgagee."* § 45a. North Dakota. — In North Dakota a mortgage does not en- title the mortgagee to the possession, but the mortgagor may agree to T. Smyth, 2 Barb. Ch. (N. Y.) 119, Kiser v. Combs, 114 N. Car. 640, 19 47 Am. Dec. 299; Phyfe v. Riley, 15 S. E. 664; Coor v. Smith, 101 N. Car. Wend. (N. Y.) 246; Shriver v. Shri- 261, 7 S. E. 669. ver, 86 N. Y. 575. The mortgagee '^Hemphill v. Ross, 66 N. Car. can not maintain an action to re- 477. See also Kiser v. Combs, 114 cover the mortgaged premises. Code N. Car. 640, 12 S. E. 664; Ellis v. of Civ. Procedure 1880, § 1498. Hussey, 66 N. Car. 501. A mort- "' Randall v. Raab, 2 Abb. Pr. (N. gagor in possession is a freeholder Y.) 307; Bolton v. Brewster, 32 within the meaning of an act relat- Barb. (N. Y.) 389; Phyfe v. Riley, ing to jurors. He has not any legal 15 Wend. (N. Y.) 248, 30 Am. Dec. estate, but the act does not provide 55. that he shall be a legal freeholder; ""Parker v. Rochester &c. R. Co., that he is an equitable freeholder 17 N. Y. 283. See ante § 13. is sufficient. State v. Ragland, 75 "Watson V. Ins. Co., 159 N. Car. N. Car. 12. 638, 75 S. E. 1105; Cauley v. Sutton, "= Hemphill v. Ross, 66 N. Car. 477. 150 N. Car. 327, 64 S. E. 3; James " Wittkowski v. Watkins, 84 N. V. Western &c. R. Co., 121 N. Car. Car. 456; Kiser v. Combs, 114 N. 523, 28 S. B. 537, 46 L. R. A. 306; Car. 640, 19 S. E. 664. '■47 IN THE DIFPEKEXT STATES § 47 such change of possession upon a new consideration.®'' The mortgage is a mere lien given as security for a debt, and confers no right of possession before or after default. Possession can not be taken until there has been a valid foreclosure."* § 46. Ohio. — In Ohio a mortgagee is regarded as holding the legal title to the estate during the continuance of the mortgage, but neither in a court of law nor of equity is he permitted to use this legal title except for the purpose of makfcug effectual the security."'^ The legal title as between the parties is held to be in the mortgagee. As to all the world beside, it is in the mortgagor. After condition broken, the mortgagee may recover possession by an action of ejectment."^ § 46a. Oklahoma. — A mortgage creates only a lien on real estate until after foreclosure and sale, and even where a deed is taken as security for a debt, the grantee must foreclose before he becomes the owner of the title."" The mortgage does not give the mortgagee either a legal or an equitable title,^" nor does it give him a right to the pos- session of the mortgaged premises.'^ He is not entitled to possession even though the mortgage purports on its face to be a deed absolute.'^ § 47. Oregon. — In Oregon a mortgage does not convey a title, but only creates a lien.'^ By statute a mortgagor can not against his will be divested of possession of the mortgaged premises, even upon default, 'without a foreclosure and sale.''* He retains the right of possession "'Rev. Code 1905, § 6164; Roberts "Balduff v. Griswold, 9 Okla. 438, V. Parker, 14 S. Dak. 323, 85 N. W. 60 Pac. 223. 591; Shimerda v. Wohlford, 13 S. ™Stat. 1893, § 3198; GUette v. Dak. 155, 82 N. W. 393; Comp. Laws, Romlng, 17 Okla. 324, 87 Pac. 325; § 4358; Yankton Bldg. &c. Assn. v. Jones v. Black, 18 Okla. 344, 88 Pac. Dowllng, 10 S. Dak. 535, 74 N. W. 1052,-90 Pac. 422. 436. "Jones v. Black, 18 Okla. 344, 88 "McClory v. Ricks, 11 N. Dak. Pac. 1052, 90 Pac. 422. 38, 88 N. "W. 1043. "Tingling v. Redwine, 12 Okla. "Harkrader v. Leiby, 4 Ohio St. 64, 69 Pac. 810. 602. "But it is incorrect to say that " Bailey v. Frazier, 62 Ore. 142, a mortgage does no more than to 124 Pac. 643; Kinney v. Smith, 58 create a mere lien upon the prop- Ore. 158, 113 Pac. 854; Kaston v. erty." Per Ranney, J. See also Storey, 47 Ore: 150, 80 Pac. 217, 114 Brown v. National Bank, 44 Ohio Am. St. 912; Adair v. Adair, 22 Ore. St. 269, 6 N. E. 648; Home Bldg. &c. 115, 29 Pac. 193; Thompson v. Mar- Assn. V. Clark, 43 Ohio St. 427, 2 shall, 21 Ore. 171, 27 Pac. 957; Sell- N. B. 846; Martin v. Alter, 42 Ohio wood v. Gray, 11 Ore. 534, 5 Pac. St. 94; Allen v. Bverly, 24 Ohio St. 196. 97; McArthur v. Franklin, 16 Ohio "Bellinger & Cotton's Codes & St. 193. Stat, § 336; Besser v. Hawthorn, 3 ■"Ely V. McGuire, 2 Ohio 223; Al- Ore. 129; Anderson v. Baxter, 4 Ore. len V. Everly, 24 Ohio St. 97; Rands 110; Semple v. Bank of British Co- V. Kendall, 15 Ohio 671. lumbia. 5 Sawy. (U. S.) 88, 394; § 48 NATURE OF A MORTGAGE 48 and the legal title.'^ But if a mortgagor choose, he can give possession to the mortgagee, or the mortgagee may obtain possession in any lawful or peaceable mode ; and when this is done, and the duration of the mortgagee's possession is not limited by agreement, the latter may retain possession until the debt is paid; and until it be paid, the mortgagor can not recover possession by an action of ejectment.'* But a mortgagee in possession by virtue of a foreclosure and sheriff's deed, is not in the position of one in possession with the consent of the mortgagor until the debt is paid.'' §48. Pennsylvania. — In Pennsylvania a mortgage passes to the mortgagee the title and right of possession to hold till payment be made. He may enter at pleasure, and take actual possession. His estate is conditional, and ceases upon payment of the debt; but until the condition is performed, both his title and his right of possession are as substantial and real as though they were absolute.'^ As between the parties, the mortgage transmits the legal title to the mortgagee, and leaves the mortgagor only a right to redeem. As to all others, the mortgage is a lien merely and not an estate. This is the view taken both in courts of equity and courts of law.'" It is weU settled that a mortgagee or his assignee may maintain ejectment and recover posses- sion of the mortgaged property before the condition is broken, unless there be a stipulation in the instrument to the contrary.^" "For some purposes a mortgage is something more than a mere security Witherell v. Wiberg, 4 Sawy. (U. he may have to resort to ejectment, S.) 232. but this is to avoid a conilict and ™ Besser v. Hawthorn, 3 Ore. 129. the statutory penalties for forcible ™ Cooke V. Cooper, 18 Ore. 142, 22 entry, for otherwise he may take Pac. 945, 17 Am. St. 709; Roberts peaceable possession, and is not lia- V. Sutherlin, 4 Ore. 219. ble as a trespasser." Tryon v. Mun- "De Lashmutt v. Sellwood, 10 son, 77 Pa. St. 250; and see numer- Ore. 319. ous cases in that state cited by the ""Thus we perceive," says Chief learned judge in support, and in il- Justice Agnew, "an interest or lustration, of this doctrine, estate in the land itself, capa- ™Brobst v. Brock, 10 Wall. (U. ble of enjoyment, and enabling S.) 519, 19 L. ed. 1002; Bonstein v. the mortgagee to grasp and hold it Schweyer, 212 Pa. 19. 61 Atl. 447; actually, and not a mere lien or po- Mclntyre v. Velte, 153 Pa. St. 350, tentiality, to follow it by legal proc- 25 Atl. 739; Lance's Appeal, 112 Pa. ess and Qpndemn it for payment. St. 456, 4 Atl. 375; Tryon v. Mun- The land passes to the mortgagee son, 77 Pa. St. 250; Soper v. Guern- by the act of the party himself, and sey, 71 Pa. St. 219; Youngman v. needs no legal remedy to enforce Blmira &c. R. Co., 65 Pa. St. 278; the right. But a lien vests no es- Horstman v. Gerker, 49 Pa. St. 282, tate and is a mere incident of the 88 Am. Dec. 501. debt, to be enforced by a remedy at ™ Youngman v. Elmira &c. R. Co., law, which may be limited. It is 65 Pa. St. 278, and cases cited, true, if the mortgagee be held out, 49 IN THE DIFFERENT STATES § 50 for a debt. It is a pledge of a specific property. It gives to the cred- itor the exceptional remedy of ejectment."^^ § 49. Rhode Island. — The eommon-la-w doctrine of the nature of mortgages prevails in this state. The mortgagee may recover pos- session by suit at law. Upon any breach of the condition, such as the nonpayment of interest, the mortgagee may maintain ejectment, though the principal sum be not due.*'' The mortgagee's remedy for waste done by the mortgagor, when a writ of estrepement will not lie, is usually to be sought in equity ; but it is a wrong at law also, and therefore a mortgagee may maintain against a mortgagor an action of replevin for wood and timber cut on the land in waste of the same.^' § 50. South Carolina. — Since the act of 1791 a mortgage has not been a conveyance of any estate, but simply a lien to secure the pay- ment of a debt.** It is provided that the mortgagee shall not be entitled to maintain any possessory action for the mortgaged estate even after the mortgage is due, but that the mortgagor shall still be deemed the owner of the land and the mortgagee the owner of the money lent or due.*^ A release of the equity of redemption operates as a conveyance of the land.'^ ^ Twitchell v. McMurtrle, 1 Wkly. Notes Cas. 407. '" Carpenter v. Carpenter, 6 R. I. 542; Waterman v. Matteson, 4 R. I. 539. "Formerly," says Chief Jus- tice Ames, "the right of the mort- gagor was, upon breach of the con- dition of the mortgage, wholly gone at law; and his equity to redeem was recognized only by the tribunal able to enforce such a right. It is true that in modern times the courts of law have, for many purposes, treated the mortgagor In possession as the real owner of the estate, look- ing upon a mortgage in the same light that a court of equity does, as a mere security for the mortgage debt; but we can see no reason why such courts would recognize in a mortgagor in possession under a forfeited mortgage greater rights over the mortgaged estate than courts of equity do." See also Rey- nolds V. Hennessy, 15 R. I. 212, 2 Atl. 701. ™ Waterman v. Matteson, 4 R. I. 539. See post § 688. 4 — Jones Mtg. — Vol. I. "McDaniel v. Stroud, 106 Fed. 486; Wallace v. Langston, 52 S. Car. 133, 29 S. E. 552; Patterson v. Rabb, 38 S. Car. 138, 17 S. B. 463, 19 L. R. A. 831; Hardin v. Hardin, 34 S. Car. 77, 12 S. E. 936; Bredenberg v. Landrum, 32 S. Car. 215, 10 S. E. 956; Navassa Guano Co. v. Richard- son, 26 S. Car. 401, 2 S. E. 307; Warren v. Raymond, 12 S. Car. 9, 17 S. Car. 181; Simons v. Bryce, 10 S. Car. 354. ==Code of Laws, 1912, § 3460, p. 953; Hughes v. Edwards, 9 Wheat. (U. S.) 489; In re Bennett, 2 Hughes (U. S.) 156, 158; Hardin V. Hardin, 34 S. Car. 77, 12 S. E. 936, 27 Am. St. 786; Williams v. Beard, 1 S. Car. 309; Thayer v. Cra- mer, 1 McCord Ch. (S. Car.) 395; Nixon V. Bynum, 1 Bailey (S. Car.) 148. '"Mitchell V. Began, 11 Rich. (S. Car.) 704; Simons v. Bryce, 10 S. Car. 354; Navassa Guano Co. v. Richardson, 26 S. Car. 401, 2 S. E. 307; Tant v. Guess, 37 S. Car. 489, 16 S. E. 477. § 50a KAT0EE OF A KOETGAGE 50 § 50a, South Dakota. — In South Dakota a statute provides that a mortgage does not entitle the mortgagee to the possession of the prop- erty unless authorized by the express terms of the mortgage.*' Under the statute of this state a mortgage upon the real estate is not a con- veyance of title, but only a lien upon the land as security for a debt. After the foreclosure sale the certificate still remains a lien only, until the time for redemption has expired, and no title is transferred until the sheriff's deed has been duly issued.** It is held that an instrument designated by the parties as a trust deed, in which it is expressly stipulated that upon failure to per- form certain specific acts by the obligor the obligee may enforce his rights in the manner prescribed for the foreclosure of mortgages, such writing is a mortgage, and is governed by the rules of law applica- ble to mortgages. *° § 51. Tennessee. — In Tennessee the legal title vests in the mort- gagee, who is entitled to immediate possession, unless the mortgage otherwise provides. He may recover possession without first giving notice to quit.'" Upon satisfaction of the mortgage debt the legal title immediately revests in the mortgagor or after his death in his heirs."^ A trust deed is nothing more than a mortgage with power of sale added.'^ The mortgagee's interest in the mortgaged land is only a security for the debt — the debt being the principal thing and the land only an incident thereto."^ § 52. Texas. — A mortgage is but a security, and the title remains in the mortgagor, subject to be divested by foreclosure. In this respect a deed of trust is held not to difEer from a mortgage ; the legal title and right of possession remain with the grantor."^ And since the "Rev. Codes 1903, § 2054, p. 827. "Vaughn v. Vaughn, 100 Tenn. This applies to an absolute deed 282, 45 S. W. 677. given as security. Shimerda v. "Robinson v. Owens, 103 Tenn. Wohlford, 13 S. Dak. 155, 82 N. W. 91, 52 S. W. 870; Bennett v. Union 393; Roberts v. Parker, 14 S. Dak. Bank, 5 Humph. (Tenn.) 612; Car- 323, 85 N. W. 591. ter v. Taylor, 3 Head (Tenn.) 30. «» Farr v. Semmler, 24 S. Dak. 290, <« McGan v. Marshall, 7 Humph. 123 N. "W. 835; West v. Middlesex (Tenn.) 121. Banking Co. (S. Dak.), 146 N. "W. "Wright v. Henderson, 12 Tex. 598- 43; Mann v. Falcon, 25 Tex. 271; '•Langmaack v. Keith (S. Dak.), Holland v. Frock, 2 Posey Un. Rep. 103 N. W. 210. Cas. 566; Walker v. Johnson, 37 ""Henshaw v. Wells, 3 Humph. Tex. 127; Stitzle v. Evans, 74 Tex. (Tenn.) 568; Vance v. Johnson, 10 596, 12 S. W. 326; McCammant v. Humph. (Tenn.) 214; Carter v. Tay- Roberts, 87 Tex. 241, 27 S. W. 86; lor, 3 Head (Tenn.) 30; Lincoln Kerr v. Galloway, 94 Tex. 641 64 S. Sav. Bank V. Ewing, 12 Lea (Tenn.) W. 858; Parker v. Benner, 1 Tex. f"S. Civ. App. 64; Denison £c. Suburban 51 IN THE DIFFERENT STATES § 55 mortgagor remains the real o\yner of the land and is entitled to the possession, after as well as before breach of condition, the mortgagee can not dispossess him by an action of trespass to try title. "^ § 53. Utah.. — It is provided that a mortgage shall not be deemed a conveyance, so as to entitle the mortgagee to recover possession with- out foreclosure."" The mortgagor may convey the title subject to the lien of the mortgage, to a third person; but such third party can ac- quire no greater rights than those possessed by his immediate grantor."^ § 54. Vermont. — ^In Vermont the mortgagor's right of possession is by statute continued as against the mortgagee until condition broken, unless otherwise stipulated in the mortgage.'* Upon the happening of that event the interest of the mortgagor becomes absolutely vested in the mortgagee, and he has a right to the immediate possession of the estate.®® He may assert this right by entering peaceably by his own act, or may bring an action of ejectment without previous notice to quit. Until he asserts this right, the mortgagor in possession is re- garded as the owner of the land, and may use and occupy it without accounting to the mortgagee.^ The mortgage passes the legal title to the mortgagee.^ A deed, absolute on its face, but intended merely as security for existing and future liabilities, will be treated as a mortgage in Ver- mont.* § 55. Virginia. — At law, the mortgagee has the legal estate, and the immediate right of possession, unless there be some stipulation in the mortgage deed to the contrary. Upon a breach of the condition, the mortgagee may enter, or recover possession by action without pre- vious notice. He is then, to all intents and purposes, the legal owner R. Co. v. Smith, 19 Tex. Civ. App. "'Hagar v. Brainerd, 44 Vt. 294; 114, 47 S. W. 278; Ferguson v. Dick- Lull v. Matthews, 19 Vt. 322; Wright inson (Tex. Civ. App.), 138 S. W. v. Lake, 30 Vt. 206; Walker v. King, 221. 44 Vt. 601; Fuller v. Eddy, 49 Vt. '"Mann v. Falcon, 25 Tex. 271. 11; Brunswick-Balke-Collender Co. "Comp. Laws 1907, § 3517; Sid- v. Herrick, 63 Vt. 286, 21 Atl. 918. ney Stevens Imp. Co. v. South Og- > Hooper v. Wilson, 12 Vt. 695; den Bldg. &c. Co., 20 Utah 267, 58 Wilson v. Hooper, 13 Vt. 653, 66 Am. Pac. 843; Dupee v. Rose, 10 Utah Dec. 366; Walker v. King, 44 Vt. 305, 37 Pac. 567; Neslin v. Wells, 601. 104 U. S. 428, 26 L. ed. 802. ^ Pierce v. Brown, 24 Vt. 165. ''Azzalia v. St. Claire, 23 Utah 'Gibson v. Seymour, 4 Vt. 518; 401, 64 Pac. 1106. Bigelow v. Topliff, 25 Vt. 273, 60 °«Pub. Stat. 1906, § 1853; Bruns- Am. Dec. 264; Rich v. Dean, 35 Vt. wick Co. V. Herrick, 63 Vt. 286, 21 125. Atl. 918. ,§ 55a NATUKE OF A MOKTGAGE 52 of the land, and vested with full legal title. The mortgagor is then regarded as a tenant at sufferance, and is not entitled to the emble- ments. In equity, however, the mortgagor may redeem, and the mort- gagee in possession is regarded as merely a trustee of the property, with liability to account.* Trust deeds are used almost exclusively in place of mortgages, and the legal title vests in the grantee in such deeds.' Any instrument pledging land for the payment of a debt is an equitable mortgage, without regard to its form." Also a deed, abso- lute on its face, but given merely as a security for a debt, will, in equity, be considered a mortgage.'' § 55a. Washington. — In Washington a mortgage is nothing more than a mere lien or security for a debt, passing no estate to the mort- gagee, and giving him no right or claim to the possession of the prop- erty.* A mortgage of real property -is not deemed a conveyance so as to enable the owner of the mortgage to recover possession of the real property without a foreclosure and sale according to law in the absence of an agreement giving the mortgagee the right of possession.' § 56. West Virginia. — Trust deeds are used in place of mortgages. The law in regard to mortgages is that which prevailed in Virginia before the separation.^" Here, as elsewhere generally, a deed absolute on its face, but given merely as security for a debt or obligation, will, in equity, be considered a mortgage.^^ § 57. Wisconsin. — In "Wisconsin the fee of the premises does not vest in the mortgagee, except upon foreclosure sale.^^ It is provided by statute that no action shall be maintained by the mortgagee for the *Code 1904, § 472; Faulkner V. ' State v. Superior Court, 21 Wash. Brockenbrough, 4 Rand. (Va.) 245; 564, 58 Pac. 1065. Bank v. Beard, 100 Va. 687, 42 S. B. " Childs v. Hurd, 32 W. Va. 66, 9 694. S. B. 362; Grant v. Cumberland Val. "Faulkner v. Brockenbrougli, 4 Cement Co., 58 "W. Va. 162, 52 S. E. Rand. (Va.) 245. 36. «Wayt V. Carwithen, 21 W. Va. "Klinck v. Price, 4 W. Va. 4, 6 516. Am. Rep. 268; Zane v. Fink, 18 W. 'Chowning V. Cox, 1 Rand. (Va.) Va. 693; Hoffman v. Ryan, 21 W. 306, 10 Am. Dec. 530. Va. 415. 'Codes & Stat. 1910, § 8750; Sny- "Wood v. Trask, 7 Wis. 566, 76 der V. Parker, 19 Wash. 276, 53 Pac. Am. Dec. 230; Schreiber v. Carey, 59, 67 Am. St. 726; Brundage v. 48 Wis. 208, 4 N. W. 124; Wolf v. Home Sav. &c. Assn., 11 Wash. 277, Thresa Village Mut. F. Ins. Co., 115 39 Pac. 666; Norfor v. Busby, 19 Wis. 402, 91 N. W. 1014; Gerhart v. Wash. 450, 53 Pac. 715; State v. Ellis, 134 Wis. 191, 114 N. W. 495; Kittitas County Superior Ct., 21 Tobin v. Tobin, 139 Wis. 494 121 N. Wash. 564, 58 Pac. 1065. W. 144. 53 IN THE DIFFERENT STATES § 58 recovery of possession of the mortgaged premises until the equity of re- demption shall have expired. ^^ The statute in efEect preserves the fee in the mortgagor until foreclosure,^* when it vests in the purchaser at the sale. When, however, the mortgagee has, after default, gone into peaceable possession, he can not be ejected by the mortgagor while the mortgage remains unsatisfied. The only remedy of the mortgagor is by bill to redeem, under which he must pay whatever is due upon the mortgage debt.^° A deed absolute in form, shown by testimony to be given to secure a debt, with an oral agreement by the grantee to execute a defeasance, is construed a mortgage by the courts of Wisconsin.^'' § 58. Summary of legal and equitable theories in the different states. — As a summary of this examination it will be found that in Alabama, Arkansas, Connecticut, Illinois, Maine, Maryland, Massa- chusetts, New Hampshire, New Jersey, North Carolina, Ohio, Penn- sylvania, Ehode Island, Tennessee, Vermont, Virginia, and West Virginia, the courts have adhered to the doctrines of the common law as regards the nature of the mortgage interest and the respective rights of the parties. They regard the mortgage deed as passing at once the legal title to the mortgagee, subject to defeasance, as a con- dition subsequent which divests or defeats the estate on performance of it. The right of possession follows the title so that the mortgagee may enter into possession of the mortgaged property immediately unless restrained by express provision, or necessary implication, of the mortgage; and in any case upon breach of the condition he becomes entitled to the possession and may recover it by action. The legal title is in the mortgagee, only for the protection and enforcement of his interests. The mortgagee's title is in the nature of a base or deter- minable fee, which continues only so long as the debt continues.^' ''Wis. Stat. 1913, § 3095. "Lightcap v. Bradley, 186 111. 510, "Wood V. Trask, 7 Wis. 566, 76 519, 58 N. B. 221; Gibson v. Rees, 50 Am. Dec. 230. 111. 383; Pollock v. Maison, 41 111. >=Hennesy v. Farrell, 20 Wis. 42; 516; Delano v. Bennett, 90 111. 533. Tallman v. Ely, 6 Wis. 244; Gillett See also Welsh v. Phillips, 54 Ala. V. Eaton, 6 Wis. 30; Fladland v. 309, 25 Am. Rep. 679; Chamberlain Delaplaine, 19 Wis. 459; Avery v. v. Thompson, 10 Conn. 243, 26 Am. Judd, 21 Wis. 262; Stark v. Brown, Dec. 390; Blaney v. Bearce, 2 Maine 12 Wis. 572, 78 Am. Dec. 762; Roche 132; Jamieson v. Bruce, 6 Gill & J. V. Knight, 21 Wis. 324; Schreiber v. (Md.) 72, 26 Am. Dec. 557; Ewer Carey, 48 Wis. 208, 214, 48 N. W. v. Hobbs, 5 Mete. (Mass.) 1; Ho- 124; Wisconsin Cent. R. Co. v. Wis- bart v. Sanborn, 13 N. H. 226, 38 cousin River Land Co., 71 Wis. 94, Am. Dec. 483; Tryon v. Munson, 77 36 N. W. 837, 839. Pa. St. 250; Simmons v. Brown, 7 ^"McCormick v. Herndon, 86 Wis. R. I. 427, 84 Am. Dec. 569. 449. I 59 NATUEE OF A MORTGAGE 54 In Delaware, Mississippi, and Missouri the eonimon-law doctrine is so far modified, that until breach of the condition and possession taken, the mortgagor is regarded as the owner of the legal estate, not only as against third persons, but as against the mortgagee himself. But upon forfeiture and entry of the mortgagee, he is regarded as having the legal title for the purpose of obtaining satisfaction out of the property.^' In other states the common-law doctrine upon this subject has been wholly abrogated by statute, and both at law and in equity, and both before and after a breach of the condition, a mortgage is regarded as merely a lien upon the property. It passes no title or estate in it to the mortgagee, and gives him no right of possession before foreclosure. This is the doctrine of mortgages in California, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michi- gan, Minnesota, Montana, Nebraska, Nevada, New Mexico, New York, North Dakota, Oklahoma, Oregon, South Carolina, South Da- kota, Texas, Utah, Washington, and Wisconsin. In Iowa, Kansas, and Nevada the statutes imply that the parties may by express stipulation give the right of possession to the mortgagee.^' § 59. Doctrine in different sections of the United States. — Group- ing the states geographicallj'', it will be noticed that the English doc- trine of the nature of mortgages, with slight modifications, prevails east of the Mississippi river in a large majority of the states; while west of the Mississippi, except only in the states of Missouri and Arkansas, the doctrine everywhere prevails that a mortgage passes no legal estate or right of possession.^" This change from the common-law rule may be traced to two sources : to the views of the early jurists of New York, who adopted and carried to logical conclusions the opinions of Lord Mansfield; >'Cooch v. Gerry, 3 Harr. (Del.) 698; Burnside v. Terry, 45 Ga. 621; 280 ; Doe V. Tunnell, 1 Houst. (Del.) Grable v. McCuUoh, 27 Ind. 472; 320; Walker v. Farmers' Bank, 8 Chick v. Willetts, 2 Kans. 384; Tali- Houst. (Del.) 258; Hill v. Robert- aferro v. Gay, 78 Ky. 496; Caruthers son, 24 Miss. 368; Buck v. Payne, v. Humphrey, 12 Mich. 270; Adams 52 Miss. 271; Woods v. Hilderbrand, v. Corriston, 7 Minn. 456; Rogers 46 Mo. 284, 2 Am. Rep. 513; John- v. Benton, 39 Minn. 39, 12 Am. St. son V. Houston, 47 Mo. 227; Red- 613; Webb v. Hoselton, 4 Nebr. 308, dick V. Gressman, 49 Mo. 389. 19 Am. Rep. 638; Phyfe v. Riley, 15 ""See McMillan v. Richards, 9 Wend. (N. Y.) 248, 30 Am. Dec. 55; Cal. 365, 70 Am. Dec. 655; Dutton HubbeJl v. Landrum, 32 S. Gar. 215; V. Warschauer, 21 Cal. 609, 82 Am. Wright v. Henderson, 12 Tex. 43. Dec. 765; Drake v. Rood, 2 Colo. '" Bredenberg v. Landrum, 32 S. 685; McMahon v. Russell, 17 Pla. Car. 215, 10 S. E. 956 (quoting text). 55 IN THE DIFFEEEXT STATES 59 and to the civil law^^ established in Louisiana, under which a mortgage is merely a pledge, giving no right of possession. The influence of the civil law is seen in the codes of a few states ; but the most potent in- fluence in bringing about this change in the nature of mortgages in the new states has come from their adoption to a large extent of the code and judicial authorities of the state of New York. As to the na- ture of a mortgage, the civil law doctrine, and what may be called the equitable doctrine adopted in Few York and the other states men- tioned, are practically and essentially the same. ^' "In the Roman law there were two sorts of transfers of property, as security passed to the creditor, upon the condition of returning it to the owner when the debt was paid. The hypotheca was when the thing pledged was not delivered to the creditor, but remained in the possession of the debtor. * * * j^; seems that the word pignus was often used indiscriminately to de- scribe both species of securities, whether applied to movables or im- movables, * * * so that it an- swered very nearly to the corre- sponding term pledge in the com- mon law, for debts; namely, the pignus and the hypotheca. The pig- nus, or pledge, was when anything was pledged as a security for money lent and the possession thereof was which, although sometimes used in a general sense to include mort- gages of land, is, in the stricter sense, confined to the pawn and de- posit of personal property. In the Roman law, however, there was gen- erally no substantial difference, in the. nature and extent of the rights and remedies of the parties, be- tween movables and immovables, whether pledged or hypothecated." 2 Story Eq. Jur., §§ 1005, 1006. CHAPTEE II FOEM AND REQUISITES OF A MOETGAGE I. The Form Generally, §§ 60-62 II. The Formal Parts of the Deed, §§ 63-68a III. The Condition, §§ 69-78a IV. Special Stipulations, §§ 79-80 V. Execution and Delivery, §§ 81-89 VI. Filling Blanks, Making Alterations and Reforming, §§ 90-lOla I. The Form Generally Section Section 60. Formal requisites generally. 62. Trust deeds. 61. Statutory forms. § 60. Formal requisites generally. — No particular form is neces- sary to constitute a mortgage.^ It must be in writing/ and must clearly indicate the creation of a lien, specify the debt to secure which it is given, and the property upon which it is to take effect.^ "An ^Woodworth v. Guzman, 1 Cal 38 N. B. 1038, 46 Am. St. 902; Wlll- 203; De Leon v. Higuera, 15 Cal. iamson v. Bitting (N. Car.), 74 S. 483; Burnside v. Terry, 45 Ga. 621; E. 808. Cross V. Weare Commission Co., 153 ^ Bikelman v. Perdew, 140 Cal. in. 499, 38 N. E. 1038, 46 Am. St. 687, 74 Pac. 291; Porter v. MuUer, 902; Bray v. Ellison, 26 Ky. L. 1039, 53 Cal. 677; Georgia So. &c. R. Co. 83 S. W. 96; Baldwin v. Jenkins, 23 v. Thompson, 111 Ga. 731, 36 S. H. Miss. 206; Mason v. Moody, 26 Miss. 945; Duke v. Culpepper, 72 Ga. 845; 184; lodence v. Peters, 64 Nebr. 425, Roberts' Trustee v. Terry (Ky.), 170 89 N. W. 1041; quoted with approval S. W. 965. Under a statutory pro- in Harris v. Jones, 83 N. Car. 317; vision that deeds, which include Williamson v. Bitting, 159 N. Car. mortgages, shall be signed by the 321, 74 S. E. 808; Bredenberg v. party to be bound, a valid mortgage Landrum, 32 S. Car. 215, 10 S. E. must be in writing. American Sav- 956; Beebe v. Wisconsin Mtg. &c. ings Bank &c. Co. v. Helgesen, 64 Co., 117 Wis. 328, 93 N. W. 1103; Wash. 54, 116 Pac. 837, Ann. Cas. Schelber v. Le Clair, 66 Wis. 579, 1913 A, 390. A mortgage is valid 29 N. W. 570, 889. A mortgage of although not all written on the same real property written on a form in- sheet of paper, where the complete- tended for a chattel mortgage and ness of the instrument is not de- acknowledged as such is neverthe- stroyed by the separation. Norman less valid. Lindley v. Ross, 200 v. Shephard, 38 Ohio St. 320. Fed. 733, 119 C. C. A. 177; Cross v. = New Orleans Nat. Banking Assn. Weare Commission Co., 153 111. 499, v. Adams, 109 U. S. 211, ,-. Sup. Ct. 56 57 F0R3I GENEEALLT § 61 instrument must be deemed and held a mortgage, whateyer may be its form, if, taken alone or in connection with the surrounding facts and attendant circumstances, it appears to have been given for the purpose or with the intention of securing the payment of money, and the mere absence of terms, of defeasance can not determine whether it is a mortgage or not."* Fulfilling these conditions, it is immaterial that the mortgage should be embraced in one instrument. As will be elsewhere noticed, a mortgage is frequently made by an absolute deed with a separate defeasance executed by the grantee ; and an abso- lute deed with a defeasance resting in parol may be a mortgage also. In this chapter, however, it is proposed to treat of the form and requi- sites of a formal legal mortgage, or deed of trust. The term '''mortgage" has a technical signification at law, and is descriptive of an instrument having all the requisites necessary to establish it in a court of law, as distinguished from that which may be so regarded in a court of equity.'* It is very clear that a verbal agree- ment to mortgage realty does not attain the dignity of a mortgage where the statutes of the state require mortgages to be in writing and subscribed by the mortgagor." A mortgage which only a court of equity will recognize is properly designated an "equitable mortgage." A formal mortgage differs from a warranty deed in a condition added, that if the grantor pay a certain sum of money, or perform other obligations named, then it shall be void. Other things besides the payment of the principal sum of money are usually made part of the condition, as for instance the payment of interest, of taxes upon the premises, of insurance upon any buildings there may be upon the land, together with a covenant against making or suffering waste. A mortgage in some states usually contains also a power authoriz- ing the mortgagee to sell upon the happening of any breach of the condition; but this is not an essential requisite of a mortgage, and will be treated elsewhere. ,§ 61. Statutory forms. — The form of the granting part of the deed as well as the condition differs much in different parts of the country. In some states statutes have been enacted by which deeds and mortgages are reduced to the shortest possible forms; and stat- 161, 27 L. ed. 910; National Bank v. = Walton v. Cody, 1 Wis. 420. Tenn. Coal &c. R. Co., 62 Ohio St. 'Williams t. Davis, 154 Ala. 422, 564, 57 N. B. 450. 45 So. 908. ' Connor v. Connor, 59 Fla. 467, 52 So. 727. See post §§ 162, 168, 264. 61 FOEil AND KEQUISITES 58 utory forms are given in some states, which are declared to be good and effectual^ All that is requisite to a good deed or mortgage may be expressed in a very few words. It was remarked by Coke, that if a deed of feoffment be without premises, habendum, tenendum, red- dendum, clause of warranty, etc., it is still a good deed. "For if a man by deed give land to another and to his heirs without more say- ing, this is good, if he put his seal to the deed, deliver it, and make livery accordingly."^ By statute the legal tenor and effect of the different covenants may be, and in some states are, obtained simply by naming them without repeating the covenants themselves. In like manner the full effect of a power of sale may be had by simple reference in the mort- gage to a statutory power," instead of cumbering the record with the elaborate powers now in use. Attempts by legislation to bring about simplicity and brevity in legal forms have not always been successful ; 'California: 2 Civ. Code 1907, § 2948. Illinois: Ann. Stat. 1885, ch. 30, § 12, Rev. Stat. 1908, ch. 30, § 11. Indiana: Burns' Rev. Stat. 1914, § 3961. Iowa: Ann. Code 1897, § 2958. Kansas: Gen. Stat. 1905, § 4482. Maryland: Pub. G. L. 1904, art. 21, §§ 54-61. Comp. Laws 1897, Ann. Code 1906, 4 Ann. Stat. 1906, pp. Rev. Civ. Code 1907, Michigan: § 8960. Mississippi: § 2820. Missouri : 4998, 5000. Montana: § 5748. New York: 3 Rev. Stat. 1901, Birdseye, p. 3057; Laws 1897, ch. 277. North Carolina: Pub. Laws 1907, ch. 337. North Dakota: Rev. Code 1905, § 6174. Oklahoma: Rev. Stat. 1908, § 5486. South Dakota: Comp. Laws 1908, § 2063. Tennessee: Code 1896, § 3680. Utah: Rev. Stat. 1898, § 1983; Comp, Laws 1907, § 1983. Virginia: Code 1904, § 2441. West Virginia: Code 1906, ch. 72, § 3052. Wisconsin: Ann. Stat. 1898, § 2209. Wyoming: Rev. Stat. 1899, §§ 2774, 2775, 2796. * Chancellor Kent gives a very brief form of a deed, and observes: "But persons usually attach so much importance to the solemnity of forms, which bespeak care and re- flection, and they feel such deep solicitude, in matters that concern their valuable interests, to make 'assurance double sure,' that gen- erally, in important cases, the pur- chaser would rather be at the ex- pense of exchanging a paper of such insignificance of appearance for a conveyance surrounded by the usual outworks, and securing respect and checking attacks by the formality of its manner, the prolixity of its provisions, and the usual redun- dancy of its language." 4 Kent Com. 461. He further says: "I ap- prehend that a deed would be per- fectly competent, in any part of the United States, to convey the fee, if it was to be the following effect: I, A B, in consideration of one dol- lar to me paid by C D, do bargain and sell (or, in New York, grant) to C D and his heirs (in New York, Virginia, &c., the words, 'and his heirs," may be omitted) the lot of land [describe it]. Witness my hand and seal," &c. 'See post, §§ 1722, 1761. 59 FOEir GENERALLY § 62 but much has been accomplished in this direction in some of the American states, making a practical return through this means to the simplicity of the ancient Saxons, who "in their deeds observed no set form, but used honest and perspicuous M^ords to express the things intended with all brevity, yet not wanting the essential parts of the deed, as the names of the donor and donee; the consideration; the certainty of the thing given ; the limitation of the estate ; the reserva- tion, and the names of the witnesses."'^'' § 62. Trust deeds. — A deed of trust to secure a debt is in legal effect a mortgage.^^ It is a conveyance made to a person other than the creditor, conditioned to be void if the debt be paid at a certain time, but if not paid that the grantee may sell the land and apply the proceeds to the extinguishment of the debt, paying over the surplus to the grantor.^^ It is in legal efEect a mortgage with a power of sale,^^ but the addition of the power of sale does not change the character of the instrument any more than it does when contained *■ Sir Henry Spellman's Works, by Bishop Gibson, p. 234. "Union Nat. Bank v. Bank, 136 U. S. 223, 34 L. ed. 341, 10 Sup. Ct. 1013; Shillaber v. Robinson, 97 U. S. 68, 24 L. ed. 967; In re Anderson, 23 Fed. 482; Means v. Montgomery, 23 Fed. 421; Stafford Nat. Bank v. Sprague, 17 Fed. 784; Connecticut Mut. L. Ins. Co. V. Jones, 8 Fed. 303; Turner v. Watkins, 31 Ark. 429; Empire Ranch &c. Co. v. Howell, 22 Colo. App. 584, 126 Pac. 1096; Barth V. Deuel, 11 Colo. 494, 19 Pac. 471; Pershing v. Wolfe, 6 Colo. App. 410, 416, 40 Pac. 856; De Wolf v. Sprague Mfg. Co., 49 Conn. 283; Wood v. Grayson, 22 App. D. C. 432; Middle- ton V. Parke, 3 App. D. C. 149; Ware V. Schintz, 190 111. 189, 60 N. E. 67; Brantley v. Wood, 97 Ga. 755, 25 S. E. 499; McGuire v. Barker, 61 Ga. 339; Brown v. Bryan, 6 Idaho 1, 5 Idaho 145, 51 Pac. 995; Union Mut. L. Ins, Co. V. White, 106 111. 67; Smith v. Sheldon, 65 111. 219; Sargent v. Howe, 21 111. 148; New- man V. Samuels, 17 Iowa 528 ; Lenox V. Reed, 12 Kans. 223; Chaffee v. Fourth Nat. Bank, 71 Maine 514, 36 Am. Rep. 345; Harriman v. Woburn Electric Light Co., 163 Mass. 85, 39 N. E. 1004; Eaton v. Whiting, 3 Pick. (Mass.) 484; Flint &c. R. Co. V. Auditor General, 41 Mich. 635, 2 N. W. 835; Mills v. Williams, 31 Mo. App. 447; Fiske v. Mayhew, 90 Nebr. 196, 133 N. W. 195; Webb v. Hosel- ton, 4 Nebr. 308; Hurley v. Estes, 6 Nebr. 386; Stearns-Roger Mfg. Co. V. Aztec Gold Min. &c. Co., 14 N. Mex. 300, 328, 93 Pac. 706; Lawrence v. Farmers' Loan &c. Co., 13 N. Y. 200; Palmer v. Gurnsey, 7 Wend. (N. Y.) 248; Wright V. Fort, 126 N. Car. 615, 36 S. E. 113; Forester v. Van Auken, 12 N. Dak. 175, 96 N. W. 301; Na- tional Bank v. Tenn. Coal &c. R. Co., 62 Ohio St. 564, 57 N. E. 450; Kem- per V. Campbell, 44 Ohio St. 210, 6 N. E. 566; Martin v. Alter, 42 Ohio St. 94; Woodruff v. Robb, 19 Ohio 212; Hoffman v. Mackall, 5 Ohio St. 124, 64 Am. Dec. 637; Thompson v. Marshall, 21 Ore. 171, 27 Pac. 957; Union Co. v. Sprague, 14 R. I. 452; Austin V. Sprague Mfg. Co., 14 R. I. 464; Aggs v. County, 85 Tex. 145, 19 S. W. 1085; McLane v. Pasejal, 47 Tex. 365; Dupee v. Rose, 10 Utah 305, 37 Pac. 567; New York Central Trust Co. V. Burton, 74 Wis. 329, 43 N. W. 141. See post § 1769. "Huene v. Cribb, 9 Cal. App. 141, 98 Pac. 78; Austin v: Sprague Mfg. Co., 49 Conn. 283; State Bank v. Chapelle, 40 Mich. 447. " Connecticut Mut. L. Ins. Co. v. Jones, 8 Fed. 303; Aggs v. Shackel- § 62 rOEM AND REQUISITES 60 in a mortgage.^* Such a deed has all the essential elements of a mortgage; it is a conveyance of land as security for a debt. It passes the legal title just as a mortgage does/° except in those states where the natural effect of a conveyance is controlled by statute ;^° and in states where a mortgage is considered merely as a security, and not a conveyance, a trust deed is apt to be regarded in this respect just like a mortgage.^^ Both instruments convey a defeasible title only; the mortgagee's or trustee's title in fee being in the nature of a base or determinable fee;^^ and the right to redeem is the same in one case as it is in the other The only important difference between them is, that in the one case the conveyance is directly to the creditor, while in the other it is to a third person for his benefit. Another practical difference is that the deed of trust with power of sale may be foreclosed according to its terms by the trustee without authority of court, whereas a simple mortgage can be foreclosed only under decree of court. ^° The instru- ford County, 85 Tex. 145, 19 S. "W. 1085. " De Wolf V. Sprague Mfg. Co., 49 Conn. 283; Newman v. Samuels, 17 Iowa 528; Eaton v. Whiting, 3 Pick. (Mass.) 484. " Ware v. Schintz, 190 111. 189, 60 N. B. 67; Esker v. HefEernan, 159 111. 38, 41 N. E. 1113; Fountain v. Bookstaver, 141 111. 461, 31 N. E. 17; Oldham v. Pfleger, 84 111. 102. ^"Turner v. Watkins, 31 Ark 427; National Bank v. Tennessee Coal &c. R. Co., 62 Ohio St. 564, 57 N. E. 450. "As in Kansas: Lenox v. Reed, 12 Kans. 223; in Nebraska: ante, § 40. See however ante, § 25, as to Florida. " Ware v. Schintz, 190 111. 189, 60 N. E. 67; Lightcap v. Bradley, 186 111. 510, 58 N. E. 221. 1' Cornell v. Conine-Eaton Lumber Co., 9 Colo. App. 225, 47 Pac. 912; Axman v. Smith, 156 Mo. 286, 57 S. W. 105. See also Southern Bldg. &c. Assn. V. McCants, 120 Ala. 616, 25 So. 8; Koch v. Briggs, 14 Cal. 257, 71 Am. Dec. 651. "There is a man- ifest and well-settled distinction be- tween an unconditional deed of trust and a mortgage, or deed of trust in the nature of a mortgage. The for- mer is an absolute and indefeasible conveyance of the subject-matter thereof for the purpose expressed; whereas the latter is conditional and defeasible. A mortgage is the con- veyance of an estate, or pledge of property, as security for the pay- ment of money, or the performance of some other act, and conditioned to become void upon such payment or performance. A deed of trust In the nature of a mortgage is a con- veyance in trust by way of security, subject to a condition of defeasance, or redeemable at any time before the sale of the property. A deed conveying land to a trustee as mere collateral security for the payment of a debt, with the condition that it shall become void on the payment of the debt when due, and with power to the trustee to sell the land and pay the debt in case of default on the part of the debtor, is a deed of trust in the nature of a mortgage. By an absolute deed of trust, the grantor parts absolutely with the title, which rests in the grantee un- conditionally for the purpose of the trust. The latter is a conveyance to a trustee for the purpose of raising a fund to pay debts, while the for- mer is a conveyance in trust for the purpose of securing a debt, subject to a condition of defeasance." Hoff- man V. Mackall, 5 Ohio St. 124, 64 Am. Dec. 637. 61 FORM GENEKALLT § 62 ment evidences a contract between the debtor and a creditor, and it is not binding upon any one until accepted by the beneficiary.^" Statutes abolishing uses and trusts in real property, except for cer- tain purposes, have no application to trust deeds in the nature of mortgages, where these do not convey a title. It does not matter that such deeds or mortgages contain a trust clause declaring the convey- ance to be in trust for the benefit of persons named or the holders of certain bonds. ^"^ Formerly, in Wisconsin, it was held that a deed to a trustee conditioned that if the grantor does not pay a debt due from him to a third party, then the trustee shall advertise and sell the lands, pay the debt, and return the surplus money to the grantor, did not constitute a mortgage, but a trust which is prohibited by the statute.^^ But this decision has since been overruled.'^ There is a well-settled distinction between a deed of trust and a deed of trust in the nature of a mortgage ; the one being for the trust purposes unconditional and indefeasible, while the other is condi- tioned and defeasible, in the same way that a mortgage is.^* The term "deed of trust," however, as used in this treatise, has reference always to a conveyance in the nature of a mortgage. "A deed con- veying land to a trustee as mere collateral security for the payment of a debt, with the condition that it shall become void on the payment of the debt when due, and with power to the trustee to sell the land and pay the debt in case of default on the part of the debtor, is a deed of trust in the nature of a mortgage. By an absolute deed of trust, the grantor parts absolutely with the title, which rests in the grantee unconditionally, for the purpose of the trust. The latter is a conveyance to a trustee for the purpose of raising a fund to pay debts; while the former is a conveyance in trust for the purpose of securing a debt, subject to condition of defeasance."^' * Byrd v. Perry, 7 Tex. Civ. App. that a deed of trust conveying prop- 378, 26 S. W. 749. erty to trustees, made to secure par- ^'carpenter v. Black Hawk Min. ticular creditors, though expressed Co., 65 N. Y. 43; Curtis v. Leavitt, in terms sufiScient to pass title if 15 N. Y. 9, 207; King v. Merchants' made for creditors generally, is a Exch. Co., 5 N. Y. 547. mortgage with some of the qualities '^ Goodrich v. Milwaukee, 24 Wis. of an assignment superadded. Bald- 422. Active trusts, lawful before win v. Peet, 22 Tex. 718, 75 Am. Dec. the statute, may still be created. 806; Jackson v. Hardy, 65 Tex. 710. '' Marvin v. Titsworth, 10 Wis. In this state the legal title remains 320. in the mortgagor. See ante, § 52. 2" For consideration generally see Pac. 56. post § 610 et seq. "Klncaid v. Howe, 10 Mass. 203; "Burnett v. Wright, 135 N. Y. Cobb v. Lucas, 15 Pick. (Mass.) 7. 543, 32 N. E. 253; Rowell v. Will- ""The original and usual mean- iams, 54 Wis. 636, 12 N. W. 86. ing of the word 'unmarried' is never " Robinson v. Williams, 22 N. Y. having been married, but circum- 380. In re Farmers' Supply Co., 170 stances may show that it is used Fed. 502. In the sense of not having a hus- "Shoemaker v. Smith, 80 Iowa band or wife living at the time of 655, 45 N. W. 744; McAteer v Mc- death." Peters v. Balke, 170 111. Ateer, 31 S. Car. 313, 9 S. E. 966- 304, 48 N. B. 1012. See also Reg v. Keyes v. Bump, 59 Vt. 391 9 Atl Wymondham, 2 Ad. & E. (N. S.) 598. 541. 65 FOKMAL PARTS OF DEED §65 the validity of the mortgage, so far as the consideration is concerned. The seal implies a consideration.^" The amount of the debt secured is in no way fixed or controlled by the nominal consideration.^^ The condition of the mortgage describes the debt and fixes the amount of it either specifically or in general terms. ^- A mortgage to indemnify against a liability, or to secure future advances, is generally of the latter description, but even in these cases the nominal consideration is immaterial. § 65. Description of premises. — An accurate description of the premises is of great importance as affecting the value of the security, and oftentimes affecting as well the interest of the mortgagor and of persons holding title under him. But a description, however general and indefinite it may be, if by extrinsic evidence it can be made prac- tically certain what property it was intended to cover, will be suffi- cient to sustain the lien.^^ A description by reference to other deeds is sufficient.^* If a deed ""See post § 613. "'Gray v. Bennett (Iowa), 105 N. W. 377. 2= Miller v. Lockwood, 32 N. Y. 293; Caston v. McCord, 130 Ala. 318, 30 So. 431. ""O'Neil V. Seixas, 85 Ala. 80, 4 So. 745; Began v. O'Reilly, 32 Cal. 11; Hancock v. Watson, 18 Cal. 137; De Leon v. Hlguera, 15 Cal. 483; ■Whitney v. Buckman, 13 Cal. 536; Broach v. O'Neal, 94 Ga. 474, 20 S. E. 113; Patterson v. Evans, 91 Ga. 799, 18 S. B. 31; Richey v. Sinclair, 167 111. 184, 47 N. E. 364; Mason v. Merrill, 129 111. 503, 21 N. E. 799; easier v. Byers, 129 111. 657, affg. 28 111. App. 128; Bybee v. Hageman, 66 111. 519; Works v. State, 120 Ind. 119, 22 N. B. 127; Thomson v. Mad- ison Bldg. &c. Assn., 103 Ind. 279, 2 N. E. 735; Rucker v. Steelman, 73 Ind. 396; Blakemore v. Taber, 22 Ind. 466; English v. Roche, 6 Ind. 62; Godfrey v. White, 32 Ind. App. 265, 69 N. E. 688; Frazer v. Talia- ferro, 6 Ky. L. 744; Roberts v. Bauer, 35 La. Ann. 453; Coogan v. Burling Mills; 124 Mass. 390; Tucker V. Field, 51 Miss. 191; Bollinger Co. v. McDowell, 99 Mo. 632, 13 S. W. 100; Morse v. Dewey, 3 N. H. 535; Boon V. Pierpont, 28 N. J. Eq. 7; Redflelds v. Redfields (N. J.), 13 Atl. 600; People v. Storms, 97 N. Y. S — Jones Mtg. — Vol. I. 364; Anderson v. Casey-Swasey Co. (Tex. Civ. App.), 120 S.W. 918. See also Baker v. Bank of La., 2 La. Ann. 371. "The part of a deed which describes the premises conveyed or mortgaged should be construed with the utmost liberality, and the deed should not be held void for uncer- tainty; if by any reasonable con- struction it can be made available. It is the office of the description to furnish the means of identification, and if the intent of the parties can, by any possibility, be gathered from the language used, it will be effectu- ated." Hannon v. Hilliard, 101 Ind. 310. In Connecticut it is declared to be the policy of the law with regard to mortgages that they shall give defi- nite information as to the property mortgaged; and it is intimated that a description which would be suffi- cient in an absolute deed might not be sufficient in a mortgage. Her- man v. Deming, 44 Conn. 124; North T. Belden, 13 Conn. 376, 35 Am. Dec. 83; De Wolf v. Sprague Mfg. Co., 49 Conn. 282, 316. It is doubtful if these cases would be law anywhere See post §§ 489, 1642. "Wallace v. Furber, 62 Ind. 103; Willard v. Moulton, 4 Maine 14. See also Berry v. Derwart, 55 Md. 66; § 65 FORM AND REQUISITES 66 describe lands by metes and bounds, a reference for further descrip- tion to other deeds recorded will convey additional land described in the deeds referred to, unless otherwise controlled.^' Although the first call in a description by boundaries be uncertain and ambiguous, other calls which are definite and certain and can be located will govern. A description by boundaries prevails as against a description by reference to other deeds.^° A description by metes and bounds pre- vails over a general description of the land as being "all" of a cer- tain tract of which a person named died seised.^' If a mortgage de- scribes a definite quantity of land, another considerable tract of land, the title to which was derived from another source, is not covered by the mortgage, although the description concludes with a general reference to a deed which conveyed both tracts.^' If the mortgage clearly and unequivocally describes more land than is embraced in the deeds referred to, although the premises described are mentioned as "the same estate" mentioned in the deeds, the conveyance is not restricted by such reference to the premises described in the deeds referred to, but will also embrace the land described by metes and bounds.''* The lines of ascertained boundaries generally, control, rather than a description of the quantity of land, unless it appears that the averment or covenant of quantity was intended to control.^" A reference to the "same premises" may enlarge the terms of a spe- cific description.^^ A mortgage may be sustained though a portion of the description is plainly erroneous where after the rejection of the erroneous portion the remaining description is suflBciently definite to render the loca- tion of the premises susceptible of ready ascertainment by any one acquainted with the locality, or by a competent surveyor.^^ A mort- gage describing the lands as all the lands of the mortgagor in a named county will pass all the land owned by him in such county.'^ And in like manner a mortgage of all the lots the mortgagor then owned in a Edmonston v. Carter, 180 Mo. 515, » Auburn Congregational Church 79 S. W. 459. y. Walker, 124 Mass. 69. =» Coogan V. Burling Mills, 124 " Maguire v. Bissell, 119 Ind. 345, Mass. 390; Bell v. Leggett, 175 Ala. 21 N. E. 326; Doyle v. Mellen 15 R 443, 57 So. 836. I. 523, 8 Atl. 709. ^i" Steele v. Williams (Ky.), 15 S. ''Patterson v. Harlan 124 Pa St W. 49. 67, 16 Atl. 496. ="Spiller V. Scribner, 36 Vt. 245; '^Carpenter Paper Co. v. Wilccx, Cummings t. Black, 65 Vt. 76, 25 50 Nebr. 659, 70 N. W. 228. Atl. 906. »"Vanmeter v. Vanmeter, 3 Grat ™ Holmes V. Abrahams, 31 N. J. (Va.) 148. Eq. 415. 67 FOEMAL PARTS OF DEED § 65 certain town, whether he had the legal or equitable title thereto, con- veys all the lots which can be identified as belonging to him by either title.^* But a mortgage of all the lands the mortgagor owns in a certain town does not include lands held by him in mortgage, though by abso- lute deed with a separate defeasance not recorded.'^ A mortgage "of all my estate," or "of all my lands wherever situated," or "of all my property," is not invalid by reason of the generality of the descrip- tion.^* A mortgage of "all the real estate" the mortgagor owns in certain towns, "of whatsoever name or nature," includes his rights as tenant in common of undivided land.'' But such a mortgage could not be made to apply to after-acquired lands.'' A mortgage of all the land owned by the mortgagor in a certain town does not include certain lots previously sold by him, the deeds of which had not been recorded at the time the mortgage was recorded.'^ A mort- gage by an heir of his undivided interest in an estate inherited by him includes all interest which he owns, whether in possession, reversion or remainder.*" When the objection is merely to the indeflniteness of description, it does not lie with the mortgagor to say that he conveyed the prop- erty by a description so loose or indefinite that no title could- pass upon a foreclosure sale of the property.*^ If nothing passes, it is the misfortune of the mortgagee, but the mortgagor is not hurt; if any- thing does pass, the mortgagee is entitled to the benefit of the mort- gage as it stands.*^ When, however, the description is such that property may pass or be sold under the mortgage which the mort- " Starling v. Blair, 4 Bibb (Ky.) key v. Cain, 69 Tex. 146, 6 S. W. 288. See also Easter v. Severin, 64 637. See also Albertson v. Prewitt, Ind. 375; City Nat. Bank v. Barrow, 20 Ky. L. 1309, 49 S. W. 196; Jack- 21 La. Ann. 396; Strouse v. Cohen, son v. De Lancey, 13 Johns. (N. Y.) 113 N. dar. 349, 18 S. E. 323. 537, 7 Am. Dec. 403; Strouse v. Co- =» Mills V. Shepard, 30 Conn. 98. hen, 113 N. Car. 349, 18 S. E. 323; A mortgage of all "unappropri- Florence v. Morien, 98 Va. 26, 34 S. ated" lands in a certain place may E. 890. not cover lands which the mort- " Drew v. Carroll, 154 Mass. 181, gagor had previously conveyed, 28 N. E. 148. though the conveyance had not been " Calhoun v. Memphis &c. R. Co., recorded at the time of the mort- 2 Flip. (U. S.) 442. gage. Crawford v. Bonner, 53 Tex. ^Fitzgerald v. Libby, 142 Mass. 194. 235, 7 N. E. 917. »» Wilson v. Boyce, 92 U. S. 320, "Carter v. McDaniel, 94 Ky. 564, 23 L. ed. 608; Usina v. Wilder, 58 23 S. W. 507. See also MePherson Ga. 178; Leslie v. Merrick, 99 Ind. v. Snowden, 19 Md. 197; Anderson 180; City Nat. Bank v. Barrow, 21 v. Casey-Swasey Co. (Tex. Civ. La. Ann. 396; Drew v. Carroll, 154 App.), 120 S. W. 918. Mass. 181, 28 N. E. 148; Fitzgerald "Whitney v. Buckman, 13 Cal. v. Libby, 142 Mass. 235, 7 N. E. 917; 536. Woodman v. Lane, 7 N. H. 241; Har- "Tryon v. Sutton, 13 Cal. 490. § 65a FORM AND REQUISITES 68 gagor did not include, or intend to include, it is proper that he should ask to have it reformed. Very strong proof is required to support an allegation that by mistake a mortgage was made to em- brace lands that ought not to have been j)ut in; and the testimony of the mortgagor that he did not intend the mortgage should cover a portion of the premises described, which were in a condition to be mortgaged, and were deliberately included, is wholly insufficient to exclude such portion.*^ A practical location of boundaries which has been acquiesced in for a long series of years will not be disturbed. If the owner of a lot makes a practical location of its side boundaries, by erecting a build- ing which covers its entire width as described in his deed, and there- after executes a mortgage with covenants, intended to cover the entire lot, but which for some unexplained reason describes it as a few inches narrower, such practical location, and the covenants in the mortgage, may be successfully invoked, as against the original owner and mort- gagor and his heirs, to extend to the entire original lot a title acquired through a foreclosure sale, after the practical location has been acqui- esced in for between thirty and forty years. ''* If the description of the property in the granting part of a mortgage be inconsistent with a provision contained in the condition, the latter must give way.*^ § 65a. Descriptions held sufficient. — Among others the following descriptions have been held sufficient and capable of ascertainment, as against the contention of uncertainty : "A certain tract or parcel of land Imown as the A. H. Draughn farm on left hand fork of Trou- blesome creek Z'^" all the lands the mortgagor holds "on the Dry Fork of Otter creek ;"*^ "the Zacariah Emerson place" and "the Thomas Bazemore place," in a specified county ;■** "the Noel Mill property, situ- ated in the Seventeenth Civil district of Franklin county ;*" grantor's undivided third interest in "Wanalaw plantation in Holmes county ;"^° "one hundred acres of land No. 173, known as the Jones place, in the Fifth district of Wilcox county;"" "one acre of land off of the north- ■" Shepard v. Shepard, 36 Mich. " Johnson v. McKay, 119 Ga 196 173. 45 S. E. 992. ■"Katz V. Kaiser, 154 N. Y. 294, 48 "Grace v. Noel Mill Co. (Tenn ), N. B. 532. 63 S. W. 246. ^"Donnan v. Intelligencer Print- "Eggleston v. Watson, 53 Miss. ing &c. Co., 70 Mo. 168. 339. See also Fields v. Fish, 26 Ky « Watts V. Parks, 25 Ky. L. 1908, L. 659, 82 S. W. 376. 78 S. W. 1125. " Jones v. McKinney, 135 Ga. 60, "Albertson v. Prewitt, 20 Ky. L. 68 S. E. 788, 31 L. R. A. (N. S ) 9iiO 1309, 49 S. W. 196. 69 FOEMAL PARTS OF DEED § 65a west corner of block 37 of South Lawn," a platted subdivision, which the court construed as one square acvef- "seventy acres in the south- west corner of the southwest quarter section of section 14," which was construed as seventy acres in the form of a square ;^^ "one hundred acres in the southeast corner of lot No. 307 in the Seventh district of North county, Georgia," where it was clear from the instrument that the land conveyed should be in the form of a square ;°* "one tract or parcel of land lying in Jefferson county, Georgia, in the Seventy-ninth district, containing one hundred acres and bounded on the north by my own land, east by land of K. Walden, on south by W. L. Phillips, on west by Sarah and Emily "Walden ;"''° "a tract of land in a specified county adjoining the lands of Patrick Lynch and E. N. Bowden situ- ate on the east side of the road leading from Jerusalem church to Pat- rick Lynch's, it being a portion of the G. R. P. tract, and containing fifty acres ;"°° parts of specified lots in a designated district and county, "it being land purchased by J. L. Henson from J. E. Derrick ;"^^ "sev- enty acres in McCracken county, on which E resides, formerly owned by H," in a specified section;^* "a part of Broad Eipple Float, section No. 1, being the tract deeded to John H. Brown, by E. Kitch, trus- tee;"^* "three hundred and twenty acres of land known as the Middle- brooks place, where the said Hurston lived last year, and where Henry Tally now lives ;"°° "My entire undivided one-tenth interest in about two hundred and sixty-five acres of land," in a specified county;*^ "thirty acres" in a certain quarter section, where the only prop- erty owned by the mortgagor in the section contained about thirty acres lying south of a creek ;^^ "a lot of land near Florence, north of the fair grounds, containing thirty-five acres," where grantor owned but one such lot;^^ "lots 8, 13, and 14, in block 17, and lot 5 in block 18, and the stock in the paper mill on said premises," where the mortgagor never owned any other lot on which there was a paper mill;®* "sixty acres lying on Mill Pond road" and being the same "Rlehey v. Sinclair, 167 III. 184, ^Eby v. Lovelace, 4 Ky. L. 449. 47 N. E. 364. '* Wilson v. Brown, 82 Ind. 471. "' Walsh V. Ringer, 2 Ohio 327, 15 ™ Tranum v. Wilkinson, 81 Ala. Am. Dec. 555. See also Scott v. Gor- 408, 1 So. 201. don, 109 Mo. App. 695, 83 S. W. 550. " Fields v. Fish, 26 Ky. L. 659, " Payton v. McPhaul, 128 Ga. 510, 82 S. W. 376. 58 S. E. 50. "^ Vanvalkenberg v. American == Walden v. Walden, 128 Ga. 126, Land Mtg. Co., 87 Fed. 617, 31 C. 57 S E 323 C A 145 =« Edwards v. Bowden, 99 N. Car. «" O'Neai v. Seixas, 85 Ala. 80, 4 80, 5 S. E. 283, 6 Am. St. 487. So. 745. " Derrick v. Sams, 98 Ga. 397, 25 " Bowden v. Wood, 35 Ind. 268. S. E. 509, 58 Am. St. 309. § 66 rOEM AXD REQUISITES 70 set over to the grantor in the division of his father's land, where par- tition proceedings disclosed that a certain platted lot 3 was awarded the grantor;"^ "section 21, less one and one-half acres in the northeast corner of the west half of southeast fourth of said section 21," the ex- ception if anything being void;'"' "seventy-two acres of land situate near Hamlin, bought of the Land Company, also twelve and one-half acres of land situate near Hamlin, conveyed to B. F. Curry by James T. Carroll, also three acres situate near Hamlin, and known as the old church lot, also my storehouse and lot and livery stable and lot in Ham- lin;'"" "lot 36, in the town of Webb," where the trust deed was dated at Webb, Mississippi;** land lying "in the village of Eaysville," with- out naming state or county, where grantors described themselves as of "Eaysville, Henry county, Indiana.""' § 66. Insufficient description. — The description may be so uncer- tain that no title will vest in the mortgagee by the deed unless it be reformed,'" or even so uncertain that it can not be reformed.''^ A mortgage describing land by township and range, without stating in what county or state the land was situated, has been held void;'^ but the courts take judicial notice of government surveys and legal sub- divisions, and, when the state and county are not named, will gen- erally presume that the land is situated in the state where the parties reside.'^ A mortgage describing land as parts of different sections, without stating the township or range, is void.'* But an error in the number of the range, or in the omission of it, will not affect the validity of a mortgage, if the property be otherwise described with such certainty as to clearly identify it.'° An error in giving the number of a block °' Hinton v. Moore, 139 N. Car. 44, " Barron v. Barron, 122 Ala. 194, 51 S. E. 787. 25 So. 55; Murphy v. Hendricks, 57 "Claraday v. Abraham, 174 Ala. Ind. 593; Cochran v. Utt, 42 Ind. 130, 56 So. 720. 267. "'Holley v. Curry, 58 W. Va. 70, "Smith v. Green, 41 Fed. 455; 51 S. E. 135, 112 Am. St. 944. Byhee v. Hageman, 66 111. 519; Bur- "'Wilkerson v. Webb, 75 Miss, ton v. Ferguson, 69 Ind. 486; Rus- 403, 23 So. 180. sell v. Sweezey, 22 Mich. 236; Quinn " Parker v. Teas, 79 Ind. 235. v. Champagne, 38 Minn. 322, 37 N. "Osborne v. Rice, 107 Ga. 281, 33 "W. 451. S. B. 54; White v. Hyatt, 40 Ind. "Boyd v. Ellis, 11 Iowa 97; Wil- 385; Swatts v. Bowen, 141 Ind. 322, son v. Calder, 8 Kans. App. 856, 55 40 N. E. 1057; Keiffer v. Starn, 27 Pac. 552; Martin v. Kitchen, 195 La. Ann. 282; Peck v. Mallams, 10 Mo. 477, 93 S. W. 780. See post N. Y. 509. § 66a. "Freed v. Brown, 41 Ark. 495; "White v. Hermann, 51 111. 243, Lewis v. Owen, 64 Ind. 446; Mer- 99 Am. Dec. 543; Kile v. Yellow- chants' BIdg. Assn. V. Soanlan, 144 head, 80 111. 208; Thornhill v. Ir.d. 11, 42 N E. IOCS. Bv.rthe, 29 La. Ann. 639; Gerald v. 71 FOEMAL PARTS OF DEED § 66 is immaterial when the description is otherwise accurate and could apply only to the lot intended, and the names of the streets upon which the land is situated are correctly given.'" An erroneous description of real estate in a mortgage that is full and consistently complete within itself, and clearly and correctly identifies a tract of land, will not be reformed to embrace an entirely different tract, to the prejudice of a subsequent mortgagee who ac- cepted his mortgage of the latter in ignorance of the mistake and in bona fide reliance upon the appearance of the public record." A mortgage of all the property of a mining company, particularly described as "located at and near the mouth of Alder Gulch, in sec- tion 10" of a certain township, does not cover property of said com- pany located in other sections of that township; and a decree author- izing the sale of property proved to be owned by the company in other sections is a nullity as regards such property. The only property that could be sold is that located in section 10.'^ A mortgage of fifty acres of land by description, the same being part of the large farm, or the next and adjoining fifty acres that is unincumbered, provided the first be incumbered, is not void for un- certainty as to either tract. The whole farm in such case is subject to the mortgage, which is to be satisfied out of any unincumbered tract nearest to that first described ; but the mortgage is not defeated although the whole farm be incumbered. '° A mortgage of five hun- dred acres of land out of a larger tract described, "beginning at the west boundary, and extending east sufBciently far to embrace five hun- dred acres," has been held valid as containing a suificient description.^" A mortgage of a certain number of acres out of a large tract, the por- tion mortgaged not being described or located, has been held to pass such an undivided joint interest in the whole tract as the quantity mortgaged bears to the quantity contained in the whole tract. "^ A Gerald, 31 S. Car. 171, 9 S. B. 792. Mont. 446, 45 Pac. 1084; Cake v. As to whether the meridian or Calce, 127 Pa. St. 400, 17 Atl. 984. county controls, see Sickmon v. " Pence v. Armstrong, 95 Ind. 191; Wood, 69 111. 329. As to definite- Rhinehardt v. Reifers, 158 Ind. 675, ness of description of portions of 64 N. E. 459. sections, see Mettart v. Allen, 139 "Largey v. Sedman, 3 Mont. 472. Ind. 644, 39 N. E. 239; Collins v. ™Lee v. Woodworth, 3 N. J. Eq. Dresser, 133 Ind. 290, 32 N. B. 883; . 36. See also Kruse v. Scripps, 11 Cook v. Gilchrist, 82 Iowa 277, 48 111. 98; Gray v. Stiver, 24 Ind. 174. N "W 84. '" Westmoreland v. Carson, 76 Tex. '" Sharp V. Thompson, 100 111. 447, 619, 13 S. W. 559. 39 Am. Rep. 61; Rhodes v. Outcalt, *' Brown v. Maury, 85 Tenn. 358, 48 Mo. 367; Baker v. Bartlett, 18 3 S. W. 175. § 66a FORM AND REQUISITES 73 description is fatally defective which describes the land as the north part of a described quarter section.®^ A mortgage which does not name the town, county, or state in which the land is situated may nevertheless be rendered certain in the description of the premises by a reference to another deed, which contains a full and accurate description,*^ or to the land of the ad- jacent owners,** or by extrinsic evidence.*^ A deed which omits to name the state and county in which the land is situated, but purports to have been executed in a certain county and state between parties residing therein, is presumed to be of land situated in such county and state.*^ A mistake in the number of a lot may be rendered imma- terial by the boundaries, which will control when fixed and certain, as for instance when they are public streets.*' § 66a. Insufficient description — ^Illustrations. — The following de- scriptions of mortgaged premises have been held insufficient, and too indefinite to pass title : "A portion of the northeast quarter of sec- tion 22, in township 6, range 20, containing twenty acres;"** "the west part of lot 8 in block G;"*' "the south part of" certain prem- ises f "a farm owned by me in townships 65 and 66 of Worth county, etc., south of Grant City, one and one-half miles," without designating section or range j"^ "the east half of the southeast fourth of section 13, township 13, range 4 east," without naming the state or county ;^^ "the northwest quarter of section 7, north of Castor river," in a cer- tain county, without reference to township or range, where the north- west quarter of section 7 of more than one township were north of the Castor river f^ "all the west half of the northwest quarter of sec- tion 8, township 6, range 7," the county or state not being named;"* "all that tract lying in the county aforesaid, on the waters of the '■^ Hill V. Hite, 86 Fed. 268. =»Hickox v. Lowe, 10 Cal. 197; ''Harding v. Strong, 42 111. 148, Armstrong v. Short, 95 Ind. 326; 89 Am. Dec. 415; Robinson v. Bren- Hodgdon v. Shannon, 44 N. H. 572; nan, 115 Mass. 582; Slater v. Breese, South Sea Co. v. Duncomb, 2 Stra. 36 Mich. 77; Boon v. Plerpont, 32 N. 919. See post § 364. J. Bq. 217. »' Carter v. Holman, 60 Mo. 498. «*Ells V. Sims, 2 La. Ann. 251. "'Barron v. Barron, 122 Ala 194. '"Slater v. Breese, 36 Mich. 77. 25 So. 55. ™ Dutch v. Boyd, 81 Ind. 146; ""Martin v. Kitchen, 195 Mo 477 Mann v. State, 116 Ind. 383, 19 N. 93 S. W. 780. See also Boyd v. Ellis, E. 181. 11 Iowa 97; Keifter v. Starn, 27 La. ''Cooper V. Bigly, 13 Mich. 463. Ann. 282. "Freed v. Brown, 41 Ark. 495. "•'Cochran v. Utt, 42 Ind. 267. See '"Merchants &c. Assn. v. Scanlan, also Murphy v. Hendricks, 57 Ind 144 Ind. 11, 42 N. E. 1008. 593. 73 FORMAL PAETS OF DEED § 67 South Beaverdam creek, adjoining the lands of Peter Eice and Sarah A. Rice, to be run ofE the lower end of my tract of land formerly owned by Eobert Steel, containing ten acres, all the remainder to be upland, in all twenty acres;""' "all that certain tract of land adjoin- ing the lands of John Summerville on the east, Peter Spence on the south, and Hiram Allen on the north, being a portion of the north end of the upper half of the lower half of the upper section of Con- ner's reservation, said to contain one hundred and fourteen acres;'""* "a certain piece or tract of land, grist mill and storehouse, adjoining the lands of Anderson Breedlove, J. C. TJsry and Dora Harris, con- taining three acres," which were not otherwise designated out of a forty-acre tract owned by the mortgagor."^ § 67. Habendum. — The oflBce of the habendum is to define the estate conveyed ; to explain how long the grantee is to hold it, and whether in an absolute or qualified manner.'* To create an absolute and unqualified estate in the grantee, the habendum must be to him and his heirs. A mortgage to one, "his executors, administrators, and assigns," without naming his heirs,"" or a mortgage to an individual, "his successors and assigns forever," without the word "heirs,"^ con- »= Osborne v. Rice, 107 Ga. 281, 33 S. B. 54. ""Swatts v. Bowen, 141 Ind. 322, 40 N. E. 1057. "'Harris v. Woodard, 130 N. Car. 580, 41 S. E. 790. "' New York Indians v. United States, 170 U. S. 1, 18 Sup. Ct. 531, 42 L. ed. 927; Sumner v. Williams, 8 Mass. 162, 5 Am. Dec. 83; Hart v. Gardnel-, 74 Miss. 153, 20 So. 877; Redstrake v. Townsend, 39 N. J. L. 372; Clapp v. Byrnes, 3 App. Div. 284, 38 N. Y. S. 1063; Hafner v. Irwin, 20 N. Car. 570, 34 Am. Dec. 390; Miller v. Graham, 47 S. Car. 288, 25 S. E. 165; Horn v. Broyles (Tenn. Ch.), 62 S. W. 297. The habendum of a mortgage, containing a power of sale in the mortgagee, passing "all the right, title, interest, claim, demand, and equity" of the mortgagors, in the premises, in- cluded whatever interes the mort- gagors had and carried their equity of redemption. Strother v. Law, 54 111. 413. "'Clearwater v. Rose, 1 Blackf. (Ind.) 137. Where a mortgage is not a conveyance but a lien merely, the word "heirs" is not necessary to create a lien on the fee simple es- tate of the mortgagor. ^ Sedgwick V. Laflin, 10 Allen (Mass.) 430; AUendorff v. Gaugen- gigl, 146 Mass. 542, 16 N. E. 283; Bredenberg v. Landrum, 32 S. Car. 215, 10 S. E. 956; Kidd v. Teeple, 22 Cal. 255; Purser v. Eagle Lake Land &c. Co., Ill Cal. 139, 43 Pac. 523. In the latter case a married woman in a mortgage of her sep- arate estate joined her husband in releasing her estate to the "grantee," though in the dower and home- stead clause she released to the grantee and "his heirs and assigns" all right to dower and homestead in the premises. It was held the mortgage conveyed her general title to the grantee for life only; the word "grantee" not including "heirs and assigns," and these words, used in the relinquishment of dower and homestead, not relating back so as to include, in the relinquishment of her general title to the grantee, his heirs and assigns. A colonial statute of 1651 pro- vided that all deeds, in order to pass an estate of inheritance, should con- tain a habendum to the grantee, his § 67 FOHII AXD EEQtJISITES 74 veys only a life estate; and the executor of the mortgagee can not maintain a writ of entry to foreclose the mortgage because it termi- nated with the mortgagee's life. A power of sale in such a mortgage, authorizing the mortgagee upon default to sell the land and execute a conveyance in fee simple, if not executed does not operate to en- large the estate. But a fee simple may be created without the use of the word "heirs" where the intention to create such an estate is clear.^ Thus where a mortgage was executed in Indiana upon lands in Ohio, according to a form authorized by statute in the former state, whereby the words "mortgage and warrant" are declared to pass an estate in fee simple, it was held in the latter state that the mortgage passed the entire estate of the mortgagor, and upon forclosure the purchaser acquired an estate in fee simple.^ But a mortgage made to a treasurer of a corporation named, with habendum "unto him the said treasurer and his successors in office, to his and their use and behoof forever," the condition of the mortgage being that the mortgagor should "pay to the said treasurer, or his successors in office," a certain sum, is held to pass an estate in fee, on the ground that these expressions in the deed showed that the grantee took the conveyance simply as trustee for the corporation, and that the nature of the trust required that a fee should pass by the deed.* The estate of the trustee must be commensurate with the equitable estate of the cestui que trust. A mortgage to trustees for bondholders, from which words of inheritance have been inadvertently omitted, but the provisions of which require that the trustees should have an estate in fee simple in order to execute them, will be con- strued as a conveyance in fee simple, and may be reformed as against subsequent purchasers with notice; and the record of the mortgage would be notice that the instrument was intended to pass a fee.° But a mortgage to executors, "their successors and assigns," containing the usual clause conveying all the mortgagor's estate, right, and title, when duly recorded, is notice to subsequent purchasers, mortgagees, and judgment creditors that such mortgage was intended to convey the fee." heirs and assigns. This provision * Broolcs v. Jones, 11 Mete. (Mass.) has been continued in each succes- 191. sive revision of the statute of the 'Randolpli v. N. J. West Line R. state. Co., 28 N. J. Eq. 49; Coe v. N. J. ^ Gould V. Lamb, 11 Mete. (Mass.) Midland R. Co., 31 N. J. Eq. 105 84, 45 Am. Dec. 187. "Bunker v. Anderson", 32* N J = De Leon v. Higuera, 15 Cal. 483; Eq. 35. Brown v. National Bank, 44 Ohio St. 269, 6 N. B. 506. 75 FORMAL PARTS OF DEED § 68 A mortgage giving the mortgagee a life estate only will not be reformed to convey a fee, as against the rights of a bona fide pur- chaser of the premises, without notice of any claim on his part of a greater estate than the mortgage as recorded purports to convey.'' Although mortgages of real estate are usually in fee, constructive notice merely of the existence of a mortgage, with no notice as to the estate conveyed, is not notice that the mortgage is in fee, when in terms a life estate only is expressed. In a mortgage or other conveyance to a corporation it is usual to make the habendum to it and its ''successors and assigns;" but neither of these words is necessary to give the corporation all the estate it can take in the land conveyed. There is an implied condi- tion, in every conveyance to a corporation, that upon the civil death of the corporation while retaining the land it shall revert to the original grantor and his heirs.* Clerical errors in the habendum clause may be disregarded as sur- plusage, as where, for example, the draftsman has erroneously in- serted the names of the grantors in the habendum, and as covenantees in the covenants.® § 68. Covenants. — The covenants of a mortgage are usually those of a warranty deed, and have the same effect and construction. If, however, a mortgage with covenants be given for purchase-money of land conveyed to the mortgagor by a deed having like covenants, and the mortgagor is evicted, he may recover damages in an action for breach of the covenant, and the vendor who holds the mortgage is not allowed to set up the covenants in the mortgage deed as a defense by way of rebutter, especially when he holds the plaintiff's promissory notes secured by the mortgage.^" "Various cases might be readily sup- posed," says Mr. Justice Dewey, "when such a defense ought not to prevail ; as in cases of large payments advanced toward the purchase- ' Wilson V. King, 27 N. J. Eq. » Parley v. Woodbury, 76 N. H. 23, 374. 78 Atl. 1073. » 2 Kent Com. 282, 307. The chan- ^ Hubbard v. Nortcn, 10 Conn, cellor, in taking a mortgage under 422; Smitli v. Cannell, 32 Maine 123; order of court, is regarded as act- Sumner v. Barnard, 12 Mete. (Mass.) ing in tlie capacity of a corporation; 459; Haynes v. Stevens, 11 N. H. 28. Chancellor v. Hoxley, 41 N. J. L. Covenants of title and warranty ex- 217; and the word "successors" hav- pressed in a mortgage or implied ing been omitted, if it be regarded by statute, have the same effect as as material, the mortgage may be in an absolute deed. Lockwood v. reformed. Chancellor v. Bell, 45 N. Sturdevant, 6 Conn. 373; Blanchard J. Eq. 53S, 17 Atl. 684. v. Haseltine, 79 Mo. App. 248; Weed V. Covin, 14 Barb. (N. Y.) 242. § 68 FORM AND REQUISITES 76 moneyj and a mortgage to secure only a small residue, and that, by the terms of the contract, to be paid at some remote future day. The rights of the defendant may be protected by postponing entry of judg- ment to await the set-ofE upon the mortgage debt."^^ In other words, the covenants in the mortgage do not estop the mortgagee to recover upon those in his vendor's deed to him. As between these parties, the mortgagor for purchase-money really pledges nothing but the interest which he obtained under his vendor's deed, and is answerable to him for no imperfection in the title existing before the conveyance. If the mortgage be redeemed, that is the end of it ; and if it be fore- closed, the title which the grantor parted with is restored to him by foreclosure, or he gets the full benefit of it. One having the mort- gagee's right after foreclosure is not allowed to recover damages for a breach of the covenant which existed at the time of the conveyance by the mortgagee; for the effect of such recovery would be to obtain all that he parted vdth in the conveyance, and the value of the incum- brance, which he is relieved from removing by the foreclosure.^^ If upon the foreclosure of a mortgage not for purchase-money the mortgagee purchase the property for the amount of the mortgage debt, he can not afterward maintain an action upon the covenants of warranty contained in the mortgage, without first having the sale and satisfaction of the judgment set aside. ^^ The covenants of warranty in a mortgage are often of importance where the mortgagor has no title, or an imperfect one at the time of making the mortgage, but afterward acquires one; they then operate by way of estoppel or rebutter, so that the after-acquired title inures to the benefit of the holder of the mortgage. Except in this way the ordinary covenants are of little use in a mortgage, because the dam- ages for a breach of them would only entitle the holder of the mort- gage to recover the amount due him on the mortgage, and this he can more readily recover by suit for the mortgage debt upon the note or bond, or upon the covenant for the payment of it sometimes contained in the mortgage.^* "Sumner v. Barnard, 12 Mete, ton, 6 Gray (Mass.) 39, 61; Cross v. (Mass.) 459. Robinson, 21 Conn. 379; Kellogg v. "Hardy v. Nelson, 27 Miine 525; Wood, 4 Paige (N. Y.) 578. Brown v. Staples, 28 Maine 497, 48 " Todd v. Johnson, 51 lov/a 192 1 Am. Dec. 504; Smith v. Camiell, 32 N. W. 498. .Maine 123; Gayer v. Girard, 22 Mo. >' Quoted with approval in Todd 159; Connor v. Eddy, 25 Mo. 72; v. Johnson, 51 Iowa 192, 1 N W Lot v. Thomas, 2 N. J. L. 407, 2 Am. 498. Dec. 354. See also Hancock v. Carl- 77 THE CONDITION S 69 § 68a. Contimiing covenants. — A mortgage may, however, contain covenants wliich do not cease to exist upon its discharge. Thus, where a mortgage securing a debt payable in five years contained covenants by the mortgagor with the grantee and his heirs and assigns tliat no building nor part of a building should be erected upon the granted premises for five years from the date of the mortgage, and that no building nor part of a building erected thereafter upon the granted premises should be more than two stories in height, and that these cov- enants should be binding upon and available to heirs and assigns and run with the land for the benefit of the adjoining land of the grantee, and in the condition it is further provided that, upon payment and other performance by the grantor the deed, with the exception of the covenants above recited should be void; an intention is clearly mani- fested that the operation of the covenants should not cease with the discharge of the mortgage, and the covenant that the land should not be used for buildings of over a certain height is in effect the grant of an easement in favor of the adjoining premises the violation of which may be restrained.^^ III. The Condition Section SBciioisr 69. Form and essentials of condi- 74. Rate of interest — Conflict ol tion, laws — Rates before and after 70. Description of the debt secured. maturity. 71. Construction of note and mort- 75. Time of payment. gage as one instrument. 76. Stipulations concerning default 72. Covenant to pay debt. — Acceleration of maturity. 73. Interest. 77. Payment of tarxes. 78. Insurance. 78a. Attorneys' fees. § 69. Form and essentials of condition. — The usual words of the proviso are, that upon the payment of the debt or performance of the duty named, "then this deed shall be void." But any equivalent ex- pression may be used,^ and in fact, if it appear from the whole instru- ment that it was intended as a security, although there be no express provision that upon the fulfilment of the condition the deed shall be void, it is a mortgage.^ The substance and not the form of expression is chiefly to be regarded ; and an enlarged and liberal view is to be taken " Brown v. O'Brien, 168 Mass. 484, Pearce v. Wilson, 111 Pa. St. 14, 56 47 N. E. 195. Am. Rep. 243; Wisconsin Cent. R. ' Bernstein v. Humes, 71 Ala. 260; Co. v. Wisconsin &c. Land Co., 71 Adams v. Stevens, 49 Maine 362; Wis. 94, 36 N. W. 837. Cowles V. Marble, 37 Mich. 158; = Snyder v. Bunnell, 64 Ind. 403. § 70 FORM AND EEQUISITES "18 of the instrument in order to ascertain and carry into effect the in- tention of the parties.^ It is not necessary that the condition of the mortgage should be so certain as to preclude the necessity of extraneous inquiry as to what it really is, and whether it has been performed,* as in the case of a mortgage to secure future advances or to indemnify a surety. But unless it appears upon what event the deed is to become void, or that it is to become void in some event, it is not in itself a mortgage.^ If the defeasance clause leaves blank the amount of the debt intended to be secilred, the defect may be supplied by parol evidence.® Even a deed absolute on its face may in equity be shown by extrinsic evidence to have been intended as a mortgage. But a deed in the form of a mortgage, and complete except in the omission to state the amount of the debt secured, is upon its face prima facie a mortgage.'' § 70. Description of the debt secured.' — To constitute a mortgage, there must necessarily be a debt which is the subject of the security. But it is not necessary that there should be any personal liability for the payment of the debt; as, in the case of a mortgage to secure ad- vances to be made subsequently, the parties may agree that the mort- gagee shall advance the money, and rely solely for his security upon the pledge of the real estate. Formerly mortgages were frequently given for the security of existing debts without mentioning any note, bond, or other personal obligation. There can be no question as to their validity, not only as against the mortgagor, but against all claiming subsequently. Whether there can be any action against the mortgagor personally may depend upon the particular circumstances of different cases. Where there is a contract, express or implied, for ' Steel v. Steel, 4 Allen (Mass.) Skinner, 57 Nebr. 164, 77 N. W. 375. 417; Lanfair v. Lanfair, 18 Pick. * Youngs v. "Wilson, 27 N. Y. 351. (Mass.) 299; Burnett v. Wright, 135 "Goddard v. Coe, 55 Maine 385; N. Y. 543, 32 N. E. 253 (quoting Adams v. Stevens, 49 Maine 262; text); Skinner v. Cox, 4 Dev. L. (N. Freeman's Bank v. Vose, 23 Maine Car.) 59. "As a mortgage in this 98. state conveys no estate, but merely ° Burnett v. Wright, 135 N. Y. 543, creates a lien, an instrument prop- 32 N. E. 253. But see Heburn v. erly executed, describing the par- Reynolds, 73 Misc. 73, 132 N. Y. S. ties, the land, and the debt, and evi- 460. dencing an intention to charge the ' Burnett v. Wright, 135 N. Y. 543, debt as a lien upon the land, is suffl- 32 N. E. 253. cient to constitute a mortgage. 'See post §§ 343-395; South Sea Words of conveyance, being inoper- Co. v. Duncomb, 2 Stra. 919; Hickox ative, are unnecessary." Morrill v. v. Lowe, 10 Cal. 197; Hodgdon v. Shannon, 44 N. H. 572. 79 THE CONDITION § 70 the payment of the debt, this is not merged in the security created by the mortgage, and the creditor may maintain assumpsit.' The mortgage must identify the indebtedness it is intended to se- cure.^" But a literal exactness in this respect is not required; it is sufficient if the description be correct so far as it goes, and full enough to direct attention to the sources of correct and full information in regard to it, and the language used is not liable to deceive or mislead as to the nature or amount of it.^^ Thus, the condition of a mortgage specified that the mortgagee was an accommodation indorser and signer for the mortgagors on sundry notes, drafts, and bills of exchange then maturing to the amount of $50,000, a particular descrip- tion of which could not be given. The mortgagors were in a failing condition, and at the time the mortgages were given it was necessary to give the security before a more accurate description could be made ; but this description was held to be sufficients^ The mortgage itself need not necessarily state the amount of the debt secured. The amount may be ascertained by reference to some other instrument, like a note or a bond.^^ Even a mortgage to secure all existing debts of the mortgagor to the mortgagee is not invalid for want of certainty in the amount secured.^* So, the description of the note may omit the names of the makers, and it will suffice, if it sets out the date, the amount, the time of payment and the interest on the note.s° In the absence of fraud a mortgage to secure against future liabilities or advances described with reasonable certainty is valid.'® The condition of the mortgage must give reasonable notice of the incumbrance on the land mortgaged in order to affect the creditors •Yates V. Aston, 4 Ad. & EI. (N. Gilman v. Moody, 43 N. H. 239; S.) 182. Sheaf e v. Gerry, 18 N. H. 245; Hurd "Chilbrooks v. McEwen, 29 Ind. v. Robinson, 11 Ohio St. 232; Gill 347; Brick v. Scott, 47 Ind. 299; In v. Pinney, 12 Ohio St. 38. re Hawks, 204 Fed. 309. "Lewis v. De Forest, 20 Conn. 427; " Curtis V. Fiinn, 46 Ark. 70; In re Hawks, 204 Fed. 3-09. But see Ricketson v. Richardson, 19 Cal. 330; post § 515. Stoughton V. Pasco, 5 Conn. 442, 13 "Pike v. Collins, 33 Maine 38; Am. Dee. 72; Booth v. Barnum, 9 Hurd v. Robinson, 11 Ohio St. 232. Conn. 286, 23 Am. Dec. 339; Bacon " Machette v. T^anless, 1 Colo. 225; V. Brown, 19 Conn. 29; Gardner v. Michigan Ins. Co. v. Brown, 11 Mich. Cohn, 191 111. 553, 61 N. E. 492; Og- 265. den V. Ogden, 79 111. App. 488; New '= Ogborn v. Eliason, 77 Ind. 393. v. Sailors, 114 Ind. 407. 5 Am. St. See also Security Loan &c. Co. v. 632; Bowen v. Ratcliff, 140 Ind. 393, Mattern, 131 Cal. 326,' 63 Pac. 482. 39 N. E. 860, 49 Am. St. 203 (citing "Tulley v. Harloe, 35 Cal. 302, 95 this section); Morris v. Murray, 82 Am. Dec. 102; Hubbard v. Savage, Ky. 36 (quoting text); Morris v. 8 Conn. 214; Brooks v. Lester, 36 Murray, 5 Ky. L. 774; Curtis v. Md. 65; Summers v. Roos, 42 Miss. Flinn, 46 Maine 362; Williams v. 749, 2 Am. Rep. 653; Blackmar v. Jloniteau Nat. Bank, 72 Mo. 292; Sharp, 23 R. I. 412, 50 Atl. 852. § n FORM AND REQUISITES 80 of the mortgagor wlio have no notice of the real incumbraiiee.^' It need not be so complete as to preclude extraneous inquiry concern- ing the liens on the property; but it must with reasonable certainty show what is the subject-matter of the mortgage, and must so de- fine the incumbrance that a fraudulent mortgagor may not substi- tute other debts and shield himself from the demands of his creditors.^' A mortgage which does not purport to secure an indebtedness but merely the payment of a certain note can not be foreclosed as drawn, so as to cut ofE intervening rights of third parties, even though an indebtedness existed, where the note was not executed with the mort- gage, but after such intervening rights had attached.^* § 71. Construction of note and mortgage as one instrument. — The note and mortgage are construed together as if they were parts of one instrument, when they were made at the same time, and in re- lation to the same subject, as parts of one transaction constituting one contract.^" They explain each other so far as the indebtedness is "Bacon v. Brown, 19 Conn. 33; Merrills v. Swift, 18 Conn. 257, 46 Am. Dec. 315; Stoughton v. Pasco, 5 Conn. 442, 446, rS Am. Dec. 72. »» Bramhall v. Flood, 41 Conn. 68; Booth V. Barnum, 9 Conn. 286, 23 Am. Dec. 339; Hubbard v. Savage, 8 Conn. 215; Crane v. Deming, 7 Conn. 387; Stoughton v. Pasco, 5 Conn. 442, 13 Am. Dec. 72; Petti- bone V. Griswold, 4 Conn. 158, 10 Am. Dec. 106. The Connecticut cases are exceptionally strict in this mat- ter, and are not followed elsewhere. See Jones on Chattel Mortgages, § 85. Where a mortgage described the debt as a note of $1,000, which was never given, but the mortgagor was Indebted to the mortgagee for goods to the amount of $756, and the latter had agreed to furnish additional goods up to the sum of $1,000, the mortgage so given as security for the whole was held void against an attaching creditor. The indebted- ness actually existing could not be substituted for the indebtedness de- scribed. Bramhall v. Flood. 41 Conn. 68. But this is an extreme case, and is not to be relied upon. This state- ment is quoted with apparent ap- proval in Clark v. Hyman, 55 Iowa 14- 26, 7 N. W. 386, 39 Am. Rep. 160. "Ogden V. Ogden, 180 111. 543, 54 N. E. 750, affg. Ogden v. Ogden, 79 111. App. 488. ^'Farnsworth v. Hoover, 66 Ark. 367, 50 S. W. 865; Phelps v. Mayers, 126 Cal. 549, 58 Pac. 1048; Meyer v. Weber, 133 Cal. 681, 65 Pac. 1110; Trinity County Bank v. Haas, 151 Cal. 553, 91 Pac. 385; San Gabriel Valley Bank v. Lake View Town Co. (Cal. App.), 86 Pac. 727; Graham V. Fitts (Fla.), 43 So. 512; Clark V. Paddock, 24 Idaho 142, 132 Pac. 795, 46 L. R. A. (N. S.) 475; First Nat. Bank v. Peck, 8 Kans. 660; Spesard v. Spesard (Kans.), 88 Pac. 576; Round v. Donnel, 5 kans. 54; Chick v. Wllletts, 2 Kans. S84; Loan &c. Co. V. Glil, 2 Kans. App. 488, 43 Pac. 991; WaTdron v. Moore (Maine), 91 Atl. 178; Phelps v. Lowell Institution (Mass.), 83 N. E. 9S9; Bartels v. Davis, 34 Mont. 285, 85 Pac. 1027; Fletcher v. Daugherty, 13 Nebr. 224, 13 N. W. 207; Conster- dine v. iStoore, 65 Nebr. 2'91, 96 N. W. 1021, 101 Am. St. 620; Flesher V. Hubbard, 37 Okla. 587, 132 Pac. 1080; Bastin v. Schafer, 15 Okla. 607, 85 Pac. 349; Green v. Frick (S. Dak.), 126 N. W. 579; Vinson v. Carter (Tex. Civ. App.), 161 S. W. 49; Bell v. Engvolsen, 64 Wash. 33, 116 Pac. 456. A mortgage executed long after the note which it was in- 81 THE CONDITION § 71 concerned.^^ The mortgage usually describes the note, stating the date, amount, the makers of it, and the time when it is payable. Such description serves to identify the note.^'^ The mortgage may describe the debt as well, and thus may qualify the terms of the note. For instance, where a note was given payable in five years from date, with interest at ten per cent., and at the same time a mortgage was given to secure the payment of the note, in which it was stipulated that the interest should be "payable annually," the agreement was held to be that interest at ten per cent, should be payable annually, and that foreclosure might be had for the nonpayment of interest.^^ And so where the mortgage contained a stipulation that a general execution should not issue upon it, although a note accompanied the mortgage, it was held that the mortgagee could not recover a general judgment on the note, his remedy being limited to the property.^* Except in this way, the mortgage notes constitute no part of the mortgage. They are not essential to its validity. ^^ They need not be produced in evidence, in order to establish the mortgage title and right to possession. The mortgage itself is a conveyance of the estate, and the recital in the condition of the notes secured is an admission of their existence, and of the existence of the debt. For the purpose of establishing the title or right of possession, the mortgage alone without the notes is evidence of title and of the mortgage debt.^" An indorsement upon a note of a provision contained in the mortgage securing it, neither adds to nor detracts from the rights of the parties. But upon the foreclosure of a mortgage it is necessary to pro- duce the note if there be one; and if the note produced corresponds with the description in the mortgage as to date, amount, parties, rate of interest, and maturity, such correspondence, coupled with the pos- session of the note by the holder of the mortgage, raises a presump- tended to secure will become a part Sheaf e v. Gerry, 18 N. H. 245; Rob- of the contract, the same as if both ertson v. Stark, 15 N. H. 109. Instruments had been executed to- == Meyer v. Graeber, 19 Kans. 165; gather. Spesard v. Spesard (Kans.), Muzzy v. Knight, 8 Kans. 456; 88 Pac. 576. See post § 351. American Mortg. Co. v. Woodward, "McDonald v. Second Nat. Bank, 83 S. Car. 521, 65 S. E. 739; Irion 106 Iowa 517, 76 N. W. 1011; Evans v. Yell (Tex. Civ. App.), 132 S. W. V. Baker, 5 Kans. App. 68, 47 Pac. 69; Bell v. Engvolsen, 64 Wash. 33, 314; Crafts v. Crafts, 13 Gray 116 Pac. 456. (Mass.) 360; Somersworth Savings "Kennion v. Kelsey, 10 Iowa 443. Bank v. Roberts, 38 N. H. 22; Boody =» O'Conner v. Nadel, 117 Ala. 595, V. Davis, 20 N. H. 140, 51 Am. Dec. 23 So. 532. 210; Bassett v. Bassett, 10 N. H. '"Mathews v. Light, 40 Maine 394; 64. Morse v. Stafford, 95 Maine 31, 49 ^'Webb V. Stone, 24 N. H. 282; Atl. 45; Powers v. Patten, 71 Maine 6 — Jones Mtg. — Vol. I. § 73 FORM AND REQUISITES 82 tion of identity, and throws upon the mortgagor the burden of show- ing another note of like description.^' A provision in the mortgage making the principal due for nonpay- ment of interest is effectual, although not contained in the note.^' Where the provisions of a note, concerning the debt or payment thereof, vary from the terms of the mortgage securing it, the provisions of the note or bond control.^' Parol evidence is admissible to identify the note intended to be secured.^" When no note or bond accompanies the mortgage, a recital of indebtedness in the mortgage is sufficient evi- dence of the debt in a suit to foreclose it.^^ Two mortgages from the same mortgagor to the same mortgagee on the same property, executed the same day are not construed together as one instrument, but each is a separate contract.'^* § 72. Covenant to pay debt. — Although it is essential that a mort- gage should secure the pa3'ment of some debt or the performance of some duty, yet it is not essential that it should contain any covenant to that effect,'^ and it is not necessary that there should be any col- lateral or personal security for the debt secured, such as a note or bond.^^ In such ease, of course, the remedy of the mortgagee is con- fined to the land alone.^* If the mortgage contains a recital of an in- debtedness, that is suffieient.^^ "The want of an express agreement," says the Supreme Court of Indiana, "in the mortgage, and in a valid writing thereby secured, to pay the debt, will prevent a personal Judg- ment against the mortgagor ; but if the mortgage sufficiently describes and identifies the indebtedness, it may be foreclosed as to the prop- 583; Smith v. Johns, 3 Gray Melvin v. Fellows, 33 N. H. 401. See (Mass.) 517; Matt v. Matt, 156 post § 352. Iowa 503, 137 N. W. 489. "Whitney v. Buckman, 13 Cal. "" Jones V. Elliott, 4 La. Ann. 303. 536. See also Eyster v. Gaff, 2 Coll. ^Trinity County Bank v. Haas, 228. 151 Cal. 553, 91 Pac. 385; Clayton "aDahlstrom v. Unknown Claim- V. Whitaker, 68 Iowa 412, 27 N. W. ants, 156 Iowa 187, 135 N. W. 567. 296. But see Indiana &c. R. Co. v. '"Hickox v. Lowe, 10 Cal. 197; Ev- Sprague, 103 U. S. 756, 26 L. ed. 554. ans v. Holman, 244 111. 596, 91 N. E. » Tipton V. Ellsworth (Idaho), 109 723; Dougherty v. McColgan, 6 Gill Pac. 134; Keys v. Lardner, 55 Kans. & J. (Md.) 275; Heburn v. Reynolds, 331, 40 Pac. 644; New England Mtg. 73 Misc. 73, 132 N. Y. S. 460. See Co. V. Casebier, 3 Kans. App. 741, post §§ 343, 678, 1225. 45 Pac. 452; Ferris v. Johnson, 136 == Mitchell v. Burnham, 44 Maine Mich. 227, 98 N. W. 1014; Fletcher 286; Smith v. People's Bank, 24 V. Daugherty, 13 Nebr. 224, 13 N. W. Maine 185; Brookings v. White, 49 207; Consterdine v. Moore, 65 Nebr. Maine 479. 291, 96 N. W. 1021, 101 Am. St. 620; «* Weed v. Covill, 14 Barb. (N Y ) Rothschild v. Rio Grande R. Co., 84 242. Hun 103, 32 N. Y. S. 37; Bastin v. »= O'Connor v. Nadel, 117 Ala. 595, Schafer, 15 Okla. 607, 85 Pac. 349. 23 So. 532. =°Prescott V. Hayes, 43 N. H. 593; 83 THE CONDITION' § 73 erty, although there be no express covenant to pay the debt, either in the mortgage or in any collateral instrument."^" The mortgages commonly used in this country refer to the debt only in the condition, and there merely by way of recital of the event upon which the deed is to be void. It is seldom that any express promise is made by the debtor in the mortgage to pay the debt ; and no promise can be implied from the recital in the condition. It is pro- vided by statute in several states that no such promise shall be im- plied in the mortgage.^^ When there is an express covenant in the mortgage for the pay- ment of the debt, the mortgagee may maintain an action at law upon it, and the mortgagor is personally liable, although he gave no note, bond or other separate evidence of the debt. He is not confined to his remedy by foreclosure suit.^* "It seems to be generally admitted in the books," says Chancellor Kent, "that the mortgagee may proceed at law on his bond or covenant at the same time that he is prosecuting on his mortgage in chancery."^* Instead of pursuing both the remedy against the person and that against the thing, he may elect to pursue either one, and afterward, if he has not obtained satisfaction, may fol- low the other.*" § 73. Interest. — Interest is the primary object for which the mort- gage is made, when it secures a loan of money, and the rate and time of payment should be stated with eare.*^ Interest coupons are some- times executed, payable at the times when interest will be due upon =' Layman v. Shultz, 60 Ind. 541; ment of the land. It is simply an Gregory v. Van Voorst, 85 Ind. 108. obligation binding the mortgagor to ^' See post § 678. O'Haver v. Shid- pay the money. We know of no ler, 26 Ind. 278; Brown v. Cascaden, rule of law which will invalidate 43 Iowa 103; Couger v. Lancaster, 6 such a covenant, when found in a Yerg. (Tenn.) 477; Newby v. For- mortgage." In Newbury v. Rutter, syth, 3 Grat. (Va.) 308; Frank v. 38 Iowa 179, the mortgagors recited Pickle, 2 Wash. Ter. 55, 3 Pac. 584. that "we are justly indebted" in a " In Brown v. Cascaden, 43 Iowa sum named, and "if from any cause 103, the covenant was as follows: said debt, interest, and charges, we "And the said party of the first part covenant and agree to pay the de- (the mortgagor) covenants with the ficiency;" and there being no note said party of the third part (the for the debt, an action at law, with- mortgagee), that he will pay the out first foreclosing the mortgage, said mortgage money and interest was sustained. See post § 1225. on the days and times aforesaid." '"Dunkley v. Van Buren, 3 Johns. The court say that such a covenant Ch. (N. Y.) 330. See post § 1215. is no part of the condition of the '"Vansant v. Allmon, 23 111. 30; instrument, and in no way pertains Lichty v. McMartin, 11 Kans. 565. to the conveyance of the land. "It See post § 1215 et seq. is not a covenant securing the mort- •''For the rates of interest al- gagee against the failure of the title, lowed in the several states, see post or warranting possession or enjoy- § 633. § 74 rOEM AND REQUISITES 84 the mortgage by its terms during the whole period it has to run. These are usually negotiable in form, and though detached from the mort- gage note or bond are still secured by the mortgage.*^ Interest is usually payable annually or semi-annually from the date of the mort- gage. A provision for the payment of "interest annually on the first day of April in each year" makes the first interest due on the first day of April following the date of the mortgage, though its date be much later in the year.*^ A provision concerning interest on the mortgage may supplement a stipulation in the note.** § 74. Rate of interest — Conflict of laws — Rates before and after maturity. — A mortgage debt made payable with interest, without naming the rate, bears interest at the rate fixed by law at the place of performance ;*° and the law in force at the date of the instrument governs.*' As a general rule the law of the state where the contract is to be performed, controls the rate of interest thereon.*' If the times when the interest shall be paid are not specified, but the language is such that some periodical payment is intended, it may be proved by parol evidence that the payments were to be made yearly, for instance, even as against a purchaser.** The terms of the mortgage can not be changed as against a purchaser, but he is subject to the agreement contained in the mortgage, and to such con- struction as may be required of what is ambiguous. The proof of the periods at which the interest is payable does not alter the instrument, but merely supplies what was omitted, and is necessary to its proper interpretation. When the time of payment of the mortgage debt is definitely fixed, and the amount of it as well, interest is allowed from the date of the default, although not stipulated for in the mortgage or the note ac- companying it. Interest follows in such case as an invariable legal in- «For the law relating to the con- For statutory rate in the several struction of coupons, their negotia- states see post § 633. bility, their crder of payment, over- ■"■ Ackens v. Winston, 22 N. J. Eq. due coupons, and suits upon ecu- 444. pons, see Jones on Corporate Bonds "' Clarke v. Taylor, 69 Ark 612 65 and Mortgages, §§ 235-267. S. W. 110; Barstow v. Thatcher, 3 "^Cook V. Clark, 3 Hun (N. Y.) Houst. (Del.) 32; Ayer v. Tilden, 81 247, 5 Thomp. & C. (N. Y.) 493, 68 Mass. 184, 77 Am. Dee. 355; French N. Y. 178. V. French, 126 Mass. 360; Faison t. « American Mtg. Co. v. Wood- Grandy, 128 N. Car. 438 38 S E ward, 83 S. Car. 521, 65 S. E. 739; 897, 83 Am. St. 693. But see Eccles Irion V. Yell (Tex. Civ. App.), 132 v. Herrick, 15 Colo. App. 359, 62 S. W. 69; Bell v. Engvolsen, 64 Pac 1040. Wash. 33, 116 Pac. 456. " Ackens v. Winston, 22 N. J. Eq. "Hayes v. Southern Home Bldg. 444. The language was, "within &c. Assn., 124 Ala. 663, 26 So. 527. si.xty days from the time it be- 85 THE CONDITION § 74 cident of the principal debt.*^ But -when the time of payment is uncertain, as for instance in case of a mortgage debt made payable at the decease of a third person, interest can be recovered only from the date of a demand for payment. '^ The statutes of several states prescribe a rate of interest for con- tracts in which the parties have not agreed upon a rate, and for cases in which interest is given by law, but allow the parties to agree in writing for any rate of interest.^^ Under such a provision the rate of interest agreed upon by the parties continues the same after the maturity of the obligation down to the time of rendering judgment upon it."^ The interest both before and after maturity is recoverable by virtue of the contract, as an incident or part of the debt.^^ But although the weight of authority seems to favor this view, there are numerous authorities which hold that where the parties have not by special agreement fixed the rate at which the interest shall run after maturity, the rate fixed for cases where the parties have not agreed upon a rate prevails. ''"' The interest after maturity is regarded as recoverable not upon the contract but upon the provisions of the stat- ute.^° Accordingly where the contract does not fix the rate of interest to be paid after the maturity of the debt, the debt will thereafter carry the legal rate, whether more or less than the contract rate.'*" There is a general agreement in the authorities that a valid contract comes due, at any time during the Great Western R. Co., 16 M. & W. ten years." This is suflBcient to put 244. a purchaser upon inquiry as to the "Cook v. Clark, 3 Hun (N. Y.) periods of payment. 247, 5 Thomp. & C. 493, affd. 68 N. " Spencer v. Pierce, 5 R. I. 63. Y. 178. ™ Gardiner v. Woodmansee, 2 R. ^ Brewster v. "Wakefield, 22 How. I. 558. (U. S.) 118, 16 L. ed. 301; Johnson "iQld Colony T. Co. v. Allentown v. Downing, 76 Ark. 128, 88 S. W. &c. Rapid Transit Co., 192 Pa. St. |25; Searle v. Adams, 3 Kans. 515, 596, 44 Atl. 319. See post § 633. 89 Am. Dec. 598; Rilling v. Thomp- " Casey v. Gibbons, 136 Cal. 368, son, 12 Bush (Ky.) 310; Eaton v. 68 Pac. 1032. Boissonnault, 67 Maine 540, 24 Am. ^Cromwell v. County of Sac, 96 Rep. 52; Lash v. Lambert, 15 Minn. U. S. 51, 24 L. ed. 681; Kohler v. 416, 2 Am. Rep. 142; Pearce v. Hen- Smith, 2 Cal. 597, 56 Am. Dec. 369; nessy, 10 R. I. 223; Langston v. Beckwlth v. Hartford &c. R. Co., 29 South Carolina R. Co., 2 S. Car. Conn. 268, 76 Am. Dec. 599; Etnyre 248; Virginia v. Canal Co., 32 Md. V. McDaniel, 28 111. 201; Hand v. 501. See, for discussion of some of Armstrong, 18 Iowa 324; Brannon these cases, Jones on Corporate V. Hursell, 112 Mass. 63; McLane v. Bonds and Mortgages, §§ 235-237. Abrams, 2 Nev. 199; Marietta Iron ""Toler v. Keiher, 81 Ind. 3*83; Works v. Lottimer, 25 Ohio St. 621; Robinson v. Kinney, 2 Kans. 184; Hopkins v. Crittenden, 10 Tex. 189; Evans v. Chapel, 13 Bush (Ky.) Pruyn v. Milwaukee, 18 Wis. 367. 121; Wright v. Hanna, 210 Pa. 349, For English cases see Gordillo v. 59 Atl. 1097; Angel v. Miller, 90 Weguelio, L. R. 5 Ch. D. 287; Mor- Tex. 505, 39 S. W. 916. But see gan V. Jones, , 8 Ex. 620 ; Price v. Pierce v. Boston Five Cent Sav. § 75 FOEM AND REQUISITES 86 may be made, ho-wever, for a lawful rate of interest from date to ma- turity, and for a higher, but lawful, rate after maturity. Such a pro- vision is not regarded as a penalty but as a contract to pay a higher rate on a contingency. °'' "The fact that the creditor is content with a lower rate before maturity," says the Supreme Court of North Caro- lina, "does not aSect his right to demand under a special agreement a higher rate, not exceeding the limit fixed by law, after maturity."^' But it has been held that when the mortgage note provided for the payment of a certain rate of interest from date until paid, and the mortgage provides that in default of the payment of any part pf the sum secured when due, a higher rate of interest shall be paid from, the date of the note, the note governs and the rate of interest is limited to that therein recited.^® § 75. Time of payment. — The time of payment of the debt secured should be fixed, so that it may be known with certainty when a default occurs. If no time of payment be named, the debt is due immediately and payable upon deinand, and suit may be brought to enforce both the debt and the mortgage immediately. The time of payment may be made to depend upon the happening of some event or contingency, without specifying any exact date."" When the time of payment is fixed by the mortgage, or the note secured by it, the mortgagor is not entitled to any notice of it."^ Grace is to be allowed in computing .the time of payment of a mortgage note, or of any instalment of it, payable at a day certain, in the same manner as upon a note not secured by mortgage."^ It is allowed also upon an instalment of interest falling Bank, 129 Mass. 425, 37 Am. Rep. ™ Mortgage Security Co. v. Case- 371; Evans v. Rice, 96 Va. 50, 30 bier, 3 Kans. App. 741, 45 Pac. 452; S. E. 463. Wriglit v. Shumway, 30 Fed. Cas. =' Vermont Loan &c. Co. V. Dygert, No. 18093, 1 Biss. (U. S.) 23; Car- 89 Fed. 123; Linton v. National Life nail v. Duval, 22 Ark. 136; Sullivan Ins. Co., 104 Fed. 584; Finger v. Mc- v. Corn Exch. Bank, 154 App. Div. Caughey, 114 Cal. 64, 45 Pac. 1004; 292, 139 N. Y. S. 97; Castelli v. McKay v. Belknap Sav. Bank, 27 Burns, 156 App. Div. 200, 140 N. Y.- Colo. 50, 59 Pac. 745; Hubbard v. S. 1057; Balfe v. Lord, 1 C. & L. 519. Callahan, 42 Conn. 524, 19 Am. Rep. 2 Dru. & War. 480, 4 Ir. Eq. 468. 564; Holmes V. Dewey,. 66 Kans. 441, "Fetrow v. Merriwether, 53 111. 71 Pac. 836; Capen v. Crowell, 66 275; Bank v. Price, 8 Ohio St. 299; Maine 282; Havermeyer v. Paul, 45 Board of Church Erection Fund v. Nebr. 373, 63 N. W. 932; Home Fire First Presby. Church, 19 Wash. 455, Ins. Co. V. Fitch, 52 Ncbr. 88, 71 N. 53 Pac. 671. See also Iberia Cy- W. 940; Sanfcrd v. Lichtenberger, press Co. v. Christen, 112 La. 451, 62 Nebr. 501, 87 N. W. 305; Close 36 So. 491. V. Riddle, 40 Ore. 592, 67 Pac. 932, " Ing v. Cromwell, 4 Md. 31. 91 Am. St. 580; Draper v. Horton, "^Coffin v. Lorlng, 5 Allen (Mass.) 22 R. I. 592, 48 Atl. 945. 153. "Pass V. Shine, 113 N. Car. 284, 18 S. E. 251. 87 THE CONDITION § 76 due at the same time with the principal or any instalment of the principal. But on an instalment of interest alone, falling due when no part of the principal becomes due, the debtor is not entitled to days' of grace. °^ The usual form of power of sale mortgage in use in Massachusetts and other New England states provides,"* that upon a sale under the power the mortgagee may, out of the money arising from the sale, "retain all sums then secured by this deed, whether then or thereafter payable." This provision in efEect makes the whole mortgage payable upon any default which authorizes the exercise of the power of sale, if he in fact does exercise the power ; and in the form in common use the condition is for the payment of the principal, instalments, and in- terest at the times named, as also the taxes and insurance, and upon any breach of the condition the mortgagee may proceed to foreclose. Of course in such case the right to receive payment of sums not due arises only upon a sale. When a trustee in a trust deed is empowered to sell the property when the first instalment falls due, and all the in- debtedness is to be considered as matured upon the first default, for the purpose of the application of the trust fund, the indebtedness not then due can not be considered as matured, so that a personal judg- ment can be rendered for it."^ § 76. Stipulations concerning default — Acceleration of maturity. — A stipulation that the whole sum shall become due and payable upon any default in the payment of the principal or interest is universally held to be legal and valid. It is not objectionable as being in the na- ture of a penalty or forfeiture. ''" "'National Bank v. Kirby, 108 ghan, 203 Mass. 591, 89 N. E. 1054; Mass. 497; Macloon v. Smith, 49 Caldwell v. Kimbrough, 91 Miss. 877, Wis. 200, 5 N. W. 336. 45 So. 7; McCarthy v. Benedict, 89 "See post § 1778. Nebr. 293, 131 N. W. 598 (in Ne- '^ Mason v. Barnard, 36 Mo. 384. braska stipulation considered as ■^ Copper Belle Min. Co. v. Cos- permissive and default must be de- tello, 12 Ariz. 318, 100 Pac. 807; Ot- clared by commencing foreclosure tawa Northern Plank Road Co. v. proceedings) ; Hale v. Gouvemeur, Murray, 15 111. 336; Curran v. Hous- 4 Edw. (N. Y.) 207; Noyes v. Clark, ton, 201 111. 442, 66 N. E. 228; Perry 7 Paige (N. Y.) 179, 32 Am. Dec. V. Fisher, 30 Ind. App. 261, 65 N. E. 620; Valentine v. Van Wagner, 37 935; Kramer v. Rebman, 9 Iowa Barb. (N. Y.) 60; Ferris v. Ferris, 114; Stanclift v. Norton, 11 Kans. 28 Barb. (N. Y.) 29; Crane v. Ward, 218; First Nat. Bank v. Peck, 8 Clarke (N. Y.) 393; Rubens v. Prln- Kans. 660; Union Trust &c. Co. v. die, 44 Barb. (N. Y.) 336; Smith v. Marshall, 130 Ky. 206, 113 S. W. 73; Lamb, 59 Misc. 568, 111 N. Y. S. Mobray v. Leckie, 42 Md. 474; 455; Robinson v. Loomis, 51 Pa. St. Schooley v. Remain, 31 Md. 574, 100 78; First Nat. Bank v. Citizens' Am. Dec. 87; Hawkinson v. Bana- State Bank (Wyo.), 70 Pac. 726; § 76 FORM AND REQUISITES 88 In some states such a provision is so usual that authority to an agent to execute a mortgage, the terms and conditions of which are not specified, would authorize him to insert this provision; while in other states special authority to use this provision is necessary. His general authority only authorizes the use of the terms and provisions ordinarily inserted, and therefore implied by the term "mortgage." But the unauthorized use of this provision would not invalidate the mortgage in other respects."^ If the provision be that the mortgagee may upon default, or after the default has continued a certain time, elect that the whole amount of the debt shall become payable, the mortgagee, after the happening of this contingency, can not be compelled to accept the interest or in- stalment due, and yield his claim for the whole amount."^ In such case courts of equity have no power to relieve against the default and its consequences.'"' It is no ground for such relief that the mort- gagor was unable to find the holder of the mortgage until the time of pajTnent had passed.'" It is not required that a formal demand should be made for interest due on a mortgage which authorizes fore- closure on default in interest payments. It is enough that the mort- gagee give the maker of the note an opportunity to pay the interest when due.'^ Of course there would be relief if the payirient was pre- vented by fraud on the part of the mortgage creditor. It is not essential that the interest clause, or option clause, as it is sometimes called, should be contained in the note or bond as well as the mortgage, to make it effectual, inasmuch as both instruments are to be construed together.'^- The stipulation making the whole debt due on default in the payment of the interest may be enforced though contained in the note and not in the mortgage. The note and mort- gage are construed as one contract.'^ Steel V. Bradfleld, 4 Taunt. 227; Ferris v. Ferris, 28 Barb. (N. Y.) James v. Thomas, 5 B. & Ad. 40. 29, 16 How. Pr. 102; Valentine v. See post §§ 1176-1181. Van Wagner, 37 Barb. (N. Y.) 60, "Pershing v. Wolfe, 6 Colo. App. 23 How. Pr. 400. 410, 40 Pac. 856; Jesup v. City Bank, ™Dwight v. Webster, 32 Barb. (N. 14 Wis. 331. Y.) 47, 19 How. Pr. 349. But see "' For construction of interest Isaacs v. Baldwin, 105 N. Y. S. 38. clauses, see post §§ 1179-1186. "James v. Brainard, 64 Wash. "Malcolm v. Allen, 49 N. Y. 448; 175, 116 Pac. 633. Bennett v. Stevenson, 53 N. Y. 508; '- Schoonmaker v. Taylor, 14 Wis. Rubens v. Prindle, 44 Barb. (N. Y.) 313. 336 ; Hale v. Gouverneur, 4 Edw. '' Sail Gabriel Valley Bank v. (N. Y.) 207; Broderick v. Smith, 26 Lake View Town Co., 4 Cal App. Barb. (N. Y.) 539, 15 How. Pr. 434; 630, 89 Pac. 360. 89 THE COXDIXION § 77 § 77. Payment of taxes.'* — The mortgage usually provides by way of covenant or condition that the mortgagor shall pay all taxes and assessments levied upon the premises.'^ The payment of the taxes thus becomes as obligatory upon the debtor as the payment of the mortgage debt; and upon his failure to pay them, the mortgagee may pay them, and have the amount included in any judgment that he may afterward obtain upon the mortgage. Sometimes the mort- gage provides that such taxes, when paid by the mortgagee, shall become a part of the mortgage debt; but without such provision, the amount so paid in fact becomes a lien under the mortgage. '* In like manner if the mortgagee redeems the mortgaged land from a tax sale, the mortgagee is entitled to have the amount paid by him to re- deem the land treated as part of the mortgage debt." A provision that the mortgagee may retain from the proceeds of a sale under the mortgage all charges and expenses incurred by reason of any failure of the mortgagor to perform the condition and covenants of the mortgage, includes payments for taxes and the like. A stipula- tion in a mortgage that, upon a failure to pay the taxes levied upon the premises, the principal debt shall become immediately due and paya- ble, is valid. '^ It is similar to the provision very common in mort- gages, and generally sustained, that the principal shall become due on a failure to pay the interest promptly.'" This covenant can not be enforced after the debt is discharged. It expires with the mortgage. The effect up'on the covenant is the "See post §§ 358, 636, 1134, 1175, ton Sav. Bank v. Davis, 14 N. J. Eq. 1597. 286; Burr v. Veeder, 3 Wend. (N. "It is provided by statute in Y.) 412. See post §§ 358, 636, 1134, Maryland that there may be such a 1597. covenant. Ann. Code Md. 1911, art. "Windett v. Union M. L. Ins. Co., 66, § 5, p. 1520. 144 U. S. 581, 36 L. ed. 551, 12 S. Ct. "Stanclift r. Norton, 11 Kans. 751; Worcester v. Boston, 179 Mass. 218. This decision had reference to 41, 60 N. E. 410; Skilton v. Roberts, a statute then in force declaring 129 Mass. 306. that taxes so paid should be a lien " Spesard v. Spesard, 75 Kans. 87, on the land; but the court declare 88 Pac. 576; Hockett v. Burns, 90 that without the statute the mort- Nebr. 1, 132 N. W. 718; Germania gagee would probably have this Life Ins. Co. v. Potter, 57 Misc. 204, right, in order to keep his security 107 N. Y. S. 912; Booth v. Wolff perfect. See also Sharp v. Barker, Process Leather Co., 224 Pa. 583, 11 Kans. 381; Jackson v. Relf, 73 Atl. 959; Clark v. Blmendorf 26 Fla. 465, 8 So. 184; Wright (Tex. Civ. App.), 78 S. W. 538. See V. Langley, 36 111. 381; Barthell v. also Bradley v. Glenmary Co., 64 N. Syverson, 54 Iowa 160, 6 N. W. 178; J., Eq. 77, 53 Atl. 49; Germania Life Williams v. Hilton, 35 Maine 547, Ins. Co. v. Potter, 124 App. Div. 814, 55 Am. Dec. 729; Spencer v. Lever- 109 N. Y. S. 435. See post 1175. Ing, 8 Minn. 461; Johnson v. Payne, ™ Stanclift v. Norton, 11 Kans. 218. 11 Nebr. 269, 9 N. W. 81; Stoning- § 78 FORM AXD KEQtJISITES 90 same vhether the mortgagor voluntarily pays the mortgage debt, or whether it is paid by the mortgagee's buying in the mortgaged premises at a foreclosure sale. If, therefore, the mortgagee purchase at the sale for less than the debt, and the deficiency be paid by the mortgagor, he can not afterward be compelled to pay to the mort- gagee the amount the latter has been obliged to pay to redeem the premises from sales for taxes assessed while the mortgage was in force. The covenant to pay taxes, being part and parcel of the mort- gage, expires with it.^" § 78. Insurance. — It is usually a condition of the mortgage, also, that the mortgagor shall keep the buildings upon the mortgaged premises insured against fire in a certain sum for the benefit of the mortgagee, at such insurance office as he may approve.^^ A breach of this condition, or of the condition to pay taxes assessed upon the premises, is as effectual in giving the mortgagee a right to enforce his mortgage as is a breach of the condition to pay an instalment of interest or principal, or the whole principal debt.^^ The provision authorizing the mortgagee to pay insurance and charge the lands with the amounts so paid does not authorize payments beyond the time of the payment of the mortgage debt.*' § 78a. Attorneys' fees. — In most jurisdictions a promise by a mortgagor to pay a stipulated attorney's fee in case of foreclosure is valid when the sum stipulated for is reasonable and not unjust or oppressive.** In some jurisdictions, however, these stipulations are expressly prohibited by statute and in other jurisdictions they are «° Hitchcock V. Merrick, 18 Wis. 449, 22 N. W. 594; Durham v. Ste- 357. See also Worcester v. Boston, phenson, 41 Fla. 112, 25 So. 284; 179 Mass. 41, 60 N. E. 410. Broadbent v. Brumback, 2 Idaho ''See chapter X on Insurance, 336, 16 Pac. 555; Barnett v. Daven- post §§ 396-427. port, 40 III. App. 57; Salomon v. »'Mix V. Hotchkiss, 14 Conn. 32; Stoddard, 107 111. App. 227; Jones Wedelhofen v. Mason, 201 111. 465, v. Schulmeyer, 39 Ind. 119; Nelson 66 N. E. 364; Barthell v. Syverson, v. Everett, 29 Iowa 184; Weatherby 54 Iowa 160, 6 N. W. 178; Moore v. v. Smith, 30 Iowa 131, 6 Am. Rep. Crandall, 146 Iowa 25, 124 N. W. 663; Tholen v. Duffy, 7 Kans. 405; 812, 140 Am. St. 276; LeIand v. Coll- Maus v. McKellip, 38 Md.. 231; Gris- ver, 34 Mich. 418; Neale v. Albert- wold v. Taylor, 8 Minn. 342; Me- son, 39 N. J. Eq. 382 ; Garza v. West- Lane v. Abrams, 2 Nev. 199; Ar- ern Mtg. &c. Co. (Tex. Civ. App.), mi jo v. Henry, 14 N. Mex. 181, 89 27 S. W. 1090. Pac. 305, 25 L. R. A. (N. S.) 275; ''Garza v. Western Mtg. &c. Co. McAllister's Appeal, 59 Pa. St. 204; (Tex. Civ. App.), 27 S. W. 1090. Branyan v. Kay, 33 S. Car. 283, 11 '* Burns v. Scoggin, 16 Fed. 734; S. E. 970; Boyd v. Summers, 10 Wis. Bailey v. Butler, 138 Al^,. 153, 35 So. 179; Hitchcock v. Merrick, 15 Wis. Ill; Hovey v. Edmison, 3 Dak. 522. 91 SPECIAL STIPULATIONS § 79 held to violate public policy unless authorized by statute.*" Where the laws authorize an attorney's fee it becomes a part of the mortgage debt on default though stipulated for in the note alone and not in the mortgage.*" IV. Special Stipulations Section Sectiox 79. Stipulations for partial pay- 80. Mortgagor's possession, ment and release. § 79. Stipulations for partial payment and release.^ — Special pro- visions of various kinds, to suit the convenience of the parties, may be inserted in the mortgage. Among those most frequently used is a pro- vision that upon making certain payments the mortgagor shall be en- titled to have certain portions of the mortgaged premises released from the operation of the mortgage ;-'or a provision that the mortgagor may pay the whole or a part of the debt, at his option, before the time fixed for the payment of it. A provision in a mortgage, reserving to the mortgagor "the right to pay all or any part of said indebtedness, at any time during the present year, in current paper funds," does not restrict him to a single payment of the entire amount due, but authorizes partial payments at different times during the year.' A stipulation for partial releases of lots embraced in the mortgage upon the payment of stipulated sums, "provided that the covenants and conditions of said mortgage shall be faithfully kept and per- formed" by the mortgagor, can be enforced only upon strict perform- ance of the conditions, and making all payments of principal and in- terest as they become due. Whether such a covenant running only to the mortgagor, without mention of his assigns, is personal in char- acter, and can not be enforced by a purchaser from him, is a question upon which the authorities are not agreed, but the better view is that such a covenant runs with the land.* A stipulation that in case the mortgagor should be able to sell the premises or mortgage them ''Thomasson v. Townsend, 10 ^See post §§ 981-982. Bush (Ky.) 114; Vosburgh v. Lay, ''Ontario Land &c. Co. v. Bedford, 45 Mich. 455; Kittermaster v. Bros- 90 Cal. 181, 27 Pac. 39. See post sard, 105 Mich. 219, 63 N. W. 75, 55 § 981. Am. St. 437; Security Co. v. Eyer, » Stalworth v. Blum, 41 Ala. 319. 36 Nebr. 507, 54 N. W. 838, 38 Am. "That it is personal, Pierce v. St. 735; Leavans v. Ohio Nat. Bank, Kneeland, 16 Wis. 672, 84 Am. Dec. 50 Ohio St. 591, 34 N. E. 1089; Bal- 726. That it runs with the land, four V. Davis, 14 Ore. 47. Vawter v. Crafts, 41 Minn. 14, 42 " Bailey v. Butler, 138 Ala. 153, N. W. 483. 35 So. Ill; Durham v. Stephenson, 41 Fla. 112, 25 So. 284, § 80 FOKM AND REQUISITES 9:3 to another, so as to pay off the mortgage debt, the mortgagee should reconvey to him, so as to enable him to carry out the transaction, does not confer upon him a power of sale, for he had that already, but operates as a covenant to reconvey for the purpose named. ° A reser- vation by a mortgagor of "the privilege of selling said land at any time, and to appropriate the proceeds first to the payment of the mortgage debt," enables him to contract for a sale of the land, and to compel the mortgagee to credit the proceeds upon the debt. But while the mortgagor has no power either to convey the land, or to receive the proceeds of a sale of it, the mortgagee is bound to make the proper conveyance, and to receive and credit the proceeds.® An agreement to release any parcel of the mortgaged land, upon payment at any time of a sum equal to the value of such parcel, must be construed as referring to the value of the parcel at the time of the release, and not at the date of the agreement.^ The provision for the release of portions of the land on the pay- ment of stated amounts must correctly describe the portions to be re- leased. In one of the cases a provision for the release of one acre' for every six hundred dollars paid was held void for indefiniteness of de- scription of the part to be released.* § 80. Mortgagor's possession.* — The provision, now almost univer- sally inserted in mortgages, that, until default in the performance of the condition of the deed, the mortgagor may hold the premises, was formerly exceptional.^" In 1819, Chief Justice Parker -said that such a provision was seldom seen in Massachusetts.^^ In another case in this state the same year, the court say that, although parties intend that the mortgagor shall remain in possession, yet they go on making mortgages without any covenant respecting the possession.'^ For construction of other provi- session. Moore v. Boagin, 111 La. sions for release of portions of the 490, 35 So. 716. property, see Brigham v. Avery, 48 "Smith v. Dyer, 16 Mass. 18, 24. Vt. 602. "Colman v. Packard, 16 Mass. 39, "Coffing v. Taylor, 16 III. 457. 40. "Frierson v. Blanton, 1 Baxt. In Massachusetts It is provided (Tenn.) 272. that the statutes relating to fore- ' People's Sav. Bank v. Nebel, 92 closure shall not prevent the mort- Mich. 348, 52 N. W. 727. gagee's entering on the premises or 'McCormiok v. Parsons, 195 Mo. recovering possession before breach 91, 92 S. W. 1162. of the condition, when there is no "See post §§ 389, 667, 668, 702. agreement to the contrary, but in *'In Louisiana, where the civil such case he must account for the law prevails, it is held that it is rents and profits. Rev. Laws Mass. not the essence o'f a mortgage that 1902, ch. 187, § 9, p. 1642. the mortgagor should remain in pos- 93 EXECUTION AlfD DELIVERY § 81 Evidence of the intention of the parties, or of their agreement, at the time of making the mortgage, that the mortgagor should continue in possession until he should fail to perform the condition, can not be received to control the settled rule of law, that without such provi- sion the mortgagee is entitled to immediate possession.^' But although the mortgagor's right of possession be not expressly provided for, he is entitled to it if the condition of the mortgage be such as to imply his possession for the purpose of performing it.^* When the mortgagor's right of possession is provided for, or neces- sarily implied, the mortgagee can not enter until default, and can not, until he has made actual entry, or brought suit for possession, give any one else the right to occupy, and exclude the owner of the equity.^'* In many of the states the rule now is that, the mortgagee has no right of possession of the mortgaged premises prior to foreclosure and sale, in the absence of a stipulation in the mortgage to that efEect,'^" and this is true though the mortgage purj^orts on its face to be an absolute deed." V. Execution and Delivery Section Section" 81. Seals. 85. Subsequent acceptance — Inter- 81a. Signatures. vening rights. 82. Witnesses. 86. Delivery for sale and assign- 83. Aclmowledgment. ment. 83a. Release of homestead. 87. Delivery in escrow. 83b. Mortgage by tenants in com- 88. Acceptance of cestui que trust mon: presumed. 84. Delivery and acceptance. 89. The date. § 81. Seals. ^ — In most of the eastern states sealing is a formality still essential to the conveyance of real estate, hut a scroll or scrawl, or generally the printed word "Seal" or "L. S." is sufficient. The K"ew England states, Maine, New Hampshire, Vermont and Massa- chusetts, still require a formal seal by an impression upon wax, paper "Hagerstown T. Groh, 101 Md. 64, 69 Pac. 810; Yankton Bldg. &c. 560, 61 Atl. 467. Assn. 'v. Dowling, 10 S. Dak. 535, 74 "Wales V. Mellen, 1 Gray (Mass.) N. W". 436. 512, and. cases cited; Clay -v.' Wren, 'For seal of corporation, see post 34 Maine'; 187; Ferris v. Wilcox, 51 § 128; seal as consideration, § 613; Mich. 105, 16 N. W. 252, 47 Am. Rep. seal as requisite to record, § 492. 551. See post §§ 389, 668, 702. At law a mortgage of reajlty re- ^^ Silloway v. Brown, 12 Allen quires a seal, unless otherwise pro- (Mass.) 30; Reading v. Waterman, vided by statute. Butler v. Meyer, 46 Mich. 107, 8 N. W. 691. 49 111. App. 176; Portwood v. Out- " Harrington v. Foley, 108 Iowa ton, 3 B. Mon. (Ky.) 247; Hebron 287, 79 N. W. 64; State v. Superior v. Centre-Harbor, 11 N. H. 571; Mc- Court 21 Wash. 564, 58 Pac. 1065. Farland v. Cornwell, 151 N. Car. "Yingllng v. Redwine, 12 Okla. 428, 66 S. E. 454; Duke v. Mark- § 81a FOEM AND EEQUISITES 94 or some adhesive substance." Private seals have been abolished either by statutory enactment or judicial decision in most of the states, in- eluding Alabama, Georgia, Indiana, Kentucky, Michigan, Mississippi, and in all of the^ states west of the Mississippi river, except Oregon. Eecent cases in New York and Georgia hold that a seal is unnecessary to the validity of a mortgage.' The decided tendency of modern de- cisions is to minimize the old distinctions between sealed and un- sealed instruments, where they have not been entirely abrogated by legislation.* All mortgages by corporations should be executed under the official seal of the corporation, which is customarily an impression upon the paper. In New York and the New England states, it is preferable and in some cases has been held necessary that the impres- sion of the corporate seal should be upon wax or other adhesive sub- stance, which must be attached to the instrument.^ A mortgage executed without a seal, in the states where it is re- quired, is not a legal mortgage. In equity it amounts to a compact for a mortgage, and as such creates no lien as against purchasers from the mortgagor, or as against his creditors, or even against an assignee under a general assignment for the benefit of creditors.* § 81a. Signatures. — Signing is the act which imparts life to the deed. Although the most essential thing of all in the execution of the deed, it is a matter so much of course that it hardly need be mentioned ham, 105 N. Car. 131, 10 S. E. 1017, and delivered, within the purview 18 Am. St. 889; Erwin v. Shuey, 8 of the common or the statute law Ohio St. 509; Bloom v. Noggle, 4 of the land, seems to be a misno- Ohio St. 45; White v. Denham, 16 mer, and is of much more question- Ohio 59; Arthur v. Screven, 39 S. able import." 4 Com. 453. Car. 77, 17 S. E. 640; Shattuck v. 'Heburn v. Reynolds, 73 Misc. 73, Knight, 25 W. Va. 590; Pratt v. 132 N. Y. S. 460; Hawes y. Glover, Clemens, 4 W. Va. 443. See also 126 Ga. 305, 55 S. E. 62; Vizard v. Martin v. Nixon, 92 Mo. 26, 4 S. W. Moody, 119 Ga. 918, 47 S. E. 348. 503. See also Ames v. Holderbaum, 44 "There was formerly much preju- Fed. 224; Woods v. Wallace, 22 Pa. dice against the use of a scroll as St. 171. a seal, which still exists in a few * Rockwell v. Capital Trac. Co., 25 of the eastern states. App. D. C. 98. Chancellor Kent says: "Whether 'Bank of Little Rock v. McCarthy, land should be conveyed by writing 55 Ark. 473, 18 S. W. 759, 29 Am. St. signed by the grantor only, or by 60; Farmers' ^c. Bank v. Haight, 3 writing signed, sealed, and deliv- Hill (N. Y.) 493. ered by the grantor, may be a °McFarland v. Cornwell, 151 N. proper subject for municipal regu- Car. 428, 66 S. E. 454; Erwin v. lation; but to abolish the use of Shuey, 8 Ohio St. 509; Bloom v. seals by the substitute of the flour- Noggle, 4 Ohio St. 45. See J. S. ish of a pen, and yet continue to Gabel Lbr. Co. v. West (Nebr.), 145 call the instrument which has such N. W. 849. For signature as pre- a substitute a deed or writing sealed requisite to record, see post § 491. 95 EXECUTION AND DELIVBEY § 83 among the requisites. The signature of the grantor in a mortgage should be in precisely the same form as in the deed by which he re- ceived title, whether or not the latter contained his full name or initials only ; and careful conveyancers always refer to the former deed or abstract for the exact name of the grantor in a mortgage or trust deed. Obviously the name in the granting clause and acknowledgment should be in the same form as in the signature. A mortgagor is bound by a signature of his name made by another person in his presence and by his direction. If his name be sub- scribed by another in his absence, he may adopt the signature as his own.^ His acknowledgment of the deed is a suiBcient recognition of it.* Execution of a mortgage may be proved by the admission of the grantor or by testimony of any one who saw him execute it.^ A forged signature of a mortgagor can be ratified by him only by executing a new mortgage though he be willing to acquiesce in its enforcement; and no ratification by him can affect intervening par- ties.i" A mortgage executed by the owner of land in the name of a ficti- tious person to whom he has made a fictitious conveyance is valid between mortgagor and mortgagee.^^ Under a statute providing that deeds, which include mortgages, shall be signed by the party to be bound, it is not necessary that a mortgage be subscribed as distinguished from signed.^^ § 82. Witnesses. — The statutes of several states provide that mort- gages and other conveyances of real estate shall be attested by wit- nesses, two being required in some states, one in others, and in still others none at all;" but this requirement, like that for the acknowl- edgment of deeds, has reference chiefly to the recording of them, and does not affect the validity of the instruments as between the parties.^* 'Fouch V. Wilson, 59 Ind. 93. As "Finley v. Babb, 144 Mo. 403, 46 to what is sufficient signing, see S. W. 165; Rothschild v. Title Guar- Zann v. Haller, 71 Ind. 136, 36 Am. antee &c. Co., 139 App. Div. 672, 124 Rep. 193; Gotthelf v. Shapiro, 136 N. Y. S. 441. App. Div. 1, 120 N. Y. S. 210. "Blackman v. Henderson, 116 «Ward V. Ward, 144 Fed. 308; Iowa 578, 87 N. W. 655. O'Neal V. Judsonia State Bank "American Savings Bank &c. Co., (Ark.), 164 S. W. 295; Kepcha v. v. Helgesen, 64 Wash. 54, 116 Pac. Lowman, 249 111. 118, 94 N. E. 102; 837, Ann. Cas. 1913 A, 390. Bartlett v. Drake, 100 Mass. 174, 97 " See post § 494. Am. Dec. 92, 1 Am. Rep. 101. But "Gardner v. Moore, 51 Ga. 268; see Dietrich v. Deavitt, 81 Vt. 160, Marable v. Mayer, 78 Ga. 60; Ben- 69 Atl. 661; American Savings Bank ton v. Baxley, 90 Ga. 296, 15 S. E. &c. Co. V. Helgesen, 67 Wash. 572, 820; Pulliam v. Hudson, 117 Ga. 127, 122 Pac. 26. 43 S. E. 407; Hawes v. Glover, 126 » Ross V. Harney, 139 111. App. 513. Ga. 305, 55 S. E. 62; Carrico v. § 83 FORM AND REQUISITES 96 Although a mortgage defectively executed in this respect is not a legal mortgage, it may be enforced in equity .^° -An agent or stockholder of a corporation, who has no personal in- terest in the transaction, is competent as an attesting witness to a mortgage executed in favor of the corporation.^^ A general counsel and stockholder of a mortgagee corporation is not incompetent as a witness to the signature of the mortgagor, though incompetent to act as notary.^' The grantee is held incompetent to attest the mortgage.^* Stockholders of a corporation mortgagee may, however, attest the sig- nature of the mortgagor.^' Attestation by a justice's signature does not affect the validity of a mortgage, where no attestation was re- quired.^" A void acknowledgment of a mortgage operates as an at- testation by the ofBcer taking it.^^ § 83, Acknowledgment. — An acknowledgment is essential in order to admit a deed to record, but is not necessary as between the parties. ^^ This subject is fully treated elsewhere,^'' and is introduced here solely with reference to the necessity of complete execution of the mortgage otherwise, before acknowledgment. The acknowledgment is the final act before the delivery of the deed, and must be made of a completed deed. There can be no valid acknowledgment of a mortgage until all material parts of the instrument are written in, such for instance as Farmers' &c. Nat. Bank, 33 Md. 235; ^ Wilson v, Kirkland, 172 Ala. 72, Baker v. Clark, 52 Mich. 22, 17 N. 55 So. 174. W. 225; Holmes v. Hull, 50 Nebr. "^Maddox v. Wood, 151 Ala. 157, 656, 70 N. W. 241; Prout v. Burke, 43 So. 968. 51 Nebr. 24, 70 N. W. 512; Jubb v. ^Johnson v. Graham Bros. Co., 98 Thorpe, 1 Wyo. 356; Conradt v. Lep- Ark. 274, 135 S. W. 853; West v. per, 13 Wyo. 473, 81 Pac. 307. 0th- Hears, 17 Cal. App. 718, 121 Pac. erwise in Alabama, Bugger v. Col- 700; Ross v. Harney, 139 111. App. lins, 69 Ala. 324. 513; Gray v. Ulrlch, 8 Kans. 122; ^Lake v. Doud, 10 Ohio 415; Am v. Matthews, 39 Kans. 272, 18 Stelts V. Martin, 90 S. Car. 14, 72 Pac. 65; Hunger v. Baldridge, 41 S. E. 550. Kans. 236, 21 Pac. 159, 13 Am. St. '"Stimpson Computing Scale Co. 273; Straeffer v. Rodman, 146 Ky. V. Holmes-Hartsfield Co., 6 Ga. App. 1, 141 S. W. 742, Ann. Gas. 1913 C, 569, 65 S. E. 358; Read v. Toledo 549; Wilson v. Kimmel, 109 Mo. 260, Loan Co., 68 Ohio St. 280, 67 N. E. 19 S. W. 24; Hannah v. Davis, 112 729, 62 L. R. A. 790, 96 Am. St. 663. Mo. 599, 20 S. W. 686; Hess v. Trigg, See also Gilbert v. Garber, 69 Nebr. 8 Okla. 286, 57 Pac. 159; Lynch v. 419, 95 N. W. 1030. Cade, 41 Wash. 216, 83 Pac. 118; "Maddox v. Wood, 151 Ala. 157, American Savings Bank &c. Co. v. 43 So. 968. Helgesen, 64 Wash. 54, 116 Pac. 837, " Amlck V. Woodworth, 58 Ohio Ann. Cas. 1913 A, 390. See also Co- st.. 86, 50 N. B. 437. lonial Trust Co. v. Foster, 234 Pa. '"Read v. Toledo Loan Co., 68 152, 82 Atl. 1128. Ohio St. 280, 67 N. E. 729, 62 L. R. ==■ See post § 495. A. 790, 96 Am. St. 663. 97 EXECUTION- AXD DELIVERY § 83a the name of the grantee, and the amount of the lien.^* The want of an acknowledgment does not affect its validit)^ as between the parties.^'' This rule applies with particular force to acknowledgments made by married women, where the law jDrotects them by requiring a sepa- rate examination by the magistrate who takes the acknowledgment.-' In a case where a wife so acknowledged an instrument intended to be a mortgage of her separate lands, while there were blanks for the insertion of the mortgagee's name and the sum borrowed, it was urged that she should be estopped from denying that she had signed and acknowledged the mortgage. But Mr. Justice Nelson said : "The answer to this is, that to permit an estoppel to operate against her would be a virtual repeal of the statute that extends to her this pro- tection, and also a denial of the disability of the common law that forbids the conveyance of her real estate by procuration. It would introduce into the law an entirely new system of conveyances of the real property of feme coverts. Instead of the transaction being a real one in conformity with established law, conveyances by signing and acknowledging blank sheets of paper would be the only formalities requisite. * * * -pj^g difficulty here is not in the form of the acknowledgment, but that it applied to a nonenity, and was, there- fore, nugatory. The truth is, that the acknowledgment in this case might as well have been taken and made on a separate piece of paper, and at some subsequent period attached by the officer, or some other person, to a deed that had never been before the feme covert."^'' The mortgage will be valid between the parties, though the notary taking the acknowledgment may be disqualified to take the particular acknowledgment.^^ § 83a. Release of homestead. — A homestead right can be barred only by complying strictly with the statute prescribing the mode of alienation ; but a mortgage of it duly executed is valid. ^ If the statute "Drury v. Foster, 2 Wall. (U. S.) Wash. 216, 83 Pac. 118; American 24, 17 L. ed. 780. Savings Bank &c. Co. v. Helgesen, 2= Jolinson v. Graham Bros. Co., 64 Wash. 54, 116 Pac. 837. 98 Ark. 274, 135 S. W. 853; Ross v. ^'Drury v. Foster, 2 Wall. (U. S.) Harney, 139 111. App. 513; Gray v. 24, 17 L. ed. 780; followed in Mc- Ulrich, 8 Kans. 122; Arn v. Mat- Quie r. Peay, 58 Mo. 56. thews, 39 Kans. 272, 18 Pac. 65; "'Drury v. Foster, 2 Wall. (U. S.) Hunger v. Baldridge, 41 Kans. 236, 24, 17 L. ed. 780. 21 Pac. 159; Straeffer v. Rodman, '"Southwestern Mfg. Co. v. 146 Ky. 1, 141 S. W. 742; Wilson v. Hughes, 24 Tex. Civ. App. 637, 60 Kimmel, 109 Mo. 260, 19 S. W. 24; S. W. 684. Hannah v. Davis, 112 Mo. 599, 20 ^New Ensrland Mtg. Sec. Co. v. S. W. 686; Hess v. Trigg, 8 Okla. Payne, 107 Ala. 578, 18 So. 164; Mor- 286, 57 Pac. 159; Lynch v. Cade, 41 ris v, Sargent, 18 Iowa 90; Whitlock 7 — Jones Mtg. — Vol. I. 83a FOEM AND REQUISITES 98 provides that the homestead release shall be made by the joint deed of the husband and wife, a deed or mortgage executed by the husband alone is void, and it does not become valid by reason that the home- stead is afterward abandoned.- Neither can the wife afterward re- V. Gosson, 35 Nebr. 829, 53 N. W. 980; McCreery v. Schaffer, 26 Nebr. 173- 41 N. W. 996; Bonorden v. Kriz, 13 Nebr. 121, 12 N. W. 831; Fleming v. Graham, 110 N. Car. 374, 14 S. E. 922; Hughes v. Hodges, 102 N. Car. 236, 9 S. E. 437; Nielson v. Peter- son, 30 Utah 391, 85 Pac. 429 (neces- sary that homestead should be de- clared). A sale of a homestead under a power of sale in a mortgage is not a forced sale under a constitution exempting homesteads from forced sales. Karcher v. Gans, 13 S. Dak. 383, 83 N. W. 431; Moran v. Clark, 30 W. Va. 358, 4 S. E. 303. Under statutes providing for the filing or recording of a claim or dec- laration of homestead by the wife in order to acquire the right, until such filing or recording the husband may mortgage the homestead with- out the wife's Joining. Missouri: Rev. Stat. Mo. 1909, § 6704. Tucker v. Wells, 111 Mo. 399, 20 S. W. 114. California: Civ. Code Cal. 1903, § 1241; First Nat. Bank v. Bruce, 94 Cal. 77, 29 Pac. 488. Texas : The Constitution of Texas, art. 16, § 50, provides that no mort- gage of a homestead shall be valid except for purchase-money or im- provements, whether executed by the husband alone or together with his wife, and that all pretended sales of the homestead involving any condition of defeasance shall be void. Under this provision any transaction, though purporting to be for cash, which is only a means to secure a loan to the husband is void. O'Shaughnessy v. Moore, 73 Tex. 108, 11 S. W. 153. But this pro- vision does not apply where there is only an intention to create a homestead which has not been con- summated by the use of the prop- erty as such. Kempner v. Comer, 73 Tex. 196, 11 S. W. 194. An unmarried man may execute a valid mortgage of his homestead. Lacy V. Rollins, 74 Tex. 566, 12 S. W. 314; Smith v. Von Hutton, 75 Tex. 625, 13 S. W. 18. And a sur- viving husband may mortgage his homestead, though it is community property, to secure payment of a debt against such property. Watts v. Miller, 76 Tex. 13, 13 S. W. 16; Hensel v. Loan Assn. (Tex.), 20 S. W. 116. A husband may incumber the homestead for the payment of pur- chase-money in the acquisition of it. McCarty v. Brackenridge (Tex.), 20 S. W. 997. He can renew the in- cumbrance or change it, at his dis- cretion, so long as he does not add other indebtedness to it. Morris t. Geisecke, 60 Tex. 633; Clements v. Lacy, 51 Tex. 150; Gillum v. Col- lier, 53 Tex. 592; De Bruhl v. Maas, 54 Tex. 464. He may make such purchase-money mortgage in pursu- ance of a parol agreement made at the time of the purchase, in case the agreement is supported by a valu- able consideration, for such agree- ment is itself treated jn equity as a mortgage. McCarty v. Bracken- ridge (Tex.), 20 S. W. 997. A mortgage of a homestead, exe- cuted by both husband and wife, to pay off a subsisting vendor's lien against the property, is valid to ex- tent of the lien so paid off. Hensel V. Int. Bldg. &c. Assn., 85 Tex. 215, 20 S. W. 116. A trust deed for borrowed money given on land actually occupied by the borrower and his family as a homestead is invalid. Texas Land Co. V. Blalock, 76 Tex. 85, 13 S. W. 12; Chamberlain v. Trammell (Tex. Civ. App.), 131 S. W. 227. Conveyance of subject of home- stead right by a husband alone is not void but voidable only at the instance of one having a right to have it pronounced void. Reid v. Allen (Ala.), 62 So. 801. = Gleason v. Spray, 81 Cal. 217, 22 Pac. 551, 15 Am. St. 47; Barber v. Babel, 36 Cal. 11; Iowa Ann. Code 1897, § 2974; Harsh v. Griffin, 72 Iowa 608, 34 N. W. 441; Bruner v. 99 EXECUTION AND DELIVERY § 83a lease her homestead right by her separate deed.^ If the statute pro- vides that the wife shall acknowledge her deed releasing her home- stead rights, a mortgage without her acknowledgment creates no lien upon the homestead.* Under a statute which provides that the home- stead release shall be by joint consent of husband and wife, if the hus- band executes a mortgage and signs his wife's name to it, and pro- cures a fraudulent acknowledgment of it in her name, the wife can not subsequently ratify the mortgage by executing a separate release." The mere signature of a married woman to a mortgage by her hus- band is no evidence of a release or waiver by either him or her of the homestead exemption, unless it is affirmatively and substantially stated in the body of the instrument that she is a party to and unites in the conveyance.* But it is sufficient that the wife joins in the hus- band's deed, wherein it is recited that she "hereby waives right of homestead and dower in and to the real estate mentioned in this mortgage," though her name does not appear in the granting clause.^ The fact that the wife is not named at all in the deed is not material in case she describes herself as "one of the undersigned mortgagors," and signs and acknowledges the deed, for by such a deed she conveys all the interest she has, and is thereby as certainly identified, and as Bateman, 66 Iowa 488, 24 N. W. 9; homestead when it was intended by Ott V. Sprague, 27 Kans. 620; Staf- both that such instruments should ford V. Tarter, 29 Ky. L. 1184, 96 operate together as a single instru- S. W. 1127; Shoemaker v. Collins, ment. 49 Mich. 597, 14 N. W. 559; Murphy ^Park v. Park, 71 Ark. 283, 72 S. v. Renner, 99 Minn. 348, 109 N. W. W. 993; American Sav. &c. Assn., 593, 8 L. R. A. (N. S.) 565, 116 Am. 19 Mont. 323, 48 Pac. 391; Montana St. 418; American Sav. &c. Assn. Nat. Bank v. Schmidt, 6 Mont. 610, v. Burghardt, 19 Mont. 323, 48 Pac. 13 Pac. 382; Phillips v. Bishop, 31 391; Waterson v. Bonner, 19 Mont. Nebr. 853, 48 N. W. 1106. 554, 48 Pac. 1108; Kimmerly v. Mc- "Howell v. McCrie, 36 Kans. 636, Michael, 83 Nebr. 789, 120 N. W. 14 Pac. 257, 59 Am. Rep. 584. A 487; Justice v. Souder, 19 N. Dak. mortgage by a husband and signed 613, 125 N. W. 1029; Compl. Laws by him in his individual capacity Okla. 1909, § 1187-1189. Hall v. and as guardian of his insane wife Powell, 8 Okla. 276, 57 Pac. 168. The was held void under the statute rule is the same where the mort- concerning release of homestead, gage is executed by the wife alone, prior to an act authorizing such or where the husband is insane, mortgages. Curry v. Wilson, 45 Hathaway v. Cook, 258 111. 92, 101 Wash. 19, 87 Pac. 1065. N. E. 227. "Hawkins v. Pugh (Ky.), 16 S. = Poole V. Gerrard, 6 Gal. 71, 65 W. 277, per Lewis, J. But see Am. Dec. 481; Wilson v. Mills, 66 Sledge &c. Co. v. Craig, 87 Ark. 371, N. H. 315, 22 Atl. 455; Dickinson v. 112 S. W. 892; Ward v. Stark, 91 McLane, 57 N. H. 31; Ott v. Sprague, Ark. 268, 121 S. W. 382; Long v. 27 Kans. 620. In the latter case it Branham, 30 Ky. L. 552, 99 S. W. was said that it might be that a 271. husband and wife, by two separate ' Davis v. Jenkins, 93 Ky. 353, 20 Instruments could alienate the S. W. 283. § 83b rOEM AND REQUISITES 100 fully bound, by the stipulations contained in the deed, as if she had been formally mentioned by name in the caption.* After the hus- band's death all the rights in the homestead land which before were vested in the husband and wife pass by a devise by the husband to his wife, so that a mortgage made by her while occupying the land with her children is a valid incumbrance. The consent of the chil- dren is never required for the purpose of alienating the homestead.* A mortgage given to secure the purchase-price of a homestead need be signed only by the person taking title to the homestead.^" § 83b. Mortgage by tenants in common. — A tenant in common has no power to mortgage the interest of his eotenant,^^ and a mort- gage given by him will operate only on his own interest in the prem- ises. ^^ So, a mortgage by a husband and- wife of property owned by them as tenants in common, in which the wife is not mentioned ex- cept as releasing and conveying her rights of dower and homestead in the premises con'\'e3red, is not operative to convey her undivided interest in the land, although signed and acknowledged by both.^' It is the holding of one of the cases that the mortgage of an interest of a tenant in common pending a suit for partition, though invalid as against a purchaser at the partition sale creates a valid lien on such mortgagor's interest in the premises.^* § 84. Delivery and acceptance. — A delivery and acceptance of the mortgage are essential to its validity.^ ° If not delivered directly to » Hawkins v. Pugh (Ky.), 16 S. W. 132 Ala. 357, 31 So. 96; Burrows v. 277. Pickens, 129 Ala. 648, 29 So. 694; "Shepard v. Brewer, 65 111. 383; Fite v. Kennamer, 90 Ala. 470, 7 So. Allen V. Holtzman, 63 Kans. 40, 64 920; Thompson v. Sheppard, 85 Ala. Pac. 966; Vining v. Willis, 40 Kans. 611, 5 So. 334; Long v. Mostyn, 65 €09, 20 Pac. 232. Ala. 543. " Jarvis v. Armstrong, 94 Miss. " Huffman v. Darling, 153 Ind. 22, 145, 48 So. 1; Irwin v. Gay, 3 Nebr. 53 N. B. 939. (Unof.) 153, 91 N. W. 197; Prout v. >' Freeman v. Peay, 23 Ark. 439; Burke, 51 Nebr. 24, 70 N. W. 512. Edwards v. Thom, 25 Fla. 222, 5 So. "Metzger v. Huntington, 139 Ind. 707; Houfes v. Schultze, 2 Bradw. 501, 37 N. E. 501; Leavell v. Carter (111.) 196; Fitch v. Miller, 200 111. (Ky.), 112 S. W. 1118; Barber v. 170, 65 N. E. 650; Johnson v. Pros- Toomey (Ore.), 136 Pac. 343. See parity Loan &c. Assn., 94 111. App. also Burge v. Chestnut (Ky.), 121 260; Woodbury v. Fisher, 20 Ind. S. W. 989. 387, 83 Am. Dec. 325; Hoadley v. " Huffman V. Darling, 153 Ind. 22, Hadley, 48 Ind. 452; Goodwin v. 53 N. E. 939; Barry v. Baker, 29 Ky. Owen, 55 Ind. 243; Henry v. Carson, L. 573, 93 S. W. 1061; Janney v. Lil- 96 Ind. 412; Fitzgerald v. Goff, 99 lard, 35 La. Ann. 1198; Manti City Ind. 28; John Shillito Co. v. McCon- Sav. Bank v. Peterson, 33 Utah 209, nell, 130 Ind. 41, 26 N. E. 832; J. S. 93 Pac. 566, 126 Am. St. 817. Gabel Lbr. Co. v. West (Nebr.), 145 ''Penny v. British &c. Mtg. Co., N. W. 849; Hoagland v. Green, 64 101 EXECUTION AND DELIVEEY 84 the mortgagee or his agent, but to a third person not authorized to act for him, it is essential to sliow the subsequent acceptance of it by the mortgagee, or else to show notice to him of the existence of the mortgage, and such additional circumstances as will afford a reasona- ble presumption of his acceptance of it.'^* Such presumption, as against others who may acquire an interest in the property, does not arise merely from the fact that the mortgage would be beneficial to him.^^ Until there be something more to show the grantee's acceptance, the presumption of it only exists for his benefit as against the grantor, his heirs, devisees, and ordinary cred- itors.^^ The possession of the deed by the mortgagee is presumptive evidence of his acceptance of it.^' Proceedings by him to enforce the title, or his release of it, are conclusive of his acceptance.^* Without delivery there is no mortgage. ^^ It takes effect only from the time of its delivery.^^ That a mortgage has been recorded raises a presumption of its delivery to the mortgagee but this is not con- elusive against his denial of it. An actual delivery is not necessary, but there must be some act which in legal contemplation is equivalent Nebr. 164, 74 N. "W. 424; Gadsden v. Thrush, 56 Nebr. 565, 76 N. W. 1060; Yeomans v. Petty, 40 N. J. Eq. 495, 4 Atl. 631 (undelivered memoran- dum ineffective as equitable mort- gage) ; Durfee v. Knowles, 50 Hun 601, 2 N. Y. S. 466; Shirley v. Burch, 16 Ore. 83, 18 Pac. 351; Gorham v. Meacham, 63 Vt. 231, 22 Atl. 572; Ault V. Blackman, 8 Wash. 624, 86 Pac. 694; Garner t. Martin (W. Va.), 80 S. E. 495; Croft t. Bunster, 9 Wis. 503. Delivery is included in the "execution" of a mortgage, re- quired by statute. Van Valken- burgh V. Oldham, 12 Cal. App. 572, 108 Pac. 42. See post §§ 501, 539. ^^ Bailey v. Gilliland, 2 Kans. App. 558, 44 Pac. 747. See also Knapstein v. Tinnette, 156 111. 322, 40 N. E. 947; Maxwell v. Hewey, 111 Maine 62, 88 Atl. 88. When a mortgage to a married woman was delivered to her husband, her acceptance was presumed. Rhea v. Planters' Mut. Ins. Assn., 77 Ark. 57, 90 S. W. 850. "Ruckman v. Ruckman, 6 Fed. 225; Freeman v. Peay, 23 Ark. 439; Evans v. White, 53 Ind. 1; Moody v. Dryden, 72 Iowa 461, 34 N. W. 210; Beil V. Farmers' Bank, 11 Bush (Ky.) 34, 21 Am. Rep. 205; Tuttle V. Turner, 28 Tex. 759. But see Merrills v. Swift, 18 Conn. 257, 46 Am. Dec. 315; In re Immanuel Pres. Church, 112 La. 348, 36 So. 408. "Bell T. Farmers' Bank, 11 Bush (Ky.) 34. ^»Ray V. Hallenbeck, 42 Fed. 381; Van Valkenburgh v. Oldham, 12 Cal. App. 572, 108 Pac. 42; Wolverton v. Collins, 34 Iowa 238; Chandler v. Temple, 4 Cush. (Mass.) 285. *Ely V. Stannard, 44 Conn. 528; Crocker v. Lowenthal, 83 111. 579; Huber v. Jennings-Heywood Oil Syn- dicate, 111 La. 747, 35 So. 889. ^Freeman v. Peay, 33 Ark. 439; Van Valkenburgh v. Oldham, 12 Cal. App. 572, 108 Pac. 42; Houfes v. Schultze, 2 Bradw. (111.) 196; Pitch V. Miller, 200 111. 170, 65 N. B. 650; Hoadley v. Hadley, 48 Ind. 452; Hoagland v. Green, 54 Nebr. 164, 74 N. W. 424; Gadsden v. Thrush, 56 Nebr. 565, 76 N. W. 1060; Shirley v. Burch, 16 Ore. 83, 18 Pac. 351, 8 Am. St. 273; Gorham v. Meacham, 63 Vt. 231, 22 Atl. 572, 13 L. R. A. 676; Croft v. Bunster, 9 Wis. 503. See post § 539. '^ Milliken v. Ham, 36 Ind. 166. I 84 FOEII AND REQUISITES 103 to this.^* The actual receipt and recording of an instrument of de- feasance is a complete acceptance thereof, notwithstanding prior ob- jection to its terms.^* A subsequent attempt by the mortgagee to enforce the mortgage may be relied upon to show an acceptance as be- tween the parties.^' Delivery may be made to an agent.^^ Delivery to a third person who subsequently delivered it to the mortgagee, though after the mort- gagor's death, has been held sufficient.^' An unconditional delivery by a husband, as agent for his wife, though unauthorized, is binding upon her.^^ When the mortgage is to a corporation, a delivery to any ofBcer or attorney who customarily acts for it in such matters is sufficient.^® An agent authorized to sell land is authorized to accept delivery of a mortgage in part payment of the purchase-money, un- less it clearly appears that it was delivered to him for some other purpose.^" Where the mortgage is to secure debts for which another is surety, the surety may accept the mortgage for his principals.^^ A delivery of a trust deed to the cestui que trust is a sufficient delivery to the trustee. His acting under the trust by advertising the property for sale is an acceptance of the trust by him, although he may not have had possession of the deed.^'' A delivery of a mortgage running to several creditors to one of them is a delivery to all, unless there is some reason to the contrary, such as repudiation of it by some. A separate delivery to each mortgagee is not necessary.'^ The fact of delivery may be shown by other writings of the parties or their privies, in which reference is made to the mortgage as an ex- isting security; or by their subsequent acts with reference to it.^* If it appear that a note and mortgage have been executed and left ''Foley V. Howard, 8 Iowa 56; gage is the mortgagee's agent to ac- Preston v. Albee, 120 App. Div. 89, cept a delivery of the instrument. 105 N. Y. S. 33; Goodwynne v. Bel- '"Booker v. Booker, 119 App. Dlv. lerby, 116 Ga. 901, 43 S. E. 275. 482, 104 N. Y. S. 21. ^ Moore v. Hopkins, 84 Kans. 469, ^ Alexander v. "Welcker, 141 Cal. 114 Pac. 1066. See also Immanuel 302, 74 Pac. 845. Presbyterian Church, 112 La. 348, » Patterson v. Ball, 19 Wis. 243. 36 So. 408. =° Akerly v. Vilas, 21 Wis. 88. See =»Aldrich v. Willis, 55 Cal. 81. post §§ 501, 539. "Lydia Pinkham Med. Co. v. "'McLaughlin v. Carter, 13 Tex. Gibbs, 108 Ga. 138, 33 S. E. 945; Civ. App. 694, 37 S. W. 666. Lampkln v. First Nat. Bank, 96 Ga. =^ Crocker v. Lowenthal, 83 111. 579. 487, 23 S. E. 390; Rushing v. Citi- "Sheldon v. Erskine, 78 Mich, zens' Nat. Bank (Tex. Civ. App.), 627, 44 N. W. 146. 162 S. W. 460; Greene v. Conant, "Renken v. Bellmer, 55 Cal. 466; 151 Mass. 223, 24 N. E. 44. A jus- Dodsworth v. Sullivan, 95 Minn. 39, tice of the peace who goes for the 103 N. W. 719; Truman v. McCoI- mortgagee to obtain the executidn lum, 20 Wis. 360. and acknowledgment of the mort- i03 EXECUTION AND DELIVERY § 85 where the mortgagee could readily obtain ■wrongful possession of them and negotiate them, the maker's negligence might prevent his setting up the defense that they have no legal existence.'" If a mort- gage be so disposed of as to evince clearly the intention of the parties that it should take effect as such, there is a sufficient delivery.^' The fact that the mortgage and note are in the hands of the mort- gagee is sufficient, in the absence of any evidence to the contrary, to warrant a finding by the court that the same had been delivered by the mortgagor. '' Where a mortgage has been duly delivered, the de- livery is unaffected by the fact that the grantee suffers it to remain in the custody of the grantor,'^ or returns it to the grantor's attorney for recording, and it is mislaid after being recorded.^® But where a mortgage was not produced in evidence or recorded or otherwise ac- counted for the proof of execution and delivery was insufficient.*" § 85. Subsequent acceptance — ^Intervening rights. — A subsequent acceptance by the mortgagee of a mortgage delivered to the recording officer, or to an unauthorized third person, gives effect to it from the time of the first delivery, as between the parties to it; but as to per- sons who have acquired title to the property, or an interest in it, or lien upon it, through or under the mortgagor, before the time of the actual acceptance of the deed by the mortgagee, the subsequent ac- ceptance gives effect to the deed only from the time of acceptance.*^ In the meantime an attachment of the property as belonging to the grantor,*^ or a judgment lien upon his property, will prevail.*^ The acceptance can not relate back so as to defeat the intervening lien.** == Tisher v. Beckwith, 30 "Wis. 55, =' Clymer v. GrofC, 220 Pa. 580, 69 11 Am. Rep. 546. Atl. 1119. =»Nazro v. Ware, 38 Minn. 443, 38 =» In re Goldville Mfg. Co., 118 N. W. 359; Herman v. Clark Fed. 892. (Tenn.), 39 S. W. 873. •"'Diamond v. Dennison, 102 Minn. "Van Valkenburgh v. Oldham, 12 302, 113 N. W. 696. Cal. App. 572, 108 Pac. 42; Schal- "Parmelee v. Simpson, 5 Wall, lehn V. Hibbard, 64 Kans. 601, 68 (U. S.) 81, 18 L. ed. 542; Clark v. Pac. 61. A mortgage duly executed Bank, 66 Fed. 404, 13 C. C. A. 545; and acknowledged and admitted in Hibberd v. Smith, 67 Cal. 547, 4 Pac. evidence in a suit to foreclose is 473, 8 Pac. 46, 56 Am. Rep. 726; sufficiently proved, without further Moody v. Dryden, 72 Iowa 461, 34 proof of delivery and acceptance, N. W. 210. See post §§ 502, 540, 541. under the New York Code. Pres- "Bell v. Farmers' Bank, 11 Bush ton V. Albee, 120 App. Div. 89, 105 (Ky.) 34. N. Y. S. 33. Possession by the re- "Woodbury v. Fisher, 20 Ind. 387, eeiver of a building association of 83 Am. Dec. 325. a mortgage executed by a member **Goodsell v. Stinson, 7 Blackf. is presumptive evidence of delivery. (Ind.) 437. Preston v. Albee, 120 App. Div. 89, 105 N. Y. S. 33. § 86 FOKJX AND EEQUISITES 104 Wlien a mortgage lias been executed and tendered in compliance with an agreement of a debtor to make a mortgage, and the creditor refuses to accept the mortgage as a compliance with the agreement, and directs his agent to procure a mortgage that will meet the terms of the agreement, the creditor can not afterward accept the mortgage without the debtor's consent.*^ It is suflBcient proof of the delivery of a mortgage that it was filed for record by the mortgagor, and was afterward found in the mortgagee's possession.*'' The subsequent acceptance of it ratifies the act and gives it effect from the time it was filed for record.*^ § 86. Delivery for sale and assignment. — A mortgage made for the purpose of being sold is not a lien in the mortgagee's hands as against subsequent purchasers or lien creditors, except from the time the advances are actually made upon it, either by the mortgagee or his assignee.** An engagement on the part of the mortgagee, or another, to advance the money in the future, would be a consideration for the making of it sufficient to support it against other liens from the time of its delivery and record.**' An assignee with notice that the mort- gage was originally given without consideration, for the purpose of raising money by a subsequent sale, is put upon inquiry as to whether there were any liens intervening between its date and his purchase. The fact that the mortgagor negotiates the sale of the mortgage is a circumstance that should put the purchaser upon inquiry.^" Where a mortgage is made for the purpose of raising money for the mortgagor, and is recorded without any delivery to the nominal mortgagee, and, before it is assigned and delivered to one who sub- sequently buys it, another person acquires a lien upon the mortgaged premises, the latter has priority. The mortgage in such case has life and validity only from the time of its assignment and delivery to the assignee for value; and it can have no retroactive operation so as to prejudice others who have acquired rights in the meantime. It is immaterial in this r-espect that the assignee, before taldng the assignment, required and obtained from the mortgagor an affidavit that the mortgagee advanced the whole sum of principal secured by ■'-■■ Adams v. Johnson, 41 Miss. 258. '^ Bailey v. Gilliland, 2 Kans. App. ^"Haskill v. Sevier, 25 Ark. 152; 558, 44 Pac. 747. Carnall v. Duval, 22 Ark. 13G; Ses- ""Fox v. Gray, 105 Iowa 433, 75 sions V. Sherwood, 78 Mich. 234, 44 N. W. 339. N. W. 263. =° Mullison's Estate, 68 Pa. St. 212 " Carnall v. Duval, 22 Ark. 136. 105 EXECUTION AND DELIVERY § 87 the mortgage without abatement, and that there was no offset or defense to it.^^ A mortgage made to a person who is entirely ignorant of the transaction, and never ratified it or claimed any interest in it, the money being advanced by a person who at the time had no authority to act for the nominal mortgagee, is fictitious and void in law, and equity will not decree a foreclosure of it though the person who ad- vanced the money acted in good faith."*^ Where a corporation executes a mortgage to secure its bonds issued to a trustee, to be delivered by him to its creditors in payment of their claims, neither the bonds nor the mortgage have any vitality until they are so delivered; and a creditor who has not demanded or received bonds before the dissolution of the corporation and ap- pointment of a receiver has no right to demand them on the ground that this debt existed when the mortgage was executed; nor has he a lien under the mortgage.'^^ § 87. Delivery in escrow. — A delivery in escrow is sufficient, and the fact that the depositary was at the time an agent of the mort- gagee, or, where the mortgagee is a corporation, the fact that he was then a director of it, does not prevent his holding in escrow.^* A mortgage and note placed in the hands of a third person, to be delivered to the mortgagee upon the happening of a certain event, and delivered by him without authority, without waiting for such event, are invalid, and can not be enforced even by a bona fide holder for value. ^'^ There is in such case no delivery of the note and mort- « Schafer v. Reilly, 50 N. Y. 61. " Andrews v. Thayer, 30 "Wis. 228. '^^ Shirley v. Burch, 16 Ore. 83, 18 A reconveyance by way of defea- Pac. 351, 8 Am. St. 273. sance to a grantor, who had given "' Hubbell V. Syracuse Iron Works, an absolute deed to secure a loan, 14 N. Y. S. 345. As was said in Lord may be placed in escrow, and such V. Fuel Gas Co., 99 N. Y. 547, 2 N. deed becomes void when the time E. 909: "Where a bond of this de- of payment expires. Fitch v. Miller, seription, having no previous vital- 200 111. 170, 65 N. E. 650. ity. Is delivered to a creditor of the "= Chipman v. Tucker, 38 Wis. 43, company to pay or secure nis debt, and cases cited, 20 Am. Rep. 1. the delivery of the bond Is the act A mortgage release delivered as an by which his debt becomes secured, escrow is a nullity if flelivered by The security to the creditor then the depositary, or obtained from him for the first time comes into being, without full compliance with the and is as effectual as if the mort- condition specified, and the regis- gage were executed at the same tration thereof will be enjoined, time with the delivery of the bond. Matteson v. Smith, 61 Nebr. 761, 86 The effect is th§ same If the bond N. W. 472. Where a mortsagor is sold to provide means to pay a fraudulently obtained possession of debt existing at the time of the a release, deposited in escrow for sale, and the proceeds are paid to delivery on payment of the debt, the creditor." and recorded it without payment. § 88 FORM AND REQUISITES 106 gage, and they have never had a legal existence. A promissory note, although negotiable, can have no legal inception without a delivery, and the rules of commercial paper do not apply; these can operate only after the paper has a valid existence. As in the case of a forged note, or of one purloined from the maker, the inquiry goes back of all considerations of negotiability, and the effect of that, to the existence of the paper as a legal obligation. A mortgage without consideration, deposited to await the performance of condi- tions which would make a consideration for it, is not made operative by a fraudulent delivery before the performance of the conditions, and without the mortgagor's consent. The mortgage in such case never becomes operative at all. It is void from the beginning.^" But the mortgagor may waive the provisions of an escrow agreement and ratify an unauthorized delivery of a mortgage.®' Where the note and mortgage of a husband and wife are delivered in escrow, and the condition performed by the mortgagee, the deposi- tary is bound to deliver the instruments to him, notwithstanding the intervening death of the husband."' Where a note and mortgage are delivered in escrow, with the under- standing that upon delivery to the mortgagee, the times of payment of interest and principal should be computed from the date of its de- livery to the depositary, such intention should control.®^ § 88. Acceptance of cestui que trust presumed. — A trust deed is a contract between the parties and acceptance by the beneficiary is essential to its validity,''" but it is not necessary that the cestui que trust should sign it, or in any way assent to it in writing;'^ the law will presume an assent from circumstances that will raise such an implication."^ As a general rule the deed passes the legal title as the release was ineffective, both As to evidence of the performance against the original parties and sub- of the conditions, see Mudd v. sequent bona fide purchasers. Green (Ky.), 12 S. W. 139. Franklin v. Killilea, 126 Wis. 88, "Dooley v. Potter, 146 Mass. 148, 104 N. W. 993. 15 N. E. 499. '" Powell V. Conant, 33 Mich. 396. ^ Davis v. Clark, 58 Kans. 100, 48 See also Burson v. Huntington, 21 Pac. 563. Mich. 415, 4 Am. Rep. 497; Pitch V. ^Either v. Christensen, 1 Cal. Miller, 200 111. 170, 65 N. B. 650; App. 90, 81 Pac. 670. Andrews v. Thayer, 30 Wis. 228. ""Byrd v. Perry, 7 Tex. Civ. App. As to right of the mortgagor to 378, 26 S. W. 749. withdraw a deed left as an escrow, " Skipwith v. Cunningham, 8 before acceptance by the mortga- Leigh (Va.) 271, 31 Am. Dec. 642. gee, see McDonald v. Huff, 77 Cal. "^Wiswall v. Ross, 4 Port. (AJa.) 279, 18 Pac. 243. 321. 107 . EXECUTION AND DELTVEET § 89 soon as it is executed by the grantor and trustee, and can be avoided only by the dissent, express or implied, of the creditor."^ § 89. The date. — A mortgage is not invalid although it is not date'd, or has a false date, or an impossible one, as, for instance, February 30th, provided the real day of its date or delivery can be proved. The date, being no part of the substance of the deed, may be contradicted. The true date or time of execution may be shown by parol evidence in contradiction of the date as it appears by the deed or by record."* It is said that there is a presumption that a mortgage was executed and delivered on the day of its date, arising from the due execution, acknowledgment, and record of it."^ It is elsewhere said that, "The absence of a date from the mortgage does not invalidate the rnort- gage. The fact that the record of the mortgage shows no date is therefore immaterial, as the validity of the mortgage does not depend upon its being dated, but it becomes effective by delivery.""" The date of the acknowledgment, together with other circumstances ap- pearing upon the face of the deed, may be sufficient to rebut this in- ference."' If the date of the mortgage be later than that of the acknowledgment, it may be shown that the date of the acknowledg- ment is erroneous, and that the mortgage was not acknowledged until after it was executed."* The date may be implied from the date of the note secured."^ "^ Field V. Arrowsmith, 3 Humph, upon delivery, creating a present (Tenn.) 442, 39 Am. Dec. 185. That charge upon the property, and its the trustee need not give an express record is at once effective against assent, see Martin v. Paxson, 66 Mo. subsequent purchasers. Jacobs v. 260. Denison, 141 Mass. 117, 5 N. E. 526. "McFall V. Murray, 4 Kans. App. '"Lryon v. Mcllvaine, 24 Iowa 9; 554, 45 Pac. 1100; Grove v. Great Savery v. Browning, 18 Iowa 246; Northern Loan Co., 17 N. Dak. 352, Parke v. Neeley, 90 Pa. St. 52. 116 N. W. 345, 138 Am. St. 707 (ab- =» Grove v. Great Northern Loan sence of date); Parke v. Neeley, 90 Co., 17 N. Dak.- 352, 116 N. W. 345, Pa. St. 52. If material at all, the 138 Am. St. 707. date is only necessary to fix the "Parke v. Neeley, 90 Pa. St. 52. time of payment of the debt se- "'Hoit v. Russell, 56 N. H. 559. cured. Woolsey v. Jones, 84 Ala. °»Woolsey v. Jones, 84 Ala. 88, 4 88, 4 So. 190. Although post-dated, So. 190. the mortgage becomes operative § 90 FORM AND REQUISITES 108 YI. Filling Blanks, Making Alterations, and Reforming Section 90. Execution in blank. 91. Authority to fill in blanks. 92. Irregular execution — Estoppel. 93. Essentials of estoppel. 94. Material alteration. 95. Immaterial alteration. 96. Alteration by parol. 97. Reformation. 98. Who may obtain reformation. Section 99. Against whom reformation may be had. 100. Lost mortgage deeds — Equita- ble relief. 101. Construction — Intention — Extrinsic evidence. 101a. Construction — What law gov- erns. § 90. Execution in blank. — A blank form of mortgage signed and acknowledged, and afterward filled np in the signer's absence by an- other person without written authority, so as to make it a mortgage on land owned by the person signing the paper, is not a deed in writing valid to pass an estate in land under the statute of frauds.^ The ancient doctrine of the common law, as stated in Sheppard's Touchstone,^ is, that "every deed well made must be written ; i. e. the agreement must be all written before the sealing and delivery of it; for if a man seal and deliver an empty piece of paper or parchment, albeit he do therewithal give commandment that an obligation or other matter shall be written in it, and this be done accordingly, yet this is no good deed." This remains the law in England,' and is gen- erally supported by the authorities in this country.* V. State Bank, 5 Ark. 525; Upton v. Archer, 41 Cal. 85, 10 Am. Rep. 266; Ingram v. Little, 14 Ga. 173, 58 Am. Dec. 549; Whitaker v. Miller, 83 111. 381; McNab v. Young, 81 111. 11; Wilson v. South Park Commis- sioners, TO 111. 46; Chase v. Palmer, 29 111. 306; People v. Organ, 27 111. 27, 79 Am. Dec. 391; Richmond Mfg. Co. V. Davis, 7 Blackf. (Ind.) 412; Ayres v. Probasco, 14 Kans. 175; Cummins v. Cassily, 5 B. Mon. (Ky.) 74; South Berwick v. Hun- tress, 53 Maine 89, 87 Am. Dec. 535; Byers v. McClanahan, 6 Gill & J. (Md.) 250; Burns v. Lynde, 6 Al- len (Mass.) 305; Parker v. Parker, 17 Mass. 370 (time of payment left blank); Stebbins v. Watson, 71 Mich. 467, 39 N. W. 721; Williams v. Crutcher, 5 How. (Miss.) 71, 35 Am. Dec. 422; Graham v. Holt, 3 Ired. L. (N. Car.) 300, 40 Am. Dec. 408; Ayres v. Harness. 1 Ohio 368, 13 Am. Dec. 629; Shirley v. Burch, 16 Ore. 83, 18 Pac. 351, 8 Am. St. 273; Pennsylvania Ins. Co. V. ^ Ayres v. Probasco, 14 Kans. 175, and cases cited; Vermont Accident Ins. Co. V. Fletcher (Vt), 89 Atl. 480. "Page 54. = Hibblewhite v. M'Morine, 6 M. & W. 200; Davidson v. Cooper, 11 M. & W. 778, 793. These cases dis- tinctly overrule Texira v. Evans, cited and stated by Wilson, J., in Master v. Miller, 1 Anstr. 225, as follows: Evans wanted to borrow £400, or so much of it as his credit should be able to raise; for this purpose he executed a bond, with blanks for the name and sum, and sent an agent to raise money on the fjond; Texira lent £200 on it, and the agent accordingly filled up the blanks with that sum and Texira's name, and delivered the bond to him. On non est factum Lord Mansfield held it a good deed. " The doctrine that written au- thority is requisite for the filling up of material blanks in a deed after execution is declared in Cross 109 BLANKS, ALTERATIONS, EEFOEMING § 90 "The filling of the blanks," said Mr. Justice Chapman in a case in which this rule of the common law was asserted by the Supreme Court of Massachusetts,^ "created the substantial parts of the in- strument itself; as much so as the signing and sealing. If such an act can be done under a parol agreement, in the absence of the grantor, its effect must be to overthrow the doctrine that an authority to make a deed must be given by deed. "We do not think such a change of the ancient common law has been made in this common- wealth, or that the policy of our legislation favors it, or that sound policy would dictate such a change. Our statutes, which provide Dovey, 64 Pa. St. 260; Gilbert v. Anthony, 1 Yerg. (Tenn.) 69, 24 Am. Dec. 439; Mosby v. Arkansas, 4 Sneed (Tenn.) 324; Preston v. Hull, 23 Grat. (Va.) 600, 14 Am. Rep. 153. But the authority of Texira v. Evans has been adopted by some au- thorities in this country: Ex parte Kerwin, 8 Cow. (N. Y.) 118; Chaun- cey V. Arnold, 24 N. Y. 330, where the earlier cases in New York are cited; and although the doctrine of Texira v. Evans is spoken of by Mr. Justice Smith as the settled doctrine in that state, yet Mr. Jus- tice Denio speaks with apparent ap- proval of the English cases over- ruling the "looser doctrine" of that case. In the case before the court, the question whether the mort- gagee's name could be filled in by one acting for the mortgagor under parol authority was left undecided, for In that case the name of the lender was not filled in at all; and it was held that the mortgage was ineffectual as security in the hands of one who had advanced money upon it in that condition. See also Campbell v. Smith, 8 Hun 6, 71 N. Y. 26, 27 Am. Rep. 5. The authority of Texira v. Evans has also been followed in South Carolina: Duncan v. Hodges, 4 Mc- cord (S. Car.) 239, 17 Am. Dec. 734; Gourdin v. Commander, 6 Rich. (S. Car.) 497. It was followed in the earlier cases in Pennsylvania: Wiley v. Moor, 17 Serg. & R. (Pa.) 438, 17 Am. Dec. 696; but in Wallace v. Harmstad, 15 Pa. St. 462, 53 Am. Dec. 603, Chief Justice Gibson said that Texira v. Evans could only be sustained on the ground that the obligor had estopped himself by an act in pais; which is in effect to wholly discard the doctrine of the case. There is a dictum by Mr. Justice Nelson of the Supreme Court of the United States, followed by Wagner, J., in Missouri, that a person com- petent to convey real estate may sign a deed in blank and authorize an agent to fill it up; but it was held in both cases that a married woman could not make such a con- veyance of her separate estate, hav- ing no authority to delegate such powers. Drury v. Foster, 2 Wall. (U. S.) 24, 17 L. ed. 780; McQuie v. Peay, 58 Mo. 56. It is followed, also, in Wisconsin: Van Etta v. Evanson, 28 Wis. 33, 9 Am. Rep. 486; Vliet v. Camp, 13 Wis. 198; Nelson v. McDonald, 80 Wis. 605, 50 N. W. 893. In Van Etta V. Evanson, 28 Wis. 33, where it was held that the name of the mortgagee might be filled in by an agent after the execution of the mortgage, the ground was taken that the fact of the delivery of the paper to the agent sufficiently showed the intention that he should supply the name of the person who might take the mortgage. It is held in Missouri that the delivery of an instrument with blanks creates an agency in the re- ceiver to fill the blanks in the way contemplated by the maker; and this principle is applicable to the blanks for a description in a mort- gage. Roe V. Town Mut. Fire Ins. Co., 78 Mo. App. 452. "Burns v. Lynde, 6 Allen (Mass.) 305. § 91 FORM AND REQUISITES 110 for the conveyance of real estate by deed acknowledged and recorded, and for the acknowledgment and recording of powers of attorney for making deeds, are evidently based on the ancient doctrines of the common law respecting the execution of deeds; and a valuable and important purpose which these doctrines still serve is, to guard against mistakes which are likely to arise out of verbal arrangements, from misunderstanding and defect of memory, even where there is no fraud. * * * If this method of executing deeds is sanctioned, it will follow that, though the defendant has a regularly executed deed, yet it remains to be settled by parol evidence whether he ought to have been the grantee, what land should have been described, whether the deed should have been absolute or conditional, and, if conditional, what the terms of the condition should have been. To leave titles to real estate subject to such disputes would subject them to great and needless insecurity." A mortgage will not be declared void because it contained no de- scription of the property when it was created, unless it be shown by a preponderance of the evidence that such was the fact. If the instrument appears upon its face to have been regularly executed, there is a presumption that it has not been altered since its execu- tion ; and if the evidence is conflicting and evenly balanced as regards such alteration, the instrument will not be held void.^ § 91. Authority to fill in blanks. — Written authority is essential for filling any blank which materially affects the meaning and opera- tion of a deed. If any such blank be filled after execution by another person having only verbal authority, unless the instrument be rede- livered and acknowledged anew, it is void. Such authority to another to fill up an instrument or any material part of it after its execution is sufficient in a case of a simple contract, but not for filling up a sealed instrument. The stream can never rise higher than its source. Authority to make an instrument under seal, or to affix a seal to it, must be given by an instrument of equal authority.'^ The name of = Des Moines Nat. Bank v. Hard- the name of an obligee in a bond, ing, 86 Iowa 153, 53 N. W. 99; Hard- after the execution of it, was held ing V. Bank, 81 Iowa 499, 46 N. W. to render it invalid, the doctrine 1071; Pennsylvania Ins. Co. v. of the text was fully declared. Upon Dovey, 64 Pa. St. 260. the point under consideration 'Upton V. Archer, 41 Cal. 85, 10 Mr. Justice Staples said: "If the Am. Rep. 266. name of the obligee may be in- In a case before the Court of serted, why may not the sum also? Appeals in Virginia (Preston v. And if these may be supplied, why Hull, 23 Grat. (Va.) 600, 14 Am. not the more formal parts of the Rep. 153), where the filling in of deed? If we once depart from the Ill BLANKS, ALTERATIONS, REFORMING § 92 the grantee or mortgagee can not be properly filled in after execution of the instrument. Such name may, however, be filled in by the oSicer taking the acknowledgment of the deed, before the delivery of it to the grantee.* V/here the mortgagor, after the execution of the deed by his wife, without her knowledge inserts the description of additional property, the mortgage is a valid lien upon the property originally covered by it; and though it would ordinarily be valid as to the additional property against the husband, it is not so when the additional property is a homestead, for the conveyance of which it is necessary that the husband and wife should join.® But in a few states it is held that the authority to fill material blanks may be given by parol; and it is even held that if the agent exceeds his instructions in filling the blanks, and negotiates the in- strument with innocent third persons, the principal will be bound by the acts of his agent, although unauthorized.^" § 92. Irregular execution — ^Estoppel. — The mortgagor may be estopped from taking advantage of the irregular execution, through the filling of blanks by some one not authorized in writing, by his acts in relation to the transaction.^^ Thus where a deed was so filled up and delivered to the grantee, who was ignorant of any rule, how is the line to be drawn the manner contemplated by the consistently with the preservation maker. of any rule at all? If we say that 'McNab v. Young, 81 111, 11. the name or sum may be inserted "Van Horn v. Bell, 11 Iowa 465, by the agent, will it not lead us 79 Am. Dec. 506. See also White v. inevitably to the doctrine that the Owen, 30 Grat. (Va.) 43; Jenkins entire deed may be executed by the v. Simmons, 37 Kans. 496, 15 Pac. agent also? We shall be carried on 522. step by step, if we mean to be con- "Nelson v. McDonald, 80 Wis. sistent, until we have destroyed 605, 50 N. W. 893. In this case a all the well-settled distinctions be- wife signed a note with her hus- tween sealed and unsealed instru- band, and signed a mortgage secur- ments." ing it, the description of the prop- In Iowa, however, it is held that erty being blank. The purchaser a deed executed in blank as to the advanced the money thereon, and grantee confers authority on a real had no notice of the fraud on the or intended grantee to fill in his wife. It was held that the wife own name. Logan v. Miller, 106 was bound by the acts of her hus- lowa 511, 76 N. W. 1005; McClain band. Johnston Harvester Co. v. V. McClain, 52 Iowa 272, 3 N. W. McLean, 57 Wis. 258, 15 N. W. 177. 60; Montgomery V. Dresher, 90 Nebr. See also Langhorst v. Shutteldryer, 633, 134 N. W. 251; Roe v. Town 2 W. L. B. 125. Mut. Fire Ins. Co., 78 Mo. App. 452. "Carr v. McColgan, 100 Md. 462, The latter case held that delivery 60 Atl. 606; Lockwood v. Bassett, 49 of a contract with blanks, consti- Mich. 546, 14 N. W. 492; Hemmen- tuting a mortgage, created an agency way v. Mulock, 56 How. Pr. (N. in the receiver to fill the blanks in Y.) 38. § 93 FOEM AND REQUISITES 112 irregularity in the execution of it, and the grantors, being fully ad- vised of the delivery of the deed, permitted the grantee to enter into possession and make improvements, and became his tenants and paid him. rent, they were not allowed to claim that the deed was void by reason of such irregularity.^'' But the mere fact that the mortgagor has enjoyed the benefit of the money loaned, or a portion of the money, is not by itself a sufficient ground upon which to found an equitable estoppel. Objection that a deed was executed in blank, and the name of the grantee inserted after delivery, can only be taken by the grantor, or by some one claiming through him, or in his right.^^ § 93. Essentials of estoppel. — A mortgagee invoking the aid of estoppel must show that he has been vigilant and careful in the pro- tection of his own rights and interests. No protection will be given him against his own negligence and folly. ^* To avail himself of the acts and admissions of the mortgagor, he must have been ignorant of the irregularity in the execution of the mortgage, and must have taken it with good reason to suppose it was properly executed. Moreover, the subsequent acts of the mortgagor are no admission or ratification of the giving of the mortgage, unless the facts of the transaction be known to him.'^^ He can not ratify a thing that he does not know the existence of, and can not be estopped by acts he never performed. An estoppel may arise from acquiescence. Thus a mortgagee who took from a prior mortgagee a relinquishment waiving priority was held estopped thereafter ■ to allege that the prior mortgage was fraudulent.^^ "Knaggs V. Mastin, 9 Kans. 532. should have said: "I know that " McNab V. Young, 81 111. 11. mortgage is void as a mortgage of "Ayres'v. Probasco, 14 Kans. 175, Mrs. Ayres; I will, therefore, not 190, Mr. Justice Valentine said: receive it. You must furnish me "Where a person negligently or a better mortgage if you want the Icnowingly puts it within the money." power of some other person to ^ In the same case, in illustra- swindle and defraud him, and he is tlon of this point, the same justice thereby swindled and defrauded, he said: "There is no evidence show- is generally allowed to suffer the Ing that Mrs. Ayres ever before- consequences of his own negli- hand authorized said mortgage to gence and folly." In the case before be filled up as it was in fact filled the court, the mortgagee, through up, or ever afterward knew that the his agent, knew that the mortgage same was so filled up, or ever knew was executed in blank and after- that it was delivered to Probasco ward filled up in the absence of as the mortgagee, or ever performed the wife, whose land it was in- an act which could be construed tended to mortgage, inasmuch as into a ratification of the instru- the deed was filled up in the agent's ment." presence. When the mortgage so " Parker v. Parker, 52 S. Car. 382, executed was offered to him he 29 S. E. 805. 113 BLANKS, ALTEEATIOXS, REFORMING § 94 § 94. Material alteration. — A material alteration of a mortgage made without the consent of the mortgagor by the holder of it, or by any one after delivery, and while in the possession or custody of the rightful owner of it, has the effect of destroying and annulling the instrument as between the parties to it.^^ A material alteration of an instrument is any alteration which causes it to speak a language different in legal effect from that which it originally spoke.^* An alteration by a mere stranger without the knowledge or consent of the holder, and while it is out of his custody, does not have this effect.io A material alteration of a promissory note secured by a mortgage cancels the debt and discharges the mortgage. The note is not merely vitiated, but the debt is discharged, and with the discharge of the debt goes a discharge of the mortgage.^" This principle was applied to making void a mortgage altered under the following circumstances: A married woman, being the owner of a house and lot, known as lot H, executed a mortgage to secure her husband's debt, in consideration of the extension of the time of payment. The mortgage, however, did not describe her property, but described a lot known as lot 26. After the delivery of the deed the error was discovered, and the mortgagee's attorney took the mortgage to the husband and his attorney for cor- rection. The words, "being the same property conveyed to the party "Russell V. Reed, 36 Minn. 376, material alteration will not avail 31 N. W. 452; Merchants' &c Bank to revive the instrument and give V. Dent, 102 Miss. 455, 59 So. 805 it force. Snell v. Davis, 149 111. App. (fraudulent alteration of descrip- 391. tion in trust deed); Kime v. Jesse, "Murray v. Klinzing, 64 Conn. 78, 52 Nebr. 606, 72 N. W. 1050; Meyer 29 Atl. 244; Wheelock v. Freeman, V. Huneke, 55 N. Y. 412; Marcy v. 13 Pick. (Mass.) 168, 23 Am. Dec. Dunlap, 5 Lans. (N. Y.) 365; War- 674; Bridges v. Winters, 42 Miss. ing V. Smyth, 2 Barb. Ch. (N. Y.) 135, 97 Am. Dec. 443; Foxworthy v. 119, 47 Am. Dec. 299; Pigot's Case, Colby, 64 Nebr. 216, 89 N. W. 800, 11 Coke 26b. The insertion of the 62 L. R. A. 393. word "gold" before "dollars" is a "Marcy v. Dunlap, 5 Lans. (N. material alteration. Foxworthy v. Y.) 365, per Johnson, J., and cases Colby, 64 Nebr. 216, 89 N. W. 800, cited; Fry v. Jenkins, 173 111. App. 62 L. R. A. 393. A deed of trust 486; Smith v. Chadsey, 1 Thomp. altered by the beneficiary, to secure & C. (N. Y.) addenda 7. Delivery other notes than those intended, is and acknowledgment of a mortgage, void. Powell v. Banks, 146 Mo. 620, after alteration of the date, consti- 48 S. W. 664. Such is the effect of tutes a ratification of the alteration. an alteration by a mortgagee after Styles v. Scotland, 22 N. Dak. 469, delivery of the mortgage, by insert- 134 N. W. 708. ing a clause to the effect that scire ™ King v. Bellamy, 82 Kans. 301, facias may issue in case of twenty 108 Pac. 117; Warder v. Willyard, days' default in payment. Mcln- 46 Minn. 531, 49 N. W. 300, 24 Am. tyre v. Velte (Pa.), 25 Atl. 739. The St. 250; Whitmer v. Frye, 10 Mo. restoration of an instrument to its 349; Walton Plow Co. v. Campbell, original form after an unauthorized 35 Nebr. 173, 52 N. W. 883; Smith 8 — Jones Mtg.— Vol. I. § 94 FORM AND REQUISITES 114 of the first part," etc., describing the deed to the mortgagor of lot H, ■were added to the description contained in the mortgage, by the hus- band's attorney, in the presence of the attorney of the mortgagee, without consulting the wife in regard to the alteration, and she had no knowledge of the change until suit was brought to reform and foreclose the mortgage. It was held that the suit could not be main- tained for either purpose.^'^ The unauthorized insertion of the word "gold" before the word "dollars" in a mortgage after its execution and delivery has been held a material alteration.^^ An indorsement on a mortgage note by a purchaser of the equity of redemption, agreeing to pay a higher rate of interest, made with- out the knowledge or consent of the maker of the note, is not an altera- tion of the note, for the alteration did not bind the maker, but only the purchaser of the equity of redemption. The original note and the maker's obligation remained intact.^^ But the former rule, rendering void an instrument altered while in the custody of the rightful holder, has in many courts given place to the more equitable rule that the instrument is not rendered void if the alteration was made by mistake, or without any fraudulent intent.^* Thus an alteration of the description in a mortgage by the husband of the mortgagor, with the mortgagee's consent, in good faith, in an honest effort to correct a mistake, and to make it conform to the intention of the parties at the time of its execution, does not render the mortgage void, but it is operative as to the land actually de- scribed in the original deed.^° The alteration is, of course, void, but the title granted by the instrument is not divested.^* Where an alteration or erasure is apparent upon the face of the instrument, the presumption of law is that it was made prior to its V. Mace, 44 N. H. 553; Martendale '"Mathias v. Leathers, 99 Iowa 18, V. Pollett, 1 N. H. 95; Bigelow v. 68 N. W. 449; Gunter v. Addy, 58 S. StUphen, 35 Vt. 521; Newell v. May- Car. 178, 36 S. E. 553; McClure v. berry, 3 Leigh (Va.) 250. A mar- Little, 15 Utah 379, 49 Pac. 298, 62 ginal notation of the name of a sub- Am. St. 938. sequent purchaser is not an altera- =" Harding v. Des Moines Nat. tion available to the mortgagors. Bank, 81 Iowa 499, 46 N. "W. 1071; Schafer v. Jackson, 155 Iowa 108, Nichols v. Rosenfeld, 181 Mass. 525, 135 N. W. 622. 63 N. E. 1063; Kime v. Jesse, 52 =• Marcy v. Dunlap, 5 Lans. (N. Nebr. 606, 72 N. W. 1050. Y.) 365. ""Burgess v. Blake, 128 Ala. 105, ^"Foxworthy v. Colby, 64 Nebr. 28 So. 963; Alabama State Land 216, 89 N. W. 800, 62 L. R. A. 393. Co. v. Thompson, 104 Ala. 570, 16 So. 2' Boutelle V. Carpenter, 182 Mass. 440; Burnett v. McCluey, 78 Mo. 417. See also Stone v. White, 8 676. Gray (Mass.) 589. 115 BLANKS, ALTEEATIONS, REFORMING § 95 execution, and the burden is upon the maker to show that it was altered after delivery. The question when an alteration was made, by whom it was made, and with what intent, is one of fact, to be sub- mitted to the jury upon the whole evidence, intrinsic and extrinsic.^' If the evidence in regard to the fact of an alteration is conflicting and evenly balanced, the presumption that the mortgage had not been altered must prevail.^* § 95. Immaterial alteration. — An alteration of an instrument which does not change its legal effect does not in law amount to an alteration, and of course does not invalidate it either at law or in equity.^® The alteration of numbers upon a series of negotiable state bonds is an immaterial alteration, where the law does not require the bonds to be numbered, and the presence or absence of the number does not affect in substance or form the written contract or proof thereof.^" An alteration which does change the legal effect of the deed may at any time be made by consent of both parties to it;'*^ thus it has been held that, authority given in a mortgage to the re- corder to insert a portion of the description omitted, when it could be obtained, is equivalent to a power of attorney to make such addi- " Wilson V. Hayes, 40 Minn. 531, of the interlined words; or if it is 42 N. W. 467, 12 Am. St. 754; Rod- in a handwriting different from the riguez v. Haynes, 76 Tex. 225, 13 S. body of the instrument, or it appears W. 296. to have been written with different ^Vogel V. Ripper, 34 111. 100; ink — in all such cases, if the court Foote V. Hambrick, 70 Miss. 157, 11 considers the interlineation suspi- So. 567; State Savings Bank v. cious on its face, the presumption Shaffer, 9 Nebr. 1, 1 N. W. 980. will be that it was an unauthorized ^Hart V. Sharpton, 124 Ala. 638, alteration after execution. On the 27 So. 450; Fry v. Jenkins, 173 111. other hand, if the interlineation ap- App. 486 (alteration of date); Bayse pears in the same handwriting with V. McKinney, 43 Ind. App. 422, 87 the original instrument, and bears N. B. 693; Goodenow v. Curtis, 33 no evidence on its face of having Mich. 505; Styles v. Scotland, 22 N. been made subsequent to the execu- Dak. 469, 134 N. W. 708 (alteration tion of the instrument, and espe- of date). The immaterial altera- cially if it only makes clear what tion of a note secured by- a mort- was the evident intention of the gage, by adding the name of the parties, the law will presume that wife of the mortgagor does not in- it was made in good faith, and be- validate the mortgage. Souza v. fore execution." See also Hart v. Lucas (Cal. App.), 100 Pac. 115. Sharpton, supra. As to burden of As to burden of proof to show proof, see Hill v. ISTelms, 86 Ala. whether an interlineation was made 442, 5 So. 796; Montgomery v. Cross- before or after execution, see Cox thwait, 90 Ala. 553, 8 So. 498. V. Palmer, 1 McCrary (U. S.) 341, '"Commonwealth v. Emigrant In- where McCrary, J., said: "If the dustrial Sav. Bank, 98 Mass. 12, 93 interlineation is in itself suspicious, Am. Dec. 126. as, if it appears to be contrary to "Gunter v. Addy, 58 S. Car. 178, the probable meaning of the instru- 36 S. E. 553. ment as it stood before the insertion § 96 FOEM AND REQUISITES 116 tion, and that a snbseqiient incumbrancer could not object to the exercise of this power.'^ It would seem, nevertheless, that the de- scription given in the mortgage to warrant such a filling up must be sufScient to indicate the property with such certainty that the lien upon it would exist without further description. A mortgage is not rendered invalid by the grantee's fraudulently adding the name of the mortgagor's wife in release of dower.^' It is valid as against the husband without the wife's signature. The title to the property passes and vests in the grantee by the execution of the deed, and the subsequent alteration or destruction of the instrument does not affect this title. § 96. Alteration by parol. — The terms of a mortgage can not be varied by any verbal agreement or understanding of the parties anterior to the execution of it. It can not rest partly in writing and partly in parol. No evidence of the acts or conversation of the parties prior to the execution of the mortgage, or at the time of it, can be admitted to contradict or vary the instrument where its terms are unambiguous.""' "The true meaning of the terms of a mortgage, like the meaning of the terms in other written instruments, must be gathered from the writing itself where it is plain and unambiguous. It can not be added to or varied by showing extrinsic matters, or a prior or contemporaneous parol agreement."^^ It may not be shown by parol that a mortgage securing advances made was also to cover future advances.^" The fact that a mortgagor, before the signing of the mortgage, ob- jected to the terms of it, and desired to reserve a certain portion of the property included in it, can not be received to vary the effect of '^ Harshey v. Blackmarr, 20 Iowa ^ Hanchey v. Powell, 171 Ala. 597, 161, 89 Am. Dec. 520. The descrlp- 55 So. 97; Cox v. Smith, 99 Ark. 218, tion was as follows: 138 S. W. 978; Quartermous v. Ken- "We, J. L. Blackmarr and Belinda nedy, 29 Ark. 544; Fowler v. Pen- (his wife), sell and convey unto dleton, 121 Md. 297, 88 Atl. 124; John Harshey, etc., the following Kirkbride &c. Oil Co. v. Satterlee, described premises, in Marshall 32 Okla. 22, 121 Pac. 635; Smith v. county, Iowa, to wit: eighty acres Texas &c. R. Co. (Tex. Civ. App.), of land, bought of Rev. James M. 105 S. W. 528. The rule forbidding Holland, lying ten miles southward the varying of written contracts by from Marshalltown, in Marshall parol applies to a mortgage exe- county, Iowa; and so soon as the cuted in Porto Rico before that numbers of the above land are ob- island became territory of the United tained, we agree that they shall be States. Veve v. Sanchez, 226 U. S. inserted in this deed, as our own 234, 33 Sup. Ct. 36. voluntary act, and the recorder of =" Bartlett Estate Co. v. Fairhaven Marshall county is instructed to do Land Co., 49 Wash. 58, 94 Pac. 900, the same for us." 15 L. R. A. (N. S.) 590. =' Kendall v. Kendall, 12 Allen "Barnhart v. Edwards, 115 Cal (Mass.) 92. 17, 47 Pac. 251. 117 BLAXKS, ALTERATIOXS, KEFOEJIING § 97 it.^' Even an agreement of the parties at the time of the execution of the mortgage, that it should not be a lien upon certain portions of the property included in it, would have no effect against the terms of it. The terms of the mortgage may, however, be varied by a written agreement executed at the time of the mortgage. Such an agreement then becomes in fact a part of the mortgage, and the two instruments must be construed together.^* Parol evidence is sometimes admissible to show the real object of a mortgage and that it was given for a purpose not disclosed in the condition.^® The rule against the varying of written instruments, including mortgages, applies solely to the parties to the instrument and not to third parties.*" § 97. Reformation. — Whenever there has been a material omis- sion or mistake in the deed, so that it fails to express what the parties intended, a court of equity may, as between the parties, reform and correct it in accordance with the transaction as it was actually agreed upon.*^ The mortgage may be reformed in the matter of a mistake of de- scription to conform to the intentions of the parties.*^ So, when part of the lands agreed to be mortgaged were omitted in the mort- gage deed, it may be so reformed as to include them.*^ And so, on the other hand, if by mistake it include land not belonging to the grantor,*^ or other land of his not intended to be included, the de- scription may be reformed. A material mistake in any part of the =' Patterson v. Taylor, 15 Fla. 336. denhall v. Steckel, 47 Md. 453, 28 '^Pitzer V. Burns, 7 W. Va. 63. Am. Rep. 481; Godwin v. Da Con- == Campbell v. Perth Amboy Ship- turbia, 115 Md. 488, 80 Atl. 1016; building &c. Co., 70 N. J. Eq. 40, 62 Anderson v. Baughman, 7 Mich. 69, Atl. 319; Boren v. Boren, 29 Tex. 74 Am. Dec. 699; McMillan v. N. Y. Civ. App. 221, 68 S. W. 184; Lippin- Water Proof Paper Co., 29 N. J. Eq. cott V. Lawrie, 119 Wis. 573, 97 N. 610; Dietrich v. Hutchinson, 73 Vt. W. 179. See also Brouillard v. 134. See post § 1464. Stimpson, 201 Mass. 236, 87 N. E. "^ Manogue v. Bryant, 15 App. D. 493. C. 245; Keys v. Lardner, 59 Kans. "Aleshire v. Lee County Sav. 545, 53 Pac. 758; Silliman v. Taylor, Bank, 105 111. App. 32; Livingston 35 Tex. Civ. App. 490, 80 S. W. 651; V. Heck, 122 Iowa 74, 94 N. W. 1098; Jenkins v. Jenkins University, 17 Wilson V. Mulloney, 185 Mass. 430, Wash. 160, 49 Pac. 247. But see 70 N. E. 448. Adams v. Baker, 24 Nev. 162, 51 « Bright V. Buckman, 39 Fed. 243; Pac. 252, 77 Am. St. 799. Kerchner v. Frazier, 106 Ga. 437, 32 « Keister v. Myers, 115 Ind. 312, S. E. 351; Phillips v. Roquemore, 96 17 N. E. 161; Hunt v. Hunt, 38 Mich. Ga. 719, 23 S. B. 855; Loomis v. 161; Blodgett v. Hobart, 18 Vt. 414. Hudson, 18 Iowa 416; Lear v. Pra- "Ruhling v. Hackett, 1 Nev. 360. ther, 89 Ky. 501, 12 S. W. 946; Men- § 97 FORM AND REQUISITES 118 deed, as for instance the description of the land,*' in the condition,*® or in the estate conveyed, the word successors having been used in- stead of heirs, may be reformed.*^ But the court will not correct a mere error of statement as to the origin of the mortgagor's title, when the deed is effectual as it stands.** A mortgage will be reformed and enforced which was intended by the parties to convey the fee, but which by mistake or ignorance only conveyed the life estate.*' The mortgage may be corrected so as to include land omitted through mu- tual mistake.^" Eeformation will generally be allowed for mutual mis- take in the absence of waiver or estoppel,^^ but a void mortgage is incapable of reformation.'^ A mortgage may be reformed by insert- ing the name of the mortgagee when this has been omitted by mistake, and it appears upon the face of the mortgage that the consideration moved from the complainant, that it was given to secure a debt due to him, and that the omission of flie name was a mere oversight.'* When a mistake is clearly shown, a claim by the adverse party of misapprehension on his part will not be regarded.'* But the fact of mistake must be shown beyond a reasonable doubt;" as also what the parties really intended.^" "The proof of mistake must be clear and certain before an instrument can be reformed; as the object of the reformation of an instrument is to make it express what the minds of the parties to it had met upon, and what they intended to express, and supposed they had expressed, in the writing. Unless this meet- ing of minds, and mistake in expressing it, is made quite clear and certain by evidence, the court should it undertake to reform, might, ' « Craig V. Pendleton, 89 Ark. 259, " First Nat. Bank v. "Wentworth, 116 S. W. 209; Fisher v. Villamil, 28 Kans. 183; Martin v. Nixon, 92 62 Fla. 472, 56 So. 559, 39 L. R. A. Mo. 26, 4 S. "W. 503; Land Mortgage (N. S.) 90, Ann. Cas. 1913 D, 1003; Co. v. Nicholson, 24 Wash. 258, 64 Adams v. Davis. 63 Fla. 324, 58 So. Pac. 156. 837; Snell v. Snell, 123 111. 403, 14 "Rowell v. Smith, 123 "Wis. 512, N. E. 684; Tichenor v. Yankey, 89 102 N. W. 1. Ky. 508, 12 S. W. 947; Harper v. "Day v. Shiver, 137 Ala. 185, 33 Combs, 61 W. Va. 561, 56 S. B. 902. So. 831; Montgomery v. Ferryman, " Wooden v. Haviland, 18 Conn. 147 Ala. 207, 41 So. 838, 119 Am. St. 101; Manatt v. Starr, 72 Iowa 677, 61. 34 N. W. 784. ==Parlin v. Stone, 1 McCrary (U. "McMillan v. N. Y. Water Proof S.) 443. Paper Co., 29 N. J. Eq. 610; Fish v. =* Wooden v. Haviland, 18 Conn. N. Y. Water Proof Paper Co., 29 N. 101. J. Bq. 16. ==Hervey v. Savery, 48 Iowa 313; *" Hathaway v. Juneau, 15 Wis. Bodwell v. Heaton, 40 Kans. 36, 18 262. Pac. 901. " Lardner v. Williams, 98 Wis. 514, ™ Turner v. Hart, 1 Fed. 295. 74 N. W. 346. 119 BLANKS, ALTERATIONS, EEFOEMING § 97 under color of reformation, make a contract for the parties which both never assented to, or intended to make."^^ A mortgage may be reformed to express the mutual intention of the parties that the principal of a senior mortgage should be excepted from the operation of its covenants, where this failure of the mort- gage in this respect was due to a scrivener's mistake."* The mistake, to be the subject of reformation, must be not merely the oversight of one of the parties, but such that the deed fails to express what was intended and agreed upon by both parties. "' The court will not re- form a deed so as to add to it a new condition not contemplated by one of the parties in the execution of it f it will not make it include what was intended by one party, unless it appear that the other party at the time had the sarrle intention;"^ or unless the other party fraud- ulently induced him to believe the mortgage contained what he asks to have it made to include; as where the mortgagor by false and fraud- ulent representations induced the mortgagee to believe, when he loaned the money and accepted the mortgage, that it covered more and other land and buildings than it did, the mortgage was re- formed, and enforced against the lands fraudulently omitted."^ In case part of the mortgage contract is contained in a will exe- cuted by the mortgagee at the same time with the mortgage, the mortgagor need not seek for reformation of the mortgage for the purpose of incorporating in the mortgage such part of the contract. Thus, where the mortgagor testified that the debt was to be paid in ten years after the mortgagee's death by annual instalments, and this was confirmed by the mortgagee's will executed at the same time, it was held that such will and mortgage would be construed together as one contract, and the testator could not, by a later will, deprive the mortgagor of his right of redemption by annual payments within the time named. '^ The right to have a deed reformed may be lost by laches.*'* " Per Johnson, J., in Marcy v. *' Fry v. Jenkins, 173 111. App. 486. Dunlap, 5 Lans. (N. Y.) 365. See «'De Peyster v. Hasbrouck, 11 N. also Alexander v. Caldwell, 55 Ala. Y. 582. See also Rider v. Powell, 28 517. N. Y. 310. "Allls V. Hall, 76 Conn. 322, 56 «=Keagle v. Pessell, 91 Mich. 618, Atl. 637. 52 N. W. 58. =» Bernheim v. Talbot, 54 Ore. 30, «* Paulison v. Van Iderstine, 29 N. 100 Pac. 1107; Barker v. Harlan, 3 J. Eq. 594. See also First Nat. Bank Lea (Tenn.) 505. v. Gough, 61 Ind. 147. In the fol- * Hart v. Hart, 23 Iowa 599, where lowing cases the delay was held in- the court refused to reform a mort- sufficient, under the circumstances, gage for support, so as to require to constitute laches: Travelli v. the mortgagee to live at a particu- Bowman, 150 Cal. 587, 89 Pac. 347 lar place. (failure of plaintiff's attorney to § 98 rOEM AND REQUISITES 130 Any consideration that will support a mortgage is sufficient to en- title the mortgagee to maintain an action to correct a mutual mistake in the same against the mortgagor and those holding under him as purchasers with notice."'' § 98. Who may obtain reformation. — A mortgagee who has sold the note and mortgage, and afterward bought them back again, has the same right to have a mistake corrected as he had before he made the transfer, if he indorsed the note at the time of the sale."* He may have the mistake corrected upon its discovery for the first time after he has purchased the land under a foreclosure sale, and taken pos- session as purchaser."' But equity will not, ordinarily, reform a mortgage at the instance of one who is a mere volunteer, and not a party to the instrument."* Accordingly the court will not reform a description in a mortgage deed at the suit of another who has become purchaser at a sale by the mortgagee."' If, however, a sheriff in making a deed of land sold by him under a foreclosure sale inserts a wrong description, he has an interest, both as an individual and as trustee, to prevent an injury to himself and the grantor in the mort- gage because of the mistake, and is a proper party to bring suit in equity to reform the deed.''" The party desiring a reformation of a deed should bring a bill in equity for the purpose. A mortgagor can not ask for this relief in an- swer to a bill to foreclose, but he may file a cross-bill.'^ The mortgagee may ask for a reformation of the mortgage in a bill to foreclose it.'^ Before a trustee in a trust deed can maintain a suit to reform it so as to include other lands, he must show that the debt has not been paid.'^ A mortgagee who has assigned his mortgage is not a neces- sary or proper party to a suit by the assignee for its reformation.'* discover the trust deed among his " Haley v. Bagley, 37 Mo. 363. See papers); Kelsey v. Agricultural Ins. also Jackson v. Lucas, 157 Ala. 51, Co., 78 N. J. Eq. 378, 79 Atl. 539 47 So. 224, 131 Am. St. 17. But see (reformation by second mortgage Greer v. Watson, 170 Ala. 334, 54 after four years); Arnstein v. Bern- So. 487; Goulding Fertilizer Co. v. stein, 127 App. Div. 550, 111 N. Y. Blanchard, 178 Ala. 298, 59 So. 485. S. 987 (reformation upon foreclo- '"Dodson v. Lomax (Mc), 21 S. sure, in reference to assumption W. 25. clause). "French v. Griffin, 18 N. J. Eq. «= Citizens' Nat. Bank v. Judy, 146 279. Ind. 322, 43 N. E. 259. "Alexander v. Rea, 50 Ala. 450; ^ Kennard v. George, 44 N. H. 440. Miller v. Kolb, 47 Ind. 220. See ""Davenport v. Sovil, 6 Ohio St. post § 1464. 459. See also First Nat. Bank v. " Dessart v. Bonynge, 10 Ariz. 37, Gough, 61 Ind. 147. 85 Pac. 72S. « Gould v. Glass, 120 Ga. 50, 47 S. " Keister v. Meyers, 115 Ind. 312, E. 505. 17 N. E. 161. 121 BLA^^KS, ALTEKATIOXS, EEFOEMING § 99 § 99. Against whom reformation may be had. — A mistake in the description of the land may be corrected as between the parties, or as against the heirs of either/^ or judgment creditors of the mort- gagor,"* or purchasers with notice,'^ but courts of equity can grant no relief as against one who has purchased the property in good faith and for a valuable consideration without notice of the mistake ; and conse- quently a bill which seeks to do this is defective when it fails to allege that the purchaser took the land with notice of the mistake.'* It is obvious, however, that a purchaser with notice stands in no better position than the mortgagor himself.'" As against a purchaser at an execution sale, notice of mistake before or at the sale is sufiBcient.*" It is the holding of one of the cases that where a mortgage upon real estate does not contain a correct description of any land, but the de- scription therein contained is sufficient to indicate to any person fa- miliar with such matters what was intended thereby, and the cor- rect description is further indicated by a plat contained in the ap- plication for the loan, — it was proper to decree reformation though the land was then owned by a subsequent purchaser.^^ A voluntary grantee also stands in the same position as the mort- gagor, and a conveyance for less than the real value is held to be vol- untary so far as the value exceeds the consideration paid.*^ The mort- '^Brinson v. Berry (Miss.), 7 So. "Bright v. Buckman, 39 Fed. 243; 322; Gates v. Union Naval Stores Fielder v. Varner, 45 Ala. 428. See Co., 92 Miss. 227, 45 So. 979; Missis- also Goodman v. Randall, 44 Conn, sippi Val. Trust Co. v. McDonald, 321; Craig v. Pendleton, 89 Ark. 146 Mo. 467, 48 S. W. 483; Straman 259, 116 S. W. 209; Manogue v. Bry- V. Rechtine, 58 Ohio St. 443, 51 N. ant, 15 App. D. C. 245; Manatt v. E. 44; Jenkins v. Jenkins Univer- Starr, 72 Iowa 677, 34 N. W. 784; sity, 17 Wash. 160, 49 Pac. 247. Hunt v. Hunt, 38 Mich. 161; Toll '" Citizens' Nat. Bank v. Judy, 146 v. Davinport, 74 Mich. 386, 42 N. Ind. 322, 43 N. E. 259. W. 63; Gale v. Morris, 29 N. J. Eq. "Citizens' Nat. Bank t. Judy, 146 222; Rutgers v. Kingsland, 7 N. J. Ind. 322, 43 N. E. 259; Doom v. Eq. 178, 658; Ruhling v. Hackett, 1 Holmes, 9 Kans. App. 520, 60 Pac. Nev. 360; Strang t. Beach, 11 Ohio 1096; Carpenter Paper Co. T. Wilcox, St. 283, 78 Am. Dec. 308. 50 Nebr. 659, 70 N. W. 228; Peters *> Williams v. Hatch, 38 Ala. 338. V. Fell, 15 S. Dak. 391, 89 N. W. «*Doom v. Holmes, 9 Kans. App. 1014. 520, 60 Pac. 1096. " Reeves v. Vinacke, 1 McCrary '" Snyder v. Partridge, 138 111. 173, (U. S.) 213; Bright v. Buckman, 39 29 N. E. 851; Keeder v. Murphy, 43 Fed. 243; Munford v. Miller, 7 Iowa 413; Strong v. Lawrence, 58 Bradw. (111.) 62; Sickmon v. Wood, Iowa 55, 12 N. W. 74; Worthington 69 111. 329 ; Easter v. Severin, 64 v. Bullitt, 6 Md. 172 ; Norton v. Nor- Ind. 375; Ford v. Daniels, 71 Mich, ton, 5 Cush. (Mass.) 524; Robinson 77, 38 N. W. 708; Farmers' &c. Bank v. Stewart, 10 N. Y. 189; and citing V. Citizens' Nat. Bank, 25 S. Dak. Boyd v. Dunlap, 1 Johns. Ch. (N. 91, 125 N. W. 642; McLouth v. Hurt, Y.) 58, 478; Church v. Chapin, 35 51 Tex. 115; Fitch v. Boyer, 51 Tex. Vt. 223. 336; Reid v. Rhodes, 106 Va. 701, 66 S. E. 722. § 99 FORM AND REQUISITES 133 gagor's assignee in bankruptcy is not in the position of a purchaser for value without notice, and therefore the mortgage may be reformed as against hini.^^ The reformation of a mortgage relates back to the date of its execution, as against the mortgagor's wife, who became such after the making of the mortgage.** A mortgage can not be reformed as against a prior judgmen!: creditor; but if, having notice of the proceeding, and of a decree for the sale of the property free of incumbrances, he omits to protect his rights, and the property is sold under such de- cree, he can not afterward assert his rights as against the purchaser.*^ A mistake in the mortgage of a married woman in a matter of de- scription merely may be reformed.*" A homestead waiver is not af- fected by a reformation of the description of the land.*' A mortgage may be reformed as against a junior mortgagee whose mortgage was taken, without notice of such a mistake, as security for an antecedent debt, without the surrender of any old security, and without any new consideration moving from him,** in a state where such a purchaser is not considered a purchaser for value.*' The mis- take may be corrected, too, against a subsequent judgment creditor;'"' but not against a purchaser of a subsequent judgment, who has in- vested his money in the purchase of the judgment upon the faith of the apparent lien upon the land.®^ The equity of the mortgagee is regarded as stronger than that of the judgment creditor, who has not, probably, parted with Ms money on the faith of the apparent facts. But when the judgment has been sold and assigned to one ignorant of the mistake in the mortgage, and who has expended his money upon the faith of the rights of the parties as they appear in *' Schulze V. Bolting, 8 Biss. (U. " Snell v. Snell, 123 111. 403, 14 N. S.) 174. B. 684. ** Hawkins v. Pearson, 96 Ala. 369, '" Busenbarke v. Ramey, 53 Ind. 11 So. 304. She is, however, a 499. See also Herring v. Fltts, 43 proper party to the suit, since she Fla. 54, 30 So. 804, 99 Am. St. 108; would be entitled to dower and First Nat. Bank v. Wentworth, 28 homestead if complainant fails on Kans. 183. his proof to correct the description ™ See post § 458. of the mortgaged property, and ""Brewster v. Clamfit, 33 Ark. 72; hence she is entitled to her day in Ft. Smith Mill. Co. v. Mikles, 61 court to contest that issue. Per Ark. 123, 32 S. W. 493; Sample v. McLellan, J. Rowe, 24 Ind. 208; White v. Wilson, »= Fowler V. Hart, 13 How. (U.S.) 6 Blackf. (Ind.) 448, 39 Am. Dec. 373. 437; Wainwright y. Flanders, 64 ""Carper v. Hunger, 62 Ind. 481; Ind. 306. Hamar v. Medsker, 60 Ind. 413. But "Flanders v. O'Brien, 46 Ind. 284; see Petesch v. Hambach, 48 Wis. Wainwright v. Flanders, 64 Ind. 306; 443, 4 N. W. 565. Rutgers v. Kingsland, 7 N. J. Eq. 658. 133 BLANKS, ALTERATIONS, EEFOKMING § 101 the respective securities, it is not considered that there is any superior equity in the mortgagee."^ A mortgage as between the parties to it may be reformed by affix- ing a seal to it; but such reformation would give no validity to a sale made by virtue of a power contained in it. The sale would be a nullity for want of any authority in the mortgagee to make it, and the reformation could give no validity to a transaction originally void.^* If a reformation be resisted when there is really no defense, the defect being a mistake of both parties, the defendant should pay costs.^* § 100. lost mortgage deeds — Equitable relief. — On proof of the loss of a mortgage deed without record of it having been made, the court may, under ordinary circumstances, decree the making of a new mortgage.^^ This may be the only adequate remedy, and without it the mortgagee may be exposed to the total loss of his security. The loss of deeds is a familiar ground of equitable relief. As a general rule a lost mortgage may not be foreclosed unless its execution is as clearly established as though the bill had been filed primarily to estab- lish it as a lost instrument.^® § 101. Construction — Intention — Extrinsic evidence. — A principle of construction applicable to mortgages is, that inasmuch as the mort- gagor is supposed to make his own selection of words and terms in drawing the deed, whenever the language is equivocal or ambiguous it is construed most strongly against him, and in such manner as to make it a valid and binding security for the mortgagee.^' "Courts of equity have ever taken a broad and humane view of the obligations of a mortgagor, and have leaned against the harsh remedies which are often invoked against him, and are inclined to protect him so long as they can justly do so without impairing the obligation of his contract with the mortgagee.'"' *" Flanders v. O'Brien, 46 Ind. 284. 109, and cases cited. See also Em- The rule is otherwise, however, in bree v. Embree, 37 Ind. App. 16, 74 Ohio. Van Thorniley v. Peters, 26 N. E. 44. Ohio St. 471; White v. Denman, 1 °° Union Baptist Church v. Roper Ohio St. 110, 16 Ohio 59; Hood v. (Ala.), 61 So. 288. Brown, 2 Ohio 266. "Jerome v. Hopkins, 2 Mich. 96; "" Springfield Sav. Bank v. Spring- Stuart v. "Worden, 42 Mich. 154, 3 field Cong. Soc, 127 Mass. 516. N. W. 876. '"Meserole v. Leary (N. J.), 23 ""Duncan v. Home Co-op. Co., 221 Atl. 1074. Mo. 315, 120 S. W. 733. "' Lawrence v. Lawrence, 42 N. H. § 101 FORM AND REQUISITES 12J: Another principle of construction is, that the intention of the par- ties as gathered from the instrument is to govern, if the inten- tion be such that it may be legally enforced." The intention of the parties is to be ascertained in accordance with the rules applicable to other contracts.^ "There is no doubt that the intention is the object to be sought for in construction. And to get at that, the situation of the parties, and the nature and object of their transactions, may be looked at. But it must be borne in mind that it is not the business of construction to look outside of the instrument to get at the intention of the parties, and then carry out that intention whether the instru- ment contains language sufiBcient to express it or not; but the sole duty of construction is to find out what was meant by the language of the instrument."^ The construction which the parties themselves have piaced upon a mortgage has force in ease of ambiguity, but prior negotiations in writing leading up to the execution can not affect the instrument finally executed. The whole document should be construed together, by a fair con- sideration of all its terms and provisions. It is improper to isolate phrases from their context and examine them separately.^ Where property is exchanged by deeds, and one grantee gives a mortgage upon that which he receives, to secure the difference in value, the deeds and mortgage may be read together and with reference to the circum- stances, in construing the intention of the parties ; and their manifest intent is not to be derogated from by adhering to the literal terms of the papers. Equity regards substance rather than form, and enforces the actual intent if lawful and just.* A mortgage is subject to and is constraed in the light of all exist- ing laws of the state where executed. If such laws affect the rights '"Walker v. Bement (Ind. App.), phrases from their context and ex- 94 N. E. 339; Weinsteln v. Sinel, amine them by themselves. Har- 133 App. Div. 441, 117 N. Y. S. 346. nickel v. Omaha Water Co., 146 App. ^ Clark v. Brenneman, 86 111. App. Div. 603, 131 N. Y. S. 489. In re 416; Houston v. Curran, 101 111. Howard, 207 Fed. 402; Matt v. Matt, App. 203; Northern Central R. Co. 156 Iowa 503, 137 N. W. 489. V. Hering, 93 Md. 164, 48 Atl. 461. =Harnickell v. Omaha Water Co., '' Paine, J., in Farmers' Loan &c. 146 App. Div. 693, 131 N. Y. S. 489. Co. V. Commercial Bank, 15 Wis. * Stuart v. Worden, 42 Mich. 154, 424, 82 Am. Dec. 689. Intention of 3 N. W. 876. A mortgage executed the parties will he determined by after the passage of a law relating a fair construction of all the terms to the opening of streets is subject and provisions of the instrument; to the act. Jackson v. Pittsburg, it is improper to detach isolated 36 Pa. Super. Ct. 274. 1S5 BLANKS, ALTEKATIOXS, KEFOEMING § 101a of a party to the mortgage, they enter into and become a part of the contract. ° The rights of the mortgagee are not affected by statements made by the mortgagor in an unrecorded application for another loan on other lands." § 101a. Construction — What law governs. — In determining what law governs the construction of a mortgage, several elements must be considered ; first and perhaps most important, the place where the real property lies; second, the place of execution; third, the place of per- formance, and fourth, the residence of the parties. The rule most in accord with the construction of conveyances generally, seems to be that the law of the state where the mortgaged land lies, determines the construction.' Where this is the rule of construction the parties may not vary it by stipulations in the mortgage that the note "is un- derstood to be made with reference to and under the laws" of another state.' There is some authority, however, that the place of execution and of payment controls, though different from the place where the land lies." In some jurisdictions all the foregoing elements are con- sidered and the question is determined by the intention of the parties.^" The law in force at the time of the execution of a mortgage governs its execution and performance.^^ * Crippen v. Comstock, 17 Colo, where. Girard Trust Co. v. Pad- App. 89, 66 Pac. 1074. dock, 88 Nebr. 359, 129 N. W. 550. ' In re Kellog, 121 Fed. 333, 57 C. » Building &c. Assn. v. Bilan, 59 C. A. 547; Ashurst v. Ashurst, 119 Nebr. 458, 81 N. W. 308. Ala. 219, 24 So. 760; Hannah v. Ven- "Lamkin v. Lovell, 176 Ala. 334, sel, 19 Idaho 796, 116 Pac. 115; Sin- 58 So. 258; Varlck v. Crane, 4 N. J. clair v. Gunzenhauser, 179 Ind. 78, Eq. 128. The place of residence and 98 N. B. 37; Jlanton v. Seiberling, of execution control in the follow- 107 Iowa 534, 78 K. W. 194; Gault ing: Caldwell v. Edwards, 5 Stew. V. Equitable Trust Co., 100 Ky. 578, & P. (Ala.) 312; Cubbedge v. Napier, 38 S. W. 1065; Bramblet v. Common- 62 Ala. 518. wealth &c. Co., 27 Ky. 156, 84 S. W. " The question of lex loci is one 545; Miller v. Shotnell, 38 La. Ann. of intention, to be decided by all 890; People's Bldg. &c. Assn. v. Par- the facts of the case, among which ish, 1 Nebr. (unoff.) 505, 96 N. W. may be the residence of the parties, 243'; Hutchinson v. Ward, 192 N. Y. the place of payment, and the loca- 375, 85 N. E. 390, 127 Am. St. 909; tion of the land mortgaged. New- Bowdle V. Jencks, 18 S. Dak. 80, 99 man v. Kershaw, 10 Wis. 333. The N. W. 98; Klinck v. Price, 4 W. Va. element of intention was also rec- 4, 6 Am. Rep. 268. An express pro- ognized in Chappell v. Jardine, 51 vision in a mortgage that the note Conn. 64, where a mortgage upon secured be governed by the law of land supposed to be in New York, the state where the premises are but actually in Connecticut, was situated is effective though the note construed under the New York law. was executed and was payable else- "Purcell v. Barnett, 30 Okla. 605, 121 Pac. 231. CHAPTER III THE PARTIES TO A MORTGAGE PART I WHO MAY GIVE A MORTGAGE I. Introductory, §§ 101b-102e II. Disability of Insanity, §§ 103, 103a III. Disahility of Infancy, §§ 103b-105 IV. Married Women, §§ 106-118a V. Tenants in Common of Partnership Real Estate, §§ 119-123 VI. Corporations, §§ 124-128 VII. Power to Mortgage, §§ 129-130a PART II WHO MAY TAKE A MORTGAGE Parties in Various Relations, §§ 131-135a I. Introductory Section Section 101b. In general. 102b. Capacity of guardian to mort- 102. Legal capacity to mortgage. gage. 102a. Capacity of executors and dev- 102c. Generally of disabilities. isees to mortgage. § 101b. In general. — It is essential to the validity of a mortgage that there be proper contracting parties, a party to make the mort- gage and a party to accept it. A person can not make a mortgage to himself, though he claims to make it in one capacity and to accept it in another. Thus, where an administrator, for the purpose of secur- ing an indebtedness to the estate under his administration, executed a mortgage and note to himself as administrator to secure such in- debtedness, and after his death they were found among his papers, the mortgage not recorded, it was held that the mortgage was invalid for want of contracting parties. The mortgagor and mortgagee were one and the same person. The addition of the word "administrator" to the mortgagee's name does not change the legal effect of the grant, which is by the mortgagor in his individual capacity to himself as mortgagee in his individual capacity.^ ^ Gorham v. Meacham, 63 Vt. 231, 22 Atl. 572. But see Lyon v. Lyon, 67 N. Y. 250. 126 127 INTEODUCTORT § 103 A mortgage executed in the name of a fictitious person, to whom the real owner had made a fictitious conveyance, is valid as between the mortgagor and the mortgagee.^ Likewise title is passed by a mort- gage to a person under an assumed name.^ § 102. Legal capacity to mortgage. — In general, any person who has a legal capacity to act for himself may make a mortgage of his property, or may authorize any one else to do this in his behalf. By statutory provisions in many states, guardians or others acting for infants, insane or other persons withoiit legal capacity to act for them- selves, may be authorized, upon application to court showing suffi- cient cause, to convey in mortgage the real estate of their wards. Like authority is sometimes given to trustees, executors, or admin- istrators, although not having title to the property themselves, but only authority over it for certain purposes, and acting in a representa- tive capacity in respect to it, to mortgage it for the benefit of the parties in interest.* The jurisdiction of a court to order the mortgaging of a decedent's real estate can only be exercised in the manner and by the procedure prescribed by the statute.'' A mortgage made by an executor or ad- ministrator without the authority of a statute and license by a court of competent jurisdiction is void, and the heirs in whom is vested the estate are not estopped to plead the invalidity of the mortgage by rea- son of the benefit resulting to them from the money obtained. upon it." Such mortgages depend upon the particular provisions authorizing them, which are too various to be given here. It may be remarked, however, that this statutory power must be exercised strictly for the purposes for which it is given, and all the requirements of the statutes in regard to obtaining and exercising the authority must be strictly followed.'' But when the power to mortgage has been grante.d by a ^Blackman v. Henderson, 116 regularities in the mortgage inval- lowa 578, 87 N. W. 655. idate it. Smith v. Eels, 27 Ind. = Wilson V. White, 84 Cal. 239, 24 App. 321, 61 N. E. 200; Griffin v. Pac. 114. Johnson, 37 Mich. 87. *Ames V. Holderbaum, 44 Fed. «Kirkbride v. Kelly, 167 Ala. 570, 224; Camden Safe Deposit &c. Co. 52 So. 660; Blaclj v. Dressell, 20 V. Lord, 67 N. J. Eq. 489, 58 Atl. 607. Kans. 153; Shrigley v. Black, 59 ■^ Duryea v. Mackey, 151 N. Y. 204, Kans. 487, 53 Pac. 477. 45 N. E. 458. Minor irregularities, ' Merritt v. Simpson, 41 111. 391 ; however, in an order of court to the Wetherill v. Harris, 67 Ind. 452; administrator do not invalidate the Smith v. Eels, 27 Ind. App. 321, 61 mortgage. The failure to direct N. E. 200; Edwards v. Taliafero, him, as provided by statute, to ex- 34 Mich. 13; Smithwick v. Kelly, 7<) ecute a promissory note, which he Tex. 564, 15 S. W. 486. For circura- did in connection therewith, is im- stances authorizing an order to material. Fast v. Steele, 127 Cal. mortgage, see In re Morris, 18 N. 202, 59 Pac. 585. Nor do mere ir- Y. S. 680. § 102a PAETIES TO A MORTGAGE 128 court of competent jurisdiction, the parties to the mortgage are pro- tected by the license without investigating the truth of the facts upon which it was granted; their truth can not be questioned in any col- lateral proceeding.^ Such mortgage must show that it was executed in pursuance of the power granted, and not in a personal capacity.* An administrator or executor who without authority undertakes to bind the estate of a decedent may make himself personally liable, although he adds to his own name the designation of his ofBce.^" Dev- isees who execute a mortgage upon the land devised to them bind their interests in the land, and this is the result, though some of them execute the mortgage in their capacity as executors.^'^ A corporation, if capable of holding real estate, has, like a person, the power of conveying it in mortgage, unless it is under some disa- bility imposed by statute or implied from its duties to the public. But while a person capable of making a grant may, if he choose, employ another to act for him, a corporation must always act by an agent.^^ § 102a. Capacity of executors and devisees to mortgage. — A testa- tor may provide by his will that his executor may mortgage his real estate, or some specific portion of it, for the purpose of raising money for the payment of his debts. A mortgage made by virtue of such authority is valid unless the making of it under such authority is in conflict with statutory provisions. But the mortgage of an executor must be strictly within the terms of the power granted in the will.^' A power given to the executor to sell does not confer on him the power to mortgage.^'' The statutory provisions by which the court may order the sale of property for the payment of debts in no way con- ' Griffin v. Johnson, 37 Mich. 87. 130 Mich. 408, 90 N. W. 25; Stokes See also United States Trust Co. v. v. Payne, 58 Miss. 614, 38 Am. Rep. Roche, 116 N. Y. 120, 22 N. E. 265. 340; Dubois v. Van Valem, 61 N. J. "Thomas v. Parker, 97 Cal. 456, 32 Eq. 331, 48 Atl. 241; Columbia Ave. Pac. 562. _ Sav. &c. Co. v. Lewis, 190 Pa. St. "Black V. Dressell, 20 Kans. 153; 558, 42 Atl. 1094. But power to Shrigley v. Black, 59 Kans. 487, 53 mortgage has been held given un- Pac. 477; Hellier v. Lord, 55 N. J. der clause of will which authorized L. 367, 26 Atl. 986. See also De Cou- the executor "to sell, exchange and dres v. Union Trust Co., 25 Ind. dispose" of testator's property. App. 271, 58 N. B. 90, 81 Am. St. 95. Faulk v. Dashiell, 62 Tex. 642, 50 " Shrigley v. Black, 59 Kans. 487, Am. Rep. 542. Where the will gives 53 Pac. 477. the executor power to raise in such " See post § 124 et seq. way as it seems best to him a suffi- » Smith V. Peyrot, 201 N. Y. 210, cient amount of money to pay the 94 N. E. 662. debts of the testator, the executor " Webb V. Winter, 135 Cal. 455, 67 may borrow money to pay on the Pac. 691; Parkhurst v. Trumbull, debts and secure the loan by mort- 129 INTEODUCTOET § 102a flict with the authority of a testator to prescribe that the property may be sold with or without such a necessity. Such a mortgage may have the sanction of a statute ;^^ and if it has, the testator's creditors can have no valid ground of objection to it. Their claims are not liens upon the real estate having priority of such a mortgage. Claims merely proved against the estate are not in any proper sense liens upon the real estate. But even if such claims could be considered liens upon the real estate in general, a mortgage made by authority of the testator's will to pay debts would be a lien superior to such claims. "The mortgage incumbrance is one created by the administration, and is a means of raising money to aid in settling the estate. It is a means provided by the law whereby the real estate is used in the settlement." ^^ There being nothing originally to show that the man- ner prescribed by the will for settlement of the estate was prejudicial to creditors, the fact that in the end it proved to be so is immaterial. The power of the executor to mortgage any particular tract is not exhausted by a single exercise of such power on such tract. An executor authorized by will to borrow money in such way as it seems best to him for the purpose of paying the testator's debts has authority to execute a mortgage upon the testator's land to secure a loan for this purpose. ^^ Although not expressly authorized by the will, an executor may under general discretionary power to dispose of the property and settle an estate, make a valid mortgage and borrow money to pay the debts of the estate, and neither judgment creditors nor residuary legatees are entitled to object to the validity of the mortgage.^* Where a principal legatee, with priority of interest, gage. Fletcher t. American Trust under the order of the court. With &c. Co., Ill Ga. 300, 36 S. E. 767, such a state of facts, the real estate 78 Am. St. 164. would as clearly be exhausted as if ^ Smith V. Eels, 27 Ind. App. 321, sold in the usual way, reserving by 61 N. E. 200; Iowa Loan &c. Co. v. the transaction an equity of re- Holderbaum, 86 Iowa 1, 52 N. W. demption. If incumbered for but 550; Brown v. Morrill, 45 Minn. 483, a fraction of its value, it is for the 48 N. W. 328. same reason partly exhausted, and "Ames V. Holderbaum, 44 Fed. the remainder, the equity of re- 224. Iowa Loan &c. Co. v. Holder- demption, remains to be sold, if baum, 86 Iowa 1, 52 N. W. 650. needed and the court should so or- Granger, J., delivering the opinion, der. To our minds, there are no said: "In a very significant sense considerations leading to a condu- it may be said that the real estate, sion that claims against the estate to the extent of the incumbrance, are liens superior to such a mort- has been exhausted, and the pro- gage." ceeds used in payment of debts. We "Fletcher v. American Trust &c. may aid the thought by the supposi- Co., Ill Ga. 300, 36 S. E. 767. tion that the loan secured by the " Thomas v. Provident Life &c. Co., mortgage is the entire value of the 138 Fed. 348, 70 C. C. A. 448; Talia- land— all that it could be sold for ferro v. Thornton, 26 Ky. L. 183, 9 — Jones Mtg. — Vol. I. § 102b PARTIES TO A MOETGAGE 130 joins with the executor in a mortgage to pay debts, it is immaterial to the rights of other beneficiaries whether the mortgage was author- ized by the will, for if any one was injured by the transaction it was such legatee. ^^ A provision in a will giving a devisee the power to sell and convey land does not of itself authorize a mortgage thereof.^" But a testa- mentary power to sell, amplified by other words of more general mean- ing may be construed to include the power to mortgage under certain circumstances.^^ A mortgage by the devisees of a decedent, some of whom are execu- tors, and sign as such, but have no authority to do so, is binding upon them in their individual capacity.^^ After the testator's creditors have for several years acquiesced in the executor's management of the estate under a provision in the will allowing him to mortgage the real estate for the payment of debts, they can not question the validity of the mortgages executed by him under such authority.^^. If a married woman joins in the application for an order author- izing a mortgage of trust property in which she is interested, and acquiesces in the making of such a mortgage, she is estopped from ■ denying that her interest is liable for the debt intended to be secured.^* A provision in a devise of land in fee, that the devisee shall never mortgage it is void as a restraint on alienation.^' § 102b. Capacity of guardian to mortgage. — A guardian may mortgage the property of his ward when licensed by the proper 80 S. W. 1097; Dewein v. Hooss, 237 dispose of" real estate devised, for Mo. 23, 139 S. W. 195. Under a lim- the support of the devisee for life, ited discretion concerning division gives the right to mortgage for the of the property an executor can not purpose specified. Hamilton v. authorize a mortgage of an undi- Hamilton, 149 Iowa 321, 128 N. W. vided interest of one of the heirs.- 380. A power in a will authorizing Garman v. Hawley, 132 Mich. 321, 93 a wife to sell and dispose of her life N. W. 871. An executor can not estate as she may deem best to sup- mortgage property of the estate to port her family and carry on the a partnership of which he is a mem- testator's business, gives the wife ber, or for any purpose other than power to mortgage the estate for lo benefit the estate. Camden Safe such purpose. Lardner v. Williams, Deposit &c. Co. v. Lord, 67 N. J. Eq. 98 Wis. 514, 74 N. W. 346. 489, 58 Atl. 607. ^» Shrlgley v. Black, 59 Kans. 487, ^"Taliaferro v. Thornton, 26 Ky. 53 Pac. 477. L. 183, 80 S. W. 1097. '' Ames v. Holderbaum, 44 Fed. ■i" O'Brien v. Flint, 74 Conn. 502, 224. 51 Atl. 547. A devise with "the right " Carrigan v. Drake, 36 S. Car. to sell, devise, or exchange" confers 354, 15 S. E. 339. no power to mortgage. Quisenberry '^ Freeman v. Phillips, 113 Ga. 589. V. Watkins Land-Mtg. Co., 92 Tex. 38 S, B. 943; Jones v. Port Huron 247, 47 S. W. 708. &c. Co., 171 111. 502, 49 N. E. 700. -'■ "The power to sell, transfer and 131 INTEODUCTOET § 102b court under statutory authority;^" he has no inherent power to mortgage his ward's estate.^'' The license must be strictly fol- lowed.^'* Such mortgage passes the title of the ward; but if the ward has no title, none passes by the mortgage. Thus, under a will by which the testator provided that land "be reserved for his children, and be equally divided among them when the youngest attains the age of twenty-one years," and devised the land to his executors in trust during the minority of his children, no title vests in the children until the youngest becomes twenty-one years old; and a mortgage made by the children's guardian under an order of court, during their minority, passes no title. ^^ A mortgage upon an infant's real estate obtained through the forms of law in pursuance of a collusive agreement between the infant's guardian, and the guardian's own creditor, the result of which is to make the infant's property security for the guardian's debt, is properly set aside by a suit in equity by the infant, attacking the proceeding by which leave to mortgage was obtained from the court. ^" The fact that the guardian had not given a bond at the time of his appointment as required by statute does not invalidate his mortgage executed in the manner provided by statute.^^ Since a guardian is entirely without authority to mortgage his ward's property, without an order of court, it is proper to charge him with the debt where he executes a mortgage not so authorized.'^ The power in any court to direct a mortgage of the real estate of an infant is purely statutory. There is no such power inherent in a court of equity.'^ A statute prescribing specific purposes for which =^ United States Mtg. Co. V. Sperry, Rogers v. Dill, 6 Hill (N. Y.) 415. 138 TJ. S. 313, 34 L. ed. 969, 11 Sup. In Losey v. Stanley, supra, Andrews, Ct. 321; Ankeny v. Richardson, 187 C. J., said: "The origin of the jur- Fed. 550, 109 C. C. A. 316. isdiction of the Court of Chancery "Tyson v. Latrobe, 42 Md. 325; in England over the persons and es- Sample v. Lane, 45 Miss. 556. tates of infants is involved In some '"Merritt v. Simpson, 41 111. 391; obscurity. The better opinion seems McMannis v. Rice, 48 Iowa 361. to be that it grew out of the transfer "^ Kingman v. Harmon, 131 111. by the Crown to the Chancellor of 171, 23 N. E. 430. the supervision theretofore exercised '"Warren v. Union Bank, 157 N. by the king as parens patriae over Y. 259, 51 N. E. 1036, 68 Ani. St. 777. persons who, by reason of nonage, "Hunt V. Insley, 56 Kans. 213, 42 were incapable of action for them- Pac. 709. selves." '''Bell V. Dingwell, 91 Nebr. 699, Lord Hardwicke in Taylor v. 136 N. W. 1128. Philips, 1 Ves. Sr. 229, said: "There '' Losey v. Stanley, 147 N. Y. 560, is no instance in this court bind- 42 N. E. 8; Jenkins v. Fahey, 73 N. ing the inheritance of an infant by Y. 355; Horton v. McCoy, 47 N. Y. any discretionary act of the court. 21; Forman v. Marsh, 11 N. Y. 544; As to personal things, as in the Baker v. Lorillard, 4 N. Y. 257; composition of debts, it has been § 102c PAETIES TO A jMCUTGAGIi 132 a guardian may mortgage his ward's land, for example, education and maintenance, does not authorize a mortgage to discharge a pre-existing incumbrance, or for any other purpose.^* Authority to mortgage gives the guardian the right to mortgage tlie ward's reversionary interest in real estate.'*^ § 102c. Generally of disabilities. — Disabilities are either natural, as in the case of insane persons, or legal, as in tlje case of married women and corporations, while the disability of infancy is either the one or the other, according to the circumstances of the case. II. Disability of Insanity Section Section 103. Capacity of insane persons. 103a. Capacity of intoxicated per- sons. § 103. Capacity of insane persons. — In general, the mortgage of an insane person is invalid as against the mortgagor, his heirs or assigns,^ unless it be confirmed by him when of sound mind, or by his legally constituted guardian, or by his heirs or devisees. It may be disaffirmed without returning the consideration money to the mort- gagee.^ A mortgage made by one who was insane at intervals both before and after the execution of it, as to its validity, depends upon the question whether he was sane at the time ; and the fact of his sanity must in such case be established by clear and satisfactory evidence.^ If the mortgagor at the time he executed the mortgage comprehended what he was doing, and the consequences of his acts, it will be held valid, if it be fair and no undue advan- done; but never as to the Inherit- parens patriae was in England lodged ance; for that -frould be taking on in the sovereign over the estates of the court a legislative authority, infants, consistent with constitu- doing that which is properly the tional limitations." subject of a private bill." Andrew, =* Gapen v. Garrison, 193 Mo. 335, C. J., in Losey v. Stanley, above 92 S. W. 368, 5 L. R. A. (N. S.) 838. cited, said: "The question of the "= Foster v. Young, 85 Iowa 27. inherent power of a court of equity ^ Bowman v. Wade, 54 Ore. 347, to order a sale of an infant's real 103 Pac. 72. property, upon the theory of a sup- ' Brigham v. Fayerweather, 144 posed benefit to him, is quite dis- Mass. 48, 10 N. E. 735; Valpey v. tinct from its acknowledged power Rea, 130 Mass. 384; Chandler v. in the enforcement and protection Simmons, 97 Mass. 508, 93 Am. Dec. of trusts and from the power of 117. But see Wiser v. Clinton, 82 courts in the exercise of their or- Conn. 148, 72 Atl. 928, 135 Am. St. dinary jurisdiction to establish or 264. enforce rights of property between ' Holmes v. Martin, 123 Mich. 155, parties to a litigation, whether in- 81 N. W. 1072; Ripley V. Babcock, fants or adults. . . . The legis- 13 Wis. 425. lature possesses whatever power as 133 DISABILITY OF INSANITY § 103 tage has been taken of him, although it may appear probable that there were times, previous to the execution of the mortgage, when he might not have had sufficient capacity, on account of a disease which would not be uniform in its influence on his mind.* This test of mental capacity is employed for grantors in deeds generally. Ability of the grantor to comprehend the nature and consequences of his act determines the validity of the deed.'^ Another test frequently employed is his knowledge of the extent and value of his property, and his ability to transact ordinary business." Sanity is presumed, as it is the normal condition of the human mind, and therefore the burden is upon a mortgagor, who seeks to avoid his mortgage on the ground of his mental disability, to prove such disability.^ A mortgage made by one who had had periodical recurrences of in- sanity, and was insane at the time he gave the mortgage, was set aside, though he had all along managed his own affairs with average cor- rectness, and had been treated by his neighbors as competent to do business even while they considered him of unsound mind, and though he was not so manifestly insane as to make the conduct of the mort- gagee fraudulent in making the bargain which it was meant to secure, notwithstanding the latter had been given sufBcient warning to put him on his guard.* Mere weakness of mind will not enable one to avoid a mortgage, unless it appears that his memory or reasoning faculties were seriously impaired." A mortgage will not be set aside on account of the weakness * Howell V. Griffiths (N. J.), 22 Wampler v. Harrell, 112 Va. 635, 72 Atl. 928; Day v. Seely, 17 Vt. 542. S. B. 135. So held in construing and applying "Greene v. Maxwell, 251 111 335, a statute. Jacks v. Deering, 150 Cal. 96 N. E. 227; Altig v. Altig, 137 272, 88 Pac. 909. Where a mort- Iowa 420, 114 N. W. 1056; Terry v. gagor is so demented that he is un- Terry, 170 Mich. 330, 136 N. W. 448; able to understand the nature of Brugman v. Brugman, 93 Nebr. 408, the instrument, the mortgage is 140 N. W. 781; Hacker v. Hoover, void. Farmers' Bank v. Normand, 89 Nebr. 317, 131 N. W. 734; Krings 3 Nebr. (unoff.) 643, 92 N. W. 723. v. Krings, 43 Pa. Super. Ct. 590; = Frederic v. Wilkins (Ala.), 62 Farmers' State Bank v. Farmer So. 518; Jacks- V. Estee, 139 Cal (Tex. Civ. App.), 157 S. "W. 283; 507 73 Pac. 247; Dunn v. Evans, Cox v. Combs, 51 Tex. Civ. App. 139 Ga. 741, 78 S. E. 122; De Nieff 346, 111 S. W. 1069. V. Howell, 138 Ga. 248, 75 S. E. 202; ' Brown v. Cory, 9 Kans. App. 702, Kelly v. Nusbaum, 244 111. 158, 91 59 Pac. 1097. N. E. 72; Beaty v. Hood, 229 111. * Curtis v. Brownell, 42 Mich. 165, 562, 82 N. E. 350; Coody v. Coody, 3 N. W. 936. 39 Okla. 719, 136 Pac. 754; Mans- 'Chancellor v. Donnell, 95 Ala. field V. Hill, 56 Ore. 400, 107 Pac. 342, 10 So. 910; White v. Farley, 81 471; Du Bose v. Kell, 90 S. Car. 196, Ala. 563, 8 So. 215; In re Carmi- 71 S. E. 371; Caddell v. Caddell chael, 36 Ala. 514; Stubbs v. Hous- (Tex. Civ. App.), 131 S. W. 432; ton, 33 Ala. 555; Rawdon v. Raw § 103a PARTIES TO A MORTGAGE 134 of the mortgagor's intellect, unless advantage has been taken of such weakness in procuring the mortgage. This is the rule applicable to the execution of any deed." The rule is the same in cases of im- paired memory or advanced age.^^ Allegations of undue influence in obtaining a mortgage from an aged and infirm debtor are not sufficient to warrant the setting aside of the mortgage, when it is not alleged that any fraud or deception was practiced upon him.^^ In some cases parties dealing in good faith with insane persons, without knowledge of their insanity, will be protected in equity to the extent of the consideration paid, and a few cases have per- mitted foreclosure;^^ but a mortgage made by an insane person without any consideration is absolutely void,^* and will not be upheld even in favor of an assignee of the mortgage who takes it relying upon the record, without knowledge of the mortgagor's insanity.^" A mortgage or other conveyance of an insane person not under guardian- ship, is ordinarily held voidable and not absolutely void, and when made to one acting in good faith and without knowledge of the incom- petency can only be avoided upon return of the consideration.^^ § 103a. Capacity of intoxicated persons. — One may lack the mental capacity to execute a mortgage where he is in such a state of intoxi- don, 28 Ala. 565; Pidcock v. Potter, ley, 15 Cal. App. 19, 113 Pac. 356; 68 Pa. St. 342, S Am. Rep. 181. An Sears v. Vaughan, 230 III. 572, 82 actual understanding of the effect N. E. 881; Riordan v. Murray, 249 of a mortgage or trust deed is not 111. 517, 94 N. E. 947; Crosby v. Dor- essential to its validity. McDaniels ward, 248 111. 471, 94 N. E. 78; How- V. Sammons, 75 Ark. 139, 86 S. W. ard v. Howard, 112 Va. 566, 72 S. 997. E. 133. " Oxford V. Hopson, 73 Ark. 170, ^ Reeves v. Lampley, 125 Ala. 449, 83 S. W. 942; Jones v. Boiling, 101 27 So. 840; Holt v. Agnew, 67 Ala. Ark. 611, 141 S. W. 1168; Clarke v. 360; Waddell v. Lanier, 62 Ala. 347; Hartt, 56 Fla. 775, 47 So. 819; John- Lacy v. Rollins, 74 Tex. 566, 12 S. son V. Coleman, 134 Ga. 696, 68 S. W. 314. E. 480; McLaughlin v. McLaughlin, "Wiser v. Clinton, 82 Conn. 148, 241 111. 366, 89 N. E. 645; Thulin 72 Atl. 928; McCracken v. Levi, 24 V. Anderson, 154 111. App. 41; Mar- Ohio Cir. Ct. 584; National Metal mon V. Marmon, 47 Iowa 121; Paulus Edge Box Co. y. Vanderveer, 85 Vt. V. Reed, 121 Iowa 224, 96 N. W. 757; 488, 82 Atl. 837, 42 L. R. A. (N. S.) Altig V. Altig, 137 Iowa 420, 114 N. 343. W. 1056; Slaughter v. McManigal, " D. M. Smith's Committee v For- 138 Iowa 643, 116 N. W. 726; Tichy sythe, 28 Ky. L. 1034, 90 S. W. 1075; V. Simicek, 4 Nebr. (unoff.) 597, 95 Bowman v. Wade, 54 Ore. 347, 103 N, W. 629; Kime v. Addlesperger, Pac. 72; Tatum t. Tatum, 101 Va. 24 Ohio Cir. Ct. 397; Woodville v. 77, 43 S. E. 184. Woodville, 63 W. Va. 286, 60 S. E. "Hull v. Louth, 109 Ind. 315, 10 140; Black v. Post, 67 W. Va. 253, N. E. 270, 58 Am. Rep. 405. 67 S. E. 1072. ^'■Coburn v. Raymond, 7G Conn. " Broaddus v. James, 13 Cal. App. 484, 57 Atl. 116, 100 Am. St. 1000, 464, 110 Pac. 158; Bretthauer v. Fo- citing numerous cases. 135 DISABILITY OP INFANCY § 103b cation at the time of its execution as to be deprived of capacity to render an intelligent assent to the contract.^' The instrument is generally held void where executed by a drunkard under guardian- ship. ^'' Where it is sought to set aside such a mortgage it must he shown affirmatively that the transaction was fraudulent, or that undue influence was taken of the intoxicated vendor, or that such intoxica- tion was produced or procured by the other party, or that he had notice of the vendor's intoxicated condition at the time of the execu- tion of the mortgage.^" A mortgage will not, ordinarily, be set aside on the ground that the mind of the mortgagor was diseased by drink, where it is shown that his business dealings were conducted with skill, ability, shrewdness and memory and it furthermore appears that the mortgage was executed in conformity with an agree- ment made at a time when his sanity was unquestioned.^" An injunction to prevent a sale by a mortgagee was made perpetual, where it appeared that the mortgagor was in a condition verging upon insanity through habitual drunkenness, and the mortgagee, who had complete power over him, could not show that he had given any con- sideration for the mortgage.^^ III. Disability of Infancy Section Section 103b. Infants — Mortgage to relieve 105. Ratification or disaffirmance of incumbrances. Infant's mortgage. 104. Infants — Purchase-money mort- gage — Avoidance — Neces- saries. § 103b. Infants — Mortgage to relieve incumbrances: — If an in- fant purchases land subject to liens, of which he assumes the payment, and to pay these executes a mortgage, he can not upon coming of age retain the land and disaffirm the mortgage.^ Where the owner- of a farm incumbered by mortgages and liens for half its value, entered into an agreement with his son, a minor, to convey the farm to him "Hale v. Stery, 7 Colo. App. 165, 321, an able decision as to a guard- 42 Pac. 598; Reinskopf v. Rogge, 37 ian's power to mortgage in Illinois, Ind. 207; Youn v. Lament, 56 Minn, written by Mr. Justice Harlan; 216, 57 N. W. 478; Tatum v. Tatum, Kingsbury v. Powers, 131 111. 182, 101 Va. 77, 43 S. B. 184. 22 N. E. 479; Kingsbury v. Sperry, "Cockrill V. Cockrill, 92 Fed. 811. 119 111. 279, 10 N. E. 8; Bond v. "Youn V. Lament, 56 Minn. 216, Lockwood, 33 111. 213. 57 N. W. 478. 'MacGreal v. Taylor, 167 U. S. =° Parker v. Marco, 76 Fed. 510. 688, 42 L. ed. 326, 17 Sup. Ct. 961; ^ Van Horn v. Keenan, 28 111. 445. Langdon v. Clayson, 75 Mich. 204, United States Mtg. Co. v. Sperry, 138 42 N. W. 805. U. S. 313, 34 L. ed. 969, 11 Sup. Ct. § 104 PARTIES TO A MORTGAGE 136 in consideration of the son's executing a mortgage to pay ofE these incumbrances and accordingly conveyed the farm to his son, who executed a mortgage, the proceeds of which were used to free the farm from incumbrances, the father representing to the mortgagee in the presence of his son that the latter was of legal age, it was held that the son upon arriving of age could not retain the land and disaffirm the mortgage.^ § 104. Infants — ^Purchase-money mortgage — Avoidance — Necessa- ries. — An infant who has purchased land, and given back a mort- gage for the purchase-money or a part of it, may, upon coming of age, avoid the transaction;* he may relinquish the property and reclaim the money paid on account of it.* But if he seeks to avoid the debt and mortgage, he must surrender and reconvey the property. If he continue to hold the estate and to apply it to his own uses, he affirms the mortgage and makes himself legally liable for its pay- ment.° The contract being voidable only, if he wishes to disaffirm it he must do so promptly upon coming of age.^ A tender of a deed of reconveyance is generally held a sufficient disaffirmance to avoid a purchase-money mortgage given by the purchaser during infancy.^ Where, however, he ratifies the conveyance to himself, he ratifies his mortgage for the purchase-money. They constitute one transaction, ='MacGreal v. Taylor, 167 U. S. Wiggin, 1 N. H. 73, 8 Am. Dec. 38; 688, 42 L. ed. 326, 17 Sup. Ct. 961; Robbins v. Baton, 10 N. H. 561; United States Investment Co. v. Ul- Henry v. Root, 33 N. Y. 526, 553; rickson, 84 Minn. 14, 86 N. W. 613; Lynde v. Budd, 2 Paige (N. Y.) 191, Jolinson V. Northwest Mut. L. Ins. 21 Am. Dec. 84; Kitchen v. Lee, 11 Co., 56 Minn. 365, 57 N. W. 934, 59 Paige (N. Y.) 107, 42 Am. Dec. 101; N. W. 992. Coutant v. Servoss, 3 Barb. (N. Y.) 'Myers v. Knabe, 51 Kans. 720, 33 128; Bigelow v. Kinney, 3 Vt. 353, Pac. 602; Leavitt v. Piles, 38 Kans. 21 Am. Dec. 589; Callis v. Day, 38 26, 15 Pac. 891 ; Gribben V. Maxwell, Wis. 643; Grace v. Whitehead, 7 34 Kans. 8, 7 Pac. 584; Kane v. Grant (U. C.) Ch. 591. If, however, Kane, 13 App. Div. 544, 43 N. Y. S. the infant mortgagor spends the 662. See also Pedro v. Pedro, 71 money borrowed before reaching Misc. 296, 127 N. Y. S. 997; Hetter- majority, he may disaffirm without ick v. Porter, 20 Ohio Cir. Ct. 110, returning the money. Kane v. Kane, 11 O. C. D. 145. 13 App. Div. 544, 43 N. Y. S. 662. " Willis V. Twambly, 13 Mass. 204. « Pedro v. Pedro, 71 Misc. 296, 127 By statute in Ohio a woman of the N. Y. S. 997; Loomer v. Wheel- age of eighteen years may execute wright, 3 Sandf. Ch. (N. Y.) 135; a valid conveyance. Rev. Stat. 1905, Featherston v. McDonell, 15 U. C. § 4836. C. P. 162. ■= Hubbard v. Cummins, 1 Maine 'And such reconveyance Is suffi- 11; Badger v. Phinney, 15 Mass. 359, cient disaffirmance though the 8 Am. Dec. 105; Ready v. Pinkham, grantee's name is left blank. Kane 181 Mass. 351, 63 N. E. 887; Young v. Kane, 13 App. Div 544 ^3 N Y V. McKee, 13 Mich. 552; Roberts v. S. 662. 137 DISABILITY OF INFAXCY § 104 and he can not enjoy the one without being bound by the other.^ The infant is not allowed, after coming of age, to try his chances of gain- ing something by the transaction, and then, upon finding that he can not, to plead his disability. If an action to foreclose the mortgage be brought after his coming of age, and he allows a decree of sale to be entered, he can not then, upon finding there is a deficiency instead of a surplus, escape liability for it by setting up his disability.'' The rule is the same in case a guardian purchases land for minor children and takes a deed to himself and them, and gives a mortgage for the purchase-money; the mortgage is good in equity against the minors who do not disclaim the title to the land vested in them.^" An infant's mortgage for necessaries is neither void nor voidable, and the services of an attorney in defending him in a criminal action are regarded as necessary, and the infant's mortgage to secure them is valid, but the recovery upon it may be reduced to the reasonable value of the services. Though an infant's naked power of sale is void, the rule is different when the power of sale is coupled with an interest, as in a power of sale given in such a mortgage. Such a power is voidable only, and is ratified by the infant's failure to pay or tender the reasonable value of the services within a reasonable time after reaching his majority.^^ Whenever money has been received from the sale of lands or other sources by one who is the custodian of an infant, and the money applied to his use and benefit, the infant is estopped to assert the invalidity of the mortgage unless the purchaser can be put in statu quo, or the infant has made some ofier of restoration, which, if ac- cepted, would leave the mortgagee unharmed.^^ An infant's mortgage being invalid, a power of sale in such mort- gage is invalid, an infant being incapable of appointing an attorney. Upon a bill setting out the invalidity of a sale under the power, the infant, although he may have satisfied the mortgage, would be entitled to redeem. ^^ « Dana v. Coombs, 6 Maine 89, 19 " Askey v. Williams, 74 Tex. 294, Am. Dec. 194; Robbins v. Eaton, 10 11 S. "W. 1101. N. H. 561; Heath v. West, 28 N. H. "Goodman v. Winter, 64 Ala. 410; 101. Robertson v. Bradford, 73 Ala. 116; ' Terry v. McClintock, 41 Mich. Pershing v. Wolfe, 6 Colo. App. 410, 492, 2 N. W. 787; Flynn v. Powers, 40 Pac. 856; McClanahan v. West, 35 How. Pr. (N. Y.) 279. 100 Mo. 309; Commonwealth v. Shu- " Peers v. McLaughlin, 88 Cal. 294, man, 18 Pa. St. 343. 26 Pac. 119, 22 Am. St. 306. "^ Rocks v. Cornell, 21 R. I. 532, 45 Atl. 552. § 105 PARTIES TO A MORTGAGE 138 § 105. Ratification or disafB.rmance of infant's mortgage. — A mort- gage given by an infant, being as a general rule voidable only and not void, he may, on coming of age, ratify it. This he may do in various ways. His payment of interest on the mortgage debt after coming of age is a ratification of the mortgage.^* The mere retaining possession of land, for vi^hich he has given a mortgage for the purchase- money, is a ratification of the whole transaction, and makes him liable upon the mortgage." So he may, on coming of age, make any other mortgage for his benefit good and effectual by recognizing or confirm- ing it. His conveyance of the same land, after attaining his majority, subject to the mortgage, is a sufficient confirmation of it." If he sells the land after reaching majority such sale will be considered a ratification of the mortgage.^'' A mortgage ratified after majority is superior to a deed made during minority and ratified subsequently to the mortgage.^* A subsequent execution of a deed to a third person, which does not refer to the mortgage, does not necessarily amount to a repudiation of the mortgage." And so a will made by one after coming of age, whereby he directed the payment of "all his just debts," is, upon his death, a sufiBcient confirmation of a mortgage and bond executed during his infancy to secure the payment of borrowed money.^" An infant's mortgage being voidable merely, must be dis- affirmed within a reasonable time after majority is attained.^^ An infant's right to avoid his mortgage is a personal privilege of the infant only, and can not be availed of by others. Thus his assignee in insolvency is not permitted to disaflBrm a mortgage made by the insolvent while under age, and not ratified or affirmed by him after attaining his ma jority.^^ The right to rescind his contract is for the protection of the infant, and he alone, or his heirs or representa- tives, can exercise it. A subsequent purchaser or lien-holder, or other person standing in the place of the infant, can not take advantage of "American Mtg. Co. v. Wright, 204, 42 N. W. 805; Uecker v. Koehn, 101 Ala. 658, 14 So. 399. 21 Nebr. 559, 32 N. "W. 583, 90 Am. "Callls v. Day, 38 Wis. 643, and Rep. 849; Callis v. Day, 38 Wis. 643. cases cited. " Tolar v. Marion County Lumber "Phillips V. Green, 5 Mon. (Ky.) Co., 93 S. Car. 274, 75 S. B. 545. 355; Boston Bank V. Chamherlin, 15 ''Palmer v. Miller, 25 Barb. (N. Mass. 220; Keegan v. Cox, 116 Mass. Y.) 399. 289; Allen v. Poole, 54 Miss. 323 ='<' Merchants' Fire Ins. Co. v. (ratification by part payment); Grant, 2 Edw. Ch. (N. Y.) 544. Lynde v. Budd, 2 Paige (N. Y.) 191, "Lawder v. Larkin (Tex. Civ. 21 Am. Dec. 84; Story v. Johnson, App.), 94 S. W. 171. 2 Y. & C. Exch. 607. '^Mansfield v. Gordon, 144 Mass. "Hubbard v. Cummings, 1 Maine 168, 10 N. E. 773. 11; Langdon v. Clayson, 75 Mich. 139 DISABILITY OF INFANCY § 105 this defense.^^ A mortgagee can not compel a present exercise by or for the infant of his right to affirm or disaffirm.^* Notice by a mortgagor, given at a foreclosure sale shortly after his removal of disability of nonage, that his interest would not pass under the sale, and the execution of a warranty deed of the same land shortly after such disability is removed has been held to constitute a disaffirmance of the mortgage. ^^ An infant's trust deed may be dis- aflfirmed by the execution of a mortgage upon the same premises shortly after his attaining majority.^" The subsequent ratification in all cases relates back to the original execution of the mortgage as against all persons except purchasers for a new and valuable consideration. ^'^ It has been held, however, that a mortgage by an infant which was not in any way for his benefit, as, for instance, one made as surety for another, is not merely voidable, but void, and therefore not sub- ject to ratification. Thus a mortgage given by an infant feme covert, to secure the debt of her husband, is held to be absolutely void, and incapable of confirmation.^* Coverture of a female infant does not remove the disability of minority. If she has given a mortgage of her land during her minor- ity, her husband joining in it, she may repudiate it on coming of age, and she is not bound to return the consideration received unless she still has the proceeds of it in her hands specifically.^^ This disability of an infant feme covert is removed by statute in some states.^" An infant feme covert can not relinquish her dower by joining with her husband in a mortgage, but the same is void as to her.^^ == Baldwin v. Rosier, 48 Fed. 810. =» See Walsti v. Young, 110 Mass. ^* Watson V. Ruderman, 79 Conn. 396, and cases cited; Dill v. Bowen, 687, 66 Atl. 515. 54 Ind. 204; Losey v. Bond, 94 Ind. '"Scott V. Brown, 106 Ala. 604, 17 67; Bradshaw v. Van "Valkentiurg, So. 731. 97 Tenn. 316, 37 S. W. 88. ^ Phillips V. Hoskins, 33 Ky. L. =" Knight v. Coleman, 117 Ala. 266, 378, 108 S. W. 283. 22 So. 974. See Jones on Real Prop- » Palmer v. Miller, 25 Barb. (N. erty, § 37, Code of Alabama 1907, Y.) 399. § 4499. ^Cronise v. Clark, 4 Md. Ch. 403; "Glenn v. Clark, 53 Md. 580. Chandler v. McKinney, 6 Mich. 217, 74 Am. Dec. 686. § 106 PARTIES TO A MORTGAGE 140 IV. Married Women . Section Section 106. Common-law disabilities — Stat- 114. Wife in position of a surety — utes. Exoneration. 107. Equity doctrine. 115. Husband's authority over wife's 108. Debts charged to separate prop- mortgage — Extension — Lit- erty. Igation. 109. American rule. 115a. Debts of third persons. . 110. Reference to separate property 116. Assumption of mortgage by — Notes and mortgages. married woman. 111. Deficiency upon foreclosure. 116a. Execution of mortgage by at- 112. Separate estate in equity — torney in fact for married Power to contract under stat- woman, utes. 117. Alabama rule. 113. Debts of husband. 117a. Georgia and Louisiana. 113a. Consideration for wife's mort- 118. Mississippi. gage. 118a. What law governs capacity. § 106. Common-law disabilities — Statutes. — At common law a married woman could not make a mortgage even to secure the pay- ment of the purchase-money of real estate conveyed to her. Both the mortgage and the note were void.^ She had no power to make con- tracts.^ In equity, however, she has long occupied quite a different position in regard to her own property, and her power to contract in relation to it. In England the courts of equity have extended her rights over her separate estate and her liahility for her contracts, until it is now the settled doctrine that her property is holden in equity for her en- gagements, whether in writing or not. Yet at law they can not be enforced. Her obligations are not strictly debts. She is not person- ally holden for them; but her separate estate is subjected to their payment. The proceeding to enforce them, therefore, is in the nature of a proceeding in rem. In this country the common-law rights and liabilities of married women have been greatly changed by statute.' Liberal provision is generally made in all the states for the holding of separate property by married women, and for their contracting in relation to it; but they have not generally gone to the extent of declaring that her entire .separate estate shall be liable for her pecuniary engagements. Under these statutes, as a rule, she is generally authorized to contract with reference to her separate property as if she were sole, and she is not ^Corinth Bank &c. Co. v. King 271, 17 Am. Rep. 86; Owens v. John- (Ala.), 62 So. 704; Savage v. Hoi- son, 8 Baxt. (Tenn.) 265. yoke, 59 Maine 345; Newbegin v. = Pickens v. Kniseley, 36 W. Va. Langley, 39 Maine 200, 63 Am. Dec. 794, 15 S. E. 997. 612; Heburn v. Warner, 112 Mass. 141 MARRIED WOMEN § 107 allowed to impair her husband's tenancy by the curtesy, except with the concurrence of her husband.^ Her deed made without such eon- sent or authority is invalid, and can not be enforced even in equity." Even when given to secure the purchase-money of the land, it does not amount to a declaration of trust in favor of the vendor." There- fore a deed by her in the name she bore before marriage, and not disclosing this, although made with the fraudulent purpose of impos- ing upon the grantee, does not estop her from setting up title to the land as against the grantee." Her sole deed is absolutely void at com- mon law.' § 107. Equity doctrine. — The equity doctrine in England, adopted also in some of our states, is that the separate property of a married woman is answerable for her debts and engagements to the full extent to which it is subject to her disposal. At a very early period in England it was held that a married woman, although incompetent at law to make a valid contract, would be regarded in equity as a feme sole in respect to her separate estate.^ "And the rule seems to have been universally recognized, where a married woman made an express ^ As, for instance, in Massachu- setts. See Rev. Laws 1902, ch. 153, p. 1; Weed Sewing Machine Co. v. Emerson, 115 Mass. 554; Concord Bank v. Bellis, 10 Cush. (Mass.) 276. But now, under Stat. 1874, ch. 184, a married woman may contract "as if she were sole," and therefore the consideration of her contracts need not inure to her own benefit. Major V. Holmes, 124 Mass. 108. To pass any interest in her prop- erty she must he a party to the granting part of the deed. A mort- gage which purports on its face to be that of her husband merely does not bind her estate, though she signs and acl^nowledges it. Berri- gan v. Fleming, 2 Lea (Tenn.) 271. See also Equitable Bldg. &c. Assn. V. King, 48 Fla. 252, 37 So. 181. " Elder v. Jones, 85 111. 384; Herd- man V. Pace, 85 111. 345. "Morrison v. Brown, 83 111. 562; Lewis v. Graves, 84 111. 205. "Lowell v. Daniels, 2 Gray (Mass.) 161, 61 Am. Dec. 448. 'Warner v. Crouch, 14 Allen (Mass.) 163; Perrine v. Newell, 49 N. J. Bq. 57, 23 Atl. 492; Rake v. Lawshee, 24 N. J. L. 613; Moore v. Rake, 26 N. J. L. 574. In Perrine v. Newell, it was held, however, that the bond or note given by a married woman with her invalid mortgage is an acknowledgment of a debt due by her for the benefit of her separate es- tate. "Although the mortgage is not valid as such, it will nevertheless operate in equity as an appoint- ment of the property described in it for the payment of that debt; and equity will decree that the debt be a charge upon the property so ap- pointed, and that the property shall be sold to pay it. The debt is not a lien upon the ebtate until made so by the decree of this court. The lien is in virtue of the decree of this court, not in virtue of the mort- gage." Citing Pentz v. Simonson, 13 N. J. Eq. 232; Wilson v. Brown, 13 N. J. Eq. 277; Harrison v. Stew- art, 18 N. J. Eq. 451; Cutler v. Tut- tle, 19 N. J. Eq. 549; Armstrong v. Ross, 20 N. J. Eq. 109; Perkins v. Elliott, 22 N. J. Eq. 127; on appeal, 23 N. J. Eq. 526; Homoeopathic M. L. Ins. Co. V. Marshall, 32 N. J. Eq. 103, 2 Story Eq. Jur. § 1399. 'Grigby v. Cox, 1 Ves. Sen. 517; Peacock v. Monk, 2 Ves. Sen. 190. lor PARTIES TO A MORTGAGE 142 contract respecting such an estate, of which she was entitled to the beneficial use, that she and the party with whom she contracted might have the aid of a court of equity to make the contract effectual."' Lord Thurlow^" carried the doctrine further, and declared he had "no doubt about this principle, that if a court of equity says a feme covert may have a separate estate, the court will bind her to the whole extent, as to making that estate liable to her own engagement; as, for instance, for the payment of debts." This subject and the English authorities upon it were fully examined by Lord Brougham, who arrives at the same result.'^^ ' Per Hoar, J., in Willard v. East- ham, 15 Gray (Mass.) 328, 77 Am. Dec. 366. "Hulme V. Tenant, 1 Bro. C. C. 16; and see same case in White & Tudor's Lead. Cas. in Eq. (Am. ed.), 324, and the authorities there col- lected. " In Murray v. Barlee, 3 Myl. & K. 209. "In all these cases," he says, "I take the foundation of the doc- trine to be this: The wife has a separate estate, subject to her own control and exempt from all other interference or authority. It she can not affect it, no one can; and the very object of the settlement which vests it in her exclusively is to enable her to deal with it as if she were discovert. The power to affect it being unquestionable, the only doubt that can arise is whether or not she has validly incumbered it. At first the court seems to have supposed that nothing could touch it but some real charge, as a mort- gage, or an instrument amounting to an execution of a power, where that view was supported by the nature of the settlement. But after- ward her intention was more re- garded, and the court only required to be satisfied that she intended to deal with her separate property. When she appeared to have done so, the court held her to have charged it, and made the trustees answer the demand thus created against it. A good deal of the nicety that at- tends the doctrine of powers thus came to be imparted to this con- sideration of the subject. If the wife did any act directly charging the separate estate no doubt could exist; just as an Instrument ex- pressing to be in execution of a power was always of course con- sidered as made in execution of it. But so, if by any reference to the estate it could be gathered that such was her intent, the same conclusion followed. Thus, if she only exe- cuted a bond, or made a note, or accepted a bill, because those acts would have been nugatory if done by a feme covert, without any refer- ence to her separate estate, it was held. In the cases I have above cited, that she must have intended to have designed a charge on that estate, since in no other way could the in- strument thus made by her have any validity or operation; in the same manner as an instrument, which can mean nothing if it means not to execute a power, has been held to be made in execution of that power, though no direct refer- ence is made to the power. Such is the principle. But doubts have been in one or two instances ex- pressed as to the effect of any deal- ing whereby a general engagement only Is raised, that is, where she .becomes indebted without executing any written instrument at all. I own I can perceive no reason for drawing any such distinction. If, in respect of . her separate estate, the wife is in equity taken as a feme sole, and can charge it by in- struments absolutely void at law, can there be any reason for holding that her liability, or more properly her power of affecting the separate estate, shall only be exercised by a written instrument? Are we en- titled to invent a rule, to add a new chapter to the statute of frauds, and to require writing where that 143 MAEEIED WOMEN § 109 § 108. Debts charged to separate property. — Equity enforces her contract on her separate property, because, her contract not being a personal liability, there is no remedy at law. Lord Cottenham,^^ agreeing in the doctrine established, was of opinion that in the reason of it there is nothing which has any resemblance to the execution of a power. "What it is, it is not easy to define. It has sometimes been treated as a disposing of the particular estate; but the contract is silent as to the particular estate, for a promissory note is merely a contract to pay, not saying out of what it is to be paid, or by what means it is to be paid; and it is not correct, according to legal prin- ciples, to say that a contract to pay is to be construed into a contract to pay out of a particular property, so as to constitute a lien on that property. Equity lays hold of the separate property, but not by virtue of anything expressed in the contract; and it is not very con- sistent with correct principles to add to the contract that which the party has not thought fit to introduce into it. The view taken of the matter by Lord Thurlow in Hulme v. Tenant is more logical. Ac- cording to that view, the separate property of a married woman being a creature of equity, it follows that if she has a power to deal with it, she has the other power incident to property in general, namely, the power of contracting debts to be paid out of it ; and inasmuch as her creditors have not the means at law of compelling payment of those debts, a court of equity takes upon itself to give effect to them, not as personal liabilities, but by laying hold of the separate property, as the only means by which they can be satisfied." § 109. American rule. — The American courts do not carry the doctrine to this extent, but as a general rule hold that her separate estate is not chargeable with her debts or obligations not relating to her separate estate, unless she specially makes them a charge upon it by some instrument in writing. Her contracts, which do not con- cern her separate estate and are not made upon its credit, remain void as they were at common law.^^ The statutes of the several states differ considerably in their effect upon her power to make act requires none? Is there any if fortified by a scrap of writing? equity, reaching written dealings No such distinction can be taken up- with the property, which extends on any conceivable principle." not also to dealing in other ways, ^^ Owens v. Dickenson, Cr. & Phil, as by sale and delivery of goods? 48. Shall necessary supplies for her ^ Pickens v. Kniseley, 36 W. Va. maintenance not touch the estate, 794, 997. Except as to her separate and yet money furnished to squan- estate, such obligation is void in der away at play be a charge on it, equity as well as at law. § 110 PARTIES TO A MORTGAGE 144 contracts, and to charge herself and her real estate with them; but, as a general rule, equity, while holding it not to be answerable for any implied undertaking of hers, will enforce upon it her mortgage or other express contract, although it be not made for her benefit, but for the sole benefit of another.^* In a case in the Supreme Court of Massachusetts,^^ Mr. Justice Hoar, after a careful review of the authorities, said: "Our conclusion is, that when by the contract the debt is made expressly a charge upon the separate estate, or is ex- pressly contracted upon its credit, or when the consideration goes to the benefit of such estate, or to enhance its value, then equity will decree that it shall be paid from such estate or its income, to the extent to which the power of disposal by the married woman may go. But when she is a mere surety, or makes the contract for the accom- modation of another, without consideration received by her, the con- tract being void at law, equity will not enforce it against her estate, unless an express instrument makes the debt a charge upon it." § 110. Reference to separate property — Notes and mortgages. — A married woman can bind herself personally only by such obliga- tions as have reference to her separate property. She is not generally bound, therefore, by a note given by her alone or jointly with her hus- " Young V. Graff, 28 III. 20; He- case of Yale v. Dederer for a full burn V. Warner, 112 Mass. 271, 17 and careful examination of the sub- Am. Rep. 86; Willard v. Eastham, ject; also to Corn Exchange Ins. 15 Gray (Mass.) 328, 77 Am. Dec. Co. v. Babcock, 42 N. Y. 613, 1 Am. 366; Rogers v. Ward, 8 Allen Rep. 601, where the English and (Mass.) 387, 85 Am. Dec. 710; Dyett American cases are reviewed. V. Central Trust Co., 140 N. Y. 54, >= Willard v. Eastham, 15 Gray 35 N. E. 341; Yale v. Dederer, 18 N. (Mass.) 328, 335, 77 Am. Dec. 366. Y. 265, 22 N. Y. 450, 72 Am. Dec. 503, Taylor v. Barker, 30 S. Car. 238, 78 Am. Dec. 216; Owen v. Cawley, 9 S. E. 115. In this case a note 36 N. Y. 600; Knowles v. McCamly, had been given by a married woman 10 Paige (N. Y.) 342; Gardner v. to her brother to establish him in Gardner, 7 Paige (N. Y.) 112; business; but no mortgage or other Jaques v. Methodist Epis. Ch., 17 charge upon her separate estate was Johns. (N. Y.) 548; Curtis v. En- given. Upon a bill in equity to gel, 2 Sandf. (N. Y.) 287; Cruger v. charge It upon her estate, it was Cruger, 5 Barb. (N. Y.) 225; Ballin held that she was not liable, and the V. Dillaye, 37 N. Y. 35; White v. bill was dismissed. But in the later McNett, 33 N. Y. 371; White v. Story, case of Heburn v. Warner, 112 Mass. 43 Barb. (N. Y.) 124; Ledlie v. Vroo- 271, where a married woman, to en- man, 41 Barb. (N. Y.) 109. able her son to borrow money, gave The earlier cases in New York her note, secured by mortgage of aoproximate to the English rule, her separate estate, it was held but the case of Yale v. Dederer that, while she was not liable upon took the ground stated in the text, the note, and the mortgage was and has been followed since. See void at law, yet in equity the mort- post § 111. gage should be enforced. See also Special attention is called to the Nourse v. Henshaw, 123 Mass. 96. 145 MARRIED WOMEN" § 110 band for a debt of the husband.^" The fact that the note is secured by a mortgage on her real estate does not make the note such an obligation respecting her separate estate as to render her liable upon it," although the mortgage itself be in equity a valid and binding lien upon her separate property.^* In some of the states a married woman may incumber her separate estate without her husband joining in the conveyance.^" In states which require the joinder of the husband in mortgages of the wife's separate estate a mortgage of the separate estate of the wife in which he does not join is generally held invalid at law,^° but equity may be invoked to enforce the lien against her estate. ^^ Where a wife gives her husband an absolute deed to be used as a mortgage in procuring a loan, renewal loans, made in reliance upon the security of the deed after the death of the wife, are valid liens upon the land.^^ Where the wife joins in the deed of the husband, to relinquish her dower and effectuate a valid alienation of the homestead, she is not a covenantor in the covenants of seisin, warranty of title and against incumbrances contained in the deed. The joinder of a wife in a "Stafford Sav. Bank v. Under- wood, 54 Conn. 2, 4 Atl. 248; Rowell V. Jewett, 69 Maine 293; Brookings V. "White, 49 Maine 479; Nourse v. Henshaw, 123 Mass. 96; Heburn v. "Warner, 112 Mass. 271; Athol Ma- chine Co. V. Fuller, 107 Mass. 437; Wlllard V. Eastham, 15 Gray (Mass.) 328, 77 Am. Dec. 366 ; Burns v. Lynde, 6 Allen (Mass.) 305; Graham v. Myers, 67 Mich. 277, 34 N. "W. 710; Northwestern Mutual Life Ins. Co. V. Mallory, 93 Nebr. 579, 141 N. W. 190; Wilson v. Mills, 66 N. H. 315, 22 Atl. 455; Conway v. "Wilson, 44 N. J. Eq. 457, 11 Atl. 607; "White v. McNett, 33 N..Y. 371; Yale v. De- derer, 18 N. Y. 265; Ledlie v. Vroo- man, 41 Barb. (N. Y.) 109. In Rhode Island a mortgage given by a hus- band and wife to secure the hus- band's note Is valid though the wife is not bound on the note. Thacker v. Medbury, 33 R. I. 37, 80 Atl. 186. ""Williams v. Hayward, 117 Mass. 532. "Thacher v. Churchill, 118 Mass. 108; Thacker v. Medbury, 33 R. I. 37, 80 Atl. 186; Dearing v. Jordan (Tex. Civ. App.), 130 S. W. 876. "Stacey v. "Walter, 125 Ala. 291, 10 — ^JoNES Mtg. — Vol. I. 28 So. 89, 82 Am. St. 235; William- son V. Yager, 91 Ky. 282, 15 S. W. 660, 34 Am. St. 184; Turner v. Shaw, 96 Mo. 22, 8 S. W. 897, 9 Am. St, 319; Richardson v. De Giverville 107 Mo. 422, 17 S. W. 974, 28 Am St. 426; Farmers' Exchange Banl V. Hageluken, 165 Mo. 443, 65 S W. 728, 88 Am. St. 434. A mort gage by a married woman of prop- erty in which her husband has a freehold interest is void if his name does not appear therein as grantor; though he signs and acknowledges it. Dietrich v. Hutchinson, 73 Vt. 134, 50 Atl. 810, 87 Am. St. 698. "> Starkey v. Starkey, 166 Ind. 140, 76 N. E. 876; Bogle v. Nelson, 151 Ky. 443, 152 S. W. 250; Deusch v. Questa, 116 Ky. 474, 25 Ky. L. 707, 76 S. W. 329; Realty Title &c. Co. v. Schaaf, 81 N. J. Eq. 115, 85 Atl. 602. Where a husband is a non- resident his joinder in wife's mort- gage is unnecessary. Collier v. Doe, 142 Ala. 422, 38 So. 244. " Realty Title &c. Co. v. Schaaf, 81 N. J. Eq. 115, 85 Atl. 602. ^^ Strong v. Gambler, 155 App. Div. 294, 140 N. Y. S. 410. § 110 PARTIES TO A MORTGAGE 146 mortgage by her husband, of land conveyed to him by a deed expressly reserving to the wife a lien for prior advances by her to the grantor operates simply as a relinquishment of her dower therein, and of the homestead.^^ Where a married woman is empowered by statute to bargain, sell, and convey her real estate or personal property, and enter into con- tracts in reference to it, she may deal with the property itself, by sale or otherwise, and assume obligations in connection therewith, as, for instance, for buildings upon her land; and she may bind herself to pay money for property purchased, as the property will become hers by the purchase, and the obligation to pay is in reference to her sepa- rate property.^* But this is the limit of her power. She can not contract as surety for her husband or for any one else. The character of a note or other contract made by her is not affected as a contract applying to her separate property by reason that it is secured by a mortgage on her land. The mortgage is collateral to the note; the one is the principal, the other the incident ; when the note is void the mortgage is void also, and can not be foreclosed at law.^^ "In an action brought by a mortgagee against his mortgagor, on a mortgage given to secure the payment of a note, the defendant may show the same matters of defense which he might show in defense of an action on the note,"^" excepting only that he can not plead the statute of limitations.^'^ In foreclosure, the burden is upon defendant to prove coverture of the mortgagor, and execution of the mortgage by her as surety, together with knowledge of such facts by the mortgagee.^' But a married woman may, with the proper assent of her husband, convey her separate real estate; and if there be a valid consideration for the conveyance, it is as effectual as it would be if she were not married. She may, therefore, convey her real estate in mortgage to secure a valid debt, as, for instance, a valid note of her husband. Her mortgage is then binding, because it is a contract entered into by her in relation to her separate property, and to secure a valid and existing =" Curry v. American Freehold see McGee v. Cunningham, 69 S. Land Mtg. Co., 107 Ala. 429, 18 So. Car. 470, 48 S. E. 473. 328. =«Mr. Justice Metcalf, in "Wlnton "Heburn v. "Warner, 112 Mass. v. King, 4 Allen (Mass.) 562. 271, 17 Am. Rep. 86, and cases cited. " Thayer v. Mann, 19 Pick. ^Brigham v. Potter, 14 Gray (Mass.) 535. (Mass.) 522; Denny v. Dana, 2 Cush. =' Webb v. John Hancock Miit. Life (Mass.) 160, 48 Am. Dec. 655. But Ins. Co., 162 Ind. 616, 69 N. B. 1006, 66 L. R. A. 632. 147 HARRIED WOMEN § 111 debt.^® A statutory provision that the separate property of a married woman shall not be liable for the debts of the husband does not affect her power to mortgage her land to secure the payment of her hus- band's debt.^" It does not matter that she has also signed her husband's note as surety. To a suggestion in such a case that the mortgage was void, because it was made to secure a note signed by the married woman as surety, Chief Justice Bigelow said:^^ "This might be a very sound argument if the note was signed by the married woman alone. In such case, the note being void, the demandant would not be entitled to judgment for possession. But the note is not void. It is a valid contract binding on the other promisors. It is, therefore, the ordi- nary case of the conveyance of real estate by a valid deed to secure the payment of debt due to the grantee." But when her mortgage is made to secure her own note given for the accommodation of her hus- band or any one else, the note being void, the security incident to it is void also. She can make the defense of invalidity in the same way that any mortgagor may defend on the ground of want of considera- tion, or of duress. Her defense at law to the note extends to the mortgage. § 111. Deficiency upon foreclosure. — The foregoing examination of the question, how far a married woman can bind herself indi- vidually by her contracts, is applicable to the question of her liability for a deficiency^^ arising upon the foreclosure of a mortgage upon her estate. It has been noticed that, while in equity the lien upon her estate may be valid, her note or other personal obligation secured may be wholly void.^^ Of course in such case, when the remedy has been exhausted against the mortgaged estate, there is no further rem- edy against her.^* If, for instance, she borrow money upon a mort- =»Newhart v. Peters, 80 N. Car. "'Bartlett v. Bartlett, 4 Allea 166. In North Carolina a convey- (Mass.) 440. ance by a married woman not a '' See post § 1718. "free trader" is not valid unless '"Heburn v. Warner, 112 Mass. executed by ber and her husband, 271. with a privy examination before »* Adams v. Fry, 29 Fla. 318, 10 So. the magistrate. Her recital in her 559; Nourse v. Henshaw, 123 Mass. mortgage that she is a "free trader" 96; Kidd v. Conway, 65 Barb. (N. does not make her such if she has Y.) 158. not filed the prescribed writing in Prior to the Stat, of 1860, ch. the registry of deeds. Williams v. 90, it was held in New York that Walker, 111 N. Car. 604, 16 S. E. a married woman could not bind 706. Code, §§ 1827, 1834. See post herself personally for the price of § 113. real estate bought by her and con- '"Hitz V. Jenks, 123 U. S. 297, veyed to her; Knapp v. Smith, 31 L. ed. 156, 8 Sup. Ct. 143. 27 N. Y. 277; nor for the rent re- § 113 PARTIES TO A MORTGAGE 148 gage of her real estate for the accommodation of hei husband, and it is paid to him, she is under no liability for any deficiency after the application of the property to the repayment of the loan.^^ A married woman is not liable for a deficiency, where the considera- tion for the note and mortgage, given by herself and husband, does not inure to her private use or benefit her separate property.^" A married woman may bind herself personally for a loan made to her upon her mortgage of her real estate, if the loan be for the benefit of her separate estate.^^ That the loan is for the benefit of her separate estate may appear by the mortgage, or may be shown by evidence.^* The burden of proving the loan a benefit to the wife's separate estate is upon the mortgagee."" Where part of the loan is used for the wife's benefit and the balance for the debt of the husband, the wife may repudiate the mortgage, except as to the part used for her benefit.*" § 112. Separate estate in equity — Power to contract under stat- utes. — ^In some states a wife's separate property is in equity held served upon a lease to her, though the lease itself was otherwise valid, and the lessor might re-enter. So a mortgage for the price of real estate conveyed to her was valid in equity, though the note or bond given in connection with it was not. Since the above statute, she can bind herself for any matter per- taining to her separate estate. == White V. McNett, 33 N. Y. 371; Payne v. Burnham, 62 N. Y. 69; Manhattan Brass &c. Co. v. Thomp- son, 58 N. Y. 80. In New York, by Laws 1882, ch. 172, § 7, it was provided that a mar- ried woman might be sued in any court, and a judgment recorded against her may be enforced against her sole and separate estate in the same manner as if she were sole. The effect of this statute is to give a legal remedy against her prop- erty generally for her debts, and not merely a remedy in equity against her estate expressly charged with the payment of a debt for which she was not personally liable. Corn Exchange Ins. Co. v. Babcock, 42 N. Y. 613; First Nat. Bank v. Garlinghouse, 53 Barb. (N. Y.) 615; Andrews v. Monilaws, 8 Hun (N. Y.) 65. '"Loizeaux v. Fremder, 123 Wis. 193, 101 N. W. 423. " Booth Mercantile Co. v. Murphy, 14 Idaho 212, 93 Pac. 777; Payne V. Burnham, 62 N. Y. 69; Littler v. Dielmann, 48 Tex. Civ. App. 392, 106 S. W. 1137. Otherwise in Pennsyl- vania. Sawtelle's Appeal, 84 Pa. St. 306. A decree of foreclosure against husband and wife is conclusive as to the liability of the wife In proceed- ings for a deficiency. Christian v. Soderberg, 124 Mich. 54, 82 N. W. 819. Under the constitution and statutes of Florida a married woman may mortgage her separate statu- tory estate in order to carry on mercantile business on the premises. Mercantile Exch. Bank v. Taylor, 51 Fla. 473, 41 So. 22. Where a married woman borrowed money ostensibly for her own use and benefit, a bona fide holder of the note and mortgage is protected al- though the money was used by the husband. Josephson v. Powers, 123 La. 5, 48 So. 564. See also American Mtg. Co. V. Woodward, 83 S. Car.- 521, 65 S. E. 739. '*Corn Exch. Ins. Co. v. Babcock, 42 N. Y. 613. "Opelousas Nat. Bank v. Pahey, 129 La. 225, 55 So. 772, Ann Cas. 1913 B, 687. "Wredman v. Falls City Sav. &c. Assn., 40 Ind. App. 478, 82 N. E. 476. 149 MARRIED WOMEN § 113 liable generally for her debts.*^ As to her separate property she is regarded as a feme sole, and is allowed to make any contract in rela- tion to it she may choose; and if she executes a note secured by a mortgage upon her separate property, her promise to pay is construed as relating not only to the mortgaged premises, but to her separate property generally.*^ It is regarded as right that her property should pay her pecuniary engagements, whether they are made for her own benefit or not, and whether they are charged upon particular property or not. Neither does it matter whether her engagements be express or implied; whether they be in writing or by parol merely. Having the power to contract debts, and to bind her separate property for their payment, she is regarded as intending that her obligations shall be enforced according to their purport. In other states the capacity of married women to make contracts has been enlarged by statute, so that in effect she is enabled to bind herself and her property as if she were sole.*^ In such states her "Alexander v. Bouton, 55 Cal. 15; Cummings v. Sharpe, 21 Ind. 331; Deering v. Boyle, 8 Kans. 525, 12 Am. Rep. 480 (where the cases are fully examined); Smith v. Wilson, 2 Mete. (Ky.) 235; Johnston v. Fer- guson, 2 Mete. (Ky.) 503; Sharp v. Proctor, 5 Bush (Ky.) 396; Hobson V. Hobson, 8 Bush (Ky.) 665; "Webb V. Hoselton, 4 Nebr. 308, 19 Am. Rep. 638; Johnson v. Cummins, 16 N. J. Bq. 97, 84 Am. Dec. 142; Wheaton v. Phillips, 12 N. J. Eq. 221; Pentz v. Simonson, 13 N. J. Eq. 232; Glass v. Warwick, 40 Pa. St. 140, 80 Am. Dee. 566; GoU v. Pehr, 131 Wis. 141, 111 N. W. 235; Todd V. Lee, 15 Wis. 365; Heath v. Van Cott, 9 Wis. 516; 1 Bishop on Mar. Women, § 873; Sehouler's Dom. Relations, 230. ^^ Alexander v. Bouton, 55 Cal. 15; Marlow v. Barlew, 53 Cal. 456. « California: Civil Code 1903, §§ 158, 162. Property acquired after marriage by either husband or wife, or by both, is community property, of which the husband has the management and control with absolute power of disposition, except by will. Property conveyed to a married woman by an instrument in writing is presumed to vest in her as her separate property. Civil Code 1903, §§ 164, 172. See Rosenberg v. Ford, 85 Cal. 610, 24 Pac. 779. If real estate be purchased with such prop- erty, and the title be taken in the name of the wife, a mortgage of it by her creates no lien. Yet if the husband dies, and the wife inherits the property, the mortgage becomes a lien on her interest. Parry v. Kelley, 52 Cal. 334. The fact that a note and mortgage were given by a wife while living apart from her husband does not of itself prove that the lands mortgaged were her separate property. McComb v. Spang- ler, 71 Cal. 418, 12 Pac. 347. Georgia: Act of 1866; Code 1911, §§ 2993, 3007, 3011; Hawkins v. Taylor, 61 Ga. 171; Tift v. Mayo, 61 Ga. 246; Harrold v. Westbrook, 78 Ga. 5, 2 S. E. 695. But the Const, of 1877, § 3, art. 9, prohibits the mortgaging of a homestead. Plant- ers' Loan &c. Bank v. Dickinson, 83 Ga. 711, 10 S. E. 446. Code 1895, § 2488, declares that "the wife is a feme sole as to her separate estate, unless controlled by the settlement. But, while a wife may contract, she can not bind her separate estate by any contract of suretyship, nor by any assumption of the debts of her husband." But a mortgage under a settlement to secure the debt of the husband is valid. ^Etna Ins. Co. v. Brodinax, 48 Fed. 892, 9 Sup. Ct. 61. Indiana: Burns' Ann. Stat. 1914, § 7853; provided her husband joined § 113 PARTIES TO A MORTGAGE 150 mortgage of her separate real estate is effectual, -whether executed by her alone or jointly with her husband. § 113. Debts of husband. — In some states a married woman may make a valid mortgage of her separate property to secure the payment of the debt of her husband or of any other person, in the same manner as if she were unmarried.** Any consideration which would be suffi- with her. Layman v. Schultz, 60 Ind. 541; Brick v. Scott, 47 Ind. 299. Kentucky: See Woods v. Davis, 153 Ky. 99, 154 S. W. 905. Louisiana: A married woman can not mortgage her estate with- out judicial authority. Stuffier v. Puckett, 30 La. Ann. 811. Massachusetts: P. S. 1882, eh. 147, § 1; Rev. Laws 1902, ch. 153, § 1, p. 1359; Nourse v. Henshaw, 123 Mass. 96; Frickee v. Donner, 35 Mich. 151. Minnesota: Gen. Stat. 1913, ch. 72, §§ 7143-4; Northwestern Mut. Life Ins. Co. V. Allis, 23 Minn. 337; Sand- wich Mfg. Co. V. Zellmer, 48 Minn. 408, 51 N. W. 379. "Stephen v. Beall, 22 Wall. (U. S.) 329, 22 L. ed. 786; Parsons v. Denis, 2 McCrary (U. S.) 359; De Roux V. Girard, 105 Fed. 798, 112 Fed. 89. Harper v. McGoogan (Ark.), 154 S. W. 187; Col- lins V. Wassell, 34 Ark. 17, 33; Johnson v. Graham Bros. Co., 98 Ark. 274, 135 S. W. 853; Goodrum V. Merchants' &c. Bank of England, 102 Ark. 326, 144 S. W. 198; Mar- low V. Barlew, 53 Cal. 456; Staf- ford Sav. Bank v. Underwood, 54 Conn. 2, 4 Atl. 248; Lynch v. Moser, 72 Conn. 714, 46 Atl. 153; Dzialynski V. Bank, 23 Fla. 346, 2 So. 696. In Alabama, the statute in effect inhibits the mortgaging of the wife's property as security for her husband's debt. But the joinder of a wife in a mortgage with her husband without expressly limiting her execution to a release of dower, does not raise a presumption that the mortgage embraces her separate property. Burgess v. Blake, 128 Ala. 105, 28 So. 963. For Alabama cases see post § 117. Josephson v. Powers, 123 La. 5, 48 So. 564 Comegys v. Clarke, 44 Md. 108 Plummer v. Jarman, 44 Md. 632 Mich. Ann. Stat. 1913, § 11545 note; Marx v. Bellel, 114 Mich. 631; Watson V. Thurber, 11 Mich. 457; Smith V. Osborn, 33 Mich. 410; Just V. State Sav. Bank, 132 Mich. 600, 94 N. W. 200; Kieldsen v. Blodgett, 113 Mich. 655 (consideration of hus- band's debt sufficient) ; Sandwich Mfg. Co. V. Zellmer, 48 Minn. 408, 51 N. W. 379; Insurance Co. v. Allis, 23 Minn. 337; Campbell v. Tomp- kins, 32 N. J. Eq. 170; Conover v. Grover, 31 N. J. Eq. 539; Tooker v. Sloan, 30 N. J. Eq. 394; Robblns v. Abrahams, 5 N. J. Eq. 465; Conway V. Wilson, 44 N. J. Eq. 457, 11 Atl. 607; Hallowell v. Daly (N. J. Eq.), 56 Atl. 234; Pape v. Ludeman (N. J. Eq.), 59 Atl. 9; Demarest v. Wyn- koop, 3 Johns. Ch. (N. Y.) 129, 144, 8 Am. Dec. 467; Foreman's Ins. Co. V. Bay, 4 Barb. (N. Y.) 407; New- hart V. Peters, 80 N. Car. 166; Moore V. Fuller, 6 Ore. 272, 25 Am. Rep. 524; Gable's Appeal (Pa.), 7 Atl. 52; Kuhn v. Ogilvie, 178 Pa. St. 303, 35 Atl. 957; Siebert v. Bank, 186 Pa. St. 233, 40 Atl. 472; Righter v. Livingston, 214 Pa. 28, 63 Atl. 195. In Indiana, under Acts 1879, p. 160, Rev. Stat. 1881, § 5119, which provided that a married woman should not mortgage her separate property acquired by descent, devise, or gift, as security for the debt of any other person, a mortgage exe- cuted by her to secure her husband's debt on land acquired by purchase, was not void or voidable. Gardner v. Case, 111 Ind. 494, 13 N. E. 36. A mortgage properly executed by a married woman upon her separate real estate is a valid and binding se- curity, unless it constitutes a con- tract of suretyship. Johnson v. Jou- chert, 124 Ind. 105, 24 N. E. 580. Such mortgage by her of her land to secure a loan, the proceeds of which are partly used to purchase land, the title to which is taken in her name, is valid to the extent so used; 151 MAKHIED WOlIESr § 113 eient to support the obligation if made by any one else, as, for in- stance, the granting of the original loan, or a subsequent extension of Johnson v. Jouchert, 124 Ind. 105, 24 N. E. 580; Jouchert v. Johnson, 108 Ind. 436, 9 N. E. 413; Vogel v. Leichner, 102 Ind. 55, 1 N. E. 554; Noland v. State, 115 Ind. 529, 18 N. E. 26; Morgan v. Street, 28 Ind. App. 131; though invalid to the extent the proceeds are for the husband's ben- efit. The burden of proving that a wife's mortgage securing her own note is invalid under this statute is upon the party who contests its validity. Field v. Noblett, 154 Ind. 357; Crisman t. Leonard, 126 Ind. 202, 25 N. E. 1101; Miller v. Shields, 124 Ind. 166, 24 N. E. 670. Other- wise when the note is by husband and wife. Crisman v. Leonard, 126 Ind. 202, 25 N. E. 1101; Cupp v. Campbell, 103 Ind. 213, 2 N. E. 565; Vogel v. Leichner, 102 Ind. 55, 1 N. E. 554. A mortgage is not within the prohibition of the stat- ute when the consideration upon which it was executed inured to the benefit of the married woman, or to the benefit of her estate. Badger V. Hoover, 120 Ind. 193, 21 N. E. 888. If the mortgage is upon the joint property of both husband and wife, and is made to secure a loan obtained upon their joint applica- tion, the burden is upon them to show that the consideration was not obtained and used for the bene- fit of their joint estate. Security Co. V. Arbuckle, 119 Ind. 69, 21 N. E. 469; Jenne v. Burt, 121 Ind. 275, 22 N. B. 256. Such a mortgage made to secure the husband's note, or debt, though given in payment for the land, is void as to the wife. Stewart v. Babbs, 120 Ind. 568, 22 N. E. 770; State v. Kennett, 114 Ind. 160, 16 N. E. 173; Jones v. Ew- ing, 107 Ind. 313, 6 N. E. 819; Prit- chett V. McGaughey, 151 Ind. 638, 52 N. E. 397; Shaw v. Jones, 156 Ind. 60, 59 N. E. 166. The provision against a married woman becoming a surety was intended for her pro- tection alone, and the defense of coverture can not be made solely for the benefit of a third person. A stranger can not set up this de- fense. Johnson v. Jouchert, 124 Ind. 105. 24 N. E. 580. As is in effect said in Sutton v. Aiken, 62 Ga. 733, 741, the purpose of the stat- ute is economical, not moral; and its policy is in favor of a class, and not of the public at large. Under this statute a mortgage by a married woman upon her sepa- rate real estate, owned by herself and husband by entireties, is void- able by her. McCormick Harvest- ing Machine Co. v. Scovell, 111 Ind. 551, 13 N. E. 58; Dodge v. Kinzy, 101 Ind. 102; Crooks v. Kennett, 111 Ind. 347, 12 N. E. 715; Bridges v. Blake, 106 Ind. 332, 6 N. B. 833; Fawkner v. Scottish-American Mtg. Co., 107 Ind. 555, 8 N. B. 689; Vogel v. Leichner, 102 Ind. 55, 1 N. E. 554; McLead v. ^tna L. Ins. Co., 107 Ind. 394, 8 N. E. 230. Under this act a married woman may convey her land to her hus- band to enable him to secure a loan by mortgage. Long v. Cross- man, 119 Ind. 3, 21 N. B. 450; Trim- ble V. State, 145 Ind. 154, 44 N. E. 260; Grzesk v. Hibberd, 149 Ind. 354, 48 N. B. 361; Wilson v. Logue, 131 Ind. 191, 30 N. B. 1079. Whether husband's mortgage of land which belonged to husband and wife as tenants by entireties, and was conveyed to him through a. third person is void, see Govern- ment Bldg. &c. Inst. V. Denny, 154 Ind. 261, 55 N. E. 757. If con- veyance to a third person was without consideration, the mortgage is voidable both as to wife and as to husband. Abicht v. Searls, 154 Ind. 594, 57 N. E. 246. See Burns' Ind. Ann. Stat. 1914, § 7852. But where one in good faith, and without notice, advances money on a mortgage executed by a married woman and her husband, on the faith of the representations of the mortgagors that the money is for the sole benefit of the wife, he is not affected by a secret agreement between the husband and the wife that the money should be used by the husband in his business. Ward V. Berkshire Life Ins. Co., 108 Ind. 301, 9 N. E. 361. Iowa Code, § 2506; Low v. Ander- son, 41 Iowa 476. § 113 PAETIES TO A MOETGAGE 152 the time of payment of the debt, is suflRcient to support her tinder- taking.*' Her mortgage, given to secure the payment of the bond of her husband, will not be regarded as having no validity or binding effect simply because the consideration of the bond is an obligation merely moral, and not enforcible at law or in equity.*^ Whatever conflict there may be in the authorities as to the ability of a wife to charge herself personally for any debts not contracted for her own benefit, there is a general unanimity in holding that a mortgage upon her property may be enforced against that, whether made for her benefit or not.*^ In Kentucky, a married woman may mortgage her separate estate to pay her own debt created for her own benefit; Hounshell v. Insur- ance Co., 81 Ky. 304; but she can not make such a mortgage to secure a debt of her husband. Merchants' &c. Loan &c. Assn. v. Jarvis, 92 Ky. 566, 18 S. W. 454; Lane v. Traders' De- posit Bank (Ky.), 21 S. W. 756; Mil- ler v. Sanders. 98 Ky. 535, 33 S. W. 621. In Missouri she may mortgage her property not held to her separate use for any purpose. Rev. Stat. 1889, § 2396; Meads v. Hutchinson, 111 Mo. 620, 19 S. "W. 1111; Fer- guson V. Soden, 111 Mo. 208, 19 S. W. 727; Rosenheim v. Hartsock, 90 Mo. 357, 2 S. W. 473; Wilcox v. Todd, 64 Mo. 388; Thornton v. Bank, 71 Mo. 221; Hagerman v. Sutton, 91 Mo. 519, 4 S. "W. 73; Rines v. Mans- field, 96 Mo. 394, 9 S. W. 798. The mortgage Is valid though the debt is evidenced by the wife's void note, the debt being a valid one. Meads V. Hutchinson, 111 Mo. 620, 19 S. W. 1111; Bell V. Bell, 133 Mo. App. 570, 113 S. W. 667. In South Carolina, a mortgage by a married woman of her separate estate, which shows on its face that it was given to secure a debt of her husband, was till recently void un- der the constitution and statutes of the state. Aultman v. Rush, 26 S. Car. 517, 2 S. E. 402; Habenicht V. Rawls, 24 S. Car. 461, 58 Am. Rep. 268; Harris v. McCaslan, 31 S. Car. 420, 10 S. E. 104; Carrigan v. Drake, 36 S. Car. 354, 15 S. E. 339. Her mortgage for the benefit of her hus- band was void, provided the lender had knowledge of such intended use. Bates v. Am. Mtg. Co., 37 S. Car. 88, 16 S. E. 883; Tribble v. Poore, 30 S. Car. 97, 8 S. B. 541; Gwynn v. Gwynn, 31 S. Car. 482, 10 S. B. 221; Greig v. Smith, 29 S. Car. 426, 7 S. E. 610; Goodgion v. Vaughn, 32 S. Car. 499, 11 S. B. 351; Salinas v. Turner, 33 S. Car. 231, 11 S. E. 702; Chambers v. Bookman, 32 S. Car. 455, 11 S. E. 349. The amount of the husband's debt included in the mortgage was, upon foreclosure, de- ducted in computing the amount due. Brown v. Prevost, 28 S. Car. 123, 5 S. E. 274; Erwin v. Lowry, 31 S. Car. 330, 9 S. E. 961. But now, by Act 1887, p. 819, any mortgage affecting her separate estate, exe- cuted by a married woman, is made a charge on her separate estate, whenever the Intention to do so is declared in such mortgage. When such intention is declared by a married woman she is bound there- by, though in fact the mortgage was given to secure her husband's debt, and the mortgagee had knowl- edge of the fact. Scottish-American Mtg. Co. V. Mlxson, 38 S. Car. 432, 17 S. E. 244; Ellis v. American Mtg. Co., 36 S. Car. 45, 15 S. E. 267; Reld V. Stevens, 38 S. Car. 519. 17 S. E. 358. Eaton V. Dewey, 79 Wis. 251, 48 N. W. 523, where it was held that the husband might make a mortgage of his wife's land partly for his ov/n benefit, there being no evidence of collusion between the husband and the mortgagee. See ante §§ 109, 110. « Short V. Battle, 52 Ala. 456; Low V. Anderson, 41 Iowa 476. •"Campbell v. Tompkins, 32 N. J. Eq. 170. "A married woman may mort- 153 MARRIED WOMEK § 113a The mortgage of a married woman upon her property, given to seciire a debt of her husband, but taken by the mortgagee in good faith, and without fraud on his part, will seldom, if ever be set aside, even on proof that her husband procured her execution of it by fraudulent representations.^* A wife having executed a paper at the request of her husband, without reading it or inquiring as to the contents of it, although it was a mortgage of her property, the mort- gagee having no knowledge of this fact, was not allowed to restrain the delivery of it, on the ground that it was procured by fraud or deceit.^" But the court will refuse to enforce a mortgage, the execu- tion of which by the wife was procured by harshness and threats on the part of the husband so excessive as to subjugate and control the freedom of her will;'*" or one procured by the husband- as agent for his creditor upon a false representation that the consideration of it was merchandise to be shipped to her for her use in her separate business.^^ The plea of coverture is a personal privilege, and a mere creditor of a married woman will not, ordinarily, be allowed to attack her mortgage on the ground that it was given to secure her husband's debt.^2 It is provided by statute in many of the states that a married woman shall not mortgage nor enter into a contract to mortgage her separate real estate, unless her husband join in such mortgage."*^ § 113a. Consideration for wife's mortgage. — The mortgage of a married woman is not valid unless made for a valid consideration."* gage her land to raise money to pay "■ Haskit v. Elliott, 58 Ind. 493. a debt of her husband, although the " Hawes v. Glover, 126 Ga. 305, mortgagee had knowledge of the 55 S. E. 62. purpose of the mortgage, if this Is ^ Interstate Bldg. &c. Assn. v. not made directly to the husband's Agricola, 124 Ala. 474, 27 So. 247; creditor. Chastain v. Peak, 111 Ga. Burns' Ind. Ann. Stat. 1914, § 7853; 889, 36 S. E. 967; Nelms v. Keller, McLead v. ^tna Co., 107 Ind. 394, 103 Ga. 745, 30 S. E. 572. 8 N. E. 230; Starkey v. Starkey, 166 "Spurgin v. Traub, 65 111. 170. Ind. 140, 76 N. B. 876; Field v. Text quoted with approval in Col- Campbell, 164 Ind. 389, 72 N. E. lins V. "Wassell, 34 Ark. 17, 33. 260, 108 Am. St. 301; Deusch v. "Comegys v. Clarke, 44 Md. 108. Questa, 116 Ky. 474; 76 S. W. 329; See also Mersman v. Werges, 112 "Weber v. Tanner, 23 Ky. L. 1107, 64 U. S. 139, 28 L. ed. 641, 5 Sup. Ct. S. W. 741; Dietrich v. Hutchinson, 65; Freeman v. Wilson, 51 Miss. 73 Vt. 134, 50 Atl. 810, 87 Am. St. 329. 698. ™ Central Bank v. Copeland, 18 "The consideration to the wife Md. 305, 81 Am. Dec. 597. But where may be certain contractual rights the payee of the mortgage had no contemporaneously acquired, such as notice of threats or duress of the an agreement to relieve her from a husband, a finding in his favor is prior mortgage, or a contempora- proper. Johnson v. A. Leffler Co., neous conveyance of property to her, 122 Ga. 670, 50 S. E. 488. and the payment of her husband's § 114 PAETIES TO A MORTGAGE 15-1 Thus, where a married ■woman executed a mortgage, without her hus- band's concurrence, to her mother, to secure, as was claimed, advances made to her by Iier father long before, and the evidence showed that the advances were intended by her father as a gift, and that the real object in executing the mortgage was to protect the property from her husband, it was held that the mortgage was not valid, and that a court of equity could not declare the loan to be a lien on the wife's separate property.^' So, a mortgage of the separate property of a wife to her husband and another as partners, when she owes them nothing, is without consideration and void, although her husband was credited on the firm books."*" It is essential to a consideration that there should be some benefit to the wife or a detriment to the mortgagee. Where a past considera- tion is void, a mortgage of a wife to secure a pre-existing debt of the husband is invalid.^' A mortgage given by a wife to indemnify a surety on her husband's bond and save him from arrest has been held supported by a sufficient consideration. The arrest "would entail loss of support and dis- grace, not only upon her husband, but upon herself and family. ISTo true wife would, under such circumstances, refuse to execute a mort- gage upon her home, and we do not think a court will ever be found to hold that a mortgage so executed is without consideration."^* In jurisdictions which do not forbid a wife to become surety for her husband a mortgage by a wife of her separate property to secure her husband's note is made for a sufficient consideration if there was a sufficient consideration for his note.^° § 114. Wife in position of a surety — Exoneration. — A wife who has mortgaged her separate property for her husband's debt is in the position of a surety."" She is entitled to all the rights of a surety, and her liability and the mortgage lien are discharged by the extension debt. Hamilton v. Hamilton, 162 Kans. 749, 75 Pac. 1028; Eaton v. Ind. 430, 70 N. E. 535. Dewey, 79 Wis. 251, 48 N. W. 523. ■>= Heller v. Groves (N. J.), 8 Atl. »» Cross v. Allen, 141 U. S. 528, 35 652. L. ed. 843, 12 Sup. Ct. 67; Spear v. == Bliss v. Cronk, 68 N. J. Eq. 655, Ward, 20 Cal. 659; Bull v. Coe, 77 60 Atl. 1133. Cal. 54, 18 Pac. 808, 11 Am. St. 235; "Bell V. Bell, 133 Mo. App. 570, Young v. Graff, 28 111. 20; Post v. 113 S. W. 667. Losey, 111 Ind. 74, 12 N. E. 121, 60 ^Bode V. Jussen, 93 Nebr. 482, Am. Dec. 677; Philbrooks v. Mc- 140 N. W. 768. Bwen, 29 Ind. 347; Ellis v. Kenyon, ''"Post v. First Nat. Bank, 138 111. 25 Ind. 134; Kinney v. Heuring, 44 559, 28 N. E. 978; Sigel Campion Ind. App. 590, 87 N. E. 1053; Indian- Live Stock Com. Co. v. Haston, 68 apolis Brew. Co. v. Behnke, 41 Ind. 155 MAEKIED WOMEN 114 of the time of payment -without her consent,"^ if the extension be a binding obligation npon the mortgagee,"- or by anything that 'would discharge a surety who is personally bound."^ Her rights in this respect are the same as if she were sole. Where a husband and wife execute a mortgage npon the home- stead, the title to which is in the husband, to secure the debt of the husband, the wife's relation to the debt is not that of a surety, so that payments made by the husband upon the debt have the effect of continuing the debt in force."* Many jurisdictions, however, deny a married woman the right to become a surety for her husband and this without regard to the use that is made of the money realized on the note and mortgage."^ The mortgage in these jurisdictions is generally held merely voidable but not absolutely void."" The wife's right or interest in the homestead rests upon the marital relation and the husband's ownership in fee. Her right is a possessory right merely and when she joins her husband in making a mortgage of the homestead she conveys no title of her own but merely waives her possessory right to the property upon a default in the conditions of the mortgage."' But the husband can App. 288, 81 N. E. 119; Green v. Scranage, 19 Iowa 461, 87 Am. Dec. 447; Hubbard v. Ogden, 22 Kans. 3G3; Eaton v. Nason, 47 Maine 132; Bartlett v. Bartlett, 4 Allen (Mass.) 440; Carley v. Fox, 38 Mich. 387; Watson V. Thurber, 11 Mich. 457; White V. Smith, 174 Mo. 186, 73 S. W. 610; Wilcox v. Todd, 64 Mo. 388; Northwestern Mut. L. Ins. Co. v. Mallory, 93 Nebr. 579, 141 N. W. 190; Smith V. Townsend, 25 N. Y. 479; Purdy V. Huntington, 42 N. Y. 334; Hawley v. Bradford, 9 Paige (N. Y.) 200, 37 Am. Dec. 390; Demarest v. Wynkoop, 3 Johns. Ch. (N. Y.) 129, 8 Am. Dec. 467; Vartie v. Under- wood, 18 Barb. (N. Y.) 561; Mc- Gowan v. Davenport, 134 N. Car. 526, 47 S. E. 27; Insurance Co. v. Miller, 24 Ohio Cir. Ct. 667; Red River Nat. Bank v. Bray (Tex. Civ. App.), 132 S. W. 968. But see Hamilton v. Hamilton, 162 Ind. 430, 70 N. E. 535. »i Spear v. Ward, 20 Cal. 659; Post v. Losey, 111 Ind. 74, 60 Am. Dec. 677; Newman v. Kling, 73 Miss. 312, 18 So. 685; White & Tudor Lead. Cas. in Eq. (4th ed.), 1922 and cases cited; Barrett v. Davis (Mo.), 15 S. W. 1010; Bank of Albion v. Burns, 46 N. Y. 170; Coleman v. Van Rens- selaer, 44 How. Pr. (N. Y.) 368; Smith V. Townsend, 25 N. Y. 479. "^Frickee v. Donner, 35 Mich. 151. °= Cross V. Allen, 141 U. S. 528, 35 L. ed. 843, 12 Sup. Ct. 67, per La- mar, J. "Roberts v. Roberts, 10 N. Dak. 531. The case of People's State Bank v. Francis, 8 N. Dak. 369, 79 N. W. 853, not followed. °= Richardson v. Stephens, 114 Ala. 238, 21 So. 949; Continental Nat. Bank v. Clarke, 117 Ala. 292, 22 So. 988; Wright v. Parvis &c. Co., 1 Marv. (Del.) 325, 40 Atl. 1123; Lewis V. Howell, 98 Ga. 428, 25 S. E. 504; Lowenstein v. Meyer, 114 Ga. 709, 40 S. E. 726; Gross v. White- ley, 128 Ga. 79, 57 S. E. 94; Burns' Ind. Ann. Stat. 1914, § 7855; Voreis V. Nussbaum, 131 Ind. 267, 31 N. E. 70, 16 L. R. A. 45; Indianapolis Brew. Co. v. Behnke, 41 Ind. App. 288, 81 N. E. 119. «" Field V. Campbell (Ind. App.), 68 N. B. 911. ''Jenness v. Cutler, 12 Kans. 500; Smith V. Scherck, 60 Miss. 491; Kuhnert v. Conrad, 6 N. Dak. 215, § 114 PARTIES TO A MORTGAGE 156 not create a new incumbrance upon the homestead without the wife's consent.^' The rule is otherwise in states where a married woman is held to bind her separate property generally by her contract in relation to any part of such property. Where this is the case, she is bound as principal when she makes a mortgage to secure her hus- band's debt, and her liability is not affected by any understanding she may have with her husband, or by the giving of additional security as collateral to the mortgage."" As between the husband's homestead exemption and the wife's dower interest, the homestead exemption must first be applied to the mortgage, and his property must be wholly exhausted before resorting to hers.'^" Generally she is entitled to have her estate exonerated out of the estate of her husband, if this be practicable.^^ When he has mort- gaged or pledged his own property for the same debt, his property should in the first instance be applied to satisfy the mortgage.'^ The creditor having security upon the husband's property for the payment of the same debt, by releasing this discharges the wife's estate."^ The husband being the principal debtor, if he acquire the mortgage it will be discharged.''* Although the right of redemption be limited to him, she may nevertheless redeem, unless it appear from the instru- ment itself, or from extraneous evidence, that she intended to make a gift of the property to her husband, and that the conveyance, there- fore, should be absolute.^^ A married woman who has joined her husband in a mortgage of his land is, according to some authorities, entitled to have a payment made by a sale of personal property belonging to her husband, mort- gaged to secure the same debt, applied in exoneration of her inchoate dower interest, in preference to an application of the same to a debt 69 N. "W. 185; Roberts v. Roberts, 10 Knight v. Whitehead, 26 Miss. 245; N. Dak. 531, 88 N. W. 289. "Wilcox v. Todd, 64 Mo. 388; Wright "'Barber v. Babel, 36 Cal. 11; v. Austin, 56 Barb. (N. Y.) 13; Bank v. Burns, 46 N. Y. 170; Spen- Gahn v. Neimcewicz, 3 Paige (N. cer V. Fredenhall, 15 Wis. 666. Y.) 614, 11 Wend. 312; Loomer v. ""Alexander v. Bouton, 55 Cal. 15. Wheelwright, 3 Sandf. Ch. (N. Y.) See also Hassey v. Wilke, 55 Cal. 135; Sheidle v. V.^eishlee, 16 Pa. St. 525. 134; Weeks v. Haas, 3 Watts & S. '" Stoehr v. Moerlein Brew. Co., 27 (Pa.) 520, 39 Am. Dec. 39. Ohio Cir. Ct. 330. ™Ayres v. Husted, 15 Conn. 504; " Browne v. Bixby, 190 Mass. 69, Johns v. Reardon, 11 Md. 465. 76 N. E. 454; Wilcox V. Todd, 64 Mo. "Fitch v. Cotheal, 2 Sandf. Ch S8S; Shinn v. Smith, 79 N. Car. 310; (N. Y.) 29. Harrington v. Rawls, 136 N. Car. 65, "= Demarest v. Wynkoop, 3 Johns. 48 S. E. 571; Huntingdon v. Hunt- Ch. (N. Y.) 129, 8 Am. Dec. 467; ingdon, 2 Bro. P. C. 1. Duffy v. Insurance Co., 8 Watts & "Johns V. Reardon, 11 Md. 465; S. (Pa.) 413, 433. 157 MARRIED WOMEN' § 115 to the mortgagee secured by a second mortgage made by the husband alone. ^^ To make the mortgagee chargeable with the equitable rights of the wife, as surety for her husband, it must appear that he had notice of this relation. ■^^ Such notice can not be inferred merely from the fact that the money was paid to the husband^ because he may have acted as his wife's agent in the transaction. But if the mortgage be made to secure a pre-existing debt of the husband's, the creditor is affected with notice of the wife's equity as surety, and in his dealings with the husband is bound by this knowledge.''^ § 115. Husband's authority over wife's mortgage — Extension — Litigation. — A husband has no presumptive authority to consent to an extension of a mortgage given by his wife to secure his debt. The holder of such a mortgage is chargeable with notice of her ownership, and that she stands in the relation of surety to the husband. The lien is therefore discharged by an extension of the time of payment without her concurrence. ■'' A renewal note has the same effect as an exten- sion.^" In a case where a wife's mortgage covered not only her land, but also property of her husband, it was held that his release of his own property without her consent operated as a release of her land.^'^ A husband has no implied authority to employ counsel to represent his wife, and to bind her in litigation respecting her separate estate.'^ ■"Gore V. Townsend, 105 N. Car. De Barrera v. Frost, 39 Tex. Civ. 228, 11 S. E. 160. See post § 1694. App. 544, 88 S. W. 476. A material " Von Hemert v. Taylor, 73 Minn, alteration in a note secured by the 339, 76 N. W. 42; Benedict v. Olson, trust deed of a married woman dis- 37 Minn. 431, 35 N. W. 10; Agnew v. charges the land. Higgins v. Deer- Meri-itt, 10 Minn. 308. Ing Harvester Co., 181 Mo. 300, 79 ™ Knight v. Whitehead, 26 Miss. S. W. 959. But see Dearing v. Jor- 245; Loomer v. Wheelright, 3 Sandf. dan (Tex. Civ. App.), 130 S. W. 876. Ch. (N. Y.) 135; Gahn v. Neimce- Where the legal title to the mort- wicz, 3 Paige (N. Y.) 614. As to gaged premises is in the husband, Kentucky, see Hobson v. Hobson, 8 his extension without her knowl- Bush (Ky.) 665. edge or consent does not release her ™ White V. Smith, 174 Mo. 186, 73 property, though she subsequently S. W. 610 ; Bank of Albion v. Burns, claims it under an antenuptial 2 Lans. (N. Y.) 52; Smith v. Town- agreement. Creighton v. Crane, 73 send, 25 N. Y. 479; De Barrera v. Nebr. 650, 103 N. W. 284. Frost, 39 Tex. Civ. App. 544, 88 S. ™ Johnson v. Franklin Bank, 173 W. 476; Red River Nat. Bank v. Mo. 171, 73 S. W. 191; Westbrook Bray (Tex. Civ. App.), 132 S. W. v. Belton Nat. Bank (Tex. Civ. 968. See also Johnson v. Franklin App.), 75 S. W. 842. Bank, 173 Mo. 171, 73 S. W. 191. «' Schneider v. Sellers (Tex.), 81 The husband's insolvency does not S. W. 126. affect the rule that his extension '"Mason v. Johnson, 47 Md. 347. alone discharges the wife's property. § 115a PARTIES TO A MOETGAGE 158 § 115a. Debts of third persons. — ^Where the law of the particulaT jurisdiction limits the liability of the separate estate of a married woman, she may not, as a general rule, mortgage her separate estate as security for the debt of a third person.*^ But a married woman will not be permitted to avoid a mortgage given by her to secure the debt of a third party, when the mortgage was made at the time she took title to the mortgaged premises, and as a part of the transaction by which she became vested with title thereto. Such a transaction "is very different from the one where a married woman, without any consideration whatever, executes a mortgage upon her separate estate to secure the debt of a third party."^* § 116. Assumption of mortgage by married woman. — A married woman may make a valid contract to assume a mortgage in a convey- ance to her of lands so incumbered, and may render herself liable for a deficiency.*^ Such a contract is not an undertaking to pay the debt of another, but to pay her own debt for the benefit of her own estate. Having the capacity to make contracts for the acquisition of land, she must have the capacity of binding herself for the payment of the price of it. It is as much within her capacity to make an agreement to assume the payment of an existing mortgage as it is to give a new mortgage and note for a part of the purchase-money. She is bound by a vendor's implied lien for the purchase-money of land conveyed to her,** and by a vendor's lien reserved in his deed or by contract.'*' A mortgage given by her in part payment of the purchase-price of land at the time of the conveyance to her, although it imposes no personal liability upon her, is nevertheless valid, and may be enforced »= Webb V. John Hancock Life Ins. Elliott, 23 N. J. Eq. 526; Indiana Co., 162 Ind. 616, 69 N. E. 1006, 66 Yearly Meeting v. Haines, 47 Ohio L. R. A. 632; Heburn v. Warner, 112 St. 423, 25 N. E. 119. Mass. 271, 17 Am. Rep. 86; Conk- An earlier case In the Supreme ling V. Levie, 66 Nebr. 132, 94 N. W. Court of New York held that a mar- 988. But see Shipman v. Lord, 58 ried woman was not liable in such N. J. Eq. 380, 44 Atl. 215; Kuhn v. case, because a purchase which Ogilvie, 178 Pa. St. 303, 35 Atl. 957. turned out so poorly— the property " Conkling v. Levie, 66 Nebr. 132, not being worth the amount of the 94 N. W. 987. mortgage covenant — could not be ^° Carpenter V. Mitchell, 54 111. 126; for the benefit of her separate es- Ballin v. Dillaye, 35 How. Pr. (N. tate. Brown v. Hermann, 14 Abb. Y.) 216, 37 N. Y. 35; Flynn v. Pow- Pr. (N. Y.) 394. See post § 753. ers, 35 How. Pr. (N. Y.) 279, 36 »" Thompson v. Scott, 1 Bradw. How. Pr. (N. Y.) 289; Vrooman v. (111.) 641; Haskell v. Scott, 56 Ind. Turner, 8 Hun (N. Y.) 78, 69 N. Y. 564; Cox v. Wood, 20 Ind. 54. See 280, 25 Am. Rep. 195; Huyler v. At- post § 193. wood, 26 N. J. Eq. 504; Perkins v. »' See post § 231. 159 MAEEIED "WOMEN 117 in equity -upon the land by foreclosure sale.*^ The conveyance and mortgage, read together as parts of one instrument, in legal effect create in the grantee an estate upon condition ; and, without reference to statutes removing the wife's common-law disabilities, a court of equity would treat her as the trustee of the grantor, and would sub- ject the land to the payment of the purchase-money.^^ If the husband assented to the transaction, a court of equity would compel him and the wife to execute a valid mortgage to secure the payment of the purchase-money.^" § 116a. Execution of mortgage by attorney in fact for married woman. — In states where a married woman is given the power of a feme sole as to the incumbrance of her separate property she may mortgage her real estate by or through her attorney in fact."^ § 117. Alabama rule. — In Alabama a married woman can not bind either herself or her statutory separate estate by a mortgage made to secure debts contracted by her husband.*^ But the burden is upon «« Marks v. Cowles, 53 Ala. 499, overruling Cowles v. Marks, 47 Ala. 612, and In part Hapgood v. Mar- lowe, 51 Ala. 478. See also Kieser V. Baldwin, 62 Ala. 526; Prout v. Hoge, 57 Ala. 28; Smith v. Carson, 56 Ala. 456; Strong v. Waddell, 57 Ala. 471; Johnson v. Ward, 82 Ala. 486, 2 So. 524. ** Patterson v. Robinson, 25 Pa. St. 81; Ramborger v. Ingraham, 38 Pa. St. 146. "Leach v. Noyes, 45 N. H. 364. The statute of Alabama does not diminish the capacity of the wife to take and receive property as rec- ognized at common law. The stat- ute relates to her common-law in- capacity to hold and transmit prop- erty, and partly removes this. At common law the right to disaffirm a conveyance to herself during cov- erture did not pertain to her, for the same reason that power to contract was denied her. Disaffirmance dur- ing coverture was within the power of the husband only, and not within his power after he had once assented to the transaction. In Marks v. Cowles, 53 Ala. 499, the husband having assented to the purchase, the court decide that the hus- band, as trustee of the wife, having under the statute power to invest, with her concurrence, the proceeds of her statutory estate in the purchase of lands, the invest- ment being a judicious one and such as a court of equity might have di- rected, the transaction of which the mortgage was a part should be sus- tained. For present statute see post § 117, note. ^ Linton v. National Life Ins. Co., 104 Fed. 584. »^ Osborne v. Cooper, 113 Ala. 405, 21 So. 320; Richardson v. Stephens, 122 Ala. 301, 25 So. 39, qualifying 114 Ala. 238, 21 So. 949; McNeil v. Davis; 105 Ala. 657, 17 So. 101; Hawkins v. Ross, 100 Ala. 459, 14 So. 278; Davidson v. Lanier, 51 Ala. 318; Wilkinson v. Cheatham, 45 Ala. 337; Cowles v. Marks, 47 Ala. 612; Northington v. Faber, 52 Ala. 45; Fry V. Hammer, 50 Ala. 52 ; Riley v. Pierce, 50 Ala. 93; Coleman v. Smith, 55 Ala. 368; Lansden v. Bone, 90 Ala. 446, 8 So. 65; Clement v. Draper, 108 Ala. 211, 19 So. 25; El- ston V. Comer, 108 Ala. 76, 19 So. 324; Henderson v. Brunson, 141 Ala. 674, 37 So. 549; Campbell v. Hughes, 155 Ala. 591, 47 So. 45; Evans v. Faircloth-Byrd Mercantile Co., 165 Ala. 176, 51 So. 785; Hanchey v. Powell, 171 Ala. 597, 55 So. 97; Lam- kin v. Lovell, 176 Ala. 334, 58 So. § 117 PARTIES TO "A MORTGAGE 160 her to prove that the debt secured was the separate debt of the hus- band and not her own."' Formerly she was incapable of incumbering such estate even to secure her own debt, although her husband joined in the conveyance. Her mortgage was an absolute nullity."* The statutes creating the wife's statutory separate estate define the debts to which it may be subjected, and the remedy by which the liability for such debts may be enforced; consequently, even a mortgage given by husband and wife, to secure the payment of any such debt, could not be enforced.''^ A mortgage of a married woman's statutory separate estate, exe- cuted by herself and husband to secure the payment of their joint 258. See Code Ala. 1907, § 4497. But see Short v. Battle, 52 Ala. 456. In ease the land has been paid for by money drawn from the hus- band's firm, a mortgage by her of the land to secure a debt of the firm will not be set aside. Mathews v. Sheldon, 53 Ala. 136. A mortgage on a wife's property is void only pro tanto where part of the debt secured is the husband's. Mills V. Hudmon, 175 Ala. 448, 57 So. 739. The fact that the money borrowed on a mortgage of the separate prop- erty of a married woman, securing the husband's note on which she was a surety, was used by the hus- band to improve and cultivate the land mortgaged, does not make the note and mortgage valid. Richard- son V. Stephens, 114 Ala. 238, 21 So. 949; Hawkins v. Ross, 100 Ala. 459, 14 So. 278; McNeil v. Davis, 105 Ala. 657, 17 So. 101; Lansden v. Bone, 90 Ala. 446, 8 So. 65; Dudley V. Collier, 87 Ala. 431, 6 So. 304; Robertson v. Hayes, 83 Ala. 290, 3 So. 674; Heard v. Hicks, 82 Ala. 484, 1 So. 639. If a married woman purchases land and gives a mortgage for a part of the purchase-money with- out the assent in writing of her husband, her coverture and dis- • ability not relieved by such assent are no defense to a bill to foreclose the mortgage which seeks no per- sonal decree against the purchaser. Joseph V. Decatur Land Imp. &c. Co., 102 Ala. 346, 14 So. 739; Bogan V. Hamilton, 90 Ala. 454, 8 So. 186; Crampton v. Prince, 83 Ala. 246, 3 So. 519; Wadsworth v. Hodge, 88 Ala. 500, 7 So. 194. Where she is regularly invested by the court, with the right to buy, sell and mortgage her property, she may exercise each of these powers in her own discretion, just as if she were a feme sole. Robinson v. Walker, 81 Ala. 404, 1 So. 347. If the decree intended to relieve a married woman of her disabilities is void for insufficiency of the peti- tion (Powell V. Security Co., 87 Ala. 602, 6 So. 339), a mortgage executed under such void decree Is itself void, and can not be ratified so as to be made valid without a new con- sideration, after the Act of Febru- ary 28, 1887, giving a married wom- an the rights of a feme sole. »' Mohr V. Griffin, 137 Ala. 456, 34 So. 378; Sample v. Guver, 143 Ala. 613, 42 So. 106; Gibson v. Wallace, 147 Ala. 322, 41 So. 960; Lamkin v. Lovell, 176 Ala. 334, 58 So. 258; In- terstate Bank v. Wesley, 178 Ala. 186, 59 So. 621. "' Curry v. American Freehold Land Mtg. Co., 107 Ala. 429, 18 So. 328; Conner v. Williams, 57 Ala. 131; Chapman v. Abrahams, 61 Ala. 108; McDonald v. Mobile Life Ins. Co., 56 Ala. 468; Gans v. Williams, 62 Ala. 41; Thames v. Rembert, 63 Ala. 561. But she could make a con- ditional sale. Vincent v. Walker, 86 Ala. 333, 5 So. 465. »' Gilbert v. Dupree, 63 Ala. 331; Harper v. T. N. Hays Co., 149 Ala. 174, 43 So. 360. 161 HAREIED WOMEN § 117a promissory note, is not binding upon her or her estate. The consid- eration of the note may be shown by parol to have been the indebted- ness of the Iiusband.*"* But if the contract of purchase was made by the husband alone, though the conveyance was taken in the name of his wife, and the vendor had no notice of the wife's claim to the money, his equity under the mortgage is regarded as superior to hers."^ A distinction is taken between the statutory real estate of a married woman and that wliicli is her equitable separate estate; and such an equitable separate estate may be created when the gift or devise, or conveyance to her, clearly and certainly shows an intent to exclude the marital rights of the husband under the statute. Such separate estate not affected by the statute she can mortgage for her own debt or the debt of her husband, or of any one else, as if she were a feme sole."* § 117a, Georgia and Louisiana. — Georgia and Louisiana have code provisions similar to that of Alabama, and a wife can not bind her "^ Stribling v. Bank of Kentucky, 48 Ala. 451. "'Haygood v. Marlowe, 51 Ala. 478. » Short V. Battle, 52 Ala. 456; Hel- metag v. Frank, 61 Ala. 67; Burrus V. Dawson, 66 Ala. 476; Allen v. Terry, 73 Ala. 123; Hooks v. Brown, 62 Ala. 258; Smythe v. Fitzsim- mons, 97 Ala. 451, 12 So. 48. Under Code 1867, §§ 2371, 2372, 2376, all property of the wife, held by her previous to the marriage, or which she may become entitled to after the marriage, in any manner, is the separate estate of the wife, and is not subject to the liabilities of the husband. This provision is continued by Code 1886, § 2341. The earlier Code provided that property thus belonging to the wife vests in the husband as her trustee, who has the right to manage and control the same, and is not required to account with the wife, her heirs, or legal representatives, for the rents, in- come, and profits thereof. The Code of 1886, §§ 2346, 2348, 2349, and Code of 1896, §§ 2528, 2529, how- ever, declare that the wife has full legal capacity to contract in writ- ing as if she were sole, with the as- sent or concurrence of the husband 11— Jones Mtg. — Vol. I. expressed in writing; but she can not directly or indirectly become a surety for her husband. Clement V. Draper, 108 Ala. 211, 19 So. 25; Hawkins v. Ross, 100 Ala. 459, 14 So. 278; Lansden v. Bone, 90 Ala. 446, 8 So. 65; McNeil v. Davis, 105 Ala. 657, 17 So. 101. The wife, joining in her hus- band's deed to release dower, etc., is not bound by a covenant of war- ranty. Threefoot v. Hillman, 130 Ala. 244, 30 So. 513. The wife, ex- cept in certain cases specified, can not alienate her land without the concurrence of her husband. For construction of the earlier statute, see Marks v. Cowles, 53 Ala. 499; Smith V. Carson, 56 Ala. 456; Strong v. Waddell, 56 Ala. 471; Ra- visies V. Stoddart, 32 Ala. 599; O'Connor v. Chamberlain, 59 Ala. 431; Gilbert v. Dupree, 63 Ala. 331. But while a married woman can not mortgage her land to secure or pay the debt of her husband she can convey it for that purpose. Gid- dens V. Powell, 108 Ala. 621, 19 So. 21. A mortgage executed by a mar- ried woman, her husband not join- ing, is void; but where the r,-;art- gage does not show on its face that § 118 PARTIES TO A MORTGAGE 162 separate estate for the debts of her husband."' Although a wife may not bind her separate estate by assumption of the debts of her liusband, or by way of suretyship, she may voluntarily borrow money and give her note and mortgage therefor, although the lender knows she intends to use the money to pay her husband's debts.^ The code provision does not affect the power of a widow to contract as to the debts of her deceased husband.^ A note and mortgage by a wife to repay a third person for dis- charging her husband's fine were held an original undertaking of the wife, and not security for a debt due by the husband.^ § 118. Mississippi. — In Mississippi a married woman can make contracts binding her separate property only for certain purposes. In general, it may be said that she has no power to borrow money by mortgaging her real estate ; but if the lender can show that the money was actually applied to discharge a debt for which her separate estate was already bound, or to make purchases for which she might charge her estate, then the lender may recover upon the property mortgaged.* She can not bind the corpus of her property to pay her husband's debt;"^ it being provided by statute that "no conveyance or incum- brance for the separate debts of the husband shall be binding on the wife beyond the amount of her income."^ Although such a mortgage may be operative on her estate to that extent, it ceases to be operative upon it in any way upon her death.' But during her lifetime the mortgagee, when entitled to possession after default, may maintain ejectment. She may maintain a bill to redeem, or for an account against the mortgagee in possession.* the mortgagor is a married woman, 'Allen v. Lenoir, 53 Miss. 321; the mortgage Is not void on its face, Harmon v. Magee, 57 Miss. 410. and its invalidity rests upon proof ° Klein v. McNamara, 54 Miss. 90; aliunde that she was married. Such Viser v. Scruggs, 49 Miss. 705; Free- a mortgage is a cloud upon the title man v. Wilson, 51 Miss. 329. See for removal of which a bill to quiet also Dibrell v. Carlisle, 51 Miss, title may be maintained. Inter- 785; Erwin v. Hill, 47 Miss. 675; state Loan &c. Assn. v. Stocks, 124 Cross v. Hedrick, 66 Miss. 61, 7 So. Ala. 109, 27 So. 506; Lansden v. 496. Bone, 90 Ala. 446, 8 So. 65. " Sevier v. Minnis, 71 Miss. 473, 15 =° Keating v. Wilbert, 119 La. 461, So. 234. Code 1871, § 1778. 44 So. 265 (construing La. Rev. Civ. ' Reed v. Coleman, 51 Miss. 835. Code 1899, art. 2398). » Stephenson v. Miller, 57 Miss. 48. 'Johnson v. A. Leffler Co., 122 Ga. See Miss. Code 1880, § 1167; Code 670, 50 S. E. 488. 1906, § 2517, completely emancipat- ^ Walker v. Walker, 139 Ga. 547, ing married women. See also Bell 77 S. E. 795. V. Clark, under this statute, 71 Miss. = Hall V. Coleman, 138 Ga. 734, 75 603, 14 So. 318 S. E. 1132. 163 PARTNERSHIP PROPERTY § 119 § 118a. What law governs capacity. — The law of the state where the land is situated governs as to the capacity of a married woman to execute a mortgage, though it be executed in another state. Thus, if a married woman should execute a mortgage without her husband joining her, in a state where such a mortgage would be valid, con- veying land in another state where the law required the husband to join with her in her conveyance, the mortgage would have no effect in the latter state,, and could not be enforced." V. Tenants in Common of Partnership Real Estate Section 119. Generally. 120. Mortgage of partnership prop- erty by one partner— Notice of partnership equities. 121. Mortgage of partnership prop- erty by one partner — Assent of other partner. Section 122. Mortgage of a partner's sepa- rate property to secure part- nership debt. 122a. Mortgage to pay individual debt of partner. 123. Disposition of partner's sepa- rate property upon death. § 119. Generally. — Land conveyed to members of a copartnership as tenants in common, but purchased with copartnership funds and used for copartnership purposes, is treated in equity as copartnership personal property.^ The creditors of the copartnership are in such case entitled to priority of payment out of it in preference to the "Swank v. Hufnagle, 71 Ind. 53, 12 N. E. 303, 13 N. E. 105; Brown v. Bank, 44 Ohio St. 269, 6 N. B. 648. See post § 823. ^Thompson v. Bowman, 6 Wall. (U. S.) 316, 18 L. ed. 736; Ames v. Ames, 37 Fed. 30; Hatchett v. Blan- ton, 72 Ala. 423; Chapman v. Hughes, 104 Cal. 302, 37 Pae. 1048, 38 Pac. 109; Robertson v. Baker, 11 Fla. 192; Hartnett v. Stillwell, 121 Ga. 386, 49 S. E. 276, 104 Am. St. 151; Jackson v. Stanford, 19 Ga. 14; Pepper t. Pepper, 24 111. App. 316; Morgan v. Olvey, 53 Ind. 6; Paige V. Paige, 71 Iowa 318, 32 N. W. 360, 60 Am. Rep. 799; Pepper v. Thomas, 85 Ky. 539, 9 Ky. L. 122, 4 S. W. 297; Spalding v. "Wilson, 80 Ky. 589, 4 Ky. L. 575; Galbraith v. Cadge, 16 B. Mon. (Ky.) 631; May V. New Orleans, 44 La. Ann. 444, 10 So. 769; BufEum v. BufCum, 49 Maine 108, 77 Am. Dee. 249; Fall River Whaling Co. v. Borden, 10 Cush. (Mass.) 458; Burnside v. Merrick, 4 Mete. (Mass.) 537; Dyer v. Clark, 5 Mete. (Mass.) 562, 39 Am. Dec. 697; Goodwin v. Richardson, 11 Mass. 469; Willet v. Brown, 65 Mo. 138, 27 Am. Rep. 265; Matthews v. Hunter, 67 Mo. 293; Quinn v. Quinn, 22 Mont. 403, 56 Pac. 824; Whitmore v. Shiverick, 3 Nev. 288; Cilley v. Huse, 40 N. H. 358; Harney v. Jersey City &c. Bank, 52 N. J. Bq. 697, 29 Atl. 221; Matlack v. James, 13 N. J. Eq. 126; Hiscock v. Phelps, 49 N. Y. 97; Leary v. Boggs, 1 N. Y. St. 571; Smith v. Tarlton, 2 Barb. Ch. (N. Y.) 336; Haynes r. Brooks, 8 Civ. Proc. (N. Y.) 106; Struthers v. Pearce, 51 N. Y. 357; Ross v. Henderson, 77 N. Car. 170; Miller v. Proctor, 20 Ohio St. 442; Page V. Thomas, 43 Ohio St. 38, 1 N. B. 79, 54 Am. Rep. 788; Abbott's Appeal, 50 Pa. St. 234; Hayes v. Treat, 178 Pa. St. 310, 35 Atl. 987; Tlllinghast v. Champlin, 4 R. I. 173, 67 Am. Dec. 510; Lime Rock Bank V. Chetteplace, 8 R. I. 56; Wilson V. Wilson, 74 S. Car. 30, 54 S. E. 227; Boyce v. Coster, 4 Strob. Eq. (S. Car.) 25; Wlnslow v. Chiffelle, Harp. Eq. (S. Car.) 25; Willis v. § 120 PARTIES TO A MORTGAGE 164 creditors of individual members of the firm.^ But if one member of the copartnership mortgages his apparent interest as tenant in com- mon of such land for a consideration paid him at the time, as, for instance, for a loan of money, the mortgagee having no notice of the character of the property in equity as copartnership property, he is entitled to hold it under his mortgage. He may rely upon the legal effect of the conveyance to his mortgagor, and upon his apparent title upon record. A person taking a mortgage vrithout notice that it covers partnership property is a purchaser, and is subject to no equity in favor of the partnership or of its creditors.^ Wliether real property is partnership assets depends upon the inten- tion or agreement of the partners. Such intention may be express or implied. In the absence of an express agreement, parol evidence may be resorted to for the determination of the question. The manner in which the members of the firm have treated and used the property always goes far in determining its character.* If the property has been purchased by the individual partners with their own funds, each taking a conveyance of an undivided interest, the fact that the property has for a time been used for the partnership business is not generally sufficient to impress it with an equitable lien for the payment of partnership debts as against a mortgage of one partner's interest to secure his individual debt.° § 120. Mortgage of partnership property by one partner — ^Notice of partnership equities. — A mortgage made by a partner of his in- Freeman, 35 Vt. 44, 82 Am. Dec. of Partnership, ch. 6 ; Story on Part- 619; Forde v. Herron, 4 Munf. (Va.) nership, §§ 92, 93. 316; Jones v. Neale, 2 Pat. & H. = Reeves v. Ayres, 38 111. 418; (Va.) 339; Cunningham v. Ward, 30 Robinson Bank v. Miller, 153 111. W. Va. 572, 5 S. E. 646. But see Ta- 244, 38 N. E. 1078, 27 L. R. A. 449, ber-Prang Art Co. v. Durant, 189 46 Am. St. 883; Hewitt v. Rankin, Mass. 173, 75 N. E. 221; Gordon v. 41 Iowa 35; quoted with approval Gordon, 49 Mich. 501, 13 N. W. 834; in Seeley v. Mitchell, 85 Ky. 508, 4 Frey v. Eisenhardt, 116 Mich. 160, S. W. 190; Hiscock v. Phelps, 49 N. 74 N. W. 501; Dexter v. Dexter, 43 Y. 97; Richmond v. Voorhees, 10 App. Div. 268, 60 N. Y. S.' 371. Wash. 316, 38 Pac. 1014. ''Matlock V. Matlock, 5 Ind. 403; "Jenkins v. Jenkins, 81 Ark. 68, Hewitt V. Rankin, 41 Iowa 35; Mes- 98 S. W. 685; Brown v. Morrill, 45 ser V. Messer, 58 N. H. 375; Everett Minn. 483, 48 N. W. 328; Deming v. V. Shepmoes, 6 Hun (N. Y.) 479; Moss, 40 Utah 501, 121 Pac. 971; Buchan v. Sumner, 2 Barb. Ch. (N. Bosworth v. Hopkins, 85 Wis. 50, 55 Y.) 165, 47 Am. Dec. 305; Hogle v. N. W. 424; Riedeburg v. Schmitt, 71 Lowe, 12 Nev. 286; Tarbel v. Brad- Wis. 644, 38 N. W. 336. See also ley, 7 Abb. (N. Cas.) (N. Y.) 273; Richtman v. Watson, 150 Wis. 385, Meily v. Wood, 71 Pa. St. 488, 10 136 N. W. 797. Am. Rep. 719; Pollock's Dig. of Law =Wllhite v. Boulware, 88 Ky. 169, 10 S. W. 629. 165 PAETNEESI-IIP rEOPEEXT § 120 terest in partnership real estate, to one who knows it to be such, is not a mortgage of the partner's undivided interest in such real estate, but of his interest in the portion mortgaged after the payment of the firm debts upon a settlement of the partnership accounts. The mortgage is not available until the partnership debts have been paid and the partnership accounts have been discharged, if the other partner chooses to assert his equity, or if subsequent partnership mortgagees assert their priority;^ or if creditors of the partnership attach the property or levy an execution upon it as belonging to the partnership.'' There would in such case be no distinction between debts incurred prior to the mortgage and those incurred subsequently.' Upon the bankruptcy of the firm, the assignee, in behalf of the creditors, would be entitled to the property in preference. If one partner, upon retiring from the partnership, conveys his in- terest in the partnership real estate to another person, who then comes in and forms a new firm, and this new partner executes a mortgage of such real estate to secure the purchase-money, in the absence of any evidence that the mortgage was intended to be a mortgage of this partner's interest in the new firm, it is proper to regard it as a mort- gage of the same partnership interest in the old firm which was con- veyed to the new partner, and not of his interest in the new firm. Such a mortgage is subject to the payment of the debts of the old firm, but not to the payment of the debts of the new firm." But the mortgagee must be in the position of a bona fide purchaser for value ; he must have parted with money or goods, or something valuable, in reliance upon the security. If he has simply taken the mortgage to secure an existing debt, or has knowledge of the facts which make the property in equity assets of the firm, then his mortgage will be postponed to the equities of those who have a right to have the property applied as as- sets of the copartnership.^" But a recital in a deed to three persons that the conveyance was in the proportion of an undivided half to one of them, and an undivided fourth to each of the others, "this being the proportional undivided interest of each of the above partners in the firm and lands" of the partnership, was held not necessarily to impart " Goldthwaite v. Janney, 102 Ala. 'Fargo v. Ames, 45 Iowa 491 431, 15 So. 560, 48 Am. St. 56; Seaman v. Huffaker, 21 Kans. 254 Beecher v. Stevens, 43 Conn. 587; Lovejoy v. Bowers, 11 N. H. 404 quoted with approval in Seeley v. French v. Lovejoy, 12 N. H. 458. Mitchell, 85 Ky. 508, 4 S. W. 190; « Lovejoy v. Bowers, 11 N. H. 404. Rockefeller v. Bellinger, 22 Mont. ' Beecher v. Stevens, 43 Conn. 587. 418, 56 Pac. 822; Page v. Thomas, See also Phelps v. McNeely, 66 Mo. 43 Ohio St. 38, 1 N. E. 79, 54 Am. 554, 27 Am. Rep. 378. Rep 788. " Hiscock v. Phelps, 49 N. Y. 97. § 121 PAETIES TO A MORTGAGE 166 notice to a mortgagee of the interest of one of the grantees of the equitable rights of the others as representing the creditors of the firm.^^ A mortgage by one partner of his interest in a mill and machinery in the continued use and occupation of the partnership, to secure such partner's individual debt, passes only what interest such partner may have after paying the debts of the copartnership.^^ The continued use of such property by the partnership is notice of the equitable rights of the partnership in the property. If tlie description of the property in the mortgage itself shows that the property is that of a partnership, as where it is described as all the right, title, and interest of a partner individually, and as a member of a certain firm in all the real estate and other property of the firm, the mortgagee necessarily has notice of the partnership equities. The existence of such a mortgage can not prevent the copartners from disposing of the real estate for the legitimate purposes of the copart- nership, such as adjusting its affairs with creditors, or with each other. The recording of such mortgage is without effect upon the other mem- bers of the copartnership, or upon any one taking a conveyance made for partnership purposes.^^ § 121. Mortgage of partnership property by one partner — ^Assent of other partner. — A valid mortgage of partnership property to se- cure a partnership debt, may be made by one partner^* with the ex- press or implied assent of the other partner.^^ Under some authorities "Van Slyck v. Skinner, 41 Mich, consent of copartner). Under Geor- 186, 1 N. W. 971. But the decision gia Civ. Code 1910, § 3172, each in this case seems not to be quite partner has power to contract or in harmony with other authorities, otherwise bind the firm and execute "Mechanics' Bank v. Godwin, 5 any writing in the course of the N. J. Eq. 334. business. "Tarbel v. Bradley, 7 Abb. N. ^^McGahan v. Rondout Bank, 156 Cas. (N. Y.) 273. See note to this TJ. S. 218, 39 L. ed. 403, 15 Sup. Ct. case for decisions relating to part- 347; Greer v. Ferguson, 56 Ark. 324, nership realty. 19 S. W. 966 (in presence of copart- "Long v. Slade, 121 Ala. 267, 26 ner with consent); Greer v. Fergu- So. 31; Breen v. Richardson, 6 Colo, son, 58 Ark. 324, 19 S. W. 966 (in 605 (given to prevent sacrifice of presence of copartner); Sutlive T. partnership realty); Citizens' Nat. Jones, 61 Ga. 676; Printup v. Tur- Bank v. Johnson, 79 Iowa 290, 44 ner, 65 Ga. 71; Cottle v. Harrold, 72 N. W. 551; Horton v. Bloedorn, 37 Ga. 830; Ely v. Hair, 55 Ky. 230 Nebr. 666, 56 N. W. 321 (in absence (with knowledge and assent of co- of copartner, firm being insolvent) ; partner) ; Ely v. Hair, 16 B. Mon. Weeks v. Mascoma Rake Co., 58 N. (Ky.) 230; Kahn v. Becnel, 108 La. H. 101; Neer v. Oakley, 2 N. Y. S. 296, 32 So. 444 (power to mortgage 482 (without consulting copart- not implied from power to secure ner) ; Baldwin V. Richardson, 33 Tex. advances); Baker v. Lee, 49 La. IC; Schwab Clothing Co. v. Claunch Ann. 874, 21 So. 588; Chittenden v. (Tex. Civ. App.), 29 S. W. 922 (with German-Amer. Bank, 27 Minn. 143, 167 rAETNEESHIP PKOPEETY § 121 such a mortgage, made without authority of the other partner, is held to bind only tlie interest of the partner executing it.^° Where a copartnership carried on business in a store built by the firm upon land, the legal title of which was in A, and one of his co- partners, to secure a copartnership debt, executed a mortgage of the land with the consent of his copartners, and in the firm name of A & Co., and acknowledged the execution of it "as his free act and deed in behalf of said firm," it was held valid as against a person who, with actual notice of this, took a subsequent mortgage of the same property executed by A.^^ Such a mortgage is valid, too, as against creditors of the firm whose lien attached afterward.^^ An exception to the general rule, that an authority to bind another by an instrument under seal must itself be created by a like instru- ment, seems to have been established in the case of partners; they may give each other authority by parol to bind each other by instru- ments under seal.^** Some of the cases cited do not refer to convey- ances of real estate. But if authority to execute a personal contract under seal may be implied from this relation, the same authority may as well extend to conveyances of real property. Lord Kenyon said that, if the relation of partnership gave this authority in the one case, it "would extend to the case of mortgages."-" An unauthorized mortgage of partnership property made by one partner using the name of his copartner may be ratified by the latter by parol, or by any act showing his recognition of the mortgage. A mortgage of such real estate by one partner to secure a copartnership 6 N. W. 773; Jones v. Davis (N. J. Cohen v. Miller, 46 Misc. 106, 91 N. Eq.), 25 Atl. 370; Hardin v. Dolge, Y. S. 345. 46 App. Div. 416, 61 N. Y. S. 753; "Sutlive v. Jones, 61 Ga. 676; Tarbell v. West, 7 Abb. N. Cas. (N. Printup v. Turner, 65 Ga. 71; Cottle Y.) 273, affd. 86 N. Y. 280; Lance v. v. Harrold, 72 Ga. 830; Baker v. Butler, 135 N. Car. 419, 47 S. E. 488; Lee, 49 La. Ann. 874, 21 So. 588; McNeal Pipe &c. Co. v. Woltman, Weeks v. Mascoma Rake Co., 58 N. 114 N. Car. 178, 19 S. E. 109; Na- H. 101. pier V. Catron, 2 Humph. (Tenn.) "Wilson v. Hunter, 14 Wis. 683, 534; Wier Plow Co. v. Evans (Tex. 80 Am. Dec. 795. Civ. App.), 24 S. W. 38; Schwab "Citizens' Nat. Bank. v. Johnson, Clothing Co. v. Claunch (Tex. Civ. 79 Iowa 290, 44 N. W. 551. App.), 29 S. W. 922; Caviness v. ""Cady v. Shepherd, 11 Pick. Black (Tex. Civ. App.), 33 S. W. (Mass.) 400, 22 Am. Dec. 379; 712; Byrd v. Perry, 7 Tex. Civ. App. Swan v. Stedman, 4 Mete. (Mass.) 378, 26 S. W. 749 (mortgage by one 548; Smith v. Kerr, 3 N. Y. 144. partner procured by other) ; Wil- See also Wilson v. Hunter, 14 Wis. son V. Hunter, 14 Wis. 683, 80 Am. 683, 80 Am. Dec. 795. Dec. 795. But see Beckman v. '"Harrison v. Jackson, 7 T. R. Noble, 115 Mich. 523, 73 N. W. 803; 203. § 123 PARTIES TO A MORTGAGE 168 debt is valid ;^i but it is not valid if made in opposition to the will of another partner vrith the knovfledge of the creditor.^^ § 122. Mortgage of a partner's separate property to secure partner- ship debt. — On the other hand, if a partner mortgage his separate property to secure a partnership debt, he becomes a surety for the firm, and his separate creditors, upon his bankruptcy or insolvency, have a right to insist that the partnership property be first applied to the payment of the debt so secured.^' § 122a. Mortgage to pay individual debt of partner. — =One partner has no right to mortgage the corporate property for the payment of his individual debt without the assent, express or implied, of the other partners, and it makes no difference in the application of this princi- ple that the separate creditor had no knowledge at the time of the fact of the property being partnership property.^* Justice Story of the United States Supreme Court says : "The im- plied authority of each partner to dispose of the partnership funds strictly and rightfully extends only to the business and transac- tions of the partnership itself; and any disposition of those funds, by any partner, beyond such purposes, is an excess of his authority as partner, and a misappropriation of those funds, for which the partner is responsible to the partnership; though in the case of bona fide purchasers, without notice, for a valuable con- sideration, the partnership may be bound by such acts. What- ever acts, therefore, are done by any partner, in regard to part- nership property or contracts beyond the scope and objects of the part- nership, must, in general, in order to bind the partnership, be derived from some further authority, express or implied, conferred upon such partner, beyond that resulting from his character as partner. Such is the general principle; and in our judgment, it is founded in good sense and reason. One man ought not to be permitted to dispose of the ^Cooley V. Hobart, 8 Iowa 358; *'Averill v. Loucks, 6 Barb. (N. Holbrook v. Chamberlin, 116 Mass. Y.) 470. 155, 17 Am. Rep. 146. Harvey v. "Rogers v. Batchelor, 12 Pet. (U. Ford, 83 Mich. 506, 47 N. "W. 242. S.) 229, 9 L. ed. 1063; H. Y. Mc- But see Baker v. Lee, 49 La. Ann. Cord Co. v. Callaway, 109 Ga. 796, 874, 21 So. 588 (ratification by pa- 35 S. E. 171; Rainey v. Nance, 54 rol insufficient). 111. 29; Deeter v. Sellers, 102 Ind. »^H. Y. McCord Co. v. Callaway, 458, 1 N. B. 854; Livingston v. 109 Ga. 796, 35 S. E. 171; Fidelity Roosevelt, 4 Johns. (N. Y.) 251, 4 Banking &c. Co. v. Kangara Val. &c. Am. Dec. 273; Lance v. Butler, 135 Co., 95 Ga. 172, 22 S. E. 50; Bull v. N. Car. 419, 47 S. E. 488. Harris, 18 B. Mon. (Ky.) 195. 169 PAKTNEESI-IIP PEOPEETT § 133 property, or to bind the rights of another, unless the latter has author- ized the act. In the case of a partner paying his own separate debt out of the partnership funds, it is manifest that it is a violation of his duty and of the rights of his partners, unless they have assented to it. The act is an illegal conversion of the funds ; and the separate creditor can have no better title to the funds than the partner himself had."^° Such a mortgage may, however, be given with the assent of copart- ners.^" The mortgage will also be valid in cases where the property covered is setoff to the mortgagor on a division of the assets of the firm.^' § 123. Disposition of partner's separate property upon death. — Upon the death of a partner holding such an interest in partnership real estate, his share descends to his heirs, but equity converts the legal title into a trust, to be devoted to the payment of partnership obliga- tions, before it can be taken as a part of his separate estate.'^* As against the partnership creditors there can be no dower in such land. But when such real estate is not required for the payment of the part- nership debts or the adjustment of accounts between the partners, it is to be treated as realty in the settlement of the estate, and is subject to dower. It is then treated in every way as real estate, and does not go to the personal representatives of the deceased. It is to be regarded as real estate, and subject to all the rules applicable to real estate.^^ The conversion of such real estate into personalty for the purpose of the settlement of the partnership affairs, is a device of equity; and as soon as the reason of the rule ceases, by the closing of the partner- ship affairs without calling upon the real estate, the rule itself no longer applies.^" This equitable interference is not extended so as to convert all real estate into personalty for the purpose of a division. A mortgage by an individual partner of such real estate is relieved of all equities in favor of the partnership so soon as the business of the partnership is closed, without requiring the application of it to the firm debts.^^ ^Rogers v. Batchelor, 12 Pet (U. 697; Howard v. Priest, 5 Mass. 582. S.) 229, 9 L. ed. 1063. =* Hewitt v. Rankin, 41 Iowa 35, "Huiskamp v. Moline Wagon Co., and cases cited; Wilcox v. Wilcox, 121 U. S. 310, 30 L. ed. 971, 7 Sup. 13 Allen (Mass.) 252; Foster's Ap- Ct. 899. peal, 74 Pa. St. 391, 15 Am. Rep. 553, " Smith V. Andrews, 49 111. 28. '" Judge Story says, in his work ^ Piatt V. Oliver, 3 McLean (U. on Partnership, § 93, that this is an S.) 27; Wilcox v. Wilcox, 13 Allen open question. But the authorities (Mass.) 252; Burnside v. Merrick, now seem decisive of the law as 4 Mete. (Mass.) 537; Dyer v. Clark, stated in the text. 5 Mete. (Mass.) 562, 39 Am. Dec. "Hewitt v. Rankin, 41 Iowa 35. § 12^ PARTIES TO A MORTGAGE 170 VI. Corporations Section 124. Implied power of corporations to mortgage. 124a. Power to mortgage all or part of tlie corporate property. 124b. Whetlier express power to mortgage is exhausted by single exercise of power. 125. Lands not necessary for the business of a railroad. 125a. Foreign corporations. Section 126. Eeliglous corporations. 126a. Limitations as to amount of mortgage. 126b. Mortgages by corporations to secure purchase-money. 126c. Mortgage of fixtures. 127. Powers of stockholders and di- rectors. 128. Use of corporate seal. § 124. Implied power of corporations to mortgage. — A corporation has the power to mortgage its real estate as an incident to the power to acquire and hold it, and to make contracts in regard to it, when the power is not expressly denied, and is not inconsistent with the public obligations of the corporation.^ A general power conferred upon a corporation to sell, or otherwise dispose of its property, includes the power to mortgage.^ But the lack of the power to sell or alienate the property does not necessarily amount to an inhibition on the power to mortgage.^ The general powers of a corporation "to sell and convey its property, and to borrow money, and make contracts" imply the power to mort- See also Shearer v. Shearer, 98 Mass. 107, for an able opinion by Mr. Justice "Wells. ^ Jones Y. Guaranty &c. Co., 101 U. S. 622, 25 L. ed. 1030; Aurora Agr. &c. Soc. V. Paddock, 80 111. 263; Thompson v. Lambert, 44 Iowa 239; State V. Topeka Water Co., 61 Kans. 547, 60 Pac. 337; Fitch v. Lewiston Steam-Mill Co., 80 Maine 34, 12 Atl. 732; Leggett v. New Jersey Mfg. &c. Co., 1 N. J. Eq. 541, 23 Am. Dec. 728; Curtis v. Leavitt, 15 N. Y. 9; Fisher's Appeal (Pa.), 14 Atl. 225; Hunt T. Memphis Gaslight Co., 95 Tenn. 136, 31 S. "W. 1006 ; Pumphrey V. Threadgill, 87 Tex. 573, 30 S. W. 356. As to mortgages by corpora- tions, see Jones on Corporate Bonds and Mortgages, § 5. ^Williamette Woolen Mfg. Co. v. Bank of B. C, li9 U. S. 191, 30 L. ed. 384, 7 Sup. Ct. 187; Susquehan- na Bridge &c. Co. v. General Ins. Co., 3 Md. 305, 56 Am. Dec. 740; Liggett V. New Jersey Mfg. &c. Co., 1 N. J. Eq. 541, 23 Am. Dec. 728; Gordon v. Preston, 1 Watts (Pa.) 385, 26 Am. Dec. 75; Watts' Appeal, 78 Pa. St. 370. See also Booth v. Robinson, 55 Md. 419; McAllister v. Plant, 54 Miss. 106. 'Dubuque v. Miller, 11 Iowa 583; Middleton Sav. Bank v. Dubuque, 15 Iowa 394; Krider v. Western Col- lege, 31 Iowa 547. "This principle was illustrated in an early Iowa case where a statute gave a city council full power as to the city's real estate; but provided that the council should not have the power to sell any such real estate, except in a specified manner. The court concluded that but for the proviso the city council would clearly have had the power to make either a mortgage or an absolute conveyance. The inquiry was then resolved into the proposition of the power to mortgage where there could be no absolute conveyance; in other words, whether a mortgage was an alienation within the meaning of such provision. The inhibition was said to have reference to transac- tions which would result in parting with the title and vesting it perma- nently and entirely in another. The 171 CORPORATIONS § 124 gage its property.* The corporate power to borrow money implies the power to execute a mortgage to secure the loan when such power is not expressly denied.^ The power to mortgage for proper corporate purposes has been im- plied in the case of banking corporations," trading corporations,' build- ing corporations," navigation companies," power companies,^" water companies,^^ and gaslight^^ and heating companies.^^ A municipal corporation has also the power to mortgage its real estate.^* In general, it may be said, that the jus disponendi of private corpo- sale contemplated in the restriction referred to an alienation and not to a mere incumbrance. In that state the mortgage was but a lien upon the land to secure the pay- ment of the debt. The conclusion was that the proviso applied to alienation and not to the execution of a mortgage." Thompson Corp. (2d ed.), § 2538. ^Packets Despatch Line v. Bella- my Mfg. Co., 12 N. H. 205, 37 Am. Dec. 203; Flint v. Clinton Co., 12 N. H. 430 ; Pierce v. Emery, 32 N. H. 484; Richards v. Merrimack &e. R. Co., 44 N. H. 127; De Ruyter v. St. Peter's Church, 3 Barb. Ch. (N. Y.) 119, 3 N. Y. 238; Haxtun v. Bishop, 3 Wend. (N. Y.) 13; Jackson v. Brown, 5 Wend. (N. Y.) 590; Gor- don V. Preston, 1 Watts (Pa.) 385, 26 Am. Dec. 75. 'Jones v. Guaranty &c. Co., 101 U. S. 622, 25 L. ed. 1030; Cleveland Sav. &c. Co. v. Bear Val. Irr. Co., 112 Fed. 693; Memphis &c. R. Co. v. Dow, 19 Fed. 388; Gaytes v. Lewis, Fed. Cas. No. 5288, 2 Biss. (U. S.) 136; Taylor v. Agricultural Assn., 68 Ala. 229 ; Savannah &c. R. Co. v. Lan- caster, 62 Ala. 555; Kelly v. Alabama &c. R. Co., 58 Ala. 489; Mobile &c. R. Co. V. Talman, 15 Ala. 472; Union Water Co. v. Murphy's Flat Fluming Co., 22 Cal. 620; Wood v. Whelen, 93 111. 153; West v. Madi- son County Agricultural Board, 82 111. 205; Wright v. Hughes, 119 Ind. 324, 21 N. E. 907, 12 Am. St. 412; Thompson v. Lambert, 44 Iowa 239; Warfield v. Marshall Canning Co., 72 Iowa 666, 34 N. W. 467, 2 Am. St. 263; Bardstown & L. R. Co. V. Metcalfe, 4 Mete. (Ky.) 199, 81 Am. Dec. 541; In re Mechanics' Soc, 31 La. Ann. 627; Swift v. Smith, 65 Md. 428, 5 Atl. 534, 57 Am. Rep. 336; Booth V. Robinson, 55 Md. 429; Bur- rill V. Bank, 2 Mete. (Mass.) 163, 35 Am. Dec. 395; Wood v. Meyer (Miss.), 7 So. 359; Thompson v. Water &c. Co., 68 Miss. 423, 9 So. 821; Richards v. Merrimack &c. R. Co., 44 N. H. 127; Central Gold Min. Co. V. Piatt. 3 Daly (N. Y.) 263; Nel- son V. Eaton, 26 N. Y. 410; Preston V. Loughran, 58 Hun 210, 12 N. Y. S. 313; Osborn v. Park, 89 Hun 167, 35 N. Y. S. 610; Moses v. Soule, 63 Misc. 203, 118 N. Y. S. 410; Hays v. Light &c. Co., 29 Ohio St. 330. In Pennsylvania corporations are ex- pressly empowered hy statute to borrow money on mortgages and bonds. Purdon's Pa. Digest 1903, Corp., § 140, p. 812; Miller v. Mont- gomery R. Co., 36 Vt. 452; Endres v. Board of Works, 1 Grat. (Va.) 364; Lehigh Valley Coal Co. v. West De- pere &c. Works, 63 Wis. 45, 22 N. W. 831. "Leggett V. New Jersey Mfg. Co., 1 N. J. Eq. 541, 23 Am. Dec. 728; Jackson v. Brown, 5 Wend. (N. Y.) 590. 'Wood V. Meyer (Miss.), 7 So. 359. ° Barry v. Merchants' Exchange Co., 1 Sandf. Ch. (N. Y.) 280. ° Australian &c. Clipper Co. v. Mounsey, 4 K. & J. 733. "American Loan &c. Co. v. Gen- eral Elec. Co., 71 N. H. 192, 51 Atl. 660. "Hackensack Water Co. v. De Kay, 36 N. J. Eq. 548. "Detroit v. Mutual Gaslight Co., 43 Mich. 594, 5 N. W. 1039. '^ Evans V. Boston Heating Co., 157 Mass. 37, 31 N. E. 698. "Vanarsdall v. Watson, 65 Ind. 176. § 134a PARTIES TO A MOETGAGE 173 rations is at common law unlimited. This right may of course be cir- cumscribed by statute/^ or by the charters under which corporations are organized; and it is the case generally that corporations, to which are given large powers and valuable privileges, from' the exercise of which it is expected the public will derive advantage, are impliedly restrained in their power of alienation. § 124a. Power to mortgage all or part of the corporate property. — The power to acquire or sell includes by necessary implication the power to mortgage. Prom this it follows that corporations possess, or- dinarily, without any express grant, the power to mortgage all their property, to the same extent as a natural person may.^^ A general power to mortgage the whole of any property necessarily carries with it the power to mortgage a part of such property, provided the property is of such a nature as to be divisible without detriment to the public interest. Thus, under an authority to mortgage the whole of a turnpike road, the company was held to have power to mortgage any specific part, upon which separate tolls could lawfully be col- lected.^'' So, the power conferred by directors upon the president of a turnpike corporation .to mortgage its entire road, was held to author- ize him to mortgage a part of the road.^* The same general principle has been applied to a railroad company.^" But this doctrine has been doubted.^* But if, however, the statutory ^° One, for instance, requiring the Ins. Co., 3 Md. 305, 56 Am. Dec. 740; written assent of a majority; Mass. Richards v. Merrimack &c. R. Co., Stat, of 1870, ch.224, § 15; or of two- 44 N. H. 127; Jackson v. Brown, 5 thirds of the stockholders. 2 Rev. Wend. (N. Y.) 590; Barry v. Mer- Stat. of N. Y., p. 499, § 18. Such a chants' Exch. Co., 1 Sandf. Ch. (N. statute is for their protection Y.) 280; Burt v. Rattle, 31 Ohio St. against the improvident acts of the 116; Watts' Appeal, 78 Pa. St. 370; ofiacers, and is not exacted because Gordon v. Preston, 1 Watts (Pa.) mortgaging corporate property is 385, 26 Am. Dec. 75. improper in itself. Therefore a de- "Joy v. Jackson &c. Plank Rd. feet in the assent to invalidate the Co., 11 Mich. 155. See also Snell v. mortgage must be material. Green- Chicago, 133 111. 413, 24 N. B. 532, point Sugar Co. v. Whitin, 69 N. Y. 8 L. R. A. 858; Chartiers R. Co. v. 328. See also Carpenter v. Black- Hodgens, 85 Pa. St. 501. hawk Gold Min. Co., 65 N. Y. 43; ^* Greensburgh &c. Co. v. McCor- Moran v. Strauss, 6 Ben. (U. S.) mick, 45 Ind. 239. 249. >» Pullam v. Cincinnati &c. R. Co., ^= Allen V. Montgomery R. Co., 11 4 Biss. (U. S.) 35, 20 Fed. Cas. Ala. 437; Mobile &c. R. Co. v. Tal- 11461; Bickford v. Grand Junction man, 15 Ala. 472; Aurora Agri. &c. R. Co., 1 Can. Sup. Ct. 696. Soc. V. Paddock, 80 111. 263; Thomp- »East Boston &c. R. Co. v. Hub- son V. Lambert, 44 Iowa 239; Bards- bard, 10 Allen (Mass.) 459; East town &c. R. Co. V. Metcalfe, 4 Mete. Boston &c. R. Co. v. Eastern R. Co., (Ky.) 199, 81 Am. Dec. 541; Susque- 13 Allen (Mass.) 422. hanna Bridge &c. Co. v. General 173 COEPOKATIONS § 124a authority to mortgage clearly indicates that any mortgage must em- brace the entire property, then, under familiar rules, a part of the property can not be mortgaged. Thus, where a statute authorized a railroad company to mortgage or pledge its lands, tolls, revenues and other property for the purpose of completing, maintaining and work- ing its road, this was held to prohibit by implication the authority to mortgage a part.^^ Where a railroad company mortgaged the part of its road which was completed, and the mortgage was subsequently foreclosed, it was held that the purchaser at the foreclosure sale could not be required to complete the road.^^ Eailroad companies can not mortgage their franchises or property es- sential to the continued operation of the roads^^ except with legislative authority.^* Such a mortgage, directly prohibited by statute, is void in toto.''" But an unauthorized mortgage, or one defectively executed, or securing bonds not properly drawn, may be subsequently confirmed by the legislature.^" Statutory power to mortgage a railroad ordinarily ^ Grand Junction R. Co. v. Bick- ford, 23 Grant Ch. U. C. 302. See also Bickford v. Grand Junction R. Co., 1 Can. Sup. Ct. 696. ^'^ Chartiers R. Co. v. Hodgens, 85 Pa. St. 501. ^Thomas v. West Jersey R. Co., 101 U. S. 71, 25 L. ed. 950; State v. Mexican Gulf R. Co., 3 Rob. (La.) 513; Commonwealth v. Smith, 10 Allen (Mass.) 448, 87 Am. Dec. 672; Atkinson v. Marietta &c. R. Co., 15 Ohio St. 21; Coe v. Columbus, Piqua &c. R. Co., 10 Ohio St. 372, 75 Am. Dec. 518; Frazier v. East Tennessee &c. R. Co., 88 Tenn. 138, 12 S. W. 537. Contra Savannah &c. R. Co. v. Lancaster, 62 Ala. 555; Allen v. Montgomery R. Co., 11 Ala. 347; Mo- bile &c. R. Co. V. Talman, 15 Ala. 472; Kelly v. Alabama &c. R. Co., 58 Ala. 489; Miller v. Rutland R. Co., 36 Vt. 452. The power of such companies to mortgage their property was re- garded as necessarily implied in Kelly V. Alabama &c. R. Co., 58 Ala. 489. This subject is barely mentioned in this treatise, because it is fully treated in the author's work on Corporate Bonds and Mortgages. A general mortgage covering the railroad, its franchise, and all its property is void. Richardson v. Sibley, 11 Allen (Mass.) 65, 87 Am. Dec. 700. "Compton V. Jesup, 68 Fed. 263, 15 C. C. A. 397; Bishop v. McKilli- can, 124 Cal. 321, 57 Pac. 76, 71 Am. St. 68; State v. Florida Central R. Co., 15 Fla. 690; Georgia &c. R. Co. V. Barton, 101 Ga. 466, 28 S. B. 482; Palmer v. Forbes, 23 111. 301; State V. Morgan, 28 La. Ann. 482; Baker V. Guaranty Trust &c. Co. (N. J.), 31 Atl. 174; Piatt v. New York &c. R. Co., 9 App. Div. 87, 41 N. Y. S. 42; Gloninger v. Pittsburgh R. Co., 139 Pa. St. 13, 21 Atl. 211; Frazier v. East Tenn. &c. Co., 88 Tenn. 138, 12 S. "W. 537; Galveston R. Co. v. Fon- taine, 23 Tex. Civ. App. 519, 57 S. W. 872. "The power may be implied from legislative act. Parker v. New Orleans &c. R. Co., 33 Fed. 693; Electric Lighting Co. v. Rust, 117 Ala. 680, 23 So. 751; Bardstown &c. R. Co. V. Metcalfe, 4 Mete. (Ky.) 199, 81 Am. Dec. 541; East Boston &c. R. Co. V. Eastern R. Co., 13 Allen (Mass.) 422; Miller v. Ratterman, 10 Ohio Dec. (reprint) 555; Coe v. Columbus R. Co., 10 Ohio St. 372, 75 Am. Dec. 518; Pierce v. Milwaukee &c. R. Co., 24 Wis. 551, 1 Am. Rep. 203. "Richardson v. Sibley, 11 Allen (Mass.) 65, 87 Am. Dec. 700. '"Chapin v. Vermont &c. R. Co., 8 Gray (Mass.) 575; Shaw v. Nor- folk County R. Co., 5 Mass. 162. § 134b PARTIES TO A JIOETGAGE 174; covers all of the property owned by the company and necessary to the operation of the road.^' A mortgage by a corporation de facto is good until the state has in- terposed and declared its exercise of corporate powers a usurpation. Until this is done, it is assumed that the corporation de facto right- fully possessed and exercised corporate powers. ^^ The right of 'a railroad company to construct a road being given because of the benefit to the public arising from the use of the road, a power conferred upon it to mortgage its property is construed to confer upon the mortgagee, or a purchaser under the mortgage in pos- session, all needful authority to use the road in a proper and beneficial manner, but no authority to take up and sell the material of which the road is made.^' A mortgage made by a solvent corporation to one who is at the time a director and stockholder, to secure a loan made by him, is not invalid on account of the relation between the parties.'" § 124b. Whether express power to mortgage is exhausted by sin- gle exercise of power. — Wliether express power to a railroad company to mortgage its property is exhausted after it is once exercised, seems to depend first on the terms of the authority; and second on the uses or purposes for which the mortgage is made. Under a charter which authorized a railroad company to increase its capital stock to a sum sufBcient to complete the road, and to stock it with everything neces- sary to give it full operation and eflEect, either by selling new stock, or by borrowing money on the credit of the company or by mortgage of its charter and works, it was held that when this charter power to mortgage was once exercised it was then exhausted, and that in respect " Dunham v. Earl, Fed. Cas. No. association and complying with oth- 4149; Phillips v. Winslow, 18 B. er formalities, becomes a quasi Men. (Ky.) 431, 68 Am. Dec. 729; corporation de facto, and a mort- Ludlow V. Hurd, 1 Disn. (Ohio) 552, gage executed by the chairman and 12 Ohio Dec. (reprint) 791; (ioe v. secretary with the partnership seal, Columbus &c. R. Co., 10 Ohio St. as provided by the act, is valid. 372, 75 Am. Dec. 518. Briar Hill Coal &c. Co. v. Atlas ^Duggan V. Colorado Mtg. &c. Co., Works, 146 Pa. St. 290, 23 Atl. 326; 11 Colo. 113, 17 Pac. 105; Collins T. Eliot v. Himrod, 108 Pa. St. 569. Rea, 127 Mich. 273, 86 N. W. 811. » Palmer v. Forbes, 23 111. 237. In Pennsylvania a limited part- ™Mullanphy Bank v. Schott, 135 nership, organized under the Act 111. 655, 26 N. B. 640; Roseboom v. of June 2, 1874, which has appar- Whittaker, 132 111. 81, 23 N. E. 339, ently complied with the provisions Beach v. Miller, 130 111. 162, 22 N. E. of the act by filing its articles of 464. 175 COEPOEATIONS § 125 to further contracts and rights it was as though it had never been granted.'^ But in another case, where it appeared that under the authority of congress a mortgage had been given by a railroad company for the purpose of raising funds with which to construct its road, it was held that after the mortgage was executed pursuant to such power, the pur- chaser at foreclosure sale and successor to the rights of the original corporation could again mortgage the road for the purpose of raising funds to complete it. In the course of the opinion the court said: "Upon this branch of the controversy the contention for the plaintiff is that the Joint resolution of congress was a privilege to the original corporation only, and. did not pass to the present corporation upon the reorganization, and that, further, in any event, it only permitted a single mortgage to be created, and the power was spent upon the crea- tion of the first mortgage. This seems to be an astute rather than a reasonable interpretation of the language of the joint resolution. The purpose of including the right to mortgage the franchises of the corpo- ration in the consent of congress was palpably in order that a purchaser under a foreclosure might succeed to all the rights and privileges of the original corporation. As there was no restriction in that consent respecting the amount for which a mortgage might be created by the corporation, or relating to the scope or character of the mortgage, the implication seems not only fair, but irresistible, that congress intended to leave all this to the discretion of the corporation itself, to be exer- cised in view of the exigencies of the undertaking. Obviously, con- gress was quite indifferent whether the mortgage should be a large one or a small one, whether it should cover the whole or a part of the property of the company, or whether all the bonds to be secured should be issued at one time or in one series or class. The power conferred is limited only by the purpose expressed, that the bonds are to be issued to aid in the construction and equipment of the road, and are to be secured by mortgage.^^ § 125. La,nds not necessary for the business of a railroad.^^ — But this limitation of the power of a railroad corporation to mortgage its real estate does not apply to lands not required to enable it to carry on the business which it was chartered to do for the benefit of the public, and not needed or used for that purpose. The alienation of such lands " East Tennessee &c. R. Co. v. Fra- 18 Fed. 467. See also Mead v. Nev/ zier, 139 U. S. 288, 35 L. ed. 196, 11 York &c. R. Co., 45 Conn. 199. Sup. Ct. 517. " See Jones on Corporate Bonds ^' Du Pont V. Northern Pac. R. Co., and Mortgages, § 12. § 125a PARTIES TO A MORTGAGE 176 in no wise impairs or affects the usefulness of the company as a rail- road corporation, or its ability to exercise any of its corporate fran- chises. Mr. Justice Poster, of Massachusetts,** in a ease involving this point, said : "The recent cases in which railroad mortgages have been adjudged invalid by this court do not countenance any doubt of the power of a railroad company to sell and convey whatever property it may hold, not acquired under the delegated right of eminent domain, or so connected with the franchise to operate and maintain a railroad that the alienation would tend to disable the corporation from perform- ing the public duties imposed upon it, in consideration of which its chartered privileges have been conferred." If a mortgage by a railroad company includes lands which it can mortgage without distinct legis- lative authority, and also lands which it can not convey without such authority, the mortgage will be upheld as to the former, but will be inoperative and void as to the latter.*^ § 125a. Foreign corporations. — Foreign corporations have the same power to mortgage their property as domestic corporations,*" except as restricted by charter or statute.*^ A corporation, organized under the laws of one state, which acquires property and carries on business in another state, may mortgage its property there, unless prohibited by statute ; and such corporation is estopped from questioning the validity of a mortgage described in a deed which it accepted.** § 126. Eeligious corporations.*' — ^A religious corporation has in general, under our laws, the same right to mortgage and create liens upon its real estate that any corporation has. Having the power to hold and enjoy real estate, unless there be an express prohibition, it has the power to mortgage it.*" The trustees of such a corporation are "'Hendee v. Pinkerton, 14 Allen Am. St. 560; Talmadge v. North (Mass.) 381. American Coal &c. Co., 3 Head "'^Hendee v. Pinkerton, 14 Allen (Tenn.) 337. (Mass.) 381; Jones on Railroad Se- ^American Water Works Co. v. curities, § 12. Farmers' Loan &c. Co., 73 Fed. 956, »= American Water Works Co. v. 20 C. C. A. 133. Farmers' Loan &c. Co., 73 Fed. 956, ™See Jones on Corporate Bonds 20 C. C. A. 133; Saltmarsh v. Spauld- and Mortgages, §§ 5a and 6, for mort- ing, 147 Mass. 227, 17 N. E. 316; gages by and to religious corpora- Union Nat. Bank v. State Nat. tions. Bank, 155 Mo. 95, 55 S. W. 989, 78 ""Methodist Epis. Church v. Am. St. 560; Bassett v. Monte Shulze, 61 Ind. 511; Madison Av. Christo Gold &c. Min. Co., 15 Nev. Ch. v. Oliver St. Ch., 9 Jones & S. 293; Talmadge v. North American (N. Y.) 369; Walrath v. Campbell, Coal &c. Co., 3 Head (Tenn.) 337. 28 Mich. 111. "It was usual in Eng- " Union Nat. Bank v. State Nat. land to restrain both the power of Bank, 155 Mo. 95, 55 S. W. 989, 78 acquisition and the power of sale of 177 COKPOKATIONS § 136a presumed to have power to mortgage the church propert}'.^^ Such power may be conferred by statute,*^ by by-laws, articles of incorpora- iion or special resolution.*'' An unauthorized mortgage of the trustees may be accepted and ratified by the members of a religious society, and long acquiescence will be treated as a ratification.** In some states authority of court is necessary for a religious corporation to mortgage its real estate.*^ § 126a. Limitations as to amount of mortgage. — ^A corporation may be limited as to the amount of a mortgage upon the corporate property; the restriction may be that the mortgages shall not exceed the amount of the capital stock ; or two-thirds of the value of the prop- erty. Where such a limitation was imposed it was held that the corporation could not execute a mortgage to secure an issue of bonds in excess of such limit, although the excess was to be issued at some fu- ture date and then upon the required consent of the stockholders. *'' But it has been held that a mortgage securing a debt in excess of the statutory amount, or in excess of its capital stock, was binding on the corporation as well as its subsequent creditors.*' So, a corporation mortgage securing bonds in excess of half of its corporate property is not void, but only renders the directors liable for any damages by ecclesiastical corporations, and a similar policy has been adopted in some of the American states in ref- erence to the real estate of such corporations; and certain restric- tions of this kind will be found in our own statutes." Per Christiancy, J. In Missouri, church corporations have power to mortgage their real estate by virtue of a statutory pro- vision "that every corporation as such has power * * * to hold, pur- chase, mortgage or otherwise con- vey such real and personal estate as the purposes of the corporation may require." Keith &c. Coal Co. V. Bingham, 97 Mo. 196, 10 S. W. 32. ■"Zion Church v. Mensch, 178 111. 225, 52 N. E. 858, affg. 74 111. App. 115; Page v. Church, 78 N. J. Eq. 114, 78 Atl. 246. «Zion Church v. Mensch, 178 111. 225, 52 N. E. 858; Methodist Epis- copal Church V. Shulze, 61 Ind. 511; Scott V. First Methodist Church, 50 Mich. 528, 15 N. W. 891. "Zion Church v. Mensch, 178 111. 225, 52 N. E. 858. 12— Jones Mtg.— Vol. I. " Scott V. First Methodist Church, 50 Mich. 528, 15 N. W. 891; McCal- lister V. Ross, 155 Mo. 87, 55 S. "W. 1027; Page v. Church, 78 N. J. Eq. 114, 78 Atl. 246; Rountree v. Blount, 129 N. Car. 25, 39 S. E. 631. ■"' In re Church of Messiah, 25 Abb. N. Cas. 354, 12 N. Y. S. 489. ■'° Plynn v. Coney Island &c. R. Co., 26 App. Div. 416, 50 N. Y. S. 74. "Sioux City Terminal R. &c. Co. V. Trust Co., 173 U. S. 99, 43 L. ed. 628, 19 Sup. Ct. 341, affg. 82 Fed. 124, 27 C. C. A. 73; Central Trust Co. v. Columbus &c. R. Co., 87 Fed. 815; Farmers' Loan &c. Co. v. Toledo &c. R. Co., 67 Fed. 49; AUis v. Jones, 45 Fed. 148; Smith v. Ferries &c. R. Co. (Cal.), 51 Pac. 710; Warfield v. Marshall &c. Co., 72 Iowa 666, 34 N. W. 467, 2 Am. St. 263; Des Moines Gas Co. V. West, 50 Iowa 16; Inter- national Trust Co. V. Davis &c. Mfg. Co., 70 N. H. 118, 46 Atl. 1054; Hack- ensack Water Co. v. De Kay, 36 N. J. Eq. 548; New Britain Nat. Bank v. Cleveland Co., 91 Hun 447, 36 N. Y. S. 387, afCd. without opinion 158 § 126b PARTIES TO A MOETGAGE 178 reason thereof.** In Kentucky it was held that a mortgage by a cor- poration in excess of the limit of indebtedness fixed by the articles of asoociation is void.** The execution and delivery by a corporation of a mortgage on its real estate, to secure bonds, vras held to be a transfer of real estate securities under a statute providing that corporations should fix a maximum of indebtedness, but the provision was not to apply where the corporate bonds were issued and secured by an actual transfer of real estate securities.""* § 126b. Mortgages by corporations to secure purchase-money. — The proposition has been asserted that the power to mortgage may be implied from other powers, and that the general power to purchase and sell implies the power to mortgage. It therefore follows that where a corporation is authorized to purchase property, express power is not required to the validity of a mortgage securing the purchase-money. If a corporation could legitimately purchase, in order to attain its le- gitimate objects, it may deal precisely as an individual. "No precedent has been found," said a federal judge, "denying to a corporation the power to execute a mortgage of everything it acquires by a purchase, when the mortgage is a condition of making the purchase ; and there seems to be no reason, in a case like the present, for denying the power when the purchase of the mortgagor includes the franchise and the whole property of the corporation."'^^ Where the vendor refused to receive a purchase-money mortgage exe- cuted by a corporation, and the corporation thereupon used the bonds, secured by such mortgage, it was held that the vendor lost his lien.^" In ISTew York it was held that a corporation could give a mortgage se- curing the purchase-money of property without the assent of the stock- holders.^'' Where a conveyance was made to a corporation which bound the grantee to pay and discharge certain mortgages, it was held that ac- ceptance of the deed would be presumed and that the corporation would N. Y. 722, 53 N. E. 1128; Fidelity «Bell &c. Co. v. Kentucky &c. &c. Co. V. West Pennsylvania &c. Co., 20 Ky. L. 1089, 48 S. W. 440. R. Co., 138 Pa. St. 494, 21 Atl. 21, 21 »» First Nat. Bank v. Sioux City Am. St. 911; Union Trust Co. v. Terminal R. &c. Co., 69 Fed. 441. Mercantile Library &c. Co., 189 Pa. " Memphis &c. R. Co. v. Dow, 19 St. 263, 42 Atl. 129. But see Foun- Fed. 388; Memphis &c. R. Co. v. taine v. Carmarthen R. Co., L. R. 5 Dow, 120 U. S. 287, 30 L. ed. 595, 7 Eq. 316; Pittsburgh &c. R. Co.'s Ap- Sup. Ct. 482. peal (Pa. St.), 4 Atl. 385. '^Rice's Appeal, 79 Pa. St. 168. '" Beebe v. Richmond Light &c. Co., ^' Farmers' Loan &c. Co. v. Equity 13 Misc. 737, 35 N. Y. S. 1. Gaslight Co., 84 Hun 373, 32 N. Y. S. 385. 179 CORPORATIONS § 12 6c be bound by the covenant to pay the mortgages.^* So, in Massachu- setts, it was held that a purchase-money mortgage, by which the ven- dor was to be paid a certain sum, or was to have the option of taking certain shares of stock, might be included in the deed.**^ And in Ala- bama it was held that the purchase-money mortgage included in the deed required the vendee to complete the construction of a railroad and issue certain stock to the vendor.'^" The power to purchase real estate includes the power to purchase real estate that is incumbered, and the power to purchase incumbered real estate implies the power to assume the incumbrance. °' § 126c. Mortgage of fixtures. — The rights of a corporation with reference to fixtures are the same as those of individuals ; and corporate mortgages of realty cover fixtures as distinguished from personal prop- erty. So, fixtures, whether attached before or after the execution of a general mortgage of the real estate of a corporation, are held to be subject to the lien of such mortgage.^^ The rule is stated by the Massachusetts court thus: "Whatever is placed in a building subject to a mortgage, by a mortgagor or those claiming under him, to carry out the purpose for which it was erected, and permanently to increase its value for occupation or use, although it may be removed without injury to itself or the building, becomes part of the realty, as between mortgagor and mortgagee, and can not be removed or otherwise disposed of while the mortgage is in force. '^" The rule as to the lien of a mortgage on fixtures in a factory has been stated thus : "A mortgage of a factory, eo nomine includes ex vi ter- mini, all the machinery and other articles essential to the factory ."°'' A trust deed of corporate property and covering the "machinery" "Stokes v. Detrick, 75 Md. 256, Eq. 452; McRea v. Central Nat. 23 Atl. 846. Bank, 66 N. Y. 489; McPadden v. "= Pinch V. Anthony, 8 Allen Allen, 134 N. Y. 489, 32 N. E. 21, (Mass.) 536. 19 L. R. A. 446; Vail v. Weaver, 132 "« Tennessee &c. R. Co. v. East Pa. St. 363, 19 'Atl. 138, 19 Am. St. Alabama R. Co., 73 Ala. 426. 598; Morotock Ins. Co. v. Rodeter, 92 "Woods Inv. Co. v. Palmer, 8 Va. 747, 24 S. E. 393, 53 Am. St. Colo. App. 132, 45 Pac. 237. 846; Kendall Mfg. Co. v. Rundle, 78 ^Porter v. Pittsburg &c. Steel Co., Wis. 150, 47 N. W. 364; Homestead 122 U. S. 267, 30 L. ed. 1210, 7 Sup. &c. Co. v. Becker, 96 Wis. 206, 71 Ct. 1206; Southbridge Sav. Bank v. N. W. 117; Gunderson v. Swarthout, Mason, 147 Mass. 500, 18 N. E. 406, 104 Wis. 186, 80 N. W. 465, 76 Am. 1 L. R. A. 350; McConnell v. Blood, St. 860. 123 Mass. 47, 25 Am. Rep. 12; Mc- ™ Smith Paper Co. v. Servin, 130 Laughlin v. Nash, 14 Allen (Mass.) Mass. 511. 136, 92 Am. Dec. 741; Shepard v. ^ Potts v. New Jersey Arms &c. Blossom, 66 Minn. 421, 69 N. W. Co., 17 N. J. Eq. 395; Delaware &c. 221, 61 Am. St. 431; Delaware &c. R. Co. v. Oxford Iron Co., 36 N. J. R. Co. V. Oxford Iron Co., 36 N. J. Eq. 452; Voorhis v. Freeman, 2 § 126e PARTIES TO A MORTGAGE 180 belonging to a cotton print works company was held to include certain copper rolls on which the designs to be printed on the cloth were en- graved, but which were not a part of the printing presses, but were purchased in the market separate from the presses, and were unavail- able for use except in the presses.^^ So, a mortgage on the real estate was held to include a dynamo and appurtenant machinery screwed to timbers spiked to the floor of the building and operated by belts from shafting firmly attached to the floor of the building.''^ So, ponderous machinery resting by its own weight on a platform supported by posts, was held to be covered by a mortgage."^ But where finished machines were set up in a fabtory and required no particular adaptation for use, or any alteration in the factory itself, and which could be removed without injury, either to themselves or to the building, they were held not to be covered by a mortgage of the real estate which included the factory as well as "the steam engines, boilers, shafting, belting, gear- ing, and all other machinery appertaining to said premises, now upon said premises, or that shall hereafter be placed or erected thereon.'"'* And the wires of one telegraph company placed on the poles of another under a contract that certain rent should be paid for the privilege, were held not to be covered by a mortgage made by the company own- ing the poles."^ The rule is perhaps more strict in its application to railroad prop- erty; and generally all articles which are used by or which become affixed to the railway system are regarded as fbctures subject to the lien of a general mortgage."" Thus, both new and old rails intended for use, or which have been used, have been held to be fixtures."^ Watts & S. (Pa.) 116, 37 Am. Dec. N. Y. 377, 13 Am. Rep. 537; Union 490; Pyle v. Pennock, 2 Watts & S. College v. Wheeler, 61 N. Y. 88; (Pa.) 390, 37 Am. Dec. 517. American Union Tel. Co. v. Middle- •^'Doty v. Oriental Print Works ton, 80 N. Y. 408; New York &c. R. Co., 28 R. I. 372, 67 Atl. 586. Co. v. Western Union Tel. Co., 36 "Vail V. Weaver, 132 Pa. St. 363, Hun (N. Y.) 205; Farnsworth v. 19 Atl. 138, 19 Am. St. 598; Gunder- Western Union Tel. Co., 6 N. Y. S. son V. Swarthout, 104 Wis. 186, 80 735, 25 N. Y. St. 393. N. W. 465, 76 Am. St. 860. <» Porter v. Pittsburg &c. Steel Co., •« Shepard v. Blossom, 66 Minn. 122 U. S. 267, 30 L. ed. 1210, 7 Sup. 421, 69 N. W. 221, 61 Am. St. 431. Ct. 1206; Posdick v. Schall, 99 U.\ "Rogers v. Prattville Mfg. Co., 81 S. 235, 25 L. ed. 339; Dillon v. Bar- Ala. 483, 1 So. 643, 60 Am. Rep. 171; nard, 21 Wall. (U. S.) 430, 22 L. ed. Penn Mut. &c. Ins. Co. v. Semple, 673; United States v. New Orleans 38 N. J. Eq. 575; Knickerbocker R. Co., 12 Wall. (U. S.) 362, 20 L. Trust Co. V. Penn Cordage Co., 62 ed. 434; Galveston R. Co. v. Cow- N. J. Eq. 624, 50 Atl. 459. drey, 11 Wall. (U. S.) 459, 20 L. ed. "^ United States v. New Orleans 199; Dunh2,m v. Cincinnati &c. R. R. Co., 12 Wall. (U. S.) 362, 20 L. Co., 1 Wall. (U. S.) 254, 17 L. cC. ed. 434; Porter v. Pittsburg &c. Steel 584. Co., 122 U. S. 267, 30 L. ed. 1210, 7 "Palmer v. Forbes, 23 111. 237; Sup. Ct. 1206; Tifft v. Horton, 53 Lehigh Coal &c. Co. v. Central R. 181 CORPORATIONS § 137 § 127. Powers of stockholders and directors. — The power to mort- gage resides primarily in the body corporate, or, in other -words, in the stockholders. They may authorize the execution of the deed by any agents they may by special vote, or general by-law, constitute for that purpose. The directors of a corporation, without authority either ex- pressly or impliedly derived from the stockholders, have no right to execute a mortgage or to authorize any one to do so.®^ But even if the directors exceed their authority in borrowing money for the corpo- ration and executing a mortgage to secure the repayment of it, the corporation can not, after enjoying the benefit of the loan, and ac- quiescing in the transaction, question their authority. The stockhold- ers may restrain the directors, or other officers, in any attempt to tran- scend their powers ; but if they remain silent, permitting them to exe- cute mortgages upon their property, and receiving the benefits of the loan, they are estopped to say that the officers were not authorized to do these acts.^" A corporation ratifies a mortgage made by its directors by issuing bonds under it, and paying interest upon them.'" The rati- fication may be through any acts which show that the corporation ac- cepts the acts of its officers or agents ;'"■ such as receiving and using the proceeds of such mortgage.''^ A statute or a by-law of a corporation, providing that in the man- agement of its affairs the directors shall have all the powers which the corporation itself possesses, invests them with power to borrow money, issue bonds, and convey in mortgage the lands of the corporation as security.'^ Whether the directors of a corporation, in the absence of Co., 35 N. J. Bq. 379; Weetjen v. 688, 78 N. W. 197; McCurdy's Ap- St. Paul &c. R. Co., 4 Hun (N. Y.) peal, 65 Pa. St. 290. 529; First Nat. Bank v. Anderson, "Campbell v. Min. Co., 51 Fed. 75 Va. 250. 1; McCurdy's Appeal, 65 Pa. St. 290. " Campbell v. Mining Co., 51 Fed. " Holbrook v. Chamberlin, 116 1; Graves v. Mono Lake Hydraulic Mass. 155, 17 Am. Rep. 146, and M. Co., 81 Cal. 303, 22 Pac. 665; cases cited. Long v. Powell, 120 Ga. 621, 48 S. "Cooke v. "Watson, 30 N. J. Eq. E. 185; McBIroy v. Nucleus Assn., 345. 131 Pa. St. 393, 18 Atl. 1063. Di- ™Hendee v. Pinkerton, 14 Allen rectors have no authority to execute (Mass.) 381; Saltmarsh v. Spauld- a mortgage except by resolution reg- ing, 147 Mass. 224, 17 N. E. 316. ularly adopted at a board meeting. Under a provision requiring the State V. Manhattan Rubber Mfg. written assent of a majority of the Co., 149 Mo. 181, 50 S. W. 321. stockholders owning at least two- °= Hotel Co. V. Wade 97 U. S. 13, thirds of the capital stock to be filed 24 L. ed. 917; Aurora Agr. &c. Soc. in the office of the county clerk, the V. Paddock, 80 111. 263; Bradley v. assent may be given by those repre- Ballard, 55 111. 413, 7 Am. Rep. 653; senting two-thirds of the stock ac- Ottawa Northern Plank Poad Co. v. tually issued, and it does not matter Murray, 15 111. 336; Beach v. Wake- that some of the shares represented field, 107 Iowa 567, 59'-", 76 N. W. in the assent have not been paid for § 127 PARTIES TO A MORTGAGE 183 any restriction by charter or by-law, may, without further authority in behalf of the corporation, mortgage its property to secure debts they are authorized to incur, is left uncertain by the authorities ; though in general the directors are regarded as having by implication all the power of the corporation in this regard.'* Where the authority to mortgage is vested in the directors, it is doubtful whether the owner of the entire stock, though a director, could execute a mortgage with- out the consent of the other directors, who are nominal stockholders.'^ It is, of course, essential that the stockholders or the directors of the corporation, whichever body is authorized to act, should be legally con- vened by notice given in accordance with the statute of the state or by-laws of the corporation, and a mortgage authorized at a meeting held without due notice is void.'" A statute prescribing a certain vote of shareholders, and due notice of the meeting, does not apply to mort- gages given for unpaid purchase-money delivered upon receipt of the conveyance." If the directors have power to execute a mortgage of corporate prop- erty, neither the president nor any other officer can execute a mortgage without a resolution of the board of directors duly assembled,'^ but such resolution need not be evidenced by an instrument under seal of the corporation, nor need it be recorded with the deed, since it is not a power of attorney.'" in full. The Lyceum v. Ellis, 30 N. " Union Nat. Bank v. State Nat. Y. St. 242, 8 N. Y. S. 867. Bank, 155 Mo. 95, 55 S. W. 989, 78 "Jones on Corp. Bonds & Mtg. Am. St. 560. § 45; Bell &c. Co. v. Kentucky Glass- '"Southern Building &c. Assn. v. Works Co., 20 Ky. L. 1089, 48 S. W. Casa Grande Stable Co., 128 Ala. 440; Augusta Bank v. Hamblet, 35 624, 29 So. 654; Bank of Little Rock Maine 491 ; Hendee v. Pinkerton, 14 v. McCarthy, 55 Ark. 473, 18 S. W. Allen (Mass.) 381, per Foster, J.; 759. Sargent v. Webster, 13 Mete. (Mass.) "Farmers' Loan &c. Co. v. Equity 497, 503, 46 Am. Dec. 743; Burrill Gaslight Co., 84 Hun 373, 65 N. Y. V. Nahant Bank, 2 Mete. (Mass.) St. 591, 32 N. Y. S. 385. See also 163, 35 Am. Dec. 395; Hoyt v. McMurray v. St. Louis Oil Mfg. Co., Thompson, 19 N. Y. 207; Bank of 33 Mo. 377; McComb v. Barcelona Middlebury v. Rutland &c. R. Co., 30 Apart. Assn., 134 N. Y. 598, 31 N. Vt. 159; Miller v. Rutland &c. R. E. 613, 45 N. Y. St. 784. Co., 36 Vt. 452. See also Forbes v. " Alta Silver M. Co. v. Mining Co., San Rafael Turnpike Co., 50 Cal. 78 Cal. 629, 21 Pac. 373; Mason &c. 340, where the power of the direct- Co. v. Metcalfe Mfg. Co., 19 Ky. L. ors was limited. 1864, 44 S. W. 629; Leggett v. New A statute requiring a vote of the Jersey Mfg. &c. Co., 1 N. J. Eq. 541, stockholders of a corporation to au- 23 Am. Dec. 728; Jennie Clarkson thorize a conveyance of its real es- Home v. Missouri &c. R. Co., 182 N. tate, does not apply to a convey- Y. 47, 74 N. E. 571, 70 L. R. A. 787. ance made by a foreign corporation. ™ Beckwith v. Windsor Mfg. Co., Saltmarsh v. Spaulding, 147 Mass. 14 Conn. 594 224, 17 N. B. 316. 183 CORPORATIONS § 128 Where it was part of the arrangement under which land was con- veyed to a corporation that it should give a mortgage to secure future advances for improvements thereon, such mortgage, being made con- temporaneously with the deed, is not within a statute requiring corpo- rations to obtain the assent of two-thirds of the owners of the capital stock as a condition precedent to the giving of a mortgage to secure a debt contracted by it in the course of its business.^" § 128. Use of corporate seal. — In states where seals have not been abolished a corporation can not make a valid mortgage of its real estate except by an instrument under its corporate seal.*^ But an im- pression of the seal of a corporation indented into the substance of the paper upon which the instrument is written is a good seal, although no wax, wafer, or other adhesive substance be used.*^ This is so held in states where the distinction between sealed and unsealed instruments is inflexibly preserved. But where a scroll is not treated as a seal, a facsimile of the seal of a corporation printed with ink on the paper is not a valid seal.*^ "No definition of a seal has ever been made," says "McComb V. Barcelona Apart- ment Assn., 10 N. Y. S. 546. "Koehler v. Black River Falls Iron Co., 2 Black (U. S.) 715; In re St. Helen Mill Co., 3 Sawyer (U. S.) 88, Fed. Cas. No. 12222; Dan- ville Seminary v. Mott, 136 111. 289, 28 N. E. 54 (deed); Duke v. Mark- ham, 105 N. Car. 131, 10 S. B. 1017, 18 Am. St. 889; Eagle Woollen Mills Co. V. Monteith, 2 Ore. 277; Thayer T. Nehalem Mill Co., 31 Ore. 437, 51 Pac. 202; McElroy v. Nucleus Assn., 131 Pa. St. 393, 18 Atl. 1063; Texas Consol. &c. Assn. v. Dublin Com- press &c. Co. (Tex. Civ. App.), 38 S. W. 404 (deed). In Tennessee, only the private seals of individuals are abolished. Garrett v. Belmont Land Co., 94 Tenn. 459, 29 S. W. 726. "'Pillow V. Roberts, 13 How. (U. S.) 472, 14 L. ed. 228; Follett v. Rose, 3 McLean (U. S.) 332, Fed. Cas. No. 4900; Orr v. Lacey, 6 Mc- Lean (U. S.) 243, Fed. Cas. No. 10589; Connolly v. Goodwin, 5 Cal. 220; Woodman v. York &c. R. Co., 50 Maine 549; Carter v. Bur- ley, 9 N. H. 558; Allen v. Sullivan R. Co., 32 N. H. 446; Corrigan v. Trenton &c. Co., 5 N. J. Eq. 52; Cur- tis V. Leavitt, 15 N. Y. 90, 17 Barb. 309. Hendee v. Pinkerton, 14 Allen (Mass.) 381. "After our own courts have allowed wafers instead of wax, and paper with gum or mucilage in- stead of wafers, there seems little reason why we should hesitate also to allow the sufficiency of an im- pression of a corporate seal on the paper itself. The extent to which this practice has prevailed among corporations; the fact that the seals of all our own courts have been from an early period of the same description; the sanction of numer- ous decisions in other states and in the federal courts; the convenience and unobjectionable character of the usage, — are arguments in its favor too powerful to be resisted, in the absence of any decisive au- thority to the contrary." Per Fos- ter, J. See also article, 1 Am. Law Rev. 638, by Geo. S. Hale, Esq. A corporate seal by impression in the paper has been legalized in many states including: Connecticut, Geor- gia, Massachusetts, Minnesota, New Hampshire, New York, Ohio, Ore- gon and West Virginia. "'Bates V. Boston &c. R. Co., 10 Allen (Mass.) 251. § 139 PARTIES TO A MORTGAGE 184 Mr. Justice Foster/* "and none can be suggested, liberal enough to include the method adopted in that ease, which would not destroy the distinction uniformly adhered to in the usage and judicial de- cisions of this state. If we should pronounce every scroll a seal, we should speedily be called upon to take the next step of pronouncing every flourish to be a scroll, and nothing would remain of the ancient fortnality of sealing." The form now required for a corporate seal is less exacting. Various devices are held valid, including a scrawl or scroll,^^ and a bit of paper attached opposite the signatures.** Where an instrument purports to be sealed with the corporate seal, and is shown to have been signed by the proper officers of the corpora- tion, a presumption arises that the seal was affixed by the proper au- thority, and the instrument will be held valid until its invalidity is shown.'^ VII. Power to Mortgage Section Section 129. Power of attorney — Implied 130. Mode of exercising the power, power to mortgage. 130a. Joint mortgagors. § 129. Power of attorney — Implied power to mortgage. — An agent or attorney may be authorized to mortgage the property of his princi- pal,^ but his authority must be in writing,^ and executed with the same formalities required in the instrument it authorizes. Where cor- "Hendee v. Pinkerton, 14 Allen such statutes in Connecticut, Mich- (Mass.) 381; Ranch v. Oil Co., 8 igan, Virginia and Wisconsin. W. Va. 36, a deed of trust reciting '"Gashwiler v. Willis, 33 Cal. 11, a corporation as the grantor, but 91 Am. Dec. 607 (deed); Mill Dam having the following attestation: Foundry v. Hovey, 21 Pick. (Mass.) "Witness the signature and seal of 417; Stebbins v. Merritt, 64 Mass. William Scott, president of said 27 (mortgage) ; Tenny v. East War- Blennerhassett Oil Co., and who Is ren Lbr. Co., 43 N. H. 343; St. Phil- legally authorized, by the board of lips Church v. Zion Pres. Ch., 23 directors of said company to make S. Car. 297. this grant, this date aforewritten. ^'MuUanphy Bank v. Schott, 135 William Scott (seal);" the corpo- 111. 655, 26 N. E. 640; Wood v. Whe- rate seal not being used, was held len, 93 III. 153; Fidelity Ins. Co. v. not to be the deed of the corpora- Shenandoah Val. R. Co. 32 W. Va. tion. ' 244, 9 So. 180. =» Johnson v. Crawley, 25 Ga. 316, ^Alta Silver Min. Co. v.' Alta 71 Am. Dec. 173 (mortgage) ; Reyn- Placer Min. Co., 78 Cal. 629, 21 Pacf olds V. Glasgow, 6 Dana (Ky.) 37 373; Sea well v. Payne, 5 La. Ann. (deed). A scrawl or scroll is per- 255; Eaton v. Dewey, 79 Wis. 251, mitted by statute in many states 48 N. W. 523. including: Georgia, Illinois, Min- "Alta Silver Min. Co. v. Alta nesota, Mississippi, Missouri, New Placer Min. Co., 78 Cal. 629, 21 Pac. Jersey, Ohio and Oregon; but seals 373. of corporations are excepted from 185 POWER TO MORTGAGE § 1-39 porate property is controlled by the directors, a mortgage executed by the president and secretary, and ratified by the stockholders, is void.^ By a power of attorney duly executed, a wife may constitute her hus- band and other named persons her agents to convey and mortgage her property.* A power to sell and convey real estate does not, as a general rule, confer a power to mortgage, and a mortgage executed under a power of attorney, authorizing the attorney to sell and convey only, is void.^ A devise of so much of the testator's estate as may be sufficient for the maintenance of the devisee during his life, "he having full power to sell and convey any and all of my real estate, at any time, if neces- sary to secure such maintenance," does not give to the devisee the right to mortgage the estate in fee." The power should expressly declare the • Alta Silver Min. Co. v. Alta Placer Min. Co., 78 Cal. 629, 21 Pac. 373. ♦Eaton v. Dewey, 79 Wis. 251, 48 N. W. 523. "Colesbury v. Dart, 61 Ga. 620; Salem Nat. Bank v. White, 159 111. 136, 42 N. B. 312; Reed v. Kimsey, 98 111. App. 364; Switzer v. Wilvers, 24 Kans. 384; Wood v. Goodridge, 6 Gusli. (Mass.) 117, 52 Am. Dec. 771; Jeffrey v. Hursh, 49 Mich. 31, 12 N. W. 898; Morris v. Watson, 15 Minn. 212; Kinney v. Mathews, 69 Mo. 520; Bloomer v. Waldron, 3 Hill (N. Y.) 361; Morris v. Ewing, 8 N. Dak. 99, 76 N. W. 1047. De Bouchout v. Goldsmid, 5 Ves. 211; Australian &c. Co. v. Mounsey, 4 K. & J. 733; Huldenby v. Spofforth, 1 Beav. 390; Stronghill v. Austey, 1 De G., M. & G. 635. Otherwise in Pennsylvania: Lan- caster V. Dolan, 1 Rawle (Pa.) 231, 18 Am. Dec. 625; Zane v. Kennedy, 73 Pa. St. 182; Presbyterian Corpo- ration V. Wallace, 3 Rawle (Pa.) 109; Gordon v. 'Preston, 1 Watts (Pa.) 385, 26 Am. Dec. 75; Duval's Appeal, 38 Pa. St. 112; Penn. Life Ins. Co. V. Austin, 42 Pa. St. 257. In Georgia: Allen v. Lindsey, 113 Ga. 521, 38 S. E. 975; Henderson v. Williams, 97 Ga. 709, 25 S. E. 395; Miller v. Redwine, 75 Ga. 130; Adams v. Rome, 59 Ga. 765. When, by the terms of a will, real and per- sonal property is given to the wife for life with the remainder to the children of the testator, a power conferred on the executrix, who was the wife of the testator, to sell any or all of the property devised and reinvest the proceeds, expressed in language which plainly and un- equivocally limits the purpose for which any sale can be made to that of reinvestment only, does not, not- withstanding the will may contain broad and liberal provisions as to the manner in which this power may be exercised, empower the ex- ecutrix to mortgage the property de- vised, nor to convey the title of such property, as security for a debt cre- ated by her. McMillan v. Cox, 109 Ga. 42, 34 S. E. 341. But a mortgage made under such a power for a greater sum than is actually loaned may be repudiated by the principal. Cleveland Ins. Co. V. Reed, 1 Diss. (XJ. S.) 180. «Hoyt V. Jaques, 129 Mass. 286, per Morton, J. "The two transac- tions of a sale and a mortgage are essentially different. A power to sell implies that the attorney is to receive for the benefit of the prin- cipal a fair and adequate price for the land; a power to mortgage in- volves a right in the attorney to convey the land for a less sum, so that the whole estate may be taken on a foreclosure for only a part of its value. So, under a will, a trust with a power to sell prima facie imports a power to sell 'out and out,' and will not authorize a mort- gage, unless there is something in the will to show that a mortgage § 129 PARTIES TO A MORTGAGE 186 intention that the agent should have authority to mortgage the prop- erty. A general power may be sufficient if it appears that the principal intended his agent should have authority to raise money on mortgage, and the nature of the business intrusted to him is such as to make it proper for him to exercise this power/ A power to lease or mortgage real estate for the purpose of procuring money thereon, in ease the at- torney can not sell the property, gives him the option to mortgage it, in the event he can not sell at a reasonable price.* A power to sell for the expressed purpose of raising money is held to imply a power to give a mortgage which is only a conditional sale.* A power, by will or otherwise, to raise a sum of money upon certain land, authorizes either an absolute sale or a mortgage, as may be deemed expedient.^" A power to mortgage may be created by reservation in a deed by the owner of land ; as where the owner of a farm conveys it to a rela- tive "saving and reserving the right to occupy the premises with the full power to mortgage said premises to raise money for my own per- sonal benefit, at any time I may desire for and during my natural life." It was held that the power was not limited to making a mortgage of the life estate so created, but included the power to mortgage the fee of the premises; and that the reservation was not repugnant to the deed." A power to mortgage given in general terms, without specifying the provisions the deed shall contain, includes the power to make it in the form and with the provisions customarily used in the state or country where the land is situated.^^ Thus such a power to mortgage given in England, or in some American states, would authorize the giving of a mortgage with a power of sale ;^^ while, in states in which such a power is not in general use, a power inserted without special authority would be void. And in regard to any other provision, as, for instance, that forfeiting credit on the mortgage upon any default in the payment of interest, and giving the mortgagee the option thereupon to consider the was within the intention of the tes- Banks, 3 P. Wms. 1; Ball v. Harris, tator." The rule that the greater 4 Myl. & C. 267; Page v. Cooper, 16 includes the less may, in a charter, Beav. 396; Oxford v. Albermarle, 17 make a power to sell include a L. J. (N. S.) Ch. 396; Devaynes v. power to mortgage. "Willlamette Robinson, 24 Beav. 86. Mfg. Co. V. Bank of British Colum- " Wareham v. Brown, 2 Vern. 153. bia, 119 U. S. 191, 30 L. ed. 384, 7 «Bouton v. Doty, 69 Conn. 531, 37 Sup. Ct. 187. See also O'Brien v. Atl. 1064. Flint, 74 Conn. 502, 51 Atl. 547. " Monroe Mercantile Co. v. Arnold, 'See Coutant v. Servoss, 3 Barb. 108 Ga. 449, 34 S. E. 176. (N. y.) 128. "Wilson v. Troup, 7 Johns. Ch. 'Mylius V. Copes, 23 Kans. 617. (N. Y.) 25, 2 Cow. (N. Y.) 195, 14 'Powell on Mort. ch. 4; Mills v. Am. Dec. 458; see post §§ 1764-1768. 187 POWER TO MOETGAGE § 130 whole sum due, a general power to mortgage would authorize its use in some states, while the same power would not authorize it in others.^* A power to execute a mortgage, though it does not in express terms limit the right of the agent to the execution of a mortgage for the benefit of the principal only, does not warrant the agent in making a mortgage for the benefit of himself or any other person, and such a mortgage is ineffectual.^^ § 130. Mode of exercising the power. — It is a rule of conveyancing that a deed by an attorney must be executed in the name of the prin- cipal.^° It should be signed in the name of the principal with the agent's name below, preceded by the word "by" and followed by the word "agent." In Combe's case,^^ "it was resolved that when any has authority, as attorney, to do any act, he ought to do it in his name who gives the authority; for he appoints the attorney to be in his place, and to rep- resent his person ; and therefore the attorney can not do it in his own name, nor as his proper act, but in the name, and as the act, of him who gives the authority." A mortgage by a corporation must be executed in its name by the agent or ofiicer authorized to act for it. Although it may purport to be the mortgage of a corporation, yet, if executed by its attorney or ofiicer in his individual name, it is not the legal mortgage of the cor- poration, and does not bind it except in equity.^* But a mortgage executed in behalf of a corporation and formal in every other respect is not vitiated, as between the parties, by any informality in the cer- tificate of acknowledgment whereby the treasurer acknowledges the instrument to be his own free act and deed.^' Although not bound by the act of an agent in giving a mortgage, the principal may ratify it by taking the benefit of it, or may otherwise so act with reference to the exercise of the power as to preclude himself from attempting to in- validate the security.^" " Bolles V. Munnerlyn, 83 Ga. 727, Nevada &c. Min. Co., 32 Cal. 639, 10 S. E. 365; Jesup v. City Bank of 91 Am. Dec. 602. See also Brinley Racine, 14 Wis. 331. See ante § 76. v. Mann, 2 Cush. (Mass.) 337, 48 "Hubback v. Ross, 96 Cal. 426, 31 Am. Dec. 669; Sargent v. Webster, Pac. 353; Nippel v. Hammond, 4 13 Mete. (Mass.) 497, 46 Am. Dec. Colo. 211. ,743. "State V. Jennings, 10 Ark. 428; "Pitch v. Lewiston Steam-Mill Copeland T. Mercantile Ins. Co., 6 Co., 80 Maine 34, 12 Atl. 732. Pick. (Mass.) 198; Elwell v. Shaw, ™ Mechanics' &c. Bank v. Harris 16 Mass. 42, 8 Am. Dec. 126. Lumber Co., 103 Ark. 283, 146 S. W. "9 Coke 75. 508, Ann. Cas. 1914 B, 713; Fitch v. "Taylor v. West Ala. Agl. &c. Lewiston Steam-Mill Co., 80 Maine Assn., 68 Ala. 229; Love v. Sierra 34, 12 Atl. 732; McAdow v. Black, 4 § 130a PARTIES TO A M0STGA6E 188 § 130a. Joint mortgagors. — Owners of separate lands may join in a mortgage, and joint owners may mortgage their entire interest.'" If the joint mortgagors are tenants in common the entire property is liable for the debt.^^ But where two persons mortgage their separate lands for one debt, each is presumed to be liable for half the debt, and his land is chargeable accordingly.^' PART II WHO MAT TAKE A MORTGAGE Parties in Various Relations Section Section 131. Capacity of mortgagees in gen- 134a. Foreign corporations. eral. 135. Joint mortgagees. 132. Aliens. 135a. Partnerships — Firm name — 133. Married women. Beneficiaries in trust deed. 134. Corporations. § 131. Capacity of mortgagees in general. — In general any one capable of holding real estate may be a mortgagee. The disabilities which prevent the making of a valid mortgage in no case prevent the taking of a mortgage, which is for the benefit of the mortgagee. An infant may take a mortgage. He is bound by the conditions of the deed, which must be wholly good or void altogether.^ A director, stockholder or officer of a private corporation is not de- barred by his relation to the corporation from loaning money to it, and taking a mortgage from it for security ; but he must act fairly and in good faith.^ A receiver, however, is debarred upon grounds of pub- lic policy from taking a mortgage upon property which he holds as re- Mont. 475, 1 Pac. 751 ; Perry v. Holl, ton V. Compton, 30 Ohio St. 299; 2 Gif. 138, 2 De G., F. & J. 38. Rat- Stroud v. Casey, 27 Pa. St. 471. iflcation of invalid corporate mort- ^ Schoenewald v. Dieden, 8 III. gages: Aurora Agi. &c. Soc. v. Pad- App. 389. dock, 80 111. 263 (approval of min- '"Cumming v. Williamson, 1 utes authorizing the mortgage); Sandf. Ch. (N. Y.) 17; Hoyt v. Middleton v. Arastraville Min. Co., Doughty, 4 Sandf. (N. Y.) 462. 146 Cal. 219, 79 Pac. 889; Browning » Parker v. Lincoln, 12 Mass. 16. V. Mullins, 12 Ky. L. 41, 13 S. W. ' St. Joe &c. Min. Co. v. First Nat. 427 (acquiescence until loan is ex- Bank, 10 Colo. App. 339, 50 Pac. pended). See also Nevada Nickel 1055; Harts v. Brown, 77 111. 226; Synd. V. National Nickel Co., 90 Fed. Farmers' Loan &c. Co. v. New York 133; Alta Silver Min. Co. v. Alta &c. R. Co., 150 N. Y. 410, 44 N. E. Placer Min. Co., 78 Cal. 629, 21 Pac. 1043, 34 L. R. A. 76, 55 Am. St. 689; 373 (assessment of shareholders to First Nat. Bank v. Commercial pay the loan, not a ratification) ; Travelers' Home Assn., 108 App. Chicago V. Cameron, 120 111. 447, 11 Div. 78, 95 N. Y. S. 454; In re Me- N. E. 899 (long delay not a ratifica- chanics' Bldg. &c. Assn., 202 Pa. 589, tion). 52 Atl. 58. ^Bowen v. May, 12 Cal. 348; Pres- 189 POWEE TO MOETGAGE § 133 ceiver, to secure a loan or advances made by him to the owner of the property. He is not allowed to deal in respect to the property which he holds in trust.^ § 132. Aliens. — In the United States aliens are generally em- powered to hold real estate. But aside from any statutory privilege, a mortgage being regarded as a personal interest, the debt the princi- pal thing, and the land merely an incident, an alien is entitled to hold and enforce a mortgage.* "The alienage of a mortgagee if he be a friend, can, upon no principle of law or equity, be urged against him."'' § 133. Married women. — A married woman may at common law be a mortgagee; but she can not enforce a foreclosure of a mortgage of which the equity of redemption is held by her husband, either by suit at law or in equity, or by entry to foreclose in the presence of two witnesses. Though her title as mortgagee still continues, she is de- barred from all proceedings to foreclose the mortgage during the con- tinuance of the marriage relation." Conversely, the same rule applies in case the husband holds a mortgage made by the wife.^ But there are decisions that a mortgage or other conveyance, made directly from a husband to his wife, to secure his debt to her, is in equity valid and may be enforced.^ A mortgage given by the husband and wife in trust for the wife, to secure money loaned out of her separate estate is valid, but is a lien, subsequent to a junior mortgage by the same parties." A statute forbidding contracts between husband and wife relative to real estate of either invalidates a mortgage from the husband to the wife, and this though the mortgage is made after separation.^" ' Thompson v. Holladay, 15 Ore. death of her husband. Northington 34, 14 Pac. 725. v. Faber, 52 Ala. 45; Coleman v. * Hughes V. Edwards, 9 Wheat. Smith, 55 Ala. 368. "A married (U. S.) 489; Richmond v. Milne, 17 woman could acquire a mortgage on La. 312; Silver Lake Bank v. North, her husband's lands, and against 4 Johns. Ch. (N. Y.) 370. him, just as freely as she could buy ^ Craig V. Kadford, 3 Wheat. (U. or take any other security already S.) 594, 4 L. ed. 467. existing, and the fact that she had "Tucker v. Fenno, 110 Mass. 311. joined in the mortgage to release See also Campbell v. Galbreath, 12 her dower could not affect her right Bush (Ky.) 459. See post § 850. to hold it, as it was not her own ' Butler v. Ives, 139 Mass. 202, 29 obligation." Youmans v. Loxley, 56 N. B. 654. Mich. 197, 22 N. W. 282. 'Wochoska v. Wochoska, 45 Wis. "McFarland v. Gilchrist, 25 N. J. 423; Putnam v. Bicknell, 18 Wis. Eq. 487. 333. In the former case the wife "Phillips v. Blaker, 68 Minn. 152, enforced her rights after a divorce, 70 N. W. 1082. and in the latter case after the § 134 PARTIES TO A MOETGAGB 190 § 134. Corporations. — A corporation, whether private^^ or munici- pal/^ though not expressly authorized by its charter or by statute to take a mortgage, if not prohibited may do so, provided only it be in furtherance of the objects for which it was created. A railroad com- pany, when not forbidden to take anything but money in payment for its stock, may take mortgages of real estate securing notes or bonds given for the stock.^^ Building and loan associations have implied power to take mort- gages to secure their loans.^* A loan association which, under its charter, or under the law by which it was organized, has no power to acquire and hold real estate except such as has been mortgaged to it or in which it has an interest can not acquire other land and assume the payment of a mortgage thereon, and upon the foreclosure of the mort- gage no decree for a deficiency can be rendered against the associa- , tion.^° A corporation de facto, though defectively organized, may take a mortgage, and ,a junior mortgagee can not defeat it by showing such defective organization.^'' A bank organized under the national banking act"^' is authorized to take and hold a mortgage of real estate by way of security for debts previously contraeted,^^ but not to take such a mortgage as security "Jackson v. Brown, 5 Wend. (N. 164, 141 S. W. 723; Vos v. Cedar Y.) 590; Gordon v. Preston, 1 Watts Grove Land &c. Assn., 8 Ohio Dec. (Pa.) 385, 26 Am. Dec. 75; Madison (reprint) 682; Faulkner's Appeal, &c. Plank Road Co. v. Watertown 11 Wkly. N. Cas. (Pa.) 48. See also &c. Plank Road Co., 5 Wis. 173. Cahall v. Citizens' Mut. Bldg. Assn., "Alexander v. Knox, 6 Sawyer 61 Ala. 232. (U. S.) 54; Vanarsdall v. Watson, "Williamson v. Kokomo Building 65 Ind. 176; State Bank t. Chapelle, Assn., 89 Ind. 389. See also Mechan- 40 Mich. 447. Ics' Bldg. Assn. v. Stevens, 5 Duer "Massey v. Citizens' Bldg. Assn., (N. Y.) 676. 22 Kans. 624; National Trust Co. v. "June 3, 1864, §§ 8, 28. Murphy, 30 N. J. Eq. 408; Lyon v. "Genesee Nat. Bank v. Whitney, Bwings, 17 Wis. 61; Andrews v. 103 U. S. 99, 26 L. ed. 443; Penn Hart, 17 Wis. 297; Western Bank v. Borman, 102 111. 523; Mapes v. V. Tallman, 17 Wis. 530; Clark v. Scott, 94 111. 379; Warner v. DeWitt Farrington, 11 Wis. 306; Blunt v. County Nat. Bank, 4 111. App. 305; Walker, 11 Wis. 334, 78 Am. Dec. Turner v. Madison First Nat. Bank, 709; Cornell V. Hichens, 11 Wis. 353. 115 Ind. 341, 17 N. E. 612; Water- "Massey v. Citizens' Bldg. Assn., loo First Nat. Bank t. Elmore, 52 22 Kans. 624; Victoria Bldg. Assn. Iowa 541, 3 N. W. 547; Heath v. V. Arbeiter Bund, 6 Ohio Dec. (re- Second Nat. Bank, 70 Ind. 106; Mat- print) 1108, 10 Am. L. Rec. 485. See thews v. Skinner, 62 Mo. 329, 21 Am. also Juergens v. Cobe, 99 111. App. Rep. 425; Thornton v. National Ex- 156. change Bank, 71 Mo. 221; Wherry "National Home Bldg. &c. Assn. v. Hale, 77 Mo. 20; Scofield v. S^ite v. Home Sav. Bank, 181 111. 35, 54 N. Nat. Bank, 9 Nebr. 316, 2 N. W. 888, B. 619, revg. 79 111. App. 303; Bldg. 31 Am. Rep. 412; Graham v. New &c. Assn. V. Barrett, 160 Mo. App. York Nat. Bank, 42 N. J. Eq. 804; 191 POWER TO MORTGAGE § 134 for a debt contracted at the time or for future advances. Such a mort- gage was formerly regarded as invalid.^' Therefore, a mortgage made to a national bank by a customer, as collateral security for the pay- ment of all notes then discounted and held by the bank, "or for any other indebtedness now due, or that may hereafter become due," was regarded a valid security only for the indebtedness existing when it was given; and upon the payment of such indebtedness, and the sur- render of the specific notes constituting such indebtedness, the mort- gage was discharged.^" The Supreme Court has, however, established a different and more reasonable construction of the prohibition in the national banking act of a loan made upon real estate security, declar- ing that, although such a loan is prohibited, it is not void. A mort- gage taken in violation of the prohibition is valid between the parties and may be enforced. The remedy for the violation is a forfeiture of the bank's charter.^^ The statute authorizes banks to hold real estate in mortgage for debts previously contracted. It does not in terms, but only by implication, prohibit a loan on real estate. It does not de- clare such a security void. It is silent upon the subject. If congress so meant, it would have been easy to say so, and it is hardly to be be- lieved that this would not have been done, instead of leaving the ques- tion to be settled by the uncertain results of litigation and judicial de- Simmons V. Union Springs First non, 196 Fed. 933; Magoffin v. Bank, Nat. Bank, 93 N. Y. 269; Walden 24 Ky. L. 585, 69 S. W. 702. Nat. Bank v. Birch, 130 N. Y. 221, *> Crocker v. Whitney, 71 N. Y. 29 N. E. 127, 14 L. R. A. 211, 41 N. 161; "Woods v. People's Nat. Bank, Y. St. 275; Buffalo Ger. Ins. Co. v. 83 Pa. St. 57. Buffalo Third Nat. Bank, 10 Misc. "National Bank v. Matthews, 98 564, 43 N. Y. S. 550; Oldham v. Wil- U. S. 621, 19 Alb. L. J. 132, 8 Cent. mington First Nat. Bank, 85 N. Car. L. J. 131; National Bank v. Whit- 240; Allen v. First Nat. Bank, 23 ney, 103 U. S. 99, 26 L. ed. 443; Kes- Ohio St. 97; Winton v. Little, 94 ner v. Trigg, 98 U. S. 50, 25 L. ed. Pa. St. 64; Wroten t. Armat, 31 83; Camp v. Land, 122 Cal. 167, 54 Grat. (Va.) 228. Pac. 839; First Nat. Bank v. El- " Kansas Val. Nat. Bank v. Row- more, 52 Iowa 541, 3 N. W. 547. ell, 2 Dill. (U. S.) 371, Fed. Cas. Contra: Skowhegan First Nat. Bank No. 7611; Ripley v. Harris, 3 Biss. v. Maxfield, 83 Maine 576, 22 Atl. (U. S.) 199; Chicago Merch. Nat. 479; Butterworth v. Kritzer Milling Bank v. Mears, 8 Biss. (U. S.) 158, Co., 115 Mich. 1, 72 N. W. 990; Fifth Fed. Cas. No. 9450; Frldley v. Nat. Bank v. Pierce, 117 Mich. 376, Bowen, 87 III. 151; Spafford v. Tama 75 N. W. 1058; Thornton v. Nat. City First Nat. Bank, 37 Iowa 181, Exchange Bank, 71 Mo. 221; George 18 Am. Rep. 6; First Nat. Bank v. v. Somerville, 153 Mo. 7, 54 S. W. Maxfield, 83 Maine 576, 22 Atl. 479; 491; Graham v. New York Nat. Kentucky Bank v. Clark, 4 Mo. 59, Bank, 32 N. J. Eq. 804; Myers v. 28 Am. Dec. 345; Crocker v. Whit- Campbell, 64 N. J. L. 186, 44 Atl. ney, 71 N. Y. 161; Fowler v. Scully, 863; Winton v. Little, 94 Pa. St. 72 Pa. St. 456, 13 Am. Rep. 699; 64; Wroten v. Armat, 31 Grat. (Va.) Woods V. People's Nat. Bank, 83 Pa. 228. St. 57. See also Barron v. McKin- § 134' PARTIES TO A MORTGAGE 193 cision. In other instances contracts are not void where they are not in terms made so. Thus, where a corporation is made incompetent by its charter to take a title to real estate, a conveyance to it is not void, but only voidable, and the sovereign alone can object. It is valid until assailed in a direct proceeding instituted for that purpose. In conclu- sion. Judge Swayne, delivering the opinion of the court, said: "We can not believe it was meant that stockholders, and perhaps depositors and other creditors, should be punished and the borrower rewarded by giving success to this defense whenever the offensive fact shall occur. The impending danger of a judgment of ouster and dissolution was, we think, the check, and none other, contemplated by congress. That has been always the punishment prescribed for the wanton violation of a charter, and it may be maide to follow whenever the public au- thority shall see fit to invoke its application. A private person can not directly or indirectly usurp this function of government."^^ Where a bank already holds a mortgage upon land and for its own protection pays the amount of a prior lien, and then takes a mortgage for this sum, the transaction does not come within the prohibition of the statute as to taking mortgages for debts concurrently created.^' There is sometimes a limitation that the mortgage to a state bank shall be for debts previously contracted. In a case where a charter con- tained this provision "it was adjudged by Chancellor Kent, that, if the loan and mortgage were concurrent acts, and intended so to be, it was not a case within the reason and spirit of the restraining clause of the statute, which only meant to prohibit the banking company from in- vesting their capital in real property and engaging in land specula- tions; 'a mortgage taken to secure a loan, advanced bona fide as a loan, in the course, and according to the usage, of banking operations, was not surely,' says he, 'within the prohibition.' "^* When a state bank was authorized to hold mortgages, but it was provided by statute that all conveyances of real estate should be made to the president of the bank, it was held that a mortgage directly to the bank was valid notwithstanding;^^ for it was considered that the ^ Supporting this view, see Silver statute providing that banks shall Lake Bank v. North, 4 Johns. Ch. not own real estate more than suflS- (N. Y.) 370; Graham v. National cient for the conduct of their busi- Bank of N. Y., 32 N. J. Eq. 804; ness, unless taken in payment of Baird v. Bank of Washington, 11 debts does not prevent the taking of Serg. & R. (Pa.) 411. real estate as security for loans. '"Ornn v. Merchants' Nat. Bank, Alexander v. Brummett (Tenn. Ch.), 16 Kans. 341. 42 S. W. 63. '"Morse on Banks and Bkg. (4th "Kennedy v. Knight, 21 Wis. 340 ed.), § 74; Silver Lake Bank v. 94 Am. Dec. 543. See also Wis. Stat North, 4 Johns. Ch. (N. Y.) 370. A 1913, §§ 2024-35. 193 POWER TO MORTGAGE § 134a object was not to prohibit the bank from taking title, but merely to facilitate business by permitting conveyances to be made for the benefit of the bank to an oflBcer of it. § 134a, roreign corporations. — In the absence of statutory pro- hibition, foreign corporations, created under laws of other states, may take mortgages of domestic real estate.^" A few cases have held that only the state can set up a want of power of a foreign corpora- tion to take a mortgage.^^ It has also been held that the mort- gagor was estopped to deny the power of a foreign corporation to make a domestic loan after accepting its benefits, and that the defense of ultra vires was unavailable. The doctrine is that "a party to a contract is estopped from urging his discharge from liability on it,, by reason of the other's want of authority to make it."^^ The validity of mortgages taken on domestic property by foreign cor- porations, including mortgage companies and building and loan asso- ciations, may depend on whether the foreign corporation has complied with the domestic statutes imposing certain duties as a condition to doing business in the state.^' A constitutional or statutory provision =»Dry Dock v. Hicks, 5 McLean (U. S.) Ill, Fed. Cas. No. 10204; Farmers &c. Co. v. McKinney, 6 Mc- Lean (U. S.) 1, Fed. Cas. No. 4667; Caesar v. Cappell, 83 Fed. 403 ; Boat- men's Bank v. Fritzlen, 175 Fed. 183; Christian v. American Free- hold Land &c. Co., 89 Ala. 198, 7 So. 427; Stevens v. Pratt, 101 111. 206; Commercial &c. Co. v. Scam- mon, 102 111. 46; Pancoast v. Travel- ers' Ins. Co., 79 Ind. 172; Lathrop V. Commercial Bank, 8 Dana (Ky.) 114, 33 Am. Dec. 481; Frazier v. Wilcox, 4 Rob. (La.) 517; American &c. Ins. Co. V. Owen, 15 Gray (Mass.) 491; Lebanon Sav. Bank v. Hollenbeck, 29 Minn. 322, 13 N. W. 145; Williams T. Creswell, 51 Miss. 817; Connecticut &c. Ins. Co. v. Al- bert, 39 Mo. 181; Long v. Long, 79 Mo. 644; Ferguson v. Soden, 111 Mo. 208, 19 S. W. 727, 33 Am. St. 512; Carlow v. Aultman, 28 Nebr. 672, 44 N. W. 873; National Trust Co. v. Murphy, 30 N. J. Eq. 408 (mortgage valid as additional security, though not authorized upon the original in- vestment) ; Bard v. Poole, 12 N. Y. 495; Silver Lake Bank v. North, 4 Johns. Ch. (N. Y.) 370; Leasure V. Union &c. Ins. Co., 91 Pa. St. 491; Pioneer Savings &c. Co. v. Cannon, 96 Tenn. 599, 36 S. W. 386, 33 L. R. A. 112, 54 Am. St. 858; Charter Oak Life Ins. Co. v. Sawyer, 44 Wis. 387. ^ St. Louis Union Nat. Bank v. Matthews, 98 U. S. 621, 25 L. ed. 188; Carlow v. Aultman, 28 Nebr. 672, 44 N. W. 873. ^''St. Louis Nat. Bank v. Mat- thews, 98 U. S. 621, 25 L. ed. 188; Pancoast v. Travelers' Ins. Co., 79 Ind. 172; Silver Lake Bank v. North, 4 Johns. Ch. (N. Y.) 370. ^Semple v. British Columbia Bank, 5 Sawy. (U. S.) 88, Fed. Cas. No. 12659; Farrior v. New England Mtg. &c. Co., 88 Ala. 275, 7 So. 200; Mullens v. American &c. Mtg. Co., 88 Ala. 280, 7 So. 201; Christian V. American &c. Land Co., 89 Ala. 198, 7 So. 427; Hanchey v. Southern Home Bldg. Assn., 140 Ala. 245, 37 So. 272; Hoskins v. Rochester Sav. Assn., 133 Mich. 505, 95 N. W. 566; Henni v. Fidelity Bldg. &c. Assn., 61 Nebr. 744, 86 N. W. 475, 87 Am. St. 519; Pioneer Sav. Assn. v. Eyer, 62 Nebr. 810, 87 N. W. 1058; New York Nat. Bldg. Assn. v. Cannon, 13 — ^JoNES Mtg. — Vol. I. § 134a PASTIES TO A MORTGAGE 194 that no foreign corporation shall do "any business" m a state without having at least one known place of business, and an authorized agent therein, is violated by a single act of making one loan of money, and taking a mortgage to secure it, by a foreign corporation engaged in the business of loaning money on mortgages, when it has no place of business or agent in the state. In such case the promise of the mort- gagor to pay is void, and a bill to foreclose the mortgage can not be maintained.^" In a suit under such a provision to foreclose a cor- porate mortgage, the complaint must aver that the corporation was authorized to do business in the state at the time the mortgage was executed and delivered. A complaint which states that complainant has complied with the laws of the state which authorize a foreign cor- poration to do business in the state, and that the mortgage sued on was executed and delivered in the state, is not suflBcient.^^ But though a mortgage was originally invalid by reason of the failure of the mortgagee, a foreign corporation, to comply with such laws, after the contract evidenced by the mortgage has been fully executed by a sale and conveyance under the mortgage, the mortgagor can not there- after avail himself of the objection.^^ In a few states foreign corporations have at different times been prohibited from making loans and taking security upon real estate therefor. A mortgage within such a prohibition is invalid from its delivery, and consequently a sale and conveyance under it is nugatory, and does not divest the owner of his iaterest in the mortgaged prem- ises.^ ^ But if the mortgagor comes into a court of equity to obtain a 99 Tenn. 344, 41 S. "W. 1054; Gil- v. Georgia Pac. R. Co., 91 Ala. 519, mer v. United States Savings &c. 8 So. 706; Dudley v. Collier, 87 Ala. Co., 103 Tenn. 272, 52 S. W. 851. 431, 6 So. 304. *° Farrior v. Security Co., 92 Ala. ^ Such was the statute in Illinois 176, 7 So. 200; Dudley v. Collier, 87 prior to the Act of 1875 (Laws of Ala. 431, 6 So. 304. See also Mil- 1875, p. 65). repealing the former ler V. Gates, 22 Mont. 305, where statute, and confirming and validat- decree of foreclosure was had be- ing prior loans made in contraven- fore objection was taken, the mort- tion of it. Scammon v. Commercial gage being not void, but only void- Union Assurance Co., 6 Bradw. (111.) able. Black v. Caldwell, 83 Fed. 551; United States Mtg. Co. v. Gross, 880. 93 111. 483. See also Hards v. Conn. =' Mullens v. Mortgage Co., 88 Mut. L. Ins. Co., 8 Blss. (U. S.) 234. Ala. 280, 7 So. 201. The subsequent act of May 26, 1897, ^' Electric Lighting Co. v. Rust, providing that a foreign corporation 117 Ala. 680, 23 So. 751; Kindred failing to file a copy of its charter V. New England Mtg. Sec. Co., 116 with the secretary of state, etc., Ala. 192, 23 So. 56; Diefenbach v. shall not maintain any suit, etc., Vaughan, 116 Ala. 150, 23 So. 88; does not apply to mortgages taken Shahan v. Tethero, 114 Ala. 404, 21 before this statute was enacted. So. 951; Thornhill v. O'Rear, 108 Richardson v. United States Mtg. Ala. 299, 19 So. 382; Gamble v. Cald- Co., 194 111. 259, 62 N. E. 606. See well, 98 Ala. 578, 12 So. 424; Long Rev. Stat. 111., p. 538, §§ 67, 67a. 195 POWER TO MOETGAGE § 135 cancelation of such a mortgage on the ground that the mortgagee had not complied with the requirements of the statute as to the right to do business in the state, he must offer to repay the money received with interest.^* In an earlier decision the court said : "We can not assent to the proposition that a person can obtain another's money upon the faith and assurance of a mortgage security, and the next moment after he receives and appropriates it, go into a court of conscience, where the maxim that he who seeks equity must do equity has ever been vigorously upheld and applied, and ask that court to cancel the security as a cloud on his title, still retaining the money and making no offer to return or repay it."^° '§ 135. Joint mortgagees. — A mortgage given to secure a Joint debt creates a joint estate in the mortgagees.^" Payment to either satis- fies the mortgage. ^^ In case of the death of one of such mortgagees, an action to recover the debt or to enforce the mortgage may be main- tained in the name of the survivor. ^^ A mortgage may be made to several persons jointly to secure separate debts.^^ Such a mortgage given to two or more persons to secure their separate debts is several and not joint; each mortgagee has a right to enforce his claim under the mortgage, in a form adapted In Pennsylvania a foreign corpora- In Minnesota it is provided that tion may enforce a mortgage upon all mortgages heretofore made of lands In that state. Leasure v. any real property, or of any interest Union Mut. Life Ins. Co., 91 Pa. St. therein, to any partnership or firm, 491. Const. Ala., § 4, art. 14; New in their partnership or firm name, England Mtg. Co. v. Powell, 94 Ala. which mortgages have been fore- 423, 10 So. 324. closed by advertisement pursuant ** George v. New England Mtg. Se- to the statute relating to foreclosure eurity Co., 109 Ala. 548, 20 So. 331; by advertisement, in the name of Ross V. New Eng. Mtg. Sec. Co., 101 the said partnership or firm, be and Ala. 362, 13 So. 564; Hartly v. the same are, together with all pro- Matthews, 96 Ala. 224, 11 So. 452. ceedings had in such foreclosure, *°Grider v. American Freehold hereby legalized and confirmed so Land Mtg. Co., 99 Ala. 281, 12 So. far as relates to any question of de- 775. feet by reason of the mortgagees' '"Appleton V. Boyd, 7 Mass. 131. names being stated in said mort- In Massachusetts mortgages are gages by their partnership or firm expressly excepted from the provi- name instead of the individual sion of statute that conveyances names of said partnership or firm, made to two or more persons shall Laws 1881, ch. 140. be construed to create estates in "Wright v. Ware, 58 Ga. 150. common. Rev. Laws 1902, ch. 134, ^ Blake v. Sanborn, 8 Gray p. 1268, § 6. It leaves the nature (Mass.) 154; Webster v. Vandeven- of the estate open to inquiry. In ter, 6 Mass. 428; Mutual L. Ins. Co. Maine a mortgage to two or more v. Sturges, 32 N. J. Eq. 678. persons is considered as constituting ^' Adams v. Nieman, 46 Mich. 135, a joint tenancy unless otherwise ex- 8 N. W. 719; Scarlett v. Nattress, 23 pressed. Acts 1881, ch. 46; Rev. Ont. App. 297. Stat. 1903, ch. 75, p. 659, § 16. § 135 PARTIES TO A MORTGAGE 196 to the case, and of course the surviving mortgagee can not maintain an action on the mortgage to enforce payment of the debt due the deceased mortgagee.*" Such mortgagees are tenants in common, each having an undivided interest; and the fact that the mortgage is void as to one of the mortgagees will not affect its validity as to the other.*'^ A round sum named as the debt may be divided by the mortgage into specific items payable to each of several creditors. In such case the mortgage secures each of such creditors for a fixed and definite sum, and may be enforced by such of them as bring suit for foreclosure without awaiting the bringing in of all the parties se- cured.*^ The mortgage is presumed to be for the benefit of the mort- gagees pro rata to the debts secured;*^ though, if the amount of the debts be not fixed, the mortgage might be presumed to be for their benefit equally. Such a mortgage does not constitute the mort- gagees trustees one for the other, at least before the law day.** But whether the debt secured be joint or several, after foreclosure the mortgagees become tenants in common of the land.*' A mortgage to husband and wife upon the death of the husband vests in the wife.*" A mortgage and note paj^able in the alternative to one or the other of two named payees is valid.*' Under statutes which make grants to two or more persons tenancies in common, unless there are words which clearly show an intention to create a joint tenancy, the mere fact that the conveyance is in mort- gage affords no implication controlling the statute and making the mortgagees joint tenants.** A mortgagee of an undivided half of a parcel of land does not become a tenant in common with the owner of the other half until his title has become absolute by a completed foreclosure. Before that "Brown v. Bates, 55 Maine 520, son, 37 111. 45; Willis v. Caldwell, 10 92 Am. Dec. 613; Gilson v. Gilson, B. Mon. (Ky.) 199. See also Jones 2 Allen (Mass.) 115, 117; Burnett on Chattel Mortgages, § 84. v. Pratt, 22 Pick. (Mass.) 556. « Bates v. Coe, 10 Conn. 280. "Bates v. Coe, 10 Conn. 280; Gil- "Randall v. Phillips, 3 Mason (U. son V. Gilson, 2 Allen (Mass.) 115; S.) 378; Goodwin v. Richardson, 11 Burnett v. Pratt, 22 Pick. (Mass.) Mass. 469; Donnels v. Edwards, 2 556; Roberts v. McWilliams, 2 Ohio Pick. (Mass.) 617; Burnett v. Pratt, Dec. (Reprint) 152; Farwell v. War- 22 Pick. (Mass.) 556. ren, 76 Wis. 527, 45 N. W. 217. " Draper v. Jackson, 16 Mass. 480. ""'Shelden v. Erskine, 78 Mich. -"Seedhouse v. Broward, 34 Pla. 627, 44 N. W. 146. 509, 16 So. 425. ■"Seedhouse v. Broward, 34 Fla. '"Randall v. Phillips, 3 Mason (U. 509, 16 So. 425; Adams v. Robert- S.) 378. 197 POWER TO MORTGAGE § 135a time the mortgage is only a lien, and the estate is to be dealt with as belonging to the mortgagor.*" § 135a. Partnerships — Firm name — Beneficiaries in trust deed. — A mortgage to a partnership in its firm name, without naming the individual members of the firm, though irregular and informal, may be enforced by the partnership. The partnership name, containing the name of one or more of the partners, sufficiently identifies the partners named so that the title will vest in them. For stronger reasons, this is the rule in states in which a mortgage is regarded as merely a lien and not a title ; for there is no question that a lien may accrue to a partnership in its firm name.^" But a mortgage of real estate to "D. B. Dorman & Co." which was a partnership composed of D. B. Dorman and another conveys only to Dorman, whose name appears in the partnership name.^^ A mortgage to "The People's Bank," under which name an indi- vidual contracts business, vests the legal title in the individual. ^^ In a trust deed, the legal title is conveyed to a trustee for the bene- fit of third persons named or described. It is not essential, however, that the beneficiaries shall be named; it is sufficient if they are so described or designated that they may be ascertained. Thus, where a deed of trust was given by a dairyman to a trustee to secure all persons who might furnish milk to be made into butter and cheese and sold by the grantor on their account, but he failed to state the names of the beneficiaries to be secured, the deed was held valid, for the beneficiaries were those who should thereafter furnish to the grantor milk to be manufactured by him into butter and cheese. The deed of trust was a continuing offer by the grantor to secure all persons who might patronize him.°^ '"Norcross v. Norcross, 105 Mass. "Gille v. Hunt, 35 Minn. 357, 29 265, and cases cited. N. W. 2. =° Woodward v. McAdam, 101 Cal. =^ Carlisle v. People's Bank, 122 438, 35 Pac. 1016; Foster v. Johnson, Ala. 446, 26 So. 115. 39 Minn. 378, 40 N. W. 255; Schupert °' First Nat. Bank v. Schween, 127 v. Dillard, 55 Miss. 348. 111. 573. 20 N. E. 681, 11 Am. St. 174. CHAPTEE IV WHAT MAT BE THE SUBJECT OP A MOHTGAGE I. Existing Interests in Real Property, §§ 136-148 II. Accessions to the Mortgaged Property, §§ 149-161a .1. Existing Interests in Real Property Section 136. Interest subject to sale and as- signment. 137. Vested, contingent and future interests. 138. Interests passed by mortgage. 138a. Homestead subject of mort- gage. 138b. When owner estopped to deny mortgage made by a tbird person. 139. Mortgage of a mortgage inter- est. 140. Mortgage of rents and profits. 141. Mortgage by one part owner or tenant in common. Section 142. Effect of mortgage of building to include land. 143. House moved from the land. 144. Legal effect of removal of fix- tures from mortgaged prem- ises. 145. Severed and growing wood sub- jects of mortgages. 146. Mortgage of improvements. 147. When realty mortgage covers Improvements subsequently made. 148. When abstract of title part of security. 1 136. Interest subject to sale and assignment. — ^Every kind of interest in real estate may be mortgaged if it be subject to sale and assignment.^ It does not matter that it is a right in remainder or reversion, a contingent interest, or a possibility coupled with an inter- est, if it be an interest in the land itself.^ But an interest in the >2 Story Bq. Jur., § 1021; 4 Kent's Comm. 144; Massey v. Papin, 24 How. (U. S.) 362, 16 L. ed. 174; Brodrick v. Kilpatrick, 82 Fed. 138; McLeod V. Barnum, 131 Cal. 605, 63 Pac. 924; Hardy v. Ruggles, 1 Ha- waii 457; Miller v. Tipton, 6 Blackf. (Ind.) 238; Dorsey v. Hall, 7 Nebr. 460; Neligh v. Michenor, 11 N. J. Eq. 539; Mendenball v. West Ches- ter &c. R. Co., 36 Pa. St. 145; Bourn V. Robinson, 49 Tex. Civ. App. 157, 107 S. W. 873; Clark v. Altizer (Tex. Civ. App.), 145 S. W. 104; Scott v. Farnam (Wash.), 104 Pac. 639; Mor- tenson v. Morse, 153 Wis. 389, 141 N. W. 273. 2 Wilson V. Russ, 17 Fla. 691; Cur- tis V. Root, 20 111. 518; Spalding v. Wayne (Ky.), 45 S. W. 517; Smith V. Provin, 4 Allen (Mass.) 516; Bacot V. Varnado, 91 Miss. 825, 47 So. 113; Flanders v. Greely, 64 N. H. 357, 10 Atl. 686; Neligh v. Mich- enor, 11 N. J. Eq. 539; Wilson v. Wilson, 32 Barb. (N. Y.) 328; In re John & Cherry Streets, 19 Wend. (N. Y.) 659; E. A. Beall Co. v. Weston, 83 S. Car. 491, 65 S. E. 823; Lipscomb v. Hammett, 56 S. Car. 198 199 INTERESTS IN EEAL PEOPEETT § 136 proceeds of land ordered to be sold and distributed among legatees is not a subject of mortgage.^ The interest of a cestui que trust may be mortgaged and sold in foreclosure proceedings.* A mere per- sonal right or interest, as, for instance, a right of pre-emption of public lands, is of course not susceptible of mortgage ;° yet the land subject to pre-emption may be mortgaged," and so may be a mining claim located upon public land.'' If one entitled to redeem from a foreclosure sale assigns such right as security for a debt, the assignee is a mortgagee.^ The Code of California states the general rule of law upon this subject in the provision that any interest in real property which is capable of being transferred may be mortgaged.® Such, for instance, is the interest of one who holds an agreement or bond for title j^" the interest of a grantee in possession under a deed held in escrow until the performance of certain conditions ;^^ the in- terest of the one in possession under a parol contract to purchase j"^^ or the interest of the holder of school land certificates until forfeited by 549, 35 S. E. 194; People's Loan &c. Bank v. Garlington, 54 S. Car. 413, 32 S. E. 513, 71 Am. St. 800; Bourn V. Robinson, 49 Tex. Civ. App. 157, 107 S. W. 873; Barnes v. Dow, 59 Vt. 530, 10 Atl. 258; Trent v. Hunt, 9 Exch. 14. 'Gray v. Smith, 3 Watts (Pa.) 289; Wood v. Reeves, 23 S. Car. 382. *Cliristian v. American Freeliold Land Mtg. Co., 92 Ala. 130, 9 So. 219. = Whitney v. Buckman, 13 Cal. 536; Reasoner v. Markley, 25 Kans. 635; Penn v. Ott, 12 La. Ann. 233; Gil- bert v. Penn, 12 La. Ann. 235; Brous- sard V. Dugas, 5 La. Ann. 585. See post § 177. Bush V. Marshall, 6 How. (U. S.) ■ 284, 12 L. ed. 684; Warren v. Van Brunt, 19 Wall. (U. S.) 646, 22 L. ed. 219. A court of equity will not set aside a mortgage made by a pre- emptor, for the reason that the stat- ute prohibits him from perfecting his pre-emption after he has exe- cuted a mortgage, and that he gave the mortgage in ignorance of the law. Douglas v. Gould, 52 Cal. 656. = Bush V. Marshall, 6 How. (U. S.) 284, 12 L. ed. 684; Whitney v. Buck- man, 13 Cal. 536. 'Alexander v. Sherman (Ariz.), 16 Pac. 45; United States Mtg. &c. Co. V. Eastern Iron Co., 120 App. Div. 679, 105 N. Y. S. 291. " San Jose Safe-Deposit Bank v. Bank of Madeira, 121 Cal. 539, 54 Pac. 83; Grant v. Cumberland Val. Cement Co., 58 W. Va. 162, 52 S. E. 36. » Civil Code 1903, enacted March 21, 1872, § 2947. "Davis V. Davis, 88 Ala. 523, 6 So. 908; Houghton v. Allen, 75 Cal. 102, 16 Pac. 532, 14 Cal. 641; Baker V. Bishop Hill Colony, 45 111. 264; McCauley v. Coe, 51 111. App. 284; Laughlin v. Braley, 25 Kans. 147; Perkins v. Robinson (Ky.), 124 S. W. 310; McPherson v. Hayward, 81 Maine 329, 17 Atl. 164; Crane v. Turner, 7 Hun (N. Y.) 357, 67 N. Y. 437; Farmers' Loan &c. Co. V. Cur- tis, 7 N. Y. 466; Titcomb v. Fonda, J. &c. R. Co., 38 Misc. 630, 78 N. Y. S. 226; Simonson v. Wenzel (N. Dak.), 147 N. W. 804; Scott v. Far- nam, 55 Wash. 336, 104 Pac. 639; Smith V. Patton, 12 W. Va. 541. "Masters v. Clark, 89 Ark. 191, 116 S. W. 186. "Sinclair v. Armitage, 12 N. J. Eq. 174; Hagar v. Brainerd, 44 Vt. 294; Bull v. Sykes, 7 Wis. 449. § 136 PEOPEETY SUBJECT OF MOETGAGE 200 nonfulfilment of the conditions of sale ;^^ or of a certificate of stock in an -unincorporated company representing an interest in real estate.^* An easement appurtenant to the land described, and all rights, privi- leges and easements subsequently acquired, which are essential to the full enjoyment of the property, pass by the mortgage, though not specifically mentioned.^^ Thus a contract which the mortgagor has for the purchase of a strip of land adjoining the land described and neces- sary for the support of the building on the mortgagor's lot passes by his mortgage, though the contract was subsequent to the mortgage.^" A contract for an option to purchase land at an agreed price within a time limited, based upon a sufiicient consideration, is an interest in real estate that may be sold or assigned, and therefore may be mort- gaged." A widow who has an unassigned right of dower in land can make a mortgage of such land which will cover her interest in it. But though at the same time she has a power under her husband's will to mortgage such land, a mortgage executed by her, without referring to the power, will be deemed a mortgage of her dower right, and not an execution of the power.^' A devisee who has a vested interest in the land devised may mort- gage that interest.^' A mere possibility or expectancy, not coupled with any interest in "^Jarvis v. Dutcher, 16 Wis. 307; tenants only and that her mortgage Mowry v. Wood, 12 Wis. 413; of such interest to a stranger con- Dodge V. Silverthorn, 12 Wis. 644. veys no title. Ritt v. Dooge, 20 R. "Durkee v. Stringham, 8 Wis. 1. I. 133, 37 Atl. 810; Maxon v. Gray, "Hyde Park Thomson-Houston 14 R. I. 641; Weaver v. Sturtevant, Light Co. V. Brown, 172 111. 329, 50 12 R. I. 537. N. B. 127; Swedish-Am. Nat. Bank "Drake v. Paige, 127 N. Y. 562, v. Conn. Mut. L. Ins. Co., 83 Minn. 28 N. B. 407. A will devised 377, 86 N. W. 420; Putnam v. Put- the residue of the testator's estate nam, 77 App. Div. 554, 78 N. Y. S. to four persons, share and share 987; Maupai v. Jackson, 64 Misc. alike. A subsequent clause empow- 407, 118 N. Y. S. 513; Latta v. Ca- ered the executors to sell a portion tawba Blectric &c. Co., 146 N. Car. or all of the land for the payment 285, 59 S. B. 1028. of debts in case the personalty '"Barnard v. Wilson, 74 Cal. 512, should prove Insufficient, and also 16 Pac. 307; Swedish-Am. Nat. Bank authorized them to partition the V. Conn. Mut. L. Ins. Co., 83 Minn, land among the four devisees after 377, 86 N. W. 420; In re Bull, 15 R. the payment of all such debts and I. 534, 10 Atl. 484. expenses. It was held that the land "Bank of Louisville v. Bau- vested in the devisees, subject to meister, 87 Ky. 6, 7 S. W. 170. the execution of the power by the "Penny v. Weems, 139 Ala. 270, executors, and that consequently a 35 So. 883; Mutual L. Ins. Co. v. mortgage executed by one of the Shipman, 119 N. Y. 324, 24 N. E. devisees, before partition, on his un- 1'77. In Rhode Island it is held that divided one-fourth interest, was a dowress can mortgage her unas- valid. See also Davis v. Willson, signed dower interest to the terre- 115 Ky. 639, 74 S. W. 696. 201 INTERESTS IN EEAL PEOPEETT § 137 or growing out of the property, can not be made the subject of a mort- gage.^" A mere expectancy of acquiring property, without a present interest in it, is not a subject of sale, and therefore not of mortgage. "The next cast of a fisherman's net" has long been used as an illustra- tion of a mere expectancy, not the subject of grant. In a Massachu- setts case it was sought to substantiate such a sale, and the court were obliged to adjudge that a man has no salable interest in halibut in the sea. There is a possibility, they say, the man may catch halibut, but he has no actual or potential interest in the fish until he has caught them." § 137. Vested, contingent and future interests. — All kinds of vested, contingent, and future interests may be mortgaged. An estate tail may be mortgaged by the life tenant. Such tenant can not preju- dice the rights of the remaindermen, but can convey whatever interest he has.^^ But it has been held that where a widow, to whom real es- tate is devised for her own use and benefit during her natural life, with remainder of whatever may remain, may execute a binding mort- gage on' the premises for moneys used in making improvements there- on by means of which she secured her support from the property.^^ A vested interest in remainder may be conveyed in mortgage.^* A con- tingent or possible interest may also be the subject of a mortgage,^" upon breach of which the mortgagee may sell whatever interest the mortgagor may have in the property, without waiting until the hap- pening of the condition on which the remainder would become vested.^" Keversions and remainders, being capable of assignment, may be the =° Skipper v. Stokes, 42 Ala. 255', ^^Hosmer v. Carter, 68 111. 98. The 94 Am. Dec. 646; Purcell v. Mather, limitation was to "her body heirs." 35 Ala. 570; Low v. Pew, 108 Mass. Lehndorf v. Cope, 122 111. 317, 13 N. 347, 11 Am. Rep. 357. See also Hoff E. 505. See also New South Bldg. V. Burd, 17 N. J. Eq. 201. &c. Assn. v. Gann, 101 Ga. 678, 29 "^Low V. Pew, 108 Mass. 347, 11 S. E. 15; Beall Co. v. Weston, 83 Am. Rep. 357. The other maxim S. Car. 491, 65 S. B. 823. '(not of the law) is applicable: =" Swarthout v. Ranier, 143 N. Y. "First catch your fish," etc. In 499, 38 N. E. 726; In re Jenks, 21 Miles V. Miles, 78 Miss. 904, it was R. I. 390, 43 Atl. 871. held that a deed by a son to his ^Flanders v. Greely, 64 N. H. brother of his interest in particular 357, 10 Atl. 686. land of their father during his "^ Wilson v. Wilson, 32 Barb. (N. life, but not disclosing this fact, Y.) 328; E. A. Beall Co. v. Weston, with a reservation of a lien for the 83 S. Car. 491, 65 S. E. 823. purchase-money is not void, but may "People's Loan &c. Bank' v. Gar- be enforced after the father's death, lington, 54 S. Car. 413, 32 S. E. 513, the father having in confirmation 71 Am. St. 800. See also Davis v. of the deed made a conveyance of Willson, 115 Ky. 639, 74 S. W. 696. this land to the grantee above. § 138 PEOPEETY SUBJECT OF MOETGAGE 202 subject of a mortgage.^^ A reversionary interest in land subject to homestead rights may be mortgaged. ^^ When the estate mortgaged is a contingent remainder, the mortgage, of course, becomes void upon the happening of the contingency vrhich divests the mortgagor.^* § 138. Interests passed by mortgage. — A mortgage passes the in- terest of the mortgagor whatever it may be.^" When a mortgage is made of an estate or interest already incumbered in any manner, the mortgage of course attaches only to the interest then remaining in the mortgagor. Upon the discharge of any prior incumbrance, the mortgage interest has the full advantage of the discharge. If the mortgagor acquires any title after making the mortgage, that, as a general rule, accrues to the benefit of the mortgage title. Although the mortgage purports to convey a title in fee simple, when the mortgagor has only an equitable title, it is effectual to pass such equitable title, and the record of it is notice to subsequent pur- chasers of the mortgagor's interest.^^ But a mortgage of the fee given by one who only had a life estate, though he had held the property under a will for thirty years suppos- ing he took a fee simple, is a mortgage of a life interest only, and a foreclosure of it after the death of the mortgagor passes no title to the purchaser.^^ And one to whom a life estate in land is conveyed can not bind the remaindermen by a mortgage given for the purchase- price, they not being parties to the mortgage. ^^ A mortgage on a leasehold interest conveys no interest beyond the term of the lease, and a mortgagee in possession thereunder can "2 Story Eq. Jur. § 1021; Curtis Commission Co., 153 111. 499, 38 N. V. Root, 20 111. 518; Spalding v. E. 1038, 46 Am. St. 902; Miller v. Wayne (Ky.), 45 S. W. 517; Coomes Michoud, 11 Rob. (La.) 225; French v. Frey, 141 Ky. 740, 133 S. "W. 758; v. Prescott, 61 N. H. 27; Hagar v. Neligh v. Michenor, 11 N. J. Eq. 539; Brainerd, 44 Vt. 294. See also Clark Barnes v. Dow, 59 Vt. 530, 10 Atl. v. Lyster, 155 Fed. 513, 84 C. C. A. 258; Trent v. Hunt, 9 Exch. 14. 27; Holmquist v. Gilbert, 41 Colo. ^ Smith V. Provin, 4 Allen (Mass.) 113, 92 Pac. 232; Re Carroll, 11 Ont 516. W. R. 179. '" L'Etourneau v. Henquenet, 89 " Christian v. American Freehold Mich. 428, 50 N. "W. 1077. Land Mtg. Co., 92 Ala. 130, 9 So. =" Brockschmidt v. Archer, 64 219; Laughlin v. Braley, 25' Kans. Ohio St. 502, 60 N. E. 623. Such, 147; Levering v. Fogg, 18 Pick, for instance, as an undivided in- (Mass.) 540; Lincoln Bldg. &c. Assn. terest in common with others, v. Hass, 10 Nebr. 581, 7 N. W. 327. Baker v. "Shephard, 30 Ga. 706. A '^j^j^ter v. Woodcock, 154 Mass. lessee may mortgage his leasehold 535, 28 N. E. 907. See also New interest in the building which he South Bldg. &c. Assn. v. Gann, 101 has erected upon the land of an- Ga. 678, 29 S. E. 15. other. Knapp v. Jones, 143 111. '"McDonald v. Woodward, 58 S. 375, 32 N. E. 382; Cross v. Weare Car. 554, 36 S. E. 918. ■203 INTERESTS IN REAL PROPERTY § 138 acquire no greater right by virtue of his possession than the lessee had."* Unless the conveyance in mortgage be limited in its operation, it passes all the interest of the mortgagor in the property described. It passes any reversionary interest he has; for instance, a mortgage of land subject to a homestead right conveys the reversionary interest after the expiration of the homestead estate, although the wife did not join in it.""^ If there be an outstanding contract of sale of which no- tice is imparted by the record or by the vendee's possession, the mort- gage is subject to the vendee's right to purchase ; and upon a foreclos- ure and sale the purchaser takes the property subject to the same right.^^ A mortgage may be made of any imperfect title which the mort- gagor has, as, for instance, an imperfect Spanish title which was sub- ject to sale and assignment."^ A clause in a mortgage, "excepting therefrom so much of said tracts as have been conveyed by the mortgagor by deed to different individ- uals," does not reserve from its operation a portion of the premises covered by a prior unrecorded mortgage."' A mortgage of several lots of land described by numbers on a plat, and by courses and distances, will pass all the title the mortgagor has in the lots, although he has only a mortgage title to one of them."' But where a mortgagor became the husband of the mortgagee, and the two joined in a second mortgage of the premises to secure a prior debt of the husband, it was held that the wife's interest under the first mortgage was not thereby affected. She had not joined in the mort- gage to assign her own mortgage, but to effectually pass the equity of redemption.*" So a mortgage of all the land and right to land which the grantor has in a certain town does not include land to which he has only a possibility of a reversion on the nonperformance of a con- dition subsequent.*^ But a mortgage of land by a vendor, who holds notes for the purchase-money of the same land and a vendor's lien, " Miller v. Warren, 182 N. Y. 539, " Massey v. Papln, 24 How. (U. 75 N. E. 1131. S.) 362, 16 L,. ed. 174. =»McGuire v. Van Pelt, 55 Ala. =» Eaton v. White, 18 Wis. 517. 344; Smith v. Provin, 4 Allen =°Murdock v. Chapman, 9 Gray (Mass.) 516. (Mass.) 156. '"Laverty v. Moore, 33 N. Y. 658. "Power v. Lester, 23 N. Y. 527. See also Masters v. Clark, 89 Ark. ■"Richardson v. Cambridge, 2 Al- 191, 116 S. W. 186; Morley v. Quim- len (Mass.) 118, 79 Am. Dec. 767. by, 132 Mich. 140, 92 N. W. 943. I 138a: PEOPEETT SUBJECT OF MOETGAGE 204 does not transfer the notes in the absence of an express mention of aiem.^2 § 138a. Homestead subject of mortgage. — Constitutional and statutory provisions establishing homestead exemptions do not neces- sarily deprive the owner of land of his right to execute a valid mort- gage thereof .^^ But in some states the mortgage of a homestead is pro- hibited altogether.** In other states, homesteads may be mortgaged for specific purposes; such as, for instance, to secure payment of money loaned for improve- ments on the land.*' In a majority of the states permitting mort- gages of homesteads such mortgages are effectual only "when there has been a special release and waiver of the homestead right;*® while in all the states, the free and voluntary assent of the mortgagor's wife, if he be a married man, is a condition precedent to the vesting of the lien.*^ But a husband may execute a valid mortgage upon a com- munity homestead in his own name and as his wife's attorney in fact, she having given him a general power of attorney to convey or other- wise dispose of their community property.*^ It has been held that an unmarried woman may mortgage her homestead, although she is the head of a family of minor children.*" § 138b. When owner estopped to deny mortgage made by a third person. — By way of estoppel in pais, an owner of land may be bound by a mortgage of it made by a third person. Thus, a person having title to real estate, who represents another as the owner, and thereby "Bell v. Blair, 65 Miss. 191, 30 Ct. 602, 104 S. W. 489; Dignowity v. So. 373. Lindheim (Tex. Civ. App.), 109 S. ■^New England Mtg. Sec. Co. v. W. 966. Payne, 107 Ala. 578, 18 So. 164; *= Hicks v. Texas Loan &c. Co., 51 Morris v. Sergent, 18 Iowa 90; Fruge Tex. Civ. App. 298, 111 S. W. 784. v. Fulton, 120 La. 750, 45 So. 595; ^"Balkum v. Wood, 58 Ala. 642; Adkinson &c. Co. v. Varnado Browning v. Harriss, 99 111. 456; (Miss.), 47 So. 113; McCreery v. Trustees v. Beale, 98 111. 248. Schaffer, 26 Nebr. 173, 41 N. W. 996; « Long v. Mostyn, 65 Ala. 543; Bonorden v. Kriz, 13 Nebr. 121, 12 Anderson v. Culbert, 55 Iowa 233, N. W. 831; Fleming v. Garbam, 110 7 N. W. 508; Chambers v. Cox, 27 N. Car. 374, 14 S. E. 922; Hughes Kans. 393; Griffin v. Proctor, 14 V. Hodges, 112 N. Car. 236, 9 S. B. Bush (Ky.) 571; Sherrid v. South- 437. wick, 43 Mich. 515, 5 N. W. 1027; " Planters' &c. Bank v. Dickinson, Justice v. Souder, 19 N. Dak. 613, 83 Ga. 711, 10 S. E. 446; Van Wickle 125 N. W. 1029. V. Laundry, 29 La. Ann. 330; Texas ^= Oregon Mtg. Co. v. Hersner, 14 Land &c. Co. v. Blalock, 76 Tex. 85, Wash. 515, 45 Pac. 40. 13 S. W. 12; Smith v. Von Hutton, ■"■ McGee v. Tinner (Tex. Civ. 75 Tex. 625, 13 S. W. 18; Hall v. App.), 129 S. W. 866. Jennings (Tex. Civ. App.), 19 Tex. 305 INTERESTS IN KEAL PEOPEETY § 139 induces a third party to accept from that other a mortgage for a valu- able consideration, is in equity bound by such mortgage, and is not permitted to set up his own title against it.^" Also where a stranger to the title, or one having only a limited interest in a tract of land, conveys the property by mortgage, and the owner receives the benefit of any part of the proceeds derived from the mortgage, knowing the facts, he is estopped to deny that the mortgage conveys a good title. And likewise, if the owner, though ignorant of the facts when he re- ceives the proceeds, afterward learns the truth, his retention of the proceeds thereafter estops him from disputing the validity and effect of the mortgage.^^ Purthermore, if the owner, knowingly and without disclosing his title, stands by and permits his property to be mortgaged by another to one who is, to the owner's knowledge, relying on the apparent ownership of the person executing the mortgage, such con- duct, irrespective of who benefits by the transaction, will estop the owner from asserting his title against the mortgagee. ^^ § 139. Mortgage of a mortgage interest. — There may be a mort- gage of a mortgage. One may mortgage an interest in real estate which he himself holds in mortgage.^^ He conveys all the interest he has ; and if he afterward acquire an absolute title, the second mortgagee by foreclosing his mortgage acquires an absolute estate. °* "Where the mortgagee conveys the estate by way of a mortgage, his mortgagee takes it subject to the original mortgagor's right to redeem; but in such a case notice to such mortgagor of the second mortgage by his mortgagee would require such original mortgagor to make payment to the sub-mortgagee, so that he might protect his interests against the "Parlin v. Stone, 48 Fed. 808; ford v. Bertholf, 1 N. J. Eq. 458, 471; Rice V. Bunee, 49 Mo. 231; Sweaney Brewster v. Baker, 16 Barb. (N. Y.) v. Mallory, 62 Mo. 485; Hart v. 613; Gaddes v. .Pawtucket Inst, for Giles, 67 Mo. 175; Story Bq. Jur. Savings, 33 R. I. 177, 80 Atl. 415, § 385. Ann. Gas. 1913 B, 407; East Green- "'Kahn v. Peter, 104 Ala. 523, 16 wich Sav. Inst. v. Kenyon, 20 R. I. So. 524; Ansonia v. Cooper, 66 Conn. 110, 37 Atl. 632. 184, 33 Atl. 905; Brewster v. Baker, "^Cutts v. York Mfg. Co., 18 Maine 16 Barb. (N. Y.) 613; Gaddes v. 190. This point was not before the Pawtucket Inst, for Savings, 33 R. court. See also Cutts v. York Mfg. I. 177, 80 Atl. 415, Ann. Cas. 1913 B, Co., 18 Maine 201; Graydon v. 407; East Greenwich Sav. Inst. v. Church, 7 Mich. 36; Slee v. Manhat- , Kenyon, 20 R. I. 110, 37 Atl. 632; tan Co., 1 Paige (N. Y.) 48; Henry Robinson v. Bailey, 19 R. I. 464, 36 v. Davis, 7 Johns. Ch. (N. Y.) 40. Atl. 1126; Brewer v. Nash, 16 R. I. But see Hudson City Sav. Inst. v. 458, 17 Atl. 857, 27 Am. St. 749. McArthur, 8 N. Y. W. Dig. 63. '"Bryan v. Ramirez, 8 Cal. 461, 68 "Murdock v. Chapman, 9 Gray Am. Dec. 340; Thompson v. Sanborn, (Mass.) 156. See also Power v. Les- 11 N. H. 201, 35 Am. Dec. 490; Craw- ter, 23 N. Y. 527. § 140 PKOPEETT SUBJECT OF MORTGAGE 306 mortgage.^' If a married -woinan having a mortgage upon her hus- band's land unites with him in the granting part of the deed and in the covenants, she conveys her mortgage interest f^ but if, having such a mortgage, she join her husband in a subsequent mortgage merely to release her dower and homestead, she does not thereby subject her mortgage interest to the lien of the latter mortgage.^' § 140. Mortgage of rents and profits. — The rents, income, and profits arising out of real estate are just as much property as the estate out of which they arise, and as such are equally the subject of mort- gage.'^ A mortgage may be made of rents due under a lease, and, although a right of entry be given to the mortgagee, the mortgage is a mere security, like any other mortgage of real estate, and the mortgagor remains the real owner until foreclosure and sale.'* A mortgage may be made of a ditch for mining purposes, the grantee having authority to collect the rents and profits of it."" Where a mortgage of the realty includes the rents and profits as an additional pledge or security for the debt, this does not interfere with the equity of redemption. The court will give the rents and profits as well as the real estate to the mortgagee as a fund to be applied to the extinguishment of the debt."^ § 141. Mortgage by one part owner or tenant in common. — A mortgage given by one part owner of land upon purchasing the re- maining portion, which describes the whole parcel, is construed to em- brace the entire interest, and not merely the undivided interest con- veyed by the mortgagee.'^ The owner of certain land, having conveyed an undivided half of ^"Hidden v. Kretschmar, 37 Fed. works Co., 107 Fed. 23; Barrollhet 465; Coffin V. Ijorlng; 9 Allen (Mass.) v. Dattelle, 7 Cal. 450; Bagley v. II- 154; Brown v. Tyler, 8 Gray (Mass.) linois Trust &c. Bank, 199 111. 76, 64 135; Murdock v. Chapman, 9 Gray N. B. 1085; Owsley v. Neeves, 179 (Mass.) 156; Murray v. Porter, 29 111. App. 61; Townsend v. Wilson, Nebr. 288, 41 N. W. 1111; Slee v. 155 III. App. 303; Schaeppl v. Bar- Manhattan Co., 1 Paige (N. Y.) 48; tholomae, 118 111. App. 316; Nellgh Henry v. Davis, 7 J6hns. Ch. (N. v. MIchenor, 11 N. J. Eq. 539; Van Y.) 40; Johnson v. Blydenburgh, 31 Rensselaer v. Dennison, 35 N. Y. N. Y. 432; Harrison v. Burllngame, 393. 48 Hun (N. Y.) 212; Solomon v. °» Potts v. Blanchard, 19 La. Ann. Wilson, 1 Whart. (Pa.) 241. 167. ■"■ Gregory v. Gregory, 16 Ohio St. " Carpenter v. Millard, 38 Vt. 9. 560. "'Ortengren v. Rice, 104 111. App. " Kitchen v. Mudgett, 37 Mich. 81. 428. ™4 Kent's Comm. 144; Wright v. ^"^ Shirras v. Calg, 7 Cranch (U. Shumway, 1 Biss. (U. S.) 23; Farm- S.) 34, 3 L. ed. 447. ers' Loan &c. Co. v. American Water- 207 INTERESTS IN REAL PROPERTX § 142 it by a deed fully describing it, afterward conveyed the remaining un- divided half to the same grantee, and received from him at the same time a mortgage conveying "the following real estate in Stamford: viz., the same and all the real estate described in the deed of the said grantor to me dated November 18, 1847," the first-named deed. The mortgage was construed to cover the whole title and interest acquired by the mortgagor by the two deeds, and not merely the undivided half conveyed to him by the former deed."^ A mortgage by a tenant in common of a moiety of land passes only his interest, although he at the time holds a power from the owner of the other moiety, and the mortgage purports to be of the whole estate, if it does not purport to be made by virtue of his power from the other owner, as well as in his own right."* One tenant in common may mortgage his interest in the common property to secure his in- dividual indebtedness, but such transaction will not affect the rights of his cotenants."'' In a case where four of eight tenants in common conveyed their interest in the common property to the remaining four tenants, and three of the latter executed a mortgage covering the entire property to secure a portion of the purchase-price, it was held that the mortgage lien did not cover the interest of the grantee who did not join in the mortgage.** § 142. Effect of mortgage of building to include land. — The mort- gage of a building carries with it the land on which it stands which is essential to its use, if such appears to have been the intention of the parties."^ Thus a mortgage, made to* secure advances to enable the mortgagor to erect a building on leased land, of "all his right, title, and interest wMch he now has in the foundation or stone-work of said building, and which he may have in and unto said building, during its erection and completion, and after it is completed," passes the land on which the building stands.*^ The right which the grantor has in the foundation, stone-work, and building is not merely or mostly a right to the materials of which they are composed, but the right of having •^Van Rensselaer v. Dennison, 35 ""Shreve v. Harvey, 74 N. J. Eq. N. Y. 393. 336, 70 Atl. 671. °'Kidd V. Teeple, 22 Cal. 255; "Wilson v. Hunter, 14 Wis. 683. First Nat. Bank v. Illinois Steel Co., See also Humphreys v. McKissock, 174 111. 140, 51 N. E. 200 (quoting 140 U. S. 304, 35 L. ed. 473; Whitney text). V. Olney, 3 Mason (U. S.) 280; Dike- '^'Poltz V. Wert, 103 Ind. 404, 2 man v. Taylor, 24 Conn. 219; Esty N. E. 950; Peck v. Williams, 113 v. Baker, 48 Maine 495; Do vie v. Ind. 256, 15 N. E. 270; Beck' v. Kail- Lord, 64 N. Y. 433, 21 Am. Rep. 629. meyer, 42 Mo. App. 563. "" Greenwood v. Murdock, 9 Gray (Mass.) 20, 69 Am. Dec. 272. § 143 PEOPEETT SUBJECT OF MOETGAGE 208 them on the land as part of a structure, with the right to use and oc- cupy them for a long period of time. It is a grant of his right to use and occupy the land under the lease. As a general rule, a building erected upon the land of another be- comes a part of the realty, and it is only by an express agreement that one can have a separate property in such a building as a chattel, with a right to remove it. If one having a contract for the purchase of a lot of land erects a house upon it, in pursuance of an agreement that he will do so, and that on receiving a deed of the land he will mort- gage it to the owner to secure the purchase-money, he can not, before receiving a deed of the land, mortgage the house as personal property to another. This agreement, instead of being an agreement that the house may be held separate from the land, is in effect an agreement that the building and land shall be united and held together."" Buildings erected under an agreement with the owner of land_ to convey it to the builder upon his paying a certain sum within a limited time are not strictly personal property ; but they are fixtures and con- stitute a part of the realty. The builder has an equitable interest in the realty, and not a pure ownership of the buildings as chattels ; and therefore a mortgage by him of the buildings should be recorded as a mortgage of real estate, and not as a chattel mortgage.'" § 143. House moved from the land. — A mortgage was made of a lot of land upon which was a dwelling-house. Subsequently, and with- out the knowledge or consent of the mortgagee, the mortgagor removed the house from the lot upon which it stood, and placed it upon an adjoining lot. It was held that the mortgagee retained his lien upon the dwelling-house, and that the house might be sold after first apply- ing the lot covered by the mortgage toward satisfying it. The adjoin- ing lot was owned by the wife of the mortgagor, and the removal was with her knowledge.'^ A mortgagor in possession of the mortgaged premises can not, without the mortgagee's consent, authorize a third person to erect buildings on the mortgaged property and remove °° Milton V. Colby, 5 Mete. (Mass.) ins v. King, 1 Wall. (U. S.) 53, 17 78. Or the mortgage might maintain L. ed. 544; Betz v. Muench (N. J.), trespass. Smith v. Goodwin, 2 Maine 13 Atl. 622; Betz v. Verner, 46 N. J. 173. See post § 687; and Jones on Eq. 256, 19 Atl. 206. In Kansas it is Chattel Mortgages, § 123. unlawful to remove a building from ™ Eastman v. Foster, S Mete, mortgaged land without the consent (Mass.) 19; Holt Co. Bank v. Tootle, of the mortgagee. As to the indict- 25 Nebr. 408, 41 N. W. 291. ment or prosecution, see State v. " Hamlin v. Parsons, 12 Minn. 108, Decker, 52 Kans. 193, 34 Pac. 780. 90 Am. Dec. 284. See also Hutch- See post §§ 453, 688. 309 INTERESTS IN REAL PEOPEETT 8 144 them.'^ By agreement, express or implied, between the owner of real estate and the owner of buildings, the latter may annex the buildings to the realty without their becoming part of it. So, in the case stated, the house did not necessarily become a part of the lot upon which it was placed by the removal. Under such circumstances there is no reason why the mortgagee should not have the benefit of the security for which he contracted. No question arises in this case as to the eSect of substantial alterations in the building, which might sometimes affect or change the title to property altered from its original form. Such was the case where a mortgagor removed a dwelling-house from the mortgaged premises, and used the materials in the construction of a house upon another lot of land, and afterward sold the house and lot. The materials having thus become a part of the freehold, the right of property therein vested in the grantee of the land; and therefore the mortgagee could not maintain trover against the purchaser, either for the new house or for the old materials used in its construction.^^ § 144. Legal effect of removal of fixtures from mortgaged prem- ises. — Whether fixtures severed from the realty become personal prop- erty, and when taken away from the realty are freed from the lien of "Bkstrom v. Hall, 90 Maine 186, 38 Atl. 106. "Pierce v. Goddard, 22 Pick. (Mass.) 559, 33 Am. Dec. 764. "The general rule is," says Mr. Justice Wilde, "that the owner of property, whether the prop- erty be movable or immovable, has the right to that which is united to it by accession or adjunc- tion. But by the law of England as well as by the civil law, a trespasser who wilfully takes the property of another can acquire no right in it on the principle of accession, but the owner may reclaim it, what- ever alteration of form it may have undergone, unless it be changed in- to a different species and be incapa- ble of being restored to its former state; and even then the trespasser, by the civil law, could acquire no right by the accession, unless the materials had been taken away in ignorance of their being the prop- erty of another. But there are ex- ceptions to the general rule. It is laid down by Molloy as a settled principle of law, that if a man cuts down trees of another, or takes timber or plank prepared for the erecting or repairing of a dwelling- house, nay, though some of them are for shipping, and builds a ship, the property follows, not the owners, but the builders. Mol. De Jure Mar. lib. 2, ch. 1, § 7. * * * In the present case it can not be questioned that the newly erected dwelling- house was a part of the freehold, and was the property of the mort- gagor. The materials used in its construction ceased to be personal property, and the owner's property in them was divested as effectually as though they had been destroyed. It is clear, therefore, that the plain- tiff could not maintain an action, even against the mortgagor, for the conversion of the new house. And it is equally clear that he can not maintain the present action for the conversion of the materials taken from the old house. The taking down of that house and using the materials in the construction of the 14 — Jones Mtg. — Vol. I. § 14:4: PKOPEETY SUBJECT OF MORTGAGE 210 the mortgage, is a question upon which the authorities are divided.'* It has been held that when buildings are severed from the mort- gaged premises and become part of another freehold, they become freed from the mortgage lien.'^ Also where property affixed to mortgaged land is severed and sold to a bona fide purchaser, it can not be followed and reclaimed/" A house having been floated off the lot covered by the mortgage into an adjacent street by a flood was sold by the owner to a person who had notice of all the circumstances. An action was brought to fore- close the mortgage upon the land and the house, then standing in the street. The court held that the house was effectually removed from the operation of the mortgage lien ; and that, so far as the legal effect of the removal was concerned, it was immaterial whether the sever- ance was by the act of God, as in this case, or the act of man.'' But in a case before the Supreme Court of the United States,'* Mr. Justice Field declared that the mortgage covers the timber after it is cut and removed from the land as well as before; that the sale of it by the mortgagors does not divest the mortgage lien; that the purchaser of the timber takes it subject to this paramount Hen; and that the holders of the mortgage can follow it and take possession of it, and hold it until the amount due upon the mortgage is paid. But what the effect of the severance of fixtures is depends very largely upon the view taken new building was the tortious act 232; Lane v. Hitchcock, 14 Johns, of the mortgagor, for which he alone (N. Y.) 213; Kimball v. Darling, 32 is responsible." Wis. 684. "Hill v. Gwin, 51 Cal. 47; Gard- " Buckout v. Swift, 27 Cal. 433, ner v. Finley, 19 Barb. (N. Y.) 317, 87 Am. Dec. 90. Mr. Justice Shaft- hold that the lien is lost. See also er, delivering the opinion of the Clark V. Reyburn, 1 Kans. 281; Har- court, said: "A building, severed ris V. Bannon, 78 Ky. 568; Citizens' and removed from mortgaged lands, Bank v. Knapp, 22 La. Ann. 117; of which lands it formed a part Woehler v. Endter, 46 Wis. 301, 1 when the mortgage was given, is N. W. 329. But contra, see Hutch- disincumbered of the lien, substan- ins v. King, 1 Wall. (U. S.) 53, 59, tially on the same principle that a 17 L. ed. 544, per Field, J., cited building, erected upon the lands below; Dorr v. Dudderar, 88 111. after the giving of the mortgage, 107. See post § 688. is subject to the lien. In the first " Harris v. Bannon, 78 Ky. 568. case the building is withdrawn from '° Hut chins v. King, 1 Wall. (U. the operation of the mortgage, for S.) 53, 17 L. ed. 544; Cooper v. the reason that it has ceased to be Davis, 15 Conn. 556; Clark v. Rey- a thing real; in the other, mere burn, 1 Kans. 281; Citizens' Bank v. materials are brought under the Knapp, 22 La. Ann. 117; Gore v. Hen, for the reason that they have Jenness, 19 Maine 53; Byrom v. become a structure by combination, Chapin, 113 Mass. 308; Gowding v. and the structure has become a Shea, 103 Mass. 360, 4 Am. St. 563; thing real by position." Kircher v. Schalk, 39 N. J. L. 335; ™Hutchins v. King, 1 Wall. (U. Van Pelt V. McGraw, 4 N. Y. 110; S.) 53, 59, 17 L. ed. 544. See also Wilson V. Maltby, 59 N. Y. 126; Gore v. Jenness, 19 Maine 53. Gardner v. Heartt, 3 Denio (N. Y.) 211 INTERESTS IN HEAL PROPERTY § 14-6 as to the nature and effect of a mortgage; whether it be regarded as a conveyance of the legal title to the property, giving the mortgagee also the right of possession, or whether it be regarded merely as a lien, and the mortgagor is protected in his possession until foreclosure. On the one hand the mortgagee's legal ownership or his actual or construc- tive possession enable him to follow and recover the property severed; but on the other hand he has merely a right to restrain the removal of the property by injunction, or after the removal at most only a right to recover damages for wrongfully impairing his security.'" § 145. Severed and growing ■wood subjects of mortgages. — A mort- gage of wood not standing on the land of the mortgagor is a mortgage of personal property, and a record of it as a mortgage of real estate is ineffectual.^" Also a mortgage of trees to be cut and severed from the soil is a mortgage of personalty, and is to be recorded as a chattel mortgage.^^ But growing wood or timber is a portion of the realty, and is embraced in a mortgage of the land.^^ § 146. Mortgage of improvements. — A mortgage of improvements conveys no title to the land itself. It passes only a right to the im- provements placed upon the land by the mortgagor, or an equitable right to compensation for them in case the owner of the land should take possession. A subsequent acquisition of the title to the land by the mortgagor does not in such case inure to the benefit of the mort- gagee.^^ A mortgage of a building erected on leased land under an agreement that the lessee might remove it, or the lessor should pay for it at its appraised value, is a mortgage of realty falling within the designation of a chattel real at common law,** and should be recorded as a mortgage of real estate, and not as a chattel mortgage.*^ Where a building has been erected by a tenant whose lease gives him the right of removal at the expiration of the lease, this right must be exercised within a reasonable time ; and one who has taken from him '" Verner v. Betz, 46 N. J. Eq. 256, ^' See Green v. Armstrong, 1 Denio 19 Atl. 206. See post § 453. (N. Y.) 550; Wintermute v. Light, =» Douglas v. Shumway, 13 Gray 46 Barb. (N. Y.) 278; Kimball v. (Mass.) 498. Sattley, 55 Vt. 285, 45 Am. Rep. 614; ''Erskine v. Plummer, 7 Maine Crosby v. Wadsworth, 6 Earit 602; 447, 22 Am. Dec. 216; Nelson v. Nel- Carrington v. Roots, 2 M. & W. 248. son, 72 Mass. 385; Cook v. Stearns, ''Mitchell v. Black, 64 Maine 48. 11 Mass. 533; First Nat. Bank v. " Griffin v. Marine Co., 52 111. 130. Weed, 89 Mich. 357, 5 N. "W. 864; *= Eastman v. Foster, 8 Mete. Cudworth v. Scott, 41 N. H. 456; (Mass.) 19; Holt Co. Bank v. Too- Wood V. Lester, 29 Barb. (N. Y.) tie, 25 Nebr. 408, 41 N. W. 291. 145; Boykin v. Rosenfield, 69 Tex. 115, 9 S. W. 318. § 147 PEOPEETT SUBJECT OF MORTGAGE 312 a mortgage upon the building acquires no better right than the tenant had, and can not remove the building after the tenant's right of re- moval has expired.** Where the provisions of a lease show that the parties to it intended that the improvements which it was contem- plated the lessee would erect on the premises should not be removed therefrom until the rent was paid, the mortgagee of such improve- ments has no right to remove same unless and until all the rent in ar- rears has been paid.^' § 147. When realty mortgage covers improvements subsequently made. — The lien of a mortgage extends to all improvements and repairs subsequently made upon the mortgaged premises, whether made by the mortgagor or by a purchaser from him without actual notice of the existence of the mortgage.** Thus a mortgage of a ditch or flume in process of construction includes, without any special men- tion, all improvements or fixtures then on the line located for the flume, as well as those which may afterward be put thereon.*' The improvements which the mortgagor, remaining in possession and enjoyment of the mortgaged premises, makes upon them, in con- templation of law he makes for himself, and to enhance the general value of the freehold. Such improvements go, of course, to the benefit and security of the mortgagee, by increasing the value of the pledge."" § 148. When abstract of title part of security. — An abstract of title delivered by the owner of land to the mortgagee's attorney, for the purpose of decreasing the expenses of searching the title, may be regarded as part of the security for the loan; and accordingly it has been held that the mortgagor is not entitled to the possession of it un- ' til the mortgage is paid. In case of a sale of the mortgage, or of a «= Smith v. Park, 31 Minn. 70, 16 «» Union Water Co. v. Murphy's N. W. 490. Plat Pluming Co., 22 Cal. 620. »' In re Potee Brick Co., 179 Ped. ='' Hamilton v. Huntley, 78 Ind. 525. See also Simpson Brick Press 521, 41 Am. Rep. 593; Bass Poundry Co. V. Wormjey, 61 111. App. 460; v. Gallentine, 99 Ind. 525; Ekstrom O'Brien v. Mueller, 96 Md. 137, 53 v. Hall, 90 Maine 186, 38 Atl. 106; Atl. 663. Meagher v. Hayes, 152 Mass. 228, 25 " Martin v. Beatty, 54 111. 100; N. E. 105, 23 Am. St. 819; Thompson Mutual Ben. L. Ins. Co. v. Hunting- v. Vinton, 121 Mass. 139; Roddy v. ton, 57 Kans. 744, 48 Pac. 19; Rice Brick, 42 N. J. Eq. 218, 6 Atl. 806; V. Dewey, 54 Barb. (N. Y.) 455; Great Western Mfg. Co. v. Bathgate, Gibson v. Am. Loan &c. Co., 58 Hun 15 Okla. 87, 79 Pac. 903; McGrillis 443, 12 N. Y. S. 444; Wharton v. v. Cole, 25 R. I. 156, 55 Atl. 196, Moore, .84 N. Car. 479, 37 Am. Rep. 105 Am. St. 875. 627; Grosvenor v. Bethell, 93 Tenn. 577, 28 S. W. 1096. 313 ACCESSIONS TO MORTGAGED PROPEETT § 149 foreclosure, it would be necessary that the mortgagee should have it, or that another should be rnade."^ II. Accessions to the Mortgaged Property Section 149. Legal and equitable view con- cerning after-acquired prop- erty. 150. Products of the soil. 151. Crops not sown. 152. Railroad mortgage covering aft- er-acquired property binding in equity. 153. Rule as to after-acquired prop- erty generally. 154. Applied to railroad companies. 155. After-acquired property passing as an incident to the fran- chise. Section 156. What property included by im- plication in a railroad mort- gage. 157. Rule as to after-acquired land. 158. Prior liens on after-acquired property. 159. Mortgage of choses in action. 160. Mortgage of future net earn- ings of railroad company. 161. Whether mortgage conveys pri- mary corporate franchise. 161a. Mortgage of primary franchise under legislative authority. § 149. Legal and equitable view concerning after-acquired prop- erty. — At common law, nothing can be mortgaged that does not be- long to the mortgagor at the time the mortgage is made.^ "It is a common learning in the law, that a man can not grant or charge that which he hath not."^ He must have a present property, either actual or potential, in the thing sold or mortgaged.^ Therefore at law, al- though a mortgage in terms is made to cover after-acquired property, yet, after such property is acquired, an execution levied upon it as the property of the mortgagor or a sale by him will prevail over the mort- gage.* But a different rule prevails in equity.^ Equity will give effect to ■»'Holm T. Wust, 11 Abb. Pr. (N. S.) (N. Y.) 113. See also Equitable Trust Co. V. Burley, 110 111. App. 538. ^ Jones on Chattel Mortgages, § 138; Moody v. Wright, 13 Mete. (Mass.) 17, 46 Am. Dec. 706; Jones V. Richardson, 10 Mass. 481; Ross v. Wilson, 7 Bush (Ky.) 29; Am- onett V. Amis, 16 La. Ann. 225; Pierce v. Emory, 32 N. H. 484. See also Maxwell v. Wilmington Dental Mfg. Co., 77 Fed. 938; Sillers v. Lester, 48 Miss. 513; Everman v. Robb, 52 Miss. 653, 24 Am. Rep. 682; Hickson Lumber Co. v. Gay Lum- ber Co., 150 N. Car. 281, 63 S. E. 1045; Coe v. Columbus, Piqua &c. R. Co., 10 Ohio St. 372, 391, 75 Am. Dec. 518; Lunn v. Thornton, 1 Com. B. 379; Lunn v. Thornton, 1 C. B. 383, 50 E. C. L. 383; Tapfield v. Hillman, 6 M. & G. 245, 46 E. C. L. 245. ^Perkins tit. Grant § 65. 'Looker v. Peckwell, 38 N. J. L. 253; Smithurst v. Edmunds, 14 N. J. Eq. 408; Benjamin on Sales, §§ 78-84. See also Ross v. Wilson. 7 Bush (Ky.) 29. "Looker v. Peckwell, 38 N. J. L. 253 and cases cited. "Little Rock &c. R. Co. v. Page, 35 Ark. 304; Frank v. Hicks, 4 Wyo. 502, 35 Pac. 475; Langton v. Horton, 1 Hare 549. In a Kentucky case, however, it is said that if such a mortgage is enforcible in equity at all, it can only be enforced as a right under 150 PEOPEETT SUBJECT OF MOETQAGE 214 a mortgage embracing future-acquired realty," and will enforce it against the mortgagor and all other persons except purchasers for value and without notice.^ Judge Story, after an elaborate examination of the question, in stat- ing the result of it, says : "It seems to me the clear result of all the authorities, that wherever the parties by their contract intended to create a positive lien or charge, either upon real or personal property, whether then owned by the assignor or not, or, if personal property, whether it is then in esse or not, it attaches in equity as a lien or charge upon the particular property as soon as the assignor or con- tractor acquires a title thereto against the latter, and all persons as- serting a claim thereto under him, either voluntarily or with notice, or in bankruptcy."^ § 150. Products of the soil. — ^TJpon this principle a valid mort- gage may be made by an owner or lessee in possession of land of a crop to be raised by him the coming season, or of crops to be grown within a certain period.' But such a mortgage does not attach until the crops come into existence and are acquired by the mortgagor.^" It is a general rule that a thing which has a potential existence may be mortgaged. "Land is the mother and root of all fruits," says Lord the contract, and not as a trust attached to the property. Ross T. Wilson, 7 Bush (Ky.) 29. "Hickson Lumber Co. v. Gay Lumber Co., 150 N. Car. 281, 63 S. E. 1045. 'Toledo &c. R. Co. v. Hamilton, 134 U. S. 296, 33 L. ed. 905; Max- well V. Wilmington Dental Mfg. Co., 77 Fed. 938; Burns v. Camp- bell, 71 Ala. 271; Christy v. Dana, 34 Cal. 548; Rice v. Kelso, 57 Iowa 115, 7 N. W. 3, 10 N. W. 3-35; Phil- lips V. Winslow, 18 B. Mon. (Ky.) 431; Hollingsworth v. Chaffe, 33 La. Ann. 547; Morrill v. Noyes, 56 Maine 458, 96 Am. Dec. 486; Howe V. Freeman, 14 Gray (Mass.) 566; Sillers v. Lester, 48 Miss. 513; Pierce v. Emery, 32 N. H. 484; Stevens v. Watson, 4 Abb. App. Dec. (N. Y.) 302; Coopers v. Wolf, 15 Ohio St. 523; Bailey v. Alle- gheny Nat. Bank, 104 Pa. St. 425; Sweetzer v. Jones, 35 Vt. 317, 82 Am. Dec. 639. s Mitchell v. Winslow, 2 Story (U. S.) 630; Jarvis v. State Bank, 22 Colo. 309, 45 Pac. 505. See also Smithurst v. Edmunds, 14 N. J. Eq. 403. = Booker v. Jones, 55 Ala. 266; Jones v. Webster, 48 Ala. 109; Leh- man V. Marshall, 47 Ala. 362; Hutchinson v. Ford, 9 Bush (Ky.) 318, 15 Am. Rep. 711; Arques v. Wasson, 51 Cal. 620, 21 Am. Rep.' 718; Jones on Chattel Mortgages, § 142; Barnard v. Eaton, 2 Cush. (Mass.) 294, per Shaw, C. J. See also Wilkerson v. Thorp, 128 Cal. 221, 60 Pac. 697; Van Hoozer v. Cory, 34 Barb. (N. Y.) 9; Stover v. Eycleshimer, 3 Keyes (N. Y.) ti20. See contra at law, Milliman V. Neher, 20 Barb. (N. Y.) 37; Schweinber v. Great Western Elev. Co., 9 N. Dak. 113, 81 N. W. 35; Comstock V. Scales, 7 Wis. 159. But see Tomlinson v. Greenfield, 31 Ark. 557; Redd v. Burrus, 58 Ga. 574; Gittings v. Nelson, 86 111. 591. ^"McMaster v. Emerson, 109 Iowa 284, 80 N. W. 389. 315 ACCESSIONS TO MORTGAGED PEOPEETX § 151 Hobart.^^ "Therefore he that hath it may grant all fruits that may arise from it after, and the property shall pass as soon as the fruits are extant." A landlord has no such interest in, or title to, crops grown on the rented lands as can be made the subject of a valid mortgage. ^^ A mortgage of grain "now standing and growing" in the field does not cover, as against an attaching creditor, grain which had at the time of the execution of the mortgage been cut.^^ Under a mortgage of a greenhouse and nursery, together with the shrubs and plants belonging to the same, new plants and shrubs, the growth of cuttings from those growing at the time of the mortgage, pass to the mortgagee by accession.^* In some jurisdictions, however, it has been held that a mortgage of annual crops, which have not been planted at the time the mortgage was executed, is invalid, especially as against attaching creditors, since such crops can not be regarded as having even a potential existence, they being distinguished in this respect from the spontaneous product of the earth, or the increase of that which is already in existence.^^ ' § 151. Crops not sown. — A valid mortgage of a crop before it is raised may be made by an owner or lessee of land.^^ And although the "Grantham v. Hawley, Hobart contended that trees raised from 132. He further remarks that "a the seed of apples picked from a person may grant all the tithe wool mortgaged tree passed under the that he shall have in such a year; mortgage, as to say the cuttings yet perhaps he shall have none; but did. a man can not grant all the wool "Gittings v. Nelson, 86 111. 591; that shall grow upon his sheep Long v. Hines, 40 Kans. 220, 19 Pac. that he shall buy hereafter; for 796, 10 Am. St. 189; Hutchinson v. there he hath it neither actually Ford, 9 Bush (Ky.) 318, 15 Am. nor potentially." See also Jones v. Rep. 711; Rochester Distilling Co. Webster, 48 Ala. 109; Arques v. v. Rasey, 142 N. Y. 570, 37 N. E. Wasson, 51 Gal. 620, 21 Am. Rep. 632, 40 Am. St. 635. But see Butt 718; Bverman v. Robb, 52 Miss. v. Bllett, 19 Wall. (U. S.) 544, 22 653, 24 Am. Rep. 682; Gotten v. L. ed. 183; Arques v. Wasson, 51 WilloughbT, 83 N. Gar. 75, 35 Am. Gal. 620, 21 Am. Rep. 718; Wheeler St. 564; Moore v. Byrum, 10 Rich. v. Becker, 68 Iowa 723, 28 N. W. 40. (S. Gar.) 452, 30 Am. Rep. 58. "Jones on Ghattel Mortgages, § "Broughton v. Powell, 52 Ala. 143; EUett v. Butt, 1 Woods (U. 123. S.) 214; Robinson v. Mauldin, 11 "Ford V. Sutherlin, 2 Hon. (Ky.) Ala. 977; Grand Forks Nat. Bank v. 440. Minneapolis &c. Elev. Co., 6 Dak. " Bryant v. Pennell, 61 Maine 357, 43 N. E. 806; Everman v. Robb, 108, 14 Am. Rep. 550. The plain- 52 Miss. 653, 24 Am. Rep. 682. See tiff attached so much of the stock also Woods v. Rose, 135 Ala. 297, of plants and shrubs as were not 33 So. 41; Cobb v. Daniel, 105 Ala. covered by the mortgage. His 335, 16 So. 882; Robinson v. Kruse, counsel claimed that the maxim, 29 Ark. 575; Wilkerson v. Thorp, "Partus sequitur ventrem," did not 128 Gal. 221, 60 Pac. 679; Hall v. apply; that it might as well be Glass, 123 Gal. 500, 56 Pac. 336, 69' 151 PROPERTY SUBJECT OF MORTGAGE 216 seed of it has not been sown or planted.^' In such case the lien at- taches, in equity, as soon as the crop is gathered, and may be enforced against purchasers with record notice/' A person having the right by parol agreement to sow certain land with wheat upon shares with the owner of the land may, after sowing the wheat, make a valid mort- gage of his interest in the crop, which will cover the interest of the mortgagor in the land.^" But a tenant's mortgage of ungrown crops passes no title to his mortgagee, where, under his contract with his landlord it is stipulated that the ownership and possession of the crops are to remain in the latter, who is entitled to hold them as security for and have a deduction of all indebtedness due him for advances before division, and the tenant fails subsequently to request any division of the crop.^" A mortgage of. crops by one who is cultivating a farm upon shares covers only his share.^'^ The owner of the land can not mortgage a Am. St. 77; Stephens v. Tucker, 55 Ga, 543, 58 Ga. 391; Hall v. State, 2 Ga. App. 739, 59 S. E. 26; Head- rick V. Brattain, 63 Ind. 438; Pen- nington V. Jones, 57 Iowa 37, 10 N. W. 274; Ambuehl v. Matthews, 41 Minn. 537, 43 N. W. 477; First Nat. Bank v. Rogers, 24 Okla. 357, 103 Pac. 582; Moore v. Byrum, 10 S. Car. 452, 30 Am. Rep. 58; Cook V. Steel, 42 Tex. 53; Smith v. At- kins, 18 Vt. 461; Kimball v. Satt- ley, 55 Vt. 285, 45 Am. Rep. 614. But see Cole v. Kerr, 19 Nebr. 553, 26 N. W. 598; Rochester Dist. Co. v. Rasey, 142 N. Y. 570, 37 N. E. 632, 40 Am. St. 635, 20 N. Y. S. 583. See ante § 150. "Butt v. EUett, 19 Wall. (U. S.) 544, 22 L. ed. 183; Woods v. Rose, 135 Ala. 297, 33 So. 41; Shows v. Brantley, 127 Ala. 352, 28 So. 716; Apperson v. Moore, 30 Ark. 56, 21 Am. Rep. 170; Comstock v. Scales, 7 Wis. 159. Ellett v. Butt, 1 Woods (U. S.) 214. In Mississippi mortgages and deeds of trust may be made to cover growing crops, or crops to be grown within fifteen months from the making of such mortgage or deed, which are valid on the interest of the mortgagor or grantor in such crop, but are subject to any lien in favor of the landlord for the rent of the property. Such mort- gages must be recorded in a sepa- rate book, entitled a chattel deed book. Laws 1876, pp. 100, 113. In Arkansas mortgages may be made of crops already planted, or to be planted, and are binding upon such crops and their products. And a laborer may mortgage his inter- est in a crop for supplies furnished to him. Acts 1875, p. 230; Dig. of Stat. 1884, § 4747. The statute of Mississippi, pro- viding that mortgages may be made on cotton crops to be produced within fifteen months, is merely declaratory of the law, with a lim- itation as to the time within which the crop must be produced. Act February 18, 1867; Sillers v. Les- ter, 48 Miss. 513. ^^Butt V. Ellett, 19 Wall. (U. S.) 544, 22 L. ed. 183; Hudmon v. Du- Bose, 85 Ala. 449, 5 So. 162; Var- num V. State, 78 Ala. 28; Jarratt V. McDaniel, 32 Ark. 598; White v. Thomas, 52 Miss. 49. See also McMaster v. Emerson, 109 Iowa 284, 80 N. W. 389; Kelley v. Good- win, 95 Maine 538, 50 Atl. 711. '"Shuart v. Taylor, 7 How. Pr. (N. Y.) 251. ™ Savings Bank v. Canfield, 12 S. Dak. 330, 81 N. W. 630. "McGee v. Fitzer, 37 Tex. 27. 217 ACCESSIONS TO MORTGAGED PROPERTY § 152 future crop to be raised thereon as against a tenant raising the crop on the shares under a lease prior to the mortgage.^ ^ Possession by prior mortgagee of a crop is notice of his rights to sub- sequent purchasers.^' The mortgage iii equity attaches as soon as the crop comes into existence.^* The crop is a chattel merely after it is gathered, and a mortgage of it, to take effect when it is gathered, should be recorded as a chattel mortgage ; but a growing crop attached to the soil may be an interest in the real estate; so that a mortgage of a present interest should, under some circumstances, be recorded as a mortgage of real estate.^^ When properly recorded, one who pur- chases and removes the crop, without the knowledge of the mortgagee, takes it subject to the rights of the mortgagee, wlio may recover the property if it can be identified, and if not, he may recover the value of it from such purchaser.^" The mortgagee is entitled to the posses- sion of the crop when it is matured and gathered, and may then main- tain an action to recover it or its value. ^^ Such a mortgage passes a mere equitable interest while the crop is growing, but after severance the equitable interest ripens into a legal title. ^* If the crop be severed and sold without the consent of the mortgagee, he may recover the value of it from a purchaser, although he has purchased it in the usual course of trade, and without actual notice. The record is constructive notice. The removal of the crop is not such a change in the property as will divest the title of the mortgagee.^' The doctrine of the federal courts is that, although an instrument which purports to mortgage a crop, the seed of which has not yet been sown, can not at the time operate as a mortgage of the crop, yet when the seed of the crop intended to be mortgaged has been sown and the crop grows, a lien attaches.'" § 152. Railroad mortgage covering after-acquired property bind- ing in equity. — A mortgage by a railroad company specifically cov- ering after-acquired property is binding in equity upon real estate and ''^Knaebel v. Wilson, 92 Iowa See also Meyer v. Davenport Elev. 536, 61 N. W. 178. Co., 12 S. Dak. 172, 80 N. W. 189. "^Grimes v. Rose, 24 Mich. 416. "Lehman v. Marshall, 47 Ala. ""Butt V. Ellett, 19 Wall. (U. S.) 362; Robinson v. Mauldin, 11 Ala. 544, 22 L. ed. 183; Lehman v. Mar- 977; Adams v. Tanner, 5^ Ala. 740. shall, 47 Ala. 362; Apperson v. '^ Mauldin v. Armistead, 14 Ala. Moore, 30 Ark. 56, 21 Am. Rep. 170. 702, 18 Ala. 500. See also McMaster v. Emerson, 109 ^Duke v. Strickland, 43 Ind. 494. Iowa 284, 80 N. W. 389. '"Butt v. Ellett, 19 Wall. (U. S.) '^ Butler V. Hill, 57 Tenn. 375. 544, 22 L. ed. 183; Senter v. Mitch- ==Duke V. Strickland, 43 Ind. 494. ell, 5 McCrary (U. S.) 147, 16 Fed. 206. § 152 PKOPEETY SUBJECT OF MORTGAGE 218 personal property afterward purchased for the use of the road, as against the mortgagors and all persons claiming under them, except purchasers for value and without notice; and especially will it bind such property as against claimants under a junior mortgage, which by its terms is subject to the prior mortgage.^^ That a contract by way of mortgage intended by the parties to create a positive lien or charge either upon real or personal property, whether owned by the mortgagor or not, or, if personal property, whether it is then in being or not, attaches in equity as a lien or charge upon the particular property as soon as the mortgagor acquires title thereto, is a proposition that is almost universally supported by the authorities.^^ The substance of the authorities is to the effect that, when the mort- gage is intended to cover after-acquired property, either express terms should be used to that end, or else it must clearly appear from the language of the instrument that such was the manifest intention of the parties.'^ If the mortgage in distinct terms covers after-acquired property, the record of the mortgage is suiEcient notice of the lien. "Whenever a mortgage is made by a railroad company to secure bonds, and the mort- gage declares that it shall include all present and after-acquired prop- erty, as soon as the property is acquired the mortgage operates upon it. In other words, it seizes the property or operates upon it by way of 'estoppel as soon as it comes into existence and is in possession of the mortgagor; and the mortgagees, under such circumstances, have a prior equity to the claims of creditors obtaining Judgments and execu- tions after the property is thus acquired and placed in possession of the mortgagor."^* Such is the settled law of the federal courts,^ ^ and "Calhoun v. Memphis &c. R. Co., nard v. Norwich &c. R. Co., 4 Cliff. 2 Flip. (U. S.) 442; Stevens v. Wat- (U. S.) 351, 14 N. Bank. Reg. 469; son, 4 Abb. App. Dec. (N. Y.) 302; Parker v. New Orleans &c. R. Co., Thompson v. White Water &c. R. 33 Fed. 693; Williamson v. New Co., 132 U. S. 68, 33 L. ed. 256, 10 Jersey &c. R. Co., 29 N. J. Eq. 311, 'Sup. Ct. 29; Central Trust Co. 15 Am. R. Cas. 572. V. Kneeland, 138 U. S. 414, 34 L. ''Toledo D. &p. R. Co. v. Hamil- ed. 1014, 11 Sup. Ct. 357; Parker v. ton, 134 U. S. 296, 33 L. ed. 905, 10 New Orleans &c. R. Co., 33 Fed. Sup. Ct. 546; Parker v. New Or- 693; Frost v. Galesburg E. &c. R. leans B. R. &c. R. Co., 33 Fed. 693. Co., 167 111. 161, 47 N. E. 357. See '^Wood v. Holly Mfg. Co., 100 Ala. Jones on Corporate Bonds and 326, 13 So. 948; per Drummond, J., Mortgages, §§ 91-120; Beach v. in Scott v. Clinton &c. R. Co., 8 Chi- Wakefield, 107 Iowa 567, 76 N. W. cago Legal News 210. 688, 78 N. W. 197; Omaha &c. R. Co. "Pennock v. Coe, 23 How. (U. v. Wabash, St. L. &c. R. Co., 108 S.) 117, 16 L. ed. 472; Galveston R. Mo. 298, 18 S. W. 1101. Co. v. Cowdrey, 11 Wall. (U. S.) '2 Central Trust Co. v. Kneeland, 459, 481, 20 L. ed. 199; Dunham v. 138 U. S. 414, 34 L. ed. 1014; Bar- Cincinnati, Peru &c. R. Co., 1 Wall. 219 ACCESSIONS TO MORTGAGED PEOPEETT 153 generally of the state courts as well.^" The rule is applied equally to real estate and personal property; to mortgages by individuals as well as those made by corporations.^^ In Louisiana, however, a mortgage does not extend to property acquired after the date of it.^^ § 153. Rule as to after-acquired property generally. — A convey- ance of what does not exist does not operate as a present transfer in equity any more than it does in law. The difference is merely that at law the conveyance, having nothing to operate upon, is void ; while in equity what is in form a conveyance operates, by way of present con- tract, to take effect and attach to the subject of it as soon as it comes into being; the agreement to convey then ripens into an actual trans- fer.^" (U. S.) 254, 17 L. ed. 584; Mitchell V. Winslow, 2 Story (U. S.) 630. See also McGourbey v. Toledo &<:. R. Co., 146 U. S. 536, 36 L. ed. 1079, 13 Sup. Ct. 170; Campbell v. Texas &c. R. Co., 2 Woods (U. S.) 271; Central Trust Co. v. Chattanooga &c. R. Co., 94 Fed. 275. =° Mitchell V. Amador C. &c. Co., 75 Cal. 464, 17 Pac. 246; Phillips v. Winslow, 18 B. Mon. (Ky.) 431, 68 Am. Dec. 729; Morrill v. Noyes, 56 Maine 458; Howe v. Freeman, 14 Gray (Mass.) 566; Sillers v. Lester, 48 Miss. 513; Hoyle v. Plattsburgh &c. R. Co., 51 Barb. (N. Y.) 45; Seymour v. Canandaigua &c. R. Co., 25 Barb. (N. Y.) 284; Benja- min V. Elmira, Jeff. &c. R. Co., 49 Barb. (N. Y.) 441, 54 N. Y. 675; Coopers v. Wolf, 15 Ohio St. 523; Philadelphia, Wil. &c. R. Co. v. Woelpper, 64 Pa. St. 366, 3 Am. Rep. 596; Pierce v. Milwaukee &c. R. Co., 24 -Wis. 551, 1 Am. Rep. 203. See also People's Trust Co. v. Schenck, 195 N. Y. 398, 88 N. E. 647, 133 Am. St. 807. "Holroyd v. Marshall, 10 H. L. Cas. 191; overruling dictum of Baron Parke in Mogg v. Baker, 3 M. & W. 195. The latter case was followed by the Supreme Court of Massachusetts in Moody v. Wright, 13 Mete. (Mass.) 17, holding that property not in existence at the time of making the mortgage is in- capable of being conveyed by it. In the District Court of Massachu- setts the doctrine of the state courts was dissented from in Brett v. Car- ter, 2 Lowell (U. S.) 458, where it was held that a mortgage of after-ac- quired chattels is valid against the assignee in bankruptcy of the mort- gagor. See same case in 3 Cent. L. J. 286, and an article upon it in the same volume, p. 359. See also in same volume, p. 608, decision of Judge Clifford, In the case of Bar- nard V. Norwich &c. R. Co., before the Circuit Court of the United States, reported also in 14 N. Bank. R. 469. See Jones on Chattel Mortgages, §§ 138-175, for a full discussion of the subject of mortgages of future personal property both at law and in equity. =» State V. Mexican &c. R. Co., 3 Rob. (La.) 231, 513; State v. New Orleans &c. R. Co., 4 Rob. (La.) 231. =» Mitchell y. Winslow, 2 Story (U. S.) 630, where the cases are re- viewed; Rust V. Electric Lighting Co., 124 Ala. 202, 27 So. 263; Wood V. Holly Mfg. Co., 100 Ala. 326, 342, 13 So. 948; Christy v. Dana, 34 Cal. 548; Hubbard v. Mulligan, 13 Colo. App. 116, 57 Pac. 738; Moore v. Jaeger, 2 MacAr. (D. C.) 465; Amonett v. Amis, 16 La. Ann. 225; Emerson v. European &c. R. Co, 67 Maine 387, 24 Am. Rep. 39; Brady V. Johnson, 75 Md. 445, 26 Atl. 49, 20 L. R. A. 737. In Georgia the Civ. Code, § 2723, limits the subject-matter upon which a mortgage can operate, to "property in possession or to which the mortgagor has a right of pos- § 153 PKOPERTT SUBJECT OP MORTGAGE 230 Courts of equity hold such conveyances operative as executory agree- ments binding on the property when acquired; the mortgagor liolding the property and equity enforcing the trust, and in some of the de- cisions the adjudications rest upon the ground of equitable lien.*" Equity considers as done that -which the mortgagor has distinctly agreed to do, and is in consequence bound to do. Upon every acquisi- tion of property within the description contained in the mortgage, a decree might be obtained that the mortgagor should execute a mort- gage of such property ; but instead of actually following out this trou- blesome process, equity treats the mortgage as already attaching to the newly acquired property as it comes into the mortgagor's possession, or, in other words, considers that, of every article of property as ac- quired, there was an actual mortgage then executed in fulfilment of the mortgagor's contract.*^ A mortgage purporting to convey all after-acquired lands in a cer- tain county, but covenanting for further conveyance and assurance of property afterward acquired for the business of the mortgagor, covers the latter only.*^ The chief question, therefore, is, whether the par- ties to the mortgage intended that the after-acquired property, which is in any case the subject of litigation, should be subject to the lien of the mortgage ; and it will be noticed that in the recent cases the con- tention is generally upon this question.** The mortgage lien upon after-acquired property only attaches from the time of the acquisition thereof by the mortgagor, and is subject to all pre-existing liens.** The mortgage only attaches to such interest as the mortgagor acquires.*^ session at the time." Durant v. "Deshautel v. Parkins, 1 Mart. D'Auxy, 107 Ga. 456, 33 S. B. 478. (N. S.) (La.) 547; Sample v. Scar- See also Holt V. Henley, 193 Fed. borough, 44 La. Ann. 257, 10 So. 1020; In re Williamsburg Knitting 860; Stevens v. Watson, 45 How. Mill, 190 Fed. 871; People's Trust Pr. (N. Y.) 104. Co. v. Schenck, 195 N. Y. 398, 88 N. " Grape Creek Coal Co. v. Farm- E. 647, 133 Am. St. 807; People's ers' Loan &c. Co., 63 Fed. 891, 12 Trust Co. V. Schenck, 121 App. Div. C. C. A. 350. 604, 106 N. Y. S. 782; Hickson Lum- ^= Omaha &c. R. Co. T. Wabash, ber Co. v. Gay Lumber Co., 150 N. St. L. &c. R. Co., 108 Mo. 298, 18 S. Car. 281, 63 S. E. 1045; McClung v. W. 1101. See also Hickson Lumber Quincy Carriage &c. Co. (Tenn.), Co. v. Gay Lumber Co., 150 N. Car. 196 S. W. 960. 281, 63 S. E. 1045. ""National Sav. £e. Bank v. "Brady v. Johnson, 75 Md. 445, Small, 7 Fed. 837; Griffith v. Doug- 26 Atl. 49, 20 L. R. A. 737; Mon- lass, 73 Maine 532, 40 Am. Rep. mouth County Electric Co. v. Mc- 395; Cayce v. Stovall, 50 Miss. 396; Kenna, 68 N. J. Eq. 160, 60 Atl. 32. Sillers v. Lester, 48 Miss. 513; « Williamson v. New Jersey &c.- Keating v. Hannenkamp, 100 Mo. R. Co., 28 N. J. Eg. 277 29 N J 161, 13 S. W. 89. Eq. 311. 321 ACCESSIONS TO MOETGAGED PEOPEKTT 154: § 154. Applied to railroad companies. — Unquestionably a railroad company having power to borrow money and secure it by mortgage on its property may, by express terms, mortgage property to be acquired subsequently.*" This doctrine has been held to apply to a de facto cor- poration.*^ A mortgage which by its terms covers property which a railroad company may afterward acquire, adapted to its use, though given be- fore any part of the road is built, covers after-acquired property con- templated by the mortgage.** It attaches to the property as it comes into existence.*'' As against the railroad company and its privies, the after-acquired property feeds the estoppel created by the deed. Even against a contractor who has at his own expense finished a railroad under contract that he shall keep possession until he has been paid, a mortgage in such terms will pass the road afterward built and ac- quired.^" A mortgage of its line of road, its tolls and revenues, covers "Dunham v. Cincinnati &c. R. Co., 1 Wall. (U. S.) 254, 17 L. ed. 584; Parker v. New Orleans &c. R. Co., 33 Fed. 693; Kelly v. Alabama &c. R. Co., 58 Ala. 489; Buck v. Sey- mour, 46 Conn. 156; Bell v. Chicago &c. R. Co., 34 La. Ann. 785; Hamlin V. European &c. R. Co., 72 Maine 83; Omaha &c. R. Co. v. "Wabash &c. R. Qc, 108 Mo. 298, 18 S. W. 1101; Baker v. Guarantee &c. Co. (N. J. Eq.), 31 Atl. 174; Coopers v. Wolf, 15 Ohio St.^23; Ludlow v. Kurd, 1 Dis. (Ohio) 552; Philadelphia &c. R. Co. V. Woelpper, 64 Pa. St. 366, 3 Am. Rep. 596; Covey v. Pittsburg &c. R. Co., 3 Phila. (Pa.) 173; In re General South American Co., L. R. 2 Ch. Div. 337; In re Panama &c. Mail Co., L. R. 5 Ch. 318. See also Guaranty Trust Co. v. Atlantic Coast Electric R. Co., 138 Fed. 517, 71 C. C. A. 41; People's Trust Co. v. Schenck, 121 App. Div. 604, 106 N. Y. S. 782. ^'McTighe v. Macon Const. Co., 94 Ga. 306, 21 S. E. 711, 32 L. R. A. 208, 47 Am. St. 153; Detroit &c. R. Co. v. Campbell, 140 Mich. 384, 103 N. W. 856. "* Galveston R. Co. v. Cowdrey, 11 Wall. (U. S.) 459, 20 L. ed. 199; Calhoun v. Memphis &c. R. Co., 2 Flip. (U. S.) 442; Parker v. New Orleans R. Co., 33 Fed. 693; Cali- fornia Title Ins. &c. Co. v. Pauly, 111 Cal. 122, 43 Pac. 586; Jones on Corporate Bonds and Mortgages, § 93; Hawkins v. Mercantile Trust &c. Co., 96 Ga. 580, 23 S. E. 498; Frost V. Galesburgh E. &c. R. Co., 167 111. 161, 47 N. E. 357; Bell v. Chicago &c. R. Co., 34 La. Ann. 785; Willink V. Morris Canal &c. Co., 4 N. J. Eq. 377, 402. In Iowa the Code 1894, § 1931, provides that "where a deed pur- ports to convey a greater interest than the grantor was at the time possessed of, any after-acquired in- terest of such grantor, to the extent of that which the deed purports to convey, inures to the benefit of the grantee." But under this provision a mortgage, which by mistake, in- cludes land to which the mortgagor had no title at the time of its exe- cution does not pass any title to such land when he subsequently ac- quires the title thereto, it appear- ing that he did not intend to mort- gage any property which he did not own at the time he made the mort- gage. Cook V. Prindle, 97 Iowa 464, 66 N. W. 781, 59 Am. St. 424. In Louisiana a future property can never be the subject of con- ventional mortgage. Rev. Civ. Code, art. 3308; New Orleans &c. R. Co. V. Union Trust Co., 41 Fed. 717. "Boston Safe Dep. &c. Co. v. Bankers' &c. Tel. Co., 36 Fed. 288. ™ Dunham v. Cincinnati, Peru &c. R. Co., 1 Wall. (U. S.) 254, 17 L. § 155 PEOPBKTT SUBJECT OF MORTGAGE 223 all the rolling stock and fixtures, whether movable or immovable, es- sential to the production of tolls and revenues/^ A mortgage by a rail- road company of "all the present and future to be acquired property of the company, including the right of way and land occupied, and all rails and other materials used therein or procured therefor," includes the rolling stock of the road.°^ A mortgage on a road with its engines, depots, and shops then owned by the company, or which it might there- after acquire, "with the superstructure, rails, and other materials used thereon," is construed to embrace wood provided for the use of the road from time to time.^^ The lien attaches to the property as soon as it is acquired j"^* and is superior to that of a subsequent mortgage or of a judgment.^® But it generally attaches to the property in the condition in which it comea to the mortgagor and does not displace existing liens. ^^ § 155. After-acquired property passing as an incident to the fran- chise. — ^After-acquired property may pass as an incident to the fran- chise, and as an accession to the subject of the mortgage.^' Where the franchise and property of the company are regarded as an indivisible entity the after-acquired property will pass by the mort- gage even in the absence of express words of futurity. °^ ed. 584; Bear Lake &c. R. Co. v. 436; Scott y. Clinton &c. R. Co., 6 Garland, 164 U. S. 1, 41 L. ed. 327, Biss. (U. S.) 529; Nichols v. Mase, 17 Sup. Ct. 7. 94 N. Y. 160. " State V. Northern Central R. °'' Bear Lake &c. Co. v. Garland, Co., 18 Md. 193. 164 U. S. 1, 16, 41 L. ed. 327, 17 Sup. "^Pullan V. Cincinnati &c. R. Co., Ct. 7; Williamson v. New Jersey &e. 4 Biss. (U. S.) 35. See also Hoyle R. Co., 28 N. J. Eq. 277, 29 N. J. r. Plattsburg &c. R. Co., 51 Barb. Eq. 311. Compare Porter v. Pitts- (N. Y.) 45. burg &c. Co., 122 U. S. 267, 30 L. ''^Coev. McBrown, 22 Ind. 252. ed. 1210, 7 Sup. Ct. 1206. See also Bath v. Miller, 53 Maine "Stevens v. Buffalo, Corning &e. 308. R. Co., 45 How. Pr. (N. Y.) 104. "Parker v. New Orleans &c. R. The decision was not, however, Co., 33 Fed. 693; Frost v. Gales- based upon this proposition. See burg, 167 111. 161, 47 N. E. 357; also Electric Lighting Co. v. Rust, Brady v. Johnson, 75 Md. 445, 26 117 Ala. 680, 23 So. 751; Rowan v. Atl. 49, 20 L. R. A. 737; Seymour v. Sharps' Rifle Mfg. Co., 29 Conn. Canandaigua &c. R. Co., 25 Barb. 282; McClain's Iowa Code, §§ 1965, (N. Y.) 284. But see New Orleans 1966; Beach v. Wakefield, 107 Iowa Pac. R. Co. V. Parker, 143 U. S. 42, 567, 76 N. W. 688; Pierce v. Em- 36 L. ed. 66, 12 Sup. Ct. 364. ery, 32 N. H. 484; Chew v. Barnet, =»Bear Lake &c. Co. v. Garland, 11 Serg. & R. Pa. 489. 164 U. S. 1, 15, 41 L. ed. 327, 17 ■« Parker v. New Orleans &c. R. Sup. Ct. 7; McGourkey v. Toledo Co., 33 Fed. 693; Willink v. Morris &c. R. Co., 146 U. S. 536, 36 L. ed. Canal &c. Co., 4 N. J. Eq. 377; 1079, 13 Sup. Ct. 170; Dunham v. Davidson v. Westchester Gaslight Cincinnati &c. R. Co., 1 Wall. (U. Co., 99 N. Y. 558, 2 N. E. 892; Sha- S.) 254, 17 L. ed. 584; Pennock v. mokin &c. R. Co. v. Livermore, 47 Coe, 23 How. (U. S.) 117, 16 L. ed. Pa. St. 465, 85 Am. Dec. 552. 333 ACCESSIONS TO MORTGAGED PEOPEETT § 155 The suggestion that a mortgage by a railroad company made in pur- suance of its charter, or of a law authorizing it, attaches to subse- quently acquired property, for the reason that the franchise by virtue of which the property was acquired itself passed by the mortgage, was noticed by the Supreme Court of Wisconsin. The court, however, while questioning the reason so assigned, held that, when a mortgage by ex- press terms covers lands that may be subsequently acquired for the uses of the company, the lien will attach to such lands the moment the company acquires an interest in them,- although this interest be only a contract of purchase. The mortgagee may compel a conveyance under such a contract, and the company can not impair the lien by a sale without the mortgagee's consent.'^" But in a case before the Court of Appeals of Kentucky the power of a corporation to pass by its mortgage after-acquired property was placed altogether upon this ground, the court saying that the power to pledge the franchises and rights of the corporation implies, as incident thereto, the power to pledge everything that may be necessary to the enjoyment of the fran- chise, and upon which its real value depends. When a railroad mort- gage is made which is to continue for many years, new cars and en- gines and materials of different kinds will become necessary from, time to time, and the road would be of little value without them ; therefore if included in a mortgage they are effectually covered by it."" On the principle of accession it has been held that, without particu- lar mention of the property afterward acquired, a mortgage by a rail- road company of all its property and rights of property will pass property afterward acquired and essential to its use, even as against other creditors who claim by later mortgages. Such a mortgage is regarded as in substance a conveyance of the road and franchise as an entire thing, and the subsequently acquired property as becoming a part of it by accession, and as incident to the franchise; and there- fore a cargo of railroad iron, after it is delivered to the railroad com- pany, becomes subject to the lien of such a mortgage.^^ This doctrine rests upon the authority of a few cases, and is not generally supported. Mortgages of after-acquired property, although made by corporations, are made to rest upon the broad equitable prin- ciples applicable to such mortgages in general. Ordinarily such prop- ^° Farmers' Loan &c. Co. v. Fish- """Phillips v. Winslow, 18 B. Mon. er, 17 Wis. 114; Hill v. La Crosse (Ky.) 431, 68 Am. Dec. 729. &c. R. Co., 11 Wis. 214; Farmers' "Pierce v. Emery, 32 N. H. 484. Loan &c. Co. v. Commercial Bank of Racine, 11 Wis. 207, 15 Wis. 424, 82 Am. Dec. 689. § 156 PROPERTY SUBJECT OF MORTGAGE 224 erty is not covered unless apt ■words are used to confer the right, or unless the instrument shows that the parties clearly intended that it should pass.'^ § 156. What property included by implication in a railroad mort- gage. — A mortgage of all the property of a railroad company, includ- ing its franchises, etc., contemplates property owned both at the time of the mortgage and that to be subsequently acquired."^ But a mort- gage by a railroad company does not by implication cover property not essential to its business, unless it is specifically described by the terms of the mortgage. Thus a mortgage by a railroad company of its real estate, road, bridges, ferries, locomotives, engines, cars, and all other personal property belonging to it, does not include canal boats run in connection with the road beyond its terminus.** And a mortgage on property "thereafter acquired for railroad purposes" was held not to cover an undivided interest in land subsequently acquired, since there was no purpose to Which the railroad could put such undivided in- terest.*^ Town lots, held by a railroad company, do not pass by a sheriffs sale, under a mortgage of the road, "with its corporate privileges and appurtenances," when they are not directly appurtenant to the railroad and indispensably necessary to the enjoyment of its franchises.*^ Thus, it has been held not to extend to property adjacent to a depot which the company leases for a store and other purposes foreign to the opera- tion of the road.*'' But a mortgage of an entire road, "as said railroad now is or may be hereafter constructed, maintained, operated or acquired, together with all the privileges, rights, franchises, real estate, right of way, depots, depot grounds, side tracks, water tanks, engines, cars, and other appurtenances thereto belonging," has been held to include real «= Thompson v. White &c. R. Co., more, 47 Pa. St. 465, 86 Am. Dec. 132 U. S. 68, 33 L. ed. 256, 10 Sup. 552. See also Calhoun v. Memphis Ct. 29; Maxwell v. Wilmington &c. R. Co., 2 Flip. (U. S.) 442; Mor- Dental Mfg. Co., 77 Fed. 938. gan v. Donovan, 58 Ala. 241; Mis- "Tennoek v. Coe, 64 U. S. 23, 16 sissippi Val. Co. v. Chicago &c. R. L. ed. 436; Qulncy v. Chicago, B. Co., 58 Miss. 896, 38 Am. Rep. 348; &c. R. Co., 94 III. 537; Coe v. Mc- Millard v. Burley, 13 Nebr. 259, 13 Brown, 22 Ind. 252; Howe v. Free- N. W. 278; Seymour v. Canan- man, 14 Gray (Mass.) 566; Pierce daigua &c. R. Co., 25 Barb. (N. Y.) V. Eimery, 32 N. H. 484. See also 284; Walsh v. Barton, 24 Ohio St. Pere Marquette R. Co. v. Graham, 28; Brainard v. Peck, 34 Vt. 496; 136 Mich. 444, 99 N. W. 408. Farmers' Loan &c. Co. v. Commer- ^ Parish v. Wheeler, 22 N. Y. 494. cial Bank, 11 Wis. 207. «= Chicago &c. R. Co. v. Tice, 232 "'Chicago &c. R. Co. v. McGuire, 111. 232, 83 N. E. 818. 31 Ind. App. 110, 65 N. E. 932, 99 ""Shamokin Val. R. Co. v. Liver- Am. St. 249. 335 ACCESSIONS TO MORTGAGED PROPEETX § 157 estate separated from the right of way by a street, but of easy access to the station and side tracks, which real estate had been subsequently purchased by the company and upon which it had built a restaurant for the accommodation of its employes and passengers."^ A mortgage by a railroad company of its road and real estate then owned by it, or which it might afterward acquire, is considered an equitable mortgage as to the property subsequently acquired for the purposes of its road, and is a valid lien upon after-acquired land so taken and used."" A mortgage of the stock, materials, and every other kind of personal property which shall be used for operating a railroad, does not profess to cover railroad chairs afterward bought by the com- pany, but which were never used by it.^" A mortgage which does not purport to cover materials subsequently acquired is not made valid as to such materials from any consideration of the nature and object of the mortgage, as, for instance, that it was made for the purpose of raising money to complete the road.'^ A mechanic's lien upon such property is subsequent to the lien of such mortgage; if this was re- corded before the materials and labor were furnished.'^ Any property connected with the use of its franchise, whether real or personal, either already or subsequently acquired, may be effectually mortgaged.'^ Upon foreclosure of such a mortgage, the property and rights of the corporation as they exist at the time of the foreclosure pass to the mortgagees or to the purchasers.''* § 157. Rule as to after-acquired land. — While at law nothing can be mortgaged not in existence and not owned by the mortgagor at the time the mortgage is executed, yet equity will give effect to a mortgage embracing land to be afterward acquired." "'See Central Trust Co. v. Knee- "Miller v. Rutland &c. R. Co., 36 land, 138 U. S. 414, 34 L. ed. 1014, 11 Vt. 452. Sup. Ct. 357; Omaha &c. R. Co. v. "Bear Lake &c. Waterworks &c. Wabash &c. R. Co., 108 Mo. 298, 18 Co. v. Garland, 164 U. S. 15, 41 L. S. W. 1101. ed. 333, 17 Sup. Ct. 7; National ™ Benjamin v. Elmira, Jefferson Waterworks Co. v. Kansas City, 78 &c. R. Co., 49 Barb. (N. Y.) 441, 54 Fed. 428; New England Water- N. Y. 675; Seymour v. Canadaigua works Co. v. Farmers' Loan &c. Co., &c. R. Co., 25 Barb. (N. Y.) 284. 136 Fed. 521, 69 C. C. A. 297; Wash- ™ Farmers' Loan &c. Co. v. Com- Ington Trust Co. v. Morse Iron mercial Bank, 11 Wis. 207. Works &c. Co., 106 App. Div. 195, "Farmers' Loan &c. Co. v. Com- 94 N. Y. S. 495; Hickson Lumber mercial Bank, 15 Wis. 424, 82 Am. Co. v. Gay Lumber Co., 150 N. Car. Dec. 689. 281, 63 S. E. 1045; Cummings v. "Reed v. Ginsburg, 64 Ohio St. Consolidated Mineral Water Co., 27 11, 59 N. E. 738. R. I. 195, 61 Atl. 353; Frank v. ''Raymond v. Clark, 46 Conn. 129; Hicks, 4 Wyo. 502, 35 Pac. 495, 1025. Coe V. Peacock, 14 Ohio St. 187. IS — Jones Mtg. — Vol. I. § 157 PEOPEEXT SUBJECT OP MOETGAGE 326 After-acquired land not within the terms of the mortgage is not covered by it. Thus a mortgage of a one-fourth interest in certain land which the mortgagor had inherited, does not embrace additional inter- ests in the same land which the mortgagor subsequently purchased at an administrator's sale.''" A mortgage by a railroad company of its road and appurtenances, and of lands after acquired for stations, shops, and the like uses, does not create any lien upon a tract of woodland afterward acquired, situate seven miles from its road, although pur- chased and used by the company for the purpose of supplying the road with timber and wood ; for such a mortgage contains no apt words to embrace land remote from the road, and which can not be used for any of the specific purposes mentioned.'''^ The lien will not extend to lands situated outside of the "layout" of the road, even though such lands were taken over by the company in securing their right of way, but will be confined to such lands as are actually necessary and convenient for the construction and opera- tion of the road, including the right of way, lands for shops, depots, stations, turnouts for fuel or water, or for other legitimate purposes.'* The authority of a company to bind its future acquisitions by mort- gage is limited to such property as it has the power by law to acquire ; and therefore it has been held that a railroad company having at the time of making a mortgage no power by its charter or by general law to accept a land grant from the United States, its mortgage, though broad enough in terms to cover such a grant, would not embrace a land grant subsequently made, and which the company was by special act afterward empowered to accept.'" But a railroad company having the authority to accept a land grant may undoubtedly mortgage it be- fore it has fulfilled the conditions upon which the grant is to be ™ Wheeler v. Aycock, 109 Ala. 146, v. Coffin, 50 Conn. 150; Chicago, I. 19 So. 497. &c. R. Co. v. McGulre, 31 Ind. App. "Dinsmore v. Racine &c. R. Co., 110, 65 N. B. 932, 99 Am. St. 249; 12 Wis. 649. See also Pardee v. Mississippi Val. R. Co. v. Chicago, Aldridge, 189 U. S. 429, 47 L. ed. St. L. &c. R. Co., 58 Miss. 896, 38 883, 23 Sup. Ct. 514; Boston &c. R. Am. Rep. 348; Seymour v. Canan- Co. V. Coffin, 50 Conn. 150; Walsh dalgua &c. R. Co., 25 Barb. (N. Y.) V. Barton, 24 Ohio St. 28; Shirley 284; People's Trust Co. v. Schenck, V. Waco Tap. R. Co., 78 Tex. 131, 10 121 App. Div. 604, 106 N. Y. S. 782; S. W. 543; Aldridge v. Pardee, 24 Shirley v. Waco Tap. R. Co., 78 Tex. Tex. Civ. App. 254, 60 S. W. 789. 131, 10 S. W. 543; Eldridge v. "See New Orleans Pac. R. Co. v. Smith, 34 Vt. 484; Farmers' Loan Parker, 143 U. S. 42, 36 L. ed. 66, &c. Co. v. ComiEercial Bank, 11 Wis. 12 Sup. Ct. 364; Humphreys v. Mc- 207. Kissock, 140 U. S. 307, 35 L. ed. 595, ™ Meyer v. Johnston, 53 Ala. 237, 11 Sup. Ct. 1022; Boston &c. R. Co. 331. 227 ACCESSIONS TO MORTGAGED PEOPEKTY § 158 made.'" A mortgage by a railroad company in its terms embracing all property which it may subsequently acquire includes a lease it afterward takes of another railroad.*^ § 158. Prior liens on after-acquired property. — The mortgage is subject to any liens there may be upon the property when acquired. The mortgage attaches to the property in the condition in which it comes into the mortgagor's hands. If it be at that time already sub- ject to mortgages or other liens, the general mortgage does not dis- place them, though they may be junior to it in point of time.*^ It is subject to a vendor's lien for unpaid purchase-money on realty, the mortgagee not being' considered a purchaser for value.^^ "It only attaches to such interest as the mortgagor acquires; and if he purchase property and give a mortgage for the purchase-money, the deed which he receives, and the mortgage which he gives, are re- garded as one transaction, and no general lien impending over him, whether in the shape of a general mortgage or judgment or recogni- zance, can displace such mortgage for purchase-money. And in such cases a failure to register the mortgage for purchase-money makes no ' difference. It does not come within the reason of the registry laws. These laws are intended for the protection of subsequent, not prior, purchasers and creditors."*^ The fact that the mortgage was given to secure purchase-money may be shown by parol evidence.' ° Thus a ™See Campbell v. Texas &c. R. S.) 481; Western Union Tel. Co. v. Co., 2 Woods (U. S.) 263. Burlington &c. R. Co., 3 McCrary ''Barnard v. Norwich &c. R. Co., (U. S.) 130; Boston Safe Deposit 2 Lowell (XT. S.) 608, 14 N. Bank. &c. Co. v. Bankers' &c. Co., 36 Fed. 469, 3 Cent. L. J. 608. See also Co- 288; Lake Erie &c. R. Co. v. Priefit, lumbia Finance &c. Co. v. Kentucky 131 Ind. 413, 31 N. E. 77; Haven V. &c. R. Co., 60 Fed. 794; Buck v. Emery, 33 N. H. 66; Williamson v. Seymour, 46 Conn. 156; Hamlin v. New Jersey Southern R. Co., 28 N. European &c. R. Co., 72 Maine 83. J. Eq. 277, 29 N. J. Eq. 311. =^Bear Lake &c. Irr. Co. v. Gar- '^Loomis v. Davenport &c. R. land, 164 U. S. 1, 41 L. ed. 327, 17 Co., 17 Fed. 301; Pierce v. Milwau- Sup. Ct. 1; Fosdick v. Schall, 99 kee &c. R. Co., 24 Wis. 551, 1 Am. U. S. 235, 25 L. ed. 339; General Rep. 203. Blec. Co. V. Transit. Equip. Co., 57 ** United States v. New Orleans N. J. Eq. 460, 42 Atl. 101. See also Railroad, 12 Wall. (U. S.) 362-365, Myer v. Car Co., 102 U. S. 1, 26 L. 20 L. ed. 434, per Bradley, J.; Wood ed. 59; Branch v. Jesup, 106 U. S. v. Holly Mfg. Co., 100 Ala. 326, 13 468, 27 L. ed. 279, 1 Sup. Ct. 495; So. 948; Continental Ins. &c. Soc. Dunham v. Cincinnati &c. R. Co., v. Wood, 168 111. 421, 48 N. E. 221; 1 Wall. (U. S.) 254, 17 L. ed. 584; Willink v. Morris Canal &c. Co., 4 Galveston R. Co. v. Cowdry, 11 N. J. Eq. 377; Daly v. New York, Wall. (U. S.) 459, 20 L. ed. 199; G. &c. R. Co., 55 N. J. Eq. 595, 38 United States v. N. O. R., 12 Wall. Atl. 202. (U. S.) 362, 20 L. ed. 434; Branch »°Bisbee v. Carey, 17 Wash. 224, v. Atlantic &c. R. Co., 3 Woods (U. 49 Pac. 220. § 159 PEOPERTY SUBJECT OF MORTGAGE 228 meclianie's lien for work done and materials furnished on such after- acquired property takes precedence of the mortgage. '° Property ac- quired under a conditional sale comes under the mortgage subject to the terms of such sale.^'' Property afterward acquired through fraud is not affected by an existing mortgage.*^ In Massachusetts it is held that a mortgage of after-acquired prop- erty is not effectual as against the attacking creditors or assignees in insolvency of the mortgagor, unless the mortgagee takes po^ession of the property.*^ § 159. Mortgage of choses in action. — It would seem that corpora- tions usually possess power to mortgage their choses in action ; and a federal court, deeming a contract to pay money for stock to be a chose in action, has held that it is negotiable by delivery and passes by vol- untary assignment.'" But choses in action will not pass by sale under a mortgage unless there is a specific description and a certain designa- tion so that bidders may know what they are about to purchase;"^ in other words, they must be described with such particularity that they can be identified.^^ It seems clear that a general futurity clause will not include calls fot unpaid subscriptions to the capital stock.**^ Thus, a railroad mort- gage on its property, present and prospective, was held to give no right to purchasers under foreclosure sale to county bonds issued in payment of a subscription.'* § 160. Mortgage of future net earnings of railroad company. — A mortgage may be made of the future net earnings of a railroad com- pany to secure the payment of interest upon its construction bonds.'' =«Jarvis v. State Bank, 22 Colo. Dec. 740. See also Merchants' 309, 45 Pac. 505; Williamson V. New Bank v. Petersburg R. Co., 12 Jersey Southern R. Co., 28 N. J. Phila. (Pa.) 482; Bennett v. Eq. 277, 29 N. J. Eq. 311. Keehn, 57 Wis. 582, 15 N. W. 776. ■"Haven v. Emery, 33 N. H. 66; "^ General Elec. Co. v. Wightman, Taylor v. Burlington, Cedar Rapids 3 App. Div. 118, 39 N. Y. S. 420. &c. R. Co., 11 West. Jur. 337. »'Dean v. Biggs, 25 Hun (N. Y.) «' Williamson v. N. J. Southern 122; Gardner v. London &c. R. Co., R. Co., 28 N. J. Eq. 277, 298. See L. R. 2 Ch. 201; King v. Marshall, also Frazier v. Frederick, 24 N. J. L. 33 Beav. 565; Moor v. Anglo-Italian 162; Field v. Post, 38 N. J. L. 346. Bank, 10 Ch. D. 681. ^Harriman v. Woburn Elec. "Morgan Co. v. Allen 103 U. S. Light Co., 163 Mass. 85, 39 N. B. 498, 26 L. ed. 498; Smith v. McCul- 1004. lough, 104 U. S. 25, 26 L. ed. 637; "Coler V. Grainger Co., 74 Fed. Morgan Co. v. Thomas, 76 111. 120. 16, 20 C. C. A. 267. »= See Jones on Corporate Bonds " Milwaukee &c. R. Co. V. Mllwau- and Mortgages, § 87; Jessup v. kee &c. R. Co., 2G Wis. 174, 88 Am. Bridge, 11 Iowa 572, 79 Am. Dec. 229 ACCESSIONS TO MORTGAGED PEOPEETT § 160 A mortgage by a railroad company of "after-acquired" property has been held to include future net earnings of the road.'" Even a mortgage of a railroad and its present and subsequently ac- quired property is a prior lien upon the net earnings of the road while the mortgagor retains possession."^ A mortgage of tolls and revenues covers only the net income after the payment of all expenses.'^ But until the mortgagee takes possession, the earnings belong wholly to the railroad company, and are subject to its control."^ Even after the road has passed into the possession of a receiver appointed by the court in the interest of the bondholders, the net earnings may be applied by the receiver to the payment of claims having equities superior to those of the bondholders.^ The net earnings may be mortgaged, but so long as they are retained by the mortgagor they are subject to trustee process in favor of the general creditors of the railroad company.^ In a comparatively recent case, a railroad company had leased its unfinished road to a company operating a connecting line and mort- gaged its property, rights and franchises to secure certain bonds which were to be disposed of by the lessee, and the latter, in order to insure the prompt payment of interest and a ready sale of the bonds, being advised that it had no power to guarantee them, mortgaged to the lessor for that purpose all the net earnings of its own line which might accrue to it "hj reason of business coming to it from or over" the lines of the lessor. It was held that this included not only the profits of the business which came literally from off the lessor's road into the lessee's road, but, also, the net earnings or business which came to the latter from both directions by reason of the fact that the leased road was an important feeder and brought new business to the lessee's road by opening up new markets and giving increased facilities. The court also held that, as there was nothing in the mortgage prescribing the 513; Dunham v. Isett, 15 Iowa 284; ^Hale v. Frost, 99 U. S. 389, 25 L. Farmers' Loan &c. Co. v. Gary, 13 ed. 419. Wis. 110. '^Gilman v. Illinois &c. R. Co., 91 I" Tompkins v. Little Rock &c. R. U. S. 603, 23 L. ed. 405; Galveston R. Co., 15 Fed. 6; Addison v. Lewis, Co. v. Cowdery, 11 Wall. (TJ. S.) 75 Va. 701. Contra, Emerson v. 459, 20 L. ed. 199; Mississippi &c. European &c. R. Co., 67 Maine 387, R. v. United States Exp. Co., 81 111. 24 Am. Rep. 39; DeGraff v. Thomp- 534; Galena &c. R. Co. v. Menzies, son, 24 Minn. 452. 26 111. 121; Dunham v. Isett, 15 "'Hale V. Frost, 99 U. S. 389, 25 Iowa 284; Emerson v. European &c. L. ed. 419. R. Co., 67 Maine 387, 24 Am. Rep. °' Jones on Corporate Bonds and 39; Noyes v. Rich, 52 Maine 115; Mortgages, §§ 80-90; Parkhurst v. Bath v. Miller, 51 Maine 341; Smith Northern Cent. R. Co., 19 Md. 472, v. Eastern R. Co., 124 Mass. 154; 81 Am. Dec. 648. Ellis v. Boston &c. R. Co., 107 Mass. ■"Fosdick V. Schall, 99 U. S. 235, 1; Clay v. Bast Tenn. &c. R. Co^ 6 25 L. ed. 339. Heisk. (Tenn.) 421. § 161 PEOPEETY SUBJECT OF MOETGAGB 230 method of ascertaining the net earnings, they must be determined in the usual way, that is, from the gross receipts must be deducted the cost of producing them, and that it knew of "no way to arrive at all this, save, approximately, by a proportion distributing the total operating expense over the whole business," thus treating the business of the entire system as a unit.'' § 161. Whether mortgage conveys primary corporate franchise. — A mortgage by a railroad company of its road and franchise, as secur- ity for debt, is held not to convey its corporate existence, or its general corporate powers, but only the franchise necessary to make the con- veyance beneficial to the grantees, and to enable them to maintain and manage the road, and receive the profits to their own use.* A mortgage of corporate property therefore does not cover the fran- chise to be a corporation — that is, the primary franchise — unless the power to incumber is clearly conf erred.'' It is" another statement of the principle to say that a mortgage conveying the corporate property and appurtenances and also its corporate franchises, incumbers only the franchise necessary to make the conveyance productive and bene- ficial to the grantees, — namely the franchise to maintain, manage and operate the corporation and receive the income and profits thereof for its own benefit, and not the franchise to be a corporation or the gen- eral corporate powers." It follows that the purchaser of the property and franchises of a corporation at a foreclosure sale,'' or a sale by an assignee in bankruptcy,* will not acquire thereby any corporate ca- ' Schmidt v. Louisville &c. R. Co., 1009; Memphis &c. R. Co. v. Rail- 95 Ky. 289, 25 S. "W. 494, 26 S. W. road Comrs., 112 U. S. 609, 28 L. 547, 61 Am. & Bng. R. Cas. 680. See ed. 837, 5 Sup. Ct. 299; City "Water also United States v. Kansas Pac. Co. v. State, 88 Tex. 6()0, 32 S. W. R. Co., 99 U. S. 455, 25 L. ed. 289; 1033. St. John V. Erie R. Co., 22 Wall. "Branch v. Atlantic &C. R. Co., (U. S.) 136, 22 L. ed. 743; PuUan v. 3 Woods (U. S.) 481; Pullan v. Cin- Railroad Co., 5 Biss. (U. S.) 237. clnnati &c. R. Co., 4 Biss. (U. S.) "Meyer v. Johnston, 53 Ala. 237, 35; Meyer v. Johnston, 53 Ala. 237; 325; Eldridge v. Smith, 34 Vt. 484; New Orleans &c. R. Co. v. Delamore, Miller V. Rutland &c. R. Co., 36 Vt. 34 La. Ann. 1225; Joy v. Jackson 452, 498. See article 19, American &c. Plank Rd. Co., 11 Mich. 155; Law Rev. 440. See also Wilmington Beebe v. Richmond &c. Power Co., R. Co. V. Reid, 13 Wall. (U. S.) 264, 13 Misc. 737, 35 N. Y. S. 1; City 20 L. ed. 568; Pullan v. Cincinnati Water Co. v. State, 88 Tex. 600, 32 &c. R. Co., 4 Biss. (U. S.) 35; Brads- S. W. 1033; Eldridge v. Smith, 34 town &c. R. Co. v. Metcalfe, 61 Ky. Vt. 484. 199, 81 Am. Dec. 541; McAllister v. 'Atkinson v. Marietta &c. R. Co., Plant, 54 Miss. 106. 15 Ohio St. 21. " Willamette &c. Mfg. Co. v. Bank, ' Metz v. Buffalo &c. R. Co., 58 119 U. S. 191, 30 L. ed. 384; New N. Y. 61, 17 Am. Rep. 201;- Com- Orieans &c. R. Oo. v. Delamore, 114 monwealth v. Central Pass. R. Co., U. S. 501, 29 L. ed. 244, 5 Sup. Ct. 52 Pa. St. 506. 231 ACCESSIONS TO MORTGAGED PEOPEETT § 161a paeity whatever. It has been pointed out that "If it were held that all the corporate franchises, including the power of corporate existence, were conveyed by the mortgage, the conclusion would seem to be logi- cal, that, on breach and foreclosure, the mortgagees would step into the shoes of the company and merely succeed to their rights in the property, and also to their corporate liabilities — a result by no means favorable to their interest."^ So authority to mortgage "the entire road, fixtures ,and equipments, with all the appurtenances, income and resources thereof," does not include the right to mortgage the fran- chise to be a corporation, but does include the right to mortgage the franchise to maintain a railroad ap.d take compensation as a carrier.^" But the fact that the mortgage does profess to include the primary franchise will not for that reason render the instrument entirely void. A rule in other cases of contracts is applicable here, and the instru- ment will be valid to convey the secondary franchises subject to aliena- tion, and will be void only so far as it undertakes to convey the pri- mary franchise.^^ § 161a. Mortgage of primary franchise under legislative authority. — The franchise to be a corporation may be incumbered by the corpo- ration when authorized by the legislature to do so. The legislature having the power to create the corporation may, without doubt, unless prevented by the constitution, clothe the corporation with the power to transfer its primary franchise. But even these cases require positive provisions in the statutes as to the methods of making the transfer.^ ^ "Eldridge v. Smith, 34 Vt. 484. Co., 25 Hun (N. Y.) 246; State v. ^"Coe V. Columbus &c. R. Co., 10 Richmond &c. R. Co., 72 N. Car. Ohio St. 372, 75 Am. Dec. 518. 634; State v. Sherman, 22 Ohio St. ^Fietsam v. Hay, 122 III. 293, 13 411; Coe v. Columbus &c. R. Co., 10 N. E. 501, 3 Am. St. 492; Butler v. Ohio St. 372, 75 Am. Dec. 518; Rahm, 46 Md. 541. Steiner's Appeal, 27 Pa. St. 313; "Mahaska Co. R. Co. v. Des Lauman v. Lebanon Val. R. Co., 30 Moines &c. R. Co., 28 Iowa 437; Pa. St. 42. See also Vicksburg v. Daniels v. Hart, 118 Mass. 543; Vicksburg Waterworks Co., 202 U. Richardson v. Sibley, 11 Allen S. 453, 50 L. ed. 1102, 26 Sup. Ct. (Mass.) 65, 87 Am. Dec. 700; East 660; Memphis &c. R. Co. v. Rail- Boston &c. R. Co. V. Eastern R. Co., road Comrs., 112 U. S. 609, 28 L. 13 Allen (Mass.) 422; Hendee v. ed. 837, 5 Sup. Ct. 299; Branch v. Pinkerton, 14 Allen (Mass.) 381; Jesup, 106 U. S. 468, 24 L. ed. 279, St. Paul &c. R. Co. V. Parcher, 14 1 Sup. Ct. 495; Pullan v. Cincinnati Minn. 297; McAllister v. Plant, 54 &c. R. Co., 4 Biss. (U. S.) 35; Miss. 106; Stewart v. Jones, 40 Mo. Frazier v. East Tennessee &c. R. 140; Pierce v. Emery, 32 N. H. 484; Co., 88 Tenn. 138, 12 S. W. 537; Black V. Delaware &c. Canal Co., 22 Threadgill v. Pumphrey, 87 Tex. N. J. Eq. 130; Carpenter v. Black 573, 30 S. "W. 356; Pierce v. Mil- Hawk &c. Min. Co., 65 N. Y. 43; waukee &c. R. Co., 24 Wis. 551, 1 Troy &c. R. Co. v. Kerr, 17 Barb. Am. Rep. 203. (N. Y.) 581; Woodruff v. Erie R. § 161a PEOPEETT SUBJECT OP MOETGAGE 232 The power to sell or mortgage the primary franchise will not be implied from authority in a statute to sell or mortgage "the property and franchises of a corporation" ;^^ nor from authority to mortgage its "road, income, and other property."^* "Cook T. Detroit &c. R. Co., 43 75 Am. Dec. 518; Eldridge v. Smith, Mich. 349, 5 N. "W. 390; Pierce v. 34 Vt. 484. Emery, 32 N. H. 484; Coe v. Co- "Pullan r. Cincinnati &c. K. Co., lumbus &c. R. Co., 10 Ohio St. 372. 4 Biss. (U. S.) 35. CHAPTBE V EQUITABLE MORTGAGES I. By Agreements and Informal Mortgages, §§ 162-1'i'l II. By Assignments of Contracts of Purchase, §§ 172-178 III. By Deposit of Title Deeds, §§ 179-188 I. By Agreements and Informal Mortgages Section • Section 162. Introductory. 166. Defective instruments — Con- 163. Agreement to mortgage. veyances in trust for support 164. Parol agreements. and special purposes. 164a. Agreement by purchaser at 167. Agreements charging specific judicial sale. lands. 165. Agreement entered upon corpo- 168. Defective or informal mort- rate records — Consent judg- gages. ment — Conditional Agree- 169. Corporate mortgages executed ment. in name of agent. 170. Mortgage by implied trust. 171. Assignment of rents and profits. § 162. Introductory. — It has been noticed that a conveyance, ac- companied by a condition contained either in the deed itself or i^ a separate instrument executed at the same time, constitutes a legal mortgage, or a mortgage at common law. In addition to these formal instruments which are properly entitled to the designation of mort- gages, deeds and contracts which are wanting in one or both of these characteristics of a common-law mortgage are often used by parties for the purpose of pledging real property, or some interest in it, as security for a debt or obligation, and with the intention that they shall have effect as mortgages. Equity comes to the aid of the parties in such cases, and gives effect to their intentions. Mortgages of this kind are therefore called equitable mortgages.^ > Quoted with approval by Harlan, 103 Ind. 23, 2 N. E. 233; Cummlngs J., in Ketohum v. St. Louis, 101 U. v. Jackson, 55 N. J. Eq. 805, 38 Atl. S. 306, 25 L. ed. 999; Alexander v. 763; New Vienna Bank v. Johnson, Mortgage Co., 47 Fed. 135 (quoting 47 Ohio St. 306, 24 N. B. 503 (quot- text); Hall v. Mobile &c. R. Co., 58 ing text); Wayt v. Carwithen, 21 Ala. 10; Gesner v. Palmateer, 89 Cal. W. Va. 516; Hoile v. Bailey, 58 Wis. 89, 24 Pac. 6C8, 26 Pac. 789, 13 L. 434, 17 N. W. 322. R. A. 187. See also Brown, v. Brown, 233 § 163 EQUITABLE MORTGAGES 334 An equitable mortgage may be broadly defined as a transaction which has the intent, but not the form, of a mortgage, and which a court of equity will enforce to the same extent as a mortgage.^ There are many kinds of equitable mortgages — as many as there are varieties of ways in which parties may contract for security by pledging some interest in lands.* "An agreement in writing to give a mortgage, or a mortgage defectively executed, or an imperfect attempt to create a mortgage or to appropriate specific property to the discharge of a particular debt, will create an equitable mortgage, or a specific lien on the property intended to be mortgaged."* So, an equitable mort- gage will result from different forms of transactions, in which there is present an intent of the parties to make a mortgage, to which intent, for some reason, legal expression is not given in the form of an effective mortgage; but in all such cases the latent to create a mortgage is the essential feature of the transaction.^ Whatever the form of the contract may be, if it is intended thereby to create a security, it is an equitable mortgage.® The intent to create an equitable mortgage, or security for the payment of a debt must be manifest, as distinguished from an intent to apply to the payment of the debt the proceeds from the sale of the property.'' It "Davidson v. Fox, 65 App. Dlv. St. 192; Reitze v. Humphreys, 53 262, 73 N. Y. S. 533. Colo. 177, 125 Pac. 518; Fort v. 'Donald v. Hewitt, 33 Ala. 534, 73 Colby (Iowa), 144 N. W. 393; Char- Am. Dec. 431; Newlin v. McAfee, pie v. Stout, 88 Kans. 318, 128 Pac. 64 Ala. 357; Clarke v. Sibley, 13 396; Reed v. Lansdale, Hard. (Ky.) Mete. (Mass.) 210; Payne v. Wilson, 6; Carter v. Holman, 60 Mo. 498; Ar- 74 N. Y. 348. nold v. Fraser, 43 Mont. 540, 117 ■■Baltimore &c. R. Co. v. Berkeley Pac. 1064; Archer v. Archer, 147 Springs &c. R. Co., 168 Fed. 770; App. Div. 44, 131 N. Y. S. 6d1; New Higgins V. Manson, 126 Cal. 467, 77 Vienna Bank v. Johnson, 47 Onio Am. St. 192; Racouillat v. San- St. 306, 24 N. E. 503 (quoting text) ; sevain, 32 Cal. 376; Daggett v. Ran- Barber v. Toomey (Ore.), 136 Pac. kin, 31 Cal. 231; Martin v. Nixon, 92 343; Marquam v. Ross, 47 Ore. 374, Mo. 26; McQuie v. Peay, 58 Mo. 56, 83 Pac. 852; Armstrong v. Burkitt 1 Am. Lead. Eq. Cas. 510. (Tex. Civ. App.), 34 S. W. 759;" = Western Nat. Bank v. National Wayt v. Carwithen, 21 W. Va. 516; Union Bank, 91 Md. 613, 46 Atl. 960. Hoile v. Bailey, 58 Wis. 434; Harri- "Flagg v. Mann, 2 Sumn. (U. S.) gan v. Gilchrist, 121 Wis. 127, 99 486, Fed. Cas. No. 4847; Gest v. N. W. 909, 981, citing numerous Packwood, 39 Fed. 525; quoted with cases, and Jones on Corporate Bonds approval in Edwards v. Scruggs, 155 and Mortgages, §§ 33-38, also Jones Ala. 568, 46 So. 850; Woodruff v. on Mortgages, §§ 163-168. This Adair, 131 Ala. 530, 32 So. 515 principle is chiefly illustrated in the (quoting text); Ross v. Perry, 105 case of absolute deeds intended Ala. 533, 16 So. 915; Wood v. Holly merely as security. This subject is M. Co., 100 Ala. 326, 13 So. 948; fully treated in chaps. VII and VIII, Newlin V. McAfee, 64 Ala. 364; Hall § 241 et seq. V. Mobile &c. R. Co., 58 Ala. 10; Hig- ' Smith v. Rainey, 9 Ariz. 362, 83 gins V. Manson, 126 Cal. 467, 77 Am. Pac. 463. 235 AGREEMENTS AND INFORMAL MORTGAGES § 162 is not necessary that the contract should be in express terms a secur- ity,* for equity will often imply this from the nature of the trans- actions between the parties. For instance, a contract for security is, in England and in some states of America, implied from a deposit of title deeds. As in case of a legal mortgage there must be some debt, liability or obligation secured.® But the debt secured by an equitable mort- gage need not be evidenced by notes, bonds, or other written obliga- tion.i» The statutes of a state relating to the execution and recording of mortgages are limited in their application to these particulars. They do not go beyond what they require as to the signing, acknowledgment, and recording of the instrument. "They prescribe no requisites as to the contents of the instrument, as to how lands shall be charged as a security, or the intent manifested. The character of the instru- ment in this regard, and its effect, are left to be determined by the application of the general principles of law and equity on the subject. So that any instrument that would, by the application of these prin- ciples, be regarded as constituting a- lien on land as against third persons with notice, will have the same effect, under our recording statutes, where it has been duly executed and recorded."^^ A bona fide purchaser for value of property subject to an equitable mortgage, without notice of such mortgage, takes the property free of the equitable mortgage. ^^ But if part of the purchase-money re- mains unpaid at the time when the purchaser receives notice of the equitable mortgage, the lien of the equitable mortgage holds to the extent of the purchase-money so remaining unpaid.^^ It has been, noticed in the preceding chapter that rights and interests in realty which are only equitable are often the subject of mortgage; that in equity formal mortgages are often made to embrace property which' at common law would not be covered at all ; as, for instance, property acquired after the execution of the mortgage. Biit the term "equi- table mortgage" is used more properly with reference solely to the kind of instrument or contract by which equity establishes a lien. "Bradley v. Merrill, 88 Maine 319, H Ohio St. 283; Hurd v. Robinson, 34 Atl. 160. 11 Ohio St. 232; Dodd v. Barthol- » McLaren v. Clark, 80 Ga. 423, 7 omew, 44 Ohio St. 171, 5 N. E. 866. S. E. 230; Mix v. White, 36 111. 484. "Watkins v. Reynolds, 123 N. Y. "Bradley v. Merrill, 88 Maine 319, 211, 25 N. E. 322; Watkins v. Vroo- 34 Atl. 160. man, 51 Hun 175, 5 N. Y. S. 172. " New Vienna Bank v. Johnson, 47 ^ Watkins v. Vrooman, 51 Hun Ohio St. 306, 24 N. E. 503, per Min- 175, 5 N. Y. S. 172. shall, C. J., citing Strang v. Beach, § 163 EQUITABLE MORTGAGES 236 It is the equitable form of the transaction, rather than the equitable nature of the property, to which this chapter has reference. There are some kinds of equitable mortgages so common and so important that they will be treated of at length farther on; as, for instance, absolute conveyances without any defeasance except by parol, and liens of vendors under written contracts or reservations. In this chapter, therefore, the less important transactions which in equity are recognized as creating securities will be considered. § 163. Agreement to mortgage. — An agreement to give a mort- gage or security on certain property, not objectionable for want of consideration, is treated in equity as a mortgage, upon the principle that equity will treat that as done which by agreement is to be done. This doctrine has been asserted frequently, both in this country and in England.^* "An executory agreement in writing, stipulating for the execution in future of a mortgage or deed of trust, is of common occurrence, and is valid, and will be specifically enforced as an equi- " White &c. Canal Co. v. Vallette, v. Ingraham, 75 N. Y. 251; Payne 21 How. (U. S.) 414, 16 L. ed. 154; v. Wilson, 74 N. Y. 348; Hale v. Biebinger v. Continental Bank, 99 Omaha Nat. Bank, 64 N. Y. 550; U. S. 143, 25 L. ed. 271; Baltimore Chase v. Peck, 21 N. Y. 581; In re &c. R. Co. V. Berkeley &c. R. Co., Howe, 1 Paige (N. Y.) 125, 19 Am. 168 Fed. 770; Bridgeport Elec. &c. Dec. 395; Burdick v. Jackson, 7 Hun Co. V. Header, 72 Fed. 115; Central (N. Y.) 448; Cotterell v. Long, 20 Trust Co. V. Bridges, 57 Fed. 753; Ohio 464; Bank of Muskingum v. Gest V. Packwood, 39 Fed. 525; Carpenter, 7 Ohio 21, 28 Am. Dec. Hester v. Hunnicutt, 104 Ala. 282, 16 616; Delaire v. Keenan, 3 Desaus. So. 162; O'Neal v. Sexias, 85 Ala. (S. Car.) 74, 4 Am. Dec. 604; Boehl 80, 4 So. 745; Morrow v. Turney, 35 v. Wadgymar, 54 Tex. 589; Ott v. Ala. 131; Richardson v. Wren, 11 King, 8 Grat. (Va.) 224; Alexander Ariz. 395, 95 Pac. 124, 16 L. R. A. v. Newton, 2 Grat. (Va.) 266; (N. S.) 190; Richardson v. Hamlett, Poland v. Lamoille Val. R. Co., 52 33 Ark. 237; Earle v. Sunnyside Vt. 144; Atkinson v. Miller, 34 W. Land Co., 150 Cal. 214, 88 Pac. 920; "Va. 115, 11 S. E. 1007; Starks v. Remington v. Higgins, 54 Cal. 620; Redfield, 52 Wis. 349; Harrigan v. Racouillat v. Sansevain, 32 Cal. 377; Gilchrist, 121 Wis. 127, 99 N. W. Daggett V. Rankin, 31 Cal. 321; 909, 981 (citing text and numerous Hall V. Hall, 50 Conn. 104; Hamilton cases); Russel v. Russel, 1 Bro. V. Hamilton, 162 Ind. 430, 70 N. E. C. C. 269; Finch v. Winchelsea, 1 535; Textor v. Orr, 86 Md. 398, 38 P. Wms. 283; Ex parte Heathcoat, 2 Atl. 939; Osgood v. Osgood, 78 Mich. Mont. D. & D. 711, 6 Jur. 1001; Burn 290, 44 N. W. 325; Adams v. John- v. Burn, 3 Ves. Jr. 582; Shakel v. son, 41 Miss. 258; Petrie v. Wright, Marlborough, 4 Madd. 463. But see 6 Sm. & M. (Miss.) 647; Carter v. Humphreys v. Snyder, Morris Holman, 60 Mo. 498; McQuie v. Peay, (Iowa) 263. Equity will not recog- 58 Mo. 56; English v. Rainear (N. nize as a mortgage an agreement to J.), 55 Atl. 41; Oliva v. Bunaforza, execute mortgage in presenti, the 31 N. J. Ea. 395; Hamilton Trust Co. execution of which fails through V. Clemes, 163 N. Y. 423, 57 N. E. inadvertence. Price v. Cutts, 29 Ga. 614; Perry v. Board of Missions, 142, 74 Am. Dec. 52. 102 N. Y. 99, 6 N. E. 116; Husted 237 AGKEEMENTS AND INFORMAL MORTGAGES § 163 table mortgage."^^ It is of frequent application under the bankrupt laws, where it operates to make valid a mortgage given to a creditor shortly before the filing of a petition in bankruptcy by the mortgagor, when this is done in pursuance of an agreement made at a time when the giving of the mortgage would not have been a fraudulent prefer- ence.^^ An agreement to make a conveyance of land, when intended as security for a debt, is in the same manner a mortgage. But all such agreements to give mortgages or other conveyances by way of security are ineffectual when no particular property is specified on which the security is to be given. '^^ An agreement to give a mortgage on "suffi- cient property" is not effectual.^* Such agreement can of course bind only the maker of it and his heirs, and persons having notice. It is not of any force as against his subsequent judgment creditors.^' The meaning of the maxim, that equity looks upon things agreed to be done as actually performed, is that equity will treat the matter, as to collateral consequences and incidents, in the same manner as if the final acts contemplated by the parties had been executed exactly as they ought to have been.^* Among other things, an equitable mortgage has been held to result from a written contract to secure a debt, in which the intention is expressed to create a lien by way of mortgage upon particular real estate, upon breach of certain conditions f^ from a written agreement by a mortgagor owning an equity of redemption, to execute a new mortgage to his creditor, upon the latter's discontinuing foreclosure f^ and from an agreement to hold property recovered in litigation, as security for advances. ^^ But it has been held that an agreement to secure a loan by mortgage on certain land, upon obtaining an interest "Atkinson v. Miller, 34 W. Va. ^'^ Daggett v. Rankin, 31 Cal. 321, 115, 11 S. E. 1007, 9 L. R. A. 544. per Currey, C. J.; Wayt v. Car- ^"Burdick v. Jackson, 7 Hun (N. withen, 21 W. Va. 516. Y.) 488; Harrigan v. Gilchrist, 121 =^ Donald v. Hewitt, 33 Ala. 534, Wis. 127, 99 N. W. 909, 981 (quoting 73 Am. Dec. 431; Richardson v. text). Wren, 11 Ariz. 395, 95 Pac. 124, 16 "Langley v. Vaughn, 10 Heisk. L. R. A. (N. S.) 190; Cummings v. (Tenn.) 553. Jackson, 55 N. J. Bq. 805, 38 Atl. "Goldthwaite v. Ellison, 99 Ala. 763; In re Dimond, 14 Pa. St. 323. 497, 12 So. 812; Adams v. Johnson, See also Clarke v. Sihley, 13 Mete. 41 Miss. 258. (Mass.) 210. "^Racouillat v. Sansevain, 32 Cal. ^'^ Matthew v. Damainville, 43 376; Price v. Cutts, 29 Ga. 142, 74 Misc. 546, 89 N. Y. S. 493. Am. Dec. 52. But m England an ^* Jackson v. Carswell, 34 Ga. 279; equitable mortgage has priority of Potter v. Kimball, 186 Mass. 120, 71 a subsequent judgment. Whitworth N. B. 308 (agreement binding on V. Gaugain, 3 Hare 416; Abbott v. heirs of equitable mortgagee). Stratten, 3 Jo. & Lat. 603. § 164 EQUITABLE MORTGAGES 338 in such land, does not operate as an equitable mortgage upon the acquisition of an equitable interest therein.^* And it has been held that a mere executory contract to give a mortgage on the happening of a contingent future event, although executed in writing and re- corded, is not an equitable mortgage.^^ § 164. Parol agreements. — There must be some kind of an agree- ment between the parties in interest,^" but it is not necessary that the agreement should in all cases be in writing. Although a parol agree- ment in respect to lands while it remains altogether executory is not enforcible,^^ yet, when there has been a part performance of it, it can not in equity be avoided.^' The parol agreement, though partly performed, must be sufficiently clear and definite for the court to enforce the understanding of the parties.^^ When such parol agree- ment has been performed by a delivery of a formal mortgage, all objection to the validity of the agreement is removed, and it becomes as effectual for all purposes as if it had been reduced to writing origi- nally.^" In this way a mortgage made a few days before the bank- ruptcy of the mortgagor, but in pursuance of a parol agreement made fifteen months before, and based upon a good consideration, is good against the assignee in bankruptcy, and is not open to the objection that it is void as a fraudulent preference.^^ ^Dudley v. Nickerson, ?14 Mass. Weigand, 92 Minn. 152, 99 N. W. 274, 101 N. B. 465. 633; Irvine v. Armstrong, 31 Minn. ^Matliews V. Damainvllle, 100 216, 17 N. W. 343; Dean v. Ander- App. Div. 311, 91 N. Y. S. 524. son, 34 N. J. Eq. 496; Sprague v. *'Levy v. McDonnell, 92 Ark. 324, Cochran, 144 N. Y. 104; Smith v. 122 S. W. 1002, 135 Am. St. 183; Smith, 125 N. Y. 228; Freeman v. Gotten V. Blocker, 6 Fla. 1; Iowa Freeman, 43 N. Y. 34, 3 Am. Hep. State Sav. Bank v. Coonrod, 97 657; Stoddard v. Hart, 23 N. Y. 556; Iowa 106, 66 N. W. 78; Barber v. Burdick v. Jackson, 7 Hun (N. Y.) Toomey (Ore.), 136 Pac. 343. 488; Baker v. Baker, 2 S. Dak. 261, " Smith V. Smith, 153 Ala. 504, 45 49 N. W. 1064; McCarty v. Bracken- So. 168; Washington Brewery Co. ridge, 1 Tex. Civ. App. 170, 20 S. V. Carry (Md.), 24 Atl. 151; Cla- W. 997. baugh V. Byerly, 7 Gill (Md.) 354, ^Girault v. Adams, 61 Md. 1; Mc- -V48 Am. Dec. 575; Bennett v. Harri- Clintock v. Laing, 22 Mich. 212 /■son, 115 Minn. 342, 132 N. W. 309, (clear and satisfactory proof re- 37 L. R. A. (N. S.) 521; Meixel v. quired). Meixel, 146 N. Y. S. 587; Mathews ™ Dodge v. Wellman, 1 Abb. App. V. Damainville, 100 App. Div. 311, 91 (N. Y.) 512; Carr v. Carr, 4 Lans. N. Y. S. 524. (N. Y.) 314; Burdick v. Jackson, 7 =* Coster V. Georgia Bank, 24 Ala. Hun (N. Y.) 104; McBurney v. 37; King v. Williams, 66 Ark. 333, Wellman, 42 Barb. (N. Y.) 390; 50 S. W. 695; Foster Lumber Co. v. Petrie v. Wright, 6 Smed. & M. Harlan County Bank, 71 Kans. 158, (Miss.) 647 (merger of equitable 80 Pac. 49, 114 Am. St. 470; Cole v. into legal mortgage). Cole, 41 Md. 301; Hicks v. Turck, 72 "Burdick v. Jackson, 7 Hun (N Mich. 311, 40 N. W. 339; Wenzel v. Y.) 488. 239 AGREEMENTS AND INFORMAL MORTGAGES § 164a The agreement must show an intention to create a lien on some particular property, sufficiently designated.'^ An agreement to give a mortgage on one of several houses to be built on certain land has been held sufficient, however, although the particular house was not designated.'^ In jurisdictions where a mortgage actually conveys an interest in land, even courts of equity, in the light of the statute of frauds will not give effect to a parol agreement to execute a mortgage, as an equi- table mortgage.'* § 164a. Agreement by purchaser at judicial sale. — A purchase at a judicial sale for the benefit of the debtor in accordance with a verbal or written agreement with him will be regarded as an equitable mort- gage to him.'^ So, an equitable mortgage is created by an assignment of a sheriff's deed or certificate of purchase to a stranger advancing money for redemption of lands from judicial sale, under an agreement to reconvey to the debtor on repayment. '° The case is the same where a junior mortgagee buys in plaintiff's land at foreclosure sale under a " Seymour v. Canandaigua &c. Co., 25 Barb. (N. Y.) 284. ^Kendall v. Niebuhr, 13 Jones & S. (N. Y.) 542; Payne v. Wilson, 74 N. Y. 348. =* Alexander v. Pardue, 30 Ark. 359; Six v. Shaner, 26 Md. 415; Gale V. Morris, 29 N. J. Eq. 224; Mar- quat V. Marquat, 7 How. Pr. (N. Y.) 417; Bower v. Oyster, 3 P. & W. (Pa.) 239; Boebl v. Wadgymar, 54 Tex. 589; Bailey v. Warner, 28 Vt. 87. But see Sprague v. Cochran, 144 N. Y. 104, 38 N. E. 1000; McCarty V. Brackenridge, 1 Tex. Civ. App. 170. »La Cotts V. La Cotts (Ark.), 159 S. W. 1111; Union Mut. Life Ins. Co. V. Slee, 123 111. 57, 12 N. E. 543, 13 N. E. 222; Klock v. Walter, 70 111. 416; Beatty v. Brummett, 94 Ind. 76; Byers v. Johnson, 89 Iowa 278, 56 N. W. 449; Stroup v. Hay- cock, 56 Iowa 729, 10 N. W. 257; Roberts v. McMahan, 4 Greene (Iowa) 34; Nichols v. Marquess, 141 Ky. 642, 133 S. W. 562; Shef- field V. Day, 28 Ky. 754, 90 S. W. 545; Howe v. Courtney, 32 Ky. L. 711, 107 S. W. 206; Guenther v. Wisdom, 27 Ky. L. 230, 84 S. W. 771; Potter v. Kimball, 186 Mass. 120, 71 N. E. 308; Anderson v. Smith, 103 Mich. 446, 61 N. W. 778; Wenzel v. Weigand, 92 Minn. 152, 99 N. W. 633; Phillips v. Jackson, 240 Mo. 310, 144 S. W. 112; English v. Rainear (N. J. Eq.), 55 Atl. 41; Barkelew v. Taylor, 8 N. J. Eq. 206; Moore v. Nye, 66 Hun 628, 21 N. Y. S. 94; Sahler v. Signer, 37 Barb. (N. Y.) 329; Williams v. Avery, 131 N. Car. 188, 42 S. E. 582; Wilson v. Giddlngs, 28 Ohio St. 554; Gaines v. Brokerhoff, 136 Pa. St. 175, 19 Atl. 958; Guinn v. Locke, 1 Head (Tenn.) 110; Liskey v. Snyder, 56 W. Va. 610, 49 S. E. 515; Beebe v. Wiscon- sin Mtg. Loan Co., 117 Wis. 328, 93 N. W. 1103; Phelan v. Fitzpatrick, 84 Wis. 240, 54 N. W. 614; Hoile v. Bailey, 58 Wis. 434, 17 N. W. 322. But see Hibernian Banking Assn. v. Commercial Nat. Bank, 157 111. 524, 41 N. E. 919; Price v. Evans, 26 Mo. 30; Merritt v. Brown, 19 N. J. Eq. 286; Jones v. Pierce, 134 Pa. St. 533, 19 Atl. 689. Where the parol evi- dence was not strong enough to make the transaction a mortgage. An agreement to buy in property and hold it in trust to secure pay- ments, creates an equitable mort- gage. Lutz v. Hoyle (N. Car.), 83 S. E. 749. "Lounsbury v. Norton, 59 Conn. § 165 EQUITABLE MORTGAGES 240 senior lien, agreeing to give plaintiff a certain time to redeem, and there can be no foreclosure by a private sale.^^ A conveyance to one who advances money for the benefit of another under an agreement of the latter to purchase at a certain price may be regarded as a mort- gage to the latter for the amount of the purchase-money which the purchaser may foreclose.^* § 165. Agreement entered upon corporate records — Consent judg- meiit — Conditional agreement. — Upon this principle, the entry of an agreement by a corporation upon its records, that a certain bond for title should be pledged to certain of its members as security for lia- bilities which they were about to incur for the company, was held to be an equitable mortgage ; and although a deed of trust was afterward made in conformity with the resolution, yet these members, having acted upon the faith of it before the deed of trust was made, were held to be entitled to the security as from that time, and the deed of trust was regarded only as a confirmation of the agreement, and as having relation to the resolution.'"' The entry of a consent judgment, declaring that "defendant has an equity to redeem" land on payment of a certain sum within a 170, 22 Atl. 153; Trogdon v. Trog- 15 111. 519; Rogers v. Davis, 91 don, 164 111. 144, 45 N. B. 575; Byers Iowa 730, 59 N. W. 265; Stratton V. Johnson, 89 Iowa 278, 56 N. W. v. Rotrock, 84 Kans. 198, 114 Pac. 449; Barthell v. Syverson, 54 Iowa 224; Weekly v. Ellis, 30 Kans. 507, 160, 6 N. W. 178; Brey v. Barbour, 2 Pac. 96; McKenney v. Page, 146 14 Ky. 655, 20 S. W. 899; Staugh- Ky. 682, 143 S. W. 382; McPherson ton V. Simpson, 69 Minn. 314, 72 N. v. Hayward, 81 Maine 329, 17 Atl. W. 126; Sweetzer's Appeal, 71 Pa. 164; StmcMeld v. Milliken, 71 St. 264; Wilson v. McWilliams, 16 S. Maine 567; Helton v. Meighen, 15 Dak. 96, 91 N. W. 453; Shank v. Minn. 69; Malloy v. Malloy, 35 Groff, 43 W. Va. 337, 27 S. E. 340. Nebr. 224, 52 N. W. 1097; Leahigh " McLure v. National Bank of v. White, 8 Nev. 147; Carr v. Carr, Commerce, 252 Mo. 510, 160 S. W. 52 N. Y. 251; Hall v. O'Connell, 52 1005. Ore. 164, 95 Pac. 717,. 96 Pac. 1070; ^* Wright V. Shumway, 1 Biss. Fessler's Appeal, 75 Pa. St. 483; (U. S.) 23, 30 Fed. Gas. No. 18093; Houser v. Lament, 55 Pa. St. 311, Watts V. Kellar, 56 Fed. 1; Hughes 93 Am. Dec. 755; Hewitt v. Huling, V. McKenzie, 101 Ala. 415, 13 So. 11 Pa. St. 27; Robinson v. Lin- 609 ; Banks v. Walters, 95 Ark. 501, coin Sav. Bank, 85 Tenn. 363, 3 S. 130 S. W. 519; Campbell v. Free- W. 656; Lucia v. Adams, 36 Tex. man, 99 Cal. 546, 34 Pac. 113; Purdy Civ. App. 454, 82 S. W. 335; Pen- V. BuUard, 41 Cal. 444; Hidden v. nington v. Hanby, 4 Munf. (Va.) Jordan, 21 Cal. 92; Lindsay v. Mat- 140; Beebe v. Wisconsin Mtg. Loan thews, 17 Fla. 575; Doris v. Story, Co., 117 Wis. 328, 93 N. W. 1103; 122 Ga. 611, 50 S. E. 348; Fleming Jordain v. Fox, 90 Wis. 99, 62 N. V. Georgia R. Bank, 120 Ga. 1023, W. 936; Schriber v. LeCIair, 66 48 S. E. 420; Stewart v. Fellows, Wis. 579, 29 N. W. 570; Hoile v. 128 III. 480, 20 N. E. 657; Smith v. Bailey, 58 Wis. 434, 17 N. W. 322. Cremer, 71 111. 185; Smith v. Sack- =» Miller v. Moore, 3 Jones Bq. ett, 15 111. 528; Davis v. Hopkins, (N. Car.) 431. 341 AGEEEMEXTS AND INFORMAL MORTGAGES § 166 specified time and that he shall be absolutely debarred on default, establishes an equitable mortgage.^" The maker of two notes gave an instrument to his sureties on the notes reciting that they were given for the purchase of land, and pro- viding, "In case I fail to pay said notes, I do bind myself, my heirs, etc., to convey to said sureties the aforesaid land." It was held that, upon the failure of the principal to pay the notes, the sureties were entitled, not to an absolute conveyance, but to a mortgage.^^ § 166. Defective instruments — Conveyances in trust for support and special purposes.*^ — An instrument which does not transfer the legal estate may yet operate as an equitable transfer of it in the nature of a mortgage.*^ Thus, a mortgage to certain executors from which the word "heirs," creating a fee, was omitted, and the word "suc- cessors" used in its stead was held to be an equitable mortgage in fee, and was reformed.** Such was held to be the effect of an agreement under seal made by one to whom land was conveyed in consideration that he should support and maintain the grantor, whereby the produce of the land was pledged for that purpose, and if that should prove insuflScient the entire fee was appropriated.*^ Such, too, is a similar instrument in which the signer agrees to maintain his father and mother during their natural lives, and as security for the fulfilment of the agreement conveys and grants to them "each and severally a life lien or dower or lien of maintenance for life" in real estate.*^ A written agreement by the owner of land to pay his creditor in posses- sion thereof a certain sum, giving him possession instead of interest, till the land was sold to pay the debt, has been held to constitute an equitable mortgage.*' The words, "we mortgage the property," ac- "Bunn V. Braswell, 139 N. Car. na Bank v. Johnson, 47 Ohio St. 135, 51 S. E. 927. 306, 24 N. E. 506. "Courtney v. Scott, Lltt. Sel. ^'Hiatt v. Parker, 29 Kans. 765; Cas. (Ky.) 457; Wayt v. Carwithen, Webster v. Cadwallader, 133 Ky. 21 W. Va. 516. 500, 118 S. W. 327, 134 Am. St. 470; ""Defective and informal mort- Price v. Hobbs, 47 Md. 359; Campau gages are specially treated in § 168 v. Chene, 1 Mich. 400; Doescher v. post. Spratt, 61 Minn. 326, 63 N. "W. 736; *■ Howard v. Iron &e. Co., 62 Minn. Chase v. Peck, 21 N. Y. 581; Abbott 298, 64 N. W. 896; White v. Uni- v. Sanders, 80 Vt. 179, 66 Atl. 1032; versity Land Co., 49 Mo. App. 619; Davis v. Davis, 81 Vt. 259, 69 Atl. Leiweke v. Jordan, 59 Mo. App. 876, 130 Am. St. 1035. But see 564; Mennde v. Delalre, 2 Desaus. Bethlehem v. Armis, 40 N. H. 34, (S. Car.) 450. 77 Am. Dec. 700. «Gale V. Morris, 29 N. J. Eq. 222; *GiIson v. Gilson, 2 Allen (Mass.) First Nat. Bank v. Adam (111.), 115. 25 N. E. 576; Brown v. Bank, 44 '"Blackburn v. Tweedie, 60 Mo. Ohio St. 269, 6 N. E. 648; New Vien- 505. 16 — ^JoNES Mtg. — Vol. I. § 166 EQUITABLE MORTGAGES 342 eompanied by a provision for the sale of it upon nonpayment of money thus secured, have been held sufficient to create a mortgage.^* A conveyance by a testator's son of his interest in a remainder, before sale of the realty by the executors under a power of sale, creates an equitable mortgage.*® And the conclusion was the same in the ease of a commissioner's deed executed to the guardian of the heirs of a purchaser at a judicial sale, reserving to the heirs the right to redeem.^" An instrument whereby a corporation "pledges the real and per- sonal estate of said company" for the payment of a debt or the fulfil- ment of a contract may be enforced as a mortgage against the com- pany and all persons claiming under it with notice; and is not ren- dered invalid for the reason that the property of the company is pledged without specification, or that the amount secured is not stated, or the time of redemption fixed.^^ An instrument which re- cites that the maker of it had employed certain persons as counsel to prosecute a claim to certain land, and promises the payment of a certain sum "at the end of the litigation out of the land," is a mort- gage.°^ It indicates the creation of a lien, and specifies the debt intended to be secured, and the property upon which it is to take effect. And so an agreement in a lease, that the lessor "is to have a lien" upon certain property for the faithful performance of the lessee's obligation to pay rent, is in effect a mortgage.''^ A covenant by a debtor, to execute to his creditor a mortgage upon the debtor's share under his father's will, whenever a division shall have been made, is a mortgage.^* So is a provision in a deed that the grantee shall pay certain legacies or certain liens which are a charge upon the property conveyed.'^ So, also, is an agreement not under seal which provides that the purchase-money of land should be secured by the property, if not resold by the purchaser, and if sold, then paid from the proceeds.^^ A seal is not necessary to make an «De Leon v. Higuera, 15 Cal. 483. N. T. 550; Bryce v. Massey, 35 S. See also BarroUhet v. Battelle, 7 Car. 127, 14 S. E. 768. Cal. 450. ""Jackson v. Carswell, 34 Ga. 279. "Archer v. Archer, 147 App. Dlv. "'First Nat. Bank v. Adam (111.), 44, 131 N. Y. S. 661. 25 N. E. 576; Whiting v. Eichel- =° Green v. Maddox, 97 Ark. 397, berger, 16 Iowa 422. 134 S. "W. 931. " Lynch v. Utica Ins. Co., 18 "White Water Val. Canal Co. v. Wend. (N. Y.) 236. Vallette, 21 How. (U. S.) 414, 16 "'Mitchell v. Wade, 39 Ark. 377; L. ed. 154; Mobile &c. R. Co. v. Tal- Howard v. Iron &c. Co., 62 Minn, man, 15 Ala. 472. See also Hamil- 298, 64 N. W. 896; Stewart v. Hutch- ton Trust Co. V. Clemes, 163 N. Y. ins, 6 Hill (N. Y.) 143. 423, 57 N. Y. 614; Husted v. Ingra- "Racouillat v. Sansevain, 32 Cal. ham, 75 N. Y. 251; Hale v. Bank, 64 376. 343 AGEEEMENTS AND INTOKMAL MORTGAGES § 166 instrument a good equitable mortgage. An unsealed instrument pledging the real and personal estate of a corporation for the per- formance of a contract is an equitable mortgage. °'* So is a power of at- torney executed by a debtor to his creditor, authorizing the latter to convey the debtor's property unless he should pay the debt within a time named.'^" So an agreement by the legal owner of land, that a mortgage of the land by one who had no title should nevertheless be a valid lien upon it, is a good equitable mortgage.^" Land was conveyed to a trustee to hold for the separate use of a mar- ried woman, reserving to her the right with her husband to sell all or any part of the same whenever she might elect to do so. She and her husband made a deed of trust of the land, to which the trustee was not a party; but, by a writing under his hand and seal of the same date, he agreed "that the above trust deed may be executed, and, in the event that a sale of the above-named lands shall have to be made, I will unite in the deed conveying, provided the said sale is made according to the terms of this trust deed." It was held that the deed, though not passing the legal title, yet created a lien on the land as an equitable mortgage."^ The purchaser of lands of a decedent at a sale by order of the pro- bate court, before payment of the entire purchase-money or the con- veyance of the title, may convey his imperfect equitable title by mort- gage."^ A mortgage executed to a partnership in its firm name, to secure a debt to the firm, duly executed and recorded, constitutes a valid lien in favor of the firm as security for such debt."^ But a recital in a deed, that it is subject to a prior mortgage de- "Racouillat v. Sansevain, 32 Cal. v. Shepherdstown Mfg. Co., 30 W. 376; Portwood v. Outton, 3 B. Mon. Va. 790, 5 S. E. 266; Wayt v. Car- (Ky.) 247; Lewis v. Small, 71 withen, 21 W. Va. 516. Maine 552; Abbott v. Godfroy, 1 ''» Donald v. Hewitt, 33 Ala. 534; Mich. 178; Lebanon Sav. Bank v. Coster v. Bank of Georgia, 24 Ala. Hollenbeck, 29 Minn. 322, 13 N. "W. 37; Kelly v. Payne, 18 Ala. 371; 145; Dunn v. Raley, 58 Mo. 134; Mobile & C. P. R. Co. v. Talman, 15 Jones V. Brewington, 58 Mo. 210; Ala. 472; Bank of Kentucky v. Harrington v. Fortner, 58 Mo. 468; Vance, 4 Litt. (Ky.) 169; Abbott v. Watkins v. Vrooman, 51 Hun 175, Godfroy, 1 Mich. 178; Campbell v. 5 N. Y. S. 172; Spencer v. Haynes, Worthington, 6 Vt. 448; Whitworth 12 Phila. (Pa.) 452; Woods v. Wal- v. Gaugain, 3 Hare 416. lace, 22 Pa. St. 171; Westerly Sav. "'Pemberton v. Simmons, 100 Ni Bank v. Stillman Mfg. Co., 16 R. I. Car. 316, 6 S. E. 122. 497, 17 Atl. 918; Bullock v. Whipp, "Watkins v. Vrooman, 51 Hun 35 R. I. 195, 2 Atl. 309; Bryce v. 175, 5 N. Y. S. 172. Massey, 35 S. Car. 127, 14 S. E. 768; "Bensimer v. Fell, 35 W. Va. 15, Holley V. Curry, 56 W. Va. 70, 12 S. E. 1078. 51 S. B. 135, 112 Am. St. 944; "^Washington v. Bogart, 119 Ala. Atkinson v. Miller, 34 W. Va. 115, 377, 24 So. 245. 11 S. E. 1007, 9 L. R. A. 544; Knott °=New Vienna Bank v. Johnson, § 167 EQUITABLE M0ETGA6ES 244 scribed, does not make an equitable mortgage of an instrument which does not pass the owner's estate. A married woman owning land joined her husband in a mortgage which she signed only in release of dower. Subsequently she executed in due form a mortgage which recited that the property was subject to that mortgage. It was held that the mortgagee in the former mortgage could not enforce his mort- gage against the wife, or against the holder of the second mortgage."* § 167. Agreements charging specific lands. — ^A written agreement that attempts to appropriate specific property to the payment of a debt, and gives the creditor possession of it to hold till the debtor shall make sale of the land and satisfy the debt from such sale, the occupation of the land and the doing of certain work to oflEset interest on the debt, constitutes an equitable mortgage binding upon the owner of the land, and upon any one who buys of him with notice of the agreement."^ An agreement on the back of a note, making it a charge upon particular land, is an equitable mortgage. In this way an agreement intended to operate as a revival of a mortgage note which had been paid may be rendered efiectual, although ineffectual to revive the mortgage lien."® So, an equitable mortgage is created by a duly executed and ac- knowledged agreement, reciting that it shall be a lien upoii a certain farm, until compensation for trees planted thereon shall be received;"' and by an agreement of the equitable owner of land, that the holder of the legal title may hold it as security for the payment of a sum of money borrowed by the former of a third person."^ A provision in a lease, giving the lessor a lien for the rent on cer- 47 Ohio St. 306, 24 N. E. 503; Chi- S. 320, 23 L. ed. 608; Daggett v. cago Lumber Co. v. Ash worth, 26 Rankin, 31 Cal. 321; Hackett v. Kans. 212. It has heen held that a Watts, 138 Mo. 502, 40 S. W. 113; conveyance to a firm is a convey- Blackburn v. Tweedie, 60 Mo. 505; ance to the members as tenants in McQuie v. Peay, 58 Mo. 58; Cum- common, who hold the title in trust mings v. Jackson, 55 N. J. Eq. 805, for the firm; Beaman v. Whitney, 38 Atl. 763; Gale v. Morris, 29 N. 20 Maine 413; Jones v. Neale, 2 J. Bq. 224; Dunman v. Coleman, 59 Pat. & H. (Va.) 339. Tex. 199; Wayt v. Carwithen, 21 W. That a partnership may acquire Va. 516; Hoile v. Bailey, 58 Wis. an equitable estate in real property 434, 17 N. W. 322. But see Allen v. is decided in Rammelsberg v. Mitch- Montgomery, 48 Miss. 101. ell, 29 Ohio St. 22, 52. "Bell v. Pelt, 51 Ark. 433, 11 S. "Franklin Sav. Bank v. Miller, W. 684; Peckham v. Haddock, 36 17 R. I. 272, 21 Atl. 542. 111. 38. » White Water Val. Canal Co. v. "Ward v. Stark, 91 Ark. 268, 121 Vallette, 21 How. (U. S.) 414, 16 S. W. 382. L. ed. 154; Wilson v. Boyce, 92 U. «*Chadwick v. Clapp, 69 111. 119. 245 AGEEEMENTS AND INFORMAL MORTGAGES § 168 tain property*^ or on buildings and fixtures to be erected by tlie lessee,'" has been held to create an equitable mortgage. Debenture bonds, issued by a corporation, pledging its property for the payment thereof, constitute an equitable mortgage.'^ So, an agreement made by bondholders secured by a mortgage of a railroad, that certain preference bonds secured by a subsequent mortgage should be a lien on the railroad prior to the bonds held by the several signers of the agreement, operates as a pledge or equitable mortgage of the interest of such bondholders under the prior mortgage; but of course such agreement does not in any way affect the interest or the priority of the lien of any bondholders who do not sign the agreement/^ A mortgage made by a person individually to himself as guardian to secure moneys belonging to his ward would be regarded in a court of equity as a valid security against the guardian, and would be given effect for the purpose of protecting the interest of the ward. After a sale of the mortgaged premises, a judgment in a foreclosure suit would estop the parties from questioning the mortgage, and a sale would confer a good title upon the purchaser.'^ It has even been held that if land intended to be included in a mort- gage is omitted by mistake, and a judgment is subsequently rendered against the mortgagor, the lien of the judgment creditor is subject to the equity of the mortgage.'^* § 168. Defective or informal mortgages.'"' — Instruments which at- tempt to create a legal mortgage or trust deed, and fail through some defect in their execution or form, and written contracts intended to operate as mortgages or as charges upon property, which are too in- formal or defective to operate at law, are generally given effect and enforced as equitable mortgages.'' A mortgage, or trust deed, which «■ Barroilhet v. Battelle, 7 Cal. "Martin v. Nixon, 92 Mo. 26, 4 450; Whiting v. Eichelberger, 16 S. W. 503. Is this decision a safe Iowa 422. precedent? "First Nat. Bank v. Adam (111.), '=See also ante § 166. Defective 25 N. E. 576. mortgages, omission of seal, words " Seymour v. Canandaigua &c. R. creating fee, etc. Co., 25 Barb. (N. Y.) 284; Poland ™Hunt v. Rhodes, 1 Pet. (U. S.) v. Lamoille R. Co., 52 Vt. 171; Dun- 1; "Wood v. Holly Mfg. Co., 100 Ala, can V. Manchester &c. Waterworks, 326; O'Neal v. Seixas, 85 Ala. 80; 8 Price 697. See also William Bell v. Pelt, 51 Ark. 433, 11 S. W. Firth Co. v. South Carolina Loan 684, 4 L. R. A. 247, 14 Am. St. 57; &c. Co., 122 Fed. 569, 59 C. C. A. 73; Peers v. McLaughlin, 88 Cal. 294, Kirkpatrick v. Eastern Milling &c. 22 Am. St. 306; Remington v. Hig- Co., 137 Fed. 387, 69 C. C. A. 579. gins, 54 Cal. 624; Love v. Sierra " Poland V. Lamoille Val. R. Co., Nevada &c. Co., 32 Cal. 639, 91 Am. 52 Vt 144. Dec. 602; Racouillat v. Sansevain, "Lyon V. Lyon, 67 N. Y. 250. 32 Cal. 376; Daggett v. Rankin, 31 § 168 EQUITABLE MORTGAGES 246 can not be enforced by a sale under the power or by a judgment of foreclosure, on account of the omission of some formality requisite to a complete mortgage or deed of trust, will nevertheless be regarded as an equitable mortgage, and the lien will be enforced by special proceedings in equity. The attempt to create a security in legal form upon specific property having failed, effect is given to the intention of the parties, and the lien enforced as an equitable mortgage/'^ Any agreement between the parties in interest that shows an inten- tion to create a lien may be in equity a mortgage/^ As stated by Judge Story,''" "If a transaction resolve itself into a security, what- ever may be its form, and whatever name the parties may choose to give it, it is in equity a mortgage." Effect has been given in this way Cal. 321; Margarum v. J. S. Chris- tie Orange Co., 37 Fla. 165, 19 So. 637; Edwards v. Hall, 93 111. 326; Peckham v. Haddock, 36 111. 38 (de- fective renewal); Vaniman v. Gardner, 99 111. App. 345; Brown V. Brown, 103 Ind. 23, 2 N. B. 233; Millholand v. Tiffany, 64 Md. 455; Sanders v. McDonald, 63 Md. 503; Dyson v. Simmons, 48 Md. 207; Jolinson v. Canby, 29 Md. 217; Price V. McDonald, 1 Md. 414, 54 Am. Dec. 657; Tlernan v. Poor, 1 Gill & J. (Md.) 216,19 Am. Dec. 225; Abbott v. Godfrey, 1 Mich. 178; Lebanon Sav. Bank v. Hollenbeck, 29 Minn. 322; Eoss V. Worthington, 11 Minn. 438, 88 Am. Dec. 95; Burnett v. Boyd, 60 Miss. 627; Blackburn v. Tweedie, 60 Mo. 505; McQuie v. Peay, 58 Mo. 58; McClurg v. Phillips, 49 Mo. 315; Davis v. Clay, 2 Mo. 161; Gale V. Morris, 29 N. J. Eq. 222; Sprague V. Cochran, 144 N. Y. 104, 38 N. E. 1000; Smith v. Smith, 125 N. Y. 224, 26 N. E. 259; Perry v. Board of Missions, 102 N. Y. 99, 6 N. E. 116; Coman v. Lackey, 80 N. Y. 350; Husted v. Ingraham, 75 N. Y. 257; Payne v. Wilson, 74 N. Y. 348; Chase v. Peck, 21 N. Y. 583; Na- tional Bank v. Lanier, 7 Hun (N. Y.) 623; Launing v. Tompkins, 45 Barb. (N. Y.) 316; Lake v. Dowd, 10 Ohio 415; Muskingum v. Car- penter, 7 Ohio 21, 28 Am. Dec. 616; Brown v. Farmers' Supply Co., 23 Ore. 544; Moore v. Thomas, 1 Ore. 201; Delaire v. Keenan, 3 Desaus. Eq. (S. Car.) 74, 4 Am. Dec. 604; Dulaney v. Willis, 95 Va. 606, 29 S. E. 324, 63 Am. St. 815; Miller v. Rutland &c. R. Co., 36 Vt. 452; Peely v. Bryan, 55 W. Va. 586, 47 S. E. 307; Harrigan v. Gilchrist, 121 Wis. 127, 99 N. W. 909; Frank V. Hicks, 4 Wyo. 502. " Margarum v. Christie Orange Co., 37 Fla. 165, 19 So. 637; Dyson V. Simmons, 48 Md. 220; Tiernan V. Poor, 1 Gill & J. (Md.) 216, 19 Am. Dec. 225; Payne v. Wilson, 74 N. Y. 348; Sprague v. Cochran, 144 N. Y. 104, 38 N. E. 1000, revg. 70 Hun 512; Sullivan v. Corn Exch. Bank, 154 App. Div. 292, 139 N. Y. S. 97; Atkinson v. Miller, 34 W. Va. 115, 11 S. E. 1007 (quoting text); Frank v. Hicks, 4 Wyo. 502, 35 Pac. 475, 1025 (quoting text). "Gest V. Packwood, 39 Fed. 525; Courtner v. Etheredge, 149 Ala. 78, 43 So. 368; Bell v. Pelt, 51 Ark. 433, 11 S. W. 684; Daggett v. Ran- kin, 31 Cal. 321; Fidelity &c. Co. V. Shenandoah Val. R. Co., 33 W. Va. 761, 11 S. E. 58; Knott v. Man- ufacturing Co., 30 W. Va. 790, 5 S. E. 266; Wayt v. Carwithen, 21 W. Va. 516. See also cases in pre- ceding note and § 162 note. The intent to create an equitable mort- gage must be manifest as distin- guished from an intent to apply the proceeds from the sale of the property to the payment of the debt. Smith V. Rainey, 9 Ariz. 362, 83 Pac. 463. See post §§ 264, 265. ™Flagg V. Mann, 2 Sum. (U. S.) 486, and see cases cited in Harrigan V. Gilchrist, 121 Wis. 127, 99 N. W. 909, 981 (quoting Judge Story). 347 AGREEMENTS AND INFORMAL MORTGAGES § 169 to a deed of trust in which the name of the trustee was accidentally omitted;*" to a mortgage from which the name of the mortgagee was omitted f^ to a mortgage in which the grantees were insufficiently designated as "Stark Brothers ;"^^ to a mortgage from which the name of the grantor's husband was omitted;*^ to one from which a seal was omitted by mistake ;'* to one sealed in fact, but not expressed to be sealed ;*' to one imperfectly acknowledged, or not acknowledged at all;*" or not witnessed as a deed of real estate is required to be.*^ It has been held that effect will not be given to a mortgage wit- nessed, acknowledged, and recorded, but not signed by the mort- gagor,** but there is authority contra.*' Although a mortgage signed in blank, and afterward filled in by an agent of the grantor, is not a legally executed deed, it may, however, create an equitable lien which the courts will enforce.'" An instrument in the form of a chattel mortgage but intended as security on real property will be construed as an equitable mortgage.'^ § 169. Corporate mortgages executed in name of agent. — A mort- gage defectively executed in the name of an agent, though purporting to be the mortgage of the corporation, is held to be binding in equity if it appear that the officer or agent had authority to bind it, and by accident or mistake executed it in his own name instead of the name of the company.'^ In such a case, before the Supreme Court of Cali- ™ Burnside v. Wayman, 49 Mo. " Longdon v. Wakeley, 62 Pla. 356; McQuie v. Peay, 58 Mo. 56; 530, 56 So. 408; Abbott v. Godfrey, Dulaney v. Willis, 95 Va. 606, 29 S. 1 Mich. 178; Watkins v. Vrooman, B. 324, 64 Am. St. 815. 51 Hun 175, 5 N. Y. S. 172; Wliite *> Dyson v. Simmons, 48 Md. 207. v. Denman, 16 Ohio 59; Lake v. =^ Stark V. Kirkley, 129 Mo. App. Doud, 10 Ohio 415; Muskingum 353, 108 S. W. 625. Bank v. Carpenter, 7 Ohio 21, 28 '"'Dietrich v. Deavitt, 81 Vt. 160, Am. Dec. 616; Moore v. Thomas, 69 Atl. 661. 1 Ore. 201; Stelts v. Martin, 90 S. "Gill V. Clark, 54 Mo. 415; Dunn Car. 14, 72 S. B. 550; Bryce v. v. Raley, 58 Mo. 134; Harrington Massey, 35 S. Car. 127, 14 S. E. V. Fortner, 58 Mo. 468; McClurg 768; Morrill v. Morrill, 53 Vt. 74, V. Phillips, 49 Mo. 315, 57 Mo. 214. 38 Am. Rep. 659. See ante § 166 note. ^Goodman v. Randall, 44 Conn. ''Jones v. Brewington, 58 Mo. 321 210. *° Martin v. Nixon, 92 Mo. 26, 4 *= Racouillat v. Sansevain, 32 Cal. S. W. 503. 376; Dyson v. Simmons, 48 Md. "Fox v. Palmer, 25 N. J. Eq. 416. 214; Price v. McDonald, 1 Md. 403, "'Standorf v. Shockley, 16 N. 54 Am. Dec. 657; Black v. Gregg, Dak. 73, 111 N. W. 622, 11 L. R. 58 Mo. 565; "Watkins v. Vrooman, A. (N. S.) 869. See ante § 60. 51 Hun 175, 5 N. Y. S. 172; Moore v. »» Welsh v. Usher, 2 Hill Ch. (S. Thomas, 1 Ore. 201; Frank v. Car.) 167, 29 Am. Dec. 63; Miller Hicks, 4 Wyo. 502, 35 Pac. 475, v. Rutland &c. R. Co., 36 Vt. 452. 1025. See ante § 127. § 170 EQUITABLE MOBTGAGES 248 fornia,'^ it was urged that the defective execution of the mortgage was caused by a mistake of law, and that therefore the defective exe- cution could not be aided. In answer to this, Mr. Justice Shaffter, delivering the opinion of the court, replies that, where there is a de- fective execution of a power, it is a matter of no equitable moment whether the error came of a mistake of law or mistake of fact. It is enough that the power existed, and that there was an attempt to act under it. The relief is not so much by way of reforming the instru- ment as by aiding its defective execution, which aid is administered through or by the application of well-settled maxims of the lawj or, as in the class of cases to which this belongs, the instrument defect- ively executed as a deed is considered as properly executed as a con- tract for a deed; and therefore as requiring neither reformation nor aid, but as ripe for enforcement, according to the methods peculiar to courts of equity. In order that an instrument defectively executed may be declared a mortgage, it must appear that the instrument was attempted to be executed by the mortgagor, in pursuance of an agreement indicating an intent that the property described is to be held or transferred as security for an obligation or debt of the mortgagor. Thus a written instrument reciting that a corporation named has mortgaged certain property, signed by one person as president and by another as secre- tary and treasurer in their own names, sealed with their seals, and acknowledged by them as their act and deed, will not be held to be an equitable mortgage, in the absence of allegations and proof that it was attempted to be executed by the corporation, or its authorized agents, as security for an obligation of the corporation.®* 'No particular form of words is necessary for an agent to bind his principal, pro- vided it appears from the mortgage that he intended it as the act of his principal. Where such intent appeared, it was held that the signa- ture Arthur W. Magill (L. S.), agent for the Middletown Manufac- turing Company, was siifiBcient to bind the corporation." 95 § 170. Mortgage by implied trust. — If a mortgage be made to two persons conditioned to secure the payment of a debt to one of them only, the legal estate would vest in them as tenants in common; but °'Love V. Sierra Nevada, L. W. "Brown v. Farmers' Supply De- &c. Co., 32 Cal. 639, 91 Am. Dec. pot Co., 23 Ore. 541, 32 Pac. 548. 602. ■" Magill v. Hinsdale, 6 Conn. 464, 16 Am. Dec. 70. 249 AGREEMENTS AND INFORMAL MORTGAGES § 170 the one having no claim secured would be a trustee to the extent' of his moiety, and hold it in trust to secure the debt due the other."" The fact that a mortgage and the note that it secures are made pay- able in the alternative to one or the other of two definitely named payees does not render them void ; but such note and mortgage are en- forcible in the courts and all the parties named as alternating payees should join in the suit to enforce such contracts.'^ In like manner, where one advances money to pay off a mortgage, which is thereupon assigned for his protection to one of the owners of a part of the property, it is a trust in the hands of the latter, and may be established, as against all parties having notice of these facts, as an equitable lien, although the mortgage has been discharged of record.** In a case where the maker of a note purchased incumbered land and caused the conveyance to be made to the payee to secure the note, the payee was declared an equitable mortgagee, who held the legal title subject to a resulting trust in favor of the maker.°° A conveyance to a creditor as trustee to sell and apply the proceeds in payment of certain enumerated debts due to him and to others, and then return any balance to the grantor, the creditors assenting in writing to such conveyance, has the effect of a mortgage for their benefit.^ The owner of land who built a mill for a party who went iuto possession under an agreement to buy and pay for the premises in a certain time, has an equitable mortgage thereon.^ A written agreement by a creditor to reconvey property to a debtor, if the in- debtedness was discharged within a year, otherwise to sell and apply the proceeds to the debt, constitutes a declaration of trust and an equitable mortgage.^ A mortgage may be given to secure the mortgagee and also a third person, and the fact that it was given in part for the benefit of an- other may be made out wholly by parol proof.* And so a mortgage given to the cashier of a bank in his individual name, for a debt due '"Root V. Bancroft, 10 Mete. Newgass, 147 N. Y. S. 4. Where (Mass.) 44. plaintiff and defendant purchase "' Seedhouse v. Broward, 34 Fla. land as tenants in common and 509, 16 So. 425. plaintiff pays the entire purchase- °'King V. McVickar, 3 Sandf. Ch. money and cost of improvements, (N. Y.) 192. defendant agreeing to repay his ■"Windt V. Covert, 152 Cal. 350, share as rapidly as possible from 93 Pac. 67. sales and income, the intent to cre- ^Fox V. Fraser, 92 Ind. 265. See ate an equitable mortgage does not ante § 62. appear. Smith v. Rainey, 9 Ariz. 'McCrillis v. Cole, 25 R. I. 156, 362, 83 Pac. 463. 55 Atl. 196. "Price v. Brown, 98 N. Y. 388. 'Drovers' Deposit Nat. Bank v. § 171 EQUITABLE MORTGAGES 350 the bank, is a valid security in favor of the bank." The court will in such cases enforce the implied trust. ,§ 171. Assignment of rents and profits. — ^An assignment of rents and profits of land as security is an equitable mortgage. Such an assignment, in the words of Lord Thurlow, "is an odd way of convey- ing; but it amounts to an equitable lien, and would entitle the assignee to come into equity and insist upon a mortgage."^ But a mere agreement to apply such rents and profits to the payment of a debt has been held insufficient to create an equitable mortgage.' And likewise an agreement by a planter to ship his crop to a factor to reimburse him for advances and supplies furnished, does not create an equitable mortgage on the crops produced.' A deed providing that it shall become void upon default in payment of purchase-money, after which the grantee should hold as- tenant and pay rent, but not providing for any lien on the crops, is not an equitable mortgage.® A formal mortgage of a leasehold estate amounts only to an assign- ment of the rents and profits for the whole term, in states where fore- closure can not be effected by a sale, but only by a strict foreclosure or a proceeding in that nature. '^'' An equitable mortgage may be created on crops to be raised, which will attach as soon as they are in esse.^^ A stipulation in a lease, that the building erected by the lessee "is mortgaged as security" for rent, is a good mortgage.^^ An assign- ment of a lease absolutely, accompanied with a bond stating it to have been made to secure the payment of a debt, and providing for a recon- veyance upon payment, is a mortgage,^^ in the same way that an abso- lute conveyance in fee accompanied by such a bond is a mortgage. An assignment of a lease proved by parol to be security for a debt, is a mortgage.^* An irrevocable power of attorney to collect rents, given ^ Lawrenceville Cement Co. V. "Allen Y. Montgomery, 48 Miss. Parker, 60 Hun 586, 15 N. Y. S. 577. 101. "Charter Oak L. Ins. Co. v. Gis- °Levy v. McDonnell, 92 Ark. 324, borne, 5 Utah 319, 15 Pac. 253; Ex 122 S. W. 1002. parte Willis, 1 Ves. Jun. 162; Ab- "Hulett v. SouUard, 26 Vt. 295. bott v. Stratten, 3 Jo. & Lat. 603. See post § 785. See also Gest v. Packwood, 39 Fed. "Creech v. Long, 72 S. Car. 25, 525 (lease with pledge of rents and 51 S. E. 614. profits) ; Providence &c. Steamboat " Barroilhet v. Battelle, 7 Cal. Co. v. Fall River, 187 Mass. 45, 72 450. N. E. 338; Cradock v. Scottish "Jackson v. Green, 4 Johns. (N. Provident Inst., 63 L. J. Ch. 15. 69 Y.) 186. L. T. 380. But see Alexander v. "Providence &c. Steamboat Co. Berry, 54 Miss. 422. v. Fall River, 187 Mass. 45, 72 N. ' Alexander v. Berry, 54 Miss. 422. E. 338. 251 ASSIGNMENTS OF CONTRACTS OF PURCHASE § 173 as security, is, as between the parties, an equitable mortgage of the rents.^" II. By Assignments of Contracts of Purchase Section 172. Assignment of contract to pur- chase as security. 172a. Conveyance conditioned upon payment of purchase-price. 173. Assignment of bond to convey. 174. Purchaser's interest — Improve- ments. 175. Assignment of partial interest. Section 176. Assignment of public land cer- tificates. 176a. Mortgage of stock in unincor- porated companies. 177. Mortgage of public lands. 178. Mortgages under act of legisla- ture. § 172. Assignment of contract to purchase as security. — An as- signment by the vendee of a contract for the purchase of land made as security for a debt or loan, may be regarded as an equitable mort- gage.^ The rules applicable to a mortgage of real property govern it both as to the effect of it and the mode of enforcing it.^ Even though the assignee of a land contract should acquire a deed from the vendor, he still holds the land merely as a mortgagee in equity.' Irrespective of the form of assignment, and though it be absolute, if intended as a security, it will be construed in equity as a mortgage.* Where one having a contract for the purchase of land agrees with " Smith Co. V. McGuinness, 14 R. 1. 59; Abbott v. Stratten, 3 Jo. & Lat. 603, 9 Ir. Eq. 233. 1 Andrews v. Cone, 124 U. S. 720; Shoecraft v. Bloxham, 124 U. S. 730, 31 L. ed. 574; 8 Sup. Ct. 686; Heard v. Heard (Ala.), (.1 So. 343; Hays V. Hall, 4 Port. (Ala.) 374, 30 Am. Dec. 530; Commercial Bank V. Pritchard, 126 Cal. 600, 59 Pac. 130; Fitzhugh v. Smith, 62 111. 486; Hunter v. Hatch, 45 111. 178; Se- mour V. Freeman, Smith (Ind.) 25; Laughlin v. Braley, 25 Kans. 147; Sibley v. Ross, 88 Mich. 315, 50 N. W. 379; Niggeler v. Maurin, 34 Minn. 118, 24 N. W. 369; Smith v. Lackor, 23 Minn. 454; Hackett v. Watts, 138 Mo. 502, 40 S. W. 113; Burrows v. Hovland, 40 Nebr. 464, 58 N. W. 947; Scharman v. Schar- majQ, 38 Nebr. 39; Malloy v. Malloy, 35 Nebr. 224; Lipp v. South Omaha &c. Syndicate, 24 Nebr. 692; Stod- dard v. Whiting, 46 N. Y. 627; Pa- trono V. Patrono, 127 App. Div. 29, 111 N. Y. S. 268; Titcomb v. Fonda J. &c. R, Co., 38 Misc. 630, 78 N. Y. S. 226; Brockway v. Wells, 1 Paige (N. Y.) 617; Lovejoy v. Chapman, 23 Ore. 571, 32 Pac. 687; Stephens V. Allen, 11 Ore. 188, 3 Pac. 168 Rhines v. Baird, 41 Pa. St. 256 Russell's Appeal, 15 Pa. St. 319 Gilkerson v. Connor, 24 S. Car. 321 Roddy V. Blam, 12 Rich. Eq. (S. Car.) 343; Morris v. Nyswanger, 5 S. Dak. 307, 58 N. W. 800; Bull v. Sykes, 7 Wis. 449; Brayton v. Jones, 5 Wis. 117. ^Brockway v. Wells, 1 Paige (N. Y.) 617. »Purdy V. Bullard, 41 Cal. 444; Smith V. Cremer, 71 111. 185; Baker V. Bishop Hill Colony, 45 111. 264; Newhouse v. Hill, 7 Blackf. (Ind.) 584; Gamble v. Ross, 88 Mich. 315; Sinclair v. Armitage, 12 N. J. Eq. 174; Fessler's Appeal, 75 Pa. St. 483 'Fitzhugh V. Smith, 62 111. 486; Meigs V. McFarlan, 72 Mich. 194; Crawford v. Osmun, 70 Mich. 561; Brockway t. Wells, 1 Paige (N. Y.) 617; Lovejoy v. Chapman, 23 Ore. 571. § 173 EQUITABLE MORTGAGES 352 another that he shall pay the purchase-money and take a deed of the land for his security until repaid, the arrangement amounts to a mort- gage of such equitable title." In like manner, if the owner of land- warrants secures a debt by having them entered in the name of his creditor, such entry is a mortgage." A mortgage made by one who holds only a bond or contract of pur- chase passes only the title he has in the premises at the time, subject to be enlarged by the mortgagor's acquiring afterward the legal title. Such mortgagor has a mortgageable interest.' The mortgage amounts to a qualified assignment of the bond or contract. If the contract and mortgage be executed formally so that they may be recorded, the record is notice to any subsequent purchaser from the vendor of the mortgagee's right to purchase the property under the contract, if the vendee does not perform the condition of the mortgage.^ The vendor and vendee can not rescind the contract as against such mortgagee after the vendor has actual notice of the mortgage. If a second mort- gagee of such an equitable title be obliged for his own protection to pay the purchase-money remaining due upon the bond, his lien for the money so advanced is superior to that of the first mortgagee of such equitable interest.^ Whether such an instrument is a mortgage or a contract of purchase and resale depends upon the inquiry whether any indebtedness existed at the time of the execution of the instrument. To make the instru- ment a mortgage, there must be a debt which the mortgage secures.^" Therefore a contract made more than twelve months after the sale of property on a foreclosure, whereby one party agreed to advance money to take up the certificate of sale and hold it for his own benefit unless the other parties, the heirs of the mortgagor, should repay the amount advanced within a certain time, is not a mortgage, but a eon- tract to convey.^^ = Banks v. "Walters, 95 Ark. 501, Tenvoorde (Minn.), 150 N. W. 396. 130 S. W. 519; Purdy v. Bullard, 41 "Dwen v. Blake, 44 111. 135. Cal. 444; Doris V. Story, 122 Ga. 611, 'Muehlberger v. ScMlling, 3 N. 50 S. B. 348; King v. McVickar, 3 Y. S. 705. Sandf. Ch. (N. Y.) 192; Fessler's «AIden v. Garver, 32 111. 32; Appeal, 75 Pa. St. 483; McClintock Steinkemeyer v. Gillespie, 82 111. V. McClintock, 3 Brewst. (Pa.) 76; 253. Chadwell V. Wheless, 3 Lea (Tenn.) » Steinkemeyer v. Gillespie, 82 312. 111. 253. An executed contract whereby " Burgett v. Osborne, 172 111. 227, the first party took title to prop- 50 N. B. 206; Carpenter v. Plagge, erty and the second had an option 192 111. 82, 61 N. E. 530. to purchase and hold it to secure "Carpenter v. Plagge, 192 111. 82, future advances was held to be an 61 N. E. 530. equitable mortgage. Tenvoorde t. 253 ASSIGNMENTS OF CONTRACTS OF PURCHASE § 173 § 172a. Conveyance conditioned upon payment of purchase-price. — A deed to a purchaser, stipulating that the fee title shall not rest in the grantee until the purchase-money is paid/^ or that the grantee shall be seized in fee upon payment of a certain sum/^ or conditioned to be void upon default in payments, is an equitable mortgage.^* § 173. Assignment of bond to convey. — A bond for a conveyance may be assigned by way of mortgage. If the assignee subsequently obtains the legal title to the land by virtue of the bond, and surren- ders that, he will hold the land subject to the right of his assignor to redeem. ^° The assignee under such a bond for conveyance succeeds to all the rights of the purchaser.^^ Such a bond is itself sometimes declared to be in equity equivalent to a conveyance of the property, with a mortgage back; so that the assignment of it is equivalent to the assignment of a mortgage.^'' When land is sold on credit, and a bond is given to the purchaser to make title on payment of the purchase-money, the effect of the con- tract is to create a mortgage, the same as if the vendor had conveyed the land by an absolute deed to the purchaser, and taken back a mortgage to secure the payment of the purchase-money. The lien so created is an incumbrance on the land, not only against the purchaser and his heirs, but also against all subsequent purchasers.^^ It is said that bonds for title came into common use through the inability of the vendor, under the public land system of the United States, to make title at the time of the sale. "Pugh V. Holt, 27 Miss. 461. Alden v. Garver, 32 III. 32; Baker 5^ Lucas V. Hendrix, 92 Ind. 54. v. Bishop Hill Colony, 45 111. 264; "Carr v. Holbrook, 1 Mo. 240; Steinkemeyer v. Gillespie, 82 111. Austin V. Conner, 25 Vt. 558. See 253. post § 268. "Jones v. Lapham, 15 Kans. 540, ^^Penno v. Sayre, 3 Ala. 458; per Brewer, J.; Button v. Scliroyer, Lewis V. Boskins, 27 Ark. 61; 5 Wis. 598. See also Sposedo v. Christy v. Dana, 34 Cal. 548; Merriman (Maine), 90 Atl. 387. Steinkemeyer v. Gillespie, 82 111. But see Sheffield v. Hurst, 31 Ky. 253; Baker v. Bishop Hill Colony, L. 890, 104 S. W. 350. 45 111 264; Alden v. Garver, 32 111. "Pintard v. Goodloe, Hemp. (U. 32; Newhouse v. Hill, 7 Blackf. S.) 502; Thredgill v. Pintard, 12 (Ind ) 584; Laughlin v. Braley, 25 How. (U. S.) 24; Strauss v. White, Kans. 147; Jones v. Lapham, 15 66 Ark. 167, 51 S. W. 64; McCon- Kans. 540; Alderson v. Ames, 6 nell v. Beattie, 34 Ark. 113; Hol- Md. 52; Sinclair v. Armitage, 12 man v. Patterson, 29 Ark. 357; N. J. Eq. 174; Neligh v. Michenor, Lewis v. Boskins, 27 Ark. 61; Shall 11 N. J. Eq. 539; Gilkerson v. Con- v. Biscoe, 18 Ark. 142; Moore v. nor, 24 S. Car. 321; Bull v. Sykes, Anders, 14 Ark. 628, 60 Am. Dec. 7 Wis. 449; Button v. Schroyer, 5 551; Smith v. Robinson, 13 Ark. ■V^is 598. 533; Tanner v. Hicks, 4 Smed. & "Lewi's V. Boskins, 37 Ark. 61; M. (Miss.) 294; Graham v. Mcr § 174 EQUITABLE MORTGAGES 254 § 174. Purchaser's interest — Improvements. — Although the con- tract of sale be conditional, it providing that the purchaser shall do certain things before he shall be entitled to the conveyance of the land, the purchaser has an interest, before the performance of the things to be done on his part, which he may assign by way of security. By complying with all the conditions of the contract he acquires an equitable title, and when he has that he may compel a conveyance of the legal title. He may also sell his interest, and by agreement re- serve a lien upon the contract to secure his vendee's note for the pur- chase-price, and, upon the failure of his vendee to pay as agreed, he may, in an action upon the note and to foreclose his lien upon the contract, have judgment upon the note, and a decree of sale of the interest under the contract to satisfy it. There is a sufficient interest in the land to support the action, although it does not amount to a title or estate.^' Where one takes possession of land and expends large sums of money upon it in repairs and improvements on the promise of the owner to convey the property to him, the former has an equitable mortgage on the property to the amount of such expenditure, as against the owner's creditors.^" § 175. Assignment of partial interest. — The assignment of a par- tial interest in a contract of purchase, as security for the payment of a debt, is an equitable mortgage ; and the mortgagee may enforce his rights in equity against the assignor and those claiming under him with notice of his rights. The holder of the legal title may be en- joined from making a transfer to any one else of the property covered by the assignment.^'^ § 176. Assignment of public land certificates. — The assignment of a certificate of purchase of public lands issued by a state or the United States operates as an equitable mortgage, when intended to secure a debt due from the assignor to the assignee.^^ It may be enforced for Campbell, Meigs (Tenn.) 52, 33 Am. Combs v. Nelson, 91 Ind. 123; Dec. 126; Paine r. McDowell, 71 Crumbaugh v. Smock, 1 Blackf. Vt. 28, 41 Atl. 1042. (Ind.) 305; Gunderman v. Gunni- ^° Curtis v. Buckley, 14 Kans. 449. son, 39 Mich. 313; Case v. McCabe, ="King V. Thompson, 9 Pet. (U. 35 Mich. 100; Burrows v. Hovland, S.) 204, 13 Pet. (U. S.) 128. 40 Nebr. 264; Malloy v. Malloy, 35 ^'Northup V. Cross, Seld. Notes Nebr. 224; Murray v. Walker, 31 (N. Y.) 111. N. Y. 399; Stover v. Bounds, 1 Ohio ^Hill V. Eldred, 49 Cal. 398; St. 107; Ross v. Mitchell, 28 Tex. Stewart v. McLaughlin, 11 Colo. 150; Jarvis v. Dutcher, 16 Wis. 307; 458; Dwen v. Blake, 44 111. 135; Dodge v. Silverthorn, 12 Wis. 644; 255 ASSIGNMENTS OP CONTRACTS OF PUKCHASE § 177 the debt, and for money paid by the assignee m order to prevent a forfeiture of the title.^^ A clause in a mortgage of a land certificate, empowering the mortgagee to locate, enter upon, enjoy, and dispose of said land, as if acquired by a good and lawful title, only amplifies the security without rendering the conveyance absolute.^* The mort- gage is of course subject to the payment of the amount due upon the certificate.^^ If the purchaser pay this, the amount so paid becomes a prior lien upon the proceeds of a foreclosure sale of the land.^" A mortgage made by assigning a contract of purchase, or a land certificate, may be foreclosed by a bill in equity, in which a decree will be made for the sale of the right under the contract.^^ An assignment of land certificates, such, for instance, as the school land certificates in some states, which are by their terms transferable by assignment and delivery, amounts to an equitable mortgage.^^ A mortgage by a purchaser of school lands before he has completed his three years' occupancy, required by the laws of Texas, has been held a valid lien against a succeeding purchaser after proof of occupancy.^^ A settler upon public lands under the homestead act, after making proof of compliance with all the requirements of the law, so as to be entitled to a patent, may make a valid mortgage although the patent has not been issued.^" But if he sell the land to another who obtains the title from the United States, the mortgagee will lose his title.^^ § 176a. Mortgage of stock in unincorporated companies. — Certifi- cates of stock in an unincorporated joint stock company, representing an interest in real estate, may be mortgaged in equity. The mort- gage in such case is of course subject to the debts of the company, and to existing equities in favor of other stockholders. "^ § 177. Mortgage of public lands. — ^A pre-emptor of public land can not mortgage his interest before entry. Before a valid mortgage Mowry v. "Wood, 12 Wis. 413. See ""Orr v. Stewart, 67 Cal. 275; also Wright v. Shumway, 1 Biss. Klempp v. Northrop, 137 Cal. 414, (U. S.) 23; Hays v. Hall, 4 Port. 70 Pac. 284; Nycum v. McAllister, (Ala.) 374, 30 Am. Dec. 530. 33 Iowa 374; Townsend v. Fenton, ^Hill V. Bldred, 49 Cal. 398. 30 Minn. 528; Jones v. Yoakum, 5 ^Ross v. Mitchell, 28 Tex. 150. Nebr. 265; Orr v. Ulyatt, 23 Nev. ''^ Dodge V. Silverthorn, 12 Wis. 134, 43 Pac. 916. 644. But one mortgaging such land is ^'' Dodge V. Silverthorn, 12 Wis. estopped by his own act from dis- 644. puting the validity of the lien so " Crumbaugh v. Smock, 1 Blackf. created by him. Kirkaldie v. Lar- (Ind.) 305. rabee, 31 Cal. 455, 89 Am. Dec. 205. ^ Mowry v. Wood, 12 Wis. 413; ^Bull v. Shaw, 48 Cal. 455. Jarvis v. Dutcher, 16 Wis. 307. '^Durkee v. Stringham, 8 Wis. 1. "•Harwell v. Harbison, 43 Tex. Civ. App. 343, 95 S. W. 30. 177 EQUITABLE MOETGAGES 256 can be made of a pre-emption of public land, an entry of it according to law must be made. The statutes of the United States provide that any grant or conveyance made before entry shall be void. Even where a mortgage is regarded as neither a grant nor a conveyance, and therefore not within the letter of the statute, it is construed to include a mortgage within its prohibition. The intention of the act was, that the title should be perfect and unincumbered when it passes from the United States by the entry to the settler.^' But, on the other hand, there are numerous decisions to the effect that an ordinary mortgage by a pre-emptor of land, prior to the time of making his final proofs, is not a grant or conveyance within the prohibitory clause of the statute.^* An assignment of a pre-emptor's == Sec. 13 of the Act of Congress, September 4, 1841, Rev. Stat. § 2262, provides that, before an entry shall be allowed, the claimant shall make oath that "he has not directly or indirectly made any agreement or contract, in any manner, with any person or persons, whatsoever, by which the title which he might ac- quire from the government of the United States should inure in whole or in part to the benefit of any per- son except himself." And it also provides that "any grant or convey- ance which he may have made, ex- cept in the hands of a bona fide purchaser for valuable considera- tion, shall be null and void." See also post § 2296; Warren v. Van Brunt, 19 Wall. (U. S.) 646; Mof- fat V. Bulson, 96 Cal. 106, 30 Pac. 1022; Bull V. Shaw, 48 Cal. 455; Mellison v. Allen, 30 Kans. 382, 2 Pac. 97; Green v. Houston, 22 Kans. 35; Brewster v. Madden, 15 Kans. 249; Penn v. Ott, 12 La. Ann. 283; Woodbury v. Borman, 15 Minn. 338; McCue V. Smith, 9 Minn. 252, 86 Am. Dec. 100; Bass v. Buker, 6 Mont. 442, 12 Pac. 922; Craig v. Tappin, 2 Sandf. Ch. (N. Y.) 78. See ante § 136. »*Norris v. Heald, 12 Mont. 282, 29 Pac. 1121, is the most recent and important decision to this effect. Blake, C. J., reviews the decisions, and cites several decisions of the secretaries of the Department of the Interior holding that the stat- ute does not prohibit mortgages by pre-emptors made in good faith for borrowed money. Larson v. Weisbecker, 1 Dec. Dep. Int. 422, April 24, 1882, followed in Ray's App., 6 Dec. Dep. Int. 340, October 11, 1887; and Haling v. Eddy, 9 Dec. Dep. Int. 337, Septem- ber 7, 1889. In the first of these decisions Mr. Teller, the secretary, said: "I am aware that the former rulings of this department, follow- ing the precedent of an early de- cision, have held that an outstand- ing mortgage given by a pre-emptor upon the lands embraced in his filing defeats his right of entry, upon the ground that such mort- gage is a contract or agreement by which title to the lands might in- ure to some other person than him- self. A careful consideration of this section leads me to a different conclusion, and to the opinion that, unless it shall appear, und^r (he rules of law applicable to the con- struction of contracts, or otherwise, that the title shall inure to another person, it does not debar the right of entry; and that the mere possi- bility that the title may so result, as in the case of an ordinary mort- gage, is not sufficient to forfeit the claim." Norris v. Heald, 12 Mont. 282, 29 Pac. 1121, overrules the earlier decision of the same court to the contrary. Bass v. Buker, 6 Mont. 442, 12 Pac. 922. The good faith of the mortgagor becomes a material consideration in this view of the statute. This is recognized by Chief Justice Blake, who says: "The purpose for which a sum of money may be borrowed becomes material to show that the mort- 257 ASSIGNMENTS OF CONTRACTS OP PURCHASE § 178 certificate of location, by way of security for a debt, is an equitable mortgage of the assignor's interest.^' If an occupant having a right of pre-emption mortgages his interest for a valuable consideration, and subsequently commutes the same, proves his occupation, pays the purchase-price, and receives a patent of the land, the mortgage is a valid lien upon the property, and the title thus acquired inures to the benefit of the mortgagee.^* The purpose of the Act of Congress that no government lands acquired as homesteads shall, in any event, be- come liable to the satisfaction of any debt or contract prior to the issuance of the patent therefor,^^ is to protect the entryman and to prevent any involuntary appropriation of the land to the satisfaction of debts incurred prior to the issuance of the patent; and therefore a mortgage upon government land vfhich had been entered as a home- stead and for which final proof had been made, but for which no patent had been issued, is valid.^^ And such a mortgage is valid although given to secure a debt contracted before such proof was made.^" § 178. Mortgages under act of legislature. — A mortgage may be constituted by act of legislature,*" as where a railroad company ac- cepted certain bonds issued under an act which declared that the bonds should "constitute a first lien and mortgage upon the road and gagor is acting in good faith, and =" Whitney v. Buckman, 13 Cal. not in collusion with the mort- 536; Fuller v. Hunt, 48 Iowa 163; gagee to convey the title, and evade Nycum v. McAllister, 33 Iowa 374; the provisions of the law. The loan Newkirk v. Marshall, 35 Kans. 77, of money to "enable the settler to 10 Pac. 571; Lang v. Morey, 40 Minn, buy seed for planting, or the neces- 396, 42 N. W. 88; Stark v. Duvall, 7 saries of life, is as legitimate as Okla. 213, 54 Pac. 453; Fariss v. the purchase of land from the gov- Deeming Inv. Co., 5 Okla. 496, 49 ernment." See also Hubbard v. Pac. 926; Spies v. Newberg, 71 Wis. Mulligan, 13 Colo. App. 116, 57 Pac. 279, -37 N. W. 417. 738; Wilcox v. John, 21 Colo. 367, »'Rev. Stat. § 2296. 40 Pac. 880; Fuller v. Hunt, 48 »= Smart v. Kennedy, 123 Ala. 627, Iowa 163; Nycum v. McAllister, 33 26 So. 198; McCollum v. Edmonds, Iowa 374; Jones v. Tainter, 15 109 Ala. 322, 324, 19 So. 501; Kirk- Minn. 512; Cheney t. White, 5 aldie v. Larrabee, 31 Cal. 455; Ny- Nebr. 261, 25 Am. Rep. 487; Jones cum v. McAllister, 33 Iowa 374; v. Yoakum, 5 Nebr. 265; Guaranty Moore v. Mcintosh, 6 Kans. 39; Lang Sav. Bank v. Bladow, 6 N. Dak. 108, v. Morey, 40 Minn. 396, 42 N. W. 69 N. W. 41; Larison v. Wilbur, 1 88; Townsend v. Fenton, 30 Minn. N. Dak. 284, 47 N. W. 381; Paige v. 528, 16 N. W. 421; Cheney v. White, Peters, 70 Wis. 178, 35 N. W. 328. 5 Nebr. 261, 25 Am. Rep. 487; Jones ^Wright v. Shimway, 1 Biss. (XJ. v. Yoakum, 5 Nebr. 265; Logue v. S.) 23; Christy v. Dana, 34 Cal. 548; Atkeson, 35 Tex. Civ. App. 303, 80 Stover V. Bounds, 1 Ohio St. 107; S. W. 137. Dodge V. Silverthorn, 12 Wis. 644; ™ Jones v. Yoakum, 5 Nebr. 265. Orr V. Stewart, 67 Cal. 275, 7 Pac. *° See Jones on Corporate Bonds 693; Kirkaldie v. Larrabee, 31 Cal. and Mortgages, § 39-44. 455, 89 Am. Dec. 205. 17 — Jones Mtg. — Vol. I. 179 EQUITABLE MORTGAGES 258 property" of the company. The word "property" includes all the lands of the company, and any sale made by it is subject to the mort- To constitute a statutory lien it must clearly appear that it was intended that the statute should have this efEect.^^ Such a lien may be released by the authority that created it,*' or another person may be substituted by agreement of parties in place of the original lien- holder.** The bonds of a corporation, pledging its real and personal property for the payment of the debt, are treated in equity as a mortgage.*^ III. By Deposit of Title Deeds Section 179. Deposit oi title deeds— Effect generally in England and America. 180. Doctrine in England criticized. 181. Effect of deposit— Future ad- vances. 182. What deeds must be deposited. 183. Deposit for preparation of legal mortgage. Section 184. What law governs. 185. Doctrine generally rejected in America. 186. Doctrine applied. 187. Written memorandum with de- posit. 188. Remedy under equitable mort- gage by deposit of title deeds. § 179. Deposit of title deeds — ^Effect generally in England and America. — An equitable mortgage may at common law be created by deposit of the title deeds of a legal or an equitable estate as security for the payment of money. This method of creating a lien upon land is of frequent use in England,^ and is sometimes *i Wilson v. Boyce, 92 U. S. 320, 23 L. ed. 608; Whitehead v. Vine- yard, 50 Mo. 30. " Cincinnati v. Morgan, 3 Wall. (U. S.) 275; Brunswick &c. R. Co. v. Hughes, 52 Ga. 557. "Murdock v. Woodson, 2 Dill. (U. S.) 188; Woodson v. Murdock, 22 Wall. (U. S.) 351. "Ketchum v. Pacific Railroad, 4 Dill. (U. S.) 78. "White Water Valley Canal Co. V. Vallette, 21 How. (U. S.) 414; Donald v. Hewitt, 33 Ala. 534; Cos- ter v. Bank of Georgia, 24 Ala. 37; Kelly V. Payne, 18 Ala. 371; Mobile &c. P. R. Co. V. Talman, 15 Ala. 472; Coe V. Johnson, 18 Ind. 218; Bank of Kentucky v. Vance, 4 Litt. (Ky.) 169; Abbott v. Godfrey, 1 Mich. 178; Campbell v. Worthington, 6 Vt. 448; Whitworth v. Gaugain, 3 Hare 416; London Banking Co. v. Ratcliffe, 6 App. Cas. 722. 'Ashworth v. Mounsey, 9 Exch. 175; Baynard v. Woolley, 20 Beav. 586; Darke v. Williamson, 25 Beav. 622; Mellor v. Porter, 25 Ch. Div. 158; Hanke v. Vernon, 2 Cox 12; Burgess v. Moxon, 2 Jur. (N. S.) 1059; Meggison v. Foster, 7 Jur. 546; Nat. Bank v. Cherry, L. R. 3 P. C. C. 299; Astbury v. Astbury, 78 L. T. (N. S.) 494; Meux v. Smith, 2 Mont. D. & D. 789; Pain v. Smith, 2 Myl. & K. 417; Lloyd v. Attwood, 3 De G. & J. 614; Casberd v. Ward, 6 Price 411; Lewthwaite v. Clarkson, 2 Y. & Coll. 370; Bozon v. Williams, 3 Y. & J. 150; Pye v. Daubuz, 2 Dick. 759; Richards v. Barrett, 3 Esp. N. P. 102; Russel v. Russel, 1 Bro. C. C. 269; Matthews v. Goodday, 8 Jur. (N. S.) 90, 31 L. J. Ch. 282, 5 L. T. 259 DEPOSIT OF TITLE DEEDS § 179 adopted in the United States/ though generally repudiated here,^ as contrary to the policy of the registration laws and in violation of the statute of frauds. In England, in the absence of a general system of recording, the (N. S.) 572, 10 Wkly. Rep. 148; Shaw V. Foster, L. R. 5 H. L. 321, 42 L. J. Ch. 49, 27 L. T. (N. S.) 281, 20 Wkly. Rep. 907; Unity &c. Bank- ing Assn. V. King, 4 Jur. (N. S.) 470; Watson v. Chapman, 18 L. T. (N. S.) 705; Whitebread v. Jordan, 1 Y. & C. 303; Ex parte Bowdaile, 2 Mont. & A. 398; Ex parte Bulteel, 2 Cox 243; Ex parte Coming, 9 Ves. 117; Ex parte Coombe, 4 Madd. 249; Ex parte Crossfield, 8 Ir. Eq. 67; Ex parte Holthausen, L. R. 9 Ch. App. 728; Ex parte Kensington, 2 Ves. & B. 83; Ex parte Hooper, 1 Mer. 1; Ex parte Langston, 17 Ves. 227, 11 Rev. Rep. 66, 34 Eng. Reprint 88; Ex parte Mountford, 14 Ves. 606; Ex parte Skinner, 1 Dea. & Ch. 403; Ex parte Whitebread, 19 Ves. 929; Zimmerman v. Sproat, 26 Ont. L. R. 448. "Mandeville v. Welch, 5 Wheat. (U. S.) 277, 5 L. ed. 87; First Nat. Bank v. Caldwell, 4 Dill. (U. S.) 314; Higgins v. Manson, 126 Cal. 467, 58 Pac. 907; Hall v. McDuff, 24 Maine 311; Carey v. Rawson, 8 Mass. 159; Bullowa v. Orgo, 57 N. J. Eq. 428, 41 Atl. 494; Gale v. Morris, 29 N. J. Eq. 222; Brewer v. Marshall, 19 N. J. Eq. 542, 97 Am. Dec. 679; Griffin v. Griffin, 18 N. J. Eq. 104; Robinson v. Urquhart, 12 N. J. Eq. 523; Hamilton Trust Co. v. Clemes, 163 N. Y. 423, 57 N. E. 614; Rock- well V. Hobby, 2 Sandf. Ch. (N. Y.) 9; Bloom v. Noggle, 4 Ohio St. 45 (dictum that deposit equivalent to. an agreement to execute a mort- gage ) ; Hackett v. Reynolds, 4 R. I. 512; Hutzler v. Phillips, 26 S. Car. 137, 4 Am. St. 687 (deposit as a bona fide immediate security) ; Jarvis v. Dutcher, 16 Wis. 307. See post §§ 186, 187. See also Carpen- ter V. Black Hawk &c. Min. Co., 65 N. Y. 51; Jackson v. Parkhurst, 4 Wend. (N. Y.) 376; Chase v. Peck, 21 N. Y. 581; jackson v. Dunlap, 1 Johns. Cas. (N. Y.) 114, 1 Am. Dec. 100; Griffin v. Griffin, 18 N. J. Eq. 104 (announcing the rule in New York); Boyce v. Shiver, 3 S. Car. 528; Welsh v. Usher, 2 Hill Eq. (S. Car.) 170, 29 Am. Dec. 63; Harper v. Barsh, 10 Rich. Eq. (S. Car.) 154; Mowry v. Wood, 12 Wis. 413; Dodge v. Silverthorn, 12 Wis. 644. In Biebinger v. Continental Bank, • 99 U. S. 143, the court held that no mortgage was created as no money was loaned and no debt created, but seemed to recognize the doctrine of an equitable mortgage by deposit of title deeds. Compare Williams v. Hill, 19 How. (U. S.) 246. ^ The doctrine was rejected in the following cases: Lehman v. Collins, 69 Ala. 127; Pierce v. Parrish, 111 Ga. 725, 37 S. E. 79; Davis v. Davis, 88 Ga. 191, 14 S. E. 194 (statutory provision); English v. McElroy, 62 Ga. 413; Tuller v. Leaveton, 143 Iowa 162, 121 N. W. 515, 136 Am. St. 756; In re Snyder, 138 Iowa 553, 114 N. W. 615; Vanmeter v. McFad- din, 8 B. Mon. (Ky.) 435; Gardner v. McClure, 6 Minn. 250; Gothard V. Flynn, 25 Miss. 58; Hackett v. Watts, 138 Mo. 502, 40 S. W. 113; Bloomfield State Bank v. Miller, 55 Nebr. 243, 75 N. W. 569, 70 Am. St. 381, 44 L. R. A. 387; Probasco v. Johnson, 2 Disn. (Ohio) 96; Ed- wards V. Trumbull, 50 Pa. St. 509; Bowers v. Oyster, 3 Pa. St. 239; Shitz v. Diefifenbach, 3 Pa. St. 233; Spencer v. Haynes, 12 Phila. (Pa.) 454, 34 Leg. Int. (Pa.) 140; Hasel- den V. Hamer (S. Car.). 81 S. E. 424; Parker v. Carolina Sav. Bank, 53 S. Car. 583, 31 S. E. 673, 69 Am. St. 888; Meador v. Meador, 3 Heisk. (Tenn.) 562; Bicknell v. Bicknell, 31 Vt. 498. See also Sidney v. Stev- enson, 11 Phila. (Pa.) 178, 33 Leg. Int. (Pa.) 42; Hutzler v. Phillips, 26 S. Car. 136, 1 S. E. 502, 4 Am. St. 687; Boyce v. Shiver, 3 S. Car. 515; Williams v. Stratton, 10 Sm. & M. (Miss.) 418; Gebensleben's Es- tate, 3 Lack. Jur. (Pa.) 19; Rlckert V. Madeira, 1 Rawle (Pa.) 325. See cases In favor of the doctrine, §§ 183- 185. § 180 EQUITABLE MORTGAGES 260 possession of the title deeds of an estate is evidence of title. A trans- fer can not be made without them. No one is supposed to have the right to retain them unless he has a legal or equitable claim to the estate they represent. In all transfers of real estate the original deeds go with the property as evidences of title, and their examination by the solicitor of the parties is a prerequisite to every sale. Except in the counties of Middlesex and York, there are no registries where search can be made to ascertain the titles to lands, with the exception of copyhold titles, which are always to be found recorded in the manor courts. The only security which the purchaser has for the validity of his grantor's title is possession of the deeds which establish it. In the United States, however, the reason for this doctrine does not exist. The registry system dispenses with the necessity of any production of title deeds, and supplies all the evidence to protect both vendor and vendee. It furnishes at once a true statement of the present condi- tion of all legal rights to land; and if an original conveyance is ever lost or destroyed, a copy from the record is received as an equivalent.' § 180. Doctrine in England criticized. — The doctrine in England is well established,'' although it has been received with considerable disapprobation. "ISTow, since the case of Eussell v. Eussell," says Kindersley, V. C," "this is well settled : that supposing A, owing money to B, deposits the title deeds of his estate with B for the purpose of a security, even without any writing, it is a good equitable ndortgage; it gives B a lien; and notwithstanding the expressions of regret of Lord Eldon that the law should be so, even in his time, we find him saying he could not disturb it ; since that time it has been acted upon over and over again. That doctrine can not now, then, be disturbed." § 181. Effect of deposit — Future advances. — The legal efEect of the deposit is, that the mortgagor contracts that his interest in the land shall be liable for the debt, and that he will make such a mort- gage or conveyance as may be necessary to vest that interest in the mortgagee. ■^ It binds whatever interest he has in the whole property described in the title deeds. It does not imply that he will make perfect title to the property, but that he will give effect to the interest he has in it at the time, or may acquire afterward during the deposit, "Probasco v. Johnson, 2 Disn. 2 V. & B. 79; Ex parte Coombe, 1 (Ohio) 96, 98. Rose 268, 17 Vesey Jr. 369, 34 Eng. ' See cases cited in § 179 ante. Reprint 142. " Lacon v. Allen, 3 Drew. 579. See ' Pryce v. Bury, 2 Drew. 41, per also National Bank v. Cherry, L. R. Kindersley, V. C. 3 P. C. C. 299; Ex parte Kensington, 261 DEPOSIT OF TITLE DEEDS 181 by the discharge of an incumbrance Tipon it, or the like.* As a rule the equitable mortgage created covers the whole property comprised in the deeds," including appurtenances and fixtures.^" One holding title deeds as indemnity against contingent liabilities is not entitled to a formal mortgage before he has paid anything on account of such liability, but is entitled to a memorandum giving the terms of the deposit.^i The deposit may be made to cover subsequent advances by a subse- quent parol agreement to that effect between the parties, without a return of the deeds and a new deposit of them.^^ In this respect an equitable mortgage is a broader security than a legal one ; for a legal mortgage can not be enlarged in its effect by a subsequent parol agreement that it shall secure further advances; but although the mortgagee holds the title deeds, he is not entitled to say that he holds them as a deposit,^^ unless the parties make an express agreement that they shall be so held.^* There must be clear proof that the further advances were made on the faith of the deposit.^' Such proof may, however, be by parol, even though the deposit was accompanied by a written memorandum.^* ' Ex parte Bisdee, 1 Mont. D. & D. 333; In re Baker, 1 M., D. & De G. 333. •Ashton V. Dalton, 2 Colly. 565; Ex parte Bisdee, 1 Mont. D. & D. 333; Chissum v. Dewes, 5 Russ. 29. "Ex parte Barclay, 5 De G. M. & G. 413; Ex parte Price, 2 Mont. D. & D. 518; Williams v. Evans, 23 Beav. 239; Ex parte Astbury, L. R. 4 Ch. 630; Longbottom v. Berry, L. R. 5 Q. B. 123; Meux v. Jacobs, L. R. 7 H. L. 481; Ex parte Moore &c. Banking Co., 14 Ch. Div. 379; Ex parte Tagart, 1 De Gex 531; Ex parte Broadwood, 1 Mont. D. & D. 631; Ex parte Lloyd, 3 D. & C. 765; Mather v. Eraser, 2 K. & J. 536; Waterfall v. Penistone, 6 El. & Bl. 876, 88 E. C. L. 876; Williams v. Evans, 23 Beav. 239 (fixtures in- eluded in mortgage created by de- posit of lease); Rutter v. Daniel, SO W. R. 724 (license necessary to use of public house); In re Brien, 11 L. R, Ir. 213 (license). See yost § 437. "Sporle T. Whayman, 20 Beav. 607. "Ex parte Hearn, Buck 165; Ex parte Hooper, 19 Ves. Jr. 477; Ex parte Langston, 17 Ves. 227; Ex parte Nettleship, 2 Mont. D. & D. 124; Ex parte Whitbread, 19 Ves. Jr. 209; Ede v. Knowles, 2 Y. & Coll. 172; Baynard v. Woolley, 20 Beav. 586; Ex parte Kensington, 2 V. & B. 79, 83. In the latter case Lord Eldon said: "In the cases alluded to I went the length of stating that, where the deposit originally was for a particular purpose, that pur- pose may be enlarged by a subse- quent parol agreement; and this distinction appeared to me to be too thin, that you should not have the benefit of such an agreement unless you added to the terms of that agreement the fact that the deeds were put back into the hands of the owner, and a redelivery of them required; on which fact there is no doubt that the deposit would amount to an equitable lien, within the principle of these cases." "Ex parte Hooper, 9 Ves. 477, 1 Mer. 7. " In re Henry, Ex parte Cross- field, 3 Ir. Eq. 67. ^Ex parte Whitbread, 19 Ves. Jr. 209; Kebell v. Philpott, 2 Jur. 739. ^^ Ex parte Nettleship, 2 Mont. D. § 183 EQUITABLE MOETGAGES 262 If the deposit is accompanied by any written instrument, the terms of the latter must be referred to, to determine the exact nature and effect of the deposit.^^ § 182. What deeds must be deposited. — It is not necessary that every material deed relating to the property should be deposited ;^^ nor is it necessary that they should show a title in the mortgagor by in- cluding the deed by which he acquired title.^® A deposit of title deeds, omitting the conveyance to the mortgagor, has priority over a subsequent deposit of the latter deed alone.^" Likewise a deposit of deeds by a joint tenant, after partition, omitting the partition deed, does not invalidate the security.^^ It has even been held that a deposit of one of the title deeds was sufficient, where the others were in the hands of the depositor's solicitors.^^ An equitable mortgage of copy- hold estates may be created by a mere deposit of the copy of the court roll.='=' § 183. Deposit for preparation of legal mortgage. — A deposit of title deeds with a solicitor, agent or attorney, for the purpose of pre- paring a legal mortgage, and with the intention that they shall oper- ate as an equitable security until a legal mortgage is drawn and exe- cuted, creates an equitable mortgage.^* But where the deeds are & D. 124; Ex parte Kensington, 2 struments deposited are material Ves. & B. 79. parts of the title; and if they are, " Shaw V. Foster, L. R. 5 H. Li. it is not necessary to say there are Cas." 321. other deeds material, if there is "Ex parte Wetherell, 11 Ves. Jr. sufficient evidence to show that the 398, 401, 32 Eng. Reprint 1141; Ex deposit was made for the purpose parte Arkwright, 3 Mont. D. & De of creating a mortgage." G. 129; Ex parte Chippendale, 1 » Roberts v. Croft, 24 Beav. 223, Deac. 67, 38 E. C. L. 375; Ex parte affg. 2 De G. & J. 1. Farley, 5 Jur. 512; Ex parte Haigh, =° Roberts v. Croft, 24 Beav. 223, 11 Ves. Jr. 403, 8 Rev. Rep. 189, 32 affg. 2 De G. & J. 1. Eng. Reprint 1143; Ex parte Pott, 7 '=»Ex parte Farley, 1 Mont. D. & Jur. 159; Dixon v. Muckleston, L. R. D. 683, 10 L. J. (N. S.) Bky. 55, 5 8 Ch. 155, 42 L. J. Ch. 210, 27 L. T. Jur. 512. (N. S.) 804, 21 Wkly. Rep. 178; ''''Ex parte Chippendale, 2 Mont. Roberts v. Croft, 24 Beav. 223; Rice & A. 299. V. Rice, 2 Drew. 76; Whltebread v. =»Whitebread v. Jordan, 1 Y. & Jordan, 1 Y. & Coll. 303; Lacon v. Coll. 303; Ex parte Warner, 19 Ves. Allen, 3 Drew. 582, 26 L. J. Ch. 18, Jr. 202; Lewis v. John, 9 Sim. 366. 61 Eng. Reprint 1024. In the lat- It would seem that, under the Tor- ter case, Kindersley, V. C, said: reus system, this rule would prevail, "The question is, is It necessary and deposit of the official certificate that every title deed should of title would be sufficient, be deposited? Suppose the owner ^Edge v. "Worthington, 1 Cox Ch. has lost an important deed, could 211, 1 Rev. Rep. 20, 29 Eng. Reprint he not deposit the rest? In each 1133; Hockley v. Bantock, 1 Russ. case we must judge whether the in- 141, 38 Eng. Reprint 55; Keys v. 263 DEPOSIT OF TITLE DEEDS § 185 delivered merely to have a mortgage prepared, with no intention of creating a present lien on the property, no equitable mortgage arises.^^ "The principle of an eqiiitable mortgage is," said Lord Eldon,^" "that the deposit of the deeds is evidence of the agreement; but if they are deposited for the express purpose of preparing the security of a legal mortgage, is not that stronger than an implied intention ?" Where no written contract or memorandum accompanies the deposit, the presumption that a mortgage was intended, arising from the pos- session of the deeds, may be rebutted by parol evidence of the circum- stances under which the deeds were left, and of the intention of the parties in the matter.^' Of course a statement in virriting of the purpose for which the deposit was made can not be contradicted.^' § 184. What law governs. — The law of the place of contract gov- erns the validity of a mortgage by the deposit of title deeds. When a citizen of a foreign country, by the law of which a lien can not be created in this way, being in England, there makes a deposit of title deeds as security, his contract is governed by the law of England.^" The deposit of title deeds to a house in Shanghai by London merchants was held to create an equitable mortgage governed by the law of England, though it was not registered according to the law of Shang- hai.'" § 185. Doctrine generally rejected in America. — In America the doctrine of a mortgage by deposit of title deeds has been adopted only to a very limited extent. Generally something more is required than Williams, 2 Jur. 611, 7 L. J. Exch. Lucas v. Dorrien, 1 Moo. 29, 7 Taunt. 59, 3 Y. & C. Exch. 55; Lloyd v. Att- 278. wood, 3 De G. & J. 614, 5 Jur. (N. S.) =»Ex parte Coombe, 17 Ves. 369, 34 1322, 29 L. J. Ch. 97, 60 Eng. Ch. Eng. Reprint 142; Baynard v. Wool- 475, 44 Eng. Reprint 1405; Ex parte ley, 20 Beav. 583. Bruce, 1 Rose 374; Ex parte Bulteel, "^Ex parte Holthausen, L. R. 9 Ch. 2 Cox 243; Ex parte Hooper,! Mer. App. 722. In Varden Seth San v. 7, 19 Ves. 477; Ex parte Wright, 19 Luckeathy, 9 Moo. Ind. App. 303, it Ves. Jr. 255, 34 Eng. Reprint 513. was held that where the contract is See also Fenwick v. Potts, 8 De G. not made with reference to any par- M. & G. 506. ticular law, and the law of the place ^ Ex parte Bulteel, 2 Cox Ch. 243, where the land is situated does not 2 Rev. Rep. 39, 30 Eng. Reprint 113; forbid, and the general law of the Norris v. Wilkinson, 12 Ves. Jr. place is English, an equitable mort- 192, 33 Eng. Reprint 73; Hutzler gage may be created by deposit of V. Phillips, 26 S. Car. 136, 1 S. B. title deeds. See also Ex parte Pol- Rep. 502, 4 Am. St. 687. lard, Mont. & C. 239; Coote v. Jecks, =«Ex parte Bruce, 1 Rose 374. See L. R. 13 Eq. 597. also Ex parte Wright, 19 Ves. 255, =»Ex parte Holthausen, L, R. 9 258. Ch. App. 722. "Ex parte Langston, 17 Ves. 227; § 186 EQUITABLE MORTGAGES 364 a mere verbal agreement or understanding that the creditor is to hold them as security or indemnity. To create a lien upon land in thi.i way would be, it is declared, to repeal judicially the statutes of fraud and perjuries, making void sales not evidenced by writing. The doc- trine, moreover, is not compatible with the registry system. The attempts to apply the doctrine have not been very numerous, it being generally understood that it has no application here. The doctrine, therefore, may be considered as generally rejected, so far as it sustains a mortgage upon a verbal or implied promise in connection with the deposit of the deeds.^^ Even where the deposit of title deeds does not create an equitable mortgage, a court of equity will not prevent enforcement of the lien by compelling the depositee to surrender the deeds to either the de- positor or his heirs, before the debt is paid:^^ § 186. Doctrine applied. — Yet in several eases mortgages created in this way have been sustained,^^ especially where an equity is shown beyond the mere deposit of title deeds.^* The deposit of a deed, con- veying the legal title to an estate as security for the amount of a »i Lehman v. Collins, 69 Ala. 127; Pierce v. Parrish, 111 Ga. 725, 37 S. E. 79; Davis v. Davis, 88 Ga. 191, 14 S. B. 194; English v. McElroy, 62 Ga. 413; Tuller v. Leaverton, 143 Iowa 162, 121 N. W. 515, 136 Am. St. 756; In re Snyder, 138 Iowa 553, 114 N. W. 615, 19 L. R. A. (N. S.) 206; Vanmeter v. McPaddln, 8 B. Mon. (Ky.) 435; Gardner v. Mc- Clure, 6 Minn. 250; Gothard v. Flynn, 25 Miss. 58; Hackett v. Watts, 138 Mo. 502, 40 S. W. 113; Bloomfield State Bank v. Miller, 55 Nebr. 243, 75 N. W. 569, 70 Am. St. 831, 44 L. R. A. 387; Probasco v. Johnson, 2 Disn. (Ohio) 96; Ed- wards V. Trumbull, 50 Pa. St. 509; Shitz V. Diefifenbach, 3 Pa. St. 233; Bowers v. Oyster, 3 Pa. St. 239; Spencer v. Haynes, 12 Phlla. (Pa.) 452; Haselden v. Hamer (S. Gar.), 81 S. E. 424; Parker v. Carolina Sav. Bank, 53 S. Car. 583, 31 S. B. 673, 69 Am. St. 888; Meador v. Header, 3 Heisk. (Tenn.) 562; Bicknell v. Bicknell, 31 Vt. 498. See also Sid- ney v. Stevenson, 33 Leg. Int. (Pa.) 42; Hutzler v. Phillips, 26 S. Car. 136, 1 S. E. 502, 4 Am. St. 687; Boyce v. Shiver, 3 S. Car. 515; Will- iams V. Stratton, 10 Sm. & M. (Miss.) 418; Gebensleben's Estate, 3 Lack. Jur. (Pa.) 19; Rickert v. Madeira, 1 Rawle (Pa.) 325. See cases in favor of the doctrine,' ante § 183. '"Griffin v. Griffin, 18 N. J. Eq. 104; Sidney v. Stevenson, 11 Phila. (Pa.) 178, 33 Leg. Int. (Pa.) 42. ^^Mandeville v. Welch, 5 Wheat. (U. S.) 277; Higgins v. Manson, 126 Cal. 467, 58 Pac. 907; Carey v. Raw- son, 8 Mass. 159; Bullowa v. Orgo, 57 N. J. Eq. 428, 41 Atl. 494; Mar- tin V. Bowen, 51 N. J. Bq. 452; Gale V. Morris, 29 N. J. Eq. 222; Griffin V. Griffin, 18 N. J. Eq. 104; Hamil- ton Trust Co. V. Clemens, 163 N. Y. 423, 57 N. E. 614; Carpenter v. Black Hawk &c. Co., 65 N. Y. 43; Jackson v. Parkhurst, 4 Wend. (N. Y.) 369; Rockwell v. Hobby, 2 Sandf. Ch. (N. Y.) 9; Hackett v. Reynolds, 4 R. I. 512; Boyce v. Shiver, 3 S. Car. 528; Jarvis v. Dutcher, 16 Wis. 307. See Hutzler V. Phillips, 26 S. Car. 136, 1 S. E. 502, 4 Am. St. 687. See cases cited in ante § 179. =* Woodruff V. Adair, 131 Ala. 530, 32 So. 515; First Nat. Bank v. Cald- well, 4 Dill. (U. S.) 314. 265 DEPOSIT OF TITLE DEEDS § 187 mortgage released by the person receiving the deposit, was held to constitute an equitable mortgage, as between the original parties and those subject to their equities.^^ Likewise it has been held that the deposit of title deeds of an equitable or legal estate creates an equi- table mortgage, which must be foreclosed in equity to establish the lien.'" A court of equity in such case will not compel the holder of the deeds to deliver them up until he has received payment of the debt for which they were pledged.^' On the contrary, it will establish the lien and enforce a sale of the depositor's interest, and the interest of those subject to this equity .'* A suit in equity is the proper means to establish the lien, and the decree should be for a sale, if the debt be not paid by a given day.'' § 187. Written memorandum with deposit. — A written memoran- dum makes the deposit a mortgage. Even where a deposit of title deeds upon a verbal agreement that they shall be held as security for a debt does not constitute an equitable mortgage, a written agreement to the same effect accompanying the deeds will make the transaction a mortgage, generally in America."" As already noticed, such written agreement alone, without the deposit of title deeds, is regarded as an equitable mortgage. Parol evidence is inadmissible to contradict the purpose of a deposit accompanied by a written memorandum.*^ A deposit of title deeds accompanied by an agreement for a loan and an advance of the money is an equitable mortgage, and parties thereafter dealing with the debtor with knowledge of the facts, deal at their peril.*^ An equitable mortgage results from the deposit and "Hackett v. Reynolds, 4 R. I. 138 Iowa" 553, 114 N. W. 615, 19 L. 512; Rockwell v. Hobby, 2 Sandf. R. A. (N. S.) 206; Carey v. Rawson, Ch. (N. Y.) 9; Jackson v. Dunlap, 8 Mass. 159; Hackett v. Watts, 138 1 Johns. Cas. (N. Y.) 114; Chase v. Mo. 502, 40 S. W. 113; Martin v. Peck, 21 N. Y. 581. The cases cited Bowen, 51 N. J. Eq. 452, 26 Atl. 823; in support of the doctrine in Luch's Appeal, 44 Pa. St. 519; Ed- America are criticized in Bloomfield wards v. Trumbull, 50 Pa. St. 509; State Bank v. Miller, 55 Nebr. 243, Rankin v. Mortimere, 7 Watts 75 N. W. 569. (Pa.) 372; Spencer v. Haynes, 12 ^'Jarvis v. Dutcher, 16 Wis. 308; Phila. (Pa.) 452. See also Mallory Mowry V. Wood, 12 Wis. 413. v. Mallory, 86 111. App. 193; First "See Griffin v. Griffin, 18 N. J. Nat. Bank v. Caldwell, 4 Dill. (U. Eq. 104, decided with reference to S.) 314. Contra: Gardner v. Mc- New York law. Clure, 6 Minn. 250 (deposit with " Hackett v. Reynolds, 4 R. I. 512; written instrument creates merely Jarvis v. Dutcher, 16 Wis. 308. a lien, not an equitable mortgage). =»Jarvis v. Dutcher, 16 Wis. 307. "Ex parte Coombe, 17 Ves. Jr. " Higgins V. Manson, 126 Cal. 467, 369. 58 Pac. 907, 77 Am. St. 192; Webb * Carpenter v. Black &c. Min. Co., V. Carter, 62 Ga. 415; In re Snyder, 65 N. Y. 51; Jackson v. Parkhurst, § 188 EQUITABLE MORTGAGES 266 assignment of land certificates, absolute in form, but intended as se- curity for debts and advances.*^ § 188. Kemedy under equitable mortgage by deposit of title deeds. — The remedy under an equitable mortgage created by a deposit of title deeds or other equitable transfer, to cut off the equity of redemp- tion, is by a bill in equity,** for foreclosure.*^ An equitable mort- gagee may proceed to foreclose an agreement to give a mortgage or a defectively executed mortgage, without first seeking the specific en- forcement of the agreement or the reformation of the defective mort- gage.*° But an equitable mortgage created by the defective execution of a legal mortgage can not be foreclosed by advertisement.*^ When, however, a mortgage is created by a conveyance of an equitable estate legal in form, it may be foreclosed in the ordinary way. When a mortgage is effected by an assignment of an executory con- tract of purchase, a foreclosure and sale operate only to transfer the debt to the purchaser, who becomes in equity the assignee of the mort- gagor's contract, and entitled to the full benefit of it without redemp- tion. Such a mortgage is ineffectual to transfer the legal title, although the mortgagor may have subsequently acquired that. It can only be enforced as an equitable lien.** When necessary for his protection the equitable mortgagee may obtain a decree enjoining the mortgagor from conveying the land to a bona fide purchaser.*" Whether an absolute deed was given as an equitable mortgage or not is a question which must be decided by a court of equity. It can not be determined at law, as, for instance, in a petition for partition.^* 4 Wend. (N. Y.) 369; Rockwell v. v. Jackson, 55 N. J. Eq. 805; Hobby, 2 Sandf. Ch. (N. Y.) 9; Ham- Sprague v. Cochran, 144 N. Y. 104. mond V. Bush, 8 Abb. Prac. (N. Y.) See also Beatty v. Clark, 20 Cal. 11. 167; Mowry v. "Wood, 12 Wis. 428. " Ross v. Worthington, 11 Minn. <^Case V. McCabe, 35 Mich. 100. 438, 88 Am. Dec. 95. "Case v. McCabe, 35 Mich. 100; '"Stewart v. Hutchinson. 29 How. Mowry v. Wood, 12 Wis. 413; Jarvis Pr. (N. Y.) 181. V. Dutcher, 16 Wis. 307. '^Northrup v. Cross, Seld. Notes « Sappington v. Holy, 12 Mo. 567; (N. Y.) Ill; London &c. Banking Stewart v. Hutchinson, 29 How. Pr. Co. v. Lewis, 21 Ch. Div. 490; Spiller (N. Y.) 181; Perry v. Board of Mis- v. Spiller, 3 Swanst. 556; Hadley v. sions, 102 N. Y. 106; Parker v. London Bank, 3 De G. J. & S. 63. Housefleld, 2 Myl. & K. 419. "Bailey v. Knapp, 79 Maine 205. "Love v. Sierra Nev. &c. Co., 32 9 Atl. 356. Cal. 639, 91 Am. Dec. 602; Cummings CHAPTEE VI vendor's lien by contract oe eeseevation Section Section 189. Lien by contract not a vendor's 201. Assignment of purchase-money lien. note or bond. 190. Legal effect of title bond. 202. Order of payment of several 191. Security not impaired by holder notes. of contract. 203. Notice to purchaser -when deed 192. Reservation of lien in deed as does not refer to a note. creating an equitable mort- 204. Subrogation to the lien, gage. 205. Statute of limitations. 193. Lien reserved, a lien by con- 206. No obligation to exhaust per- tract. sonalty before resorting to 194. Reservation of lien in deed as realty. creating mortgage. 207. Proceedings to enforce lien. 195. Personal liability of purchaser 208. Remedies of vendor. accepting a mortgage deed. 209. Tender of performance. 196. Title imperfect until the debt 210. Temporary eviction of vendee. is paid. 211. Lien of vendor exhausted by 197. Obligation of a married ■woman. foreclosure sale. 198. Waiver of the lien. 212. Effect of sale of land to pass 199. Order of liability of parcels growing crops. sold. 213. Restraint of purchaser from 200. Account of vendor in posses- impairing vendor's lien. sion. |§ 189. Lien by contract not a vendor's lien. — A lien by contract is not a vendor's lien. The interest of a vendor vi^ho has given an ordi^ nary contract or bond for the sale of land, but retains the title to the land in himself, is often spoken of in the cases as a vendor's lien;^ but it is conceived that this is a misuse of terms, which should be avoided as leading to confusion. There is a fundamental distinction between a vendor's security in such case and the lien implied by law, and properly known as a vendor's lien.^ When the legal title remains in the vendor, the vendee has merely an equity of redemption in the land, and no act of his can possibly afEect the vendor's title ; while, in case of a mere lien in the vendor, the fee is in the purchaser, who may at any time discharge the lien by conveying the land to a bona fide ^See Neel v. Clay, 48 Ala. 252; Bankhead v. Owen, 60 Ala. 457; Hill V. Grigsby, 32 Cal. 55; Stevens Baker v. Compton, 52 Tex. 252. See V. Chadwick, 10 Kans. 406, 15 Am. also Good v. Jarrard, 93 S. Car. 229, Rep. 348; Smith v. Rowland, 13 76 S. B. 698, 43 L. R. A. (N. S.) Kans. 245. 383. ^Lowery v. Peterson, 75 Ala. 109; 267 189 VENDOR S LIEN 268 purchaser for value.* In the one case the vendor has a lien without any title, and in the other he has the title without any occasion for a lien. His title, by the terms of the contract, is his security ; and he can not in any way be divested of his title, except the vendee fulfils his con- tract, and by that means becomes entitled to a conveyance. The rela- tion of vendor and- vendee in such case bears a strong similitude to that of mortgagee and mortgagor. The vendor, having the title, has a substantial, security ; having no title, he has by implication a lien in name, but it exists only in name until a court of equity has given it force by a decree.* The relation between vendor and vendee is in equity substantially that of equitable mortgagee and mortgagor, the vendee holding an equity which is subject to foreclosure by the vendor.^ A lien by contract 'Tias none of the odious characteristics of the vendor's equitable lien."" Wlien the vendor retains the legal title, the interest of the purchaser is insecure, unless the contract of purchase be recorded; for the land ' Sykes v. Betts, 87 Ala. 537, 6 So. 428; Driver v. Hudspeth, 16 Ala. 348; Hutton v. Moore, 26 Ark. 382; Sparks v. Hess, 15 Cal. 186, per Ch. J. Field; Reese v. Burts, 39 Ga. 565; Hitt V. Pickett, 91 Ky. 644, 12 Ky. L. 51, 11 S. W. 9; Wells v. Smith, 44 Miss. 296; Pitts v. Parker, 44 Miss. 247; Neil v. Rosenthal, 120 App. Div. 810, 105 N. Y. S. 681; Hines v. Per- kins, 2 Heisk. (Tenn.) 395; White v. Blakemore, 8 Lea (Tenn.) 49; Ransom v. Brown, 63 Tex. 188; Hale V. Baker, 60 Tex. 217; Shelton v. Jones, 4 Wash. 692, 30 Pac. 1061; Church V. Smith, 39 Wis. 492, per Lyon, J. A purchaser from a vendee is bound to investigate the vendor's title even though the deed to such vendee has not been recorded. Runge v. Gilbrough (Tex. Civ. App.), 87 S. W. 832. *"It is, in short, a right which has no existence until it Is estab- lished by the decree of a court in the particular case." Per Story, J., in Oilman v. Brown, 1 Mason (U. S.) 191. "His lien is an individual equity, of no force until declared by a court of equity," quoted in Camp- bell V. Rankin, 28 Ark. 401; Hutton v. Moore, 26 Ark. 382. "Hardin v. Boyd, 113 U. S. 756, 28 L. ed. 1141; Moses v. Johnson, 88 Ala. 517, 7 So. 146, 16 Am. St. 58; Lowery v. Peterson, 75 Ala. 109; Bankhead v. Owen, 60 Ala. 457; Micou v. Ashurst, 55 Ala. 607; Ro- per V. Cook, 7 Ala. 322; Chapman v. Chunn, 5 Ala. 397; Haley v. Bennett, 5 Port. (Ala.) 470; Richardson v. Wren, 11 Ariz. 395, 95 Pac. 124; Gessner v. Palmateer, 89 Cal. 89, 24 Pac. 608, 13 L. R. A. 187; Sparks V. Hess, 15 Cal. 186; Merritt v. Judd, 14 Cal. 59; Postoria Gold Min. Co. V. Hazard, 44 Colo. 495, 99 Pac. 758; Wells V. Francis, 7 Colo. 396, 4 Pac. 49; Hutchinson v. Crane, 100 111. 269; Wright v. Troutman, 81 111. 374; Green v. Cook, 29 111. 186; Robinson v. Appleton, 22 111. App. 351; Fitzhugh v. Maxwell, 34 Mich. 138; Strickland v. Kirk, 51 Miss. 795; Gaston v. White, 46 Mo. 486; Johnson v. Cochrane, 84 N. Car. 446; Edward v. Thompson, 71 N. Car. 177; Graham v. McCampbell, Meigs (Tenn.) 52, 33 Am. Dec. 126; Baker v. Compton, 52 Tex. 252; St. Paul &c. Lumber Co. v. Bolton, 5 Wash. 763, 32 Pac. 787; Wood v. Mastick, 2 Wash. Ter. 64, 3 Pac. 612; Schriber v. LeClair, 66 Wis. 579, 29 N. W. 570; Church v. Smith, 39 Wis. 495; Button v. Schroyer, 5 Wis. 598. "Per Chief Justice Watkins, in 269 BY CONTEACT OR EESEEVATIOST § 190 is subject to sale by the vendor, and subject to levy upon execution by his creditors.'^ It is just as proper to call a mortgage given for purchase-money a vendor's lien as to call by that name the lien of one who has given a contract to sell, but retains the legal title, or who has reserved a lien in his deed of conveyance. It is often said that a vendor's lien may arise as well before the conveyance as after it.^ But the same courts which give this name to the lien retained by a vendor, who holds the legal title as security for the performance of the contract of sale, gen- erally proceed to point out the differences between this lien and that which is implied upon a conveyance; and inasmuch as the only like- ness between the two liens is in their both securing the purchase- money, it is proposed, in treating of the subject, to confine the term "vendor's lien" to that lien which is in equity implied to belong to a vendor for the unpaid purchase-price of land sold and conveyed by him. Under a contract for the sale of land which says nothing about a reservation in the deed of the vendor's lien, or about any security being given for the deferred payments of purchase-money, the vendor has the right to insert in his deed a clause reserving such a lien.^ § 190. Legal effect of title bond.— The legal effect of a title bond or agreement for a deed, is sometimes said to be like a deed by the vendor and a mortgage back by the vendee.^" There can be no sensi- ble distinction between the case of a legal title conveyed to secure the payment of a debt, and a legal title retained to secure payment.^^ The vendor holds the legal title, and all persons must necessarily take no- tice of it; and although the vendee enter into possession, his deed will of course convey only his equitable title.^^ Like a mortgagor in pos- session, he has an equity of redemption; while the vendor holds the Moore v. Anders, 14 Ark. 628, 60 "Hatcher v. Hatcher, 1 Rand. Am. Dec. 551. (Va.) 53; Findley v. Armstrong, 23 'Bell V. McDuffie, 71 Ga. 264; W. Va. 113; Warren v. Branch, 15 Evans v. Ashe, 50 Tex. Civ. App. 54, W. Va. 21. 108 S. W. 389, 1190; Lacey v. Smith ^° Hardin v. Boyd, 113 U. S. 756, (Tex. Civ. App.), Ill S. W. 965; 5 Sup. Ct. 771, 28 L. ed. 1141; Wells Diffie V. Thompson (Tex. -Civ. App.), v. Francis, 7 Colo. 396, 4 Pac. 49; 88 S. W. 381. Willman v. Friedman, 3 Idaho 734, ' English V. Russell, 1 Hempst. 35 Pac. 37. See also Bigler v. Jack, (IT. S.) 35; Hill v. Grigshy, 32 Cal. 114 Iowa 667, 87 N. W. 700. 55; Amory v. Reilly, 9 Ind. 490; "Lowery v. Peterson, 75 Ala. 109; Servis v. Beatty, 32 Miss. 52; Yan- Bankhead v. Owen, 60 AJa. 457. cey V. Mauck, 15 Grat. (Va.) 300, "New York &c. Co. v. Plumer, distinguished in Wright v. Trout- 96 Pa. St. 99. man, 81 111. 374. § 190 vendor's lien 270 title by reservation rather than by grant, as in the case of an ordi- nary mortgage. The equitable estate of the vendee may be alienated or devised as real estate, and upon his death it will descend to his heirs ; while on the other hand, although the vendor holds the legal title, upon his death the securities he has taken for the purchase-money go to his personal representative.^^ Although the vendor's remedy upon the note or contract or bond taken for the purchase-money be barred by the statute of limitations, or by the discharge in bankruptcy of the vendee, the lien upon the land is not affected. As in respect to mort- gages, the vendor's lien will in such case be presumed to have been satisfied after the lapse of twenty years, and the continued possession of the vendee ;^* and on the other hand, if' the vendor remain in posses- sion, so long as he recognizes the vendee as the equitable owner the statute does not begin to run ; and after it does begin to run, the ven- dee may at any time within the same period redeem the title.^° The position of the vendor being regarded substantially as that of a mortgagee, the possession of the vendee is not adverse to the ven- dor.*^ When after sush a contract the vendor pays delinquent taxes upon the land,^^ or, at the request of the vendee, pays for improve- ments upon the property, which by the terms of the contract the ven- dee was himself to make before receiving a conveyance, the amount so "^ Lewis V. Hawkins, 23 Wall. (IT. money, in all cases where he has S.) 119, 23 L. ed. 113; Masterson v. contracted to convey, but has made Pullen, 62 Ala. 145; Relfe v. Relfe, no conveyance, he has an equitable 34 Ala. 500, 73 Am. Dec. 467; Mar- lien, as between him and the vendee, tin V. O'Bannon, 35 Ark. 62; McCon- and those claiming under such nell V. Beattie, 34 Ark. 113; Schearff vendee with notice. Birdsall v. V. Dodge, 33 Ark. 340; Holman v. Cropsey, 29 Nebr. 672, 44 N. W. 857, Patterson, 29 Ark. 357; Lewis v. 29 Nebr. 679, 45 N. W. 921; White- Boskins, 27 Ark. 61; Purdy v. Bui- horn v. Cranz, 20 Nebr. 392, 30 N. lard, 41 Cal. 444; Merritt v. Judd, 14 "W. 406; Rhea v. Reynolds, 12 Nebr. Cal. 59; Scroggins v. Hoadley, 56 128, 10 N. W. 549; Dorsey v. Hall, Ga. 165; Smith v. Price, 42 111. 399; 7 Nebr. 460. If a vendee makes Greene v. Cook, 29 111. 186; Smith payment of any part of the con- V. Moore, 26 111. 392; Dukes v. Tur- sideration after receiving notice of ner, 44 Iowa 575; Walkenhorst V. an adverse equity, to that extent Lewis, 24 Kans. 420; Lingan v. Hen- he is not a bona fide purchaser. Sav- derson, 1 Bland Ch. (Md.) 236; age v. Hazard, 11 Nebr. 323, 9 N. Schorn v. McWhirter, 8 Baxt. W. 83; Birdsall v. Cropsey, 29 Nebr. (Tenn.) 201; Schorn v. McWhirter, 672, 44 N. W. 857, 29 Nebr. 679, 45 6 Baxt. (Tenn.) 311; Cleveland v. N. W. 921; Earle v. Burch, 21 Nebr. Martin, 2 Head (Tenn.) 128; Irvine 702, 33 N. W. 254. V. Muse, 10 Helsk. (Tenn.) 477; "Lewis v. Hawkins, 23 Wall. (U. White V. Blakemore, 8 Lea (Tenn.) S.) 119, 23 L. ed. 113. 49; Skaggs v. Kelly (Tenn.), 42 S. "Harris v. King, 16 Ark. 122. W. 275; Richards v. Fisher, 8 W. "Burnett v. Caldwell, 9 Wall. (U. Va. 55; Button v. Schroyer, 5 Wis. S.) 290, 19 L. ed. 712. B98. In Nebraska, where a vendor "Lillie v. Case, 54 Iowa 177, 6 has no implied lien for purchase- N. W. 254. 271 BY CONTRACT OR RESERVATION § 191 paid becomes a further lien ■upon the property, which the vendor may enforce by a sale of the vendee's interest under the eontract.^^ If the vendor who retains the title also retains possession of the land as se- curity for the purchase-money, he is not liable to the vendee for the rent of the premises.^' § 191. Security not impaired by holder of contract. — The holder of the contract can not impair the security. The legal title of the ven- dor in such ease is not affected by any liens created by the person who holds the contract of purchase, as, for instance, a mechanic's lien for labor and materials furnished him;^" or a conveyance or mortgage by biTTi j"^ or judgment or attachment against him.^^ Such claims necessarily arise after the lien created by the contract, and must be subject to that lien. The vendee can not possibly do any- thing to impair that lien, any more than a mortgagor can, after the execution of his mortgage, do anything with his title to impair that security. But if the vendor, after a lien has attached to the interest of the vendee for materials used in the construction of a house upon the premises, takes a reconveyance of the premises, and as a part of the consideration of the reconveyance assumes the lien debt, the lien may be enforced against the whole land.^^ The right of dower of the widow of the vendee is subordinate to this lien.''* N"o homestead right in the property can be acquired by the purchaser as against the lien.^^ If the vendee sells the property to another, his lien upon the land for the purchase-money is subordinate to the lien of the original ven- dor; and a surety upon the purchase-notes given by the first vendee has an equity to have the land sold, for the payment of these notes, ^ Grove v. Miles, 71 111. 376, 58 also Tuck v. Calvert, 33 Md. 209; 111. 338. Hadley v. Nash, 69 N. Car. 162. ""■Worrelv. Smith, 6 Colo. 141. ^Tuck v. Calvert, 33 Md. 209; ^Thorpe V. Durbon, 45 Iowa 192; Hadley v. Nash, 69 N. Car. 162; Seitz v. Union Pac. R. R. Co., 16 Roberts v. Francis, 2 Heisk. (Tenn.) Kans. 133; Cochran v. Wimberly, 44 127. See also Wooten v. Ballinger, Miss. 503. See also Harville v. Lowe, 17 Fla. 289; Jones v. Sackett, 36 47 Ga. 214. ' Mich. 192; Paris Exch. Bank v. '^Williams v. Cunningham, 52 Beard, 49 Tex. 358; Grubbs v. Wy- Ark. 439, 12 S. W. 1072; Beattie v. sors, 32 Grat. (Va.) 127; Shipe v. Dickinson, 39 Ark. 205; Harvill v. Repass, 28 Grat. (Va.) 716; Davis Lowe, 47 Ga. 214; Sitz v. Deihl, 55 v. Vass, 47 W. Va. 811, 35 S. B. 826. Mo. 17; Carter v. Sims, 2 Heisk. ® Adams v. Russell, 85 111. 284. (Tenn.) 166; Rogers v. Blum, 56 '^Zeischang v. Helmke (Tex. Civ. Tex. 1; Wood y. O'Hanlon, 50 Tex. App.), 84 S. W. 436; Roush v. Mil- Civ. App. 642, 111 S. W. 178. See ler, 39 W. Va. 638. ^ Berry v. Boggess, 62 Tex. 239. § 193 vendoe's lien 272 superior to any equity wliich any claimant under such vendee can have on the land.^" After a title bond or a contract of sale has been given for the con- veyance of lands upon the payment of the purchase-money, the lands are not subject to sale under execution at law at the suit of one obtain- ing judgment afterward against the vendor ; the lien of the vendee pre- vails against the lien of the judgment creditor, which can operate only upon the interest of the vendor at the time of its rendition.^' § 192. Beservation of lien in deed as creating an ec[uitable mort- gage. — An express reservation in a deed of a lien upon the land con- veyed creates an equitable mortgage, and when the deed is recorded every one is bound to take notice of the incumbrance.^* Thus, where land was sold, and for the purchase-money several promissory notes of the purchaser were taken, and these were described in the deed of con- veyance, and expressly made a lien upon the land conveyed, a pur- chaser on execution obtained only an equity of redemption subject to such lien.^° To create such a lien there must be something more than a mere recitation that the purchase-money, to a certain amount, remains un- paid ; this amount must be expressly charged upon the land conveyed.'" The lien must be expressly reserved in order to be enforcible against =*'Beattie v. Dickinson, 39 Ark. Wells, 52 Tex. 612; Caldwell v. 205. Fraim, 32 Tex. 310; Smith v. Pate ="Shinii V. Taylor, 28 Ark. 523; (Tex. Civ. App.), 43 S. W. 312. Taylor v. Eckford, 11 Sm. & M. ^ Davis v. Hamilton, 50 Miss. 213; (Miss.) 21; Money V. Dorsey, 7 Sm. Stratton v. Gold, 40 Miss. 778; & M. (Miss.) 15. Stephens v. Mott, 81 Tex. 115, 16 S. ^Putnam v. Summerlin, 168 Ala. W. 731; Caldwell v. Fraim, 32 Tex. 390, 53 So. 101; Eichelberger v. Gitt, 310. Quoted with approval in Hall 104 Pa. St. 64; Exchange &c. Bank v. Mobile &c. R. Co., 58 Ala. 10. V. Bradley, 15 Lea (Tenn.) 279; ^ Heist v. Baker, 49 Pa. St. 9. Webster v. Mann, 56 Tex. 119, 42 There is a broad distinction be- Am. Rep. 688; Ufford v. Wells, 52 tween the rights of a vendor under Tex. 612; Baker v. Compton, 52 Tex. an absolute deed with warranty 252; Coles V. Withers, 33 Grat. (Va.) which recites the existence of un- 186. See also Hall v. Mobile &c. R. paid purchase-money notes, but re- Co., 58 Ala. 10; McKeown v. Collins, tains no express lien in terms for 38 Fla. 276, 21 So. 103; Atlanta their payment, and hin rights un- Sand &c. Co. v. Haile, 106 Ga. 498, der a deed which declares that a 32 S. E. 606; Hill v. Cole, 84 Ga. lien is reserved for unpaid pur- 245, 10 S. B. 739; Gordon v. John- chase-money. Under the former, the son, 186 111. 18, 57 N. E. 790; Davis vendor has parted with title, and V. Hamilton, 50 Miss. 213; Stratton has only an implied vendor's lien v. Gold, 40 Miss. 778; Talbot v. Roe, for purchase-money; under the lat- 171 Mo. 421, 71 S. W. 682; First ter, the superior title remains with Nat. Bank v. Edgar, 65 Nebr. 340, the vendor, and the deed is the evi- 91 N. W. 404; Honaker v. Jones, 102 dence of an executory contract. Tex. 132, 113 S. W. 748; Ufford v. Baker v. Compton, 52 Tex. 252, per 273 BY CONTRACT OH RESERVATION § 192 subsequent purchasers without notice.^^ A note or bond given for the purchase-money of land conveyed does not create a lien upon it.^^ It does not, though it recites upon its face that it is given for purchase- money of the land, stick to the land. But a reservation of a purchase- money lien in a note given for the land renders the sale executory in the same manner as if the reservation veere contained in the deed it- self.^^ But a grant of land, "to have and to hold the same under and subject, nevertheless, to the payment" of a certain sum at the decease of the grantee, constitutes a charge upon the land, in whosesoever hands it may be.^* Effect should be given to the intention of the vendor to reserve a lien, where he has not expressly done so, provided such intention may be gathered from the language used.^° A deed of land "charged with the payment" of certain specified sums creates a lien in the nature of a mortgage, and not in the nature of a vendor's lien.^' A lien is effectually reserved in a deed which de- scribes the notes given for the purchase-money, and the habendum is "to have and to hold on the payment of the notes herein above stated."^'' No particular words are essential for creating a lien by ex- press reservation. All that is necessary is, that the words used should distinctly convey the idea that the vendor retains a lien on the land. A stipulation that the "land shall be bound for the notes" given for the purchase-money creates an effectual lien.^* A purchaser who, buys land sold under a decree of court, which on its face reserves a lien for the purchase-money, buys subject to the lien reserved.^* Gould; J.; Proetzel v. Rabel, 21 Tex. 136 S. W. 533. A deed retaining a Civ. App. 559, 54 S. W. 373; Harris lien and notes executed at the same v. Shields, 111 Va. 643, 69 S. E. 933. time as evidence of the debt re- ='NefC V. Elder, 84 Ark. 277, 105 served must be construed as parts S. W. 260, 120 Am. St. 67. of the same contract. Beckham v. '^ Smith V. High, 85 N. Car. 93; Scott (Tex. Civ. App.), 142 S. W. 80. Hoskins v. Wall, 77 N. Car. 249; " Eichelberger v. Gitt, 104 Pa. St. Ransom v. Brown, 63 Tex. 188; Ba- 64; Heist v. Baker, 49 Pa. St. 9. ker V. Compton, 52 Tex. 252. See '" Lipscomb v. Fuqua, 55 Tex. Civ. also Proetzel v. Rabel, 21 Tex. Civ. App. 535, 121 S. W. 193. App. 559, 54 S. W. 373. But see =» Stanhope v. Dodge, 52 Md. 483. Briggs V. Planters' Bank, Freeman's "' Blalsdell v. Smith, 3 Bradw. Ch. (Miss.) 574; Broom v. Herring, (111.) 150. 45 Tex. Civ. App. 653, 101 S. W. 1023. =« Moore v. Lackey, 53 Miss. 85; " Lundy v. Pierson, 67 Tex. 233, 2 Lipscomb v. Fuqua, 55 Tex. Civ. S. W. 737; McKelvain v. Allen, 58 App. 535, 121 S. W. 193; Miller v. Tex. 383; New England Loan &c. Linguist (Tex. Civ. App.), 141 S. W. Co. V. "Willis, 19 Tex. Civ. App. 128, 170. See also Pugh v. Holt, 27 Miss. 47 S. W. 389; Miller v. Linguist 461; Carr v. Holbrooke, 1 Mo. 240. (Tgx. Civ. App.), 141 S. W. 170; "Ross v. Swan, 7 Lea (Tenn.) Buckley v. Runge (Tex. Civ. App.), 463. 18— Jones Mtg.— Vol. I. '§ 193 vendor's lien 374 A stipulation in a deed, that the title shall not vest in the grantee until the purchase-money is paid, amounts in equity to a mortgage.*" So does a deed providing that it shall be absolute on the payment of certain notes, but in default of payment shall be void.*^ A lien may be reserved for the security of a note for the purchase- money made payable to a third person.*^ When a deed is executed in compliance with an ordinary agree- ment for the sale of land, part of the consideration for ■which is to be paid at the time and part at a future day, and nothing is said about a lien or other security for the future payments, the vendor has a right to insert in his deed a clause reserving a vendor's lien for the unpaid purchase-money.*^ If upon an absolute sale the possession be expressly reserved to the grantor for one year, the right of possession will vest in the grantee at the end of the year, in the absence of any provision to the contrary, although a part of the purchase-price remains unpaid.** A reservation may be made of the crops to be raised on the granted land, to secure interest on the purchase-money, and such reservation creates a valid lien which may be foreclosed.*'^ § 193. Lien reserved, a lien by contract. — A lien for the purchase- money expressly reserved by a vendor in his deed of conveyance is a lien created by contract, and not by implication of law. It is a con- tract that the land shall be burdened with the lien until the note is paid. It is really a mortgage. The lien, then, becomes a matter of record when the deed is recorded.*' It is not waived by the taking *°Pugh v. Holt, 27 Miss. 461; La- lien often reserved in deeds of con- vigne V. Naramore, 52 Vt. 267. veyaace for payment of purchase- ' "Carr v. Holbrook, 1 Mo. 240. money, nor as strict mortgages or " Mize y. Barnes, 78 Ky. 506. deeds of trust for it, nor yet as the ■" Pindley v. Armstrong, 23 W. Va. security held by a vendor who has 113. only given a bond for the title. ■" Evans v. Enloe, 64 Wis. 671, 26 These are often confounded with the N. W. 170. vendor's lien, because security of "Darling v. Robbins, 60 Vt. 347, the purchase-money is common to 15 Atl. 177; Baxter v. Bush, 29 Vt. all of them. But the vendor's lien 465, 70 Am. Dec. 429. The interest arises wholly from inference or im- on interest and attorney's fees may plication, which is invisible, and be included in the reservation. Mas- can not be recorded; the others are terson v. Burnett (Tex. Civ. App.), from express contract, visible to all, 37 S. W. 987. and may be recorded. All of the "= Ober V. Gallagher, 93 U. S. 199, same consequences do not, therefore, 23 L. ed. 829; Armentrout v. Gib- necessarily result, as to assignees or bons, 30 Grat. (Va.) 632. holders of the debt secured by the White V. Downs, 40 Tex. 225, per vendor's lien, nor as to purchasers Gray, J. "The vendor's lien, how- of the land liable to it, as between ever, properly understood, is not in the original parties and privies, as all respects the same as the express do often occur in the cases of ex- 275 BY CONTEACT OK EESEEVATION § 193 of other security, as is the case with an ordinary vendor's lien.*' Thus the taking of additional security in the form of a trust deed for other lands does not affect the lien reserved.*^ Nor is it waived or impaired by pursuit of the remedy at law.*" It is governed by the same rules which govern a mortgage. It passes by an assignment of the note secured by it.^" It is foreclosed as a mortgage; and there is the same right of redemption for a limited period after a fore- closure sale.''^ "The reservation of the vendor's lien in the deed of conveyance," says Mr. Justice Bradley, of the Supreme Court of the United States,'^^ "is equal to a mortgage taken for the purchase-money contempo- raneously with the deed, and nothing more. The purchaser has the equity of redemption precisely as if he had received a deed and given a mortgage for the purchase-money." The legal title passes to the purchaser subject to the lien, and the land is subject to attaclrnicnt and execution as his property, just as an equity of redemption is sub- ject.=3 The lien differs also from a vendor's lien in that it may secure the performance of any covenant or undertaking agreed upon, instead of a fixed sum payable in money ; as, for instance, it may secure an agree- ment to pay in specific articles.^* Upon the sale of leasehold property with certain personal property press lien by contract." See also Herman, 9 Tex. Civ. App. 79, 29 S. Bozeman v. Ivey, 49 Ala. 75; Rob- W. 542; Fayette Land Co. v. Louis- inson v. Woodson, 33 Ark. 307; Ding- ville &c. R. Co., 93 Va. 274, 24 S. E. ley v. Bank of Ventura, 57 Cal. 467; 1016; Kane v. Mann, 93 Va. 239, 24 Carpenter v. Mitchell, 54 111. 126; S. B. 938. Smith V. Rowland, 13 Kans. 245; ™ Markoe v. Andras, 67 111. 34; Moore v. Lackey, 53 Miss. 85; Strat- Carpenter v. Mitchell, 54 111. 126. ton V. Gold, 40 Miss. 778; Eichel- See also Gordon v. Johnson, 186 111. berger v. Gitt, 104 Pa. St. 64; Dan- 18, 57 N. E. 790; Reynolds v. Morse, iels V. Moses, 12 S. Car. 130; Web- 52 Iowa 155, 2 N. W. 1070; Kim- ster V. Mann, 52 Tex. 416; Peters v. trough v. Curtis, 50 Miss. 117; Pow- Clements, 46 Tex. 114. ell v. Powell, 217 Mo. 571, 117 S. W. "Carpenter v. Mitchell, 54 111. 126; 1113; Atteberry v. Burnett, 52 Tex. Wilcox V. First Nat. Bank, 93 Tex. Civ. App. 617, 114 S. W. 159. 322, 55 S. W. 317. See also Boze- "Markoe v. Andras, 67 111. 34; man v. Ivey, 49 Ala. 75; Kent v. quoted with approval in Hall v. Mo- Williams, 114 Cal. 537, 46 Pac. 462; bile &c. R. Co., 58 Ala. 10; and in McCaslin v. State, 44 Ind. 151; Dingley v. Bank of Ventura, 57 Cal. Schwarz v. Stein, 29 Md. 112; 467; Pullen v. Ward, 60 Ark. 90, 28 Strickland v. Summerville, 55 Mo. S. W. 1084. 164; Nixon v. Knollenberg, 92 Mo. ^^King v. Young Men's Assn., 1 App. 20; Price v. Laure, 49 Tex. 74; Woods (U. S.) 386. Warren v. Branch, 15 W. Va. 21; "Chitwood v. Trimble, 58 Tenn. Dunlap V. Shanklin, 10 W. Va. 662. 78; Gordon v. Rixey, 76 Va. 694. 1 « Price V. Lauve, 49 Tex. 74. " Harvey v. Kelly, 41 Miss. 490, "Branch v. Taylor, 40 Tex. Civ. 93 Am. Dec 267. App. 248. 89 S. W. 813; Howard v. § 194 tendoe's lien 276 thereon for a gross sum for both, the reservation of a lien in the instniment of transfer is efEectual, and will be enforced by a sale of both the real and personal property.^' If upon purchase of land part payment be made in the notes of third persons, and the conveyance expressly stipulates that the vendor in no way waives his lien by reason of taking the personal securities, the reservation creates a contract lien in the nature of an equitable mortgage, which may be enforced upon nonpayment of the note.'^° § 194. Reservation of lien in deed as creating mortgage. — Such a reservation may appropriately be said to amount substantially to a mortgage, where by this term is meant simply a lien. Thus, in a case in the Circuit Court of the United States for Tennessee, the court, having said that the vendee stands (substantially) in the same position as if he had executed a mortgage to the vendor for the purchase-money, explained that, of course, while the court assimilated the lien to that of a mortgage, it did not mean the old common-law mortgage, in its technical sense, but the modern signification of that term, as one applied to any lien created by express contract of the parties as a security for a debt. Such a reservation creates an express lien by contract or agreement of the parties; and that is all that is meant by a mortgage in half or more of the states.^' The lien is not an equitable mortgage, but is merely treated ia equity as a mortgage, and enforced as such.^' "If not a mortgage, it approximates one more nearly than an ordinary vendor's lien."°' § 195. Personal liability of pnrcliaser accepting a mortgage deed. — Ordinarily a purchaser under such a deed would not be personally liable for the purchase-money, unless he had by note or some other writing bound himself for its payment. The general rule is that no personal obligation is implied from the giving of a mortgage deed, unless there is an express stipulation or covenant in the deed to that effect, or there be some separate promise in writing to pay the money.*" ==Ruhl V. Ruhl, 24 "W. Va. 279. See Tex. 132, 113 S. "W. 748; Webster v. post § 1071. Mann, 52 Tex. 416. ■""Kyle V. Bellenger, 79 Ala. 516. ""Priddy v. Smith, 106 Ark. 79, "'Kirk V. "Williams, 24 Fed. 437. 152 S. W. 1028, 44 L. R. A. (N. S.) See also Hall v. Mobile &c. R. Co., 285; Harris v. Haynie, 37 Ark. 348. 58 Ala. 10; Bingley v. Bank of Yen- "= Carpenter v. Mitchell, 54 111. tura, 57 Cal. 467; Atlanta Land &c. 126, 129, per Walker, J. ■Co. V. Halle, 106 Ga. 498, 32 S. E. " Dolinski v. First Nat. Bank 606; Davis v. Hamilton, 50 Miss. (Tex. Civ. App), 139 S. W. 1. Where 213; Talbot v. Roe, 171 Mo. 421, 71 a vendor takes purchase-money S. W. 682; Honaker v. Jones, 102 notes and reserves a lien in his 277 BY CONTRACT OR RESERVATION § 196 In Tennessee, however, it is held that, in an action against the grantee to recover the purchase-money, the fact that he has accepted a deed in which a lien is reserved, is conclusive proof of a promise on his part to pay the money. "^ As there exists no promise, either express or implied, to the original vendor on the part of a subsequent purchaser with notice, the courts are uniform in holding that, in a proceeding to foreclose the vendor's lien, no personal judgment can be taken against a subsequent vendee."^ § 196. Title imperfect until the debt is paid. — The vendee's title is imperfect until the debt is paid. When land has been conveyed by a deed, reserving a lien upon it for the purchase-money, the lien is an incumbrance upon it, and an execution sale of it as the property of the vendee should be made as of incumbered property."^ It has prece- dence over a prior judgment against the vendee. It is superior to interests subsequently acquired."* Thus if the grantee erects build- ings on the land, and mortgages beth buildings and land, the grantor has a superior lien, and may enforce it against both land and build- ings.°' ' The vendee's title is imperfect until this debt is paid, though the debt for the purchase-money be barred by the statute of limitations. "" Though the vendor can not enforce his lien by suit to recover the money and foreclose the lien, he can assert his superior title to the land as owner. He can not be evicted after he has regained posses- sion. '*'' Every one purchasing his title must have notice of the lien reserved. He has notice only of the debt and simple interest, unless more be reserved.*^ This lien is in fact an equitable mortgage. In the case of an implied lien, the courts have generally been unwilling to extend it beyond the security of the vendor, because it might tend to embarrass the vendee's right of disposing of the property by giving deed and the vendee conveys to an- 276, 15 N. B. 761; Thompson v. HefE- other who expressly agrees to pay ner, 11 Bush (Ky.) 353. such notes and the holder of the "Kalteyer v. Mitchell (Tex. Civ. lien releases such second vendee the App.), 110 S. W. 462; Colquitt v. first vendee is also released. Mays Sturm (Tex. Civ. App.), 91 S. W. V. Sanders (Tex. Civ. App.), 36 S. 872; Flach v. Zanderson (Tex. Civ. W. 108. See post §§ 748-770. App.), 91 S. W. 348. °'Kirk V. "Williams, 24 Fed. 437. "= Parsons v. Hoyt, 24 Iowa 154; ""Teal V. Lewis, 85 Ala. 218, 4 So. Louisville Bldg. Assn. 'v. Korb, 79 695; Wilson v. Lyon, 51 111. 530; Ky. 190. Bates V. Childers, 5 N. Hex. 62, 20 »»Hale v. Baker, 60 Tex. 217. Pac. 164; Spence v. Morris (Tex. ""Hale v. Baker, 60 Tex. 217. Civ. App.), 28 S. W. 405. «*Stricklin v. Cooper, 55 Miss. 624. "^Robinson v. Appleton, 124 111. § 197 vendor's lien 378 countenance to secret liens upon it; but this reason does not apply when the lien is reserved by express contract in the deed.*' The effect of a lien expressly reserved can not be controlled by evi- dence of a verbal agreement that there should be no lien.'" In Penn- sylvania, however, the law upon tliis subject is exceptional; for it is held that a charge upon land created by the parties to a conveyance is divested by a subsequent sheriffs sale, unless the charge be in the nature of a testamentary provision for the grantor's wife for children, or incapable of valuation, or is expressly created to run with the land.''^ It is declared that the doctrine of equitable liens was never admitted into the jurisprudence of this state. Moreover, the policy of the law is, that judicial sales shall pass property clear of all liens, and the courts have yielded with reluctance to making the exceptions above named. Accordingly, it is held that a recital in a deed that the purchase-money remains unpaid, and is to be paid annually, does not create a lien which a subsequent judicial sale will not divest.'^ Neither does a recital that the deed is made subject to a mortgage held by a person named for a specified sum create such a lien, when there was in fact no mortgage, but a judgment which subsequently expired. It was urged that the deed created a charge upon the land, and that, as this charge appeared upon the face of the title, a subsequent mort- gagee had notice of it, and took subject to it. But it was held, inasmuch as this recital did not amount to a condition, and inasmuch as the charge was not within either of the exceptions named, it was divested and destroyed by a sherifE's sale under a subsequent mort- gage. The remedy after such sale, if there be any, is upon the fund created by the sale.'^ § 197. Obligation ef a married woman. — A married woman is bound by a contract to purchase,^* or a contract in the nature of a "^Stratton v. Gold, 40 Miss. 778; Am. Dec. 569; Stewartson v. Watts, Masterson v. Cohen, 46 Tex. 520; 8 Watts (Pa.) 392; Bear v. Whlsler, Peters v. Clements, 46 Texas. 114. 7 Watts (Pa.) 144. When a lien is reserved in the deed, " Hlester v. Green, 48 Pa. St. 96, failure to record the deed or the 86 Am. Dec. 569. destruction of the deed will not af- " Pierce v. Gardner, 83 Pa. St. 211. feet the vendor's lien. Texarkana '* In North Carolina, when entered Nat. Bank v. Daniel (Tex. Civ. into according to requirements of App.), 31 S. W. 704. See also De statute. Johnston v. Cochrane, 84 Steaguer v. Pittman, 54 Tex. Civ. N. Car. 446. See also Sarver v. App. 316, 117 S. W. 481. Clarkson, 156 Ind. 316, 59 N. E. 933; "Hutchinson v. Patrick, 22 Tex. Grimes v. Grimes, 141 Ind. 480, 40 318. N. E. 912; Whetstone v. Baker, 140 "Strauss's Appeal, 49 Pa. St 353; Ind. •213, 89 N. B. 868. Hiester v. Green, 48 Pa. St. 96, 86 279 BT CONTEACT OR EESEKVATIOK § 198 mortgage for purcliase-money of land conveyed to her, and created by the vendor's reserving in the deed to her a lien upon the land for the security of her note given for such purchase-money.^ ° The right to subject the lien to the payment of the purchase-money arises not from the note, but from the deed; the reason for the rule being that, having accepted the vendor's title to the land, she is estopped from denying him the right to subject the same to the pay- ment of the purchase-money.'^ Her mortgage for purchase-money, although invalid by reason of her husband not joining in its execu- tion, has been regarded as a declaration preserving a vendor's lien, or as a declaration of a trust in favor of the vendor. '^ Even where the note of a married woman imposes no personal obligation upon her, she can be put to her election under a sale to her by title bond either to pay her note for the purchase-money, or to surrender the land and all claim to it.'* § 198. Waiver of the lien. — A lien reserved by contract, or exist- ing in the vendor by reason of his not having parted with the legal title, having given only a bond or contract of sale, is of course not lost nor waived as an implied lien is waived by accepting other securi- ties.'^ Neither does a change of notes, nor the substitution of the '" Bedford V. Burton, 106 U. S. 338, 42 So. 1016; Bozeman t. Ivey, 49 1 Sup. Ct. 98, 27 L. ed. 112; Chilton Ala. 75; Huffman v. Cauble, 86 Ind. V. Braiden, 2 Blackf. (U. S.) 458, 17 591; McCaslin v. State, 44 Ind. 151; L. ed. 304; Carpenter v. Mitchell, 54 Bradley v. Curtis, 79 Ky. 327, 2 Ky. 111. 126; Weller v. Monroe, 21 Ky. L. L. 329; Lewis v. Pusey, 8 Bush 1705, 55 S. W. 1078; Jackson v. Rut- (Ky.) 615; Lusk v. Hopper, 3 Bush ledge, 3 Lea (Tenn.) 626, 31 Am. (Ky.) 179,185; Hurley v. Hollyday, Rep. 655; Weinberg v. Rempe, 15 W. 35 Md. 469; Schwarz v. Stein, 29 Va. 829; Radford v. Carwile, 13 W. Md. 112; Magruder v. Peter, 11 Gill Va. 572. & J. (Md.) 217; Strickland v. Sum- ™ Chilton V. Lyons, 2 Blackf. (U. merville, 55 Mo. 164; Adams v. Cow- S.) 458, 17 L. ed. 304; Perry v. Rob- herd, 30 Mo. 458; Whitehurst v. erts, 30 Ind. 244, 95 Am. Dec. 689; Yandall, 7 Baxt. (Tenn.) 228; Se- Bybee v. Smith, 88 Ky. 648, 11 S. "W. horn v. McWhirter, 6 Baxt. (Tenn.) 722; Weller v. Monroe, 21 Ky. L. 313; Fogg v. Rogers, 2 Coldw. 1705, 55 S. W. 1078; Adams v. Fee- (Tenn.) 290; Hines v. Perkins, 2 der, 19 Ky. L. 581, 41 S. W. 275; Heisk. (Tenn.) 395; Price v. Lauve, Johnson v. Jones, 51 Miss. 860; 49 Tex. 74; KnIsely v. Williams, 3 Cashman v. Henry, 75 N. Y. 103, 31 Grat. (Va.) 265, 46 Am. Dec. 193; Am. Rep. 437; Kent v. Gerhard, 12 Hatcher v. Hatcher, 1 Rand. (Va.) R. I. 92, 34 Am. Rep. 612; Jackson 53; Dunlap v. Shanklin, 10 W. Va. V. Rutledge, 3 Lea (Tenn.) 626, 31 662. To the contrary, not good law: Am. Rep. 655. Hawkins v. Thurman, 1 Idaho 598. ■"Morrison v. Brown, 83 111. 562. See also Spears v. Taylor, 149 Ala. "Hendrick v. Foote, 57 Miss. 117; 180, 42 So. 1016; Acree v. Stone 142 Johnson v. Jones, 51 Miss. 860; Wil- Ala. 156, 37 So. 934; Blswick v. lingham v. Leake, 7 Baxt. (Tenn.) Matney, 132 Ky. 294, 116 S. W. 718, 453. 136 Am. St. 180; Rhodes v. Arthur, "Spears v. Taylor, 149 Ala. 180, 19 Okla. 520, 92 Pac. 244. § 198 VENDOR S LIElsr 280 notes of another person/" as for instance those of a subsequent pur- chaser, nor the reducing the notes to judgment, affect the lien/^ nor does the taking of new notes by an assignee in his own name, and extending the time of payment.*^ Where the waiver has been ob- tained by any kind of fraud its priority may be asserted.^* It is not waived by taking under duress depreciated currency in payment of tlie debt.^* It is not waived by a judgment and sale upon execution of the interest of the vendee in tlie land.^^ The burden of proof is upon the vendee to show a waiver/" and' so long as the debt exists the lien will not be presumed to have been waived except upon clear and convincing testimony.^' The vendor who has an express lien may by his acts or declarations waive it, as, for instance, by inducing another to buy the property as unincumbered; or by permitting and encouraging the administrator '"Hitt V. Pickett, 91 Ky. 644, 12 Ky. L. 51, 11 S. W. 9; Hill v. Downs, 9 Ky. L. 767, 6 S. W. 650. Where a vendor takes the note of a third person for a part of the purchase- price of her land and renews the note and collects the interest there- on for many years, he may thereby •waive his vendor's lien. Spence v. Palmer, 115 Mo. App. 76, 90 S. W. 749. See also Spears v. Taylor, 149 Ala. 180, 42 So. 1016; Acree v. Stone, 142 Ala. 156, 37 So. 934; Hood v. Hammond, 128 Ala. 569, 30 So. 540, 86 Am. St. 159; Scott v. Edgar, 159 Ind. 38, 63 N. E. 452. "Woodward v. Echols, 58 Ala. 665; Bozeman v. Ivey, 49 Ala. 75; Brad- ford V. Harper, 25 Ala. 337; Chit- wood V. Trimble, 58 Tenn. 78; Coles V. Withers, 33 Grat. (Va.) 186. See also Branch v. Taylor, 40 Tex. Civ. App. 248, 89 S. W. 813; Howard v. Herman, 9 Tex. Civ. App. 79, 29 S. W. 542; Fayette Land Co. V. Louis- ville &c. R. Co., 93 Va. 274, 24 S. B. 1016; Kane v. Mann, 93 Va. 239, 24 S. E. 938. Where the grantee as- signs notes to the grantor for the land purchased, the lien reserved in the deed only secures the liability of the grantee as assignor of the notes and his release from such lia- bility will release the lien. Pritchett V. Hape, 21 Ky. L. 408, 51 S. W. 608. <"■ Conner v. Banks, 18 Ala. 42, 52 Am. Dec. 209. ^Hooper v. Central Trust Co., 81 Md. 559, 32 Atl. 505, 29 L. R. A. 262. " Luddington v. Gabbert, 5 W. Va. 330. The vendor was compelled in this case to receive Confederate treasury notes during the rebellion. Where an express waiver is pleaded to a suit to foreclose a reserved lien, a reply denying an agreed waiver and alleging the taking of security on land purporting to be owned by the defendant as additional security and averring fraudulent representa- tions to induce the taking of such security, raises the issue of waiver or nonwaiver and is good. Wittliff V. Biscol (Tex. Civ. App.), 128 S. W. 1153. See also Jones v. Byrne, 149 Fed. 457. ^ Carter County Court v. Butler, 81 Ky. 597, 5 Ky. L. 661; Dickason V. Eby, 73 Mo. 133, per Norton, J.; Lewis V. Chapman, 59 Mo. 371. '"Spears v. Taylor, 149 Ala. 180, 42 So. 1016; Tillar v. Clayton, 75 Ark. 446, 88 S. W. 972; Stiekle v. High Standard Steel Co., 78 N. J. Eq. 549, 80 Atl. 500, 78 N. J. Eq. 578, 80 Atl. 503; Sehorn v. McWhirter, 8 Baxt. (Tenn.) 201; Whitehurst v. Yandall, 7 Baxt. (Tenn.) 228; Se- horn V. McWhirter, 6 Baxt. (Tenn.) 311; Springman v. Hawkins, 52 Tex. Civ. App. 249, 113 S. W. 966. See also Dowling v. McCall, 124 Ala. 633, 26 So. 959. ='' Selna v. Selna, 125 Cal. 357, 58 Pac. 16, 73 Am. St. 47. 281 BT CONTRACT OE EESERVATION § 198 of the vendee to sell the property to satisfy the lien, and bidding at the sale. Snch bidding at the sale could properly be interpreted by the purchaser as a waiver of the lien, and as an acknowledgment that the vendor was looking solely to the proceeds of the sale, and not to the land itself, for the satisfaction of his claim.^^ The taking of other security is not a waiver of vendor's lien reserved, as is the case with an implied lien, unless it be shown by direct evi- dence, or by the circumstances of the case, that the vendor relied wholly on such other security.^® The vendor remaining clothed with the legal title, it is presumed that he retained it as an absolute security for the purchase-money, and a waiver or abandonment of the lien can hardly be shown.*" A bond with personal security, taken for the purchase-money, does not imply a waiver of the lien under a contract for sale which makes no provision about the reservation of a lien. It may be shown, however, by direct evidence, or by the circumstances of the case, that the vendor relied only on the bond and security, and in that case he would be required to execute a deed without reserving a vendor's lien.*^ A lien reserved in the deed of sale is not lost by the recovery of a judgment for the debt, and the issuing of an execution thereon. But a sale under the execution releases the lien.®^ This lien is equivalent to a mortgage, and, as in the case with a mortgage, a judgment does not affect the lien. It is discharged only by payment, or an express release."' A sale by the vendee to one who purchases with notice does not afEect the vendor's rights.** If the lien is reserved in the deed, or the vendor retains the title, the purchaser necessarily has notice'^ If a note be taken for the amount of the lien, and remedy upon the «« Butler V. Williams, 5 Heisk. 276, 15 N. E. 761; 9ehorn v. Mc- (Tenn.) 241; Drumm Com. Co. v. Whirter, 8 Baxt. (Tenn.) 201; Rog- Core, 47 Tex. Civ. App. 216, 105 S. ers v. Blum, 56 Tex. 1. W. 843. A vendor who has reserved " Warrea v. Branch, 15 W. Va. 21. a lien may release a part of the land ™ Woods v. Ellis, 85 Va. 471, 7 S. from the lien hy his express act, but E. 852. where he does so he has a lien on '' Stephens v. Greene County Iron the remaining land for the whole Co., 11 Heisk. (Tenn.) 71; Mulher- debt. Smith v. Owen, 49 Tex. Civ. rin v. Hill, 5 Heisk. (Tenn.) 58; App. 51, 107 S. W. 929. Hines v. Perkins, 2 Heisk. (Tenn.) =» Daniels v. Moses, 12 S. Car. 130; 395; Exchange &c. Bank v. Bradley, Byrns v. Woodward, 10 Lea (Tenn.) 15 Lea (Tenn.) 279; Byrns v. Wood- 444; Hodges v. Roberts, 74 Tex. 517, ward, 10 Lea (Tenn.) 444. 12 S. W. 222; Frazier v. Hendren, 80 ** Stone Cattle &c. Co. v. Boon, 73 Va. 265; Warren v. Branch, 15 W. Tex. 548, 11 S. W. 544. Va 21 »=Hitt v. Pickett, 91 Ky. 644, 12 " Robinson v. Appleton, 124 111. Ky. L. 51, 11 S. W. 9. § 199 vendor's lien 282 note be lost by negligence, the reserved lien may still be enforced as securing the debt represented by the note.'" A lien reserved is not waived by subsequently taking a mortgage of the same property ; and though the property without the knowledge of the grantor has in the meantime been mortgaged to another person, without anything having been done by the grantor to induce the taking of such mortgage, the grantor may have the property sold to enforce his lien ; or, if he has foreclosed his mortgage, he may have the prop- erty resold under his lien for the benefit of the purchaser under the foreclosure sale."^ § 199. Order of liability of parcels sold. — Purchasers of land, subject to a lien by contract for the payment of purchase-money, have the same equities as between themselves as purchasers subject to a for- mal mortgage. The rule of contribution in the inverse order of sale applies where the same rule applies in the case of mortgages. Simul- taneous purchasers should contribute pro rata.*' And, as in the case of mortgages, the vendor, in making sale of the land to enforce his lien, should first sell the lot last sold by the vendee, and so on in the inverse order until satisfaction is obtained.'" While subpurchasers take subject to the lien of the original vendor, they may require him to exhaust the portion remaining in the hands of the vendee.^ If the vendee sells a portion of the land to various subpurchasers, and retains a portion himself, this should be first subjected to the lien ; and if the vendor releases this portion, and it is of sufficient value to pay the whole amount of the lien, he can not subject any part of the land conveyed to subpurchasers to the lien. The value of the part re- leased is to be estimated as of the date of the release, without regard to the increase of the value of this portion after the purchase, or after the decree of sale to enforce the lien.^ *" Hodges V. Roberts, 74 Tex. 517, morial Home v. Collia County Nat. 12 S. W. 222. Bank, 57 Tex. Civ. App. 313, 122 S. =' Bradford v. Howe, 11 Ky. L. W. 430; "Watson v. Vansickle (Tex. 10, 11 S. W. 466. Failure of a ven- Civ. App.), 114 S. W. 1160; Written dor to reserve his lien in a mort- v. Saunders, 75 Va. 56S. See also gage taken by him will not waive Diamond Flint Glass Co. v. Boyd, 30 the lien. The lien is merely merged Ind. App. 485, 66 N. B. 479. in the mortgage. Bradbury v. Don- * Burton v. Henry, 90 Ala. 281, 7 nell, 136 Mo. App. 676, 119 S. W. 21. S. E. 925. "'Dukes V. Turner, 44 Iowa 575; ^ Boyce v. Stanton, 15 Lea (Tenn.) Wilkes V. Smith, 4 Heisk. (Tenn.) 346; Watson v. Vansickle (Tex. Civ. 86. App.), 114 S. W. 1160; modified ""Alabama v. Stanton, 5 Lea Vansickle v. Watson, 103 Tex. 37, ,(Tenn.) 423; John M. Bonner Me- 123 S. W. 112. 283 BY CONTRACT OR RESERVATION 201 !§ 200. Account of vendor in possession. — "When a vendor, after giving a bond or contract of sale, remains in possession, and tliere is delay in making the conveyance beyond the time set for it, the vendee should be credited with a share of the rents and profits received from the use and enjoyment of the property, proportioned to the amount he may have paid on his purchase.^ As a general rule, where the vendor of land in an executory contract wrongfully keeps the vendee out of possession, the latter is entitled to recover damages for the withholding of the premises from him, or for use and occupation for the time he is so kept out of possession.* Such damages will generally be measured by the amount of rents and profits accrued during the time possession is retained by the vendor.^ § 201. Assignment of purchase-money note or bond. — An as- signee of a note or bond given for purchase-money by one who has taken a contract of sale, or who has taken a conveyance in which a lien upon the land is expressly reserved, like the assignee of a note secured by mortgage, is entitled to the benefit of the security, and may enforce specific performance of the contract of sale, or may enforce the lien re- served." = Grove v. Miles, 71 111. 376. *Covell V. Cole, 16 Mich. 223; Abrahamson v. Lamberson, 68 Minn. 454, 71 N. W. 676; Bostwick v. Beach, 103 N. Y. 414, 9 N. B. 41. " Shawhan v. Long, 26 Iowa 488, 96 Am. Dec. 164; Parsons v. Luns- ford, 21 Ky. L. 1536, 55 S. W. 885; Gilmore v. Hunt, 66 Pa. St. 321. "Ober V. Gallagher, 93 U. S. 199, 23 L. ed. 829; Lowery v. Peterson, 75 AJa. 103; Wolffe v. Nail, 62 Ala. 24; Hall v. Mobile &c. R. Co., 58 Ala. 10; Roper v. Day, 48 Ala. 509; Wells V. Morrow, 38 Ala. 125; Kelly v. Payne, 18 Ala. 371; Roper v. Mc- Cook, 7 Ala. 318; Hall v. Click, 5 Ala. 363, 39 Am. Dec. 327; Talie- ferro v. Barnett, 37 Ark. 511; Mc- Connell v. Beattie, 34 Ark. 113; over- ruling Sheppard v. Thomas, 26 Ark. 617; Campbell v. Rankin, 28 Ark. 401; Moore v. Anders, 14 Ark. 628, 60 Am. Dec. 551; Gordon v. John- son, 186 111. 18, 57 N. E. 790; Stein- kemeyer v. Gillespie, 82 111. 253; Wright V. Troutman, 81 111. 374; Markoe v. Andras, 67 111. 34; Car- penter V. Mitchell, 54 111. 126; Blais- dell V. Smith, 3 Bradw. (111.) 150; Walkenhorst v. Lewis, 24 Kans. 420; Stevens v. Chadwick, 10 Kans. 406, 15 Am. Rep. 348; Bradley v. Curtis, 79 Ky. 327, 2 Ky. L. 329; Duncan v. Louisville, 13 Bush (Ky.) 378, 26 Am. Rep. 201; Forwood v. Dehoney, 5 Bush (Ky.) 174; Lusk v. Hopper, 3 Bush (Ky.) 179; Hobson v. Ed- wards, 57 Miss. 128; Hendrick v. Foote, 57 Miss. 117; Moore v. Lackey, 53 Miss. 85; Kimbrough v. Curtis, 50 Miss. 117; Robinson v. Harbour, 42 Miss. 795, 97 Am. Dec. 501, 2 Am. Rep. 671; Stratton v. Gold, 40 Miss. 778; Terry v. George, 37 Miss. 539; Tanner v. Hicks, 4 Sm. 6 M. (Miss.) 294; Dollahite v. Orme, 2 Sm. & M. (Miss.) 590; Carter v. Leonard, 65 Nebr. 670, 91 N. W. 574; Walker v. Kee, 16 S. Car. 76; Mc- Clintic V. Wise, 25 Grat. (Va.) 448, 18 Am. Rep. 694. See also Stephens V. Anthony, 37 Ark. 571; Talieferro V. Barnett, 37 Ark. 511; Martin v. O'Bannon, 35 Ark. 62; Richardson V. Hamlett, 33 Ark. 237; Rogers v. James, 35 Ark. 77; Shall v. Biscoe, 18 Ark. 142; Felton v. Smith, 84 Ind. 485; Reynolds v. Morse, 52 Iowa l55, 2 N. W. 1070; Bills v. Mason, 42 § 201 VENDOR S LIEN 284 The lien is regarded as incident to the debt,' and passes to the as- signee whether the title has passed or not.^ If a vendor who retains the legal title for his security assigns the notes taken for the purchase-money, he then holds the legal title as trustee for the holder of the notes, and he can not properly do anything to defeat the rights of such holder. If, regardless of the trust, he con- veys the land to a stranger, who purchases in good faith, the vendor then becomes a trustee of the purchase-money which he has realized, for the benefit of the holder of the notes he assigned.® The assignment of a note which upon its face shows that it was given in consideration of the purchase-money of land, or expressly reserves a lien upon it, passes the lien to the assignee, who may enforce it.^" Though there Iowa 329; Rakestraw v. Hamilton, 14 Iowa 147; Blair v. Marsh, 8 Iowa 144; Powell v. Powell, 217 Mo. 571, 117 S. W. 1113; Adams v. Cowherd, 30 Mo. 458; Hadley v. Nash, 69 N. Car. 162; Burkhart v. Howard, 14 Ore. 39, 12 Pac. 79; Cleveland v. Martin, 2 Head (Tenn.) 128; Tharpe V. Dunlap, 4 Heisk. (Tenn.) 674; Osborne v. Royer, 1 Lea (Tenn.) 217; McCamly v. Waterhouse, 80 Tex. 340, 16 S. W. 19; Atteberry v. Burnett, 52 Tex. Civ. App. 617, 114 S. W. 159; Shelton v. Jonfes, 4 Wash. 692, 30 Pac. 1061. The cases seem to be uniform upon this point, with the exception of those in Ohio. By statute in Arkansas, Dig. of Stats. 1904, § 510, the lien, when reserved in the deed, is made as- signable by a transfer of the note or other obligation for the debt, provided the lien is expressed upon the face of the deed of conveyance. See also Campbell v. Rankin, 28 Ark. 401, 407. In California and Idaho it is pro- vided that where a buyer of real property gives to the seller a writ- ten contract for the payment of all or part of the price, an absolute transfer of such contract by the seller waives his lien to the extent of the sum payable under the con- tract; but a transfer of such con- tract in trust to pay debts, and re- turn the surplus, is not a waiver of the lien. Cal. Civ. Code 1906, § 3047; Idaho Rev. Code 1908, § 3442. ' Lowery v. Peterson, 75 Ala. 109; State Bank v. Brown, 142 Iowa 190, 119 N. "W. 81, 134 Am. St. 412; Chit- wood V. Trimble, 2 Baxt. (Tenn.) 78. His lien Is prior to a subse- quent attachment levied on. a judg- ment against his assignor. Hamil- ton-Brown Shoe Co. V. Lewis, 7 Tex. Civ. App. 509, 28 S. W. 101. In Georgia it was held under a former statute, that if a note for the purchase-money be transferred with- out indorsement or guaranty, the purchaser's equity became complete as against the vendor, and the land was subject to levy and sales as his property. Hunt v. Harbor, 80 Ga. 746, 6 S. B. 596; Carhart v. Reviere, 78 Ga. 173, 1 S. B. 222; Neal v. Mur- phey, 60 Ga. 388; McGregor v. Mat- this, 32 Ga. 417. ' State Bank v. Brown, 142 Iowa 190, 119 N. W. 81, 134 Am. St. 412. 'Conner v. Banks, 18 Ala. 42, 52 Am. Dec. 209; Cummings v. Oglesby, 50 Miss. 153; Pitts v. Parker, 44 Miss. 247; Skaggs v. Nelson, 25 Miss. 88; Parker v. Kelly, 10 Sm. & M. (Miss.) 184; Atteberry v. Bur- nett, 52 Tex. Civ. App. 617, 114 S. W. 159. The assignee of notes se- cured by a reserved lien, may under a plea of not guilty prove that the notes have not been paid and there- by defeat a suit by the original ven- dee for possession. Polk v. Kyser, 21 Tex. Civ. App. 676, 53 S. W. 87. "Aycook Bros. Lumber So. v. First Nat. Bank, 54 Fla. 604, 45 So. 501; Bailey v. Smock, 61 Mo. 213; Osborne v. Royer, 1 Lea (Tenn.) 285 BY CONTRACT OR RESERVATION § 303 has been a partial failure of the consideration for the assignment, the assignor can not subsequently seek to enforce the lien before such as- signment has been declared void.'^ One "who takes title from the vendor, with knowledge of an out- standing note for the purchase-money previously assigned by the ven- dor, takes subject to the lien of such note,'^ unless the note was trans- ferred after maturity, or in such manner that it is subject in the hancjs of the holder to all equities the maker may have against it.^* As against his assignee, the vendor can not be heard to dispute his own title to the land, or to aver that he has not an estate coextensive with that he has contracted to convey.^* § 202. Order of payment of several notes. — ^Where several notes are given for the purchase-price, the assignment of any number less than the whole carries with it so much of the lien as is necessary for their proteetion.^^ In case there are several notes or bonds secured in this way, the same equitable rule is applied as to the order of payment of such notes or bonds that is applied when they are secured by a for- mal mortgage or trust deed; that which was first assigned carries so much of the lien as is necessary to pay it, unless there be an express agreement otherwise,^" or some equity in favor of the vendor.^^ Such assignee, moreover, is entitled to all the remedies of the vendor to enforce the lien; and the latter can not, by any act of his, deprive the assignee of these remedies.^* 217; Murray v. Able, 19 Tex. 213, Texas, unless it appears that it was 70 Am. Dec. 330. the Intention that the assignee "Green v. Betts, 1 McCrary (U. should he first paid. Salmon v. S.) 72, 1 Fed. 289. Downs, 55 Tex. 243. A later deci- " Young v. Atkins, 4 Heisk. sion in this state places the rule (Tenn.) 529; Houghton v. Rogan, 17 pretty much in accord with the gen- Tex. Civ. App. 285, 42 S. W. 1018. eral rule. Whitehead v. Fisher, 64 "Shinn v. Fredericks, 56 111. 439. Tex. 638; Douglass v. Blount, 22 "Lowery v. Peterson, 75 Ala. 109. Tex. Civ. App. 493, 55 S. "W. 526; ^ Preston v. Ellington, 74 Ala. 133; Walcott v. Carpenter (Tex. Civ. Grigsby v. Hair, 25 Ala. 327; Sum- App.), 132 S. "W. 981. See also Pres- mers v. Kilgus, 14 Bush (Ky.) 449; ton v. Ellington, 74 Ala. 133; Bark- Nashville Trust Co. V. Smythe, 94 dill v. Herwig, 30 La. Ann. 618. Tenn. 513, 29 S. W. 903, 27 L. R. A. As to the rule in Mississippi, see 663, 45 Am. St. 748; Menken v. Tay- Aaron v. "Warner, 62 Miss. 370; lor, 4 Lea (Tenn.) 445; McClintic v. Christian v. Clark, 10 Lea (Tenn.) Wise, 25 Grat. (Va.) 448, 18 Am. 630; Forwood v. Dehoney, 5 Bush Rep. 694. (Ky.) 174. "Menken v. Taylor, 4 Lea "Grubbs v. Wysors, 32 Grat. (Va.) (Tenn.) 445; Paxton v. Rich, 85 Va. 127. 378, 7 S. B. 531, 1 L. R. A. 639; " McClintic v. Wise, 25 Grat. (Va.) McClintic v. Wise, 25 Grat. (Va.) 448, 18 Am. Rep. 694. 448, 18 Am. Rep. 694. Otherwise in § 203 vendor's lien 286 § 203. Notice to purchaser when deed does not refer to a note. — If the deed which retains a lien for purchase-money does not refer to any note or bond for such purchase-money, a subsequent purchaser is not bound to make inquiry for it, and is not afEected by any equity in favor of the assignee of the note or bond. A vendor who had taken a negotiable note for the purchase-money of land conveyed by a deed which reserved a lien for the purchase-money, but did not refer to the note, afterward indorsed the note to one person, and contracted to sell the land to another, who paid the purchase-money, and thereupon took from the first vendee a conveyance of the property. The second vendee was ignorant of the existence of the outstanding note, and of any claim by the holder of it to the purchase-money. It was held that the second vendee took the property unaffected by any lien in favor of the holder of the note.^"* "Other things being equal, purchasers are favored both at law and in equity above creditors, and so also the condition of the defendant is best. The chancellor prefers to allow a loss to rest where he finds it, rather than to transfer it to another -equally entitled to his consideration; he prefers to allow rather than to inflict injustice, and to abstain from acting at all when all he can do is to shift a loss from one innocent person to another."^" The assignee of the note in such case does not stand upon the same ground with the assignee of a mortgage note, where the latter is de- scribed in the mortgage. The giving of a note for the purchase-money secured by a vendor's lien is not so universal a practice as to make it incumbent upon a subpurchaser, in the absence of any reference to the note in the deed, to make inquiry for such a note. And so where a note given in consideration of a contract for the conveyance of land was transferred to a third person, and the contract was afterward canceled by the parties to it, and the land conveyed to others, it was held that the holder of the note had no lien upon the property.^^ § 204. Subrogation to the lien. — A mere voluntary payment of a vendor's lien, where payment is unnecessary for the protection of "National Val. Bank v. Harman, 200; Bank of Indiana v. Anderson, 75 Va. 604. As to the protection af- 14 Iowa 544, 83 Am. Dec. 390; Ba- forded a purchaser against an unre- con v. Van Schoonhoven, 19 Hun (N. corded assignment, or a cancelation Y.) 158; Torrey v. Deavitt, 53 Vt. of mortgage with notes outstanding, 331. see Henderson v. Pilgrim, 22 Tex. *> Summers v. Kilgus, 14 Bush 464; Smith v. Keohane, 6 Bradw. (Ky.) 449, per Coffer, J. (111.) 585; Turpin v. Ogle, 4 Bradw. ^i jj^jjiug^ ^ jj^gg^ 54 j^^g^ 522, (III.) 611; Walker v. Schreiber, 47 6 N. W. 728; Proctor v. Hart, 72 Iowa 529; Bowling v. Cook, 39 Iowa Miss. 288, 16 So. 595. 287 BY CONTRACT OK RESERVATION § 204 the person making the same, and not required by any contract with the vendor or vendee, does not raise any equitable right of subrogation to the lien of the vendor.^^ But a surety upon a note given to the vendor for the purchase- money, upon paying the note is subrogated to the vendor's lien for the purchase-money, if no equity in favor of the vendor would thereby be displaced. But a surety upon the first of three notes given for the purchase-money, upon paying such note is not entitled to be subrogated to the vendor's lien in respect to that note, when the result of such subrogation would be to displace the vendor to his prejudice in respect to his lien for the security of the other notes for the purchase-money, as would be the case if the land were an inadequate security for the payment of all notes.^^ However, a surety can have no subrogation until he has paid the entire debt.^* As a general rule, persons loaning the vendee money with which to pay the amount of the lien become subrogated to the rights of the vendor thereunder,^' but only to his rights as a creditor and not to the superior legal title held by him.^" Also one who pays off a vendor's lien at the instance of the debtor upon an agreement with him that he shall have a lien for his reim- bursement is subrogated to the vendor's lien.''^ And a vendee paying a purchase-money debt of his vendor for which the holder has a ven- dor's lien is entitled to be subrogated to such lien.^^ One who has ad- vanced money to the purchaser to enable him to pay a note or bond for the purchase-money may be subrogated to the vendor's lien.^' "= Rodman v. Sanders, 44 Ark. 504; Collin County Nat. Bank, 57 Tex. Nlchol V. Dunn, 25 Ark. 129; Mar- Civ. App. 313, 122 S. W. 430. But tin V. Martin, 164 111. 640, 45 N. E. see Rodman v. Sanders, 44 Ark. 504; 1007, 56 Am. St. 219; Greishaber v. Austin v. Underwood, 37 111. 439, 87 Farmer, 19 Ky. L. 1028, 42 S. W. Am. Dec. 252; Wooldridge v. Scott, 742. 69 Mo. 669. =»Grubbs v. "Wysors, 32 Grat. (Va.) =°Hatton v. Bodan Lumber Co., 57 127. See also Barnes v. Barnes, 24 Tex. Civ. App. 478, 123 S. W. 163. Ky. L. 1732, 72 S. W. 282; Riggs v. But see Bougner v. Laugblin, 23 Ky. Chapman, 2 Ky. L. 473, 46 S. W. L. 1161, 64 S. W. 856. 692; Nalle v. Farrish, 98 Va. 130, 34 ''Bell v. Bell, 174 Ala. 446, 56 So. S. E. 985. 926, 37 L. R. A. (N. S.) 1203; Allen ^McConnell v. Beattie, 34 Ark. v. Caylor, 120 Ala. 251, 24 So. 512, 113; Menken v. Taylor, 4 Lea 74 Am. St. 31; Warford v. Hankins, (Tenn.) 445. 150 Ind. 489, 50 N. E. 468; Hulings == Scott V. Land, Mtg., Inv. &c. Co.. v. Hulings Lumber Co., 38 W. Va. 127 Ala. 161, 28 So. 709; North 351, 18 S. E. 620. American Trust Co. v. Lanier, 78 =« Fulkerson v. Taylor, 100 Va. 426, Miss. 418, 28 So. 804, 84 Am. St. 41 S. E. 863. 635; Hatton v. Bodan Lumber Co., =» Brown v. Rash, 40 Tex. Civ. 57 Tex. Civ. App. 478, 123 S. W. 163; App. 203, 89 S. W. 438; Price v. John M. Bonner Memorial Home v. Davis, 88 Va. 939, 14 S. E. 704. § 205 VENDOU'S LIEN 288 § 205. Statute of limitations. — A lien founded upon contract may be enforced although, the debt be barred by the statute of limitations.^" The revival of a debt barred by the statute of limitations revives a ven- dor's lien incident thereto.^^ The relation of a purchaser by title bond to his vendor is similar to that of mortgagor to mortgagee, and his possession is in like manner consistent with his obligation to pay the money secured, and does not become adverse except under circumstances which would make a mort- gagor's possession adverse.^^ A vendor's lien under an agreement or bond to convey, where the purchaser enters into possession without re- ceiving a conveyance, is not barred by the statute of limitations until the lapse of twenty years without the pajrment of interest, or other recognition of the indebtedness on the part of the purchaser. Yet pay- ment may be established by circumstances such as would satisfy a jury that the continued existence of the debt was highly improbable.^^ § 206. No obligation to exhaust personalty before resorting to realty. — The obligation first to exhaust the personal remedy, which is a rule of equity adopted by some courts as to liens arising by impli- cation of law, has no application when the lien is created by express contract.^* Even in cases of liens arising by implication of law, the better rule seems to be, that the vendor may enforce his lien in equity without first attempting to collect his debt by an action at law.^° The heir or » Bizzell V. Nix, 60 Ala. 281, 31 630; Lewis v. McDowell, 88 N. Car. Am. Rep. 38; Driver v. Hudspeth, 261; Daniels v. Moses, 12 S. Car. 16 Ala. 848; Waddell v. Carlock, 41 130; Gudger v. Barnes, 4 Heisk. Ark. 523; Coldcleugh v. Johnson, 34 (Tenn.) 570. Ark. 312; White v. Blakemore, 8 == Hardin v. Boyd, 113 U. S. 756, Lea (Tenn.) 49; McPherson v. John- 28 L. ed. 1141, 5 Sup. Ct. 771; Phil- son, 69 Tex. 484, 6 S. W. 798; Smith lips v. Adams, 78 Ala. 225; May v. V. Owen, 43 Tex. Civ. App. 411, 97 Wilkinson, 76 Ala. 543. S. W. 521; White v. Cole, 9 Tex. Civ. " Sparks v. Hess, 15 Cal. 186; App. 277, 29 S. W. 1148; Dittman Huffman v. Cauble, 86 Ind. 591; Mc- V. Iselt (Tex. Civ. App.), 52 S. W. Caslin v. State, 44 Ind. 151; Smith 96; Barber v. HofEman (Tex. Civ. v. Rowland, 13 Kans. 245. But see App.), 37 S. W. 769; Paxton v. Rich, Bryant v. Stephens, 58 Ala. 636. .85 Va. 378, 7 S. E. 531. See also "» Campbell v. Roach, 45 Ala. 667; Hulbert v. Clark, 128 N. Y. 295, 28 Owen v. Moore, 14 Ala. 640; Mayes N. E. 638, 14 L. R. A. 59. v. Hendry, 33 Ark. 240; Burgess v. " Windom v. Howard, 86 Tex. 560, Fairbanks, 83 Cal. 215, 23 Pac. 292, 26 S. W. 483. 17 Am. St. 230; Sparks v. Hess, 15 =" Lewis V. Hawkins, 23 Wall. (IT. Cal. 186; Richardson v. Baker, 5 J. S.) 119, 23 L. ed. 113; Butler v. J. Marsh (Ky.) 323; Pratt v. Clark, Douglass, 1 McCrary (U. S.) 630, 3 57 Mo. 189; Stewart v. Caldwell, 54 Fed. 612; Adair v. Adair, 78 Mo. Mo. 536. 289 BY CONTEACT OK RESERVATION 207 devisee of the vendee generally may compel payment of the unpaid purchase-money to be made out of the personal estate.^* § 207. Proceedings to enforce lien. — To enforce a lien for the pur- ' chase-money reserved by the vendor in his deed, the same proceedings are had as in case of a formal mortgage. The same persons must be made parties.^^ , If the vendee has sold any part or the whole of his interest, his grantee must be made a party f^ and so must any one who has acquired a lien upon the property through him.^® But it has been held that)' persons to whom a grantee in a deed, in which a vendor's lien was re- served, has conveyed the land before suit brought to enforce the lien, are not necessary parties; but a failure to make them parties leaves open their right to redeem.*" "Where a party in possession and his vendor had merely an equity in the property, and the party in possession acquired his rights with notice by the recitals of the deed, under which he claims that the purchase- =» Sutherland v. Harrison, 86 111. 363; Wright v. Holbrook, 32 N. Y. 587; Livingston v. Newkirk, 3 Johns. Ch. (N. Y.) 312; Lamport v. Beeman, Zi Barb. (N. Y.) 239; O'Conner v. O'Conner', 88 Tenn. 75, 13 S. W. 447, 7 L. R. A. 33. =' "Wells V. Francis, 7 Colo. 396, 4 Pac. 49. Where the purchaser of land, upon which a lien was re- served, conveys the same to his wife for life and on her remarriage, to any children that might yet he born, the children are not proper or nec- essary parties to a foreclosure of such lien. Shannon v. Ruttery (Tex. Civ. App.), 140 S. W. 858. See also Boynton v. Salinger, 147 Iowa 537, 126 N. W. 369; Maas v. Morgenthaler, 136 App. Div. 359, 120 N. Y. S. 1004; Atteberry v. Burnett, 52 Tex. Civ. App. 617, 114 S. W. 159. =" Ballard v. Carter, 71 Tex. 161, 9 S. W. 92. *»King v. Young Men's Assn., 1 Woods (U. S.) 386; Gaston v. White, 46 Mo. 486. In Iowa it is provided by statute that the vendor of real estate who has given a bond or other writing to convey it, and part or all of the purchase-money remains unpaid after the day fixed for payment, whether the time is or is not of the essence of the contract, may file his petition asking the court to require the purchaser to perform his con- tract, or to foreclose and sell his in- terest in the property. The vendee in such cases, for the purpose of the foreclosure is treated as a mort- gagor of the property purchased, and his rights may be foreclosed in a similar manner. Code 1897, §§ 4297, 4298; Dukes v. Turner, 44 Iowa 575. In Tennessee it is pro- vided by statute that liens on realty retained in favor of vendors on the face of the deed, also mortgages, deeds of trust, and assignments of realty executed to secure debts, shall be barred and the liens dis- charged, unless suits to enforce the same be brought within ten years from the maturity of the debt, pro- vided that this statute shall not run against existing liens only from the date of the passage of this act. Acts 1885, ch. 9; Code 1896, § 4465. For cases cited, see Shannon's Supp., §§ 5326-5329. See post § 1541. « Talbot V. Roe, 171 Mo. 421, 71 S. W. 682. 19 — ^JoNES Mtg. — Vol. I. § 308 vendor's lien- 390 money has not been paid, it is not necessary to make such party in pos- session a party to the foreclosure proceedings.^^ "The rights of the vendee," says Mr. Justice Bradley,*^ "being the same as those of a mortgagor, they must be extinguished in the same way. They are vested and well defined in the law. They constitute an estate called, it is true, by the name of an equity of redemption; but still an estate which may be conveyed, incumbered, and laid under other liens. And the heirs and assigns of the vendee, and subsequent holders of liens on the property against him, can not be disregarded or ignored by the original vendor or his assigns, when they desire to extinguish this estate." As, in the case of a suit to foreclose a mortgage, a person claiming adversely to the mortgage title should not be made a party, so to a bill to enforce a vendor's lien under a title bond a person claiming ad- versely to the title should not be made a party, because the rights of such a claimant can not be litigated and settled in such proceeding.*^ § 208. Bemedies of vendor. — Moreover, the vendor, like a mort- gagee, has several remedies, and may pursue all of them concurrently ; he may bring an action at law to recover the debt, an action of trespass or ejectment for the possession of the land, or a suit in equity to en- force the lien.** "Robinson v. Black, 56 Tex, 215. security to the vendor and thereby "King V. Young Men's Assn., 1 induce him to release his reserved Woods (XJ. S.) 386. lien and such vendees refuse to *■ Wells V. Francis, 7 Colo. 396, 4 carry out their agreement, the ven- Pac. 49; Neeley v. Ruleys, 26 W. Va. dor may still enforce his lien. Dish- 686; Moreland v. Metz, 24 W. Va. man v. Frost (Tex. Civ. App.), 140 119, 49 Am. Rep. 246; Cunningham S. W. 358. He may sue to recover V. Hedricls, 23 W. Va. 579; Arnold the land, though the note is barred V. Coburn, 32 W. Va. 272, 9 S. E. 21. by the statute of limitations. John- In West Virginia it is held that it is son v. Lockhart, 16 Tex. Civ. App. not necessary, before entering a de- 32, 40 S. W. 640. The assignee of cree of sale under a lien, to ascer- notes where a lien is reserved in the tain the existence and amount of deed may in case of default in pay- other liens upon the property and ment enforce the lien and recover their priorities, though subsequent the land even though the notes are to the vendor's lien, or to make the barred. White v. Cole, 87 Tex. 500, lienors parties. 29 S. W. 759. See also Pitman v. "Micou V. Ashurst, 55 Ala. 607; Robbins (Tex. Civ. App.), 59 S. W. McConnell v. Beattie, 34 Ark. 113; 600. The vendor on the purchaser's Palmer v. Harris, 100 111. 276. default may elect to rescind the con- Where a vendor holds a reserved tract and recover the real estate or lien and brings an action to fore- recover judgment for 'the debt and close the same and the foreclosure foreclose his lien. Atteberry v. Bur- is void for informalities, he does not nett, 52 Tex. Civ. App. 617, 114 S. lose the lien reserved. Evans v. W. 159. See also Fowler v. Coates, Bentley, 9 Tex. Civ. App. 112, 29 S. 128 App. Div. 381, 112 N. Y. S. 849. W. 497, 36 S. W. 1070. Where pur- He may foreclose his lien on any chasers of land agree to execute notes that are due. Pamplin v. 291 BY CONTRACT OR EESEEVATION § 208 The vendor seeking to enforce the lien should set forth the terms of the agreement, and, if the title is still in him, he should aver his ability and willingness to convey the land according to the terms of sale, if the payment of the purchase-money and the execution of the convey- ance are intended by the contract to be concurrent and contempo- raneous acts, or the contract makes the purchase-money due and pay- able only on the tender of a deed of conveyance. *° But if the purchase- money be made payable on a day certain, the payment of this is not de- pendent upon the making of title ; and in such case it is not necessary for the vendor, in a bill to enforce the lien, to aver an offer on his part to convey, or to aver his readiness to make title.*® The vendee who has secured possession under his contract, and insists upon maintain- ing possession, is not permitted to deny his liability on the note, bond, or contract for the purchase-money. If he resists payment of the pur- chase-money, he must offer to restore the possession of the land to the vendor.*^ An averment also of the amount of purchase-money remain- ing unpaid is necessary to sustain a judgment for a sale of the land to satisfy the amount due upon the contract.** In some states a strict foreclosure of such a lien is allowed.*^ But a strict foreclosure is not generally allowed where such a decree is not made in the foreclosure of mortgages.^" A decree foreclosing this right of the vendee to purchase should give him a definite time within which to perform his contract.^^ Where a lien is reserved for the security of a bond for purchase-money, the lien may be enforced in equity though the bond be lost.^^ A pur- chaser under a contract of purchase can not maintain a suit for specific performance after he has assigned to another his right to receive the, Rows, 100 Ark. 144, 139 S. W. 1105. « Calvin v. Duncan, 12 Bush (Ky.)/ See also Calvin v. Duncan, 12 Bush 101. See also Johnston v. Cochrane, (Ky.) 101; Gaston v. White, 46 Mo. 84 N. Car. 446. Where a vendor 486; Johnston v. Cochrane, 84 N. sues for the land itself he need not Car. 446; Clifton v. Charles, 53; Tex. refund that part of the purchase-^ Civ. App. 448, 116 S. W. 120; Atte- money paid by the vendee. Branch herry v. Burnett, 52 Tex. Civ. App. v. Taylor, 40 Tex. Civ. App. 248, 89 617, 114 S. W. 159 ; Curtis Land &c. S. W. 813. In every case the vendor Co. V. Interior Land Co., 137 Wis. may sue to recover the land, where 341, 118 N..W. 853, 129 Am. St. 1068. the contract is executory if his right ■" McKleroy v. Tulane, 34 Ala. 78. has not been waived. Grain v. Na- ^'Munford v. Pearce, 70 Ala. 452; tional Life Ins. Co., 55 Tex. Civ. Burkett v. Munford, 70 Ala. 423; App. 406, 120 S. W. 1098. May V. Lewis, 22 Ala. 646; Reeve v. ^Vail v. Drexel, 9 Bradw. (111.) Downs, 22 Kans. 330. 439. See post § 1541. "Reeve v. Downs, 22 Kans. 330; "Fitzhugh v. Maxwell, 34 Mich. Harvey v. Morris, 63 Mo. 475; Brock 138. V. Hidy, 13 Ohio St. 306; Mclndoe "Keller v. Lewis, 53 Cal. 113; Vail V. Morman, 26 Wis. 588, 7 Am. Rep. v. Drexel, 9 Bradw. (111.) 439. 96. "= Robinson v. Dix, 18 W. Va. 528. § 209 vendor's lien 292 conveyance, for he has then no cause of action unless it be as trustee for his assignee.^' § 209. ■ Tender of performance. — It is ho defense to an equitable action to enforce a lien under a contract for unpaid purchase-money, that the vendor did not tender a deed before bringing suit.°* After the time for the performance of the contract has passed, without any offer by either party to perform on that day, there can be no action at law upon it by either, but either may claim a specific performance in equity, making an offer of performance in the bill.°' If no tender was made before bringing suit, the complainant must aver a readiness and willingness to execute a deed that will vest the title in the pur- chaser. In Indiana it is held that the tender must be kept good by bringing the deed into courtj^*" but generally an offer to deliver the deed is sufficient. If an action to foreclose the lien be brought, not by the vendor, but by his personal representatives, they should show that they are able and willing to give a deed, or else make the heir or devisee who holds the legal title in trust for the purchaser a party to the suit,' so that he will be bound by it.^'^ The vendee under a contract for the sale of lands, having performed his part of the contract, need not tender the vendor's deed for his sig- nature, when the latter has denied the vendee's right to a conveyance under the contract.^' If the vendee seeks enforcement of the contract and pleads a tender of a sum to pay the balance of the purchase-price, he thereby admits that the vendor is entitled to a decree of foreclosure for the amount tendered.^* § 210. Temporary eviction of vendee. — If the vendee has been evicted and kept for a time only out of the possession of the land, and ^ Green v. Betts, 1 McCrary (U. "'Goodwine v. Moray, 111 Ind. 68, S.) 72. 12 N. E. 82; Overly v. Tipton, 68 "Munford v. Pearce, 70 Ala. 452; Ind. 410; Sowle v. Holdridge, 63 "Wakefield v. Jotinson, 26 Ark. 506; Ind. 213; Melton v. Coffelt, 59 Ind. Evans v. Feeny, 81 Ind. 532; Pas- 310; Smith v. Turner, 50 Ind. 367. chal V. Brandon, 79 N. Car. 504. See " Thomson v. Smith, 63 N. Y. 301. also Stokes v. Acklen (Tenn.), 46 S. In an action to foreclose a vendor's W. 316. lien reserved in a sale contract ""Preeson v. Bissell, 63 N. T. 168; plaintiff must aver his willingness Bruce v. Tilson, 25 N. Y. 194; Ste- to perform by making a deed as venson v. Maxwell, 2 N. Y. 408. See provided in the contract. Powell also Security Sav. &c. Co. v. Mac- v. Hunter, 204 Mo. 293, 102 S. W. kenzie, 33 Ore. 209, 52 Pac. 1046. 1020; Tillar v. Clayton, 76 Ark. 405, But see McKenzie v. Baldridge, 49 88 S. "W. 972. Ala. 564; Watson v. Bell, 45 Ala. =« Davis v. Robert, 89 Ala. 402, 8 . 452; Turner v. Lassiter, 27 Ark. 662; So. 114, 18 Am. St. 126. Newton v. Hull, 90 Cal. 487, 27 Pae. "^ Portsmouth Sav. Bank v. Yeiser, 429; McCaslin v. State, 44 Ind. 151; 81 Nebr. 343, 116 N. "W. 38. McWilliam v. Brookens, 39 Wis. 334. 293 BY CONTRACT OR EESEEVATION § 211 then resumed its occupancy and enjoyment, when the defect in his ven- dor's title has been cured, in a suit by the vendor to enforce his lien the vendee is entitled to recoup the value of the estate for the period of dispossession."" But the vendee can not claim, as special damages on account of his temporary eviction, that he has closed out a lucra- tive business, changed his residence, disposed of property at a sacrifice, and made expenditures looking to the occupation of the land during the season, v^hich resulted in loss, for such damages are speculative and remote. °^ Where the vendor surrenders possession, and afterward, without the vendee's consent, retakes the possession, he is liable to such vendee for any rents received by him while so in possession.^^ § 211. lien of vendor exhausted by foreclosure sale. — If a vendor, who has entered into a contract to convey upon the payment of the purchase-money, elects to foreclose his contract of sale, he can not, after the land has been sold and bid in by him for a part only of the judgment, and then redeemed by the purchaser, still claim to have a vendor's lien upon the land for the balance of the purchase-money."' The decree must conform to the pleadings. If the bill asks for a sale of the land under the lien, or for a rescission of the contract of sale, a decree can not be entered for the satisfaction of the purchaser's note for the unpaid purchase-money; that the vendor retain the moneys received by him ; that the purchaser retain possession of the land, and that the title be vested in him. The decree should either enforce the vendor's lien or rescind the contract."* A vendor who has taken notes for the purchase-money can not enforce his lien by a sale of the land until all the notes are due, in the absence of a stipulation or statute to that effect."' The rule is the same as that which governs the fore- " See Christy v. Ogle, 33 111. " Crockett v. Gray, 39 Kans. 659, 295; Moreland v. Metz, 24 W. Va. 18 Pac. 595. 119, 49 Am. Rep. 246. The vendor «=Todd v. Davey, 60 Iowa 532, 15 can not enforce his vendor's lien N. W. 421; Wall v. Club Land &c. where his title fails and the vendee Co. (Tex. Civ. App.), 88 S. W. 534. is compelled to purchase title from "Baldwin v. Whaley, 78 Mo. 186. another. Williams v. Finley, 99 "' Brame v. Swain, 111 N. Car. 540, Tex. 468, 90 S. W. 1087. A pur- 15 S. E. 938. Under Kentucky Civ. chaser can not prevent a foreclosure Code 1895, § 694, the whole of a of a vendor's lien because of defects tract of land can not be sold to sat- in title of a part of the land where isfy notes for the purchase-money, no eviction is shown and where he unless all of them are due at the does not offer to pay the notes justly date of the judgment for the sale, due. Prantz v. Masterson (Tex. though all the notes are held by the Civ. App.), 133 S. W. 740. . same person, but only so much of " Gunter v. Beard, 93 Ala. 227, 9 the land may be sold as is suflScient So. 389. to satisfy the notes that are due; § 213 vendoe's lien 294 closure of a mortgage under like circumstances. But a personal judg- ment against defendant may be had on the notes due at the commence- ment of the action. § 212. Effect of sale of land to pass growing crops. — A sale of the land under order of court to satisfy the lien passes the growing crops, unless they are reserved in the order of sale.^" But the vendor's lien is subordinate to any lawful lien existing upon the crops at the time it is sought to charge them with the vendor's lien.*^ Before the vendor, however, can resort to the rents and profits of the land sold in pay- ment of the debt for purchase-money, he must allege in his bill or prove that the land itself is insufiScient to pay the debt, the land being the primary fund for its satisfaction, and the rents and profits only an incidental fund.®* A clause in a deed which provides that the grantee may cut and sell the timber on the land, a lien for the purchase-money being reserved, is interpreted as being made for the purpose of enabling the purchaser to pay the purchase-money. If, therefore, the purchaser makes a mort- gage of the land to one who advanced him money to make the pur- chase, and the mortgagee files a bill to foreclose, alleging the superior- ity of the vendor's lien, and that the timber had been so wasted that the land would not more than satisfy it, a decree directing a sale of the land to pay the vendor's lien, and of the timber to pay the mortgage debt, is erroneous, for there was no intention to sever the title of the timber from that of the land. The mortgage created a lien on the land subordinate to the lien for purchase-money, but it created no lien on the timber separate from the land.°° § 213. Restraint of purchaser from impairing vendor's lien. — ^A purchaser in possession under a contract of sale may be restrained from impairing the vendor's lien by the removal of buildings or other- wise. If the vendee sell the buildings to one who buys with knowledge of a fraudulent intent to impair the vendor's lien, no title passes as against the vendor, who may, under a judgment obtained against and if the property can not be ad- 459; Smith v. Hague, 25 Kans. 246; vantageously divided, none of it can Johnston v. Smith, 70 Ala. 108. See he sold until all the notes fall due. post §§ 658, 676, 699, 780. Gentry v. Walker, 93 Ky. 405, 14 Ky. " Wooten v. Bellinger, 17 Fla. 289. L,. 351, 20 S. W. 291; Leopold v. Fur- <» Moore v. Knight, 6 Lea (Tenn.) ber, 84 Ky. 214, 8 Ky. L. 198, 1 S. W. 427. 404; following Paught v. Henry, 13 ™ Sikes v. Page, 12 Ky. L. 780, 15 Bush (Ky.) 471. See post § 1459. S. W. 248. «» Yates v. Smith, 11 Bradw. (111.) 295 BY CONTKACT OR RESERVATION § 313 the vendee for purchase-money, levy on and sell the house in the hands of the purchaser. But inasmuch as the vendee in possession is the equitable owner, he may properly remove buildings and fences, if this does not impair the vendor's security; thus, he may remove them for the purpose of erecting better ones in the place of those re- moved. The vendor in such case would have no right to interfere. He could not maintain replevin for the house removed, or for the tim- bers composing the house.^° '"Weed V, Hall, 101 Pa. St. 582. CHAPTEE VII ABSOLUTE DEED AND AGKBEMENT TO EECONTET I. When They Constitute a Mortgage in Law, §§ 341-255 II. When They Constitute a Sale or a Conditional Sale, §§ 256-281 I. When They Constitute a Mortgage in Law Section 247a. Extrinsic evidence to connect deed and defeasance — Lead- ing cases. 248. Parol evidence to connect the deed and defeasance. 249. Illegal condition in defeasance. 250. The necessary incident of re- demption. 251. Right of redemption indefeasi- ble. 252. Cancelation of defeasance — Conversion of mortgage into absolute sale. 253. Record of separate defeasance. 254. Circumstances determining ef- fect of record as notice. 255. Notice by possession. § 241. Defeasance an essential requisite of a mortgage — ^Form — Parties to defeasance. — A defeasance has been defined as a deed or written instrument which defeats the force or operation of some other deed.^ It is immaterial whether the contract which constitutes the de- Section 241. Defeasance an essential requi- site of a mortgage — Form — Parties to defeasance. 242. Informal defeasance or agree- ment to reconvey. 242a. Lease with agreement to re- convey. 243. Objections to a separate defeas- ance. 244. Absolute deed and separate de- feasance — Effect at law. 245. Deed and defeasance as part of same transaction. 246. Contemporaneous execution and delivery — Date. 247. Defeasance delivered in escrow. ' Bouvier in his Law Dictionary defines "defeasance" to be an in- strument which defeats the force or operation of some other deed or of an estate. That which is in the same deed is called a "condition"; and that which is in another deed is a "defeasance." Simmons v. West Virginia Ins. Co., 8 W. Va. 474. De- feasance "is fetched from the French word defalre, i. e., to defeat or undo; infectum reddere quod factum est." The true meaning of this lan- guage is that it is to make void the principal deed. Co. Litt. 237a. "A defeasance is an instrument which avoids or defeats the force and operation of some other deed, and that which in the same deed would be called a 'condition' of it in another deed is a 'defeasance'; but it must contain proper words to defeat or put an end to the deed of which it is intended to be a de- feasance, as that it should be void or of no force or effect." Lippin- cott v. Tilton, 14 N. J. L. 361. See also Flagg v. Mann, 1 Fed. Cas. No. 202. A defeasance is a collateral deed, made at the same time with a feoff- ment or other conveyance, contain- ing certain conditions upon the per- formance of which the estate then 296 397 WHEN" A MORTGAGE IX LAW § 241 feasance be incorporated in the same instrument or in a separate in- strument contemporaneously executed.^ It may exist merely in parol f but it must, nevertheless, exist in some form.* The grantor must have a conditional right to have the property restored to him. There must be a valid and binding agreement of some sort on the part of the grantee to yield up the property received by him, when the conditions upon which the conveyance was made have been performed, else there is lacking an element indispensable to a mortgage. At law the defeasance must be in favor of the grantor himself, and not in favor of any third person. It does not avail anything that the conveyance contains a condition for a reconveyance, if the reconveyance is to be made to some one other than the grantor; whatever else such an instrument may be, it is not a mortgage. ° In equity the rule is different, and the transaction is a mortgage, although the defeasance be to some one other than the grantor; thus, for instance, it may be in the form of an agreement by one person to purchase property at a foreclosure sale, or other public sale, and to hold it until the purchase-money be repaid by the party who receives the agreement.® created may be defeated or totally undone. Miller v. Quick, 158 Mo. 495, 59 S. W. 955. See also Shaw V. Erskine, 43 Maine 371; Harrison V. Trustees of Phillips' Academy, 12 Mass. 456. In the construction of a statute relating to absolute conveyances Intended to be defeasible, the word "defeasible" was defined as "capa- ble of being, or liable to be avoided, annulled, or undone." Kinney v. Heatherington, 38 Okla. 74, 131 Pac. 1078; Comp. L. of Okla. 1909, § 1196. 'Dubuque Nat. Bank v. Weed, 57 Fed. 513; Rowan v. Sharp's Rifle Mfg. Co., 31 Conn. 1; Lynch v. Jackson, 123 111. 360, 14 N. E. 697; Johnson v. Prosperity Loan &c. Assn., 94 111. App. 260; Porter v. White, 128 N. Car. 42, 38 S. B. 24; Wilson v. Shoenberger, 31 Pa. St. 295. In New Hampshire the de- feasance must be in the convey- ance. Gen. Laws, ch. 136, § 2. Somersworth Sav. Bank T. Rob- erts, 38 N. H. 22; Boody v. Davis, 20 N. H. 140, 51 Am. Dec. 210; Bas- sett V. Bassett, 10 N. H. 64. ' See post ch. VIII., § 282 et seq. * See ante § 69. = Micou V. Ashurst, 55 Ala. 607; Low v. Henry, 9 Cal. 538; Mag- nusson v. Johnson, 73 111. 156; Carr v. Rising, 62 111. 14; Stephen- son V. Thompson, 13 111. 186; Warner v. Jennings, 44 Ind. App. 574, 89 N. E. 908; Warren v. Lovis, 53 Maine 463; Shaw v. Erskine, 43 Maine 371; Treat v. Strickland, 23 Maine 234; Flagg v. Mann, 14 Pick. (Mass.) 467, 479; Bickford v. Daniels, 2 N. H. 71; Pardee v. Treat, 82 N. Y. 385; Hill V. Grant, 46 N. Y. 496; Payne v. Patterson, 77 Pa. St. 134; Penn. Life Ins. Co. v. Austin, 42 Pa. St. 257; Marvin v. Titsworth, 10 Wis. 320. Likewise a separate written defeasance must be made between the same persons who were parties to the first deed, and must be signed and executed by the person whose estate is to be defeated. Miller v. Quick, 158 Mo. 495, 59 S. W. 955. An absolute conveyance to a mortgagee in settlement of fore- closure proceedings, is not ren- dered a mortgage by an option to purchase, concurrently given to a third person. Braun v. Vollmer, 89 App. Div. 43, 85 N. Y. S. 319. "Martin v. Pond, 30, Fed. 15; § 241 ABSOLUTE DEED AXD BECONVETANCE 298 At law, to constitute a mortgage the conveyance must be made by the mortgagor, and the defeasance by the mortgagee. A bond, there- fore, made by the grantee to his grantor, in consideration of the con- veyance, and conditioned to support his grantor for life, and in ease of neglect to reconvey the land, does not constitute a mortgage. If the deed be made by the person by whom the conditions are to be per- formed, and he takes back a bond for a reconveyance on the perform- ance of the conditions, the transaction may be a mortgage. But in the above case the deed is to the person by whom the conditions are to be performed, and his bond is simply a covenant to reconvey, which may be specifically enforced in equity. There is no conveyance from the supposed mortgagor to the supposed mortgagee. Although such a transaction is not a legal mortgage, the bond may be enforced in equity by a decree for reconveyance.'' An agreement to reconvey to the hus- band or wife of the grantor is a valid mortgage.^ A conveyance by two parties with an agreement to reconvey to one has been held not to constitute a mortgage.' A written contract giving the grantor in an absolute deed time to redeem by paying the amount of the debt will be construed as a mort- gage, even though the contract specifically limits the time for redemp- tion.^" The word "redeem" used in a contract collateral to a deed does not necessarily imply that an indebtedness is secured or that a de- Lindsay V. Matthews, 17 Fla. 575; v. Wellman, 42 Barb. (N. Y.) 390; First Nat. Bank v. Ashmead, 23 Sahler v. Signer, 37 Barb. (N. Y.) Fla. 379, 2 So. 657; Terwilligar v. 329, 44 Barb. (N. Y.) 606; Spicer Ballard, 64 Fla. 158, 59 So. 244. v. Hunter, 14 Abb. Pr. (N. Y.) 4; (Conveyance in trust to secure Lane v. Shears, 1 Wend. (N. Y.) debt of third person) ; Reigard v. 433; Peterson v. Clark, 15 Johns. McNeil, 38 111. 400; Bradford v. Hel- (N. Y.) 205; Muller v. Flavin, 13 S. sell, 150 Iowa 732, 130 N. "W. 908; Dak. 595, 83 N. W. 687. See also Davis T. Clifton, 145 Ky. 173, 140 Flagg v. Mann, 2 Sumn. (U. S.) 486. S. W. 161 (agreement to reconvey See post §§ 268, 331. to debtor's wife); Sheffield v. Day, 'Robinson v. Robinson, 9 Gray 28 Ky. L. 754, 90 S. W. 545; Stinch- (Mass.) 447, 69 Am. Dec. 301. But field v. Milliken, 71 Maine 567; Jef- see Davis v. Davis, 81 Vt. 259, 69 fery v. Hursh, 58 Mich. 246, 25 N. W. Atl. 876, 130 Am. St. 1035; Chase v. 176, 27 N. W. 7; Ferry v. Miller, 164 Peck, 21 N. Y. 581, where the Mich. 429, 129 N. W. 721 (agreement grantee in such case pledged the to reconvey to husband of grantor) ; land and the produce of It. Pardee v. Treat, 82 N. Y. 385; Carr ^ Davis v. Clifton, 145 Ky. 173. V. Carr, 52 N. Y. 251; Stoddard v. 140 S. "W. 161; Mills v. Darling, 43 Whiting, 46 N. Y. 627; Ryan v. Dox, Maine 565; Ferry v. Miller, 164 34 N. Y. 307, 90 Am. Dec. 696; Des- Mich. 429, 129 N. W. 721. pard V. Walbridge, 15 N. Y. 374; "Vance v. Anderson, 113 Cal. 532, Weed V. Stevenson, Clarke (N. Y.) 45 Pac. 816. 166; Umfreville v. Keeler, 1 Thomp. " Smith v. Hoff, 23 N. Dak. 37, & C. (N. Y.) 486; Barton v. May, 3 135 N. W. 772, Ann. Cas. 19140, Sandf. Ch. (N. Y.) 450; McBurney 1072. 299 "WHEN" A MORTGAGE IN LAW 243 feasance is intended, for it may be used to mean repurchase or regain; and the latter construction will apply if no debt is shown.^'- § 242. Informal defeasance or agreement to reconvey. — The usual proviso in a legal mortgage is, that upon the payment of the debt, or performance of the duty named, "then this deed shall be void." But any equivalent expression may be used.^^ If it appear from the whole instrument that it was intended to be a security for the payment of a debt or the performance of a duty, it is a mortgage, although there be no express provision that upon the fulfilment of the condition the deed shall be void.^^ The form of the defeasance is immaterial,^* if the intent to avoid the absolute conveyance clearly appears. The substance and not the form of the expression is chiefly to be regarded; and an enlarged and liberal view is taken to ascertain and carry into effect the intention of the parties.^^ " Cold V. Beh, 152 Iowa 368, 132 N. "W. 73. " Bernstein v. Humes, 71 Ala. 260; Adams v. Stevens, 49 Maine 362; Cowles T. Marble, 37 Mich. 158; Pearce v. "Wilson, 111 Pa. St. 14, 2 Atl. 99, 56 Am. Rep. 243; Wiscon- sin Cent. R. Co. v. Wisconsin &c. Land Co., 71 Wis. 94, 36 N. W. 837; Hoyt V. Fass, 64 Wis. 273, 25 N. W. 45. The following clause in a deed, "Nevertheless, this deed of convey- ance is null and void and of no effect until all the purchase-money is paid, then of full force and ef- fect," is merely a lien or mortgage to secure the unpaid purchase- money. The deed does not become void absolutely upon a noncompli- ance with the condition. Miskelly V. Pitts, 9 Baxt. (Tenn.) 193. A stipulation that the grantee will restore the deed if the money shall be paid within a time named is a sufficient proviso or defeasance. Kramer v. Brown, 114 Ala. 612, 21 So. 817, citing Reeves v. Abercrombie, 108 Ala. 535, 19 So. 41; Daniels v. Lowery, 92 Ala. 519, 8 So. 352; Peagler v. Stabler, 91 Ala. 308, 9 So. 157. See ante § 69. " Snyder v. Bunnell, 64 Ind. 403 ; Steel V. Steel, 4 Allen (Mass.) 417; Lanfair v. Lanfair, 18 Pick. (Mass.) 299; Austin v. First Nat. Bank, 100 Mich. 613, 59 N. W. 597; Doescher V. Spratt, 61 Minn. 326, 63 N. W. 736; Pearce r. Wilson, 111 Pa. St 14, 2 Atl. 99, 56 Am. Rep. 243; McCamant v. Roberts, 80 Tex. 316, 15 S. W. 1054 (quoting text). "Adams v. Stevens, 49 Maine 362; Scott v. McFarland, 13 Mass. 309; Taylor v. Weld, 5 Mass. 109; Bay ley v. Bailey, 5 Gray (Mass.) 505; Pearce v. Wilson, 111 Pa. St. 14, 2 Atl. 99, 56 Am. Rep. 243; Guthrie v. Kahle, 46 Pa. St. 331; In re Myer's Appeal, 42 Pa. St. 518; Wilson V. Shoenberger, 31 Pa. St. 295; Reitenbaugh v. Ludwick, 31 Pa. St. 131; Kelly v. Thompson, 7 Watts (Pa.) 401; Rankin v. Morti- mere, 7 Watts (Pa.) 372; Kerr v. Gilmore, 6 Watts (Pa.) 405; Mis- kelly V. Pitts, 9 Baxt. (Tenn.) 193; Austin V. Downer, 25 Vt. 558. A defeasance in the form of a pawn ticket, referring to real estate con- veyed as security for a loan, is suf- ficient. Lee v. Wilkinson (Miss.), 62 So. 275. A defeasance inserted In a warranty deed providing that the instrument "shall be void." upon payment, "otherwise of full force," is sufficient. Scott v. Hughes, 124 Ga. 1000, 53 S. B. 453. "Steel V. Steel, 4 Allen (Mass.) 417; Lanfair v. Lanfair, 18 Pick. (Mass.) 299; Burnett v. Wright, 135 N. Y. 543, 21 N. E. 253 (quoting text) ; Skinner v. Cox, 4 Dev. L. (N. Car.) 99. In determining whether a deed is a mortgage the form is not controlling; it is a § 243 ABSOLUTE DEED AND RECONVETAjSTCE 300 It is well settled that a conveyance with an agreement, condition, or stipulation incorporated therein that the same shall become null and void, or cease and determine, or become of no effect, or that the estate so conveyed shall be reconveyed when the money is paid, or other equivalent expression, is a mortgage, and not an absolute conveyance. The form of the defeasance is immaterial if the intention clearly ap- pears from the language employed. Any stipulation or agreement that plainly indicates an intention to return or reconvey the property, upon payment of the sum named, constitutes a mortgage.^' If there be in the deed itself, or in any separate deed executed at the same time, and constituting with the conveyance one transaction, a provision that the estate shall be reconveyed upon the payment of the debt, such stipula- tion constitutes a defeasance as much as if the words "on condition," or "provided, however," were used.^^ Thus, a reservation by a grantor of the privilege of redeeming within a specified time creates a mort- gage, if the deed was given to secure a debt.^^ The condition of defeasance need not necessarily be inserted in the body of the deed. It has the same effect when added underneath in such a way as to be part of the deed, or when executed separately.^" A condition written upon the back of a mortgage may be held to be a part of the deed, and therefore together with it may constitute a mort- gage. =" mortgage if executed to secure a Mass. 309; Taylor v. Weld, 5 Mass. debt. Calahan v. Dunker, 51 Ind. 109; National Bank v. Tennessee App. 436, 99 N. E. 1021. Where the Coal &c. R. Co., 62 Ohio St. 564, 57 wording and substance of a deed N. E. 450; McCamant v. Roberts, and contemporaneous agreement ex- 80 Tex. 316, 15 S. W. 1054; Austin plaining the transaction exclude the v. Downer, 25 Vt. 558. But the theory that a debt existed or that instrument is not a mortgage at a mortgage was intended, the deed law unless equivalent words are can not operate as a mortgage, used. Goddard v. Coe, 55 Maine Smith v. Smith, 153 Ala. 504, 45 So. 385. For cases upon separate agree- 168. An instrument in the form of ment as defeasance see post § 244 a warranty deed, but containing a note. clause that should the grantor pay "* Stryker v. Hershy, 38 Ark. 264; to the grantee a certain sum by a Mellon v. Lemmon, 111 Pa. St. 56, given date, "the instrument shall 2 Atl. 56. be void; otherwise of full force," "Baldwin v. Jenkins, 23 Miss. is a mortgage, and not a deed. 206; Kent v. AUbritain, 5 Miss. 317. Scott V. Hughes, 124 Ga. 1000, 53 See also Epperson v. Epperson, 108 S. B. 453. Va. 471, 62 S. E. 344; Perkins v. ^^ Pearce v. Wilson, 111 Pa. St. Dibble, 10 Ohio 433, 36 Am. Dec. 97. 14, 2 Atl. 99, 56 Am. Rep. 243. =° Stocking v. Fairchild, 5 Pick. "Ferguson v. Miller, 4 Cal. 97; (Mass.) 181; Graham v. Way, 38 Whiteomb v. Sutherland, 18 111. 578; Vt. 19; Whitney v. French, 25 Vt. Oldham v. Halley, 2 J. J. Marsh. 663 (indorsement of condition suf- (Ky.) 113; Scott V. McFarland, 13 flcient though not signed). 301 WHEN A mohtgage in law § 343a § 242a. Lease with agreement to reconvey. — In accordance with the foregoing rules concerning agreements to reconvey, in deeds and collateral instruments, a lease for years, in which the lessor acknowl- edges the receipt in advance of a sum in full for the rent of the prem- ises during the term, and in which "the lessee covenants, promises, and agrees to reconvey said premises to the lessor upon the payment of the aforesaid sum and interest thereon," is a mortgage, and the relation of the parties is that of mortgagor and mortgagee. ^^ Where a convey- ance is made to secure a debt and the grantee executes to his grantor a term lease containing an option to repurchase during the term, the transaction has been held to constitute a mortgage.^^ If the lessee re- ceives rents and profits, before the term expires, to the amount of the sum advanced by him, and interest thereon, his estate for years is thereupon defeated, and the lessor is restored to his old estate. But if no interest on the money advanced was ever demanded or paid, the transaction will be construed as an actual lease and renting and there can be no redemption. ^^ Likewise a lease, absolute in form, for a term of years, conveying to the lessee the timber on a tract of land for a stated amount paid on delivery of the instrument, may be shown to be a mortgage to secure repayment of the original sum.^* A mortgage deed disguised in the form of a lease, with the purchase-money to be paid as rent, and stipu- lating that if the annual rent was not paid when due, the lease was to terminate and title and possession to revest in the lessor, is never- theless a mortgage.^^ But where the assignor of a lease given to secure =^ Nugent v. Riley, 1 Mete. (Mass.) necessarily disprove such equitable 117, 35 Am. Dec. 355. ownership. Jones v. Gillett, 142 ^Reitze v. Humphreys, 53 Colo. Iowa 506, 118 N. W. 314. Where a 177, 125 Pac. 518. But see City deed accompanied by a lease to the Lumber Co. v. Hollands (Mich.), grantor was not intended asamort- 148 N. W. 361. gage, and had not been obtained by =" Stockton V. Dillon, 66 N. J. Eq. fraud or imposition, it will not be 100 57 Atl. 487. declared a mortgage. Strong v. ^Johnson v. Hattaway, 155 Ala. Taylor (Ark.), 158 S. W. 123. Where 516, 46 So. 760. a person who purchased a lot was ^Barnett v. Williams, 31 Ky. L. unable to pay the balance due on 255, 101 S. W. 1191. See also De the price, and conveyed to a com- Bartlett v. De Wilson, 52 Fla. 497, pany which advanced the amount 42 So. 189. An absolute deed ac- due and erected a house on the lot, companied by a lease from the giving back a lease to the pur- grantee to the grantor, with the chaser for a term of years, provid- exclusive option to repurchase, was ing that if all instalments of rent held a mortgage. Fort v. Colby were promptly paid thereunder (Iowa), 144 N. W. 393. But the with taxes, the property would be execution of a lease from the hold- reconveyed to such purchaser at er of the legal title to one claim- the end of the lease, and providing ing equitable ownership, does not for forfeiture upon nonpayment, the § 343 ABSOLUTE DEED AND EECONTETANCE 303 a debt, subsequently conveys the premises to the assignee for a consid- eration much larger than the original debt, the transaction is not a mortgage, though there be an agreement to reassign.^" Where the grantee in a deed executed to the executor of the grantor's husband a ninety-nine-year renewable lease, subject to a ground rent equal to six per cent, on the price, and the lease contained no stipulation for re- demption, the facts were held insufficient to constitute a mortgage.^^ § 243. Objections to a separate defeasance. — It is sometimes for the convenience of the parties to make the defeasance by a separate in- strument, so that the grantee, in the absence of a record of this instru- ment, is apparently the absolute ovmer. This form of mortgage has been used sometimes to the prejudice of the mortgagor, and the courts have at times discouraged the use of it as much as possible. Thus at an early date Lord Chancellor Talbot observed:^' "In the northern parts it is the custom in drawing mortgages to make an absolute deed, with the defeasance separate from it ; but I think it a wrong way, and to me it will always appear with a face of fraud, for the defeasance may be lost, and then an absolute conveyance is set up. I would dis- courage the practice as much as possible." In another case Lord Chan- cellor Hardwicke declared it to be an imposition upon the mortgagor not to insert the provision for reconveyance in the deed itself .^^ Objec- tions to this form of mortgage have been made by other judges; but a deed absolute in form, intended to operate as a security, if given in good faith to secure an actual indebtedness, is not constructively fraud- ulent as to the grantor's other creditors.^" facts were lield insufficient to have gagor; if there be no collusion on the deed declared a mortgage, upon the part of the mortgagee with the default. Copenny v. Southern mortgagor in keeping the defeas- Realty Co., 174 Ala. 378, 56 So. 721. ance unrecorded, or in keeping se- '= Morrison v. Jones, 31 Mont. 154, cret the exact nature of the trans- 77 Pac. 507. action, for the purpose of deceiving "Rosenstock v. Keyser, 104 Md. creditors; in short, if the mort- 380, 65 Atl. 37. gagee is simply endeavoring, in ^Cotterell v. Purchase, Cas. good faith, to obtain that prece- Temp. Talbot 61. dence on the security of his debt ^ Baker v. Wind, 1 Ves. Sen. 160. which the law permits — the mere "McClure v. Smith, 14 Colo. 297, isolated fact that he takes an ab- 23 Pac. 786, and all the cases cited solute deed, instead of a mortgage, in this chapter. In the case above will not, in and of itself alone, ren- cited Chief Justice Helm said: "If der his lien nugatory. The law pre- there be a bona fide debt for which scribes no absolute and inflexible the security is given; if there be no form for mortgages upon realty." understanding with the mortgagee Jefferson County Bank v. Hummel, to hold the overplus, or to hold the 11 Colo. App. 337, 53 Pac. 286. property after payment of his debt, There are a few early cases in which secretly, for the benefit of the mort- it was held that such a deed is 303 WHEN A MOETGAGE IN LAW § 244 § 244. Absolute deed and separate defeasance — ^Effect at law. — At law an absolute deed and separate absolute defeasance or agree- ment to reconvey, executed at the same time as security for a debt amount to a mortgage.^^ Such a deed and agreement to reconvey the constructively fraudulent. Bryant Turpie, 147 Ind. 652, 44 N. E. 25, V. Young, 21 Ala. 264; Smyth v. 37 L. R. A. 233; Lentz v. Martin, 75 Carlisle, 16 N. H. 464; Frledley v. Ind. 228; Crassen v. Swoveland, 22 Hamilton, 17 Serg. & R. (Pa.) 70; Ind. 427; Watkins v. Gregory, 6 Manufacturers' &c. Bank v. Bank of Blackf. (Ind.) 113; Harbison v. Pennsylvania, 7 Watts & S. (Pa.) Lemon, 3 Blackf. (Ind.) 51, 23 Am. 335; North v. Belden, 13 Conn. 376. Dec. 376; Wysong v. Sells, 44 Ind. It is quite certain, howeVer, that App. 238, 88 N. B. 954; Beidelman none of these decisions would be v. Koch, 42 Ind. App. 423, 85 N. B. followed now. 977; White v. Redenbaugh, 41 Ind. '^Teal v. Walker, 111 U. S. 242, App. 580, 82 N. E. 110; Bigler v. 28 L. ed. 415, 4 Sup. Ct. 420; Lana- Jack, 114 Iowa 667. 87 N. W. 700; han v. Sears, 102 U. S. 318, 26 L. Thompson v. People's Bldg. &c. Co., ed. 180; Dow v. Chamberlin, 5 Mc- 114 Iowa 481, 87 N. W. 438; Hag- Lean (U. S.) 281; Alter v. Clark, gerty V. Brower, 105 towa 395, 75 193 Fed. 153; Merrihew v. Fort, 98 N. W. 321; Radford v. Folsom, 58 Fed. 899; Martin v. Pond, 30 Fed. Iowa 473, 12 N. W. 536; Scott v. 15; Thomas v. Livingston, 155 Ala. Mewhirter, 49 Iowa 487; Chase v. 546, 46 So. 851 (grantor's right to Abbott, 20 Iowa 154; Caruthers v. repurchase); Rose v. Gandy, 137 Hunt, 18 Iowa 576; Vennum v. Bab- Ala. 329, 34 So. 239 (grantor's right cock, 13 Iowa 194; Calhoun v. Au- to repurchase); Seawright v. Par- derson, 78 Kans. 746, 98 Pac. 274; mer (Ala.), 7 So. 201; Cosby v. Wiswell v. Simmons, 77 Kans. 622, Buchanan, 81 Ala. 574, 1 So. 898; 95 Pac. 407; Overstreet v. Baxter, Sims V. Gaines, 64 Ala. 392; Free- 30 Kans. 55, 1 Pac. 825; McKenney man v. Baldwin, 13 Ala. 246; Sher- v. Page, 146 Ky. 682, 143 S. W. 382; rer v. Harris (Ark.), 13 S. W. 730. Davis v. Clifton, 145 Ky. 173, 140 See also Adams v. Hopkins, 144 S. W. 161; Honore v. Hutchings, 8 Cal. 19, 77 Pac. 712; Malone v. Roy, Bush (Ky.) 687; Ogden v. Grant, 94 Cal. 341, 29 Pac. 712; Rogers v. 6 Dana (Ky.) 473; Edrington v. Jones, 92 Cal. 80, 28 Pac. 97; Smith Harper, 3 J. J. Marsh. (Ky.) 353, V. Smith, 80 Cal. 323, 21 Pac. 4, 22 20 Am. Dec. 145; Fulwiler v. Rob- Pac. 186, 549; Booth v. Hoskins, 75 erts, 26 Ky. L. 297, 80 S. W. 1148; Cal. 271, 17 Pac. 225; McClure v. Frey v. Campbell, 8 Ky. L. 772, 3 Smith, 14 Colo. 297, 23 Pac. 786; S. W. 368; Snow v. Pressey, 82 Walker v. Tiffin Min. Co., 2 Colo. Maine 552, 20 Atl. 78, 85 Maine 408, 89; Gunn's Appeal, 55 Conn. 149, 27 Atl. 272; Bunker v. Barron, 79 10 Atl. 498; Waters v. William- Maine 62, 8 Atl. 253, 1 Am. St. 282 son, 21 D. C. 24; Jones v. Wight, 8 Stowe v. Merrill, 77 Maine 550 Hawaii 614; Kelley v. Leachman, Clement y. Bennett, 70 Maine 207 2 Idaho 1112, 29 Pac. 849; Wilson Knight v. Dyer, 57 Maine 174 V. Thompson, 4 Idaho 678, 43 Pac. Warren v. Levis, 53 Maine 463 557; Pritchard v. Butler, 4 Idaho Brown v. Holyoke, 53 Maine 9 518, 43 Pac. 73; Linkemann v. Smith v. Monmouth Mut. Fire Ins. Knepper, 226 111. 473, 80 N. E. 1009; Co., 50 Maine 36; Mills v. Darling, In re Bennett's Estate, 168 111. 658; 43 Maine 565; Shaw v. Erskine, 43 Helbreg v. Schumann, 150 111. 12, 37 Maine 371; Purrington v. Pierce, 38 N. E. 99, 41 Am. St. 339; Jackson Maine 447; McLaughlin v. Shep- v. Lynch, 129 111. 72, -22 N. B. 246 ; herd, 32 Maine 143, 52 Am. Dec. Bearss v. Ford, 108 111. 16; Ewart 646; Blaney v. Bearce, 2 Maine 132; V. Walling, 42 111. 453; Snyder v. Gaither v. Clarke, 67 Md. 18, 8 Atl. Griswold, 37 111. 216; Preschbaker 740; Stanhope v. Dodge, 52 Md. 483; -^ Feaman, 32 111. 475; Barlow v. Burns v. Hunnewell (Mass.), 104 Cooper, 109 111. App. 375; Lowe v. N. E. 494; Short v. Caldwell, 155 § 244: ABSOLUTE DEED AND EECONVETANCE 304 estate upon payment of a certain sum of money, or upon the perform- ance of some other condition, have always been held to constitute a Mass. 57, 28 N. B. 1124; Harrison Wend. (N. Y.) 208; Lane v. Shears. V. Phillips Academy, 12 Mass. 456; 1 Wend. (N. Y.) 433; Watkins v. Holbrook v. Finney, 4 Mass. 566, 3 Williams, 123 N. Car. 170, 31 S. B. Am. Dec. 243; Ersklne v. Town- 388; Poston v. Jones, 122 N. Car. send, 2 Mass. 493, 3 Am. Dec. 71; 536, 29 S. E. 951; Robinson v. Wil- Murphy v. Calley, 1 Allen (Mass.) loughby, 65 N. Car. 520; Mason v. 107; Bayley v. Bailey, 5 Gray Hearne, 1 Busb. Bq. (N. Car.) 88; (Mass.) 505; Judd v. Flint, 4 Gray Smith r. Hoff, 23 N. Dak. 37, 135 N. (Mass.) 557; Waters v. Randall, 6 W. 772, Ann. Cas. 1914C, 1072; Wells Mete. (Mass.) 479; Marden v. Bab- v. Geyer, 12 N. Dak. 316, 96 N. W. cock, 2 Mete. (Mass.) 99; Nugent 289; Sun Fire Ins. Office v. Clark, V. Riley, 1 Mete. (Mass.) 117, 35 53 Ohio St. 414, 42 N. E. 248; Mar- Am. Dec. 355; Flagg v. Mann, 14 shall v. Stewart, 17 Ohio 356; Pick. (Mass.) 467; Newhall v. Burt, Weiseham v. Hocker, 7 Okla. 250, 7 Pick. (Mass.) 157: Rice v. Rice, 54 Pac. 464; Raski v. Wise, 56 Ore. 4 Pick. (Mass.) 349; Clark v. Lan- 72, 107 Pac. 984; Wellenberg v. don, 90 Mich. 83, 51 N. W. 357; Jef- Minard, 87 Ore. 621, 62 Pac. 532; fery v. Hursh, 58 Mich. 246, 25 N. Safe Deposit &c. Co. v. Linton, 213 W. 176, 27 N. W. 7; Ferris v. Wil- Pa. 105, 62 Atl. 566; Pearce v. Wil- cox, 51 Mich. 105, 16 N. W. 252; son, 111 Pa. St. 14, 2 Atl. 99, 56 Enos V. Sutherland, 11 Mich. 538; Am. Rep. 243; McClurkan v. Batty V. Snook, 5 Mich. 231; Swet- Thompson, 69 Pa. St. 305; Houser land V. Swetland, 3 Mich. 482; But- v. Lamont, 55 Pa. St. 311, 93 Am. man v. James, 34 Minn. 547, 27 N. Dec. 755; Guthrie v. Kahle, 46 Pa. W. 66; Benton v. Nicoll, 24 Minn. St. 331; Wilson v. Shoenberger, 31 221; Archambau v. Green, 21 Minn. Pa. St 295; Brown v. Nickle, 6 Pa. 520; Weide v. Gehl, 21 Minn. 449; St. 390; Friedley v. Hamilton, 17 Hill V. Edwards, 11 Minn. 22; Shar- S. & R. (Pa.) 70, 17 Am. Dec. 638; key V. Sharkey, 47 Mo. 543; Cope- Johnston v. Gray, 16 S. & R. (Pa.) land V. Yoakum, 38 Mo. 349; Grogan 361, 16 Am; Dec. 577; Stoever v. V. Valley Trading Co., 30 Mont. 229, Stoever, 9 S. & R. (Pa.) 434; Manu- 76 Pac. 211; Names v. Names, 48 facturers' &c. Bank v. Bank of Nebr. 701, 67 N. W. 751; Riley v. Pennsylvania, 7 W. & S. (Pa.) 335; Starr, 48 Nebr. 243, 67 N. W. 187; Dimond v. Enoch, Add. (Pa.) 356; Nelson v. Atkinson, 37 Nebr. 577, Gubbings v. Harper, 7 Phila. (Pa.) 56 N. W. 313; Connolly v. Giddings, 276; Kelly v. Thompson, 7 Watts 24 Nebr. 131, 37 N. W. 939; First (Pa.) 401; Jaques v. Weeks, 7 Nat. Bank v. Kreig, 21 Nev. 404, Watts (Pa.) 261; Kerr v. Gilmore, 32 Pac. 641; Essex County Nat. 6 Watts (Pa.) 405; Colwell v. Bank v. Harrison, 57 N. J. Eq. 91, 40 Woods, 3 Watts (Pa.) 188, 27 Am. Atl. 209; Vliet v. Young, 34 N. J. Eq. Dec. 345; Knowles v. Knowles, 25 15; Merritt v. Brown, 19 N. J. Eq. R. I. 464, 56 Atl. 775; Francis v. 286; Van Wagner v. Van Wagner, 7 Francis, 78 S. Car. 178, 58 S. E. 804; N. J. Eq. 27; Dickey v. Goertner, 146 Brickie v. Leach, 55 S. Car. 510, 33 N. Y. S. 264; Weed v. Stevenson, S. E. 720; Bowman v. Felts Clarke (N. Y.) 166; Clark v. Henry, (Tenn.), 42 S. W. 810; Hammonds 2 Cow. (N. Y.) 324; Draper v. v. Hopkins, 3 Yerg. (Tenn.) 525; Draper, 71 Hun 349, 24 N. Y. S. Blizzard v. Craigmiles, 7 Lea 1127; Peterson v. Clark, 15 Johns. (Tenn.) 693; Moores v. Wills, 69 (N. Y.) 205; Brown v. Bement, 8 Tex. 109, 5 S. W. 675; Baxter V. Johns. (N. Y.) 96; Henry v. Davis, Dear, 24 Tex. 17; Williams v. Cham- ,7 Johns. Ch. (N. Y.) 40; Dey v. Dun- bers (Tex. Civ. App.j, 26 S. W. 270; ham, 2 Johns. Ch. (N. Y.) 182; Tuggle v. Berkeley, 101 Va. 83; 43 Decker v. Leonard, 6 Lans. (N. Y.) S. B. 199; Reynolds v. Scott, Brayt. ' 264; Hall v. Van Cleve, 11 N. Y. (Vt.) 75; Thorne v. Joy, 15 Wash. Leg. Obs. 281; Holmes v. Grant, 8 83, 45 Pac. 642; Hoffman v. Ryan, Paige (N. Y.) 243; Brown v. Dean, 3 21 W. Va. 415; Davis v. Demming, 305 WHEK A MORTGAGE IK LAW § 244 legal mortgage, if the instruments are of the same date, or were exe- cuted and delivered at the same time and as one transaction.^^ As be- tween the parties themselves, the relation is the same as if the mort- gage had been in the ordinary form.^^ It is sufficient that the deed and defeasance are substantially contemporaneous and were manifest- ly meant to constitute a mortgage.^* A defeasance made after the record of the deed is sufficient where the deed was made without the knowledge of the grantee, and the obligation to reeonvey was made upon his being informed of it.^° When the deed and defeasance are executed at the same time, or are agreed upon at the same time, it is a conclusion of law that they constitute a legal mortgage.^* The fact that possession of the property is given to the grantee by the contract for reconveyance does not affect the character of the transaction.^' A bond for reconveyance by a grantee in a warranty deed, upon pay- ment by the grantor of a debt to the grantee is an instrument of defeas- 12 W. Va. 246; Falbe v. Caves, 151 Wis. 54, 138 N. W. 87; Von Oehsen v. Brown, 148 Wis. 236, 134 N. W. 377; Wolf V. Theresa Village Mut. Fire Ins. Co., 115 Wis. 402, 91 N. W. 1014; Brinkman v. Jones, 44 Wis. 498; Plato v. Roe, 14 Wis. 453; Knowlton v. Walker, 13 Wis. 264; Second Ward Bank v. Upmann, 12 Wis. 499. See also Ray v. Tatum, 72 Fed. 112. In Georgia a convey- ance by deed to secure any debt, the grantor taking a bond for reconvey- ance upon the payment -of such debt, upon the payment of the debt passes the title to the property till the debt is repaid and is held to be an absolute conveyance, with the right reserved by the vendor to have said property reconveyed to him upon the payment of the debt or debts intended to be secured agreeably to the terms of the contract and not a mortgage. Code 1895, § 2771. For construction of this provision, see also Pirkle v. Equitable Mtg. Co., 99 Ga. 524; Marshall v. Hodgkins, 99 Ga. 592; Broach v. Smith, 75 Ga. 159; McElmurray v. Blodgett, 120 Ga. 9, 47 S. E. 531 (grantor's right to repurchase) ; Burckhalter v. Planters' Loan &c. Bank, 100 Ga. 428. Under this statute a deed giv- en to secure a debt may be fore- closed by the grantee as a mortgage. notwithstanding a provision therein that it is to be construed as a deed passing title, and not as a mort- gage, such provision being for the benefit of the grantee who may waive it at his election. <" Scott V. McFarland, 13 Mass. 308; Taylor v. Weld, 5 Mass. 109; Erskine v. Townsend, 2 Mass. 493, 3 Am. Dec. 71; Nugent v. Riley, 1 Mete. (Mass.) 117, 35 Am. Dec. 355; Lanfair v. Lanfair, 18 Pick. (Mass.) 299; Newhall v. Burt, 7 Pick. (Mass.) 157; Stocking v. Fairchild, 5 Pick. (Mass.) 181; Baton v. Whit- ing, 3 Pick. (Mass.) 484; Clark v. Landon, 90 Mich. 83, 51 N. W. 357. ^ Short V. Caldwell, 155 Mass. 57, 28 N. E. 1124; Tilden v. Greenwood, 149 Mass. 567, 22 N. E. 45. =*Jeffery v. Hursh, 58 Mich. 246, 25 N. W. 176, 27 N. W. 7. See pose § 245. '"Harrison v. Phillips Academy, 12 Mass. 456. *= Clark v. Landon, 90 Mich. 83, 51 N. W. 357; Jeffery v. Hursh, 58 Mich. 246, 25 N. W. 176, 27 N. W. 7; Waters v. Crabtree, 105 N. Car. 394, 11 S. E. 240; Wilson v. Shoen- berger, 31 Pa. St. 295; Reitenbaugh V. Ludwick, 31 Pa. St. 131. "'Clark V. Landon, 90 Mich. 83, 51 N. W. 357. 20— Jones Mtg.— Vol. I. § 244 ABSOLUTE DEED AND RECONVEYANCE 306 ance and raises a mortgage.^* A provision or reservation giving the grantor the right to repurchase at a certain price within a specified time may be equivalent to an agreement by the grantee to reconvey, and constitute a mortgage.^' A contract contemporaneous with a deed, whereby the grantee agrees to sell and the grantor to buy the land for the amount constituting the consideration, renders the transaction pre- sumptively a mortgage.*" A provision for a forfeiture in a contract to reconvey which was in fact a defeasance, accompanying a deed, amounts only to a mortgage.*^ The instrument of defeasance must be of as high a nature as is re- quired in the deed or conveyance itself; and consequently in states where seals have not been abolished, a written agreement to reconvey not under seal, though made at the same time with the deed, does not at law constitute a mortgage.*^ If not under seal, the agreement will constitute a mortgage only in equity.*^ The defeasance must also be absolute. A contract which gives the grantee the option to reconvey, or pay a sum of money, is not a de- feasance which, in connection with the deed, will constitute a mort- '"Watkins v. Gregory, 6 Blackf. (Ind.) 113; Harbison v. Lemon, 3 Blackf. (Ind.) 51, 23 Am. Dec. 376; Wysong v. Sells, 44 Ind. App. 238, 88 N. E, 954; Brown v. Holyoke, 53 Maine 9; Harrison v. Phillips Acad- emy, 12 Mass. 456; Holbrook v. Fin- ney, 4 Mass. 566, 3 Am. Dec. 243; Brskine v. Townsend, 2 Mass. 493, 3 Am. Dec. 71; Waters v. Randall, 6 Mete. (Mass.) 479; Marden v. Bab- cock, 2 Mete. (Mass.) 99; Clark v. Landon, 90 Mich. 83, 51 N. W. 357; Jeffery v. Hursh, 58 Mich. 246, 25 N. W. 176, 27 N. W. 7; Ferris v. "Wilcox, 51 Mich. 105, 16 N. W. 252, 47 Am. Rep. 551; Bnos v. Suther- land, 11 Mich. 538; Batty v. Snook, 5 Mich. 231; Swetland v. Swetland, 3 Mich. 482; Butman v. James, 34 Minn. 547, 27 N. W. 66; Archambau V. Green, 21 Minn. 520; Weide v. Gehl, 21 Minn. 449; Hill v. Edwards, 11 Minn. 22; Grogan v. Val. Trading Co., 30 Mont. 229, 76 Pac. 211; Van Wagner v. Van Wagner, 7 N. J. Eq. 27; Holmes v. Grant, 8 Paige (N. Y.) 243; Watkins v. Williams, 123 N. Car. 170, 31 S. E. 388; Friedley v. Hamilton, 17 S. & R. (Pa.) 70, 17 Am. Dec. 638; Kelly v. Thompson, 7 Watts (Pa.) 401; Jaques v. Weeks, 7 Watts (Pa.) 261; Kerr v. Gilmore, 6 Watts (Pa.) 406; Francis v. Fran- cis, 78 S. Car. 178, 58 S. E. 804. See also Reynolds v. Reynolds, 42 Wash. 107, 84 Pac. 579. =» Thomas v. Livingston, 155 Ala. 546, 46 So. 851; Rose v. Gandy, 137 Ala. 329, 34 So. 239; McBlmurray V. Blodgett, 120 Ga. 9, 47 S. E. 531. See post § 261. "Calhoun v. Anderson, 78 Kans. 746, 98 Pac. 274. ** Barlow v. Cooper, 109 111. App. 375; Second Ward Bank v. Upmann, 12 Wis. 499. "Flint V. Sheldon, 13 Mass. 443, 7 Am. Dec. 162; Kelleran v. Brown, 4 Mass. 443; Murphy v. Galley, 1 Allen (Mass.) 107; Scituate v. Han- over, 16 Pick. (Mass.) 222; Flagg v. Mann, 14 Pick. (Mass.) 467; Cut- ler V. Dickinson, 8 Pick. (Mass.) 386; Jewett v. Bailey, 5 Greenl. (Maine) 87; Warren v. Lovis, 53 Maine 463; French v. Sturdivant, 8 Maine 246; Runlet v. Otis, 2 N. H. 167; Lund v. Lund, 1 N. H. 39, 8 Am. Dec. 29. But see Harrison v. Phillips Academy, 12 Mass. 456. <" Reading v. Weston, 8 Conn. 117, 20 Am. Dec. 97; Fitch v. Miller, 200 111. 170, 179, 65 N. E. 650 (quoting text); Green v. Capps, 142 111. 286, 31 N. E. 597; West v. Reed, 55 111. 242; Kelleran v. Brown, 4 Mass. 443; Eaton V. Green, 22 Pick. (Mass.) 307 "WHEN A MORTGAGE IN LAW § 244 gage. The fee is absolute in the grantee if he so elect.** And likewise an absolute conveyance to a mortgagee in settlement of foreclosure pro- ceedings, is not rendered a mortgage by an option to purchase, concur- rently given to a third person.*^ Where there is no obligation*"^ or only a conditional obligation*' to pay the amount for which the recon- veyance was to be made, the transaction is usually intended and con- sidered as a conditional sale and not as a mortgage. The rule that when the evidence is doubtful, a deed absolute on its face is deemed a mortgage** applies to an agreement to reconvey.*' It has been held that, when the grantee in an absolute deed agrees to reconvey upon payment of a valid existing debt, the transaction is conclusively pre- sumed to be a mortgage f° but the mere agreement of such grantee to reconvey does not necessarily show that the transaction was a mort- gage to secure a debt, even though the sum to be paid upon reconvey- ance is equal to the sum secured by a former mortgage. ^^ ISTot every agreement to reconvey even upon payment of a certain sum within a specified time constitutes a mortgage, but the intention of the parties controls, as shown by all the circumstances, the terms of the instrument and parol agreements not conflicting with such terms. °^ An absolute deed with a defeasance passes the legal title to the prop- 526; Flagg V. Mann, 14 Pick. (Mass.) 881; "White v. Redenbaugh, 41 Ind. 467; Cutler v. Dickinson, 8 Pick. App. 580, 82 N. E. 110; Parks v. (Mass.) 386; Skinner v. Cox, 4 Sullivan (Tex. Civ. App.), 152 S. Dev. L. (N. Car.) 59; Phelan v. W. 704. See post §§ 260, 265, 343. Fitzpatrick, 84 Wis. 240, 54 N. W. " Mittesteadt v. Jolanson, 75 "Wash. 614. 550, 135 Pac. 214. « Thompson v. People's Bldg. &c. «See post §§ 258, 279. Co., 114 Iowa 481, 87 N. "W. 438; '^Elliott v. Bozorth, 52 Ore. 391, Bigler v. Jack, 114 Iowa 667, 87 N. 97 Pac. 632. "W. 700; Fuller v. Pratt, 10 Maine =»Beidelman v. Koch, 42 Ind. App. 197. Conversely the grantor's op- 423, 85 N. E. 977. tion to repurchase, with no absolute "^ Miller v. Smith, 20 N. Dak. 96, obligation, will not render the deed 126 N. "W. 499; Devore v. "Woodruff, a mortgage. Tost v. First Nat. 1 N. Dak. 143, 45 N. "W. 701; Hesser Bank, 66 Kans. 605, 72 Pac. 209; v. Brown, 40 "Wash. 688, 82 Pac. 934. Fabrique v. Cherokee Coal &c. Co., See post §§ 261, 267. A conveyance, 69 Kans. 733, 77 Pac. 584; Smith v. with the right to repurchase, is not Hoff, 23 N. Dak. 37, 135 N. "W. 772, necessarily a mortgage. Conway v. Ann. Cas. 1914 C, 1072; Smyth v. Alexander, 7 Cranch (U. S.) 237; Reed, 28 Utah 262, 78 Pac. 478; Slowey v. McMurray, 27 Mo. 113, Hinchman v. Cook, 45 Wash. 490, 88 72 Am. St. 251; Hill v. Grant, 46 Pac. 931; Hoover v. Bouffleur, 74 N. Y. 496; Glover v. Payn, 19 Wend. Wash. 382, 133 Pac. 602. See also (N. Y.) 518. Braun v. Vollmer, 89 App. Div. 43, "^Keeline v. Clark, 132 Iowa 360, 85 N. Y. S. 319. See post § 264. 106 N. W. 257; First Nat. Bank v. "Braun v. Vollmer, 89 App. Div. Edwards, 84 Kans. 495, 115 Pao. 118; 43, 85 N. Y. S. 319; Hoover v. Bouf- Luesenhop v. Einsfeld, 93 App. Div. fleur, 74 Wash. 382, 133 Pac. 602. 68, 87 N. Y. S. 268. «Bell V. Shiver (Ala.), 61 So. § 245 ABSOLUTE DEED AND EECONVEYANCB 308 erty even in states in which it is held that a mortgage in the usual form does not pass the title. °^ § 245. Deed and defeasance as part of same transaction. — At law the deed and defeasance must be part of the same transaction, and must take effect at the same time ; for a subsequent defeasance without a new consideration, is a mere nudum pactum, and since no rights arise under it, it can not convert an instrument once a deed into a mort- gage.^* It seems sufficient, however, that the instruments are substan- tially contemporaneous ; and the lapse of an hour or even a day between the execution of a deed and agreement to reconvey has been held in- sufficient to deprive the transaction of the character of a mortgage.^^ A subsequent defeasance can not be allowed to affect the prior convey- ance. The transaction must be a mortgage at its inception, and can not become so afterward. The defeasance must be such that it may be considered as if it were annexed to, or inserted in, the same deed, and construed as containing the condition upon the performance of which the estate may be defeated.^" The two instruments, if contempo- ■» Hughes V. Davis, 40 Cal. 117; Jay V. Welchel, 78 Ga. 786, 3 S. B. 906; Thaxton v. Roberts, 66 Ga. 704; McLaren v. Clark, 30 Ga. 423, 7 S. E. 230; First Nat. Bank v. Tighe, 49 Nebr. 299, 68 N. W. 490; Gallagher V. Giddings, 33 Nebr. 222, 49 N. W. 1126; Kemper v. Campbell, 44 Ohio St. 210; Loring v. Melendy, 11 Ohio 355; Baird v. Kirtland, 8 Ohio 21. But see Moisant v. McPhee, 92 Cal. 76, 28 Pac. 46; First Nat. Bank v. Ashmead, 23 Fla. 379, 2 So. 657. See post § 339. =♦ Ingram v. Illges, 98 Ala. 511, 13 So. 548; Bryan v. Cowart, 21 Ala. 92; Freeman v. Baldwin, 13 Ala. 246; Bunker v. Barron, 79 Maine 62, 8 Atl. 253, 1 Am. St. 282; Clement v. Bennett, 70 Maine 207; Warren v. Lovis, 53 Maine 463; Shaw v. Er- skine, 43 Maine 371; McLaughlin v. Shepherd, 32 Maine 143, 52 Am. Dec. 646; Bennock v. Whipple, 12 Maine 346, 28 Am. Dec. 186; Trull v. Skin- ner, 17 Pick. (Mass.) 213; Emer- son V. Murray, 4 N. H. 171, 17 Am. Dec. 407; Griswold v. Fowler, 6 Abb. Pr. (N. Y.) 113; Potter v. Langstrath, 151 Pa. St. 216, 25 Atl. 76; Plumer v. Guthrie, 76 Pa. St. 441; Wilson v. Shoenberger, 31 Pa. St. 295; Murray v. McCarthy, 3 Sad. (Pa.) 383, 6 Atl. 243; Kelly v. Thompson, 7 Watts (Pa.) 401; Waters v. Crahtree, 105 N. Car. 394, 11 S. B. 240. See also Thomas v. Livingston, 155 Ala. 546, 46 So. 851. A bond delivered by the grantee three years after delivery of the ab- solute deed, conditioned to recon- vey to the grantor the same land, does not constitute a defeasance and thereby render the conveyance a mortgage. Stowe v. Merrill, 77 Maine 550, 1 Atl. 684. And so a deed is not proved a mortgage by the grantee's acknowledgment un- der seal made over a year after the execution of the deed, that he held the land as security for a note. Wa- ters V. Crabtree, 105 N. Car. 394, 11 S. E. 240. But see Scott v. Henry, 13 Ark. 112; Hall v. Arnott, 80 Cal. 348, 22 Pac. 200. See post § 246. •"Sebree v. Thompson, 31 Ky. L. 1146, 104 S. W. 781 (an hour); Gubbings v. Harper, 7 Phila. (Pa.) 276 (a day). '"= Murphy v. Galley, 1 Allen (Mass.) 107, and cases cited. A collateral writing executed an hour after the deed has been held a valid defeasance, although nothing had 309 WHEN A- MOKTGAGB IN LAW § 245 raneous, will be construed together as one," and the estate conveyed in the deed may control and explain a defective description of such estate in the defeasance. ^^ If, at the time of executing an absolute deed, the parties verbally agree that a defeasance shall be executed subsequently on request, such defeasance, when executed, will relate back to the deed and make it a mortgage.^^ But, in the absence of such agreement connecting the de- feasance with the original transaction, there is not a mortgage even in equity, but only an agreement to reconvej. "Neither courts of law nor courts of equity can make or modify a valid contract. They can only determine what they are, and give them effect. Courts of equity can only give effect to and administer rights created by and growing out of them that courts of law can not, by reason of their peculiar organiza- tion and rigorous methods of procedure. Nor has a court of equity au- thority to change the settled nature of an instrument, and make it different from, and serve a purpose different from, that contemplated by the parties when they made it.""" It is not necessary that the deed and bond of defeasance should both bear the same date."^ If these have once been given, and a recon- veyance made in accordance with the terms of the bond, and subse- quently the premises are reconveyed to the obligor, under an agreement that the same bond shall continue in force for another reconveyance, this amounts to a redelivery of the bond, and makes the transaction a mortgage."^ Where the defeasance is of a different date from the deed, parol evidence is admissible to prove that they were delivered at the same time, and are part of the same transaction.*^ It is not necessary been said about it before tbat time, parol agreement at the time the Sebree v. Thompson, 31 Ky. L. 1146, deed is executed, that the grantee 104 S. W. 781. See post § 246. will later give a bond for reconvey- " Adams v. Hopkins, 144 Cal. 19, ance to the grantor, will not render 77 Pac. 712; In re Bennett's Estate, the conveyance a mortgage, although 168 III. App. 658. See also Thomas the bond is afterward given. Lund V. Livingston, 155 Ala. 546, 46 So. v. Lund, 1 N. H. 39, 8 Am. Dec. 29. 851. See post § 264. '^"Waters v. Crabtree, 105 N. Car. ^'Turner v. Cochran, 30 Tex. Civ. 394, 11 S. E. 240, per Merrimon, C. App. 549, 70 S. "W. 1024. J. =» Cosby V. Buchanan, 81 Ala. 574; "Harrison- v. Phillips Academy, Sears v. Dixon, 33 Cal. 326; Levering 12 Mass. 456; Mclntier v. Shaw, 6 V. Fogg, 18 Pick. (Mass.) 540; Doty Allen (Mass.) 83; Newhall v. Burt, v. Norton, 133 App. Div. 106, 117 7 Pick. (Mass.) 157. See post § 246. N. Y. S. 793 (same day); Reiten- "^ Mclntier v. Shaw, 6 Allen baugh V. Ludwick, 31 Pa. St. 131. (Mass.) 83. See also Judd v. Flint, See also Scott v. Henry, 13 Ark. 112; 4 Gray (Mass.) 557. Waters v. Crabtree, 105 N. Car. 394, ""Brown v. Holyoke, 53 Maine 9; 11 S. E. 240. The agreement upon Waters v. Crabtree, 105 N. Car. 394, which the two instruments rest 11 S. E. 240. must antedate them both, and a 346 ABSOLUTE DEED AND HECONVEYANCB 310 that the deed and defeasance should in terms refer to each other."* Their connection may be established by parol evidence."^ § 246. Contemporaneous execution and delivery — Date. — Although it is not material that the instruments should bear the same date/" it is essential that they should be executed"^ and delivered at the same *'A defeasance intended to cover two prior absolute conveyances, has that effect though not referring to the latter conveyance. Turner v. Cochran, 30 Tex. Civ. App. 549, 70 S. W. 1024. «> Preschhaker v. Feaman, 32 111. 475. See post § 277. *" Harrison v. Phillips Academy, 12 Mass. 455; Mclntier v. Shaw, 6 Allen (Mass.) 83; Newhall v. Burt, 7 Pick. (Mass.) 157. See also Krae- mer v. Adelsberger, 122 N. Y. 467, 25 N. B. 859. "' Lanahan v. Sears, 102 U. S. 318, 26 L. ed. 180; Dow v. Chamber lin, 5 McLean (U. S.) 281; Martin v. Pond, 30 Fed. 15; Cosby v. Bu- chanan, 81 Ala. 574, 1 So. 898; Sims V. Gaines, 64 Ala. 392; Freeman v. Baldwin, 13 Ala. 246; "Walker v. Tif- fin Gold &c. Min. Co., 2 Colo. 89; In re Gunn's Appeal, 55 Conn. 149, 10 Atl. 498; Rowan v. Sharp's Rifle Mfg. Co., 31 Conn. 1; Morrison v. Markham, 78 Ga. 161, 1 S. E. 425; Clark V. Lyon, 46 Ga. 202; Bearss v. Ford, 108 111. 16; Ewart v. Walling, 42 111. 453; Preschbaker v. Feaman, 32 111. 475; Lentz v. Martin, 75 Ind. 228; Crassen v. Swoveland, 22 Ind. 427; Watkins v. Gregory, 6 Blackf. (Ind.) 113; Harbison v. Lemon, 3 Blackf. (Ind.) 51, 23 Am. Dec. 376; Radford v. Folsom, 58 Iowa 473, 12 N. W. 536; Caruthers v. Hunt, 18 Iowa 576; Overstreet v. Baxter, 30 Kans. 55, 1 Pac. 825; Honore v. Hutchings, 8 Bush (Ky.) 687; Og- den V. Grant, 6 Dana (Ky.) 473; Edrington v. Harper, 3 J. J. Marsh. (Ky.) 353, 20 Am. Dec. 145; Frey v. Campbell, 8 Ky. L. (abst.) 772, 3 S. W. 368; Bunker v. Barron, 79 Maine 62, 1 Am. St. 282; Stowe v. Merrill. 77 Maine 550, 1 Atl. 684; Clement V. Bennett, 70 Maine 207; Warren V. Levis, 53 Maine 463; Brown v. Holyoke, 53 Maine 9; Mills v. Dar- ling, 43 Maine 565; Shaw v. Erskine, 43 Maine 871; McLaughlin v. Shep- ard, 32 Maine 143, 52 Am. Dec. 646; Bennock v. Whipple, 12 Maine 346, 28 Am. Dec. 186; Blaney v. Bearce, 2 Maine 132; Gaither v. Clarke, 67 Md. 18; Harrison v. Phillips Acad- emy, 12 Mass. 455; Murphy v. Cal- ley, 1 Allen (Mass.) 107; Woodward V. Pickett, 8 Gray (Mass.) 617; Bay- ley V. Bailey, 5 Gray (Mass.) 505; Judd V. Flint, 4 Gray (Mass.) 557; Clark V. Landon, 90 Mich. S3, 51 N. W. 357; Jeffery v. Hursh, 58 Mich. 246, 25 N. W. 176, 27 N. W. 7; Fer- ris V. Wilcox, 51 Mich. 105, 16 N. W. 252, 47 Am. Rep. 551; Enos v. Suth- erland, 11 Mich. 538; Batty v. Snook, 5 Mich. 231; Butman v. James, 34 Minn. 547, 27 N. W. 66; Benton v. Nicoll, 24 Minn. 221; Archambau v. Green, 21 Minn. 520; Hill v. Ed- wards, 11 Minn. 22; Sharkey v. Sharkey, 47 Mo. 543; Copeland v. Yoakum, 38 Mo. 349; Connolly v. Giddings, 24 Nebr. 131, 37 N. W. 939; Vliet v. Young, 34 N. J. Eq. 15; Weed V. Stevenson, Clarke Ch. (N. Y.) 166; Clark v. Henry, 2 Cow. (N. Y.) 324; Peterson v. Clark, 15 Johns. (N. Y.) 205; Henry v. Davis, 7 Johns. Ch. (N. Y.) 40; Decker v. Leonard, 6 Lans. (N. Y.) ^64; Hall v. Van Clene, 11 N. Y. Leg. Obs. 281; Brown v. Dean, 3 Wend. (N. Y.) 208; Lane v. Shears, 1 Wend. (N. Y.) 433; Robinson v. Willough- by, 65 N. Car. 520; Mason v. Hearne, 45 N. Car. 88; Marshall v. Stewart, 17 Ohio 356; McClurkan v. Thomp- son, 69 Pa. St. 305; Houser v. La- ment, 55 Pa. St. 311, 93 Am. Dec. 755; Guthrie v. Kahle, 46 Pa. St. 331; Gubbings v. Harper, 7 Phila. (Pa.) 276; Friedley v. Hamilton, 17 Serg. & R. (Pa.) 70, 17 Am. Dec. 638; Johnston v. Gray, 16 Serg. & R. (Pa.) 361, 16 Am. Dec. 577; Stoe- ver v. Stoever, 9 Serg. & R. (Pa.) 434; Manufacturers' &c. Bank v. State Bank, 7 Watts & S. (Pa.) 335, 42 Am. Dec. 240 ; Jaques v. Weeks, 7 Watts (Pa.) 261; Kerr v. Gilmore, 311 WHEN A MORTGAGE IN LAW § 247 time."^ In equity, however, it is immaterial that the deeds and the agree- ment to reconvey be executed at different times f^ and, as ■will be noticed elsewhere, it is immaterial that there be any bond or agreement to re- convey, parol evidence being sufiBcient to prove the transaction to be a mortgage.'^" Thus where a deed and defeasance are of different dates, and the latter recites that they were delivered the same day, parol evi- dence is admissible to explain the discrepancy.'^ A subsequent de- feasance must be based on a sufficient consideration, unless it be pro- fessedly executed in explanation of the intention of the parties at the time of the conveyance, and of the true character of the instrument. A mere voluntary agreement to reconvey can not be enforced.''^ '■§ 247. Defeasance delivered in escrow. — A deed deposited in escrow by a mortgagor to be delivered to the mortgagee if the debt is not paid within a given time, is regarded as a defeasance and takes effect 6 Watts (Pa.) 405; Colwell v. Woods, 3 Watts (Pa.) 188, 27 Am. Dec. 345; Blizzard v. Craigmiles, 7 Lea (Tenn.) 693; Hammonds v. Hopkins, 3 Yerg. (Tenn.) 525; Moores v. Wills, 69 Tex. 109, 5 S. W. 675; Baxter v. Dear, 24 Tex. 17, 76 Am. Dec. 89; Reynolds v. Scott, Brayt. (Vt.) 75; Hoffman v. Ryan, 21 W. Va. 415; Brinkman v. Jones, 44 Wis. 498; Plato v. Roe, 14 Wis. 453; Knowlton v. Walker, 13 Wis. 264; Second Ward Bank v. Upmann, 12 Wis. 499. ™Teal V. Walker, 111 U. S. 242, 28 L. ed. 415; Freeman v. Baldwin, 13 Ala. 246; Clark v. Lyon, 46 Ga. 202; Bwart v. Walling, 42 111. 453; Harbison v. Lemon, 3 Blackf. (Ind.) 51, 23 Am. Dec. 376; Edrington v. Harper, 3 J. J. Marsh. (Ky.) 353, 20 Am. Dec. 145; Frey v. Campbell, 8 Ky. L. (Abst.) 772, 3 S. W. 368; Bunker v. Barron, 79 Maine 62, 8 Atl. 253, 1 Am. St. 282; Cotton v. McKee, 68 Maine 486; Shaw v. Erskine, 43 Maine 371; Blaney v. Bearce, 2 Maine 132; Murphy v. Galley, 1 Allen (Mass.) 107; Judd v. Flint, 4 Gray (Mass.) 557; Lan- fair V. Lanfair, 18 Pick. (Mass.) 299; Newhall v. Burt, 7 Pick. (Mass.) 157; Stocking v. Fairchild, 5 Pick. (Mass.) 181; Taylor v. Weld, 5 Mass. 109; Kelleran v. Brown, 4 Mass. 443; Jeffery v. Hursh, 58 Mich. 246, 25 N. W. 176, 27 N. W. 7; Bnos v. Sutherland, 11 Mich. 538; Butman V. James, 34 Minn. 547, 27 N. W. 66; Copeland v. Yoakum, 38 Mo. 349; Kraemer v. Adelsberger, 122 N. Y. 467, 25 N. E. 859; Peterson v. Clark, 15 Johns. (N. Y.) 205; Decker v. Leonard, 6 Lans. (N. Y.) 264; Ma- son v. Hearne, 45 N. Car. 88; Haines v. Thomson, 70 Pa. St. 434; Kelly V. Thompson, 7 Watts (Pa.) 401; Kerr v. Gilmore, 6 Watts (Pa.) 405; Colwell v. Woods, 3 Watts (Pa.) 188, 27 Am. Dec. 345; Manufacturers' &c. Bank v. State Bank, 7 Watts & S. (Pa.) 335, 42 Am. Dec. 240; Brinkman v. Jones, 44 Wis. 498; Second Ward Bank v. Upmann, 12 Wis. 499. ™ Williams v. Chadwick, 74 Conn. 252, 50 Atl. 720; Mills v. Mills, 26 Conn. 213; Sebree v. Thompson, 31 Ky. L. 1146, 104 S. W. 781; Taber V. Hamlin, 97 Mass. 489, 93 Am. Dec. 113. ™ Scott V. Henry, 13 Ark. 112; Walker v. Tiffin Min. Co., 2 Colo. 89; Brinkman v. Jones, 44 Wis. 498. See post §§ 282-395. "Haines v. Thompson, 70 Pa. St. 434. "Ingram v. lUges, 98 Ala. 511, 13 So. 548; Bryan v. Cowart, 21 Ala. 92; Bunker v. Barron, 79 Maine 62, 8 Atl. 253, 1 Am. St. 282; Trull V. Skinner, 17 Pick. (Mass.) 213; Vasser v. Vasser, 23 Miss. 378; Griswold v. Fowler, 6 Abb. Pr. (N. Y.) 113; Waters v. Crabtree, 105 N. Car. 394, 11 S. E. 240. § 247a ABSOLUTE DEED AND RECONVEYANCE 313 from the time of deposit.'^' If the agreement to reconvey be delivered as an escrow, to be delivered to the obligee upon the repayment of the money within a certain time, it is not executed and delivered at the same time with the deed, so as to constitute part of the same transac- tion, and therefore the transaction is not a mortgage/* A conveyance absolute on its face was inade to one who advanced money to the grantor, and at the same time executed an agreement to reconvey the land, upon repayment of the money advanced, within thirty days ; and both instruments were placed in the hands of a third person, with instructions if repayment was not so made, to deliver both instruments to the grantee. The money not being repaid, both instru- ments, after the default, were delivered to the grantee, the grantor so directing. It was held that the deed, on its delivery to the grantee, conveyed the land to him absolutely, and was not a mortgage. The maxim, "Once a mortgage, always a mortgage," was declared inappli- cable to the case, because the conveyance never was a mortgage. The transaction was to the effect that, if the advance was repaid in thirty days, it should be a loan ; but if not repaid in that time, it should be the consideration for an absolute conveyance of the land in question.'^ Where a debtor who had given a mortgage, at the instance of his creditor executed an absolute deed, and placed it in escrow, to be de- livered to the defendant on default to save foreclosure fees, it was held that the deed was in eSect a mortgage and the debtor was entitled to redeem.''^ § 247a. Extrinsic evidence to connect deed and defeasance — Lead- ing' cases. — In order to constitute a mortgage, the deed and written defeasance must correspond in all essential particulars, appearing either on their face or by extrinsic evidence to constitute parts of the 'same transaction.^^ If the deed and defeasance do not on their face "Holden Land &c. Stock Co. v. v. Webster, 13 Pick. (Mass.) 411, Interstate Trading Co., 87 Kans. the bond having been delivered in 221; 123 Pac. 733; Moorhead v. El- escrow, and the conditions never lison, 56 Tex. Civ. App. 444, 120 S. being performed, it was never de- W. 1049; Plummer v. Use, 41 Wash, livered to the obligee. See also Ex- 5, 82 Pac. 1009, 2 L. R. A. (N. S.) ton v. Scott, 6 Sim. 31; Glenden- 627, 111 Am. St. 997. ning v. Johnston, 33 Wis. 347. "Bodwell V. Webster, 13 Pick. "Glendenning v. Johnston, 33 (Mass.) 411. The case of Carey v. Wis. 347. See also Leggett v. Ed- Rawson, 8 Mass. 159, in apparent wards, Hopk. Ch. (N. Y.) 530; conflict with the above, is explained Henley v. Hotaling, 41 Cal. 22. on the ground that the deed in that " Plummer v. Use, 41 Wash. 5, 82 case was not considered as an es- Pac. 1009, 2 L. R. A. (N.S.) 627, crow, but as a deed taking effect 111 Am. St. 997. presently, without the performance " A trifling discrepancy between of the conditions; but in Bodwell the description contained in the 313 WHEN A MOETGAGE IN LAW § 247a show that the transaction is a security for a debt, the instruments do not, as a matter of law, constitute a mortgage, though they may be proved to be such by extrinsic evidence.'* Instructive cases involving this distinction have been decided by the Supreme Court of the United States. In Teale v. Walker'' the defea- sance showed upon its face that the absolute deed was intended to se- cure a note given by the grantor for money borrowed of the grantee. These instruments, executed at the same time, disclosed a debt and an absolute deed as security, and were accordingly held to constitute by themselves a mortgage. In Wallace v. Johnstone*" no debt was disclosed upon the face of the papers, and no fact showing whether the deed was intended as a security or not. Mr. Justice Lamar, delivering the opinion of the court, said: "If this question could be determined by an inspection of the written papers alone, the transaction was clearly not a mortgage, but an absolute sale and deed, accompanied by an independent contract be- tween the vendee and a third person, not a party to the sale, to convey the lands to him upon his payment of a fixed sum within a certain time. Upon their face there are none of the indicia by which courts are led to construe such instruments to be intended as a mortgage or security for a loan ; nothing from which there can be inferred the ex- istence of a debt, or the relation of borrower and lender between the parties to the deeds, or between the parties to the contract. * * * ^ deed of lands absolute in form, with general warranty of title, and an agreement by the vendee to reconvey the property to the vendor or a third person upon his payment of a fixed sum within a specified time, do not of themselves constitute a mortgage, nor will they be held to ■operate as a mortgage, unless it is clearly shown, either by parol evi- dence or by the attendant circumstances, such as the condition and re- lation of the parties, or gross inadequacy of price, to have been in- tended by the parties as a security for a loan or an existing debt." In a later case upon this point* ^ the grantor conveyed land by an absolute deed, and the grantee executed a contemporaneous agreement to reconvey upon the payment of a specified sum of money on a given deed and defeasance is immaterial. 58, 32 L. ed. 619, 9 Sup. Ct. 243. See Brown v. Holyoke, 53 Maine 9; also Carroll v. Tomlinson, 192 111. Turner v. Cochran, 30 Tex. Civ. 398, 61 N. B. 484. App. 549, 70 S. W. 1024. "Bogk v. Gassert, 149 U. S. 17, ™ See ante § 244. 37 L. ed. 631, 13 Sup. Ct. 738, affg. ™Teal V. Walker, 111 U. S. 242, Gassert v. Bogk, 7 Mont. 585, 19 Pac. 28 L. ed. 415, 4 Sup. Ct. 420. 281. See post § 304a. '"Wallace v. Johnstone, 129 U. S. § 248 ABSOLUTE DEED AND RECONVEYANCE 314 date. Two days thereafter the grantor accepted a lease of the same land from the grantee, upon the expiration of which the latter brought an action for the restitution of the premises. It was held that the in- struments did not, as a matter of law, constitute a mortgage, but their effect was a question for the jury, upon all the evidence in the case. In delivering the opinion of the court, Mr. Justice Brown said : "In the case under consideration there is no mention made, in either of the three instruments, of a debt, a loan, a note, or anything from which the relation of borrower and lender can be inferred; and the case in this particular is distinguishable from that of Teale v. Walker, and is more nearly analogous to that of Wallace v. Johnstone. * * * The inadequacy of price was undoubtedly great, but this would not of itself authorize the coiirt to take the question from the jury. * * * rphe case was evidently a proper one to go to the jury, who were left to de- termine the question whether the instruments were intended as a mort- gage, and were instructed that, if they found them to be such, the plaintiffs could not recover." § 248. Parol evidence to connect the deed and defeasance. — Parol evidence is admissible to connect the deed and defeasance to show that they are parts of the same transaction, and that together they were intended to constitute a mortgage.*^ Thus an instrument bearing a date subsequent to the deed may be shown by parol to have been exe- cuted at the same time, or orally agreed upon at the same time and subsequently reduced to writing.'^ If the instruments themselves show their connection, and that the purpose of the transaction was to secure a debt, no parol proof is necessary.^* Such proof is introduced, not to contradict or vary the writings, but to show that they are really one «^Gay V. Hamilton, 33 Cal. 686; ^^ First Nat. Bank v. Ashmead, 23 First Nat. Bank v. Ashmead, 23 Fla. 379, 2 So. 657; Nlcolls v. Mc- Fla. 379, 2 So. 657; Franklin v. Donald, 101 Pa. St. 514; Umben- Ayer, 22 Fla. 654; Preschbaker v. hower v. Miller, 101 Pa. St. 71. Feaman, 32 111. 475; Tillson v. Moul- ** First Nat. Bank v. Ashmead, 23 ton, 23 111. 648; Brown v. Holyoke, Fla. 379, 2 So. 657. The deed and 53 Maine 9; Smith v. Hoff, 23 N. defeasance may be connected by Dak. 37, 135 N. W. 772, Ann. Cas. similar descriptions, though such 1914 C, 1042; Haines v. Thomson, descriptions are not identical. Tur- 70 Pa. St. 434; Reltenbaugh v. Lud- ner v. Cochran, 30 Tex. Civ. App. wick, 31 Pa. St. 131; Kelly v. 549, 70 S. W. 1024. A written agree- Thompson, 7 Watts (Pa.) 401; Tur- ment referring to a deed contempo- ner v. Cochran, 30 Tex. Civ. App. raneously executed will be con- 549, 70 S. W. 1024; Beebe v. Wis- strued with the deed as one instru- consin Mortgage Loan Co., 117 Wis. Ment. Smith v. Smith, 153 Ala. 328, 93 N. W. 1103. See also Black- 504, 45 So. 168. stock V. Robertson, 42 Colo. 472, 94 Pac. 336. 315 WHEN A MORTGAGE IN LAW § 249 arrangement, and were agreed upon at the same time.'^ It is also ad- missible to show that the defeasance has been lost or destroyed by fraud or mistake.*'^ The legal effect of the deed and bond to reeonvey, when the instru- ments are not ambiguous, is a matter of law for the court.*'' When the conveyance and the agreement to reeonvey on payment of the purchase-money are on their face of even date, and disclose a debt secured, the transaction is necessarily a mortgage, and parol evi- dence of a different understanding by the parties will not be received to convert it into a conditional sale.*^ When the two instruments are of different dates, such evidence is admissible. If the agreement recite that the deed was delivered on the same day with the agreement, al- though the dates are different, prima facie the transaction is a mort- gage ; but evidence is admissible to account for the discrepancy between the dates and the execution of the paper ; and such evidence may show that the deed was executed upon a sale, and not as security.*" Where the deed and agreement to reeonvey are not executed at the same time, the determination of the question whether they constitute a mortgage or not depends entirely upon the intention of the parties as ascertained from the circumstances."" When the agreement to reeonvey is executed subsequently to the deed the question whether the transaction is a mortgage or a sale is one of fact for the jury."^ If it be acknowledged or proved that it was in the beginning a sale, the burden of proof is upon the grantor to establish a change in its character."^ i§ 249. Illegal condition in defeasance. — If the defeasance ex- presses a condition that is illegal, or contrary to public policy, as where the grantee stipulates that, if he should not procure two witnesses to testify to a certain state of facts, the deed should be null and void, the »» Umbenhower v. Miller, 101 Pa. «» Haines v. Thompson, 70 Pa. St. St. 71; Wilson v. Shoenberger, 31 434. See also Baisch. v. Oakeley, Pa, St. 295; Reitenbaugh v. Lud- 68 Pa. St. 92; Gubbings v. Harper, wick, 31 Pa. St. 131. 7 Pbila. (Pa.) 276. «» Marks v. Pell, 1 Johns. Ch. (N. »° Haines v. Thomson, 70 Pa. St. Y.) 594. 434; Baisch v. Oakeley, 68 Pa. St. »' Keith V. Catchings, 64 Ga. 773 92; Wilson v. Shoenberger, 31 Pa. "Voss V. Eller, 109 Ind. 260, 10 St. 295; Kelly v. Thompson, 7 N. E. 74; Proctor v. Cole, 66 Ind. Watts (Pa.) 401; Kerr v. Gilmore. 576; Gassert v. Bogk, 7 Mont. 585, 6 Watts (Pa.) 405. 19 Pac. 281; Kerr v. Gilmore, 6 "'Wilson v. Shoenberger, 31 Pa. Watts (Pa.) 405; Brown v. Nickle, St. 295. 6 Pa. St. 390. In the latter case it "'^ Haines T. Thomson, 70 Pa. St. was remarked that Kerr v. Gilmore 434. "pushed the doctrine to its utmost Terge." See ante § 244. § 350 ABSOLUTE DEED AND RECONVEYANCE 316 transaction will not be lield to constitute a mortgage, because, the legal estate having once vested in the grantee, it can not be divested by his failure to perform the illegal stipulation, but the deed to him becomes and remains absolute.'^ If the condition of defeasance be that the mortgagee shall not oppose his debtor's discharge in insolvency the mortgage is void as against public policy.®* A mortgage given in composition of a felony, or upon a promise not to prosecute a crime, or a mortgage executed to procure a nolle prosequi to an indictment pending against the mortgagor, is likewise against public policy and void.°^ Equity will not permit foreclosure of such mortgages.®^ But a mortgage given by an employe for part of a sum embezzled by him, is valid and enforcible where it was not obtained as a consideration for his release from the charge of embezzlement.'^ A mortgage or an absolute deed in the nature of a mortgage given to se- cure performance of a gambling contract,"* the illegal maintenance of a saloon,"" or the enforcement of a champertous agreement,^ is void. A mortgagor may, however, be permitted to redeem, although the mort- gage was given to secure notes founded on a consideration which was illegal or against public policy.^ § 250. The necessary incident of redemption. — ^When it is once established that the separate instrument is a defeasance, the convey- « Patterson v. Donner, 48 Cal. 605, 17 N. Y. St. 344, 2 N. Y. S. 77; 369. See post §§ 618-622. Herbst v. Manss, 8 Ohio Dec. 215, "Benicia Agricultural Works v. 6 Wkly. L. Bui. 336. See also Wil- Estes, 98 Cal. XVII, 32 Pac. 938; liams v. Bnglebrecht, 34 Ohio St. Estudillo V. Meyerstein, 72 Cal. 317, 383. 13 Pac. 869; Bell v. Leggett, 7 N. »'Hunt v. Hunt (Ore.), 134 Pac. Y. 176; Rice v. Maxwell, 13 Sm. & 1180. See also Birmingham Lot Co. M. (Pa.) 289, 53 Am. Dec. 85. v. Taylor (Ala.), 62 So. 521; ''^ Johnson v. Graham Bros. Co., Schrommer v. Farwell, 56 111. 542; 98 Ark. 274, 135 S. W. 853; Small Maddox v. Rowe, 154 Ky. 417, 157 V. Williams, 87 Ga. 681, 13 S. E. S. W. 714; Loud v. Hamilton 589; Crowder v. Reed, 80 Ind. 1 (Tenn.), 51 S. W. 140, 45 L. R. A. (agreement to procure nolle prose- (N. S.) 400. qui); Wildey v. Collier, 7 Md. 273, "'Chicago International Bank v. 61 Am. Dec. 346 (agreement to pro- Vankirk, 39 111. App. 23; Luetch- cure nolle prosequi); Atwood v. ford v. Lord, 132 N. Y. 465, 30 N. Pisk, 101 Mass. 363, 100 Am. Dec. E. 859; Krake v. Alexander, 86 Va. 124; Pearce v. Wilson, 111 Pa. St. 206, 9 S. E. 991; Barnard v. Back- 14, 2 Atl. 99, 56 Am. Rep. 243; hous, 52 Wis. 693, 6 N. W. 252, 9 Pierce v. Kibbee, 51 Vt. 559 (re- N. W. 595. newal of such a mortgage, void); ""Dierkes v. Wldeman, 143 Mich. Collins V. Blantern, 2 Wils. 341. 181, 106 N. W. 735. »= Small V. Williams, 87 Ga. 681, ^Gilbert v. Holmes, 64 111. 548. 13 S. B. 589; Bane v. Detrick, 52 ^Thompson v. Lindsay, 243 Mo. 111. 19; Owens v. Green. 103 Ky. 53, 145 S. W. 472; Cowles v. Raquet, 342, 20 Ky. L. 44, 45 S. W. 84; Max- 14 Ohio 38. field V. Hoecker, 49 Hun (N. Y.) sir WHEN A MORTGAGE IN LAW 250 ance assumes the character of a mortgage with the inseparable inci- dent of redemption, which no agreement of the parties, that the estate shall be absolute if the money be not paid at the day fixed, can waive.^ The courts will give no effect to such an agreement; for the parties can not thus avoid the necessity of a foreclosure, or restrict or defeat the debtor's right of redemption.* The intent of the parties contrary to the rules of law avails nothing. The right of redemption, therefore, can not be affected by receipts and accounts given by the grantor to the grantee, mentioning the deed as an absolute conveyance.^ Although it may have been the actual purpose and intention of the parties in making and accepting a deed absolute in form instead of the usual form of a mortgage, to create a security which would cut off the right of redemption and save the expense of foreclosure, yet the courts hold that if it appears to have been intended as a mortgage, the right of re- demption can not be thus relinquished, the matter being beyond their control.* In all cases, a condition express or implied, that the deed shall be void if payment be made at the day, is in equity regarded as substan- tially performed by payment, and thereupon reconveyance may be en- forced. '^ ' Neikirk v. Boulder Nat. Bank, 53 Colo. 350, 127 Pac. 137 (citing text) ; Jackson v. Lynch, 129 111. 72, 22 N. E. 246; Mooney v. Byrne, 163 N. Y. 86, 57 N. E. 163; Kelton v. Brown (Tenn.), 39 S. W. 541. "Hodgkins v. Wright, 127 Cal. 688, 60 Pac. 431; Jackson v. Lynch, 129 111. 72, 21 N. E. 580, 22 N. E. 246; Bearss v. Ford, 108 111. 16; Barlow v. Cooper, 109 111. App. 375; Johnson v. Prosperity Loan &c. Assn., 94 111. App. 260; Reilly v. Cullen, 159 Mo. 322, 60 S. W. 126; First Nat. Bank v. Sargeant, 65 Nebr. 594, 91 N. W. 595, 59 L. R. A. 296; Fahay v. State Bank, 1 Nebr. (Unoff.), 89, 95 N. W. 505; Van Wagner v. Van Wag- ner, 7 N. J. Eq. 27; Youle v. Rich- ards, 1 N. J. Eq. 534, 23 Am. Dec. 722; Anonymous, 3 N. Car. 26; Halo V. Schick, 57 Pa. St. 319; Johnston v. Gray, 16 Serg. & R. (Pa.) 361, 16 Am. Dec. 577; Ehert v. Chapman, 8 Baxt. (Tenn.) 27; Jefferies v. Hartel (Tex. Civ. App.), 51 S. W. 653. But see Lues- enhop V. Einsfeld, 93 App. Div. 68, 87 N. Y. S. 268. "Bayley v. Bailey, 5 Gray (Mass.) 505. "Johnson v. Prosperity Loan &c. Assn., 94 111. App. 260. 'Anthony v. Anthony, 23 Ark. 479; Sherrer v. Harris (Ark.), 13 S. W. 730; Lindsay v. Matthews, 17 Fla. 575; Endel v. Walls, 16 Fla. 786; Clark v. Lyon, 46 Ga. 202; Clark V. Finlon, 90 111. 245; Hunter v. Hatch, 45 111. 178; Ewart v. Wall- ing, 42 111. 453; Relgard v. McNeil, 38 111. 400; Tillson v. Moulton, 23 111. 648; Church v. Cole, 36 Ind. 34; Thompson v. People's Bldg. Co., 114 Iowa 481, 87 N. W. 438; Brush v. Peterson, 54 Iowa 243, 6 N. W. 287; Scott T. Mewhirter, 49 Iowa 487; Wilson T. Patrick, 34 Iowa 362; HoUiday v. Arthur, 25 Iowa 19; Richardson v. Barrick, 16 Iowa 407; Moore v. Wade, 8 Kans. 380; Howe V. Russell, 36 Maine 115; Baugher V. Merryman, 32 Md. 185; Mclntier r. Shaw, 6 Allen (Mass.) 83; Steel V. Steel, 4 Allen (Mass.) 417; Parks V. Hall, 2 Pick. (Mass.) 206; Phoe- nix v. Gardner, 13 Minn. 430; Vas- ser V. Vasser, 23 Miss. 378; Wilson T. Drumrite, 21 Mo. 325; Davis v. § 351 ABSOLUTE DEED AND RECONVEYANCE 318 Neither can the right of redemption be restricted to the mortgagor personally, as such a restriction is inconsistent with the nature of a mortgage and void.* A deed absolute in form, with an agreement under seal made by the grantee at the same time, promising to reconvey within a speci- fied time upon repayment of the sum paid for the deed, with interest, constitutes a mortgage, although it is stipulated that, if the grantor fails to repay the sum within the time specified, the agreement shall be void and the deed absolute, "with no right of redemption." This latter provision is, in fact, quite decisive of the understanding of the parties that the transaction was a conveyance of the estate, defeasible upon the payment of money.^ The right to redeem and the right to foreclose are reciprocal. The mortgagee may demand pa3rment, and may foreclose the mortgage whenever the mortgagor has the right to redeem.^" § 251. Right of redemption indefeasible. — The mortgagor is not allowed to renounce beforehand his privilege of redemption. Generally, every one may renounce any privilege or surrender any right he has; but an exception is made in favor of debtors who have mortgaged their property, for the reason that their necessities often drive them to make ruinous concessions in order to raise money. When one borrows money Clay, 2 Mo. 161; Bingham v. Gan v. Marshall, 7 Humph. (Tenn.) Thompson, 4 Nev. 224; Somers- 121; Bennett v. Union Bank, 5 worth Savings Bank v. Roberts, 38 Humph. (Tenn.) 612; Wright v. N. H. 22; Judge v. Reese, 24 N. J. Bates, 13 Vt. 341; Mott v. Harring- Eq. 387; Sweet v. Parker, 22 N. J. ton, 12 Vt. 199; Yates v. Yates, 21 Eq. 453; De Camp v. Crane, 19 N. Wis. 473; Rogan v. Walker, 1 Wis. J. Eq. 166; Vanderhaise v. Hugues, 527. 13 N. J. Eq. 244; Mooney v. Byrne, 'Johnston v. Gray, 16 Serg. & R. 163 N. Y. 86, 57 N. B. 163; Miller (Pa.) 361, 16 Am. Deo. 577. See V. McGuckin, 15 Abb. N. Cas. (N. also McClurkan v. Thompson, 69 Y.) 204; Simon V. Schmidt, 41 Hun Pa. St. 305; Martin v. Allen, 67 (N. Y.) 318; Poston v. Jones, 122 Kans. 758, 74 Pac. 249 (time for re- N. Car. 536, 29 S. E. 951; Cotterell demption limited to three years— V. Long, 20 Ohio 464; Miami Ex- construed as sale with right to re- porting Co. V. Bank of U. S., Wright purchase). (Ohio) 249; In re Danzeisen's Ap- "Murphy v. Galley, 1 Allen peal, 73 Pa. St. 65; In re Sweetser's (Mass.) 107, and cases cited; Appeal, 71 Pa. St. 264; Odenbaugh Mooney v. Byrne, 163 N. Y. 86, 57 V. Bradford, 67 Pa. St. 96; In re N. E. 163. See also Sheffield v. Harper's Appeal, 64 Pa. St. 315; Day, 28 Ky. L. 754, 90 S. W. 545. Halo V. Schick, 57 Pa. St. 319; "Taylor v. McClain, 60 Cal. 651; Nichols V. Reynolds, 1 R. I. 30, 36 Sheppard v. Wagner, 240 Mo. 409, Am. Dec. 238; Hinson v. Partee, 11 144 S. W. 394 (time for redemption Humph. (Tenn.) 587; Webb v. Pat- limited to three years — construed terson, 7 Humph. (Tenn.) 431; Mc- as mortgage). 319 WHEN A MOETGAGE IN" LAW 351 upon the security of his property, he is not allowed by any form of words to preclude himself from redeeming.^^ A stipulation, that unless the debt is paid within a certain time the deed shall be absolute, will not be given that effect, because the very terms of the agreement show that the instrument is a mortgage, and such agreement of the parties in the mortgage itself or otherwise, made at the time, is without effect.^^ The transaction, being in reality a mortgage, remains a mortgage until the time of redemption is barred by some of the modes acknowledged by law, the agreement of the par- ties not being one of such modes. ^^ The grantor can not agree that upon default his mortgage shall become an absolute conveyance. A subsequent agreement that the equity of redemption should be extin- guished, or that what was originally a mortgage shall be regarded as "Peugh V. Davis, 96 TJ. S. 332, 24 L. ed. 775; Nelson v. Kelly, 91 Ala. 569, 8 So. 690; McMillan v. Jewett, 85 Ala. 476, 5 So. 145; Stoutz V. Rouse, 84 Ala. 309, 4 So. 170; Fields v. Helms, 82 Ala. 449, 3 So. ia6j Parmer v. Parmer, 74 Ala. 285; Robinson v. Farrelly, 16 Ala. 472; Quartermous v. Kennedy, 29 Ark. 544; Green v. Butler, 26 Cal. 595; Pierce v. Robinson, 13 Cal. 116; Pritcbard v. Elton, 38 Conn. 434; Horton v. Murden, 117 Ga. 72, 43 S. B. 786; Jackson v. Lyncb, 129 111. 72, 21 N. E. 580, 22 N. E. 246; Bearss v. Ford, 108 111. 16; Clark v. Finlon, 90 111. 245 Tennery v. Nicbolson, 87 111. 464 Willets V. Burgess, 34 111. 494 Wynkoop v. Cowing, 21 111. 570 Turpie v. Lowe, 114 Ind. 37, 15 N. W. 834; Brusb v. Peterson, 54 Iowa 243, 6 N. W. 287; Reed v. Reed, 75 Maine 264; Baxter v. Child, 39 Maine 110, Bayley v. Bailey, 5 Gray (Mass.) 505; Union Trust Co. V. Charlotte Gen. Elec. Co., 152 Mich. 568, 116 N. W. 379; Batty v. Snook, 5 Mich. 231; Sheppard v. Wagner, 240 Mo. 409, 144 S. W. 394; Griffin v. Cooper, 73 N. J. Bq. 465, 68 Atl. 1095; Clark v. Condit, 18 N. J. Eq. 358; Vanderhaize v. Hugues, 13 N. J. Eq. 244; Youle v. Richards, 1 N. J. Eq. 534, 23 Am. Dec. 722; Clark v. Henry, 3 Cow. (N. Y.) 324; Remsen v. Hay, 2 Edw. Ch. (N. Y.) 535; Simon v. Schmidt, 41 Hun (N. Y.) 318; Henry v. Clark, 7 Johns. Ch. (N. Y.) 40; "Wilson v. Fisher, 148 N. Car. 535, 62 S. E. 622; Gillis v. Mar- tin, 17 N. Car. 470, 25 Am. Dec. 729; Stover V. Bounds, 1 Ohio St. 107; Worley v. Carter, 30 Okla. 642, 121 Pac. 669 (quoting text) ; Rankin v. Mortimere, 7 "Watts (Pa.) 372; Johnston v. Gray, 16 Serg. & R. (Pa.) 361, 16 Am. Dec. 577; Cherry V. Bowen, 4 Sneed (Tenn.) 415; "Wing r. Cooper, 37 Vt. 169; Baxter V. "Willey, 9 Vt. 276, 31 Am. Dec. 623; Plummer v. Use, 41 "Wash. 5, 82 Pac. 1009, 2 L. R. A. (N. S.) 627, 111 Am. St. 997; Broad v. Self, 9 Jur. (N. S.) 885. See post § 1045. i^Halbert v. Turner, 233 111. 531, 84 N. E. 704; Jones v. Gillett, 142 Iowa 506, 118 N. W. 314; First Nat. Bank v. Sargent, 65 Nebr. 594, 91 N. "W. 595, 59 L. R. A. 296; Riley V. Starr, 48 Nebr. 243, 67 N. W. 187; State Bank v. Mathews, 45 Nebr. 659, 63 N. "W. 930, 50 Am. St. 565; Nelson v. Atkinson, 37 Nebr. 577, 56 N. W. 313; Tower v. Fetz, 26 Nebr. 706, 42 N. "W. 884, 18 Am. St. 795; Fahay v. State Bank, 1 Nebr. (Unoff.) 89, 95 N. "W. 505; Macauley v. Smith, 132 N. Y. 524, 30 N. E. 997; Conover v. Palmer Co., 60 Misc. 241, 111 N. Y. S. 1074; Farrow v. Work, 39 Okla. 734, 136 Pac. 739; Worley v. Carter, 30 Okla. 642, 121 Pac. 669. "Halbert v. Turner, 233 111. 531, 84 N. E. 704; Grover v. Hawthorne, 62 Ore. 77, 121 Pac. 808 (equity of redemption extinguished only by regular foreclosure). § 253 ABSOLUTE DEED AND RECONVEYANCE 320 an absolute conveyance, is open to the same objection, and will not be sustained unless fairly made upon a new consideration, and no undue advantage is taken by the creditor.^* The burden is therefore upon the creditor to show that the right of redemption was given up deliber- ately and for an adequate consideration.^^ Though a mortgagor may sell all his interest to the mortgagee, for an additional consideration, where the transaction is without fraud or undue influence, to insist on what was really a mortgage as a sale is a fraud in equity.^" Where a mortgagee purchases the mortgaged prem- ises, and the evidence shows fraud and undue influence, and the trans- action is unfair, and an unconscionable advantage has been taken against the mortgagor, equity will declare a deed absolute on its face to be a mortgage.^' Generally, when the consideration of the convey- ance was an existing debt, a provision that, if the amount required for a repurchase be not paid at the time specified, the agreement for re- purchase shall be null and void, or that there shall be no redemption afterward, is looked upon as a device to deprive the debtor of his right of redemption, and is therefore disregarded.^* § 252. Cancelation of defeasance — Conversion of mortgage into absolute sale. — An absolute conveyance originally intended as se- curity, and constituting a mortgage in equity, may afterward be con- verted' into an unconditional transfer and absolute sale, by release of the debtor's equity of redemption; but its effect can only be changed "Mills v. Mills, 26 Conn. 213; such. Lynch v. Ryan, 132 "Wis. 271, Hutchinson v. Page, 246 111. 71, 92 111 N. W. 707. N. E. 571; Cassem v. Heustis, 201 "Villa v. Rodriguez, 12 Wall. (U. 111. 208, 66 N. E. 283, 94 Am. St. S.) 323, 20 L. ed. 406; Locke v. Pal- 160; Scholl V. Hopper, 134 Ky. 83, mer, 26 Ala. 312; Bearss v. Ford, 119 S. W. 770; Sears v. Gilman, 199 108 111. 16; Brown v. GafiEney, 28 Mass. 384, 85 N. E. 466; Henry v. 111. 149; Baugher v. Merryman, 32 Davis, 7 Johns. Ch. (N. Y.) 40; Md. 185; Shaw v. Walbridge, 33 Miller V. Smith, 20 N. Dak. 96, 126 Ohio St. 1. A deed made to replace N. W. 499; Ullman v. Devereux, 46 a lost deed which was in fact a Tex. Civ. App. 459, 102 S. W. 1163; mortgage, was also a mortgage, Wright V. Bates, 13 Vt. 341. See though the grantee in the deed also Stratton v. Rotrock, 84 Kans. paid an additional sum to procure 198, 114 Pac. 224 (requirement of execution of the duplicate deed, a subsequent, superceding con- Borders v. Allen, 33 Ky. L. 194, 110 tract) ; Miller v. Smith, 20 N. Dak. S. W. 240. 96, 126 N. W. 499 (intention to "Cassem v. Heustis, 201 111. 208, change mortgage into conditional 66 N. E. 283, 94 Am. St. 160; Wagg sale with option to repurchase), v. Herbert, 19 Okla. 525, 92 Pac. A deed absolute on its face purport- 250. ing to convey the equity of redemp- "Wagg v. Herbert, 19 Okla. 525, tion to the mortgagee, if intended 92 Pac. 250. as a mortgage, will be treated as "Enos v. Sutherland, 11 Mich. 538; Batty v. Snook, 5 Mich. 231. 321 WHEN A MORTGAGE IN LAW § 253 by a new contract, founded upon adequate consideration, both fair and reasonable in its terms and free from fraud and undue influence.^' And so a deed of defeasance, made at the same time with an absolute deed, may afterward, upon suflScient consideration, be canceled, so as to give an absolute title to the mortgagee, if no rights of third parties have intervened i^o but no agreement can be made at the time of cre- ating the mortgage that will entitle the mortgagee, at his election, to hold the estate free from condition, and not subject to redemption.^^ Thus, if it be agreed that the grantee, whenever he shall be compelled to pay certain liabilities, against which the deed was given as security, may then take immediate possession of the estate, according to certain estimated values, to such an extent as shall be equal to the debt or liability so paid by him, this stipulation does not change the nature of the transaction, which must still be treated as a mortgage.^^ An agree- ment extinguishing the equity of redemption must be fair.^^ If the bond of defeasance, which was given at the time of taking the deed, be surrendered and destroyed at the expiration of the time lim- ited, and a new bond be given upon a consideration partly new, by which the grantee agrees to reconvey the premises upon payment, within an additional time, of a larger sum, the grantor thereby sur- renders his title as mortgagor, and the grantee becomes the owner in ■ fee of the land.^* If the original bond be given up and a new bond to '"McMillan v. Jewett, 85 Ala. 476, 105 Iowa 395, 75 N. "W. 321; Sears 5 So. 145; Cramer v. Wilson, 202 v. Oilman, 199 Mass. 384, 85 N. E. 111. 83, 66 N. E. 869; Cassem v. 466; Falls v. Conway Mut. Fire Ins. Heustis, 201 111. 208, 66 N. E. 283, Co., 7 Allen (Mass.) 46; Waters v. 94 Am. St. 160; Carpenter v. Car- Randall, 6 Mete. (Mass.) 479; Trull penter, 70 111. 457; LeComte v. Pen- v. Skinner, 17 Pick. (Mass.) 213; nock, 61 Kans. 330, 59 Pac. 641; Youle v. Richards, 1 N. J. Eq. 534, Dougherty v. MoColgan, 6 Gill & J. 23 Am. Dec. 722; Seawell v. Hen- (Md.) 275; Fahay v. O'Neill State dricks, 4 Okla. 435, 46 Pac. 557. See Bank, 1 Nebr. (Unoff.) 89, 95 N. W. also Stetson v. Gulliver, 2 Cush. 505 (notwithstanding express agree- (Mass.) 494; Clark v. Finlon, 90 ment); Shaw v. Walbridge, 33 Ohio 111. 245 (substitution of new de- St. 1; Wilson v. Giddings, 28 Ohio' feasance). St. 554; Wagg v. Herbert, 19 Okla. ^^ Harrison v. Phillips Academy, 525, 92 Pac. 250; Sadler v. Taylor, 12 Mass. 456; Trull v. Skinner, 17 49 W. Va. 104, 38 S. E. 583; Hursey Pick. (Mass.) 213. V. Hursey, 56 W. Va. 148, 49 S. E. =^ Waters v. Randall, 6 Mete. 367 (without new consideration). (Mass.) 479. Conversion of the mortgage into an ^ Miller v. Smith, 20 N. Dak. 96, absolute sale, if fair may be accom- 126 N. W. 499. See ante § 251. plished by a mere parol agree- "Carpenter v. Carpenter, 70 111. ment. McMillan v. Jewett, 85 Ala. 457; MaxHeld v. Patchen, 29 111. 39; 476, 5 So. 145 ; Shaw v. Walbridge, Falls v. Conway Mut. Fire Ins. Co., 33 Ohio St. 1. See post § 338. 7 Allen (Mass.) 46; Rice v. Rice, 4 ■" Cramer v. Wilson, 202 111. 83, Pick. (Mass.) 349. 66 N. E. 869; Haggerty v. Brower, 21— Jones Mtg.— Vol. I. § 353 ABSOLUTE DEED AND EECONVEYANCE 323 a third person be executed in place of it, the transaction loses it char- acter of a mortgage. A subsequent cancelation of the evidence of in- debtedness, with a parol agreement that the deed, originally intended as a mortgage, shall convey the absolute title, will not convert the mort- gage into a deed.^^ Where the mortgage relation constituted by an absolute deed and a contemporaneous agreement is terminated by a release executed by the mortgagor to the mortgagee a further agreement by the latter giving the former a right to purchase the property within a time expressly limited and made material does not revive the mortgage relation. "Here the transaction was as evidenced by the second deed and agree- ment, that the mortgage relation was to cease; that the respondent was to become the absolute owner of the property by the voluntary transfer by the complainant of all his remaining right in the property, upon condition that he should have the further right to purchase it within a fixed time. This condition was not fulfilled by the complain- ant, and he has therefore no right, as mortgagee or otherwise to ask for a further time either to purchase or redeem."^^ When once the de- feasance has been delivered up for a valid consideration to be canceled, and the original transaction is thus confirmed as a sale, and is treated as such by the grantor, it can not afterward be treated as a mortgage and foreclosed.^'' But in states where a mortgage, whatever its form may be, creates merely a lien in the mortgagee while the legal title remains in the mortgagor, the surrender or cancelation of the defeasance is insufficient to restore the title to the mortgagee.^ ^ If the contract for reconvey- ance be surrendered upon the express agreement of the grantee to re- convey upon the grantor's paying a certain sum then found to be due, the surrender will not prevent the mortgagor's redeeming upon the terms agreed upon.^" § 253. Record of separate defeasance. — The recording of the de- feasance is not necessary in order to give it full effect as between the parties themselves,'" but only as against other persons ; and as against =" Keller v. Kirby, 34 Tex. Civ. == Brinkman v. Jones, 44 Wis. 498. App. 404, 79 S. W. 82. See post § =» Clark v. Finlon, 90 III. 245. 338. "Bailey v. Myrlck, 50 Maine 171; "•Tripler v. Campbell, 22 R. I. Jackson v. Ford, 40 Maine 381; 262, 47 Atl. 385; per Stiness, C. J., Harrison v. Morton, 87 Md. 671, 40 citing Wilson v. Giddings, 28 Ohio Atl. 897; Owens v. Miller, 29 Md. St. 554; Falis v. Conway Mut. F. 144; Short v. Caldwell, 155 Mass. Ins. Co., 7 Allen (Mass.) 46. 57, 28 N. E. 1124; Bryan v. Insur- "Shubert v. Stanley, 52 Ind. 46. ance Co., 145 Mass. 389, 14 N. E. 323 WHEN A MORTGAGE IN LAW § 253 them it is not necessary when the conveyance on its face does not pur- port to be absolute.^^ Under some statutes no benefit is derived from recording an absolute deed intended as a mortgage, unless the defea- sance is recorded therewith.^ ^ The same rule is established by judicial decision in Pennsylvania f^ and under the Pennsylvania statute a deed will not be construed as a mortgage unless the defeasance or other writing explaining its character is recorded.^* In several states it is provided by statute that a bond of defeasance shall not defeat an absolute estate against any one other than the maker, his heirs, devisees, or persons having actual notice thereof, un- less it be recorded.^^ If the bond be not recorded, a person having no knowledge of it may, of course, purchase the property, or attach it as belonging absolutely to the grantee ; but if he has actual notice of the bond as constituting a part of the transaction of the conveyance, any right he acquires in the property is subject to the mortgage created by the bond.^* If the defeasance recorded be an instrument not entitled to be recorded, as, for instance, when it has not been acknowledged, the record of it is not constructive notice, and a purchaser from the grantee without notice of the defeasance will acquire a good title not- withstanding such recorded defeasance.^^ Under such statutes it is held that a separate defeasance not recorded can not be introduced in 454; Moors v. Albro, 129 Mass. 9; 213 Pa. St. 105, 62 Atl. 566; Lolirer Bay ley v. Bailey, 5 Gray (Mass.) v. Russell, 207 Pa. 105, 56 Atl. 333; 505; Marston v. Williams, 45 Minn. In re Rockhill's Estate, 29 Pa. 116, 47 N. W. 644, 22 Am. St. 719; Super. Ct. 28; Friedley v. Hamilton, Butman v. James, 34 Minn. 547, 27 17 Serg. & R. (Pa.) 70, 17 Am. Dec. N. W. 66. See also Smith v. Men- 638. mouth. Mutual Ins. Co., 50 Maine '= Such statutes exist in Alabama, 96; Stetson v. Gulliver, 2 Cush. Alaska, California, Delaware, Indi- (Mass.) 494. See post § 513. ana, Kansas, Maine, Massachusetts, "'Russell V. Waite, Walk. Ch. Michigan, Minnesota, North Dako- (Mich.) 31. ta, Oregon, Pennsylvania, Rhode '' There are such statutes in Island, Wisconsin and Wyoming. Maryland, Nebraska, New Hamp- See post § 513 note, shire. New Jersey, New York, North ="= Purrington v. Pierce, 38 Maine Dakota and South Dakota. See 447; Tufts v. Tapley, 129 Mass. 380; post § 513 note. Newhall v. Burt, 7 Pick. (Mass.) ''Corpman v. Baccastow, 84 Pa. 157; Newhall v. Pierce, 5 Pick. St. 363; Calder v. Chapman, 52 Pa. (Mass.) 450; Butman v. James, 34 St. 359, 91 Am. Dec. 163; Edwards Minn. 547, 27 N. W. 66; Corpman v. V. Trumbull, 50 Pa. St. 509; Luch's Baccastow, 84 Pa. St. 363; Friedley Appeal, 44 Pa. St. 519; In re Hen- v. Hamilton, 17 Serg. & R. (Pa.) drickson's Appeal, 24 Pa. St. 363; 70, 17 Am. Dec. 638; Manufacturers' Jaques v. Weeks, 7 Watts (Pa.) &c. Bank v. Bank of Pennsylvania, 261. See also Clark v. Condit, 18 7 Watts & S. (Pa.) 335, 42 Am. Dec. N. J. Eq. 358; McAulay v. Porter, 240; Catlin v. Bennatt, 47 Tex. 165. 71 N. Y. 173; Gerken v. Sonnabend, See post § 513. 130 N. Y. S. 605. "' Cogan v. Cook, 22 Minn. 137. •"Safe Deposit &c. Co. v. Linton, § 253 ABSOLUTE DEED AND RECONVEYANCE 324 evidence to show that an absolute conveyance is a mortgage, for the court can not assume or know that it ever would be recorded ; but it will have that effect if recorded at any time before it is introduced in evidence.^^ JSTotiee of the existence of a bond of defeasance is not to be inferred from the fact alone that the grantor continues in possession after the deed given by him has been recorded.^" Under the general statute of Texas requiring all conveyances of land and mortgages to be recorded in order to afEect creditors and subsequent purchasers, a deed absolute in form, but given to secure a debt, may be shown to be an equitable mortgage, and the record is sufficient as against a creditor of the grantee who attached the land without notice that the convey- ance was not absolute.*" To constitute notice of a legal mortgage as distinguished from one that is equitable merely, a purchaser must have reason to believe that the conveyance and bond were executed and de- livered so as to form one transaction.'*^ There is a difference of opinion as to the meaning of the words "actual notice" in these statutes. On the one hand, a strict construc- tion is given them, making actual knowledge of the defeasance neces- sary to charge third persons with actual notice. Thus, for instance, actual notice is not to be implied from knowledge that the grantor has remained in open and visible possession after his conveyance of the land by absolute deed.*^ But on the other hand it is held that knowl- edge of such possession on the part of a subsequent purchaser is evi- dence to be considered upon the question of actual notice of the grant- or's rights. "Actual notice" is distinguished from mere "notice" by holding that no constructive knowledge can be imputed to the pur- chaser as a ground of notice; for example, actual, open, and visible occupation, whether known to the purchaser or not, would not impute actual notice to the purchaser of the rights of the occupant, but would be evidence of such notice if the occupation were known to the pur- chaser. The rule is stated to be, that notice must be held to be actual when the subsequent purchaser has actual knowledge of such facts as would put a prudent man upon inquiry, which, if prosecuted with or- '^ Smith V. Monmouth Mut. F. Ins. " Newhall v. Burt, 7 Pick. Co., 50 Maine 96; Tomlinson v. (Mass.) 157. Monmouth Mut. F. Ins. Co., 47 "Crassen v. Swoveland, 22 Ind. Maine 232. 427; Lamb v. Pierce, 113 Mass. 72; ''"Newhall v. Pierce, 5 Pick. White v. Foster, 102 Mass. 375; (Mass.) 450. Story's Eq. Jur. § 399. See post § "Long v. Fields, 31 Tex. Civ. 543. App. 241, 71 S. W. 774. 325 WHEN" A MORTGAGE IN" LAW § 254 dinary diligence, would lead to actual notice of the right or title in conflict with that which he is about to purchase.*' These provisions do not require that every conveyance of land ac- companied hy a conditional agreement shall be recorded as a mort- gage, but only ■when the agreement is analogous to that of the usual condition in a mortgage, as, for instance, an agreement providing that if certain acts are performed, the deed shall not operate, but shall be- come void.** § 254. Circumstances determining effect of record as notice. — Whether the record furnishes notice of the nature of the transaction depends upon attendant circumstances. Although the instruments may in fact constitute a mortgage as between the parties, yet, if they do not of themselves show that they are parts of one transaction, but were executed on different days, and each is complete in itself and inde- pendent of the other, the record of them is not notice to a subsequent purchaser that they constitute a mortgage. He is bound only by what appears of record, and he has a right to assume, from the record in such case, that there was an absolute sale merely, with a subsequent agreement for repurchase.*' It is usual, however, to make such refer- ence in the bond to the debt secured, or to the deed or conveyance, that it is apparent from the construction of these instruments alone that the transaction was a mortgage, and a purchaser is then bound accordingly.*^ A purchaser has notice when he has actual knowledge of such cir- cumstances as would put a prudent man upon inquiry, and by prose- cuting such inquiry, he may ascertain the actual right or title.*'' But knowledge of the open and visible possession by the grantor after his conveyance by absolute deed is not sufficient to imply actual notice.*'* In 1736 land was conveyed by an absolute deed, and the grantee, in 1742, conveyed the land by a deed in which it was recited that his grantee had purchased the grantor's right of redemption. This recital, " Brinkman v. Jones, 44 Wis. 498, Deschenes, 15 N. Dak. 100, 106 N. per Taylor, J. See also "Wilson v. W. 573. Miller, 16 Iowa. Ill; Porter v. « Hill v. Edwards, 11 Minn. 22. Sevey, 43 Maine 519. See post § "Wilson v. Miller, 16 Iowa 111 339; Maupin v. Emmons, 47 Mo. Porter v. Sevey, 43 Maine 519 304; Musgrove v. Bonser, 5 Ore. 313, Maupin v. Emmons, 47 Mo. 304 20 Am. Rep. 737. Musgrove v. Bonser, 5 Ore. 313, 20 "Macaulay v. Porter, 71 N. Y. Am. Rep. 737; Brinkman v. Jones, 173. 44 Wis. 498. «Weide v. GeM, 21 Minn. 449; « Crassen v. Swoveland, 22 Ind. Waters v. Crabtree, 105 N. Car. 394, 427; Lamb v. Pierce, 113 Mass. 72; 11 S. E. 240. See also Patnode v. White v. Foster, 102 Mass. 3(5. § 255 ABSOLUTE DEED AND RECONVEYANCE 326 however, was held to be no ground for presuming that the first deed was a mortgage.*^ Equity will not enforce an agreement to reconvey land on the payment of a certain sum, where the record thereof had been destroyed by fire, and the party relying on the agreement had neglected for twenty years to re-record it, particularly where the relief is sought against a bona fide purchaser, without notice, who has been in possession many years."*" § 255. Notice by possession.^^ — When the mortgage is effected by an absolute deed accompanied by a separate defeasance, possession and actual occupation by the mortgagor is sufficient to put a purchaser from the grantee upon inquiry, and to charge him with notice of the mortgagor's rights.^^ It is not to be presumed that a bona fide pur- chaser will buy land without ascertaining, or making an attempt to ascertain, the claims of the person in open possession."*^ Such open and exclusive possession is notice to all the world of any claim which he who is in possession has upon the land. It is not to be supposed that any man who wishes in good faith to purchase the land will do so without knowing what are the claims of a person who is in open possession. He is chargeable, therefore, with knowledge of such claims.^* But possession by a person other than the vendor is not sufficient to charge the purchaser with notice, if the vendor delivers possession to him on demand ; and such a purchaser for value from a person holding by a deed absolute on its face obtains a good title against the party seeking to redeem. "*" Nor is continuance in possession by the grantor after the recording of the deed made by him sufficient to impart notice of a bond for reconveyance.'^ A conveyance of the premises by the mortgagee to a third person amounts to an assignment of the mortgage only if the grantee has notice in any way of the defeasance.^' ""King V. Little, 1 Cush. (Mass.) "Pritchard v. Brown, 4 N. H. 397, 436. 17 Am. Dec. 431. See also Brown =» Waters v. Crabtree, 105 N. Car. v. Gaffney, 28 111. 149; New v. 394, 11 S. E. 240. Wheaton, 24 Minn. 406. "'See post §§ 586-601. « Pancake v. Cauffman, 114 Pa. == Daubenspeck v. Piatt, 22 Cal. St. 113, 7 Atl. 67. 330; Brighton v. Doyle, 64 Vt. 616, "Newhall v. Pierce, 5 Pick. 25 Atl. 694. (Mass.) 450. ■^ Daubenspeck v. Piatt, 22 Cal. »' Halsey v. Martin, 22 Cal. 645; 330; Pritchard v. Brown, 4 N. H. Berdell v. Berdell, 20 N. Y. Week. 397, 17 Am. Dec. 431. Dig. 81. 327 WHEN A CONDITIONAL SALE § 257 II. When They Constitute a Sale or Conditional Sale Section Section 256. Effect of construction — Relative 269. Continuing debt and promise to advantages to parties. pay. 257. Construction in equity. 270. Grantee's option to purchase. 258. Intention the criterion — At- 271. Grantee's option to resell. tending circumstances. 272. Absence of agreement to pay 259. Intention considered in Con- debt. way V. Alexander. 273. Interest — Payable in form of 260. Evidence of intention — Exist- rent. ence of the debt secured. 274. Continued possession of 261. Stipulations and recitals of in- grantor. tention. 275. Inadequacy of price. 262. Actual sale — Rights of parties. 276. Subsequent acts and admissions 263. Character of transaction fixed as evidence — Record. in inception. 277. Parol evidence — Questions for, 264. Intention to secure repayment jury. of money. 278. Circumstances evidencing In- 265. Existence of the debt. tention — Relation and capac- 266. Effect of absolute deed to.se- ity of parties — Payment of cure a loan. taxes. 267. Conveyance in satisfaction of 278a. Effect of minor circumstances. debt — Agreement to reconvey. 279. Presumptions of construction 268. Agreement to reconvey in de- in doubtful cases. fault of purchase-price — Ad- 279a. Trend of decisions, vances secured by deed or 280. Rule applied to assignments. bond to reconvey. 281. Mortgage distinguished from a trust. § 256. Effect of construction — Relative advantages to parties. — The advantage of considering the transaction a mortgage is not all on the side of the grantor ; and as between a mortgage and a conditional sale, the latter may be the more for his benefit. In this way he avoids the continuance, or the incurring, of a debt. If at the close of the time limited for reconveyance he is not in condition to perform the contract, or does not desire to, there is no obligation resting upon him to do so. It is his option to repurchase or not. But if the transaction be a mortgage in the beginning, it is always a mortgage. The grantor is not allowed to speculate upon the chances attending the transaction, and, upon finding that the property is worth the amount of the debt, to call a mortgage a conditional sale ; or, on the other hand, when he finds that the property has increased in value, and that there would be an advantage in redeeming, to call what was actually a conditional sale a mortgage. The character of the transaction is fixed at its incep- tion. § 257. Construction in equity. — Cases involving the distinction between mortgages and conditional sales are usually brought before § 258 ABSOLUTE DEED AND KECONVETANCE 338 courts of equity for adjudication.^ At law, as has already been no- ticed, an agreement for a reconveyance, to constitute a defeasance and make the transaction a mortgage, must be executed at the same time with the conveyance, and as a part of the same transaction, and must be under seal; while in equity any evidence, whether it be in writing or merely parol, which clearly shows that the conveyance was in fact intended only as a security, will make the transaction a mortgage ; and if there be a written agreement for reconveyance, it matters not how informal it may be, or when it was executed.^ It follows, therefore, that a court of equity will often pronounce that to be an equitable mortgage which at law would be considered a conditional sale. A court of equity is not concluded by the form of the transaction, whether this seems to indicate a mortgage or a conditional sale, but will have regard to the actual facts.^ "A court of law," says Judge Story,* "may be compelled, in many cases, to say that there is no mortgage, when a court of equity would not hesitate a moment in pronouncing that there is an equitable mortgage." But since the doctrine of treating a con- ditional sale as a mortgage is a creature of equity, it will not be ap- plied where injustice would result or the parties have unreasonably slept on their rights." § 258. Intention the criterion -^ Attending circnmstances. — Whether a conveyance be a mortgage or a conditional sale must be de- termined by a consideration of all the surroupding facts and circum- 'Smitli V. Smith, 153 Ala. 504, 45 362; Scott v. McFarland, 13 Mass. So. 168; Fort v. Colby (Iowa), 144 309; Taylor v. Weld, 5 Mass. 109; N. W. 393; Mason v. Fichner, 120 Bayley v. Bailey, 5 Gray (Mass.) Minn. 185, 139 N. W. 485; Duell v. 505; Pearce v. Wilson, 111 Pa. St. Leslie, 207 Mo. 658, 106 S. W. 489; 14, 2 Atl. 99, 56 Am. Rep. 243; Gutli- Jeffreys v. Charlton, 72 N. J. Eq. rie v. Kahle, 46 Pa. St. 331; In re 340, 65 Atl. 711; Williams v. Mc- Myers' Appeal, 42 Pa. St. 518; Wil- Manus, 90 S. Car. 490, 73 S. E. 1038; son v. Shoenberger, 31 Pa. St. 295; Yates V. Caswell (Tex. Civ. App.), Reitenbaugh v. Ludwick, 31 Pa. St. 126 S. W. 914; Musick v. O'Brien 131; Kelly v. Thompson, 7 Watts (Tex. Civ. App.), 102 S. W. 458. See (Pa.) 401; Rankin v. Mortimere, 7 post § 282. Watts (Pa.) 872; Kerr v. Gilmore, ^Flagg V. Mann, 2 Sumn. (U. S.) 6 Watts (Pa.) 405; Miskelly v. Pitts, 486; Pearson v. Seay, 38 Ala. 643; 9 Baxt. (Tenn.) 193; Austin v. Dow- Williams V. Chadwick, 74 Conn. 252, ner, 25 Vt. 558. A defeasance in the 50 Atl. 720; Mills v. Mills, 26 Conn, form of a pawn ticket, referring to 213; Sebree v. Thompson, 31 Ky. L. real estate conveyed as security for 1146, 104 S. W. 781; Dougherty v. a loan, is sufficient. Lee v. Wilkin- McColgan, 6 Gill & J. (Md.) 275; son (Miss.), 62 So. 275. See ante Taber v. Hamlin, 97 Mass. 489, 93 § 242. Am. Dec. 113. ■'Flagg v. Mann, 2 Sumn. (U. S.) 'McNamara v. Culver, 22 Kans. 486. 661. Form of defeasance immate- " Sheffield v. Hurst, 31 Ky. L. 890, rial: Adams v. Stevens, 49 Maine 104 S. W. 350. 339 WHEN A CONDITIONAL SALE 258 stances of the case," including the conduct and relation of the parties,'^ and their relative knowledge or ignorance of business.^ "A glance at the numerous adjudications in controversies of this kind will suffice to show that each case must be decided in view of the peculiar circum- stances which belong to it and mark its character, and that the only safe criterion is the intention of the parties, to be ascertained by con- sidering their situation and the surrounding facts, as well as the writ- ten memorials of the transaction."' If both parties to the instrument intend that it shall operate merely as security for a debt, it is a mort- gage though in the form of an absolute deed.^° The intention of the "Horbach v. Hill, 112 U. S. 144, 28 L. ed. 671, 5 Sup. Ct. 81; Nelson V. "Wadsworth, 171 Ala. 603, 55 So. 120; Pendergrass v. Burris, 77 Cal. 19, 19 Pac. 187, 11 Am. St. 231; Lynch v. Lynch, 22 Cal. App. 653, 135 Pac. 1101; Elliott v. Connor, 63 Fla. 408, 58 So. 241; Wylly-Gahbett Co. v. Williams, 53 Fla. 872, 42 So. 910; Heath v. Williams, 30 Ind. 495; Davis T. Stonestreet, 4 Ind. 101; Beidelman v. Koch, 42 Ind. App. 423, 85 N. E. 977; Keeline v. Clark, 132 Iowa 360, 106 N. W. 257; Hughes V. Sheaff, 19 Iowa 335; First Nat. Bank v. Edwards, 84 Kans. 495. 115 Pac. 118; Tucker v. Witherbee, 130 Ky. 269, 113 S. W. 123 (quoting text) ; Edrington v. Harper, 3 J. J. Marsh. (Ky.) 353, 20 Am. Dec. 145; Trimble v. McCormick, 12 Ky. L. 857, 15 S. W. 358; Miller v. Miller, 101 Md. 600, 61 Atl. 210; King v. McCarthy, 50 Minn. 222, 52 N. W. 648; Gassert v. Bogk, 7 Mont. 585, 19 Pac. 281; Sanders T. Ayres, 63 Nebr. 271, 88 N. W. 526; Devore v. Woodruff, 1 N. Dak. 143, 45 N. W. 701; Elliott V. Bozorth, 52 Ore. 391, 97 Pac. 632; Stephens v. Allen, 11 Ore. 188, 3 Pac. 168; Bradley v. Hel- gerson, 14 S. Dak. 593, 86 N. W. 634 (though the grantee is called a trustee); Harrison v. Hogue (Tex. Civ. App.), 136 S. W. 118; Goodbar V. Bloom, 43 Tex. Civ. App. 434, 96 S. W. 657 (quoting text;; Gray v. Shelby, 83 Tex. 405, 18 S. W. 809; Loving v. Milliken, 59 Tex. 423; Gibbs V. Penny, 43 Tex. 560; Stamp- ers V. Johnson, 3 Tex. 1; Duerden V. Solomon, 33 Utah 468, 94 Pac. 978; Batchelder v. Randolph, 112 Va. 296, 71 S. E. 533; Bachrach v. Bachrach, 111 Va. 232, 68 S. E. 985; Hudkins v. Crim (W. Va.), 78 S. E. 1043; Fridley v. Somerville, 60 W. Va. 272, 54 S. B. 502. See post §§ 278, 326. ' Lynch v. Lynch, 22 Cal. App. 653, 135 Pac. 1101; Elliott v. Connor, 63 Fla. 408, 58 So. 241; Connor v. Con- nor, 59 Pla. 467, 52 So. 727; Hull v. Burr, 58 Fla. 432, 50 So. 754; De Bartlett v. De Wilson, 52 Fla. 497, 42 So. 189; First Nat. Bank v. Ed- wards, 84 Kans. 495, 115 Pac. 118; Elliott V. Bozorth, 52 Ore. 391, 97 Pac. 632; Bachrach v. Bachrach, 111 Va. 232, 68 S. E. 985; Tuggle v. Berkeley, 101 Va. 83, 43 S. E. 199. ' Irwin V. Coleman, 173 Ala. 175, 55 So. 492; Abercrombie v. Carpen- ter, 150 Ala. 294, 43 So. 746; Rose v. Gandy, 137 Ala. 329, 34 So. 239; Hamilton v. Holmes, 48 Ore. 453, 87 Pac. 154. But see Harrison v. Hogue (Tex. Civ. App.), 136 S. W. 118. See post § 278. "Tucker v. Witherbee, 130 Ky. 269, 113 S. W. 123 (quoting text); Cornell v. Hall, 22 Mich. 377, per Graves, J.; Stephens v. Allen, 11 Ore. 188, 3 Pac. 168. "Hays V. Emerson, 75 Ark. 551, 87 S. W. 1027; Connor v. Connor, 59 Fla. 467, 52 So. 727; Hurd's Illinois Rev. Stat. 1913, p. 1665, § 12; Beidel- man V. Koch, 42 Ind. App. 423, 85 N. E. 977; Dusenbery v. Bidwell, 86 Kans. 666, 121 Pac. 1098; Stratton V. Rotrock, 84 Kans. 198, 114 Pac. 224; Vaughn v. Smith, 148 Ky. 531, 146 S. W. 1094; Guenther v. Wis- dom, 27 Ky. L. 230, 84 S. W. 771; In re Schjnidt, 114 La. 78, 38 So. 26; Powell v. Crow, 204 Mo. 481, 102 S. W. 1024; Jeffreys v. Charlton, 72 N. J. Eq. 340, 65 Atl. 711; Farrow v. Work, 39 Okla. 734, 136 Pac. 739: 258 ABSOLUTE DEED AND EECONVETANCE 330 parties is the only true and infallible test, and this intention is to be gathered from the circumstances attending the transaction and the conduct of the parties, as well as from the face of the written con- tract.^^ While in all doubtful cases the courts will construe the eon- tract to be a mortgage rather than a conditional sale,^^ yet, when a Goodbar v. Bloom, 43 Tex. Civ. App. 434, 96 S. W. 657 (citing text); Frldley v. SOmervlUe, 60 W. Va. 272, 54 S. E. 502. See post § 264. " Smith V. Smith, 153 Ala. 504, 45 So. 168; Rees v. Rhodes, 3 Ariz. 235. 73 Pac. 446; Mclver v. Roberts (Ark.), 165 S. W. 273; Henley v. Hotaling, 41 Cal. 22; Elliott v. Con- nor, 63 Pla. 408, 58 So. 241; Connor V. Connor, 59 Fla. 467, 52 So. 727; Burnside v. Terry, 46 Ga. 621; Cala- han V. Dunker, 51 Ind. App. 436, 99 N. E. 1021; Beidelman v. Koch, 42 Ind. App. 423, 85 N. E. 977; Keeline V. Clark, 132 Iowa 360, 106 N. W. 257; Hughes v. Sheaff, 19 Iowa 335; Dusenbery v. Bidwell, 86 Kans. 666, 121 Pac. 1098; First Nat. Bank v. Edwards, 84 Kans. 495. 115 Pac. 118; Stratton v. Rotrock, 84 Kans. 198, 114 Pac. 224; Vaughn v. Smith, 148 Ky. 531, 146 S. W. 1094; Bor- ders T. Allen, 33 Ky. L. 194, 110 S. W. 240; In re Schmidt, 114 La. 78, 38 So. 26; Hurd v. Chase. 100 Maine 561, 62 Atl. 660; Hawes v. Williams, 92 Maine 483, 43 Atl. 101; Miller v. Miller, 101 Md. 600, 61 Atl. 210; Hopper V. Smyser, 90 Md. 363, 45 Atl. 206 (quoting text); Powell v. Crow, 204 Mo. 481, 102 S. W. 1024; Arnold v. Fraser, 43 Mont. 540, 117 Pac. 1064; Jeffreys v. Charlton, 72 N. J. Eq. 340, 65 Atl. 711; Smith v. Jensen, 16 N. Dak. 408, 114 N. W. 306; Farrow v. Work, 39 Okla. 734, 136 Pac. 739; Fawcett v. McGahan- McKee Lumber Co., 39 Okla. 68, 134 Pac. 388; Kinney v. Heatherington, 38 Okla. 74, 131 Pac. 1078; Worley V. Carter, 30 Okla. 642, 121 Pac. 669; Harmon v. Grants Pass Banking &c. Co., 60 Ore. 69, 118 Pac. 188; Wal- ton V. Moore, 58 Ore. 237, 113 Pac. 58; Elliott v. Bozorth, 52 Ore. 391, 97 Pac. 632; Hall v. O'Connell, 52 Ore. 164, 95 Pac. 717; Hume v. Le Compte (Tex. Civ. App.), 142 S. W. 934; Harrison v. Hogue (Tex. Civ. App.), 136 S. W. 118; Elliott v. Mor- ris (Tex. Civ. App.), 121 S. W. 209; Moorhead v. Ellison, 56 Tex. Civ. App. 444, 120 S. W. 1049; Beverly v. Davis (Wash.), 140 Pac. 696; Hoover v. Bouffleur, 74 Wash. 382, 133 Pac. 602; Johnson v. National Bank, 65 Wash. 261, 118 Pac. 21; Hudkins v. Crim (W. Va.), 78 S. E. 1043; Fridley v. Somerville, 60 W. Va. 272, 54 S. E. 502; Smith v. Cros- by, 47 Wis. 160, 2 N. W. 104. See ante §162. "Conway v. Alexander, 7 Craneh (U. S.) 218, 3 L. ed. 321; Morton v. Allen (Ala.), 60 So. 866; Irwin v. Coleiman, 173 Ala. 175, 55 So. 492; Nelson v. Wadsworth, 171 Ala. 603, 55 So. 120; Hubert v. Sistrunk (Ala.), 53 So. 819; Glass v. Hierony- mus, 125 Ala. 140, 28 So. 71; Reeves V. Abercrombie, 108 Ala. 535, 19 So. 41; Daniels v. Lowery, 92 Ala. 519, 8 So. 352; Peagler v. Stabler, 91 Ala. 308, 9 So. 157; Moseley v. Mose- ley, 86 Ala. 289, 5 So. 732; Cosby v. Buchanan, 81 Ala. 574, 1 So. 898; Douglass V. Moody, 80 Ala. 61; Mitchell V. Wellman, 80 Ala. 16; Gibson v. Martin, 38 Ark. 207; Sears V. Dixon, 33 Cal. 326; Elliott v. Con- nor, 63 Fla. 408, 58 So. 241; Rankin V. Rankin, 111 111. App. 403; Keith- ley V. Wood, 47 111. App. 102; White V. Redenbaugh, 41 Ind. App. 580, 82 N. E. 110; Fort v. Colby (Iowa), 144 N. W. 393; Jones v. Gillett, 142 Iowa 506, 118 N. W. 314; Vaughn V. Smith, 148 Ky. 531, 146 S. W. 1094; SchoU v. Hopper, 134 Ky. 83. 119 S. W. 770; Tucker v. Witherbee, 130 Ky. 269, 113 S. W. 123; Skinner V. Miller, 5 Lltt. (Ky.) 84; Phillips V. Jackson, 240 Mo. 310, 144 S. W. 112; Donovan v. Boeck, 217 Mo. 70, 116 S. W. 543; Mooney v. Byrne, 163 N. Y. 86, 57 N. E. 163; Poindexter V. McCannon, 1 Dev. Eq. (N. Car.) 377, 18 Am. Dec. 591; Smith v. Hoft, 23 N. Dak. 37, 135 N. W. 772, Ann. Cas. 1914 C, 1072; Smith v. Jensen, 16 N. Dak. 408, 114 N. W. 306; Kin- ney V. Smith, 58 Ore. 158, 113 Pac. 854; Bickel v. Wessinger, 58 Ore. 331 WHEX A CONDITIONAL SALE 258 conditional sale is clearly established, it will be enforced.^^ Courts scrutinize with care all transactions where a sale has been the result of negotiations initiated by an application for a loan. Yet when it clearly appears a sale was intended, it will be upheld.^* If the relation of debtor and creditor in any given case existed in the beginning, and the debt still subsists as to the consideration of the conveyance, the transaction will be treated as a mortgage.^^ The test is whether the debt continued or was extinguished.^" If the debt was extinguished by a fair agreement, and the grantor has the privilege merely of refunding if he pleases, by a given time, and thereby entitle himself to a reconveyance, the transaction is a conditional sale, and the equity of redemption does not continue.^' The grantor who neglects 98, 113 Pae. 34; Elliott v. Bozorth, 52 Ore. S91, 97 Pac. 632; Stephens V. Allen, 11 Ore. 188, 3 Pac. 168; Walker v. McDonald, 49 Tex. 458; Gray v. Shelby (Tex.), 18 S. W. 809; Hume v. Le Compte (Tex. Civ. App.), 142 S. W. 934; Duerden v. Solomon, 33 Utah, 468, 94 Pac. 978; King V. Newman, 2 Munf. (Va.) 40; Robertson v. Campbell, 2 Call. (Va.) 421; Rogers v. Burrus, 53 Wis. 530, 9 N. W. 786. See post § 279. "Felton V. Grier, 109 Ga. 320, 35 S. E. 175; Bloodgood v. Zeily, 2 Caines Cas. (N. Y.) 124; Penning- ton V. Hanby, 4 Munf. (Va.) 140; Davis V. Thomas, 1 Russ. & M. 506; Goodman v. Grierson, 2 Ball. & B. 274. "Ahem v. McCarthy, 107 Cal. 382, 40 Pac. 482; Miller v. Green, 138 111. 565, 28 N. E. 837; Shays v. Norton, 48 III. 100; Flagg v. Mann, 14 Pick. (Mass.) 467; Turner v. Kerr, 44 Mo. 429; Holmes v. Fresh, 9 Mo. 201; McDonald v. McLeod, 1 Ired. Bq. (N. Car.) 221; De France v. De France, 34 Pa. St. 385; Sadler V. Taylor, 49 W. Va. 104, 38 S. E. 583. ^ Irwin V. Coleman, 173 Ala. 175, 55 So. 492; Rodgers v. Burt, 157 Ala. 91, 47 So. 226; Smith v. Smith, 153 Ala. 504, 45 So. 168; Voss v. EUer, 109 Ind. 260, 10 N. E. 74; Sebree v. Thompson, 31 Ky. L. 1146, 104 S. "W. 781; Duell v. Leslie, 207 Mo. 658, 106 S. W. 489; Gibson v. Morris State Bank (Mont.), 140 Pac. 76; Samuelson v. Mickey, 73 Nebr. 852, 103 N. W. 671; Tannyhill v. Pepperl, 70 Nebr. 31, 96 N. W. 1005; Mitchell V. Morgan (Tex. Civ. App.), 165 S. "W. 883; Johnson v. National Bank of Commerce, 65 Wash. 261, 118 Pac. 21. See, with particular reference to subsisting debt, the following cases: Rodgers V. Burt, 157 Ala. 91, 47 So. 226; Thomas v. Livingston, 155 Ala. 546, 46 So. 851; Wynn v. Fitzwater (Ala.), 44 So. 97; Rushton v. Mc- Illvene, 88 Ark. 299, 114 S. W. 709; Holmes v. Warren, 145 Cal. 457, 78 Pac. 954; Scott v. Hughes, 124 Ga. 1000, 53 S. E. 453; Pabrique v. Cher- okee Coal &c. Co., 69 Kans. 733, 77 Pac. 584; Phillips v. Jackson, 240 Mo. 310, 144 S. W. 112; Farrow v. Work, 39 Okla. 734, 136 Pac. 739; Harmon v. Grants Pass Banking &c. Co., 60 Ore. 69, 118 Pac. 188; Francis V. Francis, 78 S. Car. 178, 58 S. E. 804; Harrison V. Hogue (Tex. Civ. App.), 136 S. W. 118; Blake v. Lowry, 43 Tex. Civ. App.l7, 93 S. W. 521; Mittlesteadt v. Johnson, 75 Wash. 550, 135 Pac. 214; Hursey v. Hursey, 56 W. Va. 148, 49 S. E. 367. See post § 265. ^opickel V. Wessinger, 58 Ore. 98, 113 Pac. 34; Francis v. Francis, 78 S. Car. 178, 58 S. E. 804; Mittle- steadt V. Johnson, 75 Wash. 550, 135 Pac. 214. "Martin v. Martin, 123 Ala. 191, 26 So. 525; Fabrique v. Cherokee Coal &c. Co., 69 Kans. 733, 77 Pac. 584; Hopper v. Smyser, 90 Md. 363, 45 Atl. 206; Blumberg v. Beekman, 121 Mich. 647, 80 N. W. 710; Duell V. Leslie, 207 Mo. 658, 106 S. W. 489; Woodworth v. Morris, 56 Barb. (N. Y.) 97; Brown v. Dewey, 2 § 259 ABSOLUTE DEED AND EECONVEYATSTCB 332 to perform tlie condition on which the privilege of repurchasing de- pends will not be relieved.'-* § 259. Intention considered in Conway v. Alexander. — This mat- ter was carefully considered by the Supreme Court of the United States in Conway v. Alexander.^^ Land had been conveyed to a third person in trust, to reconvey to the grantor if he should repay the purchase- money before a day named, and, if not, then to convey to his creditor. The grantor brought a bill to redeem, whereupon the court held that, in the absence of a bond, note, or other evidence of indebtedness, the transaction must be regarded as a conditional sale; and, as the com- plainant had not tendered the money at the time provided, that the bill should be dismissed. Chief Justice Marshall, delivering the opin- ion of the court, said : "To deny the power of two individuals, capable of acting for themselves, to make a contract for the purchase and sale of lands defeasible by the payment of money at a future day, or in other words, to make a sale with a reservation to the vendor of a right to repurchase the same land at a fixed price and at a specified time, would be to transfer to the courts of chancery, in a considerable de- gree, the guardiansbip of adults as well as infants. Such contracts are certainly not prohibited either by the letter or the policy of the law. But the policy of the law does prohibit the conversion of a real mort>- gage into a sale; and as lenders of money are less under the pressure Barb. (N. Y.) 28, 1 Sandf. (N. Y.) mortgagee should have a remedy 56; Robinson v. Cropsey, 2 Edw. Ch. against the person of the debtor. If (N. Y.) 138, 6 Paige (N. Y.) 480; this remedy really exists, its not be- Whitney v. Townsend, 2 Lans. (N. ing reserved in terms will not affect Y.) 249; Holmes v. Grant, 8 Paige the case. But it must exist in order (N. Y.) 243; Cockrill v. Whitworth to justify a construction which over- (Tenn.), 52 S. W. 524; Kunert v. rules the express words of the in- Strong, 103 Wis. 70, 79 N. W. 32. strument. Its existence in this case See also Osborne v. Morgan, 171 111. is certainly not to be collected from App. 549. See post § 265. the deed. There is no acknowledg- " Hughes T. Sheaff, 19 Iowa 335. ment of a pre-existing debt, nor any "7 Cranch (U. S.) 218, 3 L. ed. covenant for repayment. An action 321. "In this case," said Chief Jus- at law for the recovery of the money tice Marshall, "the form of the deed certainly could not have been sus- is not in itself conclusive either tained; and if, to a bill in chancery way. The want of a covenant to re- praying a sale of the premises, and pay the money Is not complete evi- a decree for so much money as might dence that a conditional sale was remain due, Robert Alexander had Intended, but Is a circumstance of answered that this was a sale and no inconsiderable importance. If not a mortgage, clear proof to the the vendee must be restrained to contrary must have been produced his principal and interest, that prin- to justify a decree against him." cipal and interest ought to be se- See also Flagg v. Mann, 2 Sumn. cure. It is, therefore, a necessary (U. S.) 486; Hopper v. Smyser, 90 ingredient in a mortgage, that the Md. 363, 382, 45 Atl. 206. 333 WHEN A CONDITIONAL SALE § 260 of circumstances which control the perfect and free exercise of the judgment than borrowers, the effort is frequently made by persons of this description to avail themselves of the advantage of this superiority, in order to obtain inequitable advantages. For this reason the leaning of courts has been against them, and doubtful cases have generally been decided to be mortgages. But as a conditional sale, if really in- tended, is valid, the inquiry in every case must be, whether the con- tract in the specific case is a security for the repayment of money, or an actual sale." § 260. Evidence of intention — ^Existence of the debt secured. — In order to convert what appears to be a conditional sale into a mort- gage, the evidence should be so clear as to leave no doubt that the real intention of the parties was to execute a mortgage f otherwise the in- tention appearing on the face of the deed ought to prevail. There is no absolute rule that the covenant to reconvey shall be regarded either in law or equity as a defeasance. ^^ It may well be that a person buys land in satisfaction of a precedent debt, or for a consideration then paid, and at the same time contracts to reconvey the lands upon the payment of a certain sum, and there is no intention on the part of either party that the transaction should be, in effect, a mortgage. The covenant or agreement to reconvey is not necessarily either at law or in equity a defeasance. It is one fact which may, in connection with •other facts, go to show that the parties really intended the deed to operate as a mortgage; but standing alone it does not produce that result. Something more is necessary ; and an indispensable thing is a debt by the grantor to the grantee for which the conveyance is se- curity. ^^ If there exists a debt to be secured its nature and form is *• Henley v. Hotaling, 41 Cal. 22; 168; Wynn v. Pitzwater (Ala.), 44 Mulhaupt V. Youree, 35 La. Ann. So. 97; Robinson v. Gassoway 1052; Cotton v. McKee, 68 Maine (Ala.), 39 So. 1023; Perdue v. Bell, 486; "Winters v. Earl, 52 N. J. Eq. 83 Ala. 396, 3 So. 698; Haynie v. 52, 28 Atl. 15; Fullerton v. McChir- Robertson, 58 Ala. 37; Rusbton v. dy, 55 N. Y. 637. McIUvene, 88 Ark. 299, 114 S. W. "^ Henley V. Hotaling, 41 Cal. 22. 709; Prefumo v. Russell, 148 Cal. =^ Wallace v. Johnstone, 129 U. S. 451, 83 Pac. 810; Holmes v. Warren, 58, 32 L. ed. 619, 9 Sup. Ct. 243; 145 Cal. 457, 78 Pac. 954; Scott v. Horbach v. Hill, 112 U. S. 144, 28 L. Hughes, 124 Ga. 1000, 53 S. E. 453; ed. 670, 5 Sup. Ct. 81; Stollenwerck Caraway v. Sly, 222 111. 203, 78 N. V. Marks (Ala.), 65 So. 1024; Bell E. 588; Bearss v. Ford, 108 111. 16; v. Shiver (Ala.), 61 So. 881; Irwin Rue v. Dole, 107 111. 275; Rankin v. V. Coleman, 173 Ala. 175, 55 So. 492; Rankin, 111 111. App. 403; Wolfe v. Nelson v. Wadsworth, 171 Ala. 603, McMillan, 117 Ind. 587, 592, 20 N. 55 So. 120; Rodgers v. Burt, 157 E. 509; Henninger v. McGuire, 146 Ala. 91, 47 So. 226; Thomas v. Liv- Iowa 270, 125 N. W. 180; Jones v. ingston, 155 Ala. 546, 46 So. 851; Gillett, 142 Iowa 506, 118 N. W. 314; Smith V. Smith, 153 Ala. 504, 45 So. Veeder v. Veeder, 141 Iowa 492, 120 260 ABSOLUTE DEED AND EECONVEYANCB 334: not material.^^ It is sufBeient that the debt is recited in the deed, and it is not necessary that it should be evidenced by a separate written instrument.^* The time for payment of the debt, and the rate of in- N. W. 61; Fanners' &c. Bank v. Kackley, 88 Kans. 70, 127 Pac. 539; Fabrique v. Cherokee Coal &c. Co., 69 Kans. 733, 77 Pac. 584; Eckert v. McBee, 27 Kans. 232; Fuson v. Chestnut, 33 Ky. L. 249, 109 S. W. 1192; Sebree v. Thompson, 31 Ky. b. 1146, 104 S. W. 781; Edrington v. Harper, 3 J. J. Marsh. (Ky.) 353, 20 Am. Dec. 145; Hopper v. Smyser, 90 Md. 363, 45 Atl. 206; Olney v. Brown, 163 Mich. 125, 128 N. W. 241; Heaton v. Darling, 66 Minn. 262, 68 N. W. 1087; Butman v. James, 34 Minn. 547, 27 N. W. 66; Buse V. Page, 32 Minn. Ill, 19 N. W. 736, 20 N. W. 95; Lipscomb v. Talbott, 243 Mo. 1, 147 S. W. 798; Donovan v. Boeck, 217 Mo. 70, 116 S. W. 543; Duell v. Leslie, 207 Mo. 658, 106 S. W. 489; Gibson v. Mor- ris State Bank (Mont), 140 Pac. 76; Morrison v. Jones, 31 Mont. 154, 77 Pac. 507; Samuelson v. Mickey, 73 Nebr. 852, 103 N. W. 671; Tannyhill v. Pepperl, 70 Nebr. 31, 96 N. W. 1005; Bascombe v. Marshall, 129 App. Div. 516, 113 N. Y. S. 991; Mooney v. Byrne, 163 N. Y. 86, 57 N. E. 163; Miller v. Smith, 20 N. Dak. 96, 126 N. W. 499; McGuin v. Lee, 10 N. Dak. 160, 86 N. W. 714; Farrow v. Work, 39 Okla. 734, 136 Pac. 739; Grover v. Hawthorne, 62 Ore. 77, 121 Pac. 808; Harmon v. Grants Pass Banking &c. Co., 60 Ore. 69, 118 Pac. 188; Blckel v. Wes- singer, 58 Ore. 98, 113 Pac. 34; El- driedge v. Hoefer, 52 Ore. 241, 93 Pac. 246; Callahan's Estate, 13 Phila. (Pa.) 381; Francis v. Fran- cis, 78 S. Car. 178, 58 S. E. 804; Hodge V. Weeks, 31 S. Car. 276, 9 S. B. 953; Jones v. Jones, 20 S. Dak. 632, 108 N. W. 23; Calhoun v. Lump- kin, 60 Tex. 185; Mitchell v. Mor- gan (Tex. Civ. App.), 165 S. W. 883; Parks V. Sullivan (Tex. Civ. App.), 152 S. W. 704; Harrison v. Hogue (Tex. Civ. App.), 136 S. W. 118; O'Neill V. O'Neill (Tex. Civ. App.), 135 S. W. 729; Hall v. Jennings (Tex. Civ. App.), 104 S. W. 489; Blake v. Lowry (Tex. Civ. App.), 93 S. W. 521; Holladay v. Willis 101 Va. 274, 43 S. E. 616; Mittlesteadt V. Johnson, 75 Wash. 550, 135 Pac. 214; Johnson v. National Bank o£ Commerce, 65 Wash. 261, 118 Pac. 21; Boyer v. Paine, 60 Wash. 56, 110 Pac. 682; Fridley v. Somerville, 60 W. Va. 272, 54 S. E. 502; Hursey v. Hursey, 56 W. Va. 148, 49 S. B. 367; Kerr v. Hill, 27 W. Va. 576; Polly V. Gumney (Wis.), 147 N. W. 356; McCourt V. Peppard, 126 Wis. 326, 105 N. W. 809; Wolf v. Theresa Vil- lage Mut. Fire Ins. Co., 115 Wis. 402, 91 N. W. 1014. "The owner of the lands may be willing to sell at the price agreed upon, and the purchaser may also be willing to give his vendor the right to repurchase upon specified terms; and If such appears to be the intention of the parties, it is not the duty of the court to attrib- ute to them a different Intention. Such a contract is not opposed to public policy, nor is it in any sense illegal; and courts would depart from the line of their duties should they, in disregard of the real inten- tion of the parties, declare it to be a mortgage." Per Chief Justice Rhodes In Henley v. Hotaling, 41 Cal. 22. See post § 335. ^' Batcheller v. Batcheller, 144 111. 471, 33 N. E. 24 (contingent liability insufficient) ; Bearss v. Ford, 108 111. 16 (existing mortgage debt); Clark V. Seagraves, 186 Mass. 430, 71 N. E. 813 (debt due a third per- son) ; Bethlehem v. Annis, 40 N. H. 34, 77 Am. Dec. 700 (unliquidated damages insufficient) ; Meeker v. Warren, 66 N. J. Eq. 146, 57 Atl. 421, (debt due a third person); Stelts V. Martin, 90 S. Car. 14, 72 S. E. 550; Kaphan v. Toney (Tenn.), 58 S. W. 909 (fiduciary obligation for misappropriated funds); Jones v. Cullen, 100 Tenn. 1, 42 S. W. 873 (liability as indorser). "Brant v. Robertson, 16 Mo. 129; Graham v. Stevens, 34 Vt. 166, 80 Am. Dec. 675. See also Overstreet V. Baxter, 30 Kans. 55, 1 Pac. 825. 335 WHEN A CONDITIONAL SALE § 261 terest need not appear, but will be implied.-^ Parol evidence is admis- sible to show the existence of a debt to be secured by the conveyance intended as a mortgage. ^° § 261. Stipulations and recitals of intention. — A contract of re- purchase may upon its face show that the parties really intended an absolute sale, with the privilege to the vendor of repurchasing on the terms named. It will be so interpreted when the provisions of the con- tract are inconsistent with the idea that a mortgage to secure an in- debtedness was intended.^' The agreement upon its face may be either an agreement to reconvey merely, or may amount with the deed to a mortgage,^ ^ in which case a resort to evidence outside of these instru- ments may be necessary to determine the character of the transac- tion.^^ An agreement to reconvey on payment by the grantor of a valid ex- isting debt is conclusively presumed to be a mortgage, and no stipula- tion of the parties can make it otherwise.^" An express provision that the contract for reconveyance should be regarded only as a contract to reconvey and not as evidence that the deed was intended as a mort- gage, if consistent with the whole transaction, should be given effect as declaring the intention of the parties that it should not create a mortgage.^^ An agreement between a mortgagor and the holder of a ^^ McMillan v. Bissell, 63 Mich. 66, rents per month should exceed that 29 N. W. 737 ; Helm v. Boyd, 124 111. sum, the grantee should apply them 370, 16 N. E. 85 (no time for pay- to the payment of the considera- ment specified). See also Wilson v. tion. Kirkland, 172 Ala. 72, 55 S. W. 174. » Parish v. Gates, 29 Ala. 254; * Locke V. Moulton, 96 Cal. 21, 30 McCarron v. Cassidy, 18 Ark. 34; Pac. 957; People v. Irwin, 14 Cal. Snyder v. Griswold, 37 111. 216; 428; McNamara v. Culver, 22 Kans. Bishop v. "Williams, 18 111. 101; Mc- 661. But see Thomas v. McCormack, Naanara v. Culver, 22 Kans. 661; 9 Dana (Ky.) 108 (parol evidence Devore v. Woodruff, 1 N. Dak. 143, not admissible to contradict the 45 N. W. 701; Rich v. Doane, 35 Vt. deed). 125: "'Hanford v. Blessing, 80 111. 188; '"'Beidelman v. Koch, 42 Ind. App. Voss V. Eller, 109 Ind. 260, 10 N. E. 423, 85 N. E. 977. See also McRob- 74; Hays v. Carr, 83 Ind. 275; Yost ert v. Bridget (Iowa), 149 N. W. v. First Nat. Bank, 66 Kans. 605, 72 906. Pac. 209; Pumilia v. De George ''Ford v. Irwin, 18 Cal. 117; Hen- (Tex. Civ. App.), 74 S. W. 813; ley v. Hotaling, 41 Cal. 22; Chicago, Smith V. Crosby, 47 Wis. 160, 2 N. B. &c. R. Co. v. Watson, 113 111. 195; W. 104. Hays v. Carr, 83 Ind. 275; Donovan ^Hickox V. Lowe, 10 Cal. 197. In v. Boeck, 217 Mo. 70, 116 S. W. 543; this case a debtor conveyed to his McGuin v. Lee, 10 N. Dak. 160, 86 creditor, and took back an agree- N. W. 714; Jasper v. Hazen, 4 N. ment to reconvey whenever the Dak. 1, 58 N. W. 454, 23 L. R. A. grantor should repay the consider- 58. An express provision that a con- ation, with a stipulated sum per veyance is not a mortgage but an •month for the use of the money, absolute conveyance, which is with a provision that, if the net wholly inconsistent with the facts § 263 ABSOLUTE DEED AND EECONVETANCB 336 mortgage, reciting that default had been made in payment of the note secured, that the mortgagor had conveyed the premises by warranty deed in consideration of the cancelation of the debt, and providing that the holder would reconvey upon payment of the debt within a specified time and further reciting that the agreement should not be construed to be a mortgage, was accordingly held to be a conditional sale and not a mortgage.^^ If an instrument declares that it is a con- ditional deed and not a mortgage, and is to be absolute upon the non- payment of a sum mentioned at a time specified, it is to be construed as a conditional deed and not a mortgage.^^ Sometimes the terms of the agreement for reconveyance may not be conclusive that a sale was intended with the privilege of repurchas- ing, but may be so inconsistent with any other theory that very little further evidence to the same effect will lead to this determination.'* On the other hand, an absolute deed of land, which contains a recital that it was executed to secure the payment of a loan of money, shows upon its face that it is a mortgage.'^ A debtor conveyed land to his creditor as security, under an agreement that the debtor was to remain in possession for a' certain time, during which he might pay the debt and receive a reconveyance. If he should sell the land, he was to pay the debt and keep the excess, and if the creditor should sell it he was to pay the excess to the debtor. It was held that the agreement amounted to a mortgage, and the creditor could not maintain unlaw- ful detainer, after the expiration of the stipulated time within which the debtor might pay the debt and receive a reconveyance.^'' Where an antecedent indebtedness constitutes the consideration for the convey- ance, payment whereof was intended to be secured, a recital purporting to cancel an antecedent indebtedness does not preclude the application of the principles by which an absolute deed is declared a mortgage.'^ § 262. Actual sale — ^Rights of parties. — A purchaser is entitled to have an actual sale enforced. When there is, in fact, a sale instead of a mortgage, but the grantor subsequently claims the transaction to of the case does not render absolute ton v. Hitchcock, 47 Barb. (N. Y.) a conveyance which is shown to 220; Reed v. Parker, 33 Wash. 107, have been executed for the purpose 74 Pac. 61. and with the intention of securing ^'Hanford v. Blessing, 80 111. 188. the payment of money. Connor v. ^ Montgomery v. Chadwick, 7 Connor, 59 Fla. 467, 52 So. 727. Iowa 114. '" Donovan v. Boeck, 217 Mo. 70, '« Hunter v. Maanum, 78 Wis. 656, 116 S. "W. 543. 48 N. W. 51. ^'Burnside v. Terry, 45 Ga. 621. "Shields v. Simonton, 65 "W. Va. See also Chalres v. Brady, 10 Fla. 179, 63 S. E. 972. 133; Rue v. Dole, 107 111. 275; Sax- 337 WHEK A CONDITIONAL SALE § 262 be a mortgage, the grantee may maintain a bill in equity to have it decreed a sale.'^ A purchaser is as much entitled to have his rights protected as is a mortgagor. A sale in connection with an agreement for repurchase comes very near in form and substance to a mortgage, but the rights of the parties are very different.^' While a mortgage may be redeemed at any time before the right is cut ofE by foreclosure, there can be no redemption under a conditional sale after the day ap- pointed. This is the contract of the parties, and either one of them is entitled to have it enforced according to its terms.*"" The option to repurchase may be a personal privilege which can not be enforced in case of the death of the obligee during the continuance of the op- tion.*'- A deed executed at the same time as a mortgage, upon the same consideration, to the same party and covering the same land, is merely additional security, and operates as a mortgage.*^ If it appears that a mortgage of a large tract of land was made to secure a loan, and at the same time the mortgagor made a conveyance to the mortgagee of four acres of land not included in the mortgage, and that this conveyance was made as a bonus to induce the mortgagee to advance the money, in the absence of any undue advantage taken by the mortgagee, the mortgagor can not have this conveyance declared to be additional security for the loan, and in effect a mortgage.*^ A mortgagor, upon being notified that the mortgagee would proceed to foreclose the mortgage for nonpayment of interest, which had been due for several years, replied that he preferred to make a deed of the property rather than to have a sale made under the mortgage; and accordingly he executed a deed absolute in form, and took back a con- =»Kahn v. Weill, 42 Fed. 704; 28; Holmes v. Grant, 8 Paige (N. Manasse v. Dinkelspiel, 68 Cal. 404, Y.) 243; Glover v. Payn, 19 Wend. 9 Pac. 547; Gassert v. Bogk, 7 Mont. (N. Y.) 518; Haines v. Thomson, 70 585, 600, 19 Pac. 281; Rloh v. Doane. Pa. St. 434; Rich v. Doane, 35 Vt. 35 Vt. 125. See also Conway v. 125; Ransome v. Frayser, 10 Leigh Alexander, 7 Cranch (U. S.) 218, 3 (Va.) 592; Moss v. Green, 10 Leigh L. ed. 321. (Va.) 251, 34 Am. Dec. 731; Schri- ™ Conway v. Alexander, 7 Cranch ber v. Le Clair, 66 Wis. 579, 29 N. (U. S.) 218, 3 L. ed. 321; Flagg v. W. 570; Joy v. Birch, 4 CI. & F. 57; Mann, 14 Pick. (Mass.) 467. Pegg v. Wisden, 16 Beav. 239; Perry ""Henley v. Hotaling,' 41 Cal. 22; v. Meddowcroft, 4 Beav. 197; Bar- People V. Irwin, 14 Cal. 428, 18 Cal. rell v. Sabine, 1 Vern. 268; St. John 117; Phipps V. Munson, 50 Conn. v. Wareham, cited in Thornborough 267; Hanford v. Blessing, 80 111. 188; v. Baker, 3 Swanst. 628; Bnsworth Carr v. Rising, 62 111. 14; Shays v. v. Griffiths, 1 Bro. P. C. 149. Norton, 48 111. 100; Dwen v. Blake, "Newton v. Newton, 11 R. I. 390, 44 111. 135; Pitts v. Cable, 44 111. 23 Am. Rep. 476. 103; Trucks v. Lindsey, 18 Iowa "Belieu v. Card (Nebr.), 145 N. 504; Cornell v. Hall, 22 Mich. 377; W. 976. Merritt v. Brown, 19 N. J. Bq. 287; « Butts v. Robson, 5 Wash. 268, Brown v. Dewey, 2 Barb. (N. Y.) 31 Pac. 760. 22 — Jones Mtg. — Vol. I. § 263 ABSOLUTE DEED AND EECOXVETA^TCE 338 tract for the conveyance of the land to him upon the payment of a sum agreed upon within one year. His notes were surrendered, and he executed no new obligation to pay the mortgage debt. It was held that the transaction was a conditional sale, and not a mortgage.*^ § 263. Character of transaction fixed in inception. — The character of the transaction is fixed at its inception and is what the intention of the parties makes it.*^ The form of the transaction and the cir- cumstances attending it are the means of finding out the intention.*' If it was a mortgage in the beginning it remains so,*' in accordance with the maxim "once a mortgage always a mortgage" ;*' and if it was a conditional sale at the start no lapse of time will make a mortgage of it. The recording of the conveyance as a mortgage, if it was intended as a sale with a right of repurchase at the option of the grantor, does not make it a mortgage.*' If not a security in the beginning, but an absolute sale or a conditional sale, no subsequent event, short of a new agreement between the parties, can convert it into a mortgage."" Where an instrument contains the exact terms agreed on by the par- "Rue V. Dole, 107 111. 275. *'Knowles v. Williams, 58 Kans. 221, 48 Pac. 856; Kleinschmidt v. Kleinschmidt, 9 Mont. 477, 24 Pac. 266; Gassert v. Bogk, 7 Mont. 585, 19 Pac. 281; Macauley v. Smith, 132 N. Y. 524, 30 N. E. 997; Poston v. Jones, 122 N. Car. 536, 29 S. E. 951; Devore v. ■Woodruff, 1 N. Dak. 143, 45 N. W. 701; Gray v. Shelby, 83 Tex. 405, 18 S. W. 809; Davis v. Brewster, 59 Tex. 93; Goodbar v. Bloom, 42 Tex. Civ. App. 434, 96 S. W. 657 (citing text); Wasatch Min. Co. V. Jennings, 5 Utah 251, 15 Pac. 65; Clambey v. Copeland, 52 Wash. 580, 100 Pac. 1031 (quoting text). See post § 340. « Goodbar v. Bloom, 43 Tex. Civ. App. 434, 96 S. W. 657 (quoting text). See ante § 258 and post § 278. "Elliott V. Connor, 63 Fla. 408, 58 So. 241; Connor v. Connor, 59 Fla. 467, 52 So. 727; Hawes v. Will- iams, 92 Maine 483, 43 Atl. 101; Pos- ton V. Jones, 122 N. Car. 536, 29 S. B. 951; Goodbar v. Bloom, 43 Tex. Civ. App. 434, 96 S. W. 657 (quoting text) ; Wasatch Min. Co. v. Jen- nings, 5 Utah 243, 16 Pac. 399 (quot- ing text) ; Clambey v. Copland, 52 Wash. 580, 100 Pac. 1031; Hudkins V. Crim (W. Va.), 78 S. E. 1043; Hursey v. Hursey, 56 W. Va. 148, 49 S. E. 367. «Rees V. Rhodes, 3 Ariz. 235, 73 Pac. 446; Elliott v. Connor, 63 Fla. 408, 58 So. 241; Connor v. Connor, 59 Fla. 467, 52 So. 727; Doyle v. Ringi (Ind.), 102 N. E. 18; Fergu- son V. Boyd (Ind. App.), 79 N. E. 549, 169 Ind. 537, 81 N. E. 71; Loeb V. McAlister, 15 Ind. App. 643, 41 N. B. 1061, 44 N. E. 378; Stratton V. Rotrock, 84 Kans. 198, 114 Pac. 224; McPherson v. Hayward, 81 Maine 329, 17 Atl. 164; Reed v. Reed, 75 Maine 264; Vanderhaize v. Hugues, 13 N. J. Eq. 244; Wilson v. Giddings, 28 Ohio St. 554; Clambey V. Copland, 52 Wash. 580, 100 Pac. 1031; Hudkins v. Crim (W. Va..), 78 S. E. 1043. See post § 340, *" Morrison v. Brand, 5 Daly (N. Y.) 40; Jackson v. Richards, 6 Cow. (N. Y.) 617. See post § 276. "Reed v. Reed, 75 Maine 264; Buse V. Page, 32 Minn. Ill, 19 N. W. 736, 20 N. W. 95; Finck v. Adams, 36 N. J. Eq. 188; Kearney v. Ma- comb, 16 N. J. Eq. 189; Clark v. Henry, 2 Cow. (N. Y.) 324; Goodbar V. Bloom, 4S Tex. Civ. App. 434, 96 S. W. 657 (quoting text). 339 WHEN" A CONDITIOIfAL SALE § 264 ties, and expresses their intent and meaning, tlie fact that they tliought it a mortgage, while it was in fact a conditional sale, does not change its character or effect. °^ § 264. Intention to secure repayment of money. — If intended by the parties as a security for money, an absolute conveyance is in equity a mortgage. Of course it is entirely competent for persons capable of acting for themselves to make a sale with a reservation to the ven- dor of a right to repurchase the same land at a fixed price, and at a specified time ; and the inquiry in every case therefore is, whether the contract is a security for the repayment of money, or an actual or con- ditional sale.^^ The rule at law and in equity is the same in respect "Hershey v. Luce, 56 Ark. 320, 19 S. W. 963; Goodbar v. Bloom, 43 Tex. Civ. App. 434, 96 S. W. 657 (quoting text). "^ Coaway v. Alexander, 7 Crancli (U. S.) 218, 3 L. ed. 321; In re Borg, 184 Fed. 640; Lindbloom v. Kidston, 2 Alaska 292; Hubert v. Sistrunk (Ala.), 53 So. 819; Smith v. Smith, 153 Ala. 504, 45 So. 168; Crismon v. Kingman Plow Co., 106 Ark. 166, 152 S. W. 989; American Mtg. Co. v. Williams, 103 Ark. 484, 145 S. W. 234; Rushton v. Mclllvene, 88 Ark. 299, 114 S. W. 709; Land v. May, 73 Ark. 415, 84 S. W. 489; Blake- more V. Byrnside, 7 Ark. 505; John- son V. Clark, 5 Ark. 321; Porter v. Clements, 3 Ark. 364; Cal. Civ. Code, § 2924; Shirley v. All Night and Day Bank (Cal.), 134 Pac. 1001; Beckman v. Waters, 161 Cal. 581, 119 Pac. 922; Renton v. Gibson, 148 Cal. 650, 84 Pac. 186; Anglo-Cali- fornian Bank v. Cerf, 147 Cal. 384, 81 Pac. 1077; Whitehouse v. White- house, 22 Cal. App. 565, 135 Pac. 509; Schumacher v. Langford, 20 Cal. App. 61, 127 Pac. 1057; Elliott V. Connor, 63 Fla. 408, 58 So. 241 (citing text) ; Berry v. Williams (Ga.), 81 S. E. 881; Fleming v. Georgia R. Bank, 120 Ga. 1023, 48 S. E. 420; Spence v. Steadman, 49 Ga. 133; Clark v. Lyon, 46 Ga. 202; Bergen v. Johnson, 21 Idaho 619, 123 Pac. 484; Hannah v. Vensel, 19 Idaho 796, 116 Pac. 115; Hurd's Illi- nois Rev. Stat. 1913, p. 1665, § 12; Risser v. Patten, 232 HI. 353, 83 N. E. 914; Morriss v. Blackman, 179 111. 103, 53 N. E. 547; Whittemore V. Fisher, 132 111. 243. 24 N. E. 636; Jackson v. Lynch, 129 111. 72, 21 N. E. 580; Bearss v. Ford, 108 111. 16; Klock V. Walter, 70 111. 416; Ewart V. Walling, 42 111. 453; Preschbaker V. Feaman, 32 111. 475; Tillson v. Moulton, 23 111. 648; Wilson v. Rehm, 117 111. App. 473; McCorkle V. Richards, 112 111. App. 495 (mas- ter's deed given as security) ; Sin- clair V. Guzenhauser, 179 Ind. 78, 98 N. E. 37; Ferguson v. Boyd (Ind. App.), 79 N. B. 549, 169 Ind. 537, 81 N. E. 71; Crassen v. Swoveland, 22 Ind. 427; Watkins v. Gregory, 6 Blackf. (Ind.) 113; Harbison v. Lemon, 3 Blackf. (Ind.) 51, 51 Am. Dec. 376; Calahan v. Dunker, 51 Ind. App. 436, 99 N. E. 1021; Beidel- man v. Koch, 42 Ind. App. 423, 85 N. B. 977; Fort v. Colby (Iowa), 144 N. W. 393; Baxter v. Pritchard, 122 Iowa 590, 98 N. W. 372, 101 Am. St. 282; Montgomery v. Chadwick, 7 Iowa 114; Wiswell v. Simonds, 77 Kans. 622, 95 Pac. 407; Tucker v. Witherbee, 130 Ky. 269, 113 S. W. 123; Guenther v. Wisdom, 27 Ky. L. 230, 84 S. W. 771; Brey v. Bar- bour (Ky.), 20 S. W. 899; Hurd v. Chase, 100 Maine 561, 62 Atl. 660; Hawes v. Williams, 92 Maine 483, 43 Atl. 101; Hicks v. Hicks, 5 Gill & J. (Md.) 75; Clark v. Seagraves, 186 Mass. 430, 71 N. E. 813; Camp- bell V. Dearborn, 109 Mass. 130, 12 Am. Rep. 671; Ehle v. Looker (Mich.), 148 N. W. 378; Olney v. Brown, 163 Mich. 125, 128 N. W. 241; Flynn v. Holmes, 145 Mich. 606, 108 N. W. 685, 11 L. R. A. (N. S.) 209; Weise v. Anderson, 134. § 264 ABSOLUTE DEED AND KECONVEYANCE 340 to the obligation as a security. In both courts the intention of the parties, that the conveyance is to stand merely as a security for a debt, Mich. 502, 96 N. "W. 575; Sanborn V. Sanborn, 104 Mich. 180, 62 N. W. 371; Enos v. Sutherland, 11 Mich. 538; Teal v. Scandinavian-Ameri- can Bank, 114 Minn. 435, 131 N. W. 486; Buse v. Page, 32 Minn. Ill, 19 N. W. 736, 20 N. "W. 95; Weide v. Gehl, 21 Minn. 449; Holton v. Mei- ghen, 15 Minn. 69; Hill v. Edwards, 11 Minn. 22; Duell v. Leslie, 207 Mo. 658, 106 S. W. 489; Stumpe v. Kopp, 201 Mo. 412, 99 S. W. 1073; O'Neill V. Capelle, 62 Mo. 202; Shar- key v. Sharkey, 47 Mo. 543; Cope- land V. Yoakum, 38 Mo. 349; Tibeau V. Tibeau, 22 Mo. 77; Wilson v. Drumrite, 21 Mo. 325; Gassert v. Strong, 38 Mont. 18, 98 Pac. 497; Morrison v. Jones, 31 Mont. 154, 77 Pac. 507; Huston v. Canfield, 57 Nebr. 345, 77 N. W. 763; Lipp v. Syndicate, 24 Nebr. 692, 40 N. W. 129; Leahigh v. White, 8 Nev. 147; Cramer v. Cale, 72 N. J. Eq. 210, 73 Atl. 813; Meeker v. Warren, 66 N. J. Eq. 146, 57 Atl. 421; Montgomery v. Beecher (N. J. Eq.), 31 Atl. 451; Pidcock V. Swift, 51 N. J. Eq. 405, 27 Atl. 470; White Y. Megill (N. J. Eq.), 18 Atl. 355; Garland v. Sper- ling, 6 N. Mex. 623, 30 Pac. 925; Shields v. Russell, 66 Hun (N. Y.) 226; Mooney v. Byrne, 163 N. Y. 86, 57 N. E. 163; Mutual Life Ins. Co. v. Nicholas, 144 App. Div. 95, 128 N. Y. S. 902; Doty v. Norton, 133 App. Div. 106, 117 N. Y. S. 793; White v. Walsh, 62 Misc. 423, 114 N. Y. S. 1015; Conover v. Palmer, 123 App. Div. 817, 108 N. Y. S. 480; Con- nor V. Atwood, 4 N. Y. S. 561; Nor- ris V. Schuyler, 4 N. Y. S. 558; Rob- inson V. Willoughby, 65 N. Car. 520; Vallely v. First Nat. Bank, 14 N. Dak. 580, 106 N. W. 127, 5 L. R. A. (N. S.) 387, 116 Am. St. 700; Jasper V. Hazen, 4 N. Dak. 1, 58 N. W. 454, 23 L. R. A. 58; National Bank v. Tennessee &c. R. Co., 62 Ohio St. 564, 57 N. E. 450; Marshall v. Stew- art, 17 Ohio 356; Worley v. Carter, 30 Okla. 642, 121 Pac. 669; Wagg v. Herbert, 19 Okla. 525, 92 Pac. 250; Yingling v. Redwine, 12 Okla. 64, 69 Pac. 810; Balduff v. Griswold, 9 Okla. 438, 60 Pac. 223;. Weiseham V. Hocker, 7 Okla. 250, 54 Pac. 464; Houser v. Lament, 55 Pa. St. 311, 93 Am. St. 755; Guthrie v. Kahle, 46 Pa. St. 331; Cole v. Bolard, 22 Pa. St. 431; Wheeland v. Swartz, 1 Yeates (Pa.) 579; Krug v. Kautz, 21 S. Dak. 461, 113 N. W. 623; Kidd v. Sparks (Tex. Civ. App.), 167 S. W. 799; Yates v. Caswell (Tex. Civ. App.), 126 S. W. 914; Lapowski v. Shith, 1 Tex. Civ. App. 391, 20 S. W. 957; Baxter v. Dear, 24 Tex. 17, 76 Am. Dec. 89; Duerden v. Solo- mon, 33 Utah 468, 94 Pac. 978; Crahan v. Chittenden, 82 Vt. 410, 74 Atl. 86; Winn v. Cooper, 37 Vt. 169; Hudkins v. Crim (W. Va.), 78 S. E. 1043; Dudley v. Buckley, 68 W. Va. 630, 70 S. E. 376; Shields v. Simon- ton, 65 W. Va. 179, 63 S. E. 972; Furguson v. Bond, 39 W. Va. 561, 20 S. E. 591; Klinck v. Price, 4 W. Va. 4, 6 Am. Rep. 268; Falbe v. Caves, 151 Wis. 54, 138 N. W. 87; Wells v. Scanlan, 124 Wis. 229, 102 N. W. 571; Schneider v. Reed, 123 Wis. 488, 101 N. W. 682; Schierl v. New- burg, 102 Wis. 552, 78 N. W. 761; Schribei' v. Le Clair, 66 Wis. 579, 29 N. W. 570; Hoile v. Bailey, 58 Wis. 434, 448, 17 N. W. 322; Brinkman v. Jones, 44 Wis. 498; Plato v. Roe, 14 Wis. 453; Second Ward Bank v. Up- mann, 12 Wis. 499. See also Rev. Code N. Dak. 1905, § 6153; Adams V. Mclntyre, 22 N. Dak. 337, 133 N. W. 915. But see Baxter v. Pritch- ard, 122 Iowa 590, 98 N. W. 372, 101 Am. St. 282. By statute In some states, every transfer of property made as security for another act, other than a trust, is a mortgage. Renton v. Gibson, 148 Cal. 650, 84 Pac. 186; Krug v. Kautz, 21 S. Dak. 461, 113 N. W. 623. In Robinson v. Cropsey, 2 Edw. Ch. (N. Y.) 138, the court say: "If a deed or con- veyance be accompanied by a condi- tion or matter of defeasance ex- pressed in the deed, or even con- tained in a separate instrument, or exist merely in parol, let the con- sideration for it have been a pre- existing debt or a present advance of money to the grantor, the only inquiry necessary to be made is, whether the relation of debtor and creditor remains, and a debt still 341 WHEN A CONDITION-AL SALE § 264 stamps it infallibly as a mortgage.^^ The intention may be to secure other obligations than the payment of money. A deed given to secure the grantee as surety for the grantor has been held a mortgage.^* To determine the intention of the parties instruments executed at the same time, constituting one transaction, are to be read together.^^ Thus a deed and a separate instrument contemporaneously executed and giv- ing the grantor the right to repurchase within a specified time will be construed together to determine whether the contract is a mortgage or a conditional sale.^* Of course the mere secret intention of either party to an absolute conveyance as to the purpose of it is without effect in determining the character of it.°^ The rights of the parties to the conveyance must be reciprocal. If the transaction be in the nature of a mortgage, so that the grantor may insist upon a reconveyance, the grantee at the same time may insist upon repayment; but if it be a conditional sale, so that the grantor need not repurchase except at his option, the grantee can not insist upon repayment. °^ If both parties to a warranty deed intend that- it shall operate as a conveyance and not as security for a debt, and redemption by repayment under the bond for reconveyance is en- tirely optional with the grantor, the transaction is a conditional sale and not a mortgage.^^ subsists between the parties; for if veyed, was held a mortgage; and it does, then the conveyance must such real estate could not be omit- be regarded as a security for the ted from the bankrupt's schedule, payment, and be treated in all re- In re Borg, 184 Fed. 640. spects as a mortgage. On the other "= Tillison v. Moulton, 23 111. 648. hand, where the debt forming the "Meeker v. Warren (N. J. Eq.), consideration for the conveyance is 57 Atl. 421. extinguished at the time by the ex- "^ Adams v. Hopkins, 144 Cal. 19, press agreement of the parties, or 77 Pac. 712; In re Bennett's Estate, the money advanced is not paid by 168 111. App. 658; Turner v. Coch- way of loan, so as to constitute a ran, 30 Tex. Civ. App. 549, 70 S. W. debt and liability to repay it, but 1024. See ante § 245. by the terms of the agreement the ^"Thomas v. Livingston, 155 Ala. grantor has the privilege of refund- 546, 46 So. 851. See also Adams v. ing or not at his election, then it Hopkins, 144 Cal. 19, 77 Pac. 112. must be purchase-money, and the " Haney v. Clark, 65 Tex. 93. transaction will be a sale upon con- ^ Text quoted with approval in dition, which the grantor can defeat McNamara v. Culver, 22 Kans. 661; only by a repurchase, or perform- Eckert v. McBee, 27 Kans. 232; ance of the condition on his part Williams v. Owen, 10 Sim. 386; Da- within the time limited for the pur- vis v. Thomas, 1 Russ. & M. 506; chase, and in this way entitle him- Shaw v. Jeffery, 13 Moore P. C. 432; self to a reconveyance of the prop- Goodman v. Grierson, 2 Ball & B. erty." A conveyance by a bankrupt 274; Alderson v. White, 2 De G. & prior to bankruptcy to his wife not J. 97; Tapply v. Sheather, 8 Jur. (N. as a gift but to secure her for S.) 1163. money contributed to the construe- ""Pabrique v. Cherokee Coal &c. tion of buildings on the realty con- Co., 69 Kans. 733, 77 Pac. 584; Yost § 265- ABSOLUTE DEED AND EECONVETANCE v 342 An absolute deed was made, with an agreement by the grantee, executed at the same time, whereby it was stipulated that the grantor might at his election repurchase the lands for a certain sum in three months, and for certain other and greater sums in six and twelve months respectively, provided he would so elect at the expiration of six months from the date of the agreement, which sums were largely in excess of the consideration expressed in the deed, and six per cent, interest thereon. The election to repurchase • not having been made within the time stipulated, the purchaser refused to allow a repur- chase, and claimed that the sale and deed were absolute : the evidence showing that the transaction was really a loan, it was held that the grantor might redeem upon the payment of the consideration ex- pressed in the deed, with interest.^" The reservation of an absolute life estate out of property conveyed as security for performance of a bond to support the grantor operates as a mortgage."^ § 265. Existence of the debt. — The existence of the debt is the test. If an absolute conveyance be made and accepted in payment of an existing debt, and not merely as security for it, an agreement by the grantee to reconvey the land to the grantor upon receiving a cer- tain sum within a specified time does not create a mortgage, but a conditional sale, and the grantee holds the premises subject only to the right of the grantor to demand a reconveyance according to the terms of the agreement."^ If the debt is not extinguished by the conveyance, V. First Nat. Bank, 66 Kans. 605, 72 Ala. 504, 45 So. 168; Maxwell t. Pac. 209; Smith v. Hofe, 23 N. Dak. Herzfeld, 149 Ala. 67, 42 So. 987; 37, 135 N. W. 772, Ann. Cas. 1914 C, Robinson v. Gassoway (Ala.), 39 1072; Smythe v. Reed, 28 Utah 262, So. 1023; Pearson v. Dancy, 144 78 Pac. 478; Hoover v. Bouffleur, 74 Ala. 427, 39 So. 474; Martin v. Mar- Wash. 382, 133 Pac. 602; Hinchman tin, 123 Ala. 191, 26 So. 525; Adams V. Cook, 45 Wash. 490, 88 Pac. 931. v. Pilcher, 92 Ala. 474, 8 So. 757; Conversely the grantee's option to Vincent v. Walker, 86 Ala. 333, 5 reconvey is a conditional sale. See So. 465; McMillan v. Jewett, 85 ante § 244. Ala. 476, 5 So. 145; Perdue v. Bell, "Klinck V. Price, 4 W. Va. 4, 6 83 Ala. 396, 3 So. 698; Booker v. Am. Rep. 268. Waller, 81 Ala. 549, 8 So. 225; Doug- «'Hurd V. Chase, 100 Maine 661, lass v. Moody, 80 Ala.. 61; Turner 62 Atl. 660. See post § 388 et seq. v. Wilkinson, 72 Ala. 364; Mobile ^' Villa V. Rodriguez, 12 Wall. (U. Building &c. Assn. v. Robertson, 65 S.) 323, 20 L. ed. 406; StoUenwerck Ala. 382; Tisdale v. Maxwell, 58 V. Marks (Ala.), 65 So. 1024; Bell Ala. 42; Haynie v. Robertson, 58 V. Shiver (Ala.), 61 So. 881; Nel- Ala. 37; Peoples v. Stolla, 57 Ala. son V. Wadsworth, 171 Ala. 603, 55 53; Wells v. Morrow, 38 Ala. 125 So. 120; Rodgers v. Burt, 157 Ala. (circumstances rendering thetrans- 91, 47 So. 226; Farrow v. Cotney, action a mortgage); West v. Hen- 153 Ala. 550, 45 So. 69 (deed given drix, 28 Ala. 226; Robinson v. Far- by wife in satisfaction of her bus- relly, 16 Ala. 475; Hays v. Emerson, band's debt); Smith v. Smith, 153 75 Ark. 551, 87 S. W. 1027; Stryker 343 WHEN A CONDITIONAL SALE § 265 but continues as a subsisting obligation, the transaction will be re- V. Hersliy, 38 Ark. 264; Cooley v. Miller, 156 Cal. 510, 105 Pac. 981; Prefumo v. Russell, 148 Cal. 451, 83 Pac. 810; Hillhouse v. Dunning, 7 Conn. 139; Pitts v. Maier, 115 Ga. 281, 41 S. E. 570 (overruling Frost V. Allen, 57 Ga. 326); Pirkle v. Mortgage Co., 99 Ga. 524 (so far as in conflict) ; Murphy v. Purlfoy, 52 Ga. 480; Spence v. Steadman, 49 Ga. 133; Linkemann v. Knepper, 226 111-. 473, 80 N. E. 1009 (absolute deed given in consideration of tlie grantee's satisfaction of the grant- or's debt); Caraway v. Sly, 222 111. 203, 78 N. E. 588; Cassem v. Heus- tis, 201 111. 208, 66 N. E. 283, 94 Am. St. 160; Crane v. Chandler, 190 111. 584, 60 N. E. 826; Burgett v. Os- borne, 172 111. 227, 50 N. E. 206; Kerting v. Hilton, 152 111. 658, 38 N. E. 941; Batcheller v. Batcheller, 144 111. 471, 33 N. E. 24; Fisher v. Green, 142 111. 80, 31 N. E. 172; Freer v. Lake, 115 111. 662, 4 N. E. 512; Union Mut. Life Ins. Co. v. Slee, 110 111. 35; Rue v. Dole, 107 111. 275; Magnusson v. Johnson, 73 111. 156; Pitts V. Cable, 44 111. 103; Sutphen v. Cushman, 35 111. 186; Osborne v. Morgan, 171 111. App. 549; Rankin v. Rankin, 111 111. App. 403; Rogers v. Beach, 115 Ind. 413, 17 N. B. 609; Voss v. Eller, 109 Ind. 260, 10 N. E. 74; Bigler v. Jack, 114 Iowa 667, 87 N. W. 700; Bridges v. Linder, 60 Iowa 190, 14 N. W. 217 (quoting text) ; Trucks v. Sheaff, 19 Iowa 343; Hughes v. Sheaff, 19 Iowa 335; Hall v. Savill, 3 Greene (Iowa) 37, 54 Am. Dec. 485; Fabrique v. Cherokee Coal &c. Co., 69 Kans. 733, 77 Pac. 584; Ho- nore v. Hutchings, 8 Bush (Ky.) 687; Hawes v. Williams, 92 Maine 483, 43 Atl. 101; Reed v. Reed, 75 Maine 264; Stinchfield v. Milliken, 71 Maine 567; French v. Sturdi- vant, 8 Maine 246; Duell v. Leslie, 207 Mo. 658, 106 S. W. 489; Stowe v. Banks, 123 Mo. 672, 27 S. W. 847; O'Neill V. Capelle, 62 Mo. 202; Slowey V. McMurray, 27 Mo. 113, 72 Am. Dec. 251; Brant v. Robert- son, 16 Mo. 129; Morrison v. Jones, 31 Mont. 154, 77 Pac. 507; Klein- schmldt V. Kleinschmidt, 9 Mont. 477, 24 Pac. 266; Gassert v. Bogk, 7 Mont. 585, 19 Pac. 281; Harrah V. Smith, 79 Nebr. 51, 112 N. W. 337; Kraemer v. Adelsberger, 122 N. B. 469, 25 N. E. 859; Odell v. Montross, 68 N. Y. 499; Morrison V. Brand, 5 Daly (N. Y.) 40; Glover V. Payn, 19 Wend. (N. Y.) 518; Pemberton v. Simmons, 100 N. Car. 316, 6 S. E. 122; King v. Kincey, 1 Ired. Bq. (N. Car.) 187, 36 Am. Dec. 40; Miller v. Smith, 20 N. Dak. 96, 126 N. W. 499; McGuin t. Lee, 10 N. Dak. 160, 86 N. W. 714; Gray v. Shelby, 83 Tex. 405, 18 S. W. 809; Seeligson v. Singletary, 66 Tex. 271, 17 S. W. 541; Ruffier v. Womack, 30 Tex. 332; Parks v. Sul- livan (Tex. Civ. App.), 152 S. W. 704; Stringfellow v. Braselton, 54 Tex. Civ. App. 1, 117 S. W. 204; Rotan Grocery Co. v. Turner, 46 Tex. Civ. App. 534, 102 S. W. 932; Pumilia v. DeGeorge (Tex. Civ. App.), 74 S. W. 813; Wilcox v. Ten- nant, 13 Tex. Civ. App. 220, 35 S. W. 865; Snavely v. Pickle, 29 Grat. (Va.) 27; Boyer v. Paine, 60 Wash. 56, 110 Pac. 682; Thacker v. Mor- ris, 52 W. Va. 220, 43 S. E. 141, 94 Am. St. 928; Kerr v. Hill, 27 W. Va. 576; Hoffman v. Ryan, 21 W. Va. 415; Davis v. Demming, 12 W. Va. 246; Hoile r. Bailey, 58 Wis. 434, 17 N. W. 322; Smith v. Crosby, 47 Wis. 160, 2 N. E. 104. In Adams v. Pilcher, 92 Ala. 474, 8 So. 757, Coleman, J., forcibly stated the law upon this subject, saying: "If the parties intended a sale, whether in paynient of an antecedent debt or a present con- sideration paid, with the right to repurchase within a specified time, and for an agreed price, the pur- chaser becomes the owner of the property, and the vendor of the right to repurchase, if he sees proper to do so. No obligations rest upon the grantor to do so. It is optional whether he will or not. If he declines to do so, the vendee has no cause of action against him, either by reason of money paid, or for the debt satisfied by the con- veyance. If there remain in the vendee a cause of action for the money paid, or, in the other case, for the antecedent debt, this will § 265 ABSOLUTE DEED AND EECONYETANCE 344 garded as a mortgage."^ A debt either pre-existing or created at the time, or contracted to be created, is an essential requisite of a mort- gage."* "A mortgage is, in equity, a hypothecation or pledge of prop- erty for the security of a debt. There must be a debt, or there can be no security for its payment. Hence it is said, if there is no debt, there determine the transaction to have been intended as a mortgage, not an absolute conveyance. It is not left optional with the grantor to determine whether he owes a debt to the grantee or not, and, by his election to owe a debt to the grantee, convert a sale with the right of repurchase into a mort- gage. His power to elect to repur- chase or redeem exists only where there is a sale with the right to re- purchase. If a mortgage was in- tended by the parties, the debt ex- ists, whether he consents or not, and the mortgagee has the same legal authority to enforce the in- strument as a mortgage as the grantor to have the instrument de- clared a mortgage." An absolute conveyance of prop- erty in partial satisfaction of a debt accompanied by an agreement that if the property enhances in value to a certain extent within a specified time, notes given in sat- isfaction of the remainder of the debt shall be canceled, does not constitute an equitable mortgage. Pearson v. Dancy, 144 Ala. 427, 39 So. 474. See post §§ 267, 325. "Thomas v. Livingston, 155 Ala. 546, 46 So. 851; Wynn v. Fitzwater (Ala.), 44 So. 97; American Mfg. Co. v. Williams, 103 Ark. 484, 145 S. W. 234; Rushton v. Molllvene, 88 Ark. 299, 114 S. "W. 709; Holmes V. Warren, 145 Cal. 457, 78 Pac. 954; Scott v. Hughes, 124 Ga. 1000, 53 S. E. 453; Fabrique v. Cherokee Coal &c. Co., 69 Kans. 733, 77 Pac. 584; Duell v. Leslie, 207 Mo. 658, 106 S. W. 489; Samuelson v. Mickey, 73 Nebr. 852, 103 N. W. 671; Tanny- hill V. Pepperl, 70 Nebr. 31, 96 N. W. 1005; Farrow v. Work, 39 Okla. 734, 136 Pac. 739; Caro v. Wollen- berg (Ore.), 136 Pac. 866; Harmon V. Grant's Pass Banking &c. Co., 60 Ore. 69, 118 Pac. 188; Biokel v. Wes- singer, 58 Ore. 98 113 Pac. 34; Francis v. Francis, 78 S. Car. 178, 58 S. E. 804; Harrison v. Hogue (Tex. Civ. App.), 136 S. W. 118; Blake v. Lowry, 43 Tex. Civ. App. 17, 93 S. W. 521; Mittlesteadt v. Johnson, 75 Wash. 550, 135 Pac. 214; Hursey v. Hursey, 56 W. Va. 148, 49 S. E. 367. ""Irwin V. Coleman, 173 Ala. 175, 65 So. 492; Hubert v. Sistrunk (Ala.), 53 So. 819; Thomas v. Liv- ingston, 155 Ala. 546, 46 So. 851; Smith V. Smith, 153 Ala. 504, 45 So. 168; Wynn v. Fitzwater (Ala.), 44 So. 97; Lindbloom v. Kidston, 2 Alaska 292; American Mtg. Co. v. Williams, 103 Ark. 484, 145 S. W. 234; Rushton v. Mclllvene, 88 Ark. 299, 114 S. W. 709; Land v. May, 73 Ark. 415, 84 S. W. 489; Holmes v. Warren, 145 Cal. 457, 78 Pac. 954; Bergen v. Johnson, 21 Idaho 619, 123 Pac. 484; Hannah v. Vensel, 19 Idaho 796, 116 Pac. 115; Sinclair v. Gunzenhauser, 179 Ind. 78, 98 N. E. 37; Ferguson v. Boyd (Ind. App.), 79 N. E. 549, 169 Ind. 537, 81 N. E. 71; Beidelman v. Koch, 42 Ind. App. 423, 85 N. E. 977; Fort v. Colby (Iowa), 144 N. W. 393; Henninger V. McGuire, 146 Iowa 270, 125 N. W. 180; Jones v. Gillett, 142 Iowa 506, 118 N. W. 314; Veeder v. Veed- er, 141 Iowa 492, 120 N. W. 61; Chandler v. Chandler, 76 Iowa 574, 51 N. W. 319; Bridges v. Linder, 60 Iowa 190 (quoting text); Farmers' &c. Bank v. Kackley, 88 Kans. 70, 127 Pac. 539; Eckert v. McBee, 27 Kans. 232; McNamara v. Culver, 22 Kans. 661 ; Tucker v. Witherbee, 130 Ky. 269, 113 S. W. 123; Puson v. Chestnut, 33 Ky. L. 249, 109 S. W. 1192; Sebree v. Thompson. 31 Ky L. 1146, 104 S. W. 781; Olney v Brown, 163 Mich. 125, 128 N. W 241; Weise v. Anderson, 134 Mich 502, 96 N. W. 575 ; Lipscomb v. Tal bott, 243 Mo. 1, 147 S. W. 798; Don ovan V. Boeck, 217 Mo. 70, 116 S W. 543; Duell v. Leslie, 207 Mo, 658, 106 S. W. 489; Gibson v. Mor- ris State Bank (Mont), 140 Pac 345 WHEN A CONDITIONAL SALE 365 can be no mortgage. Debt, in this connection, means a duty or obli- gation to pay, for the enforcement of which an action will lie.""^ The absolute deed may secure advances to be made, and in that case the mortgage becomes effectual when the advances are made."" "Where there is no debt and no loan, it is impossible to say that an agreement to resell will change an absolute deed into a mortgage.""^ A deed executed to secure the payment of a note, representing an 76; Morrison v. Jones, 31 Mont. 154, 77 Pac. 507; Samuelson v. Mickey, 73 Nebr. 852, 103 N. W. 671; Tanny- hill V. Pepperl, 70 Nebr. 31, 96 N. W. 1005; Doty v. Norton, 133 App. Div. 106, 117 N. Y. S. 793; Bas- combe v. Marsliall, 129 App. Div. 516, 113 N. Y. S. 991; Miller v. Smith, 20 N. Dak. 96, 126 N. W. 499; Vallely v. First Nat. Bank, 14 N. Dak. 580. 106 N. V 127, 5 L. R. A. (N. S.) 387, 116 Am. St. 700; Farrow v. Work, 39 Okla. 734, 136 Pac. 739; Caro v. Wollenberg (Ore.), 136 Pac. 866; Grover v. Hawtliorne, 62 Ore. 77, 121 Pac. 808; Harmon v. Grant's Pass Bank- ing &c. Co., 60 Ore. 69, 118 Pac. 188; Bickel v. Wessinger, 58 Ore. 98, 113 Pac. 34; Eldriedge v. Hoefer, 52 Ore. 241, 93 Pac. 246, judgment modified 94 Pac. 563; Francis v. Francis, 78 S. Car. 178, 58 S. E. 804; Jones v. Jones, 20 S. Dak. 632, 108 N. W. 23; Kidd v. Sparks (Tex. Civ. App.), 167 S. W. 799; Mitchell v. Morgan (Tex. Civ. App.), 165 S. W. 883; Harrison r. Hogue (Tex. Civ. App.), 136 S. W. 118; O'Neill v. O'Neill (Tex. Civ. App.), 135 S. W. 729; Yates v. Caswell (Tex. Civ. App.), 126 S. W. 914; Hall v. Jennings (Tex. Civ. App.), 104 S. W. 489; Goodbar v. Bloom, 43 Tex. Civ. App. 434, 96 S. W. 657 (quoting text); Blake v. Lowry (Tex. Civ. App.), 93 S. W. 521; Crahan v. Chittenden, 82 Vt. 410, 74 Atl. 86; Tuggle v. Berkeley, 101 Va. 83, 43 S. E. 199; Mittle- steadt V. Johnson, 75 Wash. 550, 135 Pac. 214; Johnson v. National Bank of Commerce, 65 Wash. 261, 118 Pac. 21; Fridley v. Somerville, 60 W. Va. 272, 54 S. E. 502; Hursey v. Hursey, 56 W. Va. 148, 49 S. E. 367; Polly V. Gumney (Wis.), 147 N. W. 356; McCourt v. Peppard, 126 Wis. 326, 105 N. W. 809; Wolf v. Theresa Village Mut. Fire Ins. Co., 115 Wis. 402, 91 N. W. 1014. Rev. Stat. Wis., 1898, § 2243. The owner of a house and lot, in possession, not being able to pay an existing mortgage thereon, deeded it to a party who paid the mortgage, the latter giving an op- tion to a relative of the owner to repurchase the property, the owner being advised at the time that her deed divested her of all interest. Subsequently the party holding the option refused to purchase the prop- erty, which was then sold to a third party. It was held that since the payment of the mortgage did not constitute a new debt, but a con- sideration for the deed to the prop- erty, no mortgage arose by impli- cation, but the transaction was a conditional sale. Holladay v. Wil- lis, 101 Va. 274, 43 S. E. 616. "° Stollenwerck v. Marks (Ala.), 65 So. 1024; Nelson v. Wadsworth, 171 Ala. 603, 55 So. 120; Vincent v. Walker, 86 Ala. 333, 5 So. 465; Douglass V. Moody, 80 Ala. 61. See also Haynie v. Robertson, 58 Ala. 37; McKinstry v. Conly, 12 Ala. 678. "Bull v. Coe, 77 Cal. 54, 18 Pac. 808; Cramer v. Cale, 72 N. J. Eq. 210, 73 Atl. 813. *' Per Bronson, J., in Glover v. Payn, 19 Wend. (N. Y.) 518. See also Vincent v. Walker, 86 Ala. 333, 5 So. 465; Rue v. Dole, 107 111. 275; Mooney V. Byrne, 163 N. Y. 86, 57 N. E. 163; Macauley v. Smith, 132 N. Y. 524, 30 N. E. 997; Barry v. Hamburg-Bremen F. Ins. Co., 110 N. Y. 1, 17 N. E. 405; Odell v. Mont- ross, 68 N. Y. 499; Meehan v. For- rester, 52 N. Y. 277; McGuin v. Lee, 10 N. Dak. 160, 86 N. W. 714. See post § 266. § 265 ABSOLUTE DEED AND RECONVEYANCE 346 indebtedness, is a mortgage."* Thus a deed made to secure and in- demnify the grantee as the accommodation indorser of notes made by the grantor was held a mortgage."* The debt may not be evidenced by any bond or note, or -covenant to pay it; so that the facts and circumstances of the transaction must be inquired into in order to ascertain whether the consideration of the deed was really a debt or loan; if not one or the other, the deed can hardly be a mortgage.'" It is not material that there should be any note or bond or other written evidence of debt, nor is it material that the indebtedness should have arisen in any particular manner. It is only material that there should be a bona fide debt.'^^ The law on this subject is well stated by Judge Parker in a New York ease.'^ He says: "In determining whether a contract is to be treated as a mortgage, or a conditional sale, or a conveyance in fee, courts have commented upon the presence or absence of various par- ticulars which commonly accompany mortgages, but the essential fea- ture necessary to create a mortgage is that it should be a conveyance intended as a security. Such evidently was the purpose of the contract before us, but the plaintiff calls attention to the absence of a covenant to pay the amount of the indebtedness. It was agreed that interest should be paid on the full amount; that, after sales should be made, the proceeds should be applied in reduction of the amount of the then existing obligation ; and that the firm would pay the difference, if any should remain. So that, while there was not an agreement in terms to pay the entire indebtedness, such may be said to have been the pur- pose and effect of the agreement ; but in any event, the absence of such a covenant is not conclusive, but is a circumstance to be considered in construing the contract." An agreement by the grantee in an absolute conveyance, that if the " Lindbloom v. Kidston, 2 Alaska not a mere conveyance to secure the 292; Land v. May, 73 Ark. 415, 84 payment of a debt. Grubb v. Bren- S. W. 489 ; Doty v. Norton, 133 App. del, 52 Ind. App. 531, 100 N. E. 872. Dlv. 106, 117 N. Y. S. 793; Crahan On the other hand, the existence of V. Chittenden, 82 Vt. 410, 74 Atl. 86. a written promise to repay money' »» Dudley v. Buckley, 68 W. Va. advanced is strong evidence of an 630, 70 S. E. 376. existing personal debt and mort- ™ Conway v. Alexander, 7 Cranch gage, though not conclusive. Bev- (U. S.) 218, 3 L. ed. 321; Henley v. erly v. Davis (Wash.), 140 Pac. 696. Hotaling, 41 Gal. 22; Gait v. Jack- '^Overstreet v. Baxter, 30 Kans. son, 9 Ga. 151; Reed v. Reed, 75 55, 1 Pac. 825; Graham v. Stevens, Maine 264; Flagg v. Mann, 14 Pick. 34 Vt. 166, 80 Am. Dec. 675. (Mass.) 467; Lund v. Lund, 1 N. H. "Kraemer v. Adelsberger, 122 N. 39, 8 4.m. Dec. 29. The absence of Y. 467, 25 N. B. 859. See also Mor- any written evidence of a debt is a ris v. Budlong, 78 N. Y. 543; Horn circumstance indicating a sale, and v. Keteltas, 46 N. Y. 605. 347 WHEN A CONDITIONAL SALE § 365 grantor should, within a certain time, bring him the amount of the consideration of the deed with interest, he would deliver up the deed, but otherwise the grantor should forfeit all claim to such deed, was held not to be a defeasance of a mortgage, as there was no debt secured, but merely a contract to reconvey on certain termsJ^ But whenever a debt is recognized by the parties or established by evidence, such an agreement serves to make a mortgage of the conveyance,'* as where a grantee, a year after the making of the deed, gave a bond reciting that there had been a loan, and that the conveyance was made to secure it, the transaction was a mortgage, although the bond contained a condi- tion, that if the money was not paid on a day named, the obligation should be void.'' And so where a grantee executed a bond to the grantor reciting the deed and the grantor's indebtedness, and provid- ing that if the debt should be paid on or before a certain day the bond should be void, but that the bond should remain in force if the grantee after payment should neglect to reconvey the land, the transaction was a mortgage.'" If an absolute deed was intended as security, it is a mortgage, though the bond for reconveyance makes time of the essence of the contract." In a case before the Supreme Court of California,'^ the agreement was that the grantee should execute a bond to reconvey the premises ; but the grantor did not agree to repurchase, and the bond was deliv- ered as an escrow, and it remained an escrow until after the time therein mentioned for the execution of the deed, and was then can- celed. If the d€ed was intended as a mortgage, says the court, the mortgagee would have a right of action to foreclose the mortgage ; but if he had brought such an action, the answer that there was no promise, "Pearson v. Seay, 35 Ala. 612; 589, 22 N. E. 246; Tannery v. Nich- Reading v. Weston, 7 Conn. 143, 18 olson, 87 111. 464. Am. Dec. 89; Robertson v. Moline "Henley v. Hotaling, 41 Cal. 22. M. Stoddard Co., 106 Iowa 414, 76 This case differs from Sears v. N. W. 736; Bridges v. Linder, 60 Dixon, 33 Cal. 326, in the important Iowa 190, 14 N. W. 217. particular that in that case the "Voss V. Eller, 109 Ind. 260, 10 mortgagor covenanted to repay the N. E. 74; Reed v. Reed, 75 Maine purchase-money at a fixed time, and, 264; Hart v. Eppstein, 71 Tex. 752, under the name of rent, to pay in- 10 S. W. 85; Alstin v. Cundlff, 52 terest thereon at a stipulated rate; Tex. 453. and the court also found that the ''Montgomery v. Chadwick, 7 parties intended to execute a mort- lowa 114. gage; but in this case the court ™Van Wagner v. Van Wagner, 7 found that the parties intended the N. J. Eq. 27. deed to be in fact, as it was in form, " Cassem v. Heustis, 201 111. 208, an absolute conveyance. See ante 66 N. B. 283, 94 Am. St. 160; Jack- § 247. son T. Lynch, 129 III. 72, 21 N. E. § 266 ABSOLUTE DEED AND EECOXYETANCE 348 either express or implied, on the part of the alleged mortgagor to re- pay the purchase-money would have been a complete bar. § 266. Effect of absolute deed to secure a loan. — An absolute con- veyance to secure a loan of money is generally held to be a mortgage," and equity vrill look through the forms in which the lender has en- veloped the transaction.*" When an absolute conveyance has been made upon an application for a loan, and an agreement is made to reconvey upon payment of the money advanced, as a general rule the transaction is adjudged to constitute a mortgage.*^ In each case the purpose of the grantor was in the beginning to borrow money; and unless a change be shown in his intentions it is presumed that any use he may have made of his real estate, in connection with it, was merely as a pledge to secure a loan.*^ The parties having originally met upon the footing of borrowing and lending, although a different consideration be recited in the deed, it will be considered a mortgage until it be shown that the parties afterward bargained for the property independently of the loan.*^ But an application for a loan may in any case result in a sale of land ab- solutely or conditionally, and because the transaction began with such an application it is not to be concluded that it necessarily ended in a '"Alter V. Clark, 193 Fed. 153; 1076, 87 S. W. 804; Wagg v. Her- Whitehouse v. Whitehouse, 22 Cal. bert, 19 Okla. 525, 92 Pac. 250. App. 565, 135 Pac. 509; Schumacher *' Russell v. Southard,. 12 How. V. Langford, 20 Cal. App. 61, 127 (U. S.) 139, 13 L. ed. 927; Parme- Pac. 1057; Fleming v. Georgia R. lee v. Lawrence, 44 111. 405; Miller Bank, 120 Ga. 1023, 48 S. E. 420; v. Thomas, 14 111. 428; Crassen v. Garvin v. Vincent, 27 Ky. L. 1076, Swoveland, 22 Ind. 427; Wheeler v. 87 S. W. 804; Ehle v. Looker Ruston, 19 Ind. 334; Cross v. Hep- (Mich.), 148 N. W. 378; Restrick ner, 7 Ind. 359; Kellum v. Smith, Lumber Co. v. Wyrembolski, 164 33 Pa. St. 158; Brown v. Nickle, 6 Mich. 71, 128 N. W. 1083; Stumpe Pa. St. 390; McSorley v. Hughes, 12 V. Kopp, 201 Mo. 412, 99 S. W. 1073; N. Y. S. 179; Holmes v. Grant, 8 Conover v. Palmer, 123 App. Div. Paige (N. Y.) 243; Hart v. Epp- 817, 108 N. Y. S. 480; Worley v. stein, 71 Tex. 752, 10 S. W. 85; Carter, 30 Okla. 642, 121 Pac. 669; Hoffman v. Ryan, 21 W. Va. 415; Wagg V. Herbert, 19 Okla. 525, 92 Davis v. Demming, 12 W. Va. 246. Pac. 250; Krug v. Kautz, 21 S. Dak. »= Mobile Bldg. &c. Assn. v. Rob- 461, 113 N. W. 623; Froidevaux v. ertson, 65 Ala. 382; Crews v. Jordan, 64 W. Va. 388, 62 S. E. 686; Threadgill, 35 Ala. 334; Greenwood Wells V. Scanlan, 124 Wis. 229, 102 Bldg. Assn. v. Stanton, 28 Ind. App. N. W. 571; Schneider v. Reed, 123 548; Anon., 3 Hayw. (N. Car.) 26; Wis. 488, 101 N. W. 682. A deed Davis v. Hemenway, 27 Vt. 589; executed as security for a loan does Kerr v. Hill, 27 W. Va. 576; Van- not become a mortgage until the gilder v. Hoffman, 22 W. Va. 1. actual advance of the loan. Schu- '^ Morris v. Nixon, 1 How. (U. S.) macher v. Langford, 20 Cal. App. 118, 11 L. ed. 69; Crews v. Thread- 61, 127 Pac. 1057. gill, 35 Ala. 334; Smith v. Doyle, " Garvin v. Vincent, 27 Ky. L. 46 111. 451. See also Dwen v. Blake, 349 WHEX A CONDITIONAL SALE § 867 loan.^* The language of the courts, m some eases, would seem to im- ply that a court of equity would always allow redemption in such case ; but although such transactions should be carefully scrutinized, when it appears that the negotiations resulted in a sale absolute or conditional this will be supported.*" Where a party borrows money from a bank to pay for land, and causes the conveyance to be made to the bank, and gives his note re- citing that it is secured by the deed, such conveyance, though absolute on its face, is a deed to secure the payment of the loan.*" Where the owners of lots conveyed them to secure a loan, and the grantees gave back a land contract showing a balance unpaid, the transaction was held a mortgage.*'' On the other hand, where there was no intimation of a proposition to borrow money or secure a loan by mortgage before or after the execution of an absolute deed, the transaction was construed to be what it appeared on its face.** Evidence that the grantee in a deed refused to take a mortgage upon the property when approached upon the subject, tends to show that an absolute deed to him and his agreement to resell were not intended by him merely as a mortgage. *° The terms of a contract, to the effect that the grantee would recon- vey upon the paym'ent of a certain sum and interest, less the rents he might receive, tend to show that the debt, whether pre-existing or cre- ated at the time, was not extinguished, although it be declared in the contract that it is merely an agreement to reconvey, and not in ac- knowledgment of a mortgage.^" § 267. Conveyance in satisfaction of debt — Agreement to reconvey. — Where an absolute deed is executed in consideration of a precedent debt, accompanied by an agreement to reconvey to the grantor upon 44 111. 135; Richardson v. Barrlck, Fresh, 9 Mo. 201; McDonald v. Mc- 16 Iowa 407; Leahigh v. White, 8 Leod, 1 Ired. Eq. (N. Car.) 221. Nev. 147; Phillips V. Hulsizer, 20 N. '"Fleming v. Georgia R. Bank, J. Eq. 398; Fiedler v. Darrin, 50 N. 120 Ga. 1023, 48 S. E. 420. See also Y 437 59 Barb. (N. Y.) 651; Tibbs Whitehouse v. Whitehouse, 22 CaL V. Morris, 44 Barb. (N. Y.) 138; App. 565, 135 Pac. 509. Marvin v. Prentice, 49 How. (N. "Restrick Lumber Co. v. Wyrem- Y.) 385; Sweetzer's Appeal, 71 Pa. bolski, 164 Mich. 71, 128 N. W. 1083. St 264; Knowlton v. Walker, 13 ''Conway v. Alexander, 7 Cranch Wis. 264. (U- S.) 218, 3 L. ed. 321. See also *'Bogk v. Gassert, 149 U. S. 17, Hubert v. Sistrunk (Ala.), 53 So. 37 L. ed. 631, 13 Sup. Ct. 738. 819. '=^Hanford v. Blessing, 80 111. 188; '"Bacon v. National German- Flagg V. Mann, 14 Pick. (Mass.) Am. Bank, 191 111. 205, 60 N. E. 846; 467; Cobb v. Day, 106 Mo. 278, 17 Conner v. Clapp, 37 Wash. 299, 79 S. W. 323 (quoting text) ; Turner Pac. 929. v. Kerr, 44 Mo. 429 ; Holmes v. ^ People v. Irwin, 14 Cal. 428. 2G7 ABSOLUTE DEED AND RECONVEYANCE 350 payment of the consideration, a decisive test whether the transaction constitutes a mortgage or a conditional sale is found in the question whether the debt was discharged by the deed or subsisted afterward. An absolute deed delivered in payment of a debt is not converted into a mortgage merely because the grantee therein gives a contempo- raneous stipulation binding him to reconvey, on being reimbursed, within an agreed period, an amount equal to the debt and the interest thereon. If the conveyance extinguishes the debt and the parties so intend, so that a plea of payment would bar an action thereon, the transaction will be held an absolute or conditional sale, and not a mortgage."^ »' Farrow v. Cotney, 153 Ala. 550, 45 So. 69; Martin v. Martin, 123 Ala. 191, 26 So. 525; Knaus v. Dreher, 84 Ala. 319, 4 So. 287; Perdue v. Bell, 83 Ala. 396, 3 So. 698; "West v. Hendrix, 28 Ala. 226; Rees v. Bhodes, 3 Ariz. 235, 73 Pac. 446; Rushton V. Mclllvene, 88 Ark. 299, 114 S. W. 709; Holmes v. Warren, 145 Cal. 457, 78 Pac. 954; Farmer v. Grose, 42 Cal. 169; Page v. Villiac, 42 Cal. 75; Pendergrass v. Burris (Cal.), 19 Pac. 187; Hickox v. Lowe, 10 Cal. 197; Phipps v. Munson, 50 Conn. 267; Carroll v. Tomlinson, 192 111. 398, 61 N. E. 484, 85 Am. St. 344; Freer v. Lake, 115 111. 662, 4 N. B. 512; Bearss v. Ford, 108 111. 16; Rue V. Dole, 107 111. 275 (quoting and approving text) ; Johnson v. Pros- perity Loan &c. Assn., 94 111. App. 260; Mann v. Jobusch, 70 111. App. 440; Glass v. Doane, 15 111. App. 66; Rogers v. Beach, 115 Ind. 418, 17 N. E. 609; Voss v. Filer, 109 Ind. 260, 10 N. E. 74; Hays v. Carr, 83 Ind. 275; Bridges v. Linder, 60 Iowa 190, 14 N. W. 217; Hughes v. Sheaff, 19 Iowa 335; Blston v. Chamberlain, 41 Kang. 354, 21 Pac. 259; Howe v. Austin, 40 La. Ann. 323, 4 So. 315; Baugher v. Merryman, 32 Md. 185; Knight V. Hartman, 93 Mich. 69, 52 N. W. 1044; Shultes v. Stivers, 66 Minn. 517, 69 N. W. 639; Weathers- ly V. Weathersly, 40 Miss. 462, 90 Am. Dec. 344; Hoopes v. Bailey, 28 Miss. 328; Duell v. Leslie, 207 Mo. 658, 106 S. W. 489; Turner v. Kerr, 44 Mo. 429; Slowey v. McMurray, 27 Mo. 113, 72 Am. Dec. 251; Harrah V. Smith, 79 Nebr. 51, 112 N. W. 337; Samuelson v. Mickey, 73 Nebr. 852, 103 N. W. 671; Tannyhill v. Pepperl, 70 Nebr. 31, 96 N. W. 1005; Doying v. Chesebrough (N. J. Eq.), 36 Atl. 893; Phillips v. Hulsizer, 20 N. J. Eq. 308; Kearney v. Macomb, 16 N. J. Eq. 189; Blazy v. McLean, 129 N. Y. 44, 29 N. E. 6; Randall v. Sanders, 87 N. Y. 578; Morrison v. Brand, 5 Daly (N. Y.) 40; Whitney V. Townsend, 2 Lans. (N. Y.) 249; Coburn v. Anderson, 62 How. Pr. (N. Y.) 268; McGuin v. Lee, 10 N. Dak. 160, 86 N. W. 714; Duclos v Walton, 21 Ore. 323, 28 Pac. 1; Null V. Fries, 110 Pa. St. 521, 1 Atl. 551; Callahan's Estate, 13 Phila. (Pa.) 381; Tripler v. Campbell, 22 R. I. 262, 47 Atl. S85; Francis v. Francis, 78 S. Car. 178, 58 S. E. 804; Creswell V. Smith, 61 S. Car. 575, 39 S.B. 757; Brown v. Bank of Sumter, 55 S. Car. 51, 32 S. B. 816; Shiver v. Arthur, 54 S. Car. 184, 32 S. B. 310; Miller v. Yturria, 69 Tex. 549, 7 S. W. 206; Calhoun v. Lumpkin, 60 Tex. 185; Stringf allow v. Breselton, 54 Tex. Civ. App. 1, 117 S. W. 204; Goodbar v. Bloom, 43 Tex. Civ. App. 434, 96 S. W. 657 (quoting text): Boyer v. Paine, 60 Wash. 56, 110 Pac. 682; Neeson v. Smith, 47 Wash. 386, 92 Pac. 131; Hesser v. Brown, 40 Wash. 688, 82 Pac. 934; Dabney V. Smith, 38 Wash. 40, 80 Pac. 199; Swarm v. Boggs, 12 Wash. 246, 40 Pac. 941; Hursey v. Hursey, 56 W. Va. 148, 49 S. B. 367; Sadler v. Tay- lor, 49 W. Va. 104, 38 S. E. 583; Weltner v. Thurmond, 17 Wyo. 268, 98 Pac. 590, 99 Pac. 1128, 129 Am. St. 1113. See ante §§ 244, 265, and post §§ 325, 326. 351 WHEN- A CONDITIONAL SALE § 268 And so if there was in fact a sale, an agreement by the purchaser to resell the property within a limited time, at the same price, does not convert it into a mortgage.''^ A farmer agreed with another that he might sell the farm and have all he could obtain above $2,000; and, to give effect to this agreement, the farmer conveyed to him the land, and took back a reconveyance, on condition that the reconvey- ance should be void upon the payment of $2,000. The transaction was of course held to be a conditional sale-^** But if the indebtedness be not canceled, equity will regard the con- veyance as a mortgage, whether the grantee so regard it or not. He can not at the same time hold the land absolutely and retain the right to enforce payment of the debt on account of which the conveyance was made. The test, therefore, in cases of this sort, by which to de- termine whether the conveyance is a sale or a mortgage, is to be found in the question whether the debt was discharged or not by the con- veyance.** If in the subsequent transactions of the parties there is no recognition in any way of the relation of debtor and creditor, and the vendee for a considerable period holds possession without paying in- terest or rent, these facts go to show that there is only an agreement for repurchase and not a mortgage."^ § 268. Agreement to reconvey in default of purchase-price — Ad- vances secured by deed or bond to reconvey. — Where one induces a third person to purchase land from him, and the purchaser agrees to reconvey the land to the grantor if certain payments are made to him within a specified time, in default of payment there is no right of re- '''Eckert V. McBee, 27 Kans. 232; Min. Co. v. Jennings, 5 Utah 243, 16 Mason v. Moody, 26 Miss. 184; Gas- Pac. 399 (quoting text), sert V. Bogk, 7 Mont. 585, 19 Pac. ""Goodbar v. Bloom, 43 Tex. Civ. 281. See also Rogers v. Beach, 115 App. 434, 96 S. W. 657 (quoting Ind. 413, 17 N. E. 609. See ante text) ; O'Reilly v. Donogliue, Ir. Rep. § 244, and post § 271. 10 Bq. 73. The Master of the Rolls * Porter v. Nelson, 4 N. H. 130. acted upon this principle in a trans- See post § 270. action held to be a sale where the °*Rue V. Dole, 107 111. 275; Sut- agreement for repurchase was phen V. Cushman, 35 111. 186; Voss founded upon the following letter: v. Bller, 109 Ind. 260, 10 N. E. 609; "At any time within the next ten Bigler v. Jack, 114 Iowa 667, 87 N. years you come forward and pay me W. 700; Macauley v. Smith, 132 N. £160, provided you want it for your- Y. 524, 30 N. E. 997; Wallace v. self or any of your children. * * * Smith, 155 Pa. St. 78, 25 Atl. 807 I will hand you possession of the (quoting text); Null v. Fries, 110 same with pleasure, and become Pa. St. 521, 1 Atl. 551; Goodbar v. your yearly tenant." See also Wolfe Bloom, 43 Tex. Civ. App. 434, 96 S. v. McMillan, 117 Ind. 587, 20 N. E. W. 657 (quoting text); Wasatch 509. § 269 ABSOLUTE DEED AND KECONVETANCE 352' demption afterward.*'' If the relation of debtor and creditor is not created between the parties, the transaction is not a mortgage, but a conditional sale."^ If, however, the money paid by the purchaser was intended to be in fact a loan, the deed will be regarded as a mortgage rather than an absolute sale.'* This is the test to be applied in every case. It is a question of fact, for the determination of which equity allows a wide range of inquiry into the relations of the parties and the circumstances of the case ; and from the facts the law deduces the in- ference, either that there was a sale absolutely or upon condition, or else that the transaction was a mortgage.®'- "When a person advances money, and at the same time receives a deed and gives back to the grantor a bond to reconvey, these facts tend to show that the transaction is a loan and a security. But the case is different when the obligation to convey is given to a person other than the grantor.^ A conveyance in consideration that the gran- tee and her husband would advance the balance due on the price, and that the grantors might continue to live on the premises during their lives, after which the property should go to the grantee, is not a mort- gage.2 § 269. Continuing debt and promise to pay. — That there is no con- tinuing debt is a strong circumstance to show that the transaction is a contract for repurchase.'' If the proof establishes that the considera- tion money was a loan, and the party receiving it is personally liable for its payment, that constitutes it a debt ; it does not require a writing '"Stephenson v. Thompson, 13 111. 520; Devore v. Woodruff, 1 N. Dak. 186; Hull V. McCall, 13 Iowa 467; 148, 45 N. W. 701; Sweetzer's Ap- Roberts v. McMahan, 4 Greene peal, 71 Pa. St. 264; Todd v. Camp- (lowa) 34; Hill v. Grant, 46 N. Y. bell, 32 Pa. St. 250; Hiester v. Ma- 496; Becker v. Howard, 75 Wis. 415, deria, 3 Watts & S. (Pa.) 384; Mc- 44 N. W. 755. See post § 331. Nees v. Swaney, 50 Mo. 388; Tur- "Galt v. Jackson, 9 Ga. 151; ner v. Kerr, 44 Mo. 429; Goulding Chapman v. Ogden, 30 111. 515; Mc- v. Bunster, 9 Wis. 513. Laughlin v. Royce, 108 Iowa 254, ^Carr v. Rising, 62 111. 14. See 78 N. W. 1105; Humphreys v. Sny- also Smith v. Sackett, 15 111. 528; der, Morris (Iowa) 263. See post Davis t. Hopkins, 15 111. 519, for § 272. cases where a third party fur- "' Harrington v. Foley, 108 Iowa nished the money, but was not a 287, 79 N. W. 64; Jenkins v. Stew- party to the transaction. See post art, 13 Ky. L. 112, 16 S. W. 356. § 331. ™Micou V. Ashurst, 55 Ala. 607; ''Gustin v. Crockett, 51 Wash. 67, Baker v. Fireman's Fund Ins. Co., 97 Pac. 1091; 79 Cal. 34, 21 Pac. 357 ; Stinchfield = Duell v. Leslie, 207 Mo. 658, 106 V. Milliken, 71 Maine 567; Rice v. S. W. 489; Parks v. Sullivan (Tex. Rice, 4 Pick. (Mass.) 349; Henry Civ. App.), 152 S. W. 704. See ante V. Davis, 7 Johns. Ch. (N. Y.) 40; §§ 260, 265. Robinson v. Willoughby, 65 N. Car. 353 WHEN A CONDITIONAL SALE § 369 to make it such/ nor is it extinguished by or merged in a mortgage taken for security.^ Unless the relation of debtor and creditor existed between the parties in the beginning in reference to the consideration of the conveyance, and the relation continues so that the grantee would have the right to call upon the grantor to supply any deficiency that might arise in a case of a foreclosure and sale of the premises, the agreement to reconvey in connection with the deed constitutes a condi- tional sale." If there was no loan in the beginning, or if a prior debt was extinguished by the conveyance, and the grantor merely has the privilege of repaying if he pleases, by a given time, and of receiving a reconveyance, the transaction is a conditional sale/ A mortgagee commenced proceedings to foreclose his mortgage, be- lieving the security inadequate, but by agreement with the mortgagor the proceedings were dismissed, and the mortgagor executed a deed to the mortgagee, and the mortgagee satisfied the mortgage of record, and the mortgagor was to have the privilege of selling the land within six months, and retaining all moneys which he might receive over and above a specified sum, which he was to pay to the mortgagee. The mortgagor made no promise to pay any sum to the mortgagee, but in case of a resale the latter was to receive several thousand dollars less than the mortgage debt. There was no provision for the payment of interest. The mortgagee at once took possession of the land. The transaction was construed, not to be a mortgage, but a conditional sale, to become absolute on the mortgagor's failure to sell the land within the time specified. In addition to the fact that there was no promise to pay, there were many circumstances which repelled the presumption that either party supposed that the deed was held as security.^ There can be no mortgage without a debt. There may be agree- ments for the performance of obligations other than the payment of money; but leaving these out of view, it is essential that there be an agreement, either express or implied, on the part of the mortgagor, or some one in whose behalf he executes the mortgage, to pay to the 'See post § 282 et seq. McGuin v. Lee. 10 N. Dak. 160, 86 » Porter v. Clements, 3 Ark. 364; N. "W. 714; Saxton v. Hitchcock, 47 Farmer v. Grose, 42 Cal. 169; Phil- Barb. (N. Y.) 220; Robinson v. lips V. Hulszler 29 N. J. Eq. 308. Cropsey, 2 Edw. Ch. (N. Y.) 138; "Blakemore v. Brynside, 7 Ark. De Bruhl v. Maas, 54 Tex. 464. 505; Johnson v. Clark, 5 Ark. 321; 'Bell v. Shiver (Ala.), 61 So. Hoopes v. Bailey, 28 Miss. 328; 881; Stahl v. Dehn, 72 Mich. 645, Duell V. Leslie, 207 Mo. 658, 106 S. 40 N. W. 922; De Bruhl v. Maas, W. 489; Slowey v. McMurray, 27 54 Tex. 464. Mo. 113, 72 Am. Dec. 251; Gassert 'Fletcher v. Northcross (Cal.), V. Bogk, 7 Mont. 585, 19 Pac. 281; 32 Pac. 328. 23— Jones Mtc— Vol. I. § 270 ABSOLUTE DEED AND RECONVEYANCE 354 mortgagee a sum of money either on account of a pre-existing debt or a present loan.' § 270. Grantee's option to purchase. — An agreement that the grantee may buy the property absolutely, after a specified time, is re- garded as a circumstance tending to show that the transaction is a con- ditional sale. Thus where the grantee's covenant, executed at the same time with an absolute conveyance to him, recited that this was made for the purpose of paying a certain sum of money, and stipulated that he would not convey the premises within one year without the consent of the grantor, and, if the grantor within that time should find a pur- chaser, the grantee would convey the land on receiving the amount with interest for which the land had been conveyed to him ; and that in case such sale should not be made within the year, it should then be submitted to certain persons named, to determine what additional sum the grantee should pay for the land, which sum he covenanted to pay, the transaction was held not to be a mortgage, but a conditional sale, giving the grantee the right to recover possession of the land, after the expiration of the year, in ejectment against the grantor.^" In like manner an agreement by the grantee, made as a part of the transaction, to account to the grantor for a portion of the profits which may be realized on a resale of the premises if made within a specified time, and to sell if a specified price can be obtained, is not inconsistent with the vesting of the title.^^ A conveyance made for the purpose of securing future loans, ac- companied by an oral agreement to convey on reimbursement, has been held to be a mortgage. ^^ § 271. Grantee's option to resell. — On the other hand, an agree- ment that the grantee may sell all the property for the best possible price and retain from the proceeds the amount due him, paying the residue to the grantor, shows that the transaction is a mortgage.^' In 'Henley v. Hotaling, 41 Cal. 22, "Madigan v. Mead, 31 Minn. 94, per Rhodes, C. J. See also Voss 16 N. W. 539. V. EUer, 109 Ind. 260, 10 N. E. 74; "Robinson v. Gassoway (Ala.), Usher v. Livermore, 2 Iowa 117; 39 So. 1023; Beckman v. Wilson, Klein v. McNamara, 54 Miss. 90. 61 Cal. 335; Kidd v. Teeple, 22 Cal. See post § 272. 255; Blackstock v. Robertson, 42 "Daniels v. Johnson, 24 Mich. Colo. 472, 94 Pac. 336; Crane v. 430; Baker v. Thrasher, 4 Denio Buchanan, 29 Ind. 570; Truman v. (N. Y.) 493. Truman, 79 Iowa 506, 44 N. W. "Cadman v. Peter, 12 Fed. 363, 721; Ogden v. Grant, 6 Dana (Ky.) affirmed 118 U. S. 73, 30 L. ed. 78, 473: Hagthorp v. Hook, 1 Gill & 6 Sup. Ct. 957; Macaulay v. Porter, J. (Md.) 270; Curtiss v. Sheldon, 71 N. Y. 173. See ante § 267. 47 Mich. 262, 11 N. W. 151; Law- 355 WHEN A CONDITIOXAL SALE § 271 case the land should sell for a less sum than the debt, the grantee is entitled to recover the deficiency.*'' And so a conveyance to a trustee with power to sell the land, pay the creditor from the proceeds, and deliver the balance to the grantor on his failure to pay the debt, is a mortgage, and subject to the provi- sions of a registry law relating to mortgages.*' A written agreement by a purchaser of timber land providing for the payment of the pro- ceeds to the mortgagee in payment of the purchase-price was held to be a mortgage and not a contract of purchase.*' An agreement be- tween co-owners of land reciting a conveyance by one, of his half in- terest, to the other for a specified consideration, and providing that if the grantee disposed of the land, the real consideration should be what- ever he realized from the sale, the grantor to have credit upon his debt rence v. Farmers' Loan &c. Co., 13 N. Y. 200; Gillis v. Martin, 2 Dev. Eq. (N. Car.) 470, 25 Am. Dec. 729; Stephens v. Allen, 11 Ore. 188, 3 Pac. 168; Ruffners v. Putney, 12 Grat. (Va.) 541; Hoffman v. Ryan, 21 W. Va. 415. See also Duclos v. Walton, 21 Ore. 323, 28 Pac. 1; Col- gan V. Farmers' &c. Bank, 59 Ore. 469, 117 Pac. 807. A deed, accom- panied by a contract requiring the grantee to resell and account for the excess above the grantor's debt, and giving the grantor the right to redeem, is in effect a mort- gage. Colgan V. Farmers' &c. Bank (Ore.), 138 Pac. 1070. The owner of an -equity of redemption agreed with one who advanced money to redeem the land that the latter should have the right within two years to sell the land, pay the ad- vancements and interest and ac- count for the proceeds. Thereafter, without any new consideration, the owner executed a warranty deed of the land to the wife of the party redeeming, subject to the mort- gages referred to in the original agreement. It was held that such contract and deed should be con- sidered a mortgage and the own- er's rights did not lapse by his failure to pay such advances with- in two years. Malone v. Danforth, 137 Mich. 227, 100 N. W. 445. But see Fuson v. Chestnut, 33 Ky. L. 249, 109 S. "W. 1192; Duell v. Leslie, 207 Mo. 658, 106 S. W. 489. Such agreement is not alone sufficient to convert the deed into a mortgage. Rogers v. Beach, 115 Ind. 413, 17 N. E. 609. Where there was al- ready a mortgage upon land for nearly its full value, and, to save the expense of foreclosure, the mortgagor conveyed the land to the mortgagee, the latter agreeing by writing that, if he should sell the same for a greater sum than his debt and expense, he would pay the former all sums of money in ex- cess of the same, it was held that the transaction was not a mort- gage with a power of sale in the mortgagee as trustee, but that he was liable on his promise in an ac- tion at law, or for money had and received, when there was such sur- plus in his hands arising from the sale. Eaton v. Whiting, 3 Pick. (Mass.) 484. See also Trimble v. McCormick, 12 Ky. L. 857, 15 S. W. 358; Jones v. Blake, 33 Minn. 362, 23 N. W. 538; Tower v. Fetz, 26 Nebr. 706, 42 N. W. 884, 18 Am. St. 795; Clark v. Haney. 62 Tex. 511, 50 Am. Rep. 536. "Palmer v. Gurnsey, 7 Wend. (N. Y.) 248, distinguished and questioned in Baker v. Thrasher, 4 Denio (N. Y.) 493; Macaulay v. Porter, 71 N. Y. 173. "Woodruff V. Robb, 19 Ohio 212. See also Walsh v. Brennan, 52 111. 193; Irwin v. Longworth, 20 Ohio 581. But see Alleghany R. &c. Co. V. Casey, 79 Pa. St. 84. "Hurst V. Winchester Bank, 154 Ky. 358, 157 S. W. 685. § 272 ABSOLUTE DEED AND RECONVEYANCE 356 to the grantee for the amount so realized, was held to constitute a mortgage. ^^ But a stipulation that if the grantor can, within a limited time, "dispose of the land conveyed to better advantage," he may do so, pay- , ing to the grantee the "consideration money" mentioned in the deed, does not make the instrument a mortgage.^* And so a covenant by the grantor, who is a joint tenant, not to make partition without the advice and consent of the grantee, does not turn a conditional sale into a mortgage.^" A statement by the grantee in an absolute deed that, when he got back out of the real estate conveyed to him the money he had advanced the grantor, he would deed the remainder back to the grantor, will not impress on the deed the characteristics of an equitable mortgage.^" An agreement by the grantee in an absolute deed that he will not convey the premises within a specified time without consent of the grantor, and that if the grantor within that time should find a purchaser, the grantee would convey on receiving the amount with interest for which the land was conveyed to him, renders the transac- tion a conditional sale and not a mortgage. ^^ § 272. Absence of agreement to pay debt. — The fact that there is no agreement for the payment of the debt is a circumstance entitled to considerable weight, as tending to show that the conveyance was not intended as a mortgage, and that the relation of debtor and cred- itor did not exist, but is not conclusive. ^^ Nor does the absence of an agreement for repayment show conclusively that the transaction was a conditional sale.^^ "The want of a covenant to repay the money," "Horn V. Bates (Ky.), 114 S. W. brough (N. J. Eq.), 36 Atl. 893; 763. Macaulay v. Smith, 132 N. Y. 524, "Stratton v. Sabin, 9 Ohio 28, 34 30 N. E. 997; Morris v. Budlong, Am, Dec. 418. 78 N. Y. 543; Matthews v. Sheehan, "Cotterell v. Purchase, For. 61, 69 N. Y. 585; Horn v. Keteltas, 46 Cas. temp. Talb. 61. N. Y. 605; Brumfield v. Boutall, 24 ^^ Smith V. Smith, 153 Ala. 504, Hun (N. Y.) 451; Holmes v. Grant, 45 So. 168. 8 Paige (N. Y.) 243; Brown v. " Duell V. Leslie, 207 Mo. 658, 106 Dewey, 1 Sandf. Ch. (N. Y.) 56; S. W. 489. McGuin v. Lee, 10 N. Dak. 160, 86 ^^ Locke V. Moulton, 96 Cal. 21, 30 N. W; 714; McCamant v. Roberts, Pac. 957; Jarvis v. WoodrufC, 22 80 Tex. 316, 15 S. W. 580; Hubby Conn. 548; Bacon v. Brown, 19 v. Harris, 68 Tex. 91, 3 S. W. 558; Conn. 34; White v. Redenbaugh, 41 Schriber v. Le Clair, 66 Wis. 579, Ind. App. 580, 82 N. E. 110 (citing 29 N. W. 570, 889; Rockwell v. text); Plagg v. Mann, 14 Pick. Humphrey, 57 Wis. 410, 15 N. W. (Mass.) 467; Niggeler v. Maurin, 394. 34 Minn. 118, 24 N. W. 369; Madi- ^Conway v. Alexander, 7 Cranch gan V. Mead, 31 Minn. 94, 16 N. W. (U. S.) 218, 3 L. ed. 321; White v. 539; Pisk v. Stewart, 24 Minn. 97; Redenbaugh, 41 Ind. App. 580, 82 Jeffreys v. Charlton, 72 N. J. Eq. N. E. 110; Davis v. Stonestreet, 4 340, 65 Atl. 711; Doying v. Chese- Ind. 101. 357 WHEN A CONDITIONAL SALE § 272 says Chief Justice Marshall/* "is not complete evidence that a condi- tional sale was intended, but is a circumstance of no inconsiderable importance." ISTo conveyance can be a mortgage unless made for the purpose of securing the payment of a debt, or the performance of a duty either existing or created at the time, or else to be created or to arise in the future. But it is not necessary that the debt or duty should be evidenced by any express covenant, or by any separate written se- curity.^^ Although a mortgage can not be a mortgage on one side only, but must be a mortgage with both parties,^'' yet this principle is appli- cable to the lien upon the land only, and not to the personal obliga- tion. The fact that there is no collateral undertaking by the grantor for the payment of money, or the performance of any obligation, is by no means conclusive of the nature of the transaction. This is only one circumstance to be regarded in ascertaining whether it is to be treated as a mortgage or a sale with a contract for repurchased^ It affects the equitable rights and claims of the parties. If there be no contract for the repayment of the money, the grantee must bear any loss arising from depreciation in value; and it would seem equitable, on the other hand, that he should have the benefit of any advance in the value of the property, if the repurchase be not made within the stipulated period. A debtor conveyed to his sureties certain land, taking from them a bond providing that the obligors should pay his debt, and stating that "the intent of the deed was to indemnify and save them harm- less." The bond also referred to the deed as "indemnity and security in addition to security" of other lands mortgaged to the obligors, and stipulated that the land should not be sold for three years, so that the debtor "may redeem if he chooses to do so." If the obligors were not "reimbursed" within the three years, they were to hold the lands free from all claim on the debtor's part, but they agreed to place no ob- stacles in the way of his "paying said debts and redeeming the said lands." The transaction was adjudged to, be a mortgage, and not a "In Conway v. Alexander, 7 12 Mass. 387; Murphy v. Galley, 1 Cranch (U. S.) 218, 3 L. ed. 321. Allen (Mass.) 107; Flagg v. Mann, """Fisk V. Stewart, 24 Minn. 97; 14 Pick. (Mass.) 467; Bodwell v. Brant v. Robertsori, 16 Mo. 129. Webster, 13 Pick. (Mass.) 411; Rice ^Copleston v. Boxwill, 1 Cb. Ca. v. Rice, 4 Pick. (Mass.) 349; Brant 1; White V. Ewer, 2 Vent. 340. See v. Robertson, 16 Mo. 129; Brown v. ante § 264. Dewey, 1 Sandf. (N. Y.) 56, 2 Barb. "Flint v. Sheldon, 13 Mass. 443, (N. Y.) 28; Stephens v. Allen, 11 448, 7 Am. Dec. 162; Kelly T. Beers, Ore. 188, 3 Pac. 168. § 273 ABSOLUTE DEED AND RECONVEYANCE 358 conditional sale, although there was no covenant on the part of the grantor to pay the debt.^' § 273. Interest — ^Payable in form of rent. — The fact that interest is payable, by the terms of the contract, upon the money advanced by the person who takes the title to the property, is a circumstance tend- ing to show that the transaction was a loan upon security instead of a conditional sale. Anything tending to show that there was a sub- sisting debt, or an advance by way of loan, goes to prove the transac- tion to be a mortgage.^' What is in fact a payment of interest is sometimes disguised under the payment of rent by the grantor in possession to the grantee; but although the transaction has the appearance of a conditional sale, the payment of rent in lieu of interest may be a circumstance tending to show that it is in fact a mortgage.^" If a conveyance of land be made in fee, and the grantee give back a bond to reconvey upon repayment of the consideration money, and to permit the grantor to occupy the premises at a rent equal to the interest on the consideration, these are parts of one and the same transaction, and constitute a mortgage.^^ The owner of land occupied by him as a homestead executed an ab- solute conveyance of it in consideration of one thousand dollars, and the grantee at the same time executed with him a Joint instrument ^ Wing V. Cooper, 37 Vt. 169. sum are to be equally divided be- =* Farmer v. Grose, 42 Cal. 169; tween said parties. * * * This Harbison v. Houghton, 41 111. 522; arrangement is to continue eighteen Turpie v. Lowe, 114 Ind. 37, 15 N. months, when, if the property has E. 834; Murphy v. Galley, 1 Allen not been sold, said Honore is to pay (Mass.) 107; Lee v. Wilkinson one-half the sum so advanced, with (Miss.), 62 So. 275; Kraemer v. the accrued interest, or said Hutch- Adelsberger, 122 N. Y. 467, 25 N. ings is to be the sole owner of the E. 859, per Parker, J.; Wilson v. same.' The land was not sold with- Fisher, 148 N. Car. 535, 62 S. E. in the time speciiied, and Honore 622; Wells v. Geyer, 12 N. Dak. 316, failed to pay any part of the sum 96 N. W. 289; Hesser v. Brown, 40 advanced. In 1869 Hutchings sold Wash. 688, 82 Pac. 934. See also the land for $100,000, and refused Honore v. Hutchings, 8 Bush to pay any part of the profits to (Ky.) 687. Honore. But it was decided that "Hutchings and Honore, in 1861, Hutchings held the legal title to jointly purchased thirty acres of one-half the land in trust for Ho- land near Chicago, 111. Hutchings nore, and must account for the pro- advanced the entire purchase-price, ceeds according to the agreement." took a conveyance to himself, and ™Bearss v. Ford, 108 111. 16; executed a writing in which, among Ewart v. Walling, 42 111. 453; other things, 'it is agreed between Preschbaker v. Feaman, 32 111. 475; said parties that, when said land is Woodward v. Pickett, 8 Gray sold, said Hutchings is to have first (Mass.) 617; Wright v. Bates, 13 his six thousand dollars so ad- Vt. 341. vanced, and ten per cent. Interest, "Woodward v. Pickett, 8 Gray and the profits over and above said (Mass.) 617. 359 WHEN A CONDITIONAL SALE § 274 stipulating that the grantor should have the privilege of repurchasing the premises for the same price, at any time within twelve months, and should remain in possession, and pay rent at the rate of forty dollars per month until such repurchase, or the expiration of the twelve months. He remained in possession eleven years, and paid over twelve hundred dollars as rents. The transaction was held to be a mortgage ; that the rent was a device to screen usury, and that the debt had been extinguished by the payments made.^^ The owner of land agreed with a third person to build a mill for him, and to sell him the land and the mill at an agreed price, the third person agreeing to buy the land and mill within a certain number of years, paying a certain sum each year, and interest on the price of the land and money expended in erecting the mill. The third person also agreed to furnish a part of the materials. It was held that in equity the owner of the land stood as a mortgagee to the third person.^^ § 274. Continued possession of grantor. — The continued possession of the grantor, as is elsewhere noticed with reference to proving by parol that an absolute conveyance is not a sale, is a circumstance tend- ing to show that the agreement for repurchase, in connection with the deed, constitutes a mortgage rather than a conditional sale.^* But this circumstance is not conclusive, and other considerations may show that an absolute or conditional sale was really intended.^^ =2 In Boatright v. Peck, 33 Tex. Streator v. Jones, 10 N. Car. 423; 68. McGill v. Thorne, 70 S. Car. 65, 48 =«McCrillis v. Cole, 25 R. I. 156, S. B. 994; Lewie v. Hallman, 53 S. 55 Atl. 196, 105 Am. St. 875. Car. 18, 30 S. E. 601; Lewis v. Bay- »« Richmond v. Richmond, Fed. less, 90 Tenn. 280, 16 S. "W. 376; Cas. No. 11801; Bentley v. Phelps, Gray v. Shelby, 83 Tex. 405, 18 S. Fed. Cas. No. 1331, 2 Woodb. & M. W. 809; Azzalia v. Le Claire, 23 (U. S.) 426; Nelson v. Wadsworth, Utah 401, 64 Pac. 1106; Wright v. 171 Ala. 603, 55 So. 120; Parks v. Bates, 13 Vt. 341; Tuggle v. Berke- Parks, 66 Ala. 326; Crews v. Thread- ley, 101 Va. 83, 43 S. E. 199; Ran- glU, 35 Ala. 334; Prefumo v. Rus- some v. Frayser, 10 Leigh (Va.) sell, 148 Cal. 451, 83 Pac. 810; Berry 592; Hursey v. Hursey, 56 W. Va. v. "Williams (Ga.), 81 S. E. 881; 148, 49 S. E. 367; Ferguson v. Clark V. Finlon, 90 III. 245; Strong Boyd, 39 W. Va. 561, 20 S. E. 591; v. Shea, 83 111. 575; Gibson v. Eller, Gilchrist v. Beswick, 33 W. Va. 168, 13 Ind. 124; Ingalls v. Atwood, 53 10 S. E. 371; Hoffman v. Ryan, 21 Iowa 283, 5 N. W. 160; Fames v. W. Va. 415; Lawrence v. Du Bois, Woodson, 120 La. 1031, 46 So. 13; 16 W. Va. 443; Davis v. Demming, Rester v. Powell, 120 La. 406, 45 So. 12 W. Va. 246 ; Ogle v. Adams, 12 372; Jameson v. Emerson, 82 Maine W. Va. 213. See post §§ 328, 600, 359, 19 Atl. 831; Stevens v. Hulin, the cases being equally applicable 53 Mich. 93, 18 N. W. 569; Pidcock here. V. Swift, 51 N. J. Eq. 405, 27 Atl. '= Buffum v. Porter, 70 Mich. 623, 470; Luesenhop v. Einsfield, 93 38 N. W. 600; Shiver v. Arthur, 54 App. Div. 68, 87 N. Y. S. 268; Rob- S. Car. 184, 32 S. E. 310; Matheney inson v. Willoughby, 65 N. Car. 520; v. Sandford, 26 W. Va. 386. § 275 ABSOLUTE DEED AND EECONVEYANCE 360 Eetention of possession by the grantor coupled with payment of taxes by him and admissions by the grantee, constitutes sufficient ground for holding an absolute deed a mortgage; although the mere retention of possession might have been otherwise explained.'" Where a grantee by absolute deed executed a contract to reconvey on payment of a debt owing by the grantor, the transaction was held a mortgage, notwithstanding that the grantee took possession and re- fused to accept an ordinary mortgage, on account of the expense of foreclosure.'^ One holding a mortgage upon a farm after commencing proceed- ings to foreclose entered into an arrangement with the mortgagor and a third person to whom the jnortgagor was indebted whereby the latter bought the property at the foreclosure sale and executed a new mort- gage to the former mortgagee. At the same time the debtor entered into a written contract with the third person whereby the latter was to convey to the debtor on repayment of the amount together with the amount which the debtor owed him, etc., the debtor to assume the new mortgage. The debtor was to retain possession of the farm. It was held that the relation between the debtor and the third person was that of mortgagor and mortgagee.'^ §275. Inadequacy of price. — Inadequacy of price is one of the circumstances which are considered as of weight, as tending to show that an absolute conveyance accompanied by an agreement to reconvey is a mortgage rather than a conditional sale. This alone will not au- thorize a court to give the grantor a right to redeem, but in connec- tion with other evidence affords much ground of inference that the transaction was not really what it purports to be.'° =«Hursey v. Hursey, 56 W. Va. Ala. 612; Crews v. ThreadglU, 35 148, 49 S. E. 367. Ala. 334; West v. Hendrix, 28 Ala. "Wiswell V. Simmons, 77 Kans. 226; Lyncli v. Lynch, 22 Cal. App. 622, 95 Pac. 407. 653, 135 Pac. 1101; Elliott v. Con- =» English V. Rainear (N. J. Eq.), nor, 63 Fla. 408, 58 So. 241; Rue v. 55 Atl. 41. Dole, 107 111. 275; Carr v. Rising, =" Russell v. Southard, 12 How. 62 111. 14; Turpie v. Lowe, 114 Ind. (U. S.) 139, 13 L. ed. 927; Morris 37, 15 N. E. 834; Davis v. Stone- v. Nixon, 1 How. (U. S.) 118, 11 L. street. 4 Ind. 101; Calahan v. Dun- ed. 69; Martin v. Martin, 123 Ala. ker, 51 Ind. App. 436, 99 N. E. 191, 26 So. 525; Adams v. Pilcher, 1021; White v. Redenbaugh, 41 Ind. 92 Ala. 474, 8 So. 757; Peagler v. App. 580, 82 N. E. 110 (citing text) ; Stabler, 91 Ala. 308, 9 So. 157; Vin- Bigler v. Jack, 114 Iowa 667, 87 N. cent v. Walker, 86 Ala. 333, 5 So. W. 700; Bridges v. Linder, 60 Iowa 465; Perdue v. Bell, 83 Ala. 396, 3 190, 14 N. W. 217 (quoting text); So. 698; Douglass v. Moody, 80 Ala. Oldham v. Halley, 2 J. J. Marsh. 61; Rapier v. Gulf City Paper Co., (Ky.) 113; Pulwiler v. Roberts, 26 77 Ala. 126; Pearson v. Seay, 35 Ky. L. 297, 80 S. W. 1148; Trimble 361 WHEN A CONDITIONAL SALE § 275 Inadequacy of price, to be of controlling effect, must be gross.*" If it be very inadequate, it is a circumstance tending to show a loan and mortgage; but it is not conclusive. Nor would the fact of the adequacy of the price, taken in connection with the absence of any obligation to repay the money, be conclusive that a conditional sale was intended.*^ Nevertheless, the fact that the consideration is fully equal to the value of the land is evidence of some weight that the transaction was a sale and not a mortgage, because men in making a loan do not usually ad- vance the full amount of the land.*^ But it has been held that even where the value of the property was less than the debt secured, the conveyance was nevertheless a mortgage.*^ If the transaction creates no debt or loan, but only a right to repur- V. McCormick, 12 Ky. L. 857, 15 S. W. 358; Eames v. Woodson, 120 La. 1031, 46 So. 13; Rester v. Powell, 120 La. 406, 45 So. 372; Bonnette V. Wise, 111 La. 855, 35 So. 953; Reed v. Reed, 75 Maine 264; Thomp- son V. Banks, 2 Md. Ch. 430; Camp- bell v. Dearborn, 109 Mass. 130, 12 Am. Rep. 671; Freeman v. Wilson, 51 Miss. 329; Donovan v. Boeck, 217 Mo. 70, 116 S. W. 543; Jeffreys v. Charlton, 72 N. J. Eq. 340, 65 Atl. 711; Mooney v. Byrne, 163 N. Y. 86, 57 N. E. 163; Lawrence v. Farmers' L. &c. Co., 13 N. Y. 200; Brown v. Dewey, 2 Barb. (N. Y.) 28; Robinson v. Cropsey, 6 Paige (N. Y.) 480; Harris v. Hirsch, 121 App. Div. 767, 106 N. Y. S. 631; Steel V. Black, 3 Jones Eq. (N. Car.) 427; Streator v. Jones, 3 Hawks (N. Car.) 423; Kemp v. Earp, 7 Ired. Eq. (N. Car.) 167; Sellers v. Stalcup, 7 Ired. Eq. (N. Car.) 13; Forester v. Van Auken, 12 N. Dak. 175, 96 N. W. 301; Wagg V. Herbert, 19 Okla. 525, 92 Pac. 250; Harmon v. Grants Pass Bank- ing &c. Co., 60 Ore. 69, 118 Pac. 188; Kinney v. Smith, 58 Ore. 158, 113 Pac. 854; Gray v. Shelby, 83 Tex. 405, 18 S. W. 809; Douglass V. Culverwell, 3 Gif. 251; Langton V. Horton, 5 Beav. 9; Thornborough V. Baker, 3 Swanst. 628; Davis v. Thomas, 1 Russ. & M. 506; Wil- liams V. Owen, 5 M. & C. 303. In- adequacy of consideration coupled with a confidential relation between the parties will be considered in an action to declare a deed a mort- gage. Lynch v. Lynch, 22 Cal. App. 653, 135 Pac. 1101. The convey- ance of a residence and garden lot in consideration of taxes amount- ing only to the value of the latter constitute a mortgage rather than a conditional sale, the requisites of inadequacy of consideration, reten- tion of possession, and a debt to be secured, concurring. Tuggle v. Berkeley, 101 Va. 83, 43 S. E. 199. In Wharf v. Howell, 5 Binn. (Pa.) 499, a lot worth eight hun- dred dollars was conveyed in con- sideration of two hundred dollars, with an agreement to reconvey upon the payment of this sum within three months. See post § 329. "Elliott V. Maxwell, 7 Ired. Eq. (N. Car.) 246; Forester v. Van Auken, 12 N. Dak. 175, 96 N. W. 301. The fact that land worth seven dollars per acre was sold for five dollars per acre is not alone sufficient to render the deed a mortgage, particularly where the grantors retained a life estate. Lynch v. Lynch, 22 Cal. App. 653, 135 Pac. 1101. "Brown v. Dewey, 2 Barb. (N. Y.) 28, 1 Sandf. Ch. (N. Y.) 56. "Carr v. Rising, 62 111. 14, per Walker, J.; Jeffreys v. Charlton, 72 N. J. Eq. 340, 65 Atl. 711; in re Dunbar's Estate, 51 Pa. Super. Ct. 216; Hesser v. Brown, 40 Wash. 688, 82 Pac. 934. See also Dabney V. Smith, 38 Wash. 40, 80 Pac. 199 (property of less value than the debt). ""Lipscomb v. Talbott, 243 Mo. 1, 147 S. W. 798. § 276 ABSOLUTE DEED AND RECONVEYANCE 362 chase, it is immaterial whether the consideration for the reconveyance is fixed at the same price paid for the conveyance, or at an advanced price.** § 276. Subsequent acts and admissions as evidence — ^Record. — In determining whether a deed was intended to operate as a mortgage, verbal admissions are entitled to little weight.*^ The acts or declara- tions of one party in reference to the transaction afterward will not change its character. The transaction remains what the parties made it in the beginning, until by mutual agreement they change it. It can hardly be said that the treatment of an absolute deed as conditional by the grantee can make it a mortgage. If it was a mortgage in the be- ginning, his admission of the fact only relieves the mortgagor from proving it. If it was not a mortgage in the beginning, his treating it as such has no effect unless the mortgagor concurs in so treating it, so that in fact, by mutual agreement, the character of the instrument is changed.*" But subsequent acts and admissions of the parties have been consid- ered as corroborative of a pre-existing intent concerning the nature of the transaction.*'' Thus an admission by the grantee of a declaration at the time of the conveyance of his willingness to receive back within five years the money advanced, coupled with retention of possession and payment of taxes by the grantor, and the conduct of both parties recognizing an interest of the grantor in the land, was considered sufficient evidence of a mortgage.** When the transaction is otherwise a conditional conveyance and not a mortgage, the latter character is not imparted to it by the mere fact that the instrument is recorded as a mortgage.*' § 277. Parol evidence — Cluestions for jury. — Parol evidence is ad- missible in equity to show that a conditional sale, and not a mortgage was intended, in case there is nothing on the face of the papers to de- "West V. Hendrix, 28 Ala. 226; 767, 106 N. Y. S. 631; Waters v. Pitts V. Cable, 44 111. 103; French v. Crabtree, 105 N. Car. 394, 11 S. B. Sturdlvant, 8 Maine 246; Glover v. 240 (subsequent admission by Payn, 19 Wend. (N. Y.) 518. grantee under seal not conclusive). ■"Ricbardson v. Beaber, 62 Misc. "Elliott v. Bozorth, 52 Ore. 391, 542, 115 N. Y. S. 821.. 97 Pac. 632; Hoskins v. Hoskins, ■^See, on this point, but not 27 Ky. L. 980, 87 S. W. 320 (declara- wholly agreeing with the statement tions of the grantor's father), in the text, Holmes v. Fresh, 9 Mo. ^'Hursey v. Hursey, 56 W. Va. 201; Thomaston Bank v. Stlmpson, 148, 49 S. E. 367. 21 Maine 195; Nichols v. Reynolds, ""Morrison v. Brand, 5 Daly (N. 1 R. I. 30, 36 Am. Dec. 238. See Y.) 40; Jackson v. Richards, 6 Cow. also Harris v. Hirsch, 121 App. Div. (.N. Y.) 617. 363 WHEN A CONDITIONAL SALE § 277 termine whether the transaction was the one or the other.^" The ques- tion is then to be decided by the jury, under instructions, and not by the court.^^ For this purpose evidence of the repeated assertions of the grantee that he had bought the property and owned it, of his re- peated denials that the grantor had any interest in it, and of acts of ownership inconsistent with the position of a mere mortgagee may be received.'^ But if the instrument on its face be a mortgage, or if a deed and bond of defeasance be executed together as part of the same transac- tion, and therefore constitute a mortgage, parol evidence is not ad- missible to show that the parties intended that the transaction should operate as a conditional sale.°^ It is then for the court to construe the instruments and determine their legal effect.'^* Parol evidence, if ad- mitted, would contradict the writing ; the court must construe the in- strument without resort to parol proof.^^ No agreement or intention ""Bogk V. Gassert, 149 U. S. 17, 37 L. ed. 631, 13 Sup. Ct. 738; Heath v. Williams, 30 Ind. 495; Big- ler V. Jack, 114 Iowa 667, 87 N. "W. 700; Gassert v. Bogk, 7 Mont 585, 19 Pac. 281. In Alabama, however, it is declared that parol proof is in- admissible to show that an absolute conveyance was intended to operate as a conditional sale, or a sale with a right to redeem. Peagler v. Stab- ler, 91 Ala. 308, 9 So. 157, per Cole- man, J.: "It is only when the writings, whether executed as a whole or in separate instruments, express what purports to be a con- ditional sale, are considered with parol evidence that courts incline to construe the instruments to be a mortgage rather than a condi- tional sale; or if the instruments be absolute in form, and it be admitted there was a contemporaneous agree- ment, diiferent from that expressed in the writings, such admission may be important, in weighing the parol evidence offered to show that the conveyance, though absolute in form, was intended to operate as a mortgage." See also Daniels v. Lowery, 92 Ala. 519, 8 So. 352. The fact that a party who ad- vanced money refused to make a loan or take a mortgage as security, is evidence that the conveyance made to him did not constitute a mortgage. Conner v. Clapp, 37 Wash. 299, 79 Pac. 929. But see Taber v. Hamlin, 97 Mass. 489, 93 Am. Dec. 113. It has been fre- quently held in the United States court that evidence, either written or oral, is admissible in an action to declare an absolute deed a mort- gage, to show the real character of the transaction. Jackson v. Lawrence, 117 U. S. 679, 29 L. ed. 1024; Brick v. Brick, 98 U. S. 514, 25 L. ed. 256; Peugh v. Davis, 96 U. S. 332, 24 L. ed. 775; Babcock V. Wyman, 19 How. (U. S.) 289, 15 L. ed. 644; Russell v. Southard, 12 How. (U. S.) 139, 13 L. ed. 927. ■^'Bogk V. Gassert, 149 U. S. 17, 37 L. ed. 631,-13 Sup. Ct. 738; Baker V. Fireman's Fund Ins. Co., 79 Cal. 34, 21 Pac. 357; Wolfe v. McMillan, 117 Ind. 587, 20 N. E. 509; Alstin v. CundifC, 52 Tex. 453. ""Hanford v. Blessing, 80 111. 188; Langton v. Horton, 5 Beav. 9; New- comb V. Bonham, 1 Vern. 8, 214, 232. See ante § 246, and post § 282 »=' Snyder v. Griswold, 37 111. 216; Gassert v. Bogk, 7 Mont. 585, 19 Pac. 281. "Voss V. Eller, 109 Ind. 260, 10 N. E. 74; Buse v. Page, 32 Minn. Ill, 19 N. W. 736, 20 N. W. 95; Als- tin V. Cundiff, 52 Tex. 453. ''^ Reitenbaugh v. Ludwick, 31 Pa. St. 131; Woods v. Wallace, 22 Pa. St. 171; Wharf v. Howell, 5 Binn. § 278 ABSOLUTE DEED AND KECONVETANCE 364 of the parties, whether at the time of the transaction or subsequently, can change the redeemable character of a mortgage. ^^ And, on the other hand, parol evidence is admissible in equity to show that a formal conveyance, with a defeasance executed at the same time or afterward, constituted in fact a mortgage, and not a condi- tional sale.°^ But although a formal conveyance can be shown to be a mortgage by extrinsic evidence, a formal mortgage can not be shown to be a con- ditional sale/' The reason of the rule, that a formal conveyance may be shown by parol to be a mortgage, while a formal mortgage can not be shown to be a conditional sale by the same means, is, that "in the one case such proof raises an equity consistent with the vsTiting, while in the other it would contradict the writing."^" Wlien the transaction is a sale with a right of repurchase, and the grantor claims it to be a mortgage, a bill will lie to have 'the sale established."^ Such evidence is inadmissible at law."^ It is received only in equity, and when there exist equitable grounds for its admission. It is held, too, that the rule admitting parol evidence in equity for the purposes mentioned does not extend to an oflBcial conveyance, such as the deed of a sheriff selling under process."' Such oflBcer has no power to make any sale other than an absolute one. § 278. Circumstances evidencing intention — Relation and capacity of parties — Payment of taxes. — As previously noted, the intent of the parties to an absolute deed that it should operate as a mortgage may be shown by the circumstances surrounding the transaction,"* includ- (Pa.) 499; McClintock v. McClin- (Pa.) 499; McClintock v. McClin- tock, 3 Brewst. (Pa.) 76; Kunkle took, 3 Brews. (Pa.) 76. V. Wolfersljerger, 6 Watts (Pa.) "Woods v. Wallace, 22 Pa. St. 126. 171; Per Gibson, C. J., in Kunkle ■^ Reitenbaugh v. Ludwick, 31 Pa. v. Wolfersberger, 6 Watts (Pa.) St. 131; Woods v. Wallace, 22 Pa. 126. St. 171; Wharf v. Howell, 5 Binn. "Rich v. Doane, 35 Vt. 125. 390; Kunkle v. Wolfersberger, 6 ^'^ Bragg v. Massie, 38 Ala. 89, 79 Watts (Pa.) 126; Colwell v. Woods, Am. Dec. 82; Heath v. Williams, 30 3 Watts (Pa.) 188, 27 Am. Dec. 345; Ind. 495; Belote v. Morrison, 8 Hart V. Eppstein, 71 Tex. 752, 10 Minn. 87; McClane v. White, 5 S. W. 85; Wing v. Cooper, 37 Vt. Minn. 178; Webb v. Rice, 6 Hill (N. 169. Y.) 219. Contra, Tillson v. Moul- "* Farmer v. Grose, 42 Cal. 169; ton, 23 111. 648. See post § 282. Reitenbaugh v. Ludwick, 31 Pa. St. '"Ryan v. Dox, 25 Barb. (N. Y.) 390. See also Gay v. Hamilton, 33 440. Cal. 686; Bearss v. Ford, 108 111. 16; "Horbach v. Hill, 112 U. S. 144, Tillson V. Moulton, 23 111. 648; 28 L. ed. 670, 5 Sup. Ct. 81; Nelson Heath v. Williams, 30 Ind. 495. v. Wadsworth, 171 Ala. 603, 55 So. ™ Reitenbaugh v. Ludwick, 31 Pa. 120; Pendergrass v. Burris, 77 Cal. St. 131; Wharf v. Howell, 5 Binn. 19, 19 Pac. 187, 11 Am. St. 231; 365 ■WHEN A CONDITIONAL SALE § 278 ing the relations between the parties"^ and the grantor's ignorance of business. '"' Financial embarrassment of the grantor is a circumstance which will be considered as tending to show that an absolute deed was intended as a mortgage."^ Lynch t. Lynch, 22 Cal. App. 653, 135 Pac. 1101; Elliott v. Connor, 63 Fla. 408, 58 So. 241; Wylly-Gabbett Co. V. Williams, 53 Fla. 872, 42 So. 910; Heath v. Williams, 30 Ind. 495; Davis v. Stonestreet, 4 Ind. 101; Beidelman v. Koch, 42 Ind. App. 423, 85 N. E. 977; Keeline Y. Clark, 132 Iowa 360, 106 N. W. 257; Hughes V. Sheafi, 19 Iowa 335; First Nat. Bank v. Edwards, 84 Kans. 495, 115 Pac. 118; Bdrington V. Harper, 3 J. J. Marsh. (Ky.) 353, 20 Am. Dec. 145; Trimble y. McCormick, 12 Ky. L. 857, 15 S. W. 358; Miller T. Miller, 101 Md. 600, 61 Atl. 210; King v. McCarthy, 50 Minn. 222, 52 N. W. 648; Gassert v. Bogk, 7 Mont. 585, 19 Pac. 281, 1 L. R. A. 240; Sanders v. Ayres, 63 Nebr. 271, 88 N. W. 526; Devore v. WoodrufE, 1 N. Dak. 143, 45 N. W. 701; Elliott V. Bozorth, 52 Ore. 391, 97 Pac. 632; Stephens v. Allen, 11 Ore. 188, 3 Pac. 168; Bradley v. Helgerson, 14 S. Dak. 593, 86 N. W. 634; Harrison v. Hogue (Tex. Civ. App.), 136 S. W. 118; Goodbar Co. V. Bloom, 43 Tex. Civ. App. 434, 96 S. W. 657 (quoting text) ; Gray v. Shelby, 83 Tex. 405, 18 S. W. 809; Loving T. Milllken, 59 Tex. 423; Gibbs V. Penny, 43 Tex. 560; Stamp- ers V. Johnson, 3 Tex. 1; Duerden V. Solomon, 33 Utah 468, 94 Pac. 978; Batchelder v. Randolph, 112 Va. 296, 71 S. E. 533; Bachrach v. Bachrach, 111 Va. 232, 68 S. E. 985; Hudklns v. Crlm (W. Va.), 78 S. E. 1043; Fridley v. Somerville, 60 W. Va. 272, 54 S. B. 502. See ante § 258. ■^ Elliott T. Connor, 63 Fla. 403, 58 So. 241; Connor v. Connor, 59 Fla. 476, 52 So. 727, 28 L. R. A. (N. S.) 102; Hull V. Burr, 58 Fla. 432, 50 So. 754; De Bartlett v. De Wil- son, 52 Fla. 497, 42 So. 189; First Nat. Bank v. Edwards, 84 Kans. 495, 115 Pac. 118; Elliott v. Bozorth, 52 Ore. 391, 97 Pac. 632; Bachrach v. Bachrach, 111 Va. 232, 68 S. B. 985; Tuggle v. Berkeley, 101 Va. 83, 43 S. B. 199. See also Lynch V. Lynch, 22 Cal. App. 653, 135 Pac. 1101. "■ Where a deed was signed by an ignorant person, upon repre- sentation that it was a copy of an agreement for a loan to be secured by the property conveyed, it was declared a mortgage, and ordered to be canceled. Irwin v. Coleman, 173 Ala. 175, 55 So. 492. Where a wife, to relieve her hus- band from embarrassment, conveys to his creditor her separate prop- erty to secure his indebtedness, and the creditor must have known her purpose, the conveyance will be held a mortgage, and the property may be redeemed by the wife. El- liott v. Connor, 63 Fla. 408, 58 So. 241. A deed executed by an illiterate servant conveying a house and lot to his master to whom he was in- debted, reserving the right of pos- session without paying rent, and the right to repurchase within three years, was considered a mortgage, although no note or bond was given. Rose v. Gandy, 137 Ala. 329, 34 So. 239. Where an ignorant person being old and unable to read writing, though he could read printing and could sign his name, signed a deed which was not read to him but which he was told was a mortgage, the grantee being intelligent, and the grantor thereafter made im- provements and paid taxes on the land, he was entitled to redeem. Abercrombie v. Carpenter, 150 Ala. 294, 43 So. 746. The mere fact that a grantor mis- understood a transaction to be a mortgage Is not sufficient to estab- lish the fact. Harrison Y. Hogue (Tex. Civ. App.), 136 S. W. 118. See also Hamilton v. Holmes, 48 Ore. 453, 87 Pac. 154. « Hull v. Burr, 58 Fla. 432, 50 So. 754; Murray v. Butte-Monitor Tun- nel Min. Co., 41 Mont. 449, 110 Pac. 497, 112 Pac. 1132; Montgomery v. Beecher (N. J. Eq.), 31 Atl. 451; § BYSa ABSOLUTE DEED AND EECONVETANCE 366 Payment of taxes by the grantor after execution of a deed is further evidence that it was not intended as an absolute conveyance, but merely as a mortgage ;°° while payment of taxes by the grantee indi- cates that he regarded himself as owner, and negatives the idea of a mortgage."* Evidence of attending circumstances and the relations of the parties is admitted not for the purpose of contradicting and varying the deed, but to construe and explain it, and to establish an equity superior to its termsJ* § 278a. Effect of minor circumstances. — Very slight circumstances showing that the transfer was not understood at the time to be abso- lute, but was made to secure the repayment of the sum advanced, may be sufficient to turn the scale, if the evidence be not clear whether the transaction was a sale or only a mortgage.^^ And so, where there is an. agreement to reconvey, very slight circumstances will suffice, in re- lation to such a transaction, to determine its character, — whether it is a mortgage or an absolute conveyance with a stipulation securing the grantor a reconveyance upon certain terms and within a certain time.'^^ Thus the circumstance that the reconveyance is to be made upon pay- ment of the precise amount of the consideration, with interest, is taken into consideration as favoring the conclusion that a loan was made.'^ A memorandum extending the time for payment' and redemption of the land, in reference to a contract to reconvey, is evidence that the transaction was a mortgage and not a conditional sale.'^* The fact that the grantee undertook to pay only so much money as was required to remove liens on the land conveyed is a circumstance indicating that the transaction was only a mortgage. ^^ The fact that the deed con- tains a covenant by the grantee assuming the payment of a prior mort- gage is also a circumstance entitled to consideration in determining Steel T. Black, 56 N. Car. 427; see Hume v. Le Compte (Tex. Civ. Blaokwell v. Overby, 41 N. Car. 38; App.), 142 S. W. 934. Streator v. Jones, 10 N. Car. 423; "Stephens v. Allen, 11 Ore. 188, Gilchrist v. Beswick, 33 W. Va. 3 Pac. 168. 168, 10 S. B. 371. "McKinney T. Miller, 19 Mich. "« Parks V. Parks, 66 Ala. 326; 142. Boocock v. Phipard, 52 Hun (N. Y.) "Waite v. Dimick, 10 Allen 614, 5 N. Y. S. 228, 24 N. Y. St. 267, (Mass.) 364. 1 Silv. (N. Y.) 407; O'Toole v. Om- "Hickox v. Lowe, 10 Cal. 197. lie, 8 N. Dak. 444, 79 N. W. 849. See ante § 275. »»Hart V. Randolph, 142 111. 521, "SchoU v. Hopper, 134 Ky. 83, 32 N. E. 517; Petty v. Petty, 52 S. 119 S. W. 770. Car. 54, 29 S. E. 406; Slawson v. "Fort V. Colby (Iowa), 144 N. W. Denton (Tenn.), 48 S. W. 350. But 393. 367 WHEN A CONDITIONAL SALE 379 what was the purpose of the parties in making the contract, but it is not controlling. ■'^ § 279. Presumptions of construction in doubtful cases. — ^When it is doubtful whether the transaction is a mortgage or a conditional sale, it will generally be treated as a mortgage,'^ although it is in some of the eases said tliat the transaction, appearing upon its face to be a con- ditional sale, will be held to be such when no circumstances appear showing an intention that it should be considered' a mortgage.'* Courts of equity will generally seek to avoid the harshness of for- feiture for failure to comply strictly with the terms of a contract of conditional sale and give the benefit of any doubt arising upon the evidence to the grantor's right to redeem; always inclining against a conditional sale, and in favor of a mortgage.'* "It is unquestionably "Kraemer v. Adelsberger, 122 N. Y. 467, 25 N. E. 859, per Parker, J., in his language. "Flagg V. Mann, 2 Sumn. (U. S.) 4S6; Russell v. Southard, 12 How. (U. S.) 139, 13 L. ed. 927; Irwin v. Coleman, 173 Ala. 175, 55 So. 492; Nelson v. Wadsworth, 171 Ala. 603, 55 So. 120; Hubert v. Sistrunk (Ala.), 53 So. 819; Vincent v. Walker, 86 Ala. 333, 5 So. 465; Cosby v. Buchanan, 81 Ala. 574, 1 So. 898; Bacon v. Brown, 19 Conn. 34; El- liott v. Connor, 63 Fla. 408, 58 So. 241; Rankin v. Rankin, 111 HI. App. 403; Wolfe v. McMillan, 117 Ind. 587, 20 N. E. 509; Heath v. Williams, 30 Ind. 495; White v. Redenbaugh, 41 Ind. App. 580, 82 N. E. 110; Fort v. Colby (Iowa), 144 N. W. 393; Trucks v. Lindsey, 18 Iowa 504; Vaughn v. Smith, 148 Ky. 531, 146 S. W. 1094; Baugher V. Merryman, 32 Md. 185; Cornell V. Hall, 22 Mich. 377; Klein v. Mc- Namara, 54 Miss. 90; Phillips v. Jackson, 240 Mo. 310, 144 S. W. 112; Donovan v. Boeck, 217 Mo. 70, 116 S. W. 543; O'Neill v. Capelle, 62 Mo. 202; Turner v. Kerr, 44 Mo. 429; Brant v. Robertson, 16 Mo. 129; Desloge v. Ranger, 7 Mo. 327; McRobert v. Bridget (Iowa), 149 N. W. 906; Smith v. Jensen, 16 N. Dak. 408, 114 N. W. 306; Bickel v. Wessinger, 58 Ore. 98, 113 Pac. 34; Stephens v. Allen, 11 Ore. 188, 3 Pac. 168; Hume v. Le Compte (Tex. Civ. App.), 142 S. W. 934; Moor- head V. Ellison, 56 Tex. Civ. App. 444, 120 S. W. 1049; De Bruhl v. Maas, 54 Tex. 464; Duerden v. Solo- mon, 33 Utah 468, 94 Pac. 978; Snavely v. Pickle, 29 Grat. (Va.) 27; Gilchrist v. Beswick, 33 W. Va. 168, 10 S. E. 371. See ante § 258, post §§ 335, 336. But see Johnson v. Scrimshire, 42 Tex. Civ. App. 611, 93 S. W. 712; Gasaway v. Ballin, 57 Wash. 355, 106 Pac. 905, and cases cited. "Swetland v. Swetland, 3 Mich. 482; Robinson v. Cropsey, 2 Edw. Ch. (N. Y.) 138. "Morton v. Allen (Ala.), 60 So. 866; Williams v. Reggan, 111 Ala. 621, 20 So. 614; Reeves v. Aber- crombie, 108 Ala. 535, 19 So. 41; Daniels v. Lowery, 92 Ala. 519, 8 So. 352; Peagler v. Stabler, 91 Ala. 308, 9 So. 157; Cosby v. Buchanan, 81 Ala. 574, 1 So. 898; Turner v. Wilkinson, 72 Ala. 361; Mobile Building &c. Assn. v. Robertson, 65 Ala. 382; McNeil v. Norsworthy, 39 Ala. 156; Crews T. Threadgill, 35 Ala. 334; Locke v. Palmer, 26 Ala. 312; Turnipseed v. Cunningham, 16 Ala. 501, 1 Am. Dec. 190; Scott v. Henry, 13 Ark. 112; Hickox y. Lowe, 10 Cal. 196; Pensoneau v. Pulliam, 47 111. 58; Bishop v. Wil- liams, 18 111. 101; Williams v. Bish- op, 15 111. 553; Miller v. Thomas, 14 111. 428; Heath v. Williams, 30 Ind. 496; Jones v. Gillett, 142 Iowa 506, 118 N. W. 314; Baird v. Rein- inghaus, 87 Iowa 167, 54 N. W. 148; Barthell v. Syverson, 54 Iowa 162, 6 N. W. 178; Scott v. Mewhirter, 49 § 279 ABSOLUTE DEED AND RECONVEYANCE 368 true that, in cases wtere upon all the circumstances the mind is un- certain whether a security' or a sale was intended, the courts, when compelled to decide between them, will be somewhat guided by pru- dential considerations, and will consequently lean to the conclusion that a security was meant, as more likely than a sale to subserve the ends of abstract Justice and avert injurious consequences. And where the idea that a security was intended is conveyed with reasonable dis- tinctness by the writings, and no evil practice or mistake appears, the court will incline to regard the transaction as a security rather than a sale, because in such a case the general reasons which favor written evidence concur with the reason just suggested."'" Chief Justice Marshall, in setting forth the reason for the rule, says : "Lenders of money are less under the pressure of circimistances which control the perfect and free exercise of the judgment than borrowers ; the effort is frequently made by persons of this description to avail themselves of the advantage of this superiority, in order to obtain in- equitable advantages. Por this reason the leaning of courts has been against them, and doubtful cases have generally been decided to be mortgages. * * * ^ conditional sale made in such a situation, at a price bearing no proportion to the value of the property, would bring suspicion on the whole transaction."** Iowa 487; Hughes v. Sheaff, 19 (citing text) ; Elliott v. Bozortli, 52 Iowa 335; Trucks v. Lindsey, 18 Ore. 391, 97 Pac. 632; Stephens v. Iowa 504; Jenkins v. Stewart Allen, 11 Ore. 188, 3 Pac. 168; Fee (Ky.) 16 S. W. 356; Reed v. Reed, v. Cobine, 11 Ir. Eq. 406; Eglauch 75 Maine 264; Baugher v. Merryman, v. Labadie, Rap. Jud. Que. 21 C. S. 32 Md. 185; Artz v. Grove, 21 Md. 481. "A resort, however, to a for- 456; Dougherty v. McColgan, 6 Gill mal conditional sale, as a device to & J. (Md.) 275; Cornell v. Hall, 22 defeat the equity of redemption, Mich. 377; McKinney v. Miller, 19 will, of course, when shown, be un- Mich. 142; Holton v. Meighen, 15 availing for that purpose. And the Minn. 69; Freeman v. Wilson, 51 possibility of such resort, together Miss. 329; King v. Greves, 42 Mo. with other considerations, has App. 168; Gassert v. Bogk, 7 Mont, driven courts of equity to adopt as 585, 19 Pac. 281; Mooney v. Byrne, a rule that, when it is doubtful 163 N. y. 86, 57 N. B. 163; Mat- whether the transaction is a condi- thews V. Sheehan, 69 N. Y. 585; tional sale or a mortgage, it will Brown v. Dewey, 2 Barb. (N. Y.) be held to be the latter." Trucks t. 28; Horn v. Keltetas, 42 How. Pr. Lindsey, 18 Iowa 504, per Cole, J. (N. Y.) 138; Robinson v. Cropsey, See also Reed v. Reed, 75 Maine 6 Paige (N. Y.) 480; Glover t. 264. Payne, 19 Wend. (N. Y.) 518; Poin- »" Cornell v. Hall, 22 Mich. 377, dexter v. McCannon, 1 Dev. Eq. (N. per Graves, J. See also Sowles v. Car.) 377, 18 Am. Dec. 591; Smith Wilcox, 127 Mich. 77, 86 N. W. 689. V. Hoff, 23 N. Dak. 37, 135 N. W. "Conway v. Alexander, 7 Cranch 772, Ann. Cas. 1914C, 1072; Kinney (U. S.) 218, 3 L. ed. 321. V. Smith, 58 Ore. 158, 113 Pac. 854 369 WHEN A CONDITIONAL SALE § 279a § 279a. Trend of decisions. — The authorities have not been in full accord upon the question whether, in a doubtful case, the court should presume that the deed was intended to be an absolute conveyance or a mortgage ; yet the trend of the decisions seems to be to the effect that the party claiming that a deed was intended as a mortgage should es- tablish that fact by clear and convincing evidence, and slight or in- definite evidence will not be permitted to change the character of the instrument from what it appears on its face to be, into a mortgage. The rule may be stated to be, that the evidence offered to show that a deed was intended as a mortgage should be satisfactory, and sufficient to overcome the strong presumption created by the language of the deed — that it is what it purports to be, an absolute conveyance — and where the evidence is doubtful and unsatisfactory, the deed must be held to be absolute.^^ Some authorities go so far as to say that the proof that a mortgage was intended must leave no room for a reason- able or substantial doubt. ^^ '^Cadman v. Peter, 118 U. S. 73, 30 L. ed. 78; Coyle v. Davis, 116 U. S. 108, 29 L. ed. 583; Howland v. Blake, 97 U. S. 624, 24 L. ed. 1027; Satterfield v. Malone, 35 Fed. 445, 1 L. R. A. 35; Glass v. Hieronymus, 125 Ala. 140, 28 So. 71, 82 Am. St. 225; Downing v. Woodstock Iron Co., 93 Ala. 262, 9 So. 177; Knaus V. Dreher, 84 Ala. 319, 4 So. 287; Williams v. Cheatham, 19 Ark. 278; Mahoney v. Bostwick, 96 Cal. 53, 30 Pac. 1020, 31 Am. St. 175; Hen- ley V. Hotaling, 41 Cal. 22; Perot v. Cooper, 17 Colo. 80, 28 Pac. 391, 31 Am. St. 258; Armor v. Spalding, 14 Colo. 302, 23 Pac. 789; Adams v. Adams, 51 Conn. 544; Matthews v. Porter, 16 Fla. 466; Heaton v. Gaines, 198 111. 479, 64 N. E. 1081; Williams v. Williams, 180 111. 361, 54 N. E. 229; Burgett v. Osborne, 172 111. 227, 50 N. E. 206; Strong v. Strong, 126 111. 301, 18 N. E. 665, affg. 27 III. App. 148; Helm v. Boyd, 124 111. 370, 16 N. E. 85; Bailey v. Bailey, 115, 111. 551, 4 N. E. 394; Conwell V. Evill, 4 Blackf. (Ind.) 67; Langer v. Merservey, 80 Iowa 158, 45 N. W. 732; Wright v. Ma- haffey, 79 Iowa 96, 40 N. W. 112 Ensminger v. Ensmlnger, 75 Iowa 89, 39 N. W. 208, 9 Am. St. 462; Allen V. Fogg, 66 Iowa 229, 23 N. W. 643; Knight v. McCord, 63 Iowa 429, 19 N. W. 310 Kibby v. Harsh. 24 — Jones Mtg.— Vol. I. 61 Iowa 196, 16 N. W. 85; Hyatt v. Cochran, 37 Iowa 309; Knapp v. Bailey, 79 Maine 195, 9 Atl. 122, 1 Am. St. 295; Faringer v. Ramsey, 2 Md. 365; Tilden v. Streeter, 45 Mich. 533, 8 N. W. 502; Johnson v. Van Velsor, 43 Mich. 208, 5 N. W. 265; Williams v. Stratton, 10 Sm. & M. (Miss.) 418; Cobb v. Day, 106 Mo. 278, 17 S. W. 323 Pierce v. Traver, 13 Nev. 526; Bingham v. Thompson, 4 Nev. 224; Wilson v. Parshall, 129 N. Y. 223, 29 N. E. 297; Erwin v. Curtis, 43 Hun (N. Y.) 292, 6 N. Y. St. 116; Holmes v. Grant, 8 Paige (N. Y.) 243; Hinton V. Pritchard, 107 N. Car. 128, 12 S. B. 242, 10 L. R. A. 401; McNair V. Pope, 100 N. Car. 404, 6 S. E. 234; Moore v. Ivey, 43 N. Car. 192; Albany &c. Canal Co. v. Crawford, 11 Ore. 243, 4 Pac. 113; Pancake v. Cauffman, 114 Pa. St. 113, 7 Atl. 67; in re Lance's Appeal, 112 Pa. St. 456, 4 Atl. 375; Logue's Appeal, 104 Pa. St. 136; in re Hartley's Ap- peal, 103 Pa. St. 23; Edwards v. Wall, 79 Va. 321; Kerr v. Hill, 27 W. Va. 576; Hunter v. Maanum, 78 Wis. 656, 48 N. W. 51; McCormick V. Herndon, 67 Wis. 648, 31 N. W. 303; Schriber v. Le Clair, 66 Wis. 579, 29 N. W. 570; Butler v. Butler, 46 Wis. 430, 1 N. W. 70. *■ Townsend v. Peterson, 12 Colo. 491, 21 Pac. 619; A. J. Dwyer Pine § 280 ABSOLUTE DEED AND EECONVETANCB 370 § 280. Rule applied to assignments. — The same considerations as to determining the character of the transaction apply to an assignment of a mortgage, accompanied by an agreement to reas- sign within a time mentioned. In Henry v. Davis** the Chancellor said : "It is clearly established by the answer and proofs that the bond and mortgage were assigned by the plaintifE to the defendant by way of mortgage, to secure the payment of $325 by a given day; and any agreement that the assignment was to be an absolute sale, without re- demption upon default of payment on the day, was unconscientious, oppressive, illegal, and void. The equity of redemption still existed in the plaintiff, notwithstanding any such agreement." The same consid- erations apply also to an assignment of a lease made in connection with an agreement to reassign, and to the determination of the question whether they constitute a mortgage or a conditional sale of the lease- hold estate. ^^ But an absolute lease is not deemed a mortgage because the rent is to go in satisfaction of a debt.*" § 281. Mortgage distinguished from a trust. — A mortgage or a trust deed in the nature of a mortgage differs from a trust, in that in a mortgage or a trust in the nature of a mortgage the property is to re- vert or be conveyed to the grantor upon the payment of the debt se- cured.*^ A mortgage is created by an instrument conveying land to a trustee to secure a note executed by the grantor to such trustee, and providing for foreclosure on default.** It is the purport of several Maryland decisions that where a convey- ance is made to the grantee as security for a loan to a third party, who is the real purchaser, a resulting trust is established in his favor, and the transaction is substantially a mortgage.*' A declaration of trust made by one to whom a conveyance was made. Land Co. v. Whiteman, 92 Minn. (N. Y.) 40. See also Warren t. 55, 99 N. W. 362; Gerhardt v. Tuck- Emerson, 1 Curtis (U. S.) 239. er, 187 Mo. 46, 85 S. W. 552; Farm- «=Polhemus v. Trainer, 30 Cal. ers' &c. Bank v. Smith, 61 App. Div. 685. See also King v. King, 3 P. 315, 70 N. Y. S. 536; Shattuck v. Wms. 358; Goodman v. Grierson, 2 Bascom, 55 Hun (N. Y.) 14, 9 N. Ball & B. 274. Y. S. 934, 28 N. Y. St. 333; Little '"Halo v. Schick, 57 Pa. St. 319. V. Braun, 11 N. Dak. 410, 92 N. W. '' Neikirk v. Boulder Nat. Bank, 800; Jasper v. Hazen, 4 N. Dak. 1, 53 Colo. 350, 127 Pac. 137; Hoffman 51 N. W. 583; Beebe v. Wisconsin v. Mackall, 5 Ohio St. 124, 64 Am. Mtg. Loan Co., 117 Wis. 328, 93 N. Dec. 637; In re Lance's Appeal, 112 W. 1103; Becker v. Howard, 75 Pa. St. 456, 4 Atl. 375. Wis. 415, 44 N. W. 755; McCormick ^^ Brown v. Hall, 32 S. Dak. 225, V. Herndon, 67 Wis. 648, 31 N. W. 142 N. W. 854. 303. «■ Miller v. Miller, 101 Md. 600, »^ Henry v. Davis, 7 Johns. Ch. 61 Atl. 210; Pickett v. Wadlow, 94 371 WHEN A CONDITIONAL SALE § 281 upon his advancing money for the benefit of one having an agreement for the purchase of the land, may be treated, in connection with the conveyance, as a mortgage rather than a trust.'" A debtor conveyed all his real estate to one of his creditors by an absolute deed, the cred- itor making a declaration of trust that he would sell the property, pay the debt due himself, and sums to be advanced by him for the payment of other debts of the grantor, and after retaining a certain sum for commissions would reconvey what might remain of the property to the grantor. The transaction was adjudged to be a mortgage, and not an assignment for the benefit of creditors, so that no one but the grantor could call upon the grantee to account.^^ The equity of redemption Md. 567, 51 Atl. 423; Hopper v. Smyser, 90 Md. 363, 45 Atl. 206; Dryden v. Hanway, 31 Md. 254, 100 Am. Dec. 61; Dougherty v. McCol- gan, 6 Gill & J. (Md.) 275. ""Brumfield v. Boutall, 24 Hun (N. Y.) 451. See also Stewart v. Fellows, 128 111. 480, 17 N. E. 476; Stephens v. Allen, 11 Ore. 188, 3 Pac. 168. »' Vance v. Lincoln, 38 Cal. 586; Koch V. Briggs, 14 Cal. 256, 73 Am. Dec. 651; Turpie v. Lowe, 114 Ind. 37, 15 N. E. 834; Comstock v. Stew- art, Walk. (Mich.) 110; Gothainer V. Grigg, 32 N. J. Eq. 567; Hoffman V. Mackall, 5 Ohio St. 124, 64 Am. Dec. 637; Woodruff v. Robb, 19 Ohio 212; Taylor v. Cornelius, 60 Pa. St. 187; Myer's Appeal, 42 Pa. St. 518; Chambers v. Goldwin, 5 Ves. 834; Bell v. Carter, 17 Beav. 11; Jenkin v. Row, 5 De G. & S. 107. The fact that an instrument contains no provision for restoring the title to the grantor, but pro- vides that the grantee may sell at his discretion, is somewhat incon- sistent with the theory of a mort- gage; for in mortgages the defeas- ance ordinarily provides that, upon payment of the debt, title to the premises incumbered shall revert to the mortgagor. Armor v. Spalding, 14 Colo. 302, 23 Pac. 789. In In re Lance's Appeal, 112 Pa. St. 456, 4 Atl. 375, the court say that a mortgage is distinguishable from a trust in this only, that the property in it is to revert to the mortgagor on the discharge of the obligation for the performance of which it is pledged. In Hoffman v. Mackall, 5 Ohio St. 124, 64 Am. Dec. 637, the court say: "A mort- gage is a conveyance of an estate, or pledge of property as security for the payment of money, or the performance of some other act, and conditioned to become void upon such payment or performance. A deed of trust in the nature of a mortgage is a conveyance in trust by way of security, subject to a condition of defeasance or redemp- tion at any time before the sale of the property* A deed conveying land to a trustee as mere collateral security for the payment of a debt, with the condition that it shall be- come void on the payment of the debt when due, and with power to the trustee to self the land and pay the debt in case of default on the part of the debtor, is a deed of trust in the nature of a mortgage. By an absolute deed of trust the grantor parts absolutely with the title, which rests in the grantee, unconditionally, for the purpose of the trust. The latter is a convey- ance to a trustee for the purpose of raising a fund to pay debts; while the former is a conveyance in trust for the purpose of securing a debt, subject to a condition of defeas- ance." A deed stated that it was given to indemnify the grantor's sureties on a certain bond, payable at her death, and to save them from pecuniary harm, conveyed "in trust, however, as aforesaid, to the in- tent" that the beneficiaries "shall have possession, exclusive control and management of the lots, and be entitled to all the profits and rents" ; § ^81 ABSOLUTE DEED AND KECONVETANCE 372 was still subject to attachment by the creditors of the grantor. But a conveyance expressly in trust to pay debts, and after the debts are paid in trust for one of the grantors, was held not to be a mortgage,^^ and, therefore, the creditors could not maintain a suit for foreclosure or sale. In such a conveyance, a covenant on the part of the debtor to pay the debts would, doubtless, make a mortgage of it."^ A declaration of trust by a grantee, to the eilect that the money to be paid by him belonged to certain creditors of the grantor, is not in the nature of a defeasance, and does not with the deed constitute a mortgage."* and the trustee, at the death of the grantor or thereafter, as the bene- ficiaries may direct, shall "make and convey such title as is vested in him" to any person or persons whom the beneficiaries may desig- nate. The Instrument was held to be in the nature of a mortgage, and not an absolute conveyance. Fon- tainn v. Schulenburg &c. Lumber Co., 109 Mo. 55, 18 S. W. 1147. See further as to the distinction be- tween a mortgage and a trust. Tur- pie V. Lowe, 114 Ind. 37, 15 N. B. 834. See also Catlett v. Starr, 70 Tex. 485, 7 S. W. 844. '^Charles v. Clagett, 3 Md. 82; McMenomy v. Murray, 3 Johns. Ch. (N. Y.) 435; Ladd v. Johnson, 32 Ore. 195, 49 Pac. 756; Marvin v. Titsworth, 10 Wis. 320. The latter case citing, as to distinction be- tween a trust and a mortgage, Flagg V. Walker, 113 U. S. 659, 28 L. ed. 1072, 5 Sup. Ct. 697. Title Guarantee &c. Co. v. Northern Counties Inv. Trust, 73 Fed. 931; Turner v. Watkins, 31 Ark. 429; Soutter V. Miller, 15 Fla. 625; New- man V. Samuels, 17 Iowa 528; Mc- Donald V. Kellogg, 30 Kans. 170, 2 Pac. 507; Hoffman v. Mackall, 5 Ohio St. 124, 64 Am. Dec. 637; Woodruff V. Robb, 19 Ohio 212; Kin- ney V. Heatley, 13 Ore. 35, 7 Pac. 359; Catlett v. Starr, 70 Tex. 485, 7 S. W. 844. "^Taylor v. Emerson, 4 Dr. & War. 117; Holmes v. Matthews, 3 Eq. 450. See also . Pemberton v. Simmons, 100 N. Car. 316, 6 S. B. 122. " Frick's Appeal, 87 Pa. St. 327. CHAPTEE VIII PAEOL EVIDENCE TO PROVE AN ABSOLUTE DEED A MORTGAGE I. The Grounds Upon Which it is Admitted, §§ 282-333 II. What Facts are Considered, §§ 323a-342d I. The Grounds Upon Which it is Admitted Section 282. Grounds for admission In eq- uity — Parol evidence inad- missible at law. 283. Equitable grounds — Transfers to defraud creditors. 284. Grounds for admission of parol evidence under English, deci- sions. 285. Doctrine in the United States courts. 286. Alabama. 286a. Arizona. 287. Arkansas. 288. California. 288a. Colorado. 289. Connecticut. 290. Delaware. 290a. District of Columbia. 291. Florida. 292. Georgia. 292a. Idaho. 293. Illinois. 294. Indiana. 295. Iowa. 296. Kansas. 297. Kentucky. 297a. Louisiana. 298. Maine. 299. Maryland. 300. Massachusetts. 301. Michigan. 302. Minnesota. 303. Mississippi. 304. Missouri. § 282. Grounds for admission in equity — Parol evidence inadmis- sible at law. — It is a settled rule and practice of courts of equity to set aside a formal deed, and allow the grantor to redeem upon proof, even by parol evidence, that- the conveyance was not a sale, but merely a security for a debt, and therefore a mortgage. Except where, as in New Hampshire and Georgia, the exercise of this power is prohibited by statute, there is probably now no dissent anywhere from the doc- 373 Section 304a. Montana. 305. Nebraska. 306. Nevada. 307. New Hampshire. 808. New Jersey. 308a. New Mexico. 309. New York. 310. North Carolina. 310a. North Dakota. 311. Ohio. 311a. Oklahoma. 311b. Oregon. 312. Pennsylvania. 313. Rhode Island. 314. South Carolina. 314a. South Dakota. 315. Tennessee. 316. Texas. 316a. Utah. 317. Vermont. 318. Virginia. 318a. Washington. 319. West Virginia. 320. Wisconsin. 321. Review of cases. 321a. Strict construction of rule ad- mitting parol evidence. 322. Statute of frauds — Rule prohib- iting contradiction of written instruments. Statute of frauds — Subsequent fraudulent conduct of grantor. 323. § 283 PAROL EVIDENCE 374 trine that in equity a deed may be converted into a mortgage whenever there are proper equitable grounds for the exercise of the power. To this extent there is substantial uniformity in the decisions of the courts of the United States and of the several states. But as to the grounds upon which this equitable power is exercised there is much diversity of opinion, and there is also considerable diversity of adjudi- cation in the application of the doctrine. Under what circumstances and upon what evidence this power shall be exercised, it is only reasonable to expect considerable divergence of practice in different courts. The cases in which the courts have been called upon to receive parol evidence to show that a deed absolute in terms is a mortgage are very numerous. For these reasons, and because the subject is of much practical importance, a statement of the various grounds upon which such evidence is admitted in each of the several states is given in the following sections. At law it is generally agreed that parol evidence to show that a deed absolute on its face was intended only as a mortgage is inadmissi- ble.'^ However, in California,^ Illinois,^ Iowa,* Pennsylvania, Texas,^ and Wisconsin" such evidence is admissible at law. Parol evidence is admissible in equity to show that a deed absolute in form is in fact a mortgage, not because the rules of evidence are different in equity from what they are at law, but because the Juris- diction and power of the courts with reference to dealing with the facts presented are different. The rules of evidence are the same in both courts. The question whether an absolute deed was intended to operate as a mortgage is one which belongs exclusively to equity tri- ^ Bragg V. Massie, 38 Ala. 89, 69 ley v. Stutler, 52 W. Va. 92, 43 S. E. Am. Dec. 82; Benton v. Jones, 8 96. See article 13 West Jur. 193, Conn. 186; Reading v. "Weston, 8 fully examining this subject. See Conn. 117; Thompson v. Burns, 15 ante § 277. But see Swart v. Serv- Idaho 572, 99 Pac. Ill (citing text) ; ice, 21 Wend. (N. Y.) 36, 34 Am. Finlon v. Clark, 118 111. 32, 7 N. E. Dec. 211. 475; Farley v. Goocher, 11 Iowa "Jackson, v. Lodge, 36 Cal. 28; 570; More v. Wade, 8 Kans. 380; Cunningham v. Hawkins, 27 Cal. Staton V. Commonwealth, 2 Dana 603, 85 Am. Dec. 73. See post § 288. (Ky.) 397; Bailey v. Knapp, 79 'Northern Assur. Co. v. Chicago Maine 205, 9 Atl. 356; Stinchfield v. Mut. Bldg. &c. Assn., 198 III. 474, 64 Milliken, 71 Maine 567; Bryant v. N. E. 979; Tillson v. Moulton, 23 111. Crosby, 36 Maine 562, 58 Am. Dec. 648; Miller v. Thomas, 14 111. 428; 767; Thomaston Bank v. Stimpson, Coates v. Woodworth, 13 111. 654. 21 Maine 195; Gates v. Sutherland, *McAnnulty v. Seick, 59 Iowa 586, 76 Mich. 231, 42 N. W. 1112; Jones 13 N. W. 743. v. Blake, 33 Minn. 362; Belote v. "In Pennsylvania, and Texas, Morrison, 8 Minn. 87; McClane v. there are no chancery courts, and White, 5 Minn. 178; Hogel v. Lin- this evidence is admitted at law. dell, 10 Mo. 483; Webb v. Rice, 6 See post §§ 312, 316. Hill (N. Y.) 219; Taylor v. Bald- "Barchent v. Snyder, 128 Wis. win, 10 Barb. (N. Y.) 582; Billings- 423, 107 N. W. 329. See post § 320. 375 UPON WHAT GROUNDS ADMITTED § 283 bunals, and over which comnion-law tribunals have no jurisdiction whatever^ This distinction is not observed, however, in those courts v/hich exercise both legal and equitable jurisdiction, and in which both legal and equitable defenses may be interposed in the same action.® §283. Equitable grounds — Transfers to defraud creditors. — To obtain relief the plaintiff must have equitable grounds for it. The grounds on which courts of equity admit oral evidence, to show that a deed absolute in form is in fact a mortgage, are purely equitable, and relief is refused whenever the equitable consideration is wanting." Therefore, when a debtor has made an absolute conveyance of his land to one creditor for the purpose of defrauding his other creditors, he is in no condition to ask a court of equity to interfere actively in his behalf to help him get his land back again, and thus secure to him the fruits of his fraudulent devices.^" "One who comes for relief into a court whose proceedings are intended to reach the conscience of the parties must first have that standard applied to his own conduct in the transactions out of which his grievance arises. If that condemns himself, he can not insist upon applying it to the other party."" An oral agreement between the debtor and the creditor who took the con- veyance, whereby the latter agreed to reconvey the land upon payment of the debt due him, is not deemed in such case an equitable ground for relief. The court will interfere only for the benefit of those whom the debtor intended to defraud. It is true that a grantee, whose rights were not infringed, can not set up the grantor's fraud against other creditors in the conveyance, to defeat any legal claim or interest which the fraudulent debtor may seek to enforce. But the difficulty is, that when the debtor has no legal right, but comes into equity seeking re- lief, he has in such case no equitable standing, and must go out of court. A fraudulent grantor will not be aided in redeeming his absolute conveyance as being a mortgage only. Thus, if he has executed such conveyance to his creditor to secure a debt to the latter, and at the same time to hinder and delay other creditors, an oral agreement of the grantee to reconvey the land to the grantor on payment of the ' Stinchfield v. Milliken, 71 Maine " Hassam v. Barrett, 115 Mass. 567; Foley v. Kirk, 33 N. J. Eq. 170; 256; Arnold v. Mattison, 3 Rich. Eq. See' also Calahan v. Dunker, 51 Ind. (S. Car.) 153; "Webber v. Farmer, 4 App. 436, 99 N. E. 1021. Bro. P. C. 170; Baldwin v. Caw- " Wakefield v. Day, 41 Minn. 344, thome, 19 Ves. 166. 43 N. W. 71; Despard v. Walbridge, "Mr. Justice Wells, in Hassam v. 15 N. Y. 374; Webb v. Rice, 6 Hill Barrett, 115 Mass. 256. See also (NY) 219. Ybarra v. Lorenzana, 53 Cal. 197; 'Fitch V. Miller, 200 111. 170, 65 Parrott v. Baker, 82 Ga. 364, 9 S. E. N. E. 650. 384 PAROL EVIDENCE 376 debt will not be enforced in equity.^^ The heirs of such grantor stand in no better position than he, with respect to a right to declare an absolute conveyance in form a mortgage in effect. ^* But the rights of a widow in land conveyed by her husband in fee to a creditor to secure him, and to defraud other creditors, are not affected by such fraudulent intent, unless she was aware of and par- ticipated in the same; and, if she be innocent in the premises, the absolute conveyance will, as to her rights, be declared a mortgage.^* § 284. Grounds for admission of parol evidence under English de- cisions. — The English decisions are to the effect that in equity an absolute conveyance may be construed to be a mortgage when the de- feasance has been omitted by fraud or accident;^'' when the grantee has made a separate defeasance, although merely verbal ;^^ or when by the payment of interest, or other circumstances, it appears that the conveyance was intended to be a mortgage.^^ § 285. Doctrine in the United States Courts. — The decisions of the Supreme Court of the United States, and the circuit and district courts, are uniform in admitting parol evidence to show that an abso- lute conveyance is in fact a mortgage.'^* The admission of such evi- 1068; Kitts v. Wilson, 130 Ind. 492, 29 N. E. 401 (quoting text). " Kitts V. Willson, 130 Ind. 492, 29 N. E. 401; Henry v. Stevens, 108 Ind. 281, 9 N. B. 356; Edwards v. Haverstlck, 53 Ind. 348; Sweet v. Tinslar, 52 Barb. (N. Y.) 271; Bolt V. Rogers, 3 Paige (N. Y.) 154. ^ Kitts V. Willson, 130 Ind. 492, 29 N. B. 401; Wilson v. Campbell, 119 Ind. 286, 290, 21 N. B. 893; Springer V. Drosch, 32 Ind. 486; Laney v. Laney, 2 Ind. 196; Moseley v. Mose- ley, 15 N. Y. 334; Stewart v. Ackley, 52 Barb. (N. Y.) 283; Patnode v. Darveau, 112 Mich. 127, 70 N. W. 439; Gorrell v. Alspaugh, 120 N. Car. 362, 27 S. E. 85; Battle v. Street, 85 Tenn. 282, 2 S. W. 284. " Kitts V. Willson, 130 Ind. 492, 29 N. E. 401. "Maxwell v. Mountacute, Prec. Ch. 526; Card v. Jaffray, 2 Sch. & Lef. 374; England v. Codrington, 1 Eden 169; Dixon v. Parker, 2 Ves. Sen. 219, per Lord Hardwicke; Irn- ham V. Child, 1 Bro. C. C. 92; Port- more V. Morris, 2 Bro. C. C. 219; Lincoln v. Wright, 4 De G. & J. 16. '"Manlove v. Bale, 2 Vern. 84; Lincoln v. Wright, 4 De G. & J. 16; Whitfield V. Parfitt, 15 Jur. 852. "Allenby v. Dalton, 5 L. J. K. B. 312; Cripps v. Jee, 4 Bro. C. C. 472; Sevier v. Greenway, 19 Ves. 413. ''Risher v. Smith, 131 U. S. clvi. 24 L. ed. 808; Peugh v. Davis, 96 U. S. 332, 24 L. ed. 775; Amory v. Law- rence, 3 Cliff. (U. S.) 523; Andrews V. Hyde, 3 Cliff. (U. S.) 516; Wy- man v. Babcock, 2 Curtis (U. S.) 386; Babcock v. Wyman, 19 How. (U. S.) 289, 15 L. ed. 644; Russell V. Southard, 12 How. (U. S.) 139, 13 L. ed. 627; Morris v. Nixon, 1 How. (U. S.) 118, 11 L. ed. 69; Sprigg V. Bank of Mount Pleasant, 14 Pet. (U. S.) 201, 10 L. ed. 419; Sprigg V. Bank, 1 McLean (U. S.) 384, affd. 14 Pet. 201, 10 L. ed. 419; Eldredge v. Jenkins, 3 Story (U. S.) 181; Flagg v. Mann, 2 Sumn. (U. S.) 486; Taylor v. Luther, 2 Sumn. (U. S.) 228; Hughes v. Edwards, 9 Wheat. (U. S.) 489, 6 L. ed. 142; Bentley v. Phelps, 2 Wood. & M. (U. S.) 426; Nicholson v. Hayes, 174 Fed. 653, 98 C. C. A. 407; Lewis v. Wells, 85 Fed. 896; Villa v. Rodri- guez, Fed. Cas. No. 172, revg. 12 Wall. (U. S.) 323. See also Jack- son V. Lawrence, 117 U. S. 679, 29 L. ed. 1024, 6 Sup. Ct. 915. 31!7 UPON WHAT GROUNDS ADMITTED § 286 dence is not limited to eases in which express deceit or fraud in taking the conveyance in that form is shown. It is admitted where the in- strument of defeasance has been "omitted by design upon mutual oonfidenge between the parties." It is admitted to show the real inten- tion of the parties, and the real nature of the transaction. It is ad- mitted even in cases where the person taking an absolute deed had expressed at the time his unwillingness to accept a mortgage. ^^ In Eussell V. Southard^*^ the Supreme Court declared that when it is al- leged and proved that a loan was really intended, and the grantee sets up the loan as a payment of purchase-money, and the conveyance as a sale, both fraud and a vice in the consideration are sufficiently averred and proved to require a court of equity to hold the transaction to be a mortgage ; and that, whenever the transaction is in substance a loan of money upon security of the land conveyed, a court of equity is bound to look through the forms in which the contrivance of the lender has enveloped it, and declare the conveyance to be a mortgage. In the case of Peugh v. Davis^" the court also declare that as the equity, upon which the court acts in such cases, arises from the real character of the transaction, any evidence, written or oral, tending to show this, is admissible. The evidence must be clear, unequivocal and convincing,^^ and must leave no substantial doubt of the intent to create a mortgage.^^ § 286. Alabama. — In Alabama a court of equity will not by parol evidence establish a deed absolute on its face as a mortgage "unless the proofs are clear, consistent, and convincing" that it was not in- tended as an absolute purchase, but was intended as a security for money.^^ Such evidence seems by the earlier cases to have been ad- " "Williams v. Chadwick, 74 Conn. ^Wallace v. Johnstone, 129 U. S. 252, 50 Atl. 720; Mills v. Mills, 26 58, 32 L. ed. 619, 9 Sup. Ct. 243; Con- Conn. 213; Susman v. Whyard, 149 way v. Alexander, 7 Cranch (U. S.) N. Y. 127, 43 N. E. 413. 218, 3 L. ed. 321. *%12 How. (tr. S.) 139, 13 L. ed. ^Harrison v. Maury, 157 Ala. 627. 227, 47 So. 724; Thornton v. Pinck- *■ Peugh v. Davis, 96 U. S. 332. ard, 157 Ala. 206, 47 So. 289; See also Risher v. Smith, 131 U. S. Rodgers v. Burt, 157 Ala. 91, 47 So. App. 156; Horbach v. Hill, 112 U. S. 226; Johnson v. Hattaway, 155 Ala. 144, 5 Sup. Ct. 81. 516, 46 So. 760; Jones v. Kennedy, ^Campbell v. Northwest Bcking- 138 Ala. 502, 35 So. 465; Rose v. ton Imp. Co., 229 U. S. 561,' 57 L. Gandy, 137 Ala. 329, 34 So. 239; ed. 1330, 33 Sup. Ct. 796; Wallace Glass v. Hieronymus, 125 Ala. 140, V. Johnstone, 129 U. S. 58, 32 L. ed. 28 So. 71, 82 Am. St. 225; Kramer 619, 9 Sup. Ct. 243; Coyle v. Davis, v. Brown, 114 Ala. 612, 21 So. 817; 116 U. S. 108, 6 Sup. Ct. 314; Con- Peagler v. Stabler, 91 Ala. 308, 9 So. way v. Alexander, 7 Cranch (U. S.) 157; Knaus v. Dreher, 84 Ala. 319, 218, 3 L. ed. 321; Guarantee Gold 4 So. 287; Cosby v. Buchanan, 81 Bond Loan &c. Co. v. Edwards, 164 Ala. 574, 1 So. 898; Turner v. Wil- Fed. 809. kinson, 72 Ala. 361; Parks v. Parks, § 286 PAROL EVIDENCE 378 mitted upon the ground of fraud, accident, or mistake,^* but the later cases admit parol evidence generally, to show the real character of the transaction,^^ and that a deed absolute in form was intended to operate as security for a debt.^° Thus where an absolute deed of land is given to enable the grantee to pay off a prior mortgage thereon it must be clearly shown that the grantee as well as the grantor intended it to operate as a mortgage.^' It is in equity and not at law that parol evidence is admissible in such cases.^^ Where the controversy is whether the contract was a conditional sale or mortgage, oral testimony will be resorted to in equity to ascertain what was in fact the contract made by the parties, and if the court can not, upon a thorough con- sideration of the testimony say with reasonable satisfaction that the writings evidence a conditional conveyance of the fee and were not intended as a mortgage, then the court will lean toward the theory that the writings were intended as a mortgage. This rule does not seem to prevail where the controversy is whether the deed was in fact an unconditional sale or was only intended as a mortgage to secure the debt.^" To authorize the court to declare a deed absolute on its face to be a mortgage, the evidence must be clear and satisfactory.^" It is not 66 Ala. 326; Phillips v. Croft, 42 Ala. ing land can be created except by 477. implication of law, does not prevent "* Wells V. Morrow, 38 Ala. 125; the introduction of parol evidence Crews V. Threadgill, 35 Ala. 334; to show that a deed absolute on its Parish v. Gates, 29 Ala. 254; West face was intended as a mortgage. V. Hendrix, 28 Ala. 226; Brantlev Glass v. Hieronymus, 125 Ala. 140, v. West, 27 Ala. 542; Locke v. Pal- 28 So. 71, 82 Am. St. 225. mer, 26 Ala. 312; Bryan v. Cowart, "Rodgers v. Burt, 157 Ala. 91, 47 21 Ala. 92; Bishop v. Bishop, 13 Ala. So. 226; Johnson v. Hattaway, 155 475; English v. Lane, 1 Port. (Ala.) Ala. 516, 46 So. 760; Shreve v. Mc- 328. Gowin, 143 Ala. 665, 42 So. 94. ''^ Morton v. Allen (Ala.), 60 So. '"Thornton v. Pinckard, 157 Ala. 866; Richter v. Noll, 128 Ala. 198, 206, 47 So. 289. 30 So. 740; Williams v. Reggan, 111 ^^ Morton v. Allen (Ala.), 60 So. Ala. 621, 20 So. 614; Reeves v. Aber- 866; Rodgers v. Burt, 157 Ala. 91, crombie, 108 Ala. 535, 19 So. 41; 47 So. 226; Bragg v. Massie, 38 Ala. Jordan v. Garner, 101 Ala. 411, 13 89, 106, 79 Am. Dec. 82; Jones v. So. 678; Ingram v. Illges, 98 Ala. Trawick, 31 Ala. 253; Parish v. 511, 13 So. 548; Adams v. Pilcher, Gates, 29 Ala. 254. 92 Ala. 474, 8 So. 757; Vincent v. =" Morton v. Allen (Ala.), 60 So. Walker, 86 Ala. 333, 5 So. 465; Mc- 866. See also Irwin v. Coleman, 173 Millan v. Jewett, 85 Ala. 476, 5 So. Ala. 175, 55 So. 492. 145; Knaus v. Dreher, 84 Ala. 319, '"Tribble v. Singleton, 158 Ala. 4 So. 287; Stoutz v. Bouse, 84 Ala. 308, 48 So. 481; Harper v. T. N. 309; 4 So. 170; Perdue v. Bell, 83 Hays Co., 149 Ala. 174, 43 So. 360; Ala. 396, 3 So. 698; Cosby v. Bu- Rose v. Gandy, 137 Ala. 329, 34 So. chanan, 81 Ala. 574, 1 So. 898; Rob- 239; Glass v. Hieronymus, 125 Ala. inson v. Farrelly, 16 Ala. 472. The 140, 28 So. 71, 82 Am. St. 225; Kra- Alabama Code of 1896, § 1041, pro- mer v. Brown, 114 Ala. 612, 21 So. viding that no parol trusts concern- 817. 379 UPON WHAT GEOUNDS ADMITTED § 287 sufficient to raise merely a doubt whether the instrument speaks the intention of the parties. The court must be satisfied by at least a clear preponderance of the evidence that a mortgage was intended and clearly understood by the grantee as well as the grantor. This severe rule does not apply in cases where the writings express a conditional sale, or where it is admitted that there was a contemporaneous agree- ment different from that expressed in the instrument.^^ The law is well settled, that "in a court of equity, the character of the conveyance must be determined by the clear and certain intention of the parties ; and if there be an agreement between them that it shall operate as a security for a debt, it can and will operate only as a mortgage. The agreement may be expressed in the deed, or in a separate writing, or it may rest in parol."^^ § 286a. Arizona. — By statute in Arizona, every transfer of real property, other than a trust, made only as security for the perform- ance of another act, is to be deemed a mortgage, and the fact that a transfer was made subject to defeasance may be proved by parol, ex- cept as against a subsequent purchaser or incumbrancer without notice, though the fact does not appear by the terms of the instrument.^^ In admitting parol and extrinsic evidence, the court is not restricted to any particular kind of evidence, but may take into consideration almost any pertinent matters which tend to prove the real intention and un- derstanding of the parties and the true nature of the transaction.^* '§ 287. Arkansas. — In Arkansas parol evidence is admissible to show an absolute deed to be a mortgage.^^ The ground of its admission is stated in some of the cases to be fraud or mistake;'"' but in later eases it seems to be held generally admissible to show the Intention of the parties, and the fact that the transaction was really a mortgage, intended as security.^' Accordingly it is held that where land is con- veyed as security, or where land is purchased at judicial sale under an "Morton v. Allen (Ala.), 60 So. Blanks, 78 Ark. 527, 94 S. W. 694; 866; Reeves v. Abercrombie, 108 Harmon v. May, 40 Ark. 146; An- Ala. 535, 19 So. 41. thony v. Anthony, 23 Ark. 479; Mc- '2 Harrison v. Maury, 157 Ala. 227, Carron v. Cassidy, 18 Ark. 34; Scott 47 So. 724, quoting Douglass T. v. Henry, 13 Ark. 112; Blakemore Moody, 80 Ala. 61. v. Byrnside, 7 Ark. 505; Johnson v. =' Arizona Rev. Stat. 1913, §§ 4095, Clark, 5 Ark. 321. 4096. =» Jordan v. Fenno, 13 Ark. 593; "^Rees V. Rhodes, 3 Ariz. 235, 73 Blakemore v. Byrnside, 7 Ark. 505. Pac. 446. "Harman v. May, 40 Ark. 146; "'Rushton V. Mclllvene, 88 Ark. Anthony v. Anthony, 23 Ark. 479. 299, 114 S. W. 709; Reynolds, v. § 288 PAROL EVIDBN-CB 380 agreement that the purchaser shall hold the title as security for money advanced the owner, the transaction constitutes a mortgage in equity, and the agreement may be proved by parol evidence, since it is not within the statute of frauds. ^^ In a recent ease the court adopting the language of Mr. Pomeroy says: "The general doctrine is fully established, and certainly pre- vails in a great majority of the states, that the grantor and his repre- sentatives are always allowed in equity to show, by parol evidence, that a deed absolute on its face was only intended to be a security for the payment of a debt, and thus to be a mortgage, although the parties deliberately and knowingly executed the instrument in its existing form, and without any allegations of fraud, mistake, or accident in its mode of execution. The sure test and the essential requisite are the continued existence of a debt. If there is no indebtedness, the con- veyance can not be a mortgage. If there is a debt existing, and the conveyance was intended to secure its payment, equity will regard and treat the absolute deed as a mortgage. The presumption, of course, arises that the instrument is what it purports on its face to be, an ab- solute conveyance of the land. To overcome this presumption, and to establish its character as a mortgage, the cases all agree that the evidence must be clear, unequivocal, and convincing, for otherwise the natural presumption will prevail."^' § 288. California.— 'In California, parol evidence is admissible in law*" as well as in equity*^ to show that a deed absolute upon its face was iatended as a mortgage, and such evidence is not restricted to cases of fraud, accident, or mistake. If the evidence shows that the "La Cotts V. La Cotts (Ark.), 159 (Ark.), 159 S. W. 1111; Gates v. S. W. 1111. McPeace, 106 Ark. 583, 153 S. W. '"Rushton V. Mclllvene, 88 Ark. 797; Grismon v. Kingman Plow Co., 299, 114 S. "W. 709, citing Cadman 106 Ark. 166, 152 S. W. 989; Ed- V. Peter, 118 U. S. 73, 30 L. ed. 78, wards "v. Bond, 105 Ark. 314, 151 S. 6 Sup. Ct. 957; Coyle v. Davis, 116 W. 243; Griffin v. "Welch, 88 Ark. U. S. 108, 29 L. ed. 583, 6 Sup. Ct. 336, 114 S. W. 710; Reynolds v. 314; Hays v. Emerson, 75 Ark. 551, Blanks, 78 Ark. 527, 94 S. W. 694: 87 S. W. 1027; Harman v. May, 40 That the evidence must be clear and Ark. 146; Trieber v. Andrews, 31 decisive, see Harman v. May, 40 Ark. 163; Williams v. Cheatham, 19 Ark. 146; Trieber v. Andrews, 31 Ark. 278; 3 Pomeroy's Equity Juris- Ark. 163; "Williams v. Cheatham, 19 prudence (3d ed.), § 1196, and cases Ark. 278. cited. See also, to the effect that "Vance v. Lincoln, 38 Cal. 586; the evidence must be clear, unequiv- Jackson v. Lodge, 36 Cal. 28; Cun- ocal and convincing: Ford v. Nun- ningham v. Hawkins, 27 Cal. 603. nelley (Ark.), 165 S. W. 291; Grum- "Todd v. Todd, 164 Cal. 255, 128 jner v. Price, 101 Ark. 611, 143 S. "W. Pac. 413; Beckman v. Waters, 161 95; Prickett v. Williams (Ark.), 161 Cal. 581, 119 Pac. 922; Couts v. Win- S. W. 1023; La Cotts v. La Cotts ston, 153 Cal. 686, 96 Pac. 357; An- 381 UPON WHAT GROUNDS ADMITTED § 288 deed was intended merely as security for the payment of a debt, it is a mortgage, "no matter how strong the language of the deed or any instrument accompanying it might be."*^ Notwithstanding the code provision that a mortgage can be created only by writing executed with the formalities required in a grant of real property, a deed absolute on its face may in equity be shown by parol evidence to have been intended as a mere mortgage, and the debt intended to be secured thereby, whether present or future, may also be shown by parol evi- dence, although not specified in the deed or in any contemporaneous writing.*^ Evidence of the circumstances and relations existing between the parties is admitted, not for the purpose of contradicting or varying the deed, but to establish an equity superior to its terms.** The deed must speak for itself, but the objects and purposes of the parties in executing the instrument may be inquired into. Fraud in the use of the deed is as much a ground for the interposition of equity as fraud in its creation. In Pierce v. Eobinson,*° Mr. Justice Field forcibly glo-Californian Bank v. Cerf, 147 Cal. 384, 81 Pac. 1077; Holmes v. Warren, 145 Cal. 457, 78 Pac. 954; Woods V. Jensen, 130 Cal. 200, 62 Pac. 473; Ahern v. McCarthy, 107 Cal. 382, 40 Pac. 482; Malone v. Roy, 94 Cal. 341, 29 Pac. 712; Montgom- ery V. Spect, 55 Cal. 352; Vance v. Lincoln, 38 Cal. 586; Raynor v. Ly- ons, 37 Cal. 452; Gay v. Hamilton, 33 Cal. 686; Cal. Civ. Code §2924. '"Todd V. Todd, 164 Cal. 255, 128 Pac. 413; Woods v. Jensen, 130 Cal. 200, 62 Pac. 473. «Cal. Civ. Code § 2922; Anglo- Californian Bank v. Cerf, 147 Cal. 384, 81 Pac. 1077. « Ahern v. McCarthy, 107 Cal. 382, 40 Pac. 482; Locke v. Moulton, 96 Cal. 21, 30 Pac. 957; Husheon v. Husheon, 71 Cal. 407, 12 Pac. 410; Arnot V. Baird (Cal.), 12 Pac. 386. "'Pierce v. Rohinson, 13 Cal. 116, overruling the earlier cases of Lee v. Evans, 8 Cal. 424, and Low v. Henry, 9 Cal. 538, restricting such evidence to cases of fraud, accident or mistake. In further illustration of the reason of the rule, the learned judge says: "Unless parol evidence can be admitted, the policy of the law will he constantly evaded. Debtors, under the force of press- ing necessities, will submit to al- most any exactions for loans of a trifling amount compared with the value of the property, and the equity of redemption will elude the grasp of the court, and rest in a simple good faith of the creditor. A mortgage, as I have observed, is in form a conveyance of the condi- tional estate, and the assertion of a right to redeem from a forfeiture involves the same departure from the terms of the instrument as in the case of an absolute conveyance executed as security. The convey- ance upon condition by its terms purports to vest the entire estate upon the breach of the condition, just as the absolute conveyance does in the first instance. The equity arises and is asserted in both cases upon exactly the same principles, and , is enforced without reference to the agreement of the parties, but from the nature of the transaction to which the right attaches, from, the policy of the law, as an insep- arable incident." See also Garwood V. Wheaton, 128 Cal. 399, 60 Pac. 961; Blair v. Squire, 127 Cal. xviii, 59 Pac. 211; Murdock v. Clarke, 90 Cal. 427, 27 Pac. 275; Butler v. Hyland, 89 Cal. 575, 26 Pac. 1108; Hall v. Arnott, 80 Cal. 348, 22 Pac. 200; Brison v. Brison, 75 Cal. 525, 17 Pac. 689; Booth v. Hoskins, 75 Cal. 271, 17 Pac. 225; Raynor v. Drew, 72 Cal. 307, 13 Pac. 866; Healy v. O'Brien, 66 Cal. 517, 6 Pac. 386; § 288a PAEOL EVIDENCE 383 and clearly declares these to be the true grounds for the admission of parol evidence to show that a deed absolute in its terms is in fact a mortgage. Such a deed being a mortgage does not pass the title to the land.^" It is declared by statute that every transfer of an interest in real estate, other than in trust made only as a security for the perform- ance of another act, is to be deemed a mortgage.*' The fact that the transfer is made subject to defeasance may be proved, though it does not appear by the terms of the instrument. To show that an absolute deed was intended to be a mortgage in the absence of direct evidence, the evidence of intention must be clear and the fact can not be estab- lished merely by inferences and arguments.*^ The evidence must be clear, specific and decisive.*' Where the evidence is doubtful whether an instrument was intended as a mortgage or not, a subsequent reference to it as a mortgage, by the mortgagees, in a release, will be considered in determining the question.^" It is also proper to admit in evidence a receipt given by the grantor to the grantee for money for a final payment upon the land, together with a contract between the parties whereby the grantee agreed to sell the land to the grantor for si certain price before a speci- fied date.^^ § 288a. Colorado. — It is provided by statute in Colorado that a deed may be proved by oral testimony to be in efEect a mortgage. ^^ In Taylor v. McLaln, 64 Cal. 513, 2 Pac. 52 Pac. 707, 65 Aim. St. 184; Ahem 399; Montgomery v. Spect, 55 Cal. v. McCarthy, 107 Cal. 382, 40 Pac. 352; Kuhn v. Rumpp, 46 Cal. 299; 482; Ganceart v. Henry, 98 Cal. 281, Farmer v. Grose, 42 Cal. 169; Vance 33 Pac. 92; Henley v. Hotaling, 41 v. Lincoln, 38 Cal. 586; Raynor v. Cal. 22; Peres v. Crocker (Cal.), 47 Lyons, 37 Cal. 452; Jackson v. Pac. 928; Meeker v. Shuster (Cal.), Lodge, 36 Cal. 28; Gay v. Hamilton, 47 Pac. 580. S3 Cal. 686; Hopper v. Jones, 29 Cal. «Renton v. Gibson, 148 Cal. 650, 18; Cunningham v. Hawkins, 24 Cal. 84 Pac. 186; Penney v. Simmons, 99 403, 85 Am. Dec. 73; Lodge v. Tur- Cal. 380, 33 Pac. 1121; Couts v. Win- man, 24 Cal. 385; Johnson v. Sher- ston, 153 Cal. 686, 96 Pac. 357 (clear, man, 15 Cal. 287, 76 Am. Dec. 481. consistent, and convincing) ; Emery ^Moisant v. McPhee, 92 Cal. 76, v. Lowe, 140 Cal. 379, 73 Pac. 981 28 Pac. 46; Fisher v. Witham, 132 (clear and satisfactory proof). Pa. St. 488, 19 Atl. 276. ' » Adams v. Hopkins, 144 Cal. 19, ■" Cal. Civil Code, §§ 2924, 2925. 77 Pac. 712. Under this statute a deed executed " Holmes v. "Warren, 145 Cal. 457, as security for a debt. Is a mort- 78 Pac. 954. gage. Shirley v. All Night and Day "^Code Civ. Proc. 1908, § 280; Da- Bank, 166 Cal. 50, 134 Pac. 1001; vis v. Pursel (Colo.), 134 Pac. 107; Peninsular Trade &c. Co. v. Pacific Reltze v. Humphreys, 53 Colo. 177, S. W. Co., 123 Cal. 689, 56 Pac. 604; 125 Pac. 518; Blackstock v. Robert- Husheon v. Husheon, 71 Cal. 407, 12 son, 42 Colo. 472, 94 Pac. 336; Hall Pac. 410. V. Linn, 8 Colo. 264, 5 Pac. 641; «Falk V. Wittram, 120 Cal. 479. Quinn v. Kellogg, 4 Colo. App. 157, 383 trPON WHAT GEOUNDS ADMITTED § 289 this state the admission of parol evidence, in a proceeding to have deeds absolute on their face declared mortgages and to enforce an equity of redemption, is not subject to the objection that an interest in real property is sought to be created or established by parol.^^ The authorities generally hold that when the papers fail to recite the exist- ance of a debt to be secured, and on their face purport otherwise, parol evidence may be resorted to, to show the intent of the parties and the true nature of the transaction ; and if it appears that there was a loan and a debt resulting therefrom, the transaction will be declared to be a mortgage to secure such debt.^* The evidence 'in cases of this character must be not merely a pre- ponderance in weight, but must be clear, certain and conclusive that the deed was executed, delivered and accepted as a mortgage. '*'* Mere preponderance of evidence in favor of a party ■ on whom the burden lies is not sufficient. In the language of the court in a comparatively recent case : "The proof must be clear, certain, satisfactory, unequivo- cal, trustworthy, and convincing, and some cases say, conclusive. In short, the case must be made out with that fulness and precision which is essential to a conviction in a criminal case — beyond a reason- able .doubt."=8 § 289. Connecticut. — In Connecticut the court in one case seemed to regard it as an undecided question whether parol evidence is ad- missible to show that an absolute deed is a mortgage,^^ but in a later case it was held that an absolute deed, if intended as a security for a debt, is to be regarded as a mortgage.^* In early cases it was held 35 Pac. 49. As to the evidence, see deed was in fact a mortgage. Butsch Davis V. Hopkins, 18 Colo. 153, 32 v. Smitli, 40 Colo. 64, 90 Pac. 61. Pac. 70; Perot v. Cooper, 17 Colo. 80, "= Perot v. Cooper, 17 Colo. 80, 28 28 Pac. 391; Jefferson County Bank Pac. 391, 31 Am. St. 258. V. Hummell, 11 Colo. App. 337, 53 =»Baird v. Baird, 48 Colo. 506, 111 Pac. 286. See also Butsch v. Smith, Pac. 79; Butsch v. Smith, 40 Colo. 40 Colo. 64, 90 Pac. 61; Jefferson 64, 90 Pac. 61; Davis v. Hopkins, 18 County Bank v. Hummell, 11 Colo. Colo. 153, 32 Pac. 70; Perot ^v. App. 337, 53 Pac. 286. Cooper, 17 Colo. 80, 28 Pac. 391, 31 "^ Heron v. Weston, 44 Colo. S79, Am. St. 258; Armor v. Spalding, 14 100 Pac. 1130. Colo. 302, 23 Pac. 789; Townsend v. "Reitze v. Humphreys, 53 Colo. Petersen, 12 Colo. 491, 21 Pac. 619; 177, 125 Pac. 518; Heron v. "Weston, Bohm v. Bohm, 9 Colo. 100, 10 Pac. 44 Colo. 379, 100 Pac. 1130. Parol 790; Whitsett v. Kershow, 4 Colo, proof that the grantor by absolute 419; Fetta v. Vandevier, 3 Colo, deed was obliged to borrow the en- App. 419, 34 Pac. 168. tire consideration for the deed, and "Osgood v. Thompson Bank, 30 obtain a surety to sign a note for Conn. 27. the loan was admissible as a cir- =' Williams v. Chadwick, 74 Conn, cumstance to be considered in de- 252, 50 Atl. 720; French v. Burns, termining the issue whether the 35 Conn. 359. § 290 PAEOL EVIDENCE 384 that siicli evidence was inadmissible in courts of law, either as between the parties or between third persons.^' An absolute deed may be shown to be a mortgage by evidence from any paper signed by the grantee showing that the deed was given as security only.'" In equity parol evidence seems to have been admitted to show that the defeas- ance was omitted by fraud or mistake.*^ § 290. Delaware. — A court of equity will treat a deed absolute in form as a mortgage, or a conveyance in trust for the payment of debts, if the parties in executing it intended it as a security. But where there was no deception, undue influence, or other fraudulent means employed to procure a deed absolute in form, the party relying upon parol evidence to prove that there was an agreement, understanding, or intention that the instrument should be in efEect a mortgage or security for the payment of an indebtedness, must adduce clear and convincing proof ."^ § 290a. District of Columbia. — A deed absolute in form may be shown by parol evidence to have been intended as a security for money and will be so treated in equity as a mortgage."* A deed absolute in form will not be construed as a mortgage where the evidence is un- satisfactory and only sufficient to throw doubt on the transaction.** § 291. Florida. — In Florida it is provided by statute that all con- veyances made with the intention of securing the payment of money shall be deemed mortgages.*^ Accordingly it has been held that an =' Benton v. Jones, 8 Conn. 186; ==Balloch v. Hooper, 6 Mack, (D. Reading v. Weston, 8 Conn. 117, 20 C.) 421; Hubbard v. Stetson, 3 Mac- Am. Dec. 97, 7 Conn. 143. See also Arthur (D. C.) 113; Peugh v. Da- Butler V. Catling, 1 Root (Conn.) vis, 96 U. S. 332, 2 MacAr. (D. C.) 310. But see Brainerd v. Brainerd, 14; Nieman v. Mitchell, 2 App. (D. 15 Conn. 575. C.) 195. ""Belton V. Avery, 2 Root (Conn.) "Hayward v. Mayse, 1 App. (D. 279, 1 Am. Dec. 70; French v. Lyon, C.) 133; Hubbard v. Stetson, 3 Mac- 2 Root (Conn.) 69. Arthur (D. C.) 113. "French v. Burns, 35 Conn. 359; '^Gen. Stat. 1906, § 2494. Connor Collins V. Tillou, 26 Conn. 368, 38 v. Connor, 59 Fla. 467, 52 So. 727; Am. Dec. 398; Mills v. Mills, 26 DeBartlett v. De "Wilson, 52 Fla. Conn. 213; Jarvis v. Woodruff, 22 497, 42 So. 189; State First Nat. Conn. 548; Bacon v. Brown, 19 Conn. Bank v. Ashmead, 23 Fla. 379, 2 So. 29; Brainerd v. Brainerd, 15 Conn. 657. An express agreement that a 575; Washburn v. Merrills, 1 Day conveyance is not a mortgage but (Conn.) 139, 2 Am. Dec. 59; Daniels an absolute conveyance, which is V. Alvord, 2 Root (Conn.) 196. wholly inconsistent with the facts "^Walker v. Farmers' Bank, 8 of the case does not render abso- Houst. (Del.) 258, 14 Atl. 819. per lute a conveyance which under the Salisbury, Ch.; Hall v. Livingston, statute Is shown to have been exe- 3 Del. Ch. 348. cuted "for the purpose and with the 385 UPON WHAT GROUNDS ADMITTED § 292 instrument must be deemed and held a mortgage, whatever may be its form, if, taken alone or in connection with the surrounding facts and attendant circumstances, it appears to have been given for the purpose or with the intention of securing the payment of money, and the mere absence of terms of defeasance can not determine whether it is a mortgage or not/" The statute does not change the rule as to the admission of parol evidence to show that a deed absolute on its face was intended as a mortgage; but some ground for equitable in- terference must be shown, such as fraud, accident, or mistake in the execution of the instrument.'^'' In a late case the court says that parol evidence is admissible in equity to show that an absolute deed was intended as a mortgage ; that the court looks beyond the terms of the instrument to the real transac- tion ; that any evidence tending to show this is admissible f^ and that in case of doubt, the instrument will be held to be a mortgage.*" § 292. Georgia. — In Georgia it is provided by statute that a deed absolute on its face, accompanied with possession of the property, shall not be proved, at the instance of the parties, by parol evidence, to be a mortgage only, unless fraud in its procurement is the issue to be intention of securing the payment of money." Connor v. Connor, 59 Fla. 467, 52 So. 727. A deed absolute made with the intention of securing the payment of money is to be deemed merely a mortgage, and ac- cording to repeated decisions it may be enforced as a mortgage for the debt it was intended to secure, though no mention of the debt is made in the instrument itself, and the evidence of the debt rests in other writings or in parol only. Equitable Bldg. &c. Assn. v. King, 48 Fla. 252, 37 So. 181. "Connor v. Connor, 59 Fla. 467, 25 So. 727. « Matthews v. Porter, 16 Fla. 466 ; Chaires v. Brady, 10 Fla. 133; Lindsay v. Matthews, 17 Fla. 577. "This question," says Du Pont, C. J., in the latter case, "has been a fruitful source of litigation in the courts of the country, and there has been great diversity and con- tradiction in the adjudications of the several states constituting the late Union. In some of them, any evidence going to show the inten- tion of the parties is admissible to fix the character of the instrument; while in others it is held that such evidence only as tends to show fraud, accident, mistake, or trust will be permitted. We are not aware that there has been any authorita- tive adjudication of the question in this state, and it is now presented to us as one of first impression. The theory uppn which the former class of adjudications proceed is, that the fact of a deed being given as secur- ity determines its character, and not the evidence of the fact. Also, that parol evidence that a deed is a mortgage is not heard in contra- diction of the deed, but in explana- tion of the transaction to prevent the perpetration of fraud by the mortgagee." See also Franklin v. Ayer, 22 Fla. 654; Walls v. Endel, 20 Fla. 86; Shear v. Robinson, 18 Fla. 379. «« Connor v. Connor, 59 Fla. 467, 52 So. 727; First Nat. Bank v. Ash- mead, 23 Fla. 379, 2 So. 657. "»> Connor v. Connor, 59 Fla. 467, 52 So. 727. 25 — ^JoNEs Mtg. — Vol. I. § 393 PAEOL EVIDENCE 38G tried.'" Such a deed passes the legal title, and enables the grantee to recover possession by ejectment, although a formal mortgage does not.'^ It may, nevertheless, be used as security for a debt.'^ "It does not follow, because a mortgage is only security, that every security is only a common mortgage."'^ While parol evidence is inadmissible to convert an absolute deed into a mortgage, virhere possession has been surrendered to 'the grantee, the deed of a grantor remaining in possession may be proved by parol to be a mortgage.'* A grantor in possession may defend his possession by pleading an equitable plea and doing equity ; that is, tendering the debt and interest. When the deed has served its purpose, that is, when the debt is discharged, the facts having been established by competent evidence, the creditor will be compelled to reconvey.'^ He is treated as holding the title in trust for his debtor."' Evidence of the value of the property is material upon the issue whether a deed is an abso- lute conveyance or a mortgage." It is further provided by statute that an absolute conveyance of real property by deed to secure a debt, where the vendor takes a bond for leconveyance upon payment of such debt, shall pass the title to the vendee till the debt secured has been paid, and shall be held an abso- lute conveyance with the right reserved to the vendor to have the prop- erty reconveyed upon payment of the debt, and shall not operate as a '"Georgia Code 1911, § 3258; Hall Ga. 632, 71 S. B. 1075; Bashinskl v. V. Waller, 66 Ga. 483; Keith v. Swint, 133 Ga. 38, 65 S. B. 152; Catchings, 64 Ga. 773. See also Spencer v. Schuman, 132 Ga. 515, 64 Spence v. Steadman, 49 Ga. 133; S. B. 466; Askew v. Thompson, 129 New England Mtg. Sec. Co. v. Jar- Ga. 325, 58 S. B. 854; Georgia Civ. ver, 60 Fed. 660, 9 C. C. A. 190, 23 Code 1910, § 3258. Where it was U. S. App. 114. But it may be contended that an absolute deed shown by such evidence to be a was given to secure a debt, which mortgage in a contest between gen- had been fully paid before suit, evi- eral creditors of the mortgagor and dence is admissible that the grantor his widow claiming dower in the had asked the grantee if he was not property. Carter v. Hallahan, 61 to make a deed back to the grantor's Ga. 314. See ante §26. wife when the money was paid, and "Ashley v. Cook, 109 Ga. 653, 35 that at first the grantee laughed S. E. 89; Mitchell v. FuUington, 83 and did not answer, and then said Ga. 301, 9 S. W. 1083; McLaren v. "Yes." Spencer v. Schuman, 132 Clark, 80 Ga. 423, 7 S. E. 230; Ga. 515, 64 S. B. 466. Broach v. Smith, 75 Ga. 159; Thax- ™ See Ga. Laws 1889, p. 118; Laws ton V. Roberts, 66 Ga. 704; Code 1893, p. 117. 1882, § 1969; Code 1895, § 2771. ™Biggers v. Bird, 55 Ga. 650; " Jewell V. Walker, 109 Ga. 241, Lackey v. Bostwiek, 54 Ga. 45; Hop- 34 S. E. 337; Carter v. Gunn, 64 Ga. kins v. Watts, 27 Ga. 490. 651; Broach v. Barfield, 57 Ga. 601. "Chapman v. Ayer, 95 Ga. 581, 23 " Biggers v. Bird, 55 Ga. 650, 652. S. E. 131; Rodgers v. Moore, 88 Ga. "Lowe V. Findley, 141 Ga. 380, 81 88, 13 S. E. 962; Pope v. Marshall, S. B. 230; Mercer v. Morgan, 136 78 Ga. 635, 4 S. B. 116. 387 UPON WHAT GEOUNDS ADMITTED § 393 mortgage.'^ Where a deed is given to secure an indebtedness not specified therein, and no bond for reconveyance is made, parol evidence if admissible to show that the deed was given to secure an indebted- ness already existing to the amount expressed as a consideration, and also to secure future advances.'^ The creditor may sue for the debt secured and may have a special judgment subjecting the property to the payment of the debt.^" § 292a. Idaho. — The intention of the parties to an absolute deed may be ascertained by parol testimony, and when ascertained will be carried out by the courts.*^ The evidence that the instrument is se- curity for a debt and not a conveyance of title must be clear and sat- isfactory.^^ Under the statute of Idaho, every transfer of an interest in real property other than in trust, made only as security for the performance of another act, is to be deemed a mortgage, and this i&, applicable although the conveyance be a deed absolute on its face with- out any defeasance or condition expressed therein.'^ § 293. Illinois. — In Illinois it is provided by statute that every deed of real estate intended as security, though absolute in terms, shall be considered as a mortgage.** Such intention may be proved by paroP^ in an action at law where the title is not directly in issue.'*- In order to change an absolute sale into a mortgage, the evidence 1 •"Civil Code 1910, § 330G. Pearson v. Pearson, 131 111. 464, 23' "Hester v. Gairdner, 128 Ga. 531, N. B. 418; Helm v. Boyd, 124 111.' 58 S. E. 165. 370, 16 N. B. 85; Workman v. Green- " Jewell v. "Walker, 109 Ga. 241, ing, 115 111. 477, 4 N. B. 385; Hal- 34 S. B. 337. lesy v. Jackson, 66 111. 139; Tillson "Thompson v. Burns, 15 Idaho v. Moulton, 23 111. 648; Belllnskl v. 572, 99 Pac. Ill; Pelland v. Voll- National Brew. Co., 124 111. App. 45; mer Mill &c. Co., 6 Idaho 120, 53 ^tna Ins. Co. v. Jacobson, 105 111. Pac. 268; Winters v. Swift, 2 Idaho App. 283. See also Northern Assur. 60, 3 Pac. 15. Co. v. Chicago IVlut. Bldg. Assn., 198 »^ Bergen V. Johnson, 21 Idaho 619, 111. 474, 64 N. B. 979; Bartllng v. 123 Pac. 484. Brasuhn, 102 111. 441. But proof ^ Hannah v. Vensel, 19 Idaho 796, that the grantor made the convey- 116 Pac. 115. ance to secure an indebtedness to ^Caraway v. Sly, 222 111. 203, 78 the grantee, on an understanding N. E. 588; Merriman v. Schmitt, 211 that the grantor might redeem by 111. 263, 71 N. E. 986; Union Mutual paying the indebtedness when he be- L. Ins. Co. V. Slee, 123 111. 57, 12 N. came able to do so, is Insufficient E. 543, 13 N. B. 222; Hurd's Rev. to render an absolute deed a mort- Stat. 1913, ch. 95, § 12, p. 1665. gage. Caraway v. Sly, 222 111. 203, «= Deadman v. Yantis, 230 111. 243, 78 N. B. 588. 82 N B. 592, 120 Am. St. 291; Mer- «» German Ins. Co. v. Gibe, 162 111. riman v. Schmitt, 211 111. 263, 71 251, 44 N. E. 490, affd. 59 111. App. N. B. 986; Moffett v. Hanner, 154 111. 614; May v. May, 158 111. 209, 42 N. 649, 39 N. E. 474; Whlttemore v. W. 56. Fisher, 132 111. 24S, 24 N. E. 636; § 393 PAROL EVIDENCE 388 must clearly show the intention of parties to make a, mortgage,^^ and 8 mere preponderance of evidence is insufficient.^' To convert a deed absolute in form into a mortgage the burden of overcoming the pre- sumption of law that the deed is what it purports to be rests upon the party claiming that it is a mortgage.*' To overcome the express terms of the deed, a debt must exist, and the liability to pay it. The kind of parol evidence which is properly receivable to show an absolute deed to be a mortgage is that of facts and circumstances of such a nature as, in a court of equity, will con- trol the operation of a deed, and not of loose declarations of parties touching their intentions or understanding. The latter is a dangerous species of evidence upon which to disturb the title to land, being ex- tremely liable to be misunderstood or perverted. If the papers show Tipon their face a sale and agreement for repurchase, to make the transaction a mortgage the evidence must do more than create a doubt as to the character of the transaction."" '' Deadman v. Yantis, 230 111. 243, 82 N. B. 592, 120 Am. St. 291 (clear and convincing evidence); Gannon v. Moles, 209 111. 180, 70 N. B. 689; Heaton v. Gaines, 198 111. 479, 64 N. B. 1081; Low v. Grafe, 80 111. 360; Knockamus v. Shepard, 54 111. 500; Babcock v. Babcock, 179 111. App. 188 (clear and decisive evidence); Martinet v. Duff, 178 111. App. 199 (clear, strong, definite, Tinequivocal, convincing and satisfactory); Hog- lund V. Royal Trust Co., 159 111. App. 390; Gray v. Hayhurst, 157 111. App. 488 (clear, satisfactory, and convincing) ; Hill v. Viele, 128 111. App. 5 (clear, sufficient and con- vincing evidence); Rankin v. Ran- kin, 111 111. App. 403 (clear, satis- factory and convincing) ; May v. May, 55 111. App. 488, affd. 158 111. 209, 42 N. B. 56. ^Martinet v. Duff, 178 111. App. 199. *" Deadman v. Yantis, 230 111. 243, 82 N. B. 592, 120 Am. St. 291; Ran- kin V. Rankin, 216 111. 132, 74 N. E. 763; Gannon v. Moles, 209 111. 180, 70 N. E. 689; Heaton v. Gaines, 198 111. 479, 64 N. E. 1081, affg. 100 111. App. 26; Martinet v. Duff, 178 111. App. 199; Bartolettl v. Hoerner, 154 111. App. 336; Belinski v. National Brew. Co., 124 111. App. 45. ^ Whittemore v. Fisher, 132 111. 243, 24 N. E. 636; Strong v. Strong, 126 111. 301, 18 N. E. 665; Darst v. Murphy, 119 111 343, 9 N. B. 887; Bailey v. Bailey, 115 111. 551, 4 N. E. 394; Bearss v. Ford, 108 111. 16; Union Mut. L. Ins. Co. v. White, 106 111. 67; Bartling v. Brasuhn, 102 111. 441; Clark v. Pinion, 90 111. 245; Hancock v. Harper, 86 111. 445; Knowles v. Knowles, 86 111. 1 ; West- lake V. Horton, 85 111. 228; Sharp V. Smitherman, 85 111. 153; Strong V. Shea, 83 111. 575; Wilson v. Mc- Dowell, 78 111. 514; Heald v. Wright, 75 111. 17; Magnusson v. Johnson, 73 111. 156; Smith v. Cremer, 71 111. 185; Klock v. Walter, 70 111. 416; Remington v. Campbell, 60 111. 516; Alwood V. Mansfield, 59 111. 496; Price V. Karnes, 59 111. 276; Lin- dauer v. Cummings, 57 111. 195; Shays v. Norton, 48 111. 100; Ennor V. Thompson, 46 111. 214; Christie V. Hale, 46 111. 117; Hunter v. Hatch, 45 111. 178; Parmelee v. Lawrence, 44 111. 405; Dwen v. Blake, 44 111. 135; Pitts V. Cable, 44 111. 103; Taintor v. Keys, 43 111. 332; Ewart V. Walling, 42 111. 453; Reigard v. McNeil, 38 111. 400; Snyder v. Gris- wold, 37 111. 216; Sllsbee v. Lucas, 36 111. 462; Roberts v. Richards, 36 III. 339; Sutphen v. Cushman, 35 111. 186; Preschbaker v. Feaman, 32 111. 475; Maxfield v. Patchen, 29 111. 39; Shaver v. Woodward, 28 111. 277; Weider v. Clark, 27 III. 251; 389 DPOK WHAT GEOUNDS ADMITTED § 293 Evidence of fraud, or 'andue advantage or oppression, is allowed, as tending to show that an absolute conveyance should be regarded as a mortgage.'^ If the fact be established by parol evidence that there was a loan of money, equity regards the deed as a security for the re- payment of the money loaned."^ To establish this fact, a parol agree- ment that the land conveyed should be held by the grantee as security for money loaned the grantor, or paid for his benefit, may be proved,^^ or that it should be held to indemnify the grantee for moneys to -be paid by him on the debts of the grantor."* In short, any evidence is admissi- ble which tends to show the relations between the parties, or to show any other fact or circumstance of a nature to control the deed, and establish such an equity as would give a right of redemption."^ De Wolf v. Strader, 26 111. 225; Till- son V. Moulton, 23 111. 648; Davis v. Hopkins, 15 111. 519; Miller v. Thomas, 14 111. 428 ; Coates v. Wood- worth, 13 111. 654; Bartoletti v. Hoer- ner, 154 111. App. 330; Rankin v. Rankin, 111 111. App. 403. See ante §§ 265, 267, concerning existence of the debt. « Brown r. Gaffney, 28 111. 149. "^Wynkoop v. Cowing, 21 111. 570; Williams v. Bishop, 15 111. 553, 18 111. 101; Smith v. Sackett, 15 III. 528; Davis v. Hopkins, 15 111. 519. " Scanlan v. Scanlan, 134 111. 630, 25 N. E. 652; Reigard v. McNeil, 38 111. 400. « Roberts v. Richards, 36 III. 339. ^=In Sutphen v. Cushman, 35 111. 186, Mr. Justice Beckwith states very clearly the rule governing the admission of parol evidence in such cases: "In determining whether the transaction consummated by the deed in question was an absolute sale or should be regarded merely as a mortgage, we entirely disre- gard the testimony of those wit- nesses introduced for the purpose of establishing their understanding of the nature of the transaction, and who relate conversations of the parties. The conveyance purports to convey an absolute estate to the grantee, and it must be taken as the exponent of the right of the parties, unless some equity is shown, not founded on the mere allegation of a contemporaneous understanding in- consistent with the terms of the deed, but independently both of the deed itself and of the understanding with which it was executed. The right to redeem lands conveyed can not be established by simply prov- ing that such was the understand- ing on which the deed was exe- cuted, because equity as well as the law, will seek for the understand- ing of the parties in the deed itself. The right must be one paramount to, and independent of, the terms of the deed, as well as of the under- standing between the parties at the time it was executed. Parol evi- dence is admissible so far as it conduces to show the relations be- tween the parties, or to show any other fact or circumstance of a nature to control the deed, and to establish such an equity as would give a right of redemption, and no further. In the application of this rule, parol evidence is received to establish the fact that a debt ex- isted, or money was loaned on ac- count of which the conveyance was made; for such facts will, in a court of equity, control the opera- tion of the deed. So, too, in regard to any other fact or circumstance having the same operation. From some expressions of opinion in cases hitherto decided by this court, it has been supposed that a more en- larged rule has been adopted in this state, but a careful examination of them will show that this court has never departed from the rule we now enunciate." The ground or principle of the doctrine was also considered in Ruckman v. Alwood, 71 111. 155, where, after referring to the earlier § 294 PAEOL EVIDENCE 390 Any circTimstance tending to illustrate the purpose and intent of the parties, including their declarations at the time of the execution of the instrument, may be given in evidence.*^ But the testimony of a third person who was present at the execution of a trust deed alleged to have been executed as security for the payment of an annuity, is not admissible concerning a conversation between the alleged annui- tant and a justice of the peace who drew the papers ; nor is the testi- mony of a person admissible, who advised the making of the agree- ment, but who was not present when it was signed, to prove a like con- versation.®' § 294. Indiana. — The admission of parol evidence to show that an absolute deed was executed merely as security for the payment of money, or the performance of some act, is a well-settled rule in this state.'* Formerly the ground on which it was received seemed to be cases in this state, the court say: "It will be perceived that in none of these cases did the court at- tempt to range the jurisdiction, to turn an absolute deed into a mort- gage by parol evidence, under any specific head of equity, such as fraud, accident, or mistake; but the rule seems to have grown into rec- ognition as an independent head of equity. Still it must have its foun- dation in this, that, where the trans- action is shown to have been meant as a security for a loan, the deed will have the character of a mort- gage, without other proof of fraud than is implied in showing that a conveyance, taken for the mutual benefit of both parties, has been ap- propriated solely to the use of the grantee." "Conant v. Riseborough, 139 111. 383, 28 N. E. 789, affg. 30 111. App. 498; Helm v. Boyd, 124 111. 370, 16 N. E. 85; Darst v. Murphy, 119 111. 343, 9 N. B. 887; Workman v. Green- ing, 115 111. 477, 4 N. B. 385; Bent- ley V. O'Bryan, 111 111. 53; Bartling V. Brasuhn, 102 111. 441; Belinski V. National Brew. Co., 124 111. App. 45; .^tna Ins. Co. v. Jacobson, 105 111. App. 283. "'Miller v. Mandel, 259 111. 314, 102 N. E. 760. ""Mott V. Fiske, 155 Ind. 597, 58 N. E. 1053; Brown v. PoUette, 155 Ind. 316, 58 N. E. 197; Kitts v. Will- son, 130 Ind. 492, 29 N. E. 401; Ham- ilton V. Byram, 122 Ind. 283, 23 N. B. 795; Pickett v. Green, 120 Ind. •584, 22 N. B. 737; Diven v. Johnson, 117 Ind. 512, 20 N. E. 428, 3 L. R. A. 308; Turple v. Lowe, 114 Ind. 37, 15 N. E. 834; Voss v. EUer, 109 Ind. 260, 10 N. B. 74; Hanlon v. Doherty, 109 Ind. 37, 9 N. E. 782; Singer Mfg. Co. V. Forsyth, 108 Ind. 334, 9 N. E. 372; Cox v. RatclifEe, 105 Ind. 374, 5 N. B. 5; Beatty v. Brummett, 94 Ind. 76; Landers v. Beck, 92 Ind. 49; Herron v. Herron, 91 Ind. 278; Parker v. Hubble, 75 Ind. 580; Tut- tle V. Churchman, 74 Ind. 311; Cra- vens V. Kitts, 64 Ind. 581; Caress V. Foster, 62 Ind. 145; Butcher v. Stultz, 60 Ind. 170; Graham v. Gra- ham, 55 Ind. 23; Heath v. Williams, 36 Ind. 495; Crane v. Buchanan, 29 Ind. 570; Smith v. Parks, 22 Ind. 59; Cross v. Hepner, 7 Ind. 359; Davis V. Stonestreet, 4 Ind. 101; Hayworth v. Worthington, 5 Blackf. (Ind.) 361, 35 Am. Dec. 126; Blair V. Bass, 4 Blackf. (Ind.) 539; Con- well V. Evill, 4 Blackf. (Ind.) 67; Harbison v. Lemon, 3 Blackf. (Ind.) 51, 23 Am. Dec. 376; Ward v. Tuttle (Ind. App.), 102 N. E. 405; Beidel- man v. Koch, 42 Ind. App. 423, 85 N. E. 977; Greenwood Bldg. &c. Assn. v. Stanton, 28 Ind. App. 548, 63 N. E. 574; Matchett v. Knisely, 27 Ind. App. 664; Kelso v. Kelso, 16 Ind. App. 615, 44 N. E. 1013, 45 N. 391 UPON WHAT GROUNDS ADMITTED § 295 fraud or mistake ; and the attempt to set up such a deed as an absolute conveyance was regarded in itself as a fraud; but the later decisions hold that, without showing any fraud, accident, or mistake, parol evi- dence is admissible to prove that an absolute deed was intended as a security. "' The proof that a mortgage was intended must be clear and decisive.^ Although a conveyance absolute on its face, without any accom- panying defeasance may be shown in equity to be a mortgage as be- tween the parties and persons with notice, it can not so operate against bona fide purchasers.^ The owner of a tract of land executed first, second and third mort- gages thereon. Thereafter when the first mortgage became due it was paid by the holder of the second mortgage, to whom a deed of the property was given as security for the amount due on both mortgages, it being agreed as a part of the transaction that the time of payment of the second mortgage should be extended. It was held, that the deed given was in fact a mortgage and was a lien superior to that of the third mortgage.^ § 295. Iowa. — In Iowa parol evidence is admissible, on the ground that to declare that to be a sale which was really a mortgage would be a fraud.* The recent cases admit parol evidence generally, to show that a deed absolute in form was given as security^ and intended as a mortgage.^ E. 1065; Loeb v. McAlister, 15 Ind. 'Lavalleur v. Hahn, 152 Iowa 649, App. 643, 41 N. E. 1061, 44 N. E. 132 N. W. 877, 39 L. R. A. (N. S.) 378. 24. "Cox V. Ratcliffe, 105 Ind. 374, 5 "Cold v. Beh, 152 Iowa 368, 132 N. B. 5; Beatty v. Brummett, 94 N. "W. 73; Mahaffy v. Faris, 144 Ind. 76; Smith v. Brand, 64 Ind. Iowa 220, 122 N. W. 934, 24 L. R. A. 427 (N. S.) 840; Jones v. Gilbert, 142 1 Rogers v. Beach, 115 Ind. 413, Iowa 506, 118 N. W. 314, 121 N. W. 17 N. B. 609; Voss v. EUer, 109 Ind. 5; Kinkead v. Feet, 137 Iowa 692, 260, 10 N. B. 74; Cox v. RatclifEe, 114 N. W. 616. Parol evidence is 105 Ind. 374, 5 N. E. 5; Fox v. Fra- admissible to show that a sheriff's ser, 92 Ind. 265; Lucas v. Hendrix, deed was executed under an agree- 92 Ind. 54; Landers v. Beck, 92 Ind. ment that the grantee was to hold 49; Herron v. Herron, 91 Ind. 278; the legal title as mortgagee subject Parker v. Hubble, 75 Ind. 580; Con- to redemption by payment of the well V. Evill, 4 Blackf. (Ind.) 67. debt for which the property was ^Calahan v. Dunker, 51 Ind. App. sold. Foster v. Rice, 126 Iowa 190, 436, 99 N. E. 1021. 101 N. W. 771. And the code provi- ' Matchett v. Knisely, 27 Ind. App. sion, § 2918. declaring that express 664. trusts in real estate must be exe- * Beroud v. Lyons, 85 Iowa 482, 52 cuted as deeds of conveyance, does N. W. 486; Berberick v. Fritz, 39 not exclude parol evidence that the Iowa 700; Johnson v. Smith, 39 grantee in a sheriff's deed agreed Iowa 549; Roberts v. McMahan, 4 to purchase the land sold on execu- Greene (Iowa) 34. tion, and hold it as security for a 296 PAEOL EVIDENCE 393 Parol testimony to show that an absolute deed was intended as a mortgage is not excluded by the statute of frauds, or by the code pro- vision requiring declarations of trusts or powers to be executed as deeds of conveyance^ Such evidence is not admitted to- contradict or vary the written deed, but, as an exception to the rule, to show the intention of the parties. The burden of proving that a mortgage was intended is upon the party seeking to establish it as such, and the proof must be clear, satisfactory, and conclusive,* and even then the evidence is received with caution. Inadequacy of the consideration paid is a strong circumstance to support the claim that the conveyance was intended to operate as a mortgage; and the fact that the grantor remains in possession is also to be considered in determining this question.' The conduct of the parties, and all the surrounding circumstances, will be weighed. It is not necessary to show that a defeasance has been omitted or destroyed by fraud or mistake.^" § 296. Kansas. — In Kansas it is declared that, although such evi- dence may not be admissible at law, it is in equity. Although no writ- debt of the land owner. McBlroy V. AUfree, 131 Iowa 112, 108 N. W. 116, 117 Am. St. 412. 'Iowa Code, § 2918; Salinger v, McAllister (Iowa), 146 N. W. 8. This rule applies also to one acquir- ing a legal title from a third person, under an agreement with another, who agrees to pay the nurchase- price, and for whom the purchase- money is advanced as a loan. Jones V. Gillett, 142 Iowa 506, 118 N. W. 314. »Cold V. Beh, 152 Iowa 368, 132 N. W. 73; Bradford v. Helsell, 150 Iowa 732, 130 N. W. 908; Jones v, Gillett, 142 Iowa 506, 118 N. "W. 314; Krebs v. Lauser, 133 Iowa 241, 110 N. W. 443; Betts v. Betts, 132 Iowa 72, 106 N. W. 928; Wright v. Wright, (Iowa), 98 N. W. 137; McLaughlin V. Royce, 108 Iowa 254, 78 N. W. 1105; Haggerty v. Brower, 105 Iowa 395, 75 N. W. 321; Baird v. Reining- haus, 87 Iowa 167, 54 N. W. 148; Langer v. Meservey, 80 Iowa 158, 45 N. W. 732; Ensminger v. Ensmin- ger, 75 Iowa 89, 39 N. W. 208, 9 Am. St. 462; Corliss v. Conable, 74 Iowa 58, 36 N. W. 891; Knight v. McCord, 63 Iowa 429, 19 N. W. 310; Kihby V. Harsh, 61 Iowa 196, 16 N. W. 85; Woodworth v. Carman, 43 Iowa 504; Crawford v. Taylor, 42 Iowa 260; Zuver V. Lyons, 40 Iowa 510; Green V. Turner, 38 Iowa 112; Hyatt v. Cochran, 37 Iowa 309; Wilson v. Patrick, 34 Iowa 362; Key v. Mc- Cleary, 25 Iowa 191; HoUiday v. Arthur, 25 Iowa 19; Childs v. Gris- wold, 19 Iowa 362; Sunderland v. Sunderland, 19 Iowa 325; Gardner V. Weston, 18 Iowa 33; Cooper v. Skeel, 14 Iowa 578; Atkins v. Faulkner, 11 Iowa 326; Corbit v. Smith, 7 Iowa 60, 71 Am. Dec. 431; Noel V. Noel, 1 Iowa 423; Robertson V. Moline Milburn-Stoddard Co., 106 Iowa 414, 76 N. W. 736. Loose ran- dom statements by a grantee to dis- interested persons that the land was conveyed to him in trust merely are not admissible to show that a deed was intended as a mortgage. Eng- land V. England, 94 Iowa 716, 61 N. W. 920. Where the agreement to re- convey expressly provides that it shall not be considered as a mort- gage, very strong evidence is re- quired to prove that a deed with an agreement to reconvey consti- tutes a mortgage. Irish v. Steeves, 154 Iowa 286, 134 N. W. 634. "Wilson V. Patrick, 34 Iowa 362; Trucks V. Lindsey, 18 Iowa 504. " Bigler V. Jack, 114 Iowa 667, 87 N. W. 700. 393 UPON WHAT GROUNDS ADMITTED § 397 ten defeasance was ever executed between the parties, their under- standing, intention, or agreement may be shown to create a parol of defeasance. The mortgage results from the facts of the case, and the statute of frauds and the statute relating to trusts, while making void parol agreements respecting land, do not make void an estate which lesults from, or is created by, operation of law. This evidence is ad- mitted to show the facts of the case which render the deed defeasible. ^^ That an instrument purporting to be an absolute deed of conveyance may be shown by parol evidence to have been intended as security for the payment of money or the performance of an act is, in efEect, im- plied by statute,^^ and has been frequently ruled in judicial decision.^^ The deed may be declared a mortgage not only upon the application of the grantor, but also upon application of his creditors who seek to reach his interest by attachment.^* The evidence must be clear and decisive,^ ° leaving no substantial doubt that a mortgage was in- tended.^* '§297. Kentucky. — Until recently parol evidence was admitted in this class of cases only upon the ground of fraud or mistake.^^ Espe- cially if the transaction be infected with usury, it is admissible to show that the real character of the transaction is different from what it purports to be.^^ In some decisions an absolute deed has been held '^ McDonald v. Kellogg, 30 Kans. mortgagor to the mortgagee it may 170, 2 Pac. 507; Glynn v. Home Bldg be shown upon foreclosure that Assn., 22 Kans. 746; Moore v. Wade, such deed was intended as security 8 Kans. 380; Barnes v. Crockett, 4 only. Where the mortgage was Kans. App. 777, 46 Pac. 997. given by husband and wife, and "Kans. Gen. Stat. 1909, § 5195; upon partial release, other land is Saylor v. Crooker, 89 Kans. 51, 130 deeded by the husband alone to the Pac. 689. mortgagee, evidence that the deed "Farmers' &c. Bank v. Kackley, was a mortgage is admissible 88 Kans. 70, 127 tac. 539; Hubbard against the wife, as well as the hus- V. Cheney, 76 Kans. 222, 91 Pac. 793, band, she having joined in the an- 123 Am. St. 129, note p. 133; swer. Hilt v. Griffin, 77 Kans. 783, Abrams V. Abrams, 74 Kans. 888, 88 90 Pac. 808. Pac. 70;. Martin v. Allen, 67 Kans. "Bennett v. Wolverton, 24 Kans. 758, 74 Pac. 249; Yost v. Bank, 66 284. Kans. 605, 72 Pac. 209; McNamara "= Winston v. Burnell, 44 Kans. V. Culver, 22 Kans. 661. Parol 367, 24 Pac. 477, 21 Am. St. 289. proof may be resorted to to show '"Elston v. Chamberlin, 41 Kans. that a deed to a husband and wife 354, 21 Pac. 259. jointly was intended as a mortgage " Munf ord v. Green, 103 Ky. 140; to secure money advanced by her Crutcher v. Muir, 90 Ky. 142, 13 S. toward the purchase-price. Hub- W. 435; Blanchard v. Kenton, 4 bard v. Cheney, 76 Kans. 222, 91 Bibb (Ky.) 451; Skinner v. Miller, Pac. 793, 123 Am. St. 129. Where a 5 Litt. (Ky.) 84. part of the land covered by a mort- "Cook v. Colyer, 2 B. Mon. (Ky.) gage is released from its operation 71; Stapp v. Phelps, 7 Dana (Ky.) and other land! is deeded by the 296; Lindley v. Sharp, 7 Mon. (Ky.) § 297a PAROL EVIDENCE 394 to be a mortgage, though neither fraud nor mistake was shown in its execution, or the intention of the parties as shown by the attendant circumstances.^'' Parol evidence has been held admissible to show that an assignment by a purchaser at commissioner's sale to a third person who had become surety for the purchase-money, was not an absolute conveyance of the purchaser's right, but was made for the purpose, of protecting the surety.^" The burden of proof to show an absolute deed to be a mortgage is jipon the grantor, whose unsupported testimony, when denied by the grantor is insufficient.^^ TJntil the most recent decisions the Court of Appeals has adhered to the statement that parol evidence is admissible only in case there is an allegation of fraud or mistaker** But parol evidence is now admis- sible to show an absolute deed a mortgage, though there is no plea of fraud or mistake, or of any over-reaching in a relation of trust or con- fidence.^^ Such evidence must be clear and satisfactory.^* § 297a. louisiana. — A conveyance in the form of an absolute sale, but intended and understood by both parties to be a security for a debt, is a mortgage, and does not vest the ownership in the apparent buyer. Parol evidence is admissible to show the real nature of the conveyance,^ The later authorities construe Civil Code, art. 2236, 248; Murphy v, Trigg, 1 Mon. (Ky.) Tandy, 146 Ky. 101, 141 S. W. 1183; 72. Brown v. Spradlin, 136 Ky. 703, 125 "» Seller v. Northern Bank, 86 Ky. S. W. 150; Hobbs v. Rowland, 136 128, 5 S. W. 536; Davis v. Bastham, Ky. 197, 123 S. W. 1185; overruling 81 Ky. 116; Timmons v. Center Munford v. Green, 103 Ky. 140, 44 (Ky.), 43 S. W. 437; Brey v. Bar- S. W. 419; and Holtheide v. Smith, hour (Ky.), 20 S. W. 899; Gossum 24 Ky. L. 2535, 74 S. W. 689. See V. Gossum (Ky.), 15 S. W. 1057; also Graham v. Fischer (Ky.), 110 .Green v. Ball, 4 Bush. (Ky.) 586. S. W. 386; Hobbs v. Rowland, 136 '"Crockett's Guardian v. Waller, Ky. 197, 123 S. W. 1185; Oberdorfer 29 Ky. L. 1155, 96 S. W. 860. v. White, 25 Ky. L. 1629, 78 S. W. '^Runyon v. Pogue (Ky.), 42 S. W. 436. 910. ^Stokeley v. Flanders (Ky.), 128 =■ Bennett v. Bennett, 137 Ky. 17, S. W. 608. 121 S. W. 495, Ann. Cas. 1912 A, 407; '^Crozier v. Ragan, 38 La. Ann. Munford v. Green, 103 Ky. 140; 154; Parmer v. Mangham, ' 31 La. Crockett's Guardian v. Waller, 29 Ann. 348. In Mulhaupt v. Youree, Ky. L. 1155, 96 S. W. 860. See also 35 La. Ann. 1052, it was held that Crutcher v. Muir, 90 Ky. 142, 13 S. where, in a sale with an agreement W. 435, 29 Am. St. 356. Where the of redemption, possession was given court say that in Seller v. Northern to the purchaser, written evidence Bank, 86 Ky. 128, there was no alone is admissible to show the sale question involving the right to in- a mortgage unless fraud or error troduce parol evidence to vary a be charged. See also Eames v. written instrument. Woodson, 120 La. 1031, 46 So. 13; ^ Smith V. Berry, 155 Ky. 686, 160 Franklin v. Sewall, 110 La. 292, 34 S. W. 247; Vaughn v. Smith, 148 So. 448. Ky. 531, 146 S. W. 1094; Leibel v. 395 UPON WHAT GEOUNDS ADMITTED § 298 to the effect that a sale of lands or immovable property, can not be thown to be an antichresis, as between the parties or their heirs, except by a counter letter or answers to formal interrogatories pro- pounded to the apparent owner, or by proof of fraud or mistake.^" § 298. Maine. — In Maine, by statutory definition, mortgages of real estate include those made in the usual form in which the con- dition is set forth in the deed, an^ those made by a conveyance ap- pearing on its face to be absolute, with a separate instrument of de- feasance executed at the same time, or as part of the same transac- tion.''^ Parol evidence is not admissible at law to convert an abso- lute deed into a mortgage. ^^ In equity a resulting trust was formerly lield to arise in favor of a grantor who had conveyed land by an abso- lute deed to secure a debt due to the grantee, under which redemption might be had within a reasonable time.^' Under the more recent decisions a new rule in equity has been adopted. Where the proof is clear and convincing, a deed absolute on its face may be construed to be an equitable mortgage.^" In a case upon this subject the court said : "It is a sound policy as well as prin- ciple to declare, that to take an absolute conveyance as a mortgage, without any defeasance, is in equity a fraud."^^ The intention of the "Harang v. Ragan, 134 La. 201, Maine 206; Howe v. Russell, 36 63 So. 875; Breaux v. Royer, 129 Maine 115; Whitney v. Batohelder, La. 894, 57 So. 164 (parol evidence 32 Maine 313. admissible only in case of fraud or '° Bradley v. Merrill, 88 Maine 319, error); Maskrey v. Johnson, 122 La. 34 Atl. 160; Libby v. Clark, 88 Maine 791, 48 So. 266; Eames v. "Woodson, 32, 33 Atl. 657; Jameson v. Emer- 120 La. 1031, 46 So. 13 (parol evi- son, 82 Maine 359, 19 Atl. 831; Reed dence admissible in favor of liens v. Reed, 75 Maine 264; Stinchfleld of vendor in case of fraud or v. Milliken, 71 Maine 567; Lewis v. error). See also Mulhaupt v. Youree, Small, 71 Maine 552. This doctrine 35 La. Ann. 1052; Janney v. Ober, was first allowed in this state in 28 La. Ann. 281; West v. Hickman, Rowell v. Jewett, 69 Maine 293; af- 14 La. Ann. 610; Theufer v. firmed in Knapp v. Bailey, 79 Maine Schmidt, 10 La. Ann. 125; Ranald- 195, 9 Atl. 122. Since the statute son V. Hamilton, 5 La. Ann. 203; of 1874, eh. 175, conferring full ju- Dabadie v. Poydras, 3 La. Ann. 153. risdiction in equity, the court has But . see Ker v. Evershed, 41 La. complete jurisdiction over equitable Ann. 15, 6 So. 566; Crozier v. Ra- mortgages. Reed v. Reed, 75 Maine gan, 38 La. Ann. 154; Newman v. 264. Shelly, 36 La. Ann. 100; Testart v. The dictum of the court in Rich- Belot, 31 La. Ann. 795; Frost v. Be- ardson v. Woodbury, 43 Maine 206, bout, 14 La. Ann. 104. that a resulting trust arises in such " Maine Rev. Stat. 1903, ch. 92, case, is not supported by any reli- § 1, p. 794. able authority or well-grounded rea- "* Bryant v. Crosby, 36 Maine 562, son, and it has never been followed. 58 Am. Dec. 767; Ellis v. Higgins, Reed v. Reed, 75 Maine 264, per Vir- 32 Maine 34; Thomaston Bank v. gin J. Stimpson, 21 Maine 195. " Stinchfleld v. Milliken, 71 Maine ''Richardson v. Woodbury, 43 567. § 299 PAROL EVIDENCE 396 parties is tlie criterion, and tliis may be ascertained from any facts within or without the deed. § 299. Maryland. — Parol evidence was formerly admitted only to show that the defeasance was omitted or destroyed by fraud or mis- take.^^ Fraud may be inferred from the facts and circumstances of the, case, from the character of the contract, or from the situation of the parties. ^^ Parol evidence is adipitted upon the same principle that it is admitted to establish a resulting trust.^* It has been said that such evidence is admitted not to contradict or vary the terms of the instrument, but to establish an equity paramount to the mere form of the conveyance.^ ^ According to the more recent cases, it is admitted not only to pre- vent fraud and oppression, but to promote substantial justice between the parties, and to carry out their real intentions.^" Thus parol evi- dence is admissible to prove a deed to have been intended as a mort- gage,^^ not only between the parties, but as against all deriving title from the grantee, who are not bona fide purchasers.^* The evidence must be clear and decisive.^" An oral agreement to permit repur- chase, though made for a valuable consideration, raises a mere option, and not a mortgage.*" § 300. Massachusetts. — In Massachusetts parol evidence is ad- mitted in these cases, not to vary, add to, or contradict the deed, but to establish the fact of an inherent fault in the transaction or its con- sideration, which affords ground for avoiding the effect of the deed by restraining its operation or defeating it altogether.*^ This doctrine '^Bauglier v. Merryman, 32 Md. ""Gaitlier v. Clarke, 67 Md. 18, 8 185; Artz v Grove, 21 Md. 456, 474; Atl. 740; Booth v. Robinson, 55 Md. Farrell v. Bean, 10 Md. 217; Bank 419, 451. of Westminster v. Whyte, 1 Md. Ch. =" Mil-Ier v. Miller, 101 Md. 600, 61 536, 3 Md. Ch. 508; Dougherty v. Atl. 210; Punk v. Harshman, 110 McColgan, 6 Gill & J. (Md.) 275; Md. 127, 72 Atl. 665. Bend v. Susquehanna Bridge &c. Co., ^ Funk v. Harshman, 110 Md. 127, 6 Har. & J. (Md.) 128, 14 Am. Dec. 72 Atl. 665. 261. See also Price v. Gover, 40 Md. =° Funk v. Harshman, 110 Md. 127, 102. 72 Atl. 665; Cochrane v. Price == Thompson v. Banks, 2 Md. Ch. (Md.), 8 Atl. 361; Faringer v. Ram- 430, 3 Md. Ch. 138; Watkins v. sey, 2 Md. 365. Stocketi, 6 Har. & J. (Md.) 435; "Riggin v. Robinson, 117 Md. 81, Brogden v. Walker, 2 Har & J. (Md.) 83 Atl. 143. But see Hopper v. Smy- 285. ser, 90 Md. 363, 45 Atl. 206. "Booth V. Robinson, 55 Md. 419; "Campbell v. Dearborn, 109 Mass. Cochrane v. Price (Md.), 8 Atl. 361. 130,, 12 Am. Rep. 671; Cullen v. == Pickett V. Wadlow, 94 Md. 564, Carey, 146 Mass. 50, 15 N. E. 131; 51 Atl. 423; Booth v. Robinson, 55 Pond v. Eddy, 113 Mass. 149; Mc- Md. 419. Donough v. O'Neil, 113 Mass. 92; 397 UPON WHAT GEOtTNDS ADMITTED § 300 is regarded as a sound and salutary principle of equity jurisprudence, when properly administered; but it is declared to be a power to be exercised with the utmost caution, and only when the grounds of in- terference are fully made out, so as to be clear from doubt. "It is not enough," says Mr. Justice Wells, "that the relation of borrower and lender, or debtor and creditor, existed at the time the transaction was entered upon. Negotiations, begun with a view to a loan or security for a debt, may fairly terminate in a sale of the property originally proposed for security. And if, without fraud, oppression, or unfair advantage taken, a sale is the real result, and not a form adopted as a cover or pretext, it should be sustained by the court. It is to the determination of this question that the parol evidence is mainly di- rected."^^ The late cases admit parol evidence generally to show that a deed absolute on its face is in fact security for a debt, and hold that the introduction of such parol proof of a mortgage is not in conflict McDonough v. Squire, 111 Mass. 217; Glass v. Hulbert, 102 Mass. 24, 3 Am. Rep. 418; Newton v. Fay, 10 Allen (Mass.) 505. Prior to the Statute of 1855, ch. 194, § 1, Gen. Stat. ch. 113, § 2, conferring upon the Supreme Judicial Court juris- diction in equity "in all cases of fraud, and of conveyances or trans- fers of real estate in the nature of mortgages," the jurisdiction of the court in relation to the foreclosure and redemption of mortgages was confined to cases of a defeasance contained in the deed, or in some other instrument under seal. Flint V. Sheldon, 13 Mass. 443, 7 Am. Dec. 162; Boyd v. Stone, 11 Mass. 442; Stackpole v. Arnold, 11 Mass. 27, 6 Am. Dec. 150; Kelleran v. Brown, 4 Mass. 443; Coffin v. Loring, 9 Allen (Mass.) 154; Lincoln v. Par- sons, 1 Allen (Mass.) 388; Eaton v. Green, 22 Pick. (Mass.) 526; Flagg v. Mann, 14 Pick. (Mass.) 467; Bodwell v. Wehster, 13 Pick. (Mass.) 411. Saunders v. Frost, 5 Pick. (Mass.) 259, 16 Am. Dec. 394. But before that statute parol evi- dence had been frequently admitted where there was a deed and a pro- vision for a reconveyance, to show the real nature of the transaction; and the instruments had been con- strued as constituting a mortgage when it was shown that the trans- action was really and essentially a loan of money. Flagg v. Mann, 14 Pick. (Mass.) 467; Carey v. Raw- son, 8 Mass. 159; Taylor v. Weld, 5 Mass. 109; Kelleran v. Brown, 4 Mass. 443; Erskine v. Townsend, 2 Mass, 493, 3 Am. Dec. 71; Rice v. Rice, 4 Pick. (Mass.) 349; Parks V. Hall, 2 Pick. (Mass.) 206. But the question whether, in the ab- sence of any written defeasance, an absolute deed could be converted into a mortgage, or restricted in its operation so as to allow a redemp- tion, when shown to be in fact merely security for a loan, was not decided until it came before the court in Campbell v. Dearborn, 109 Mass. 130, 12 Am. Rep. 671, though the question had been discussed in Newton v. Fay, 10 Allen (Mass.) 505, and, so far as concerned the statute of frauds, in Glass v. Hul- bert, 102 Mass. 24, 3 Am. Rep. 418. The opinion of Mr. Justice Wells, in Campbell v. Dearborn, contains a full and able discussion of the whole subject. " Campbell v. Dearborn, 109 Mass. 130, 143, 12 Am. Rep. 671. § 301 PAEOL EVIDENCE 398 with the statute of frauds.*^ The testimony, however, must establish an equity in the grantor's favor.** There is no presumption of law arising from the fact that one per- son is indebted to another that a deed of land absolute ia form given by the creditor was or was not intended as a mortgage.*' Dissent is expressed, in the opinion of the court already quoted, from the doc- trine advanced in some' of the cases, that the subsequent attempt to retain the property, and refusal to permit it to be redeemed, constitute a fraud and breach of trust, which afford ground of jurisdiction and judicial interference. "There can be no fraud, or legal wrong, ia the breach of a trust from which the statute withholds the right of judicial recognition. Such conduct may sometimes appear to relate back and give character to the original transaction, by showing in that an ex- press intent to deceive and defraud. But ordinarily it will not be con- nected with the original transaction otherwise than constructively, or C3 involved in it as its legitimate consequence and natural fruit."** The fault is in the original transaction rather than in the grantee's subsequent conduct in relation to it. As between borrower and lender, or debtor and creditor, an absolute deed given as security, and a re- nunciation of all legal right of redemption, are regarded as so signifi- cant of oppression, and so calculated to invite to or result in wrong and injustice on the part of the stronger toward the weaker party in the transaction, as in themselves to constitute a quasi fraud against which equity ought to relieve — in the same way that it does against the strict letter of an express condition of forfeiture.*'^ § 301. Michigan. — Parol evidence is admissible to convert an ab- solute deed into a mortgage,** in favor either of the grantor or his heirs.** It is admitted to show the intention of the parties in the "Jennings v. Demmon, 194 Mass. Ruch, 159 Mich. 231, 124 N. W. 52; 108, 80 N. E. 471; Alexander v. Carvetli v. Winegar, 133 Mich. 34, Grover, 190 Mass. 462, 77 N. E. 487; 94 N. W. 381; Sowles v. Wilcox, 127 Clark V. Seagraves, 186 Mass. 430, Mich. 166, 86 N. W. 689; Abbott v. 71 N. E. 813; Potter v. Kimball, 186 Gruner, 121 Mich. 140, 79 N. W. Mass. 120, 71 N. E. 308; Hennessey 1065; McArthur v. Robinson, 104 V. Conner, 139 Mass. 120, 29 N. E. Mich. 540, 62 N. W. 713; Reilly v. 475. Brown, 87 Mich. 163, 49 N. W. 557; "Sears v. Oilman, 199 Mass. 384, Hurst v. Beaver, 50 Mich. 612, 16 85 N. E. 466. N. W. 165; Barber v. Miller, 43 "'Crowell V. Keene, 159 Mass. 353, Mich. 248, 5 N. W. 92; Johnson v. 34 N. E. 405. Van Velsor, 43 Mich. 208, 5 N. W. *' Campbell V. Dearborn, 109 Mass. 265; Emerson v. Atwater, 7 Mich. 130, 12 Am. Rep. 671. 12; Swetland v. Swetland, 3 Mich. "Per Wells, J., in Hassen v. Bar- 482; Wadsworth v. Loranger, Har. rett, 115 Mass. 256. (Mich.) 113. . "Olney v. Brown, 163 Mich. 125, «01ney v. Brown, 163 Mich. 125, 128 N. W. 241 ; Schmidt v. Barclay, 128 N. W. 241. 161 Mich. 1, 125 N. W. 729; Ruch v. 399 UPON WHAT GROUNDS ADMITTED § 302 transaction, but whether as an exception under the statute of frauds, or upon the ground of fraud, the court in one case expressly leave un- determined j"" but in another it is said that neither the statute of frauds nor the statute requiring powers and trusts to be created in writing is encroached upon by a court of equity in exercising its juris- diction in this class of cases; that a different construction would make them what they were never intended to be — a shield for the protection of oppression and fraud ; that the court will interfere between creditor and debtor to prevent oppression; and that to give relief in such cases has ever been the province of courts of equity, whose chief excellence consists in a wise and judicious exercise of this part of their jurisdic- tion.^^ Evidence of all the circumstances surrounding the transac- tion, the conversation at the time, and the value of the land is ad- missible. °^ The burden of proof is upon the grantor to prove beyond a reason- able doubt that his deed was meant to be in effect a mortgage.^^ While a preponderance of evidence has been held sufficient,"* it has also been said that the evidence of intention to create a mortgage must be clear and convincing.'"' § 302. Minnesota. — Parol evidence is admissible in equity of the circumstances under which the deed was made, and the relation sub- sisting between the parties.^" At first it was held to be admissible ™ Fuller V. Parrish, 6 Mich. 211. 104 N. W. 561; Philips v. Mo, 91 "Emerson v. Atwater, 7 Micb. 12. Minn. 311, 97 N. W. 969; Backus v. =»Carveth v. Winegar, 133 Mich. Burke, 63 Minn. 272, 65 N. "W. 459; 34, 94 N. W. 381. Terry v. Wilson, 50 Minn. 570, 52 '^ Kellogg V. Northrup, 115 Mich. N. W. 973; Nye v. Swan, 49 Minn. 327, 73 N. W. 230; McArthur v. Rob- 431, 52 N. W. 39; Marshall v. Thomp- inson, 104 Mich. 540, 62 N. W. 713; son, 39 Minn. 137, 39 N. W. 309; Etheridge v. Wisner, 86 Mich. 166, Madigan v. Mead, 31 Minn. 94, 16 48 N. W. 1087; McMillan v. Bissel, N. W. 539; Weide v. Gehl, 21 Minn. 63 Mich. 66, 29 N. W. 737; Tilden 449; Phoenix v. Gardner, 13 Minn, v. Streeter, 45 Mich. 533, 8 N. W. 430. See also Webster v. McDowell, 502; Nickodemus v. Nickodemus, 45 102 Minn. 445, 113 N. W. 1021. The Mich. 385, 8 N. W. 86. fact that a deed is in fact a mort- " Schmidt v. Barclay, 161 Mich. 1, gage may be established by circum- 125 N. W. 729; Cady v. Burgess, 144 stantial evidence, especially where Mich. 523, 108 N. W. 414; Kellogg the grantor is dead. Hollen v. Slee, V. Northrup, 115 Mich. 327, 73 N. 120 Minn, 261, 139 N. W. 493. Parol W. 230; Sanborn v. Sanborn, 104 proof is admissible to show that the Mich. 180, 62 N. W. 371 (preponder- deed was in fact a mortgage to se- ance of proof sufficient). cure future advances and the per- " Smith V. Smith, 177 Mich. 268, formance of a contract, though the 143 N. W. 86; Dalton v. Mertz, 173 mortgagor did not yet have title to Mich. 153, 138 N. W. 1055; Rath- the land. Stitt v. Rat Portage Lum- bone V. Maltz, 155 Mich. 306, 118 N. ber Co., 96 Minn. 27, 104 N. W. 561. W. 991. Minn. Rev. Laws 1905. § 3361, re- ^ Grannis v. Hitchcock, 118 Minn, quiring a written defeasance to be 462, 137 N. W. 186; Stitt v. Rat recorded where intended to render Portage Lumber Co., 96 Minn. 27, an absolute deed defeasible does § 303 PAROL EVIDENCE 400 only upon the ground of fraud, mistake, or surprise in making or exe- cuting the instrument ; but, subsequently, it was held to be admissible to show the real character of the transaction. In a court of law, such evidence can not be received on any ground. "^^ Equity will not, upon mere conjecture or unsubstantial evidence, convert an absolute deed into a mortgage.^* The evidence must be clear and positive, and leasonably conclusive, but need not amount to proof beyond a reason- able doubt.^^ § 303. Mississippi. — In Mississippi it is well settled that parol evi- dence will be admitted in equity to show that an absolute deed was intended to be security for money, and therefore a mortgage.'" It is received to explain the true character of the transaction. For this purpose, the conduct of the parties at the time and subsequently, and all the attending circumstances, may be looked at; and when it is shown that the consideration of the conveyance was a loan or a debt, the courts always incline to regard it as a mortgage.'^ By statute a conveyance absolute on its face, where the maker parts with the pos- session, can not be proved by parol evidence to be a mortgage only, unless fraud in its procurement be the issue to be tried."^ The statute not imply that a writing is neces- W. 399; Belote v. Morrison, 8 Minn, sary between the parties, but serves 87; McCIane v. "White, 5 Minn. 178, merely to protect persons dealing in keeping within the statute of frauds, land on faith of the record title. ^ Minneapolis Threshing Mach. Jones V. Bradley Timber &c. Sup- Co. v. Jones, 95 Minn. 127, 103 N. ply Co., 114 Minn. 415, 131 N. "W. W. 1017. 494. Evidence that a third person ''° Baumgartner v. Corliss, 115 was present when the deed was de- Minn. 11, 131 N. W. 638; Stitt v. livered, who had agreed to redeem Rat Portage Lumber Co., 96 Minn, from the foreclosure sale in settle- 27, 104 N. W. 561; A. J. Dwyer Pine ment of which the deed was given. Land Co. v. Whiteman, 92 Minn. 55, and that the grantee knew such 99 N. W. 362. fact, was properly excluded as evi- ™Fultz v. Peterson, 78 Miss. 128, dence of a collateral fact not per- 28 So. 829; Klein v. McNamara, 54 tinent to the issue. Philips v. Mo, Miss. 90; Freeman v. Wilson, 51 91 Minn. 311, 97 N. W. 969. An Miss. 329 and cases cited; Little- instrument executed by a grantee wort v. Davis, 50 Miss. 403 and cases under absolute deed, after death of cited; Weathersly v. Weathersly, 40 the mortgagor for a sale of part of Miss. 462, 90 Am. Dec. 344; Anding the property involved to one of the v. Davis, 38 Miss. 574, 594; Soggins grantor's heirs, and to accept the v. Heard, 31 Miss. 426; Vasser v. quitclaim deed of the grantor's Vasser, 23 Miss. 378; Prewett v. widow to another portion of the Dobbs, 13 Sm. & M. (Miss.) 431; property, was admissible to show Watson v. Dickens, 12 Sm. & M. conduct of defendant inconsistent (Miss.) 608. with his claim of absolute owner- " Freeman v. Wilson, 51 Miss. 329. ship. Holien v. Slee, 120 Minn. 261, "» Annot. Code 1892, § 4233. See 139 N W. 493. also Culp v. Wooten, 79 Miss. 503, , " Swedish-Am. Nat. Bank v. Ger- 31 So. 1; Schwartz v. Lieber, 79 mania Bank, 76 Minn. 409, 79 N. Miss. 257, 30 So. 649. 401 UPON^ -WHAT GEOUNDS ADMITTED § 304a applies only where the vendor parts with the possession. of the prop- erty."^ § 304. Missouri. — ^A conveyance intended as a security at the time of its execution, though absolute in form, is treated as a mortgage. Such intention may be shown by parol evidence, on the ground that the denial of the trust character of the deed by the grantee is a fraud on his part, which gives a court of equity jurisdiction of the case, and thus enables it to hold to the verbal or implied defeasance as effectu- ally as if this had been a formal written one."^ It is not admissible at law.''^ Concerning the sufficiency of the evidence, it has been held that it must be satisfactory as to its credibility, unequivocal as to its terms and meaning, and clear and convincing beyond a reasonable doubt.*" Where a quitclaim deed is asserted to be a mortgage parol evidence is admissible that the mortgagors were elderly people in straitened circumstances, and that they conveyed the property to en- able the grantee to sell part of the land and discharge an existing mortgage."^ § 304a. Montana. — Parol evidence is received to show that an absolute deed was in fact a mortgage. Where there is a deed and a contract to reconvey, they in law constitute a mortgage, if the papers upon their face show a loan. "Parol evidence will be received to show that the transaction was in fact a mortgage ; but it seems that where the papers on their face show a mortgage, parol evidence will not be admitted to show that it was in fact a sale. Where the papers do not show that a security was meant, it is incumbent upon the party seek- ing to establish a mortgage to show that a mortgage was intended. ^'Helrmann v. Stricklin, 60 Miss. °»Hogel v. Lindell, 10 Mo. 483. 234. Under the practice act, the rule al- "Brightwell v. McAfee, 249 Mo. lowing the admission of parol evi- 562, 155 S. W. 820; O'Neill v. Ca- dence in such cases seems to be re- pelle, 62 Mo. 202. See also Jones garded as a rule of evidence which v. Rush, 156 Mo. 364, 57 S. W. 118; may be invoked even in an action Bobb v. Wolff, 148 Mo. 335, 49 S. which, under the old system, would W. 996; Book v. Beasley, 138 Mo. be termed an action at law. Quick 455, 40 S. W. 101; Cobb v. Day, 106 v. Turner, 26 Mo. App. 29; Wood v. Mo. 278, 17 S. W. 323; Schradski Matthews, 73 Mo. 477. V. Albright, 93 Mo. 42, 5 S. W. 807; "'Rlnkel v. Lubke, 246 Mo. 377, Zittlosen Tent Co. v. Exchange 152 S. W. 81; Gerhardt v. Tucker, Bank, 57 Mo. App. 19; Slowey v. 187 Mo. 46, 85 S. W. 552. See also McMurray, 27 Mo. 113, 72 Am. Dec. Brightwell v. McAfee, 249 Mo. 562, 251; Tibeau v. Tibeau, 22 Mo. 77; 155 S. W. 820. Wilson v. DrumTite, 21 Mo. 325; ^^ Brightwell v. McAfee, 249 Mo. Johnson v. Huston, 17 Mo. 58; Hogel 562, 155 S. W. 820. V. Lindell, 10 Mo. 483; Quick v. Turner, 26 Mo. App. 29. 26 — ^JoNES Mtg. — Vol. I. § 305 PAEOL EVIDENCE 402 Where there is a deed and a contract to reconvey, and oral evidence has been introduced tending to show that the transaction Tvas one of security, and leaving upon the mind a well-founded doubt as to the nature of the transaction, then courts of equity incline to construe the transaction as a mortgage. But where there is a deed alone, and it is sought to show a parol defeasance, then it seems the evidence must be clear and convincing."*' § 305. Nebraska. — In ISTebraska a formal conveyance may be shown to be a mortgage by extrinsic evidence. "This rule seems to be founded on the principle that in such case the proof raises an equity which does not contradict the writing or affect its validity, but simply varies its import so far as to show the true intention and object of the parties without a written defeasance, and establish the trust purpose for which the deed was executed. But to thus vary the legal import of such ab- solute deed, and especially when fraud, accident, mistake, or surprise is not alleged, the evidence in reference to the understanding and in- tention of the parties, at the time of the execution of the writing, must be clear, certain, and conclusive, before a court of chancery will de- termine such writing to be a mortgage security only."*^ The later decisions strongly assert the general doctrine that, when by satisfactory evidence it is established that an absolute deed was executed and intended as a security in the nature of a mortgage, a court of equity will carry out the intention of the parties by declaring it a mortgage.'* Where land has been conveyed by absolute deed in satisfaction of a pre-existing mortgage thereon, a subsequent parol promise to recon- ^ Gassert v. Bogk, 7 Mont. 585, 19 Nebr. 97; Schade v. Bessinger, 3 Pac. 281, quoted from the able opin- Nebr. 140; Wilson v. Richards, 1 ion of Judge Bach, affirmed by the Nebr. 342; Fahay v. State Bank, 1 Supreme Court in Bogk v. Gassert Nebr. (Unoff.) 89, 95 N. W. 505. But (U. S.), 13 Sup. Ct. 738. See also where an absolute deed was given Gibson v. Morris State Bank as a mortgage, the grantee, in order (Mont.), 140 Pac. 76. See ante to defeat the equity of redemption § 247a. on the ground of a parol settlement '" O'Hanlon T. Barry, 87 Nebr. 522, or an oral election to regard the 127 N. W. 860; Huston v. Canfield, conveyance as an absolute deed, 57 Nebr. 345, 77 N. W. 763; Stall must establish such parol agreement V. Jones, 47 Nebr. 706, 66 N. W. by a clear preponderance of the evi- 653; Kemp v. Small, 32 Nebr. 318, dence. Sprecher v. Folda, 94 Nebr. 49 N. W. 169; Tower v. Fetz, 26 201, 142 N. W. 539. Nebr. 706, 42 N. "W. 884, 18 Am. St. ™ Wilde v. Homan, 58 Nebr. 634, 795; Biseman v. Gallagher, 24 Nebr. 79 N. W. 546; Morrow v. Jones, 41 79, 37 N. W. 941; Newman v. Ed- Nebr. 867, 60 N. W. 369; Kemp v. wards, 22 Nebr. 248, 34 N. W. 382; Small, 32 Nebr. 318, 49 N. W. 169; McHugh V. Smiley, 17 Nebr. 626, 24 Tower v. Fetz, 26 Nebr. 706, 42 N. N. W. 277; Deroin v. Jennings, 4 W. 884, 18 Am. St 795. 403 UPON WHAT GEOUNDS ADMITTED SOI" vey to the grantor, without any new consideration, will not sustain an action to declare the deed a mortgage and redeem from the liens which have been canceled/^ Where a party acquires title by purchase at a sheriff's sale under a parol agreement with the judgment debtor to hold the title as security for the loan of the money to satisfy the lien, and to reconvey when the money is refunded, parol evidence is admissible to show the nature of the transaction.'^ '§ 306. Nevada. — In ISTevada a conveyance absolute upon its face may be shown by parol to be a mortgage. It is not received to con- tradict the deed, but to prove an equity superior to if The proof on ihe part of the plaintiff must be clear, satisfactory and convincing. The presumption is in favor of the natural effect of the instrument. The evidence to overcome such presumption should be so cogent, weighty and convincing as to leave no doubt upon the mind.'* i§ 307. New Hampshire. — In Few Hampshire it is provided by statute that every conveyance of lands made for the purpose of secur- ing the payment of money or the performance of any other thing in the condition thereof stated is a mortgage ; but that no conveyance in v/riting of any lands shall be defeated, nor any estate incumbered by any agreement, unless it is inserted in the condition of the convey- ance, and made part thereof, stating the sum of money to be secured, or other thing to be performed.'^ But a proviso that if the grantor comply with the conditions of a bond executed by him to the grantee at the same time, the deed shall be void, sufBciently sets forth the thing to be done.'^ And a condition to indemnify the mortgagee against loss, by reason of having indorsed certain notes payable at banks named, is sufficiently certain to warrant the admission of parol evidence to show what notes were intended to be secured." An indem- nifying clause in a mortgage, to hold one 'Tiarmlesg from all liabilities where he is bound for me," is sufficient to admit evidence of the iden- "Samuelson v. Mickey, 73 Nebr. "Stat. July 3, 1829; Pub. Stats. 852, 106 N. W. 461. 1901, ch. 139, §§ 1, 2; Knickerbocker " Dickson v. Stewart, 71 Nebr. Trust Co. v. Penacook Mfg. Co., 100 424, 98 N. W. 1085, 115 Am. St. 596. Fed. 814; Boody v. Davis, 20 N. H. " Cookes V. Culbertson, 9 Nev. 140, 51 Am. Dec. 210. 199; Saunders v. Stewart, 7 Nev. '"New Hampshire v. Willard, 10 200; Bingham v. Thompson, 4 Nev. N. H. 210; Bassett v. Bassett, 10 N. 224; Carlyon v. Lannan, 4 Nev. 156. H. 64. "Pierce v. Traver, 13 Nev. 526; "Benton v. Sumner, 57 N. H. 117. Bingham v. Thompson, 4 Nev. 224. § 308 PAEOL EVIDENCE 404 tity of a note as one for the payment of which the mortgage was in- tended as security.'^ Under this statute a parol agreement entered into between the gran- tor and grantee at the time of the delivery of the deed that the grantee should give a bond to reconvey, even after a bond is subsequently given in pursuance of such agreement, does not make the conveyance a mort- gage.'" Even a bond executed at the same time with the conveyance, providing that the conveyance shall be void upon payment of a cer- tain sum of money, does not constitute a mortgage. The defeasance must be inserted in the deed itself ; and a deed without such defeas- ance confers an absolute title upon the grantee.*" § 308. New Jersey. — The efficacy of the parol evidence is not to establish an agreement to reconvey, the specific performance of which a court of equity will enforce, but to establish the true nature and effect of the instrument by showing the object for which it was made. It is well settled that this may be done.*^ The proof by parol evidence that a deed was intended as a mortgage, must be clear and con- vincing.*^ The question in every case is, whether the transaction was a sale and conveyance, coupled with an agreement for a reconveyance, or whether it was a security for a loan. "Any means of proof may be used to show it to be the latter : the declaration of the parties ; the re- lations subsisting between them; the possession of the premises re- tained by the complainant; the value of the property, compared with the money paid ; the understanding that the sums advanced should be repaid; and the payment of interest meanwhile on the amount. The distinction between parol evidence to vary a written instrument and parol evidence showing facts which control its operation is employed to reconcile the allowance of such proofs with the statute of frauds and the general rule of common law. Deeds absolute on their face "Barker v. Barker, 62 N. H. 366; Budd v. Van Orden, 33 N. J. Bq. Farrington v. Barr, 36 N. H. 86. 143; Sweet v. Parker, 22 N. J. Bq. '"Boody V. Davis, 20 N. H. 140, 453; Crane v. Decamp, 21 N. J. Bq. 51 Am. Dec. 210; Clark v. Hobbs, 414; Coadit v. Tlohenor, 19 N. J. 11 N. H. 122; Porter v. Nelson, 4 Eq. 43; Vandegrift v. Herbert, 18 N. H. 130; Runlet v. Otis, 2 N. H. N. J. Eq. 466; Lokerson v. Stillwell, 167; I/und v. Lund, 1 N. H. 39, 8 13 N. J. Eq. 357; Crane v. Bonnell, Ajn. Dec. 29. 2 N. J. Eq. 264; Youle v. Richards, «> Tifft V. Walker, 10 N. H. 150. 1 N. J. Eq. 534. " Vanderlioven v. Romaine, 56 N. »^ This rule was recognized in Wil- J. Eq. 1, 39 Atl. 129; Winters v. son v. Terry. 70 N. J. Eq. 231, 62 Earl, 52 N. J. Bq. 52, 28 Atl. 15; Atl. 310. Frink v. Adams, 36 N. J. Eq. 485; 405 UPON WHAT GROUNDS ADMITTED § 309 have been frequently decreed to be mortgages by this court, and the grantors allowed to redeem."*^ A parol agreement is admissible to prove that a mortgage, though absolute in terms, was given as collateral security for the payment of the mortgagor's chattel mortgage ; for such evidence does not vary the terms of the instrument.'* § 308a. New Mexico. — ^An absolute unconditional deed may be shown to be a mortgage by agreement of the parties, and tHs agree- ment may be proved by parol evidence.*^ Only a preponderance of evidence seems to be necessary.*^ § 309. New York. — In New York such evidence was admitted in some of the earlier cases solely upon the ground of fraud or mistake.*' But Chancellor Kent apparently thought the only fraud necessary to be shown was the fraud on the part of the grantee in attempting to convert a mortgage into an absolute sale;** and it is distinctly asserted in other eases that it is not necessary to prove that the deed was given in this form through fraud or mistake.*" This evidence is admitted in all cases without reference to the reason why a written defeasance was omitted, or why the grantee denies the redeemable character of the "Per Vice-Chancellor Dodd, In 425, 7 Am. Dec. 499; Swart v. Serv- Sweet V. Parker, 22 N. J. Eq. 453; ice, 21 Wend. (N. Y.) 36. 35 Am. Hogan V. Jaques, 19 N. J. Bq. 123, Dec. 211; Patchin v. Pearce, 12 97 Am,. Dec. 644. See also Phillips Wend. (N. Y.) 61. V. Hulsizer, 20 N. J. Bq. 308. »* Strong v. Stewart, 4 Johns. Ch. »* Wilbur V. Jones, 80 N. J. Eq. (N. Y.) 167. 520, 86 Atl. 769. ■» Brown v. ClifEord, 7 Lans. (N. =' Alexander v. Cleland, IS N. Mex. Y.) 46, per Mr. Justice Mullin: "I 524, 86 Pac. 425; King v. Warring- have said that parol evidence was ton, 2 N. Mex. 318. admissible, although no fraud or *" Alexander v. Cleland, 13 N. Mex. mistake in making the deed was al- 524, 86 Pac. 425. leged or proved, and I say this be- " Taylor v. Baldwin, 10 Barb. (N. cause in nearly all of the cases Y.) 582; Webb v. Rice, 6 Hill (N. cited, and in the numerous others Y.) 219. In the latter case it was upon the same point, no fraud or held that such evidence is inadmis- mistake was either alleged or sible at law, and earlier cases at proved, nor was any suggestion law in which it had been admitted made that any such allegation or were overruled. Strong v. Stewart, proof was necessary to justify the 4 Johns. Ch. (N. Y.) 167; Marks v. court in admitting the parol evi- Pell, 1 Johns. Ch. (N. Y.) 594; Ste- dence." vens V. Cooper, 1 Johns. Ch. (N. Y.) § 309 PAROL EVIDENCE 406 conveyance. It is admitted to show what the transaction really -was,'" and that it was intended as security for money." ^ "Horn V. Keteltas, 46 N. Y. 605. "It is now too late," says Mr. Justice Allen, delivering the judg- ment in this case, "to controvert the proposition that a deed, abso- lute upon its face, may in equity be shown, by parol or other extrin- sic evidence, to have been intended as a mortgage; and fraud or mis- take in the preparation or as to the form of the instrument is not an essential element in an action for relief, and to give effect to the intention of the parties. The courts of this state are fully committed to the rule. It is not enough to author- ize a reconsideration of the ques- tions, that the rule has been author- itatively adjudged otherwise as a rule of evidence In common-law courts, and that eminent judges have contended earnestly against its adoption as a rule in courts of equity. Notwithstanding their pro- tests, the rule has been, upon the fullest consideration, deliberately established, and can not now be lightly departed from." The learned judge refers to the earlier cases in New York, saying: "The principle was recognized by the Chancellor in Holmes v. Grant, 8 Paige (N. Y.) 243, although it was not applied in that case, and had been before asserted under like cir- cumstances in Robinson v. Cropsey, 2 Edw. (N. Y.) 138. "It was ex- pressly adjudged in Strong v. Stew- art, 4 Johns. Ch. (N. Y.) 167, that parol evidence was admissible to show that a mortgage only was in- tended by an assignment absolute in terms; and to the same effect is Clark V. Henry, 2 Cow. (N. Y.) 324, which was followed by this court in Murray v. Walker, 31 N. Y. 399. In Hodges V. Tennessee Marine &c. Ins. Co., 8 N. Y. 416, the court says that 'from an early day in this state the rule, that parol evidence is admis- sible for the purpose named, has been established as the law of our courts of equity, and it is not fitting that the question should be re-ex- amined, and the cases in which it has been so adjudged are cited with approval.' In Sturtevant v. Sturte- vant, 20 N. Y. 39, 75 Am. Dec. 371, the same judge, pronouncing the opinion as in the case last cited, distinguishes between the case of a mortgage and trust; and it was de- cided that, while a deed absolute in terms could be shown to be a mort- gage, a trust in favor of the grantee could not be established by parol. See also Despard v. Walbridge, 15 N. Y. 374. The rule does not con- flict with that other rule which for- bids that a deed or other written instrument shall be contradicted or varied by parol evidence. The in- strument is equally valid, whether intended as an absolute conveyance or a mortgage. Effect is only given to it according to the intent of the parties, and courts of equity will always look through the forms of a transaction and give effect to it, so as to carry out the substantial in- tent of the parties." Odell v. Mont- ross, 68 N. Y. 499; Meehan v. For- rester, 52 N. Y. 277; Carr v. Carr, 52 N. Y. 251, 4 Lans. (N. Y.) 314; Fiedler v. Darrin, 50 N. Y. 437; Stoddard v. Whiting, 46 N. Y. 627; Sturtevant v. Sturtevant, 20 N. Y. 39, 75 Am. Dec. 371; Despard v. Wal- bridge, 15 N. Y. 374; Hodges v. Ten- nessee Marine &c. Ins. Co., 8 N. Y. 416; Clifford v. Gates, 70 Hun 597, 23 N. Y. S. 1085; Barton v. Lynch, 69 Hun 1, 23 N. Y. S. 217; Erwin v. Curtis, 43 Hun (N. Y.) 292; Simon v. Schmidt, 41 Hun (N. Y.) 318. See also Van Dusen v. Wor- rell, 4 Abb. App. Dec. (N. Y.) 473; Gilroy v. Everson-Hickok Co., 118 App. Div. 733, 103 N. Y. S. 620; Loomis V. Loomis, 60 Barb. (N. Y.) 22; Clark v. Henry, 2 Cow. (N. Y.) 324; Mclntyre v. Humphreys, I Hoff. (N. Y.) 31; Marks v. Pell, 1 Johns. Ch. (N. Y.) 594; Moses v. Murga- troyd, 1 Johns. Ch. (N. Y.) 119, 7 Am. Dec. 478; Brown v. Clifford, 7 Lans. (N. Y.) 46; Van Buren v. Olmstead, 5 Paige (N. Y.) 9; Whit- tick V. Kane, 1 Paige (N. Y.) 202. "'Bork V. Martin, 132 N. Y. 280, 30 N. E. 584, 28 Am. St. 570; In re Mechanics' Bank, 156 App. Div. 343, 141 N. Y. S. 473; Richardson v. Bea- ber, 62 Misc. 542, 115 N. Y. S. 821. 407 UPON WHAT GEOUKDS ADMITTED § 310 Where it was claimed that a vendor of land held title merely as se- curity, exclusion of parol evidence tliat the purchase-money under a contract for the purchase of land had been substantially paid was held erroneous.'^ And where an heir conveyed, by an instrument absolute on its face, his* interest as devisee under his parent's will, parol evi- dence was held admissible to show the conveyance was intended as a mortgage.®^ The evidence that a deed absolute on its face was intended as a mortgage must be clear and satisfactory,"* and according to recent de- cisions must be convincing and conclusive beyond a reasonable doubt.°° § 310. North Carolina. — Parol evidence has generally been ad- mitted only upon the usual grounds of equity Jurisdiction in cases of fraud, undue advantage, ignorance, accident, and mistake."" "In equity plaintiffs are allowed, by making the proper preliminary allegations, — as that a certain clause was intended to be inserted in a written in- strument, but was omitted by the ignorance or mistake of the drafts- man; or by some fraud or circumvention of the opposite party; or some oppression or advantage taken of the plaintiffs necessities; or when an unlawful trust was designedly omitted to evade the law, — to call for a discovery on the oath of the defendant. If the fact is confessed, the plaintiff can have relief. If it be denied, although it was for a long time questioned, it is now settled that, provided the matter can be established, not merely by the declarations of the par- ties or the unaided memory of the witnesses, but by facts and circum- stances dehors the instrument, such as are more tangible and less lia- ble to be mistaken than mere words, equity will give relief, by con- sidering the clause thus shown to have been omitted as if it had been set out in the instrument."" Thus, where there was a preliminary »" Brown v. Grossman, 206 N. Y. Sherrod, 105 N. Car. 197, 10 S. E. 471, 100 N. E. 42. 986; Norris v. McLam, 104 N. Car. ""Nevius V. Nevius, 117 App. Dlv. 159, 10 S. E. 140; Egerton v. Jones, 236, 101 N. Y. S. 1091. 102 N. Car. 278, 9 S. E. 2, 12 S. E. *■ Reich V. Cochran, 102 N. Y. S. 434; Elliott v. Maxwell, 7 Ired. Eq. 827, affirmed 139 App. Div. 931, 124 (N. Car.) 246; Sellers v. Stalcup, N. Y. S. 1127 (clear and convincing 7 Ired. Eq. (N. Car.) 13; Kelly v. evidence); In re Holmes, 79 App. Bryan, 6 Ired. Eq. (N. Car.) 283; Div. 264, 79 N. Y. S. 592, affd. 176 N. Blackwell v. Overby, 6 Ired. Eq. (N. Y. 603, 68 N. E. 1118. Car.) 38; M'Laurin v. Wright, 2 «= Richardson v. Beaber, 62 Misc. Ired. Eq. (N. Car.) 94; McDonald 542, 115 N. Y. S. 821; Bascombe v. v. McLeod, 1 Ired. Eq. (N. Car.) Marshall, 129 App. Div. 516, 113 N. 221; Steel v. Black, 3 Jones Eq. (N. y s 991 Car.) 427; Glisson v. Hill, 2 Jones «Hall V. Lewis, 118 N. Car. 509, Eq. (N. Car.) 256; Cook v. Gudger, 24 S. E. 209; Sprague v. Bond, 115 2 Jones Eq. (N. Car.) 172. N. Car. 530, 20 S. B. 709; Green v. »' Kelly v. Bryan, 6 Ired. Eq. (N. § 310 PAEOL EVIDENCE 408 allegation of oppression to account for the omission of the defeasance, and it was shown that the plaintiff was hard pressed for money, and was forced to consent to the omission of this clause ; and it was further shown that there was great inadequacy of price, and that the plaintiff retained possession and paid interest, he was allowed t6 redeem.^' The grantor having executed a deed, knowing it to be absolute, must be deemed to have intended it to be so, unless there is strong and clear proof of mistake or imposition.'^ Evidence merely of the declarations of the parties is not sufficient, but there must be evidence of facts and circumstances inconsistent with the idea of an absolute sale.^ Parol evidence of admissions on the part of the grantee that the deed was intended as a mere security are not alone sufficient. There must also be shown facts or circumstances inconsistent with the idea of an ab- solute conveyance, and proof of fraud, oppression, ignorance, or mis- take, so as to account for the conveyance being absolute on its face, when such was not the intention.^ The evidence must be clear and convincing.^ Eecent cases, however, seem to dispense with the proof of fraud, ac- cident or mistake as prerequisite to the introduction of parol evidence that a deed was intended as a mortgage. The court adopting the lan- guage of a New York decision says : "It is well established that a deed, absolute on its face, can be shown by parol or other extrinsic evidence to have been intended as a mortgage ; and that, the relation of mort- gagor and mortgagee being thus established, all the rights and obliga- tions incident to that relation attach to the parties."* However disguised may be the terms, if the real object of the trans- action be the taking or holding of land for the security of a loan or debt, it is in equity a mortgage, and if necessary the subsequent con- Car.) 283, per Pearson, J. See also ^Watkins v. 'Williams, 123 N. Car. Poston V. Jones, 122 N. Car. 536, 29 170, 31 S. E. 388. S. B. 951; Egerton v. Jones, 107 N. ^^ Green v. Sherrod, 105 N. Car. Car. 284, 12 S. E. 434; Hinton v. 197, 10 S. E. 986; Glisson v. Hill, Pritchard, 107 N. Car. 128, 12 S. E. 2 Jones Eq. (N. Car.) 256; Brothers 242; Norris v. McLam, 104 N. Car. v. Harrill, 2 Jones Eq. (N. Car.) 159, 10 S. E. 140; Egerton v. Jones, 209; Cook v. Gudger, 2 Jones Bq. 102 N. Car. 278, 9 S. E. 2; Bonham (N. Car.) 172. Admissions of par- V. Craig, 80 N. Car. 224. ties, in their pleadings, may stand ''Streator v. Jones, 3 Hawks (N. for the writings required by the Car.) 423, 1 Murph. 499. In such statute of frauds. Sandling v. Kear- case the relation of mortgagor and ney, 154 N. Car. 596, 70 S. B. 942. mortgagee must be alleged and ' Watkins v. Williams, 123 N. Car. proved. Norris v. McLam, 104 N. 170. 31 S. E. 388. Car. 159, 10 S. E. 140. ■> Sandling v. Kearney, 154 N. Car. »» Elliott V. Maxwell, 7 Ired. Eq. 596, 70 S. E. 942, quoting Carr v. (N. Car.) 246. Carr, 52 N. Y. 251. 409 UPON WHAT 6E0UNDS ADMITTED § 311 duct of the parties, with reference to the matter, may be examined to ascertain their true intent, as the giving of a note for the money or receiving part payment or interest on the same.'' § 310a. North Dakota. — It is provided that every transfer of an interest in real estate not in trust, made as a security for the perform- ance of another act, is to be deemed a mortgage ; and the fact that the transfer was made subject to defeasance may be proved, except as against a subsequent purchaser or incumbrancer for value and with- out notice, though it does not appear by the terms of the instrument." Thus an instrument in the form of an absolute deed may be proved by parol testimony to be a mortgage, as between the parties and all others with knowledge of its purpose.^ The declarations of the par- ties both at the time of execution and subsequently are also admissible to determine tlieir real intention and the nature of the instrument.' A deed absolute in form will not be declared a mortgage unless the evidence is clear, satisfactory and convincing that such was the intent of the parties when the deed was executed." This rule applies only to parol evidence, and where there is a defeasance in a collateral paper or contract for resale, no such rule of strict proof applies.^" § 311. Ohio. — Parol evidence is admitted to show that an absolute deed is a mortgage. If given as a security it is a mortgage, whatever its form; and the fact of its being so given, and not the evidence of the fact, determines its character. In such a case a trust arises in favor of the grantor. Being a tacit trust, it is more difficult to establish than one that is expressed; but when it is ascertained, the same conse- quences attach to it. The evidence for this purpose must be clear, cer- tain, and conclusive. ^^ = Sandling v. Kearney, 154 N. Car. v. Jensen, 16 N. Dak. 408, 114 N. 596 70 S E. 942. W. 306; Northwestern Fire &c. Ins. ' Civil Code N. Dak. 1913, §§ 6151, Co. v. Lough, 13 N. Dak. 601, 102 6153 O'Toole v. Omlie, 8 N. Dak. N. W. 160; Wells v. Gayer, 12 N. 444 79 N W. 849. Dak. 316, 96 N. W. 289; Forester ' bmlie V. O'Toole, 16 N. Dak. 126, v. Van Auken, 12 N. Dak. 175, 96 112 N W 677. See also Smith y. N. W. 301; Little v. Brawn, 11 N. Jensen, 16 N. Dak. 408, 114 N. W. Dak. 410, 92 N. W. 800; MoGuin 306. The form of the deed is not v. Lee, 10 N. Dak. 160, 86 N. W. controlling, parol evidence being ad- 714; Jasper v. Hazen, 4 N. Dak. 1, missible to show what the agree- 58 N. W. 454, 23 L. R. A. 58; Devore ment was. Miller v. Smith, 20 N. v. Woodruff, 1 N. Dak. 143, 45 N. Dak. 96, 126 N. W. 499. W. 701. = Miller V. Smith, 20 N. Dak. 96, "Smith v. Hoff, 23 N. Dak. 37, 126 N W. 499. 135 N. W. 772, Ann. Cas. 1914 C, "Adams' V. Mclntyre, 22 N. Dak. 1072 ,, „ .. o^,- c-. 337 133 N W 915; Miller v. Smith, "Kemper v. Campbell, 44 Ohio St. 20 N Dak 96 126 N. W. 499; Smith 210, 6 N. E. 566; Shaw v. Walbridge, § 311a PAEOL EVIDENCE 410 § 311a. Oklahoma. — A deed absolute on its face given as security may be shown by parol evidence to be a mortgage.^^ The holder of such deed can only acquire title by foreclosure. The mortgagor must enforce his rights by redemption. ^^ Where a transaction is in sub- stance a loan of money upon security of real estate, equity will look behind the forms in which the contrivance of the lender has enveloped it, and if satisfied by extraneous or parol evidence, will declare the conveyance a mortgage.^* § 311b. Oregon. — Parol evidence is admissible to show that a deed absolute on its face was intended to operate as a mortgage,^^ whether the deed is between the parties to the suit or is procured to be made to the grantee therein by a third person.^" Such evidence is admitted not to contradict a written instrument of conveyance, but for the purpose of establishing the intent of the parties.^' The deed must speak for itself and a contradictory provision or condition can not be ingrafted upon a deed absolute in form by parol evidence.^^ The intention of the parties is the only safe criterion for determin- ing whether the transaction is a mortgage, and for the purpose of showing such intention evidence may be given of the situation of the parties; of the value of the property as compared with the price fixed for it ; of the conduct of the parties before and after the transaction ; and of all the surrounding facts and circumstances, so far as they serve to explain the real character of the transaction.^" The evidence must be clear and satisfactory, and sufficient to overcome the presump- tion that the instrument is what it purports to be.^" 33 Ohio St. 1; Wilson v. Giddings, "Wagg v. Herbert, 19 Okla, 525, 28 Ohio St. 554; Slutz v. Desenberg, 92 Pac. 250. See ante § 266. 28 Ohio St. 371; Mathews v. Lea- ^= Grover v. Hawthorne, 62 Ore. 77, man, 24 Ohio St. 615; Cotterell v. 121 Pac. 808; Elliott v. Bozorth, 52 Long, 20 Ohio 464; Marshall v. Stew- Ore. 391, 97 Pac. 632; Eldriedge v. art, 17 Ohio 356; Stall v. Cincinnati, Hoefer, 52 Ore. 241, 93 Pac. 246, 16 Ohio St. 169; Miller v. Stokely, judgment modified 94 Pac. 563; 5 Ohio St. 194; Miami Exporting Swegle v. Belle, 20 Ore. 323, 25 Pac. Co. V. Bank of United States, 633; Hurford v. Harned, 6 Ore. 362. Wright (Ohio) 249. "Bickel v. Wesslnger, 68 Ore. 98, '^Wagg V. Herbert, 19 Okla. 525, 113 Pac. 34. 92 Pac. 250; Weiseham v. Hocker, " Grover v. Hawthorne, 62 Ore. 77, 7 Okla. 250, 54 Pajc. 464; Balduff v. 121 Pac. 808. Grlswold, 9 Okla. 438, 60 Pac. 223; "Harmon v. Grants Pass Banking Comp. Laws Okla. 1909, §§ 1196, &c. Co., 60 Ore. 69, 118 Pac. 188. 1198; Laws 1897, p. 95, § 12. See "Marshall v. Williams, 21 Ore. also Krauss v. Potts, 38 Okla. 674, 268, 28 Pac. 137; Swegle v. Belle, 135 Pac. 362. 20 Ore. 323, 25 Pac. 633; Stephens " Weiseham v. Hocker, 7 Okla. v. Allen, 11 Ore. 188, 3 Pac. 168. 250, 54 Pac. 454. ""Bean v. Beall, 67 Ore. 33, 135 411 UPON" WHAT GROUNDS ADMITTED § 313 The rule that an absolute deed given as security for the repayment of a loan may be shown by parol to be intended as a mortgage, applies where the purchaser of land borrows the purchase-money and causes the title to pass directly from the vendor to the creditor as security for the loan.^^ § 312. Pennsylvania. — The courts of this state have no general equity jurisdiction. Mortgages are dealt with as matters of strict law ; and yet parol evidence, under restrictions as to its suflBciency, was, prior to the statute of 1881, admitted to show that an absolute convey- ance is in fact a mortgage.^^ That statute requires a written defeas- ance to reduce an absolute deed to a mortgage, and therefore the cases relating to the use of parol evidence to convert such a deed into a mortgage are now applicable only to deeds executed before the passage of that statute.^^ "In strict law," said Chief Justice Lowrie, "no mortgage is allowed that is not proved by written evidence, and the judge may not admit any lower evidence on equitable grounds with- out seeing that justice imperiously demands it. The ease of a lost instrument is a useful analogy. If, in such a case, the judge refuses Pac. 185; Bickel v. Wessinger, 58 Ore. 98, 113 Pac. 34; Osgood v. Os- good, 35 Ore. 1, 56 Pac. 1017; Al- bany &c. Canal Co. v. Crawford, 11 Ore. 243, 4 Pac. 113. The evidence must be clear, consistent and con- vincing. Hall V. O'Connell, 52 Ore. 164, 95 Pac. 717, decree modified on rehearing 96 Pac. 1070. Proof of intention to create a mortgage ought clearly to preponderate. Har- mon V. Grants Pass Banking &c. Co., 60 Ore. 69, 118 Pac. 188. ''I Hall V. O'Connell, 52 Ore. 164, 95 Pac. 717, decree modified on re- hearing 96 Pac. 1070. "Wallace v. Smith, 155 Pa. St. 78, 25 Atl. 807; Fisher v. Witham, 132 Pa. St. 488, 19 Atl. 276; Pan- cake v. CaufCman, 114 Pa. St. 113; Hartley's Appeal, 103 Pa. St. 23; Huoncker v. Merkey, 102 Pa. St. 462; Umbenhower v. Miller, 101 Pa. St. 71; Stewart's Appeal, 98 Pa. St. 377; Paige v. Wheeler, 92 Pa. St. 282; Fessler's Appeal, 75 Pa. St. 483; McClurkan v. Thompson, 69 Pa. St. 305; Odenbaugh v. Bradford, 67 Pa. St. 96; Harper's Appeal, 64 Pa. St. 315, 7 Phlla. 276; Houser v. Lament, 55 Pa. St. 311, 93 Am. Dec. 755; Guthrie v. Kahle, 46 Pa. St. 831; Kenton v. Vandergrift, 42 Pa. St. 339; Rhines v. Baird, 41 Pa. St. 256; Kellum v. Smith, 33 Pa. St. 158; Todd v. Campbell, 32 Pa. St. 250; Cole v. Bolard, 22 Pa. St. 431; McLanahan v. McLanahan, 6 Humph. (Pa.) 99; Friedley v. Hamilton, 17 Serg. & R. (Pa.) 70, 71 Am. Dec. 638; Kelly v. Thomp- son, 7 Watts (Pa.) 401; Jaques v. Weeks, 7 Watts (Pa.) 261; Kerr v. Gilmore, 6 Watts (Pa.) 405; Kunkle V. Wolfersberger, 6 Watts (Pa.) 126; Manufacturers' &c. Bank v. Bank of Pa., 7 Watts & S. (Pa.) 335; Reeder v. TruUinger, 151 Pa. St. 287, 24 Atl. 1104. In this case the deed was before the Act of June 8, 1881. ® By statute it is provided that no defeasance should have the ef- fect of reducing an absolute deed to a mortgage unless it be made in writing, signed, sealed, acknowl- edged, and delivered by the grantee, and recorded within sixty days from the execution of the same. Laws of 1881, p. 84, Purd. Pa. Dig. 1905, p. 1180, § 154, p. 5395, § 22. McHen- dry V. Shaffer, 242 Pa. 476, 89 Atl. 587. This statute does not impair the obligation of contracts. Felts' § 313 PAROL EVIDENCE 413 to hear secondary evidence until he is perfectly satisfied that the jus- tice of the case can not be otherwise administered, much more, it would seem, ought this to be so where the evidence, which the law makes not merely primary but essential, never had any existence."^* Therefore it is held that mere evidence of verbal declarations by the parties, unless corroborated by other facts and circumstances, is not a proper substitute for the written evidence required by law.^'' The presumption always is that the deed is what it purports to be. To prove it otherwise, the evidence must be clear and convincing. If the intention of the parties be to create a mortgage rather than a con- veyance, this must be established, not merely by loose conversations between the parties, or by declarations to third persons, but by facts and circumstances outside the deed, inconsistent with the idea of an absolute purchase.^^ The principle upon which parol evidence is ad- mitted is to show and explain the true intention and purpose of the parties, in order to develop the real character of the transaction.^' Whether the transaction is to be regarded as an absolute conveyance or a mortgage depends more upon its attendant circumstances than upon any express agreement making it defeasible; and it is doubtful whether parol proof of an agreement to reconvey, standing alone and without fraud, would be permitted to convert it into a mortgage. But Appeal (Pa.), 17 Atl. 195. But an and in the natural changes of its agreement which does not amount customs, exceptional principles are to a defeasance, and is not executed constantly demanding recognition, and recorded as provided, may and continually enlarging their amount to a sale with a declaration sphere, until they become general, of trust. Potter v. Langstrath and thus truly legal. In this way (Pa.), 25 Atl. 76. Unless a written the social system keeps pace with defeasance is executed, and ac- the changes of social purposes and knowledged by the grantee, and principles, and never requires any duly recorded, a grantee can not be violent disruption." De France v. declared a trustee, ex maleficio, un- De France, 34 Pa. St. 385, per Liow- less fraud is alleged. O'Donnell v. rie, C. J. Vandersaal, 213 Pa. 551, 63 Atl. 60. "^ De France v. De France, 34 Pa. "An action for damages for the St. 385; Todd v. Campbell, 32 Pa. breach of a parol contract to convey St. 250. land can not be sustained where it ^° Barber v. Lefavour, 176 Pa. St. appears that such contract was 331, 35 Atl. 202; Wallace v. Smith, merely a parol defeasance of an ab- 155 Pa. St. 78, 25 Atl. 807; Lance's solute deed. Molly v. Ulrich, 133 Appeal, 112 Pa. St. 456; Logue's Pa. St. 41, 19 Atl. 305. "Equita- Appeal, 104 Pa. St. 136; Hartley's ble principles are continually insin- Appeal, 103 Pa. St. 23; NlcoUs v. uating themselves into the system McDonald, 101 Pa. St. 514; Rowand of the law. Our law abounds with v. Finney, 96 Pa. St. 192; Todd v. principles that were formerly purely Campbell, 32 Pa. St. 250, per equitable. And the process by which Strong, J. this takes place is perfectly nat- "Kerr v. Gllmore, 6 Watts (Pa.) ural; for, in the progress of society, 405. 413 UPON WHAT GROUNDS ADMITTED § 313 facts and circumstaBces inconsistent with its being an absolute con- \eyance may be proved ; and if they are clear and convincing enough to authorize a court of equity to infer that the conveyance was in- tended to secure a loan, under the jurisprudence of this state they should be submitted to a jury to find whether the transaction was a mortgage.^^ The proof must establish an agreement for a reconvey- ance substantially contemporaneous with the execution and delivery cf the deed, and not rest on the subsequent admissions and declara- tions of the mortgagee only. The agreement need not, however, be express; it may be inferred from circumstances.^* The testimony of the grantor, not supported by other witnesses or circumstances, is in- fcufficient.^'* The evidence must be clear, precise, indubitable, and sufficient to satisfy the mind of a chancellor; otherwise it is error to submit it to the jury.^^ A parol agreement, upon conveyance of land by a debtor to a cred- itor in satisfaction of a debt, that both parties should attempt to sell the property and that upon sale any surplus above the debt should be paid to the debtor, does not render the transaction a mortgage with an unrecorded defeasance, void under the statute. ^^ After default, a mortgager conveyed the property absolutely to the mortgagee, and the mortgagee conveyed it to a relative without con- sideration. Subsequently the mortgagor sought to compel reconvey- ance under a parol agreement permitting redemption on payment of principal and interest within a year. It was held that because of the failure of the grantor to require a written defeasance in accordance with the statute, no trust or equity of redemption could be enforced.^* § 313. Bhode Island. — Parol evidence is admissible to show that an absolute deed was intended as a mortgage, and that the defeasance "* Kinports v. Boynton, 120 Pa. St. the wise provision of the statute of 306, 14 Atl. 135; Pearson v. Sharp, frauds." Per Mercur, J. See also 115 Pa. St. 254, 9 Atl. 38; Huoncker Moran v. Munhall, 204 Pa. 242, 53 V. Merkey, 102 Pa. St. 462; Ni colls Atl. 1094. V. McDonald, 101 Pa. St. 514; Plum- =° Barber v. Lafavour, 176 Pa. St. er V. Guthrie, 76 Pa. St. 441; Mo- 331, 35 Atl. 202. Clurkan v. Thompson, 69 Pa. St. "Pancake v. Cauffman, 114 Pa. 305; Balsch v. Oakeley, 68 Pa. St. St. 113, 7 Atl. 67; Lance's Appeal, 92; Rhines v. Baird, 41 Pa. St. 256. 112 Pa. St. 456, 4 Atl. 375; Hunger ■^Plumer v. Guthrie, 76 Pa. St. v. Casey (Pa. St.), 17 Atl. 36; Por- 441. "Less than this would not only ter v. Mayfield, 21 Pa. St. 263. conflict with the rules of evidence '^ Moran v. Munhall, 204 Pa. 242, which prescribe the Inanner in 53 Atl. 1094. which a written instrument may be "■ Wingenroth v. Dellenbach, 219 changed by parol, but also defeat Pa. 536, 69 Atl. 84. § 314 PAROL EVIDENCE 414 has been omitted or destroyed by fraud or mistake, or omitted by de- sign, upon mutual confidence between the parties.^* Where a deed absolute in form was given as security for the gran- tee's indorsement of the grantor's note, there being a contemporaneous written instrument from the grantee by the terms of which he agreed that if the note was paid to transfer the land on demand, a reconvey- ance was necessary to revest the title in the grantor.^^ § 314. South Carolina. — Parol evidence is received to convert an instrument absolute on its face into a defeasible instrument, where the omission to reduce the defeasance to writing was occasioned by fraud or mistake.^" It appears by recent cases that it may be received to show the intention of the parties to secure a debt and create a mort- gage;"' but the evidence must be very clear and convincing.^* In the absence of clear, unequivocal, and convincing evidence, the presump- tion will prevail that a deed of conveyance is what on its face it ap- pears to be."* The burden of proof is on the party alleging the abso- lute deed to be a mortgage.*" § 314a. South Dakota. — A deed absolute may by parol evidence be shown, to be a mortgage.*^ The statute is similar to that of North Dakota.*^ But it has been held that the code provision that a transfer of property as security for the performance of an act is to be deemed a mortgage, does not authorize parol evidence concerning the intent of the parties in the execution of an absolute deed, without limitations '^ Taylor v. Luther, 2 Sumn. (U. Car. 276, 9 S. E. 953; Brownlee v. S.) 228; Nichols v. Reynolds, 1 R. Martin, 21 S. Car. 392. I. 30, 36 Am. Dec. 238. »» Banks v. Frith, 97 S. Car. 362, '''Knowles v. Knowles, 25 R. I. 81 S. E. 677; Williams v. McManus, 464, 56 Atl. 775. 90 S. Car. 490, 73 S. E. 1038; Hodge =" Carter v. Evans, 17 S. Car. 458; v. Weeks, 31 S. Car. 276, 9 S. E. Walker v. Walker, 17 S. Car. 329; 953; Nesbitt v. Cavender, 27 S. Car. Arnold v. Mattlson, 3 Rich. Eq. (S. 1, 2 S. E. 702; Arnold v. Mattison, Car.) 153. 3 Rich. Eq. (S. Car.) 153. "Leland v. Morrison, 92 S. Car. ™Creswell v. Smith, 61 S. Car. 50-, 75 S. E. 889; Surasky v. Wain- 575, 39 S. E. 757; Brown v. Bank traub, 90 S. Car. 522, 73 S. E. 1029; of Sumter, 55 S. Car. 51. 32 S. E. Welborn v. Dixon, 70 S. Car. 108, 816. 49 S. E. 232; Brickie v. Leach, 55 "Miller v. Price, 66 S. Car. 85, 44 S. Car. 510, 33 S. B. 720; Brown S. E. 584. V. Bank, 55 S. Car. 51, 32 S. E. 816; "Meyer v. Davenport Elevator Shiver v. Arthur, 54 S. Car. 184, 32 Co., 12 S. Dak. 172, 80 N. W. 189; S. E. 310; Petty v. Petty, 52 S. Car. Ashton v. Ashton, 11 S. Dak. 610, 54, 29 S. E. 406; Campbell v. Linder, 79 N. W. 1001. 50 S. Car. 169, 27 S. E. 648; Mc- «Rev. Code S. Dak. 1903, §§ 2044, Ateer v. McAteer, 31 S. Car. 313, 9 2046. See ante § 310a. S. E. 966; Hodge v. Weeks, 31 S. 415 UPON WHAT GROUNDS ADMITTED § 316 or qualifications as to the interest intended to be conveyed/^ And an absolute deed, though intended as a mortgage, has been held under the code to convey the absolute title, as against one claiming under the grantee's assignee for the benefit of creditors, without notice of the parol defeasance.*^ § 315. Tennessee. — It is well settled that, although a conveyance be absolute in its terms, it may be shown by parol proof to be a mort- gage. It seems to be admitted for the purpose of showing the inten- tion of the parties and the real character of the transaction.*^ "When a parol defeasance is shown, the effect of it is to reduce the title under an absolute deed to what was intended by the parties, a defeasible estate; a security for a debt, instead of a sale.*" The evidence, how- ever, must be clear and decisive, as the presumption is in favor of the deed as it appears upon its face.*'' A decree confirming a partition sale and vesting title in one who has advanced purchase-money for a bidder who was unable to comply with his bid may be held a mortgage where it clearly appears that the title was taken by him as security only for the repayment of the money advanced.*^ § 316. Texas. — The doctrine that parol evidence is admissible to prove that an absolute deed was intended merely as a security for the payment of a debt, is fully recognized.*" And conversely, parol testi- •"Bernardy v. Colonial &c. Mtg. W. 316; Slawson v. Denton (Tenn.), Co., 20 S. Dak. 193, 105 N. W. 737. 48 S. W. 350; Nickson v. Toney, 3 " S. Dak. Civ. Code, § 2071; Grigs- Head (Tenn.) 655; Haynes v. by V. Verch (S. Dak.), 146 N. "W. Swann, 6 Heisk. (Tenn.) 560; Lane 1075. V. Dickerson, 10 Yerg. (Tenn.) 373; ""Jones V. CuUen, 100 Tenn. 1, 42 Hickman v. Quinn, 6 Yerg. (Tenn.) S. W. 873; Bowman v. Felts 96; Hammonds v. Hopkins, 3 Yerg. (Tenn.), 42 S. W. 810; Robinson (Tenn.) 525; Overton v. Bigelow, 3 v. Lincoln Savings Bank, 85 Tenn. Yerg. (Tenn.) 513. 363, 3 S. W. 656; Nichols v. Cabe, « Spicer v. Johnson (Tenn.), 61 3 Head (Tenn.) 92; Ruggles v. Will- S. W. 1041. iams, 1 Head (Tenn.) 141; Guinn ""Nagle v. Simmank, 54 Tex. Civ. v. Locke, 1 Head (Tenn.) 110; Jones App. 432, 116 S. W. 862; Stafford V. Jones, 1 Head (Tenn.) 105; Hin- v. Stafford, 29 Tex. Civ. App. 73, son V. Partee, 11 Humph. (Tenn.) 71 S. W. 984; Hexter v. Urwitz, 6 587; Ballard v. Jones, 6 Humph. Tex. Civ. App. 580, 25 S. W. 1101; (Tenn.) 455; Leech v. Hillsman, 8 White v. Harris, 85 Tex. 42, 19 S. Lea (Tenn.) 747; Yarborough v. W. 1077; McLean v. Ellis, 79 Tex. Newell, 10 Yerg. (Tenn.) 376; Lane 398, 15 S. W. 394; Ullman v. Jasper, v. Dickerson, 10 Yerg. (Tenn.) 373; 70 Tex. 446, 7 S. W. 763; Hubby v. Brown v. Wright, 4 Yerg. (Tenn.) Harris, 68 Tex. 91, 3 S. W. 558; 57. Calhoun v. Lumpkin, 60 Tex. 185; ■"Ruggles V. Williams, 1 Head Loving v. Milliken, 59 Tex. 423; (Tenn.) 141. Gibbs v. Penny, 43 Tex. 560; Ruffier "Sellers V. Sellers (Tenn.), 53 S. v. Womack, 30 Tex. 332; Grooms § 316 PAEOL EVIDENCE 416 mony of the intention of the parties is admissible to rebut the inten- tion that the deed is a mortgage."" "Where there is an absolute con- veyance and an oral or written agreement to reeonvey, parol evidence is admissible to show the real situation of the parties, the existence of a debt, the intention to secure its payment, and the actual character of the instruments, as evidence of a mortgage, between the original parties, and as against those claiming under the grantee except bona fide purchasers for value without notice."^ Parol evidence is admitted to show that the deed was really executed and delivered upon certain trusts, not reduced to writing, which the grantee promised to perform. These trusts existing in parol are estab- lished to prevent the fraudulent use of the deed or written instru- ment."^ It is not necessary that there should be any charge of fraud, mistake, or surprise to afEord a foundation for the introduction of such evidence."' When it is attempted to use the deed for a fraudulent purpose, or one wholly different from that intended by the parties, equity interposes to prevent the fraud and establish the trust. The trust must be shown with "clearness and certainty,""* and it has sometimes been said that it must be shown by the testimony of more than one witness, unless that testimony be supported by corroborating circumstances."" A few cases have held it error for the court to instruct the jury V. Rust, 27 Tex. 231; Mann v. Fal- had been admitted for throwing con, 25 Tex. 271; Cuney v. Dupree, light on the final trade, but that 21 Tex. 211; Hannay v. Thompson, the jury were to determine the 14 Tex. 142; McClenny v. Floyd, 10 cause according to the understand- Tex. 159; Miller v. Thatcher, 9 Tex. ing and agreement of the parties 482, 60 Am. Dec. 172; Mead v. Ran- when the trade was finally consum- dolph, 8 Tex. 191; Carter v. Carter, mated by delivery of the deed. 5 Tex. 93; Stampers v. Johnson, 3 Grier v. Casares (Tex. Civ. App.), Tex. 1. In an action to declare an 76 S. W. 451. absolute deed a mortgage, it may ^"Browning v. Currie (Tex. Civ. be shown that the grantor, when App.), 140 S. W. 479. he made depositions stating that "Hall v. Jennings (Tex. Civ. the instrument was Intended as a App.), 104 S. W. 489. mortgage, was mentally incompe- "Moreland v. Barnhart, 44 Tex. tent, though insanity was not 275; Grooms v. Rust, 27 Tex. 231; pleaded. Kellner v. Randle (Tex. Mead v. Randolph, 8 Tex. 191. Civ. App.), 165 S. W. 509. Prior '^ Mead v. Randolph. 8 Tex. 191; to the execution of a deed, it was Carter v. Carter, 5 Tex. 93. orally agreed in two separate con- "Miller v. Yturria, 69 Tex. 549, versations that the deed to be ex- 7 S. W. 206; Pierce v. Fort, 60 Tex. ecuted should be security for money 464; Markham v. Carothers, 47 Tex. loaned. It was held that such parol 21; Hughes v. Delaney, 44 Tex. 529; agreement would control the char- Moreland v. Barnhart, 44 Tex. 275. acter of the instrument, and it was ™ Moreland v. Barnhart, 44 Tex. error to limit the evidence of such 275 and cases cited, conversations by instruction that it 417 UPON WHAT GROUNDS ADMITTED § 317 that the proof that an absolute deed is a mortgage must be "clear and convincing," as exacting a higher degree of proof than the law re- quires in cases of this character.**" But several recent cases state the prevailing rule that one who claims a deed absolute on its face to be a mortgage has the burden of establishing the fact by clear and satis- factory evidence."' As in Pennsylvania, there being no court of chan- cery, such evidence must be passed upon by a jury."* § 316a. Utali. — An absolute conveyance may be shown to be a mortgage by parol evidence that the consideration of it is a loan, or that the instrument was obtained by fraud, mistake or undue influ- ence.^' Equity will look beyond the terms of an absolute deed and in- quire into the object of the parties and the real nature of the transac- tion, and when it is shown that the deed is one of security only it will be given effect as such.*" In determining whether an instrument should be treated as a deed or mortgage the courts will consider all the facts and circumstances of the transaction, the object and purpose for which it was given and received, and whether it was given as secur- ity or for a bargain and sale of the land.*^ § 317. Vermont. — In Vermont parol testimony is admissible to show that a deed absolute in terms was in fact made as security for money loaned, if the grantor has remained in possession, and the title has continued in the grantee.*^ If he has parted with the title, the grantor loses his right to redeem. The fact that the grantor remains in possession is always regarded as a strong circumstance tending to show that the deed is a mortgage.*^ The absence of any written evi- " Wallace v. Berry, 83 Tex. 328, Womack, 30 Tex. 332; Carter v. Car- 18 S. W. 595; Miller v. Yturria, 69 ter, 5 Tex. 93. Tex. 549, 7 S. W. 206; Prather v. ""Ewing v. Keith, 16 Utah 312, 52 Wilkens, 68 Tex. 187, 4 S. W. 252. Pac. 4; Wasatch Min. Co. v. Jen- =' Harrison v. Hogue (Tex. Civ. nings, 5 Utah 243, 385, 16 Pac. 399, App.), 136 S. W. 118; Frazer v. Seu- 15 Pac. 65. reau (Tex. Civ. App.), 128 S. W. ""Duerden v. Solomon, 33 Utah 649; Stringfellow v. Braselton, 54 468, 94 Pac. 978. Tex. Civ. App. 1, 117 S. W. 204; «'Duerden v. Solomon, 33 Utah Rotan Grocery Co. v. Turner, 46 468, 94 Pac. 978. Tex. Civ. App. 5.34, 102 S. W. 932; «» Morgan v. Walbridge, 56 Vt. Lowry v. Carter, 46 Tex. Civ. App. 405; Crosby v. Leavltt, 50 Vt. 239. 488, 102 S. W. 930; Irvin v. John- "° Hills v. Loomis, 42 Vt. 562; son, 44 Tex. Civ. App. 436, 98 S. Wing v. Cooper, 37 Vt. 169; Rich W. 405; Goodbar v. Bloom, 43 Tex. v. Doane, 35 Vt. 125; Bigelow v. Civ. App. 434, 96 S. W. 657. Topliff, 25 Vt. 273, 60 Am. Dec. 264; ■^Ullman v. Jasper, 70 Tex. 446, Hyndman v. Hyndman, 19 Vt. 9, 46 7 S. W. 663; Miller v. Yturria, 69 Am. Dec. 171; Wright v. Bates, 13 Tex. 549, 7 S. W. 206; Moreland v. Vt. 341; Mott v. Harrington, 12 Vt. Barnhart, 44 Tex. 275; Ruffier v. 199; Baxter v. Willey, 9 Vt. 276, 31 27— Jones Mtg.— Vol. I. § 318 PAKOL EVIDENCE 418 dence of a debt does not make the deed less effectual as a mortgage.** The cireumstanees existing at the time of the execution of the deed determine its character, regardless of the effect resulting from changed conditions of the parties.*^ The ground upon which parol evidence is admitted was stated in an early case to be that when the instrument is in fact a mortgage, and there is an attempt to set it up as an absolute conveyance, there is a fraudulent application or use made of it which a court in chancery may interfere with to prevent.*" In later cases, however, parol evi- dence seems to be admitted on the broad, equitable ground of showing the intention of the parties that the absolute deed should operate as a security for a debt.*^ More than a mere preponderance of evidence is required; it must exclude all reasonable doubt on the question.''* § 318. Virginia. — Parol evidence is admitted in equity to deter- mine whether a deed shall be considered a mortgage or an absolute purchase,"^ and the evidence is not restricted to cases of fraud, acci- dent or mistake. '''' The court is governed by the intention of the parties. The question is whether the parties intended to treat of a purchase, or to secure the repayment of money. To determine this, the whole circumstances of the transaction will be examined.''^ The evidence must be clear, unequivocal and convincing.''^ Am. -Dec. 623; Campbell v. "Worth- 82 Va. 462, 4 S. B. 591; Bruce v. ington, 6 Vt. 448. In Mussey v. Slemp, 82 Va. 352, 4 S. E. 692; Ed- Bates, 60 Vt. 271, 14 Atl. 457, the wards v. Wall, 79 Va. 321; Robert- state of the pleadings made parol son v. Campbell, 2 Call (Va.) 421; evidence inadmissible. In Conner Chapman v. Turner, 1 Call (Va.) V. Chase, 15 Vt. 764, it was held 280, 1 Am. Dec. 514; Summers v. that such evidence was inadmissible Darne, 31 Grat. (Va.) 791; Snavely to show that a deed of warranty, v. Pickle, 29 Grat. (Va.) 27; Phelps followed by possession through sev- v. Seely, 22 Grat. (Va.) 573; Dab- eral successive grantees by similar ney v. Green, 4 Hen. & Munf. (Va.) deeds, was a mortgage. 101, 4 Am. Dec. 503; Bird v. Wil- " Graham v. Stevens, 34 Vt. 166, klnson, 4 Leigh (Va.) 266; Craw- 80 Am. Dec. 675. ford v. Jarrett, 2 Leigh (Va.) 630; ""Herrlck v. Teachout, 74 Vt. 196, Pennington v. Hanby, 4 Munf. (Va.) 52 Atl. 432. 140; King v. Newman, 2 Munf. "= Wright V. Bates, 13 Vt. 341. (Va.) 40; Breckenrldge v. Auld, 1 "Hills V. Loomis, 42 Vt. 562; Rich Rob. (Va.) 148; Thompson v. Dav- y. Doane, 35 Vt. 125. enport, 1 Wash. (Va.) 125; Ross v. "'Skeels v. Blanchard (Vt.), 81 Norvell. 1 Wash. (Va.) 14, 1 Am. Atl. 913. Dec. 422. ""'Skeels v. Blanchard (Vt.) 81 "Hill v. Saunders, 115 Va. 50, 78 Atl. 913. S. B. 559; Motley v. Carstalrs, ™ Batchelder v. Randolph, 112 Va. 114 Va. 429, 76 S. E. 948; 296, 71 S. E. 533; Bachrach v. Bach- Batchelder v. Randolph, 112 Va. 296, rach, 111 Va. 232, 68 S. E. 985. 71 S. E. 533; Bachrach v. Bachrach, "Tuggle V. Berkeley, 101 Va. 83, 111 Va. 232, 68 S. E. 985; HoUaday 43 S. E. 199; French v. Williams, v. Willis, 101 Va. 274, 43 S. B. 616. 419 UPON WHAT GEODNDS ADMITTED § 330 § 318a. Washington. — The common-law rule that evidence will not be admitted to show that a deed is in fact a mortgage, and the chancery rule that it will only be received to show fraud and mistake, do not prevail in this state, but the true intent of the parties may be shown by competent testimony.^^ When it is shown by parol or other extrinsic evidence that the pai ties intended a mortgage, or security for a debt, a deed absolute on its face will be treated as suchJ'' Where there is no written defeasance, strict proof of such intention is required and the evidence must be clear, satisfactory, unequivocal, and convincing in favor of the party seeking to have the instrument declared a mortgage. '^ § 319. West Virginia. — The rule in relation to the admission of parol evidence, to show that a deed is a mortgage, is the same as that which prevails in Virginia. The real nature of the transaction may be shown by parol evidence of surrounding circumstances.'* Parol evidence that a deed absolute on its face is intended as a mort- gage is inadmissible in a suit at law.'' Equity admits such evidence not to vary or contradict the deed, but to establish an independent equity founded upon the intent of the parties.'^ The evidence must be clear and decisive." § 320. Wisconsin. — In Wisconsin the admissibility of parol proof, to show a deed absolute on its face to be a mortgage, is the settled "Dempsey v. Dempsey, 61 Wash. 27 S. B. 340; McNeel v. Auldridge, 632, 112 Pac. 755. 34 W. Va. 748, 12 S. B. 851; Gil- "Ross V. Howard, 31 Wash. 393, christ v. Beswick, 33 W. Va. 168, 72 Pac. 74; Miller v. Ausenig, 2 aO S. B. 371; Kerr v. Hill, 27 W. Wash. T. 22, 3 Pac. 111. Va. 576; Matheney v. Sandford, 26 '= Beverly v. Davis (Wash.), 140 W. Va. 386; Vangilder v. Hoffman, Pac. 696; Hansen v. Abrams, 76 22 W. Va. 1; Hoffman v. Ryan, 21 Wash. 457, 136 Pac. 678; Mittle- W. Va. 415; Lawrence v. DuBois, steadt V. Johnson, 75 Wash. 550, 135 16 W. Va. 443; Troll v. Carter, 15 Pac. 214; Hoover v. Bouffleur, 74 W. Va. 267; Davis v. Demmlng, 12 Wash. 382, 133 Pac. 602; Kegley v. W. Va. 246; Klinck v. Price, 4 W. Skillman, 68 Wash. 637, 123 Pac. Va. 4, 6 Am. Rep. 268, citing the 1081; Johnson v. National Bank of above cases in Virginia. Commerce, 65 Wash. 261, 118 Pac. " Billingsley v. Stutler, 52 W. Va. 21; Washington Safe Deposit &c. 92, 43 S. E. 96. Co. V. Lietzow, 59 Wash. 281, 109 "Shields v. Simonton, 65 W. Va. Pac. 1021; Sahlin v. Gregson, 46 179, 63 S. E. 972. Wash. 452, 90 Pac. 592; Reynolds '» Way v. Mayhugh, 57 W. Va. 175, V. Reynolds, 42 Wash. 107, 84 Pac. 50 S. B. 724; Vangilder v. Hoffman, 579. 22 W. Va. 1. ™ Shank v. Grofl, 43 W. Va. 337, § 320 PAROL EVIDENCE 430 law.*" This is not only the rule in equity/^ but at law as well. The evidence, however, must be clear and convincing, equal in force to that upon which a deed will be reformed, and leaving no substantial doubt that the real intention of the parties was to execute a mortgage security.'^ "Where a grantor had fraudulently represented himself as owner of the land conveyed, evidence in favor of the grantee, that the deed was given as security and intended as a mortgage is not objectionable on the ground that it altered the terms of the written contract.*^ As to the grounds upon which the evidence is admitted, it was said in an early case that "it is the fraudulent use of the deed which equity interposes to detect and prevent, and for this purpose parol proof is admissible, not to vary the deed, but to maintain the equity which at- taches to the transaction inherently, and wMch the deed or contract of the parties does not create and can not -destroy. If an equity of redemption really attaches to the transaction itself, any attempt to defeat that equity by setting up the deed as absolute is fraudulent."** But in the later cases, parol evidence seems to have been admitted upon the broad ground of showing that the absolute deed was intended "' Lynch v. Ryan, 132 Wis. 271, 112 N. "W. 427; Barchent v. Snyder, 128 Wis. 423, 107 N. W. 329; Wilcox v. Bates, 26 Wis. 465. "Notwith- standing what was said in the opin- ion in Rasdall v. Rasdall, 9 Wis. 379, as to the admissibility of parol evidence to prove an absolute deed a mortgage, upon principle it has since been frequently held hy this court that the admissibility of such evidence had been so long estab- lished by author'ty as to have be- come a rule of property, which ought not to be changed by the ju- dicial department." Per Paine, J. See also Beebe v. Wisconsin Mtg. Loan Co., 117 Wis. 328, 93 N. W. 1103; Schierl v. Newburg, 102 Wis. 552, 78 N. W. 761; McCormick v. Herndon, 67 Wis. 648, 31 N. W. 303; Schriber v. Le Clair, 66 Wis. 579, 29 N. W. 570, 889; Parish v. Reeve, 63 Wis. 315, 23 N. W. 568; Rockwell v. Humphrey, 57 Wis. 410, IS N. W. 394; Starks v. Redfield, 52 Wis. 349, 9 N. W. 168; Butler V. Butler, 46 Wis. 430, 1 N. W. 70; Spencer v. Fredendall, 15 Wis. 666; Sweet V. Mitchell, 15 Wis. 641; Plato V. Roe, 14 Wis. 453. "Kent V. Agard, 24 Wis. 378; Kent V. Lasley, 24 Wis. 654. "The doctrine that a deed absolute in its terms can be thus transformed into a mortgage, and the title of the holder defeated, is purely an equita- ble, and not a legal, doctrine. It had its origin in the Court of Chan- cery, in which court alone the rem- edy could formerly be administered. The rules and practice of that court were such as to afford many safe- guards to the rights of the grantee, and to obviate many evils which must otherwise have grown up out of the doctrine." Per Dixon, C. J. »= Becker v. Howard, 75 Wis. 415, 44 N. W. 755; McCormick v. Hern- don, 67 Wis. 648, 31 N. W. 303; Sa- ble V. Maloney, 48 Wis. 331, 4 N. W. 479; Smith v. Crosby, 47 Wis. 160, 2 N. W. 104; McClellan v. San- ford, 26 Wis. 595; Harrison v. Ju- neau Bank, 17 Wis. 340; Fowler v. Adams, 13 Wis. 458; Lake v. Meach- am, 13 Wis. 355; Newton v. HoUey, 6 Wis. 592. «Hurlbert v. T. D. Kellogg Lum- ber &c. Co., 115 Wis. 225, 91 N. W. 673. "Rogan V. Walker, 1 Wis. 527. 431 UPON WHAT GEOUXDS ADMITTED § 321 by the parties to operate as a security for a debt.^^ Parol evidence is admissible to show that the purpose of several writings, taken together, was to create a mortgage, though they bear on their face no semblance thereof.^® § 321. Review of cases. — A review of the cases, with reference to the grounds upon which parol evidence is admitted to prove that an absolute conveyance is a mortgage in equity, will show that in the earliest cases, both in England and America, it was admitted solely upon the ground of fraud, accident, or mistake, which are ordinary grounds of equity jurisdiction. In several states this is still declared by the courts or by statute to be the only ground upon which their in- terference, in such case, can be Justified; or, at any rate, there have been no decisions which distinctly place such interference upon any other ground.*^ Such seems to be the doctrine in Connecticut, Geor- gia, North Carolina, and Ehode Island.'^ In a few states, as for instance Missouri and Ohio, the intention of the parties to create a security only seems to be regarded as raising a trust in favor of the grantor which equity will enforce. ^^ In New Hampshire and Pennsylvania, no conveyance is a mortgage unless the condition is inserted in the deed. But the doctrine in this country, now generally accepted, is that the admission of parol evidence is not confined to cases of distinct fraud on the part of the grantee in obtaining a deed without a defeasance, or mistake on the part of the grantor in giving such a deed. The doc- trine declared by the Supreme Court of the United States in Eussell V. Southard,'" and Peugh v. Davis,'^ and by the Supreme Court of Massachusetts in several cases,°^ is, that the mere fact that an absolute deed was intended merely as security affords ground of jurisdiction to courts of equity to. interfere and give relief; that a security in this form is so calculated to be an instrument of oppression and wrong as '=McFarlane v. Loudon, 99 Wis. "'See ante §§ 285, 300. See also 620, 75 N. W. 394, 67 Am. St. 883; Maxwell v. Mountacute, Free. Ch. Becker v. Howard, 75 Wis. 415, 44 526; Walker v. Walker, 2 Atk. 98; N. W. 755; Schriber v. Le Clair, 66 Joynes v. Statham, 3 Atk. 388; Pym Wis. 579, 29 N. W. 570, 289; Hoile v. Blackburn, 3 Ves. Jr. 34; Town- V. Bailey, 58 Wis. 448, 17 N. W. 322; shend v. Stangroom, 6 Ves. 328. Starks v. Redfield, 52 Wis. 349, 9 '"This was formerly the case in. N. W. 168; Howe v. Carpenter, 49 Maine. See ante § 298. Wis. 697, 6 N. W. 357. ""See ante § 285. "^Beebe v. Wisconsin Mtg. Loan "'96 U. S. 332. Co., 117 Wis. 328, 93 N. W. 1103. " See ante §300. "Marshall v. Williams, 21 Ore. 268, 28 Pac. 137 (following text). § 321a PAEOL EVIDENCE 432 in itself to constitute a quasi fraud, which equity should relieve against; that the fraud or fault is inherent in the transaction itself, and does not arise out of the subsequent conduct of the grantee in. attempting to retaia the property. This doctrine is declared with more or less distinctness in the later decisions of the courts of Ala- bama, Arkansas, California, Colorado, Delaware, Florida, Illinois, In- diana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Maine, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New Mexico, New York, North Dakota, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, Washington, West Vir- giuia and Wisconsin. § 321a. Strict construction of rule admitting parol evidence. — Although parol evidence is now generally admitted to prove the in- tention of the parties, the courts say that the rule is not to be en- larged in its application, but is to be strictly construed.^^ Conse- quently, parol evidence is admissible so far as it tends to show the re- lation between the parties, or any other fact or circumstance to control the nature of the deed and establish an equity of redemption, but no further."* And such evidence is admissible only to show the iuten- tion of the parties at the time of the execution of the deed.°^ It has also been held that parol evidence is not admissible to show that a conveyance, appearing on its face to be a mortgage, was in fact ia- tended to operate as an absolute or conditional sale.°® § 322. Statute of frauds — Eule prohibiting contradiction of writ- ten instruments. — The statute of frauds was at first supposed to stand in the way of allowing a grant, absolute on its face, to be established by parol evidence as a mortgage. But the courts, after a struggle and much hesitation, established the doctrine, as otherwise it was found that the statute designed to prevent frauds and perjuries would be- come in this way an effectual instrument of fraud or injustice."' It is now well settled that it does not violate the statute of frauds to »»Howland v. Blake, 7 Blss. (U. Wallace, 22 Pa. St. 171; Brown v. S.) 40, 12 Fed. Cas. No. 6792, afed. Nickle, 6 Pa. St. 390; Kunkle v. 97 U. S. 624, 24 L. ed. 1027. Wolfersberger, 6 Watts (Pa.) 126; " Sutphen v. Cushman, 35 111. 186; Eckford v. Berry, 87 Tex. 415, 28 Hall v. Jennings (Tex. Civ. App.), S. W. 937. See also Wolfe v. Mc- 104 S. W. 489. Millan, 117 Ind. 587, 20 N. E. 509. "= Barrett v. Carter, 3 Lans. (N. ''The doctrine was established Y.) 68; Hall v. Jennings (Tex. Civ. only after a struggle. Carr v. Carr, App.), 104 S. W. 489. 52 N. Y. 251; Sprague v. Bond, 115 "Johnson v. Prosperity Loan &c. N. Car. 530. Assn., 94 111. App. 260; Woods v. 423 UPON WHAT GROUNDS ADMITTED § 323 admit parol evidence of the real agreement,'^ as an element in the proof of fraud, or other vice in the transaction, ■which is relied upon to defeat the written instrument.'^ Although the admission of such evidence is placed upon different grounds by different courts, there is substantial unanimity in holding that, when once the fact is established that the grant was intended as a mortgage, the conveyance will be so regarded. The statute of frauds does not interpose any insuperable obstacle to granting relief in such a case, because relief, if granted, is obtained by setting aside the deed; and parol evidence is availed of to establish the equitable grounds for impeaching that instrument, and not for the purpose of setting up some other or different contract to be substituted in its place. The equities of the parties are adjusted according to the nature of the transaction and the facts and circumstances of the case, including the real agreement.^ Lord Hardwicke said that such evidence has nothing to do with the statute of frauds.^ ISTeither does the rule which excludes parol testimony to contradict osWyman v. Babcock, 2 Curt. (U. S.) 386, Fed. Cas.. No. 18113; Jen- kins V. Eldredge, 3 Story (U. S.) 299, Fed. Cas. No. 7267; Glass v. Hieronymus, 125 Ala. 140, 28 So. 71, 82 Am. St. 225; Sewell v. Price, 32 Ala. 97; La Cotts v. La Cotts (Ark.), 159 S. W. 1111; Byers v. Locke, 93 Cal. 493, 29 Pac. 119, 27 Am. St. 212; Whitsett v. Kershow, 4 Colo. 419; Union Mut. Life Ins. Co. v. White, 106 111. 67; Reigard v. McNeil, 38 111. 400; Brown v. Fol- lette, 155 Ind. 316, 58 N. E. 197; Landers v. Beck, 92 Ind. 49; Sal- inger V. McAllister (Iowa), 146 N. W. 8; Jones v. Gillett, 142 Iowa 506, 118 N. W. 314, 121 N. "W. 5; McDon- ald V. Kellogg, 30 Kans. 170, 2 Pac. 507; Glynn v. Home Bldg. Assn., 22 Kans. 746; Moore v. Wade, 8 Kans. 380; Barnes v. Crockett, 4 Kans. App. 777, 5 Kans. App. 48, 46 Pac. 997; Reed v. Reed, 75 Maine 264; Jennings v. Demmon, 194 Mass. 108, 80 N. E. 471; Potter v. Kimball, 186 Mass. 120, 71 N. E. 308; Hennessey v. Conner, 139 Mass. 120, 29 N. E. 475; Campbell V. Dearborn, 109 Mass. 130, 12 Am. Rep. 671; Klein v. McNamara, 54 Miss. 90; Anding v. Davis, 38 Miss. 574, 77 Am. Dec. 658; Chance v. Jennings, 159 Mo. 544, 61 S. W. 177; Sweet V. Parker, 22 N. J. Eq. 453; Carr v. Carr, 52 N. Y. 251; Sturte- vant V. Sturtevant, 20 N. Y. 39, 75 Am. Dec. 371; Streator v. Jones, 10 N. Car. 423; Mathews v. Lea- man, 24 Ohio St. 615; Swegle v. Belle, 20 Ore. 323, 25 Pac. 633; Sweetzer's Appeal, 71 Pa. St. 264; Pattison v. Horn, 1 Grant (Pa.) 301; Guinn v. Locke, 1 Head (Tenn.) 110; Wasatch Min. Co. v. Jennings, 5 Utah 385, 16 Pac. 399; Jordan v. Warner, 107 Wis. 539, 83 N. W. 946; Cotterell v. Purchase, Cas. temp. Talbot, 61; Lincoln y. Wright, 4 De G. & J. 16; Walker v. Walker, 2 Atk. 98. See also Phil- lips V. Hulsizer, 20 N. J. Bq. 308; Sweet V. Mitchell, 15 Wis. 641. But see Emerson v. Atwater, 7 Mich. 12. ■" Amory v. Lawrence, 3 Cliff. (U. S.) 523; Wyman v. Babcock, 2 Curtis (U. S.) 386; Taylor v. Lu- ther, 2 Sum. (U. S.) 228; Reed v. Reed, 75 Maine 264; Campbell v. Dearborn, 109 Mass. 130, 12 Am. Rep. 671; Glass v. Hulbert, 102 Mass. 24, 3 Am. Rep. 418; Newton V. Fay, 10 Allen (Mass.) 505; Horn V. Keteltas, 46 N. Y. 605. 'Campbell v. Dearborn, 109 Mass. 130, 12 Am. Rep. 671, per Wells, J. => Walker v. Walker, 2 Atk. 98. § 333 PAROL EVIDENCE 434 or vary a written instrument have any application to such a case.' This rule has reference to the, language used by the parties. That can not be qualified or varied from its natural import, but must speak for itself. The rule does not forbid an inquiry into the object of the parties in executing and receiving the instrument. Thus it may be shown that a deed was made to defraud creditors, or to give a prefer- ence, or to secure a loan, or for any other object not apparent on its face. The object of parties in such cases will be considered by a court of equity; it constitutes a ground for the exercise of its jurisdiction, which will always be asserted to prevent fraud or oppression, and to promote justice.* The courts have frequently remarked, in admitting parol evidence, that it was not received to contradict or vary the terms of the instrument, but to prove an equity superior to the mere form of the conveyance.^ The rule excluding parol evidence to contradict or vary a written instrument, is limited in its application to the par- ties to the instrument and their privies.^ Where a creditor, holding an absolute deed as security, has in a fair transaction released to the debtor other security on his parol agree- ment to release his interest in the land to the creditor, the debtor will not be allowed to invoke the statute of frauds in an action to cancel his absolute conveyance, but the court will leave this absolute deed to carry the estate in fee, as it purports to do.'' 'Florida First Nat. Bank v. Ash- 314; Beroud v. Lyons, 85 Iowa 482, mead, 23 Fla. 379, 2 So. 657; North- 52 N. W. 486; Pickett v. Wadlow, ern Assur. Co. v. Chicago Mut 94 Md. 564, 51 Atl. 423; Booth v. Bldg. &c. Assn., 198 111. 474, 64 N. Robinson, 55 Md. 419; Schade v. E. 979; Bearss v. Ford, 108 111. 16; Bessinger, 3 Nebr. 140; Cookes v. Pickett V. Wadlow, 94 Md. 564, 51 Culbertson, 9 Nev. 199; Saunders v. Atl. 423; Booth v. Robinson, 55 Md. Stewart, 7 Nev. 200; Kelly v. Bryan, 419; Grier v. Casares (Tex. Civ. 41 N. Car. 283; Rogan v. Walker, App.), 76 S. W. 451; Shields y. 1 Wis. 527. In Massachusetts parol Simonton, 65 W. Va. 179, 63 S. B. evidence is admitted not to vary 972; Wolf V. Theresa Village Mut. or contradict the deed, but to es- Fire Ins. Co., 115 Wis. 402, 91 N. tablish an inherent fault in the W. 1014; Hurlbert v. T. D. Kellogg transaction or its consideration. Lbr. &c. Co., 115 Wis. 225, 91 N. W. Cullen v. Carey, 146 Mass. 50, 15 N. 673; Butler v. Butler, 46 Wis. 430, E. 131; Pond v. Eddy, 113 Mass. 1 N. W. 70. See also Brick v. 149; McDonough v. O'Niel, 113 Brick, 98 TJ. S. 514, 25 L. ed. 256; Mass. 92; McDonough v. Squire, 111 Kinkead v. Peet, 137 Iowa 692, 114 Mass. 217; Campbell v. Dearborn, N. W. 616. 109 Mass. 130, 12 Am. Rep. 671. " Peugh v. Davis, 96 U. S. 332, per « Northern Assur. Co. v. Chicago Field, J.; Brick v. Brick, 98 U. S. Mut. Bldg. &c. Assn., 198 111. 474. 514, 25 L. ed. 256. 64 N. E. 979; Harts v. Emery, 184 = Pierce v. Robinson, 13 Cal. 116; 111. 560, 56 N. E. 865; Silshury v. Cold V. Beh, 152 Iowa 368, 132 N. Blumb, 26 111. 287. W. 73; Bradford v. Helsell, 150 'Bazemore v. MuUins, 52 Ark. Iowa 732, 130 N. W. 908; Jones v. 207, 12 S. W. 474. Gillett, 142 Iowa, 506, 118 N. W. 425 UPOIT WHAT GEOUKDS ADMITTED § 323 § 323. Statute of frauds — Subsequent fraudulent conduct of grantor. — The grantor is not estopped from showing the true char- acter of the transaction by reason that he has sworn, on an application for discharge in bankruptcy, that he had no interest in the land. The original transaction being without fraud, the subsequent improper conduct of the mortgagor, even if he were guilty of perjury, would not affect his right. At any rate the mortgagee can not make the mis- conduct of the mortgagor, about which he need not concern himself, a ground for the nonperformance of his own contract.^ The statute of frauds can not be set up as inconsistent with show- ing that an absolute deed was intended by the parties merely as a se- curity of the payment of money.' On the other hand, parol evidence has been frequently admitted on the ground that it is a fraud for the grantee to declare that to be a sale which was really a mortgage.^" If the grantee deny the trust raised by a verbal defeasance, on proof of the trust, such denial is regarded in some courts as a fraud, and the grantee is held to be as firmly bound by his verbal agreement as he would be by a written one, "hedged about with all the formal solemnity known to the law."^^ Apart from the statute of frauds, parol evidence is admissible to show that an absolute deed was intended as a mortgage, not only as between the original parties, but as against third persons, provided they have not been misled by the form of the instrument, or acted in reliance upon it.^^ But such evidence is not admissible a,s against a subsequent purchaser vrithout notice.^* An agreement between the grantee and a third person that the land » Smith V. Cremer, 71 111. 185. " Russell v. Southard, 12 How. 'Russell V. Southard, 12 How. (U. S.) 139, 13 L. ed. 927; Roberts (U. S.) 139, 13 L. ed. 927; Raynor v. McMahan, 4 Greene (Iowa) 34; V. Lyons, 37 Cal. 452; Lee v. Evans, Brightwell v. McAfee, 249 Mo. 562, 8 Cal. 424; Salinger v. McAllister 155 S. W. 820; O'Neill v. Capelle, 62 (Iowa), 146 N. W. 8; Jones v. Gil- Mo. 202; Strong v. Stewart, 4 Johns, lett, 142 Iowa 506, 118 N. W. 314, Ch. (N. Y.) 167; Markham v. Ca- 121 N. W. 5; McDonald v. Kellogg, rothers, 47 Tex. 21; Hughes v. De- 30 Kans. 170, 2 Pac. 507; Glynn v. laney, 44 Tex. 529; Moreland v. Home Bldg. Assn., 22 Kans. 746; Barnhart, 44 Tex. 275; Wright v. Jennings v. Demmon, 194 Mass. 108, Bates, 13 Vt. 341; Regan v. Walker, 80 N. E. 471; Potter v. Kimball, 186 1 Wis. 527. Mass. 120, 71 N. E. 308; Hennessey "O'Neill v. Capelle, 62 Mo. 202. V Conner, 139 Mass. 120, 29 N. E. "Walton v. Cronly, 14 Wend. (N. 475; Sweet v. Parker, 22 N. J. Eq. Y.) 63. See also Carter v. Halla- 453; Payne v. Patterson, 77 Pa. St. han, 61 Ga. 314. 134; Maffit v. Rynd, 69 Pa. St. 380, >= Hills v. Loomis, 42 Vt. 562; and cases cited; Houser v. Lamont, Conner v. Chase, 15 Vt. 764. 55 Pa. St. 311, 93 Am. Dec. 755. See ante § 322. § 323 PAROL EVIDENCE 426 shall be conveyed to him upon the payment by him of the purchase- money and interest, is within the statute of frauds, because such a conveyance and agreement do not constitute a mortgage.^* To con- stitute a mortgage, such agreement must be made with the grantor and not with a stranger. A promise by a third person to purchase the property, and convey it to the grantor, is open to the same objection.^ ^ One claiming the beneiit of such an agreement must show that at that time he had an equitable interest in the property. A mortgagee having foreclosed his mortgage, which was in the form of a trust deed, and purchased the property at the foreclosure sale, the mortgagor claimed there was a verbal agreement with him that the premises should still be held as security for the payment of the mortgage debt, and that when the rents received had been sufficient for that purpose the premises should be reconveyed to the mortgagor; that afterward the mortgagor procured another person to advance the money for the payment of the mortgage debt, and the former mortgagor thereupon conveyed the property to this other person by absolute deed ; and that this purchaser made an agreement to the same effect with the former mortgagor. The evidence was not very satisfactory. Mr. Justice Hunt, delivering the opinion of the Supreme Court in this case, declared that, unless the equity of redemption of the mortgagor was kept alive by the alleged agreement with his mortgagee, he had no interest which could sustain a parol agreement by the purchaser from the mortgagee to buy the property for the mortgagor's benefit and to convey to him when required. Such an agreement is one creating by parol a trust or interest in lands, which can not be sustained under the statute of frauds. It is a naked promise by one to buy lands in his own name, pay for them with his own money, and hold them for the benefit of another. It can not be enforced in equity, and is void.^° "Wilson V. McDowell, 78 111. 514; ""Howland v. Blake, 97 U. S. 624, Payne v. Patterson, 77 Pa. St. 134. 11 Chicago L; N. 139, 7 Biss. 40. See also Sweet v. Mitchell, 15 Wis. See also Levy v. Brush, 45 N. Y. 641. 589; Digby v. Jones, 67 Mo. 104; "Wilson V. McDowell, 78 111. 514; Richardson v. Johnson, 41 Wis. 100, Perry v. McHenry, 13 111. 227; 22 Am. Rep. 712. See post §§ 331, Stephenson v. Thompson, 13 111. 332. 186. 427 WHAT FACTS ARE CONSIDERED § 323a II. What Facts are Considered Section Section 323a. General considerations. 337. Rights of judgment creditors. 324. Intention of the parties — Con- 338. Parol waiver of defeasance by duct and declarations. mortgagor. 325. Evidence of continuing debt. 339. Grantee's rights against third 326. Satisfaction or survival of the persons. debt — Burden of proof. 340. Once a mortgage always a mort- 327. Actual sale after application for gage. loan. 341. Grantee's liability for mort- 328. Continued possession of gaged land sold by him. grantor. 342. Redemption in equity— Grant- 329. Inadequacy of price. ee's right to relief. 330. Delay in claiming absolute title. 342a. Bona fide purchasers from 331. Conveyance by third person — grantee. Debtor's right to redeem. 342b. Liability of mortgagee under 332. Purchase at judicial sale for absolute deed on exchange benefit of equitable owner. of land. 333. Assignment of a mortgage as 342c. Effect of absolute deed in vest- collateral, ing title and right of pos- 334. Assignment of contract of pur- session — Compensation for chase. improvements. 335. Burden of proof — Strictness of 342d. Redemption by grantor after proof. conveyance by grantee to a 336. Rights of grantor — Payment bona fide purchaser. prerequisite to redemption. § 323a. General considerations. — The Supreme Court of Iowa, in determining whether an absolute deed is intended as a mortgage, con- siders the following as the most important questions : First, whether there was a continuing obligation by the grantor to pay a debt which it is claimed the deed was made to secure; second, the value of the land as compared with the debt which was to be secured; third, how have the parties treated the conveyance ; fourth, in what form are the written evidences of the transaction ; and fifth, what sort of testimony is relied on to show that the deed was accepted as security for a debt ?^ In Ohio, the course of decisions in this class of cases indicates that courts are vigilant to discover whether a condition of defeasance in law or fact attaches to the deed absolute in form. To this end they scruti- nize the prior pecuniary relations of the parties, each toward the other, contemporaneous acts bearing on the question, all after acts and admis- sions of the parties that are competent to be considered as evidence in relation to the transaction, any material inadequacy of consideration, and the terms of any written agreement entered into by the parties.^ The Supreme Court of Oregon, in recent cases, follows and approves ' Ridings v. Marengo Sav. Bank, ' Slutz v. Desenberg, 28 Ohio St. 147 Iowa 608, 125 N. W. 200. 371. § 324 PAEOL EVIDENCE 428 this line of Ohio decisions/ and in enumerating the tests to determine whether a deed was intended as a mortgage, mentions among other circumstances, the pecuniary relation of the parties, their previous ne- gotiations, their contemporaneous acts and declarations, and subse- quent acts and admissions.* In a recent Arkansas case the court con- sidered among other circumstances the situation of the parties, the property conveyed, its value, the price paid, defeasances verbal or writ- ten, and the acts and declarations of the parties.^ The courts of Ken- tucky consider particularly, the relation of debtor and creditor, the inadequacy of price, and imminent danger of loss of the property by the debtor, as facts which will lead the court to declare the instru- ment a mortgage, rather than a deed." § 324. Intention of the parties — Conduct and declarations. — In admitting parol and extrinsic evidence, the court is not restricted to any particular kind of evidence, but may take into consideration any pertinent matters which tend to prove the real understanding of the parties, and the true nature of the transaction.'^ The true character of the conveyance will be inquired into, and effect given to the inten- tion of the parties as ascertained by their conduct and declarations at the time and subsequently.^ Thus, a statement in a deed or a verbal agreement made at the time 'Kramer v. "Wilson, 49 Ore. 333, 419; Hughes v. Edwards, 9 Wheat. 90 Pac. 183. (U. S.) 489, 6 L. ed. 142; Reavls t. * Elliott V. Bozorth, 52 Ore. 391, Reavls, 103 Fed. 813; Harrison v. 97 Pac. 632. Maury, 157 Ala. 227, 47 So. 724; "Mclver v. Roberts (Ark.), 165 Rodgers v. Burt, 157 Ala. 91, 47 So. S. W. 273. 226; Rose v. Gaudy, 137 Ala. 329, « Smith V. Berry, 155 Ky. 686, 160 34 So. 239; Parmer v. Parmer, 88 S. W. 247. Ala. 545, 7 So. 657; Vincent v. 'Rees V. Rhodes, 3 Ariz. 235; 73 Walker, 86 Ala. 333, 5 So. 465; Pac. 446; Hurd v. Chase, 100 Maine Eiland v. Radford, 7 Ala. 724, 42 561, 62 Atl. 660; Phillips v. Mo, 91 Am. Dec. 610; Mclver v. Roberts Minn. 311, 97 N. W. 969. See also (Ark.), 165 S. W. 273; Hodgkins Blackwell v. Overby, 41 N. Car. 38 v. Wright, 127 Cal. 688, 60 Pac. 431; (proof of facts and circumstances Brandt v. Thompson, 91 Cal. 458, inconsistent with purchase admit- 27 Pac. 763; Hall v. Arnot, 80 Cal. ted although direct proof of inten- 348, 22 Pac. '200; Manasse v. Dinkel- tion excluded); Bentley v. Phelps, spiel, 68 Cal. 404; Montgomery v. 2 Woodb. & M. (U. S.) 426, 3 Fed. Spect, 55 Cal. 352; Lodge v. Tur- Cas. No. 1331 (proof by admissions man, 24 Cal. 385; Daubenspeck v. of grantee and receipts of money Piatt, 22 Cal. 330; Elliott v. Con- from grantor together with contin- nor, 63 Fla. 408, 58 So. 241; Connor ued possession of grantor). v. Connor, 59 Pla. 467, 52 So. 72'i; * Russell V. Southard, 12 How. Deadman v. Yantis, 230 111. 243, 82 (U. S.) 139, 13 L. ed. 927; Morris N. E. 592, 120 Am. St. 291; Darst v. V. Nixon, 1 How. (U. S.) 118, 11 L. Murphv, 119 111, 343, 9 N, E. 887; ed. 69 ; Sprigg v. Bank of Mt. Pleas- Workman v. Greening, 115 111, 477, ant, 14 Pet. (U. S.) 201, 10 L. ed. 4 N, E. 385; Reigard v. McNeil, 38 429 WHAT FACTS ABE CONSIDERED § 324 of the conveyaneej that it shall operate as security for a loan of money, 111. 400; Whitcomb v. Sutherland, (N. Y.) 433; Strong v. Gambler, 155 18 111. 578; "Williams v. Bishop, 15 App. Div. 294, 140 N. Y. S. 410; 111. 553; Purviance v. Holt, 8 111. Conover v. Palmer, 123 App. Div. 394; Steele v. Steele, 112 111. App. 817, 108 N. Y. S. 480; Faulkner v. 409; Zimmerman v. Marchland, 23 Cody, 45 Misc. 64, 91 N. Y. S. 633; Ind. 474; Calahan v. Dunker, 51 Miller v. Smith, 20 N. Dak. 96, 126 Ind. App. 436, 99 N. E. 1021; Beid- N. W. 499; Smith y. Jensen, 16 N. elman v. Koch, 42 Ind. App. 423, 85 Dak. 408, 114 N. W. 306; Okla. N. E. 977; Ferguson v. Boyd (Ind. Comp. Laws 1909 § 1196; Farrow App.), 79 N. B. 549, 81 N. E. 71; v. Work, 39 Okla. 734, 136 Pac. Loeb V. McAlister, 15 Ind. App. 643, 739; Fawcett v. McGahan-McKee 41 N. E. 1061, 44 N. E. 378; Keeline Lumber Co., 39 Okla. 68, 134 Pac. V. Clark, 132 Iowa 360, 106 N. W. 388; Kinney v. Heatherington, 38 257; Laub v. Romans, 131 Iowa 427, Okla. 74, 131 Pac. 1078; Worley y. 105 N. W. 102; Ingalls v. Atwood, Carter, 30 Okla. 642, 121 Pac. 669; 53 Iowa 283, 5 N. W. 160; Dusen- Beall v. Beall (Ore.), 135 Pac. 185; bery v. Bidwell, 86 Kans. 666, 121 Grover v. Hawthorne, 62 Ore. 77, Pac. 1098; First Nat. Bank v. Ed- 121 Pac. 808; Harmon v. Grants wards, 84 Kans. 495, 115 Pac. 118; Pass Banking &c. Co., 60 Ore. 69, Stratton v. Rotrock, 84 Kans. 198, 118 Pac. 188; Walton v. Moore, 58 114 Pac. 224; Smith v. Berry, 155 Ore. 237, 114 Pac. 105; Mansfield v. Ky. 686, 160 S. W. 247; Vaughn v. Hill, 56 Ore. 400, 107 Pac. 471, judg- Smith, 148 Ky. 531, 146 S. W. 1094; ment modified 108 Pac. 1007; El- McKibben v. Diltz, 138 Ky. 684, 128 liott v. Bozorth, 52 Ore. 391, 97 Pac. S. W. 1082, 137 Am. St. 408; Brown 632; Hall v. O'Connell, 52 Ore. 164, V. Spradlin, 136 Ky. 703, 125 S. W. 95 Pac. 717; Null v. Fries, 110 Pa. 150; Borders v. Allen, 33 Ky. L. St. 52, 1 Atl. 551; Cole v. Bolard, 194, 110 S. W. 240; In re Schmidt, 22 Pa. St. 431; Niles v. Lee, 31 S. 114 La. 78, 38 So. 26; Hurd v. Chase, Dak. 234, 140 N. W. 259; Overton 100 Maine 561, 62 Atl. 660; Bradley v. Bigelow, 3 Yerg. (Tenn.) 513; V. Merrill, 88 Maine 319, 34 Atl. Mitchell v. Morgan (Tex. Civ. 160; Libby v. Clark, 88 Maine 32, App.), 165 S. W. 883; Hume v. Le 33 Atl. 657; Reed v. Reed, 75 Compte (Tex. Civ. App.), 142 S. W. Maine 264; Miller v. Miller, 101 Md. 934; Harrison v. Hogue (Tex. Civ. 600, 61 Atl. 210; Ferris v. Wilcox, App.), 136 S. W. 118; Yates v. Cas- 51 Mich. 105, 16 N. W. 252; Free- well (Tex. Civ. App.), 126 S. W. man v. Wilson, 51 Miss. 329; Prew- 914; Elliott v. Morris (Tex. Civ. ett v. Dobbs, 21 Miss. 431; Shep- App). 121 S. W. 209; Moorhead v. pard V. Wagner, 240 Mo. 409, 144 S. Ellison, 56 Tex. Civ. App. 444, 120 W. 394, rehearing denied 145 S. W. S. W. 1049; Nagle v. Simmank, 54 420; Gibbs v. Haughowout, 207 Mo. Tex. Civ. App. 432, 116 S. W. 862; 384, 105 S. W. 1067; Powell v. Crow, Moore v. Kirby, 52 Tex. Civ. App. 204 Mo. 481, 102 S. W. 1024; Cobb 200, 115 S. W. 632 (declaration that V. Day, 106 Mo. 278, 17 S. W. 323; grantor "could have the land" upon O'Neill v. Capelle, 62 Mo. 202; Wor- payment of a debt, admissible); ley v. Dryden, 57 Mo. 226; Tibeau Middleton v. Johnston (Tex. Civ. V. Tibeau, 22 Mo. 77; Brant v. Rob- App.), 110 S. W. 789; Musick v. ertson, 16 Mo. 129; Arnold v. O'Brien (Tex. Civ. App.), 102 S. Fraser, 43 Mont. 540, 117 Pac. 1064; W. 458; Gazley v. Herring (Tex.), Sanders v. Ayres, 63 Nebr. 271, 88 17 S. W. 17; Loving v. Milllken, 59 N. W. 526 ; Kemp V. Small, 32 Nebr. Tex. 423; Ruffier v. Womack, 30 318, 49 N. W. 169; Fahay v. State Tex. 332; Carter v. Carter, 5 Tex. Bank of O'Neill, 1 Nebr. (Unofe.) 93; Abbott v. Sanders, 80 Vt 809, 95 N. W. 505; Jeffreys v. Charl- 179, 66 Atl. 1032, 13 L. R. A. ton, 72 N. J. Eq. 340, 65 Atl. 711; (N. S.) 725, 130 Am. St. 974; Bev- Crane y. Bonnell, 2 N. J. Eq. 264; erly y. Davis (Wash.), 140 Pac. Mooney v. Byrne, 163 N. Y. 86, 57 696; Hoover v. Bouffleur, 74 Wash. N. E. 163; Lane y. Sears, 1 Wend. 382, 133 Pac. 602; Johnson y. Na- § 324 PAROL EVIDENCE 430 or as indemnity to a surety, if clearly proved, is decisive of the char- acter of the transaction.' And so is an agreement that the deed shall stand only as security for a debt, and that in case of a sale by the grantee the excess of the proceeds over the debt shall be paid to the grantor. Such an agreement and deed constitute a mortgage; and therefore the agreement is not void, as an attempt to create a trust by parol.^" Declarations of a party to the deed and to the action to declare such deed a mortgage, may be received in evidence as against himself.^ ^ It is proper to admit evidence of the previous negotiations of the parties, their agreements and conversations, and their dealings prior to and leading up to the execution of the deed.^^ The statements and declarations of the parties made pending negotiations, and at the final execution of the deed and contract to reeonvey, are admissible to show that the deed was intended as security for a debt.^^ Positive tional Bank of Commerce, 65 Wash. 261, 118 Pac. 21; Dempsey v. Demp- sey, 61 Wash. 632, 112 Pac. 755; Hudkins v. Grim (W. Va.), 78 S. E. 1043; Froidevaux v. Jordan, 64 W. Va. 388, 62 S. E. 686, 131 Am. St. 911; Fridley v. Somerville, 60 W. Va. 272, 54 S. E. 502; Gumps v. Kiyo, 104 Wis. 456, 80 N. W. 937; Rockwell V. Humphrey, 57 Wis. 410, 15 N. W. 394; Smith y. Crosby, 47 Wis. 160, 2 N. W. 104. The in- tention of the grantee to give the grantor any profit that was real- ized on a. final sale of the property would not justify a finding that the deed was intended as mere secur- ity for a loan. Harris v. Hirsch, 121 App. Div. 767, 106 N. Y. S. 631. The intention governing the nature of the conveyance must be that of both parties, and where a home- stead is conveyed the intention of the grantor and his wife, regard- less of the grantee's intent can not be conclusive. Nagle v. Simmank, 54 Tex. Civ. App. 432, 116 S. W. 862. See ante §§ 162, 168, 258, 321. "Dorthan Guano Co. v. Ward, 132 Ala. 380, 31 So. 748; Anthony v. Anthony, 28 Ark. 479; First Nat. Bank. v. Ashmead, 23 Fla. 379, 2 So. 657; Hibernian Banking Assn. V. Commercial Nat. Bank, 157 111. 524, 41 N. E. 919; Ashton v. Shep- herd, 120 Ind. 69, 22 N. E. 98; And- ing V. Davis, 38 Mich. 574, 77 Am. Dec. 658; Wolf v. Theresa Village Mut. F. Ins. Co. (Wis.), 91 N. W. 1014. See ante §§ 264, 266. On the other hand, it has been held that verbal admissions are en- titled to little weight. Richardson V. Beaber, 62 Misc. 542, 115 N. Y. S. 821; Everett v. Estes, 66 So. 615. Where the grantee in a deed ad- mitted that it was intended as a mortgage, evidence that third par- ties understood the instrument as an absolute conveyance will not overcome the admission of the grantee and intention of the par- ties. Kellner v. Randle (Tex. Civ. App.), 165 S. W. 509. "Crane v. Buchanan, 29 Ind. 570; Tower v. Fetz, 26 Nebr. 106, 42 N. W. 884, 18 Am. St. 795. "Adams v. Hopkins, 144 Cal. 19, 77 Pac. 712; Ross v. Brusie, 64 Cal. 245, 30 Pac. 811; Hopper v. Smyser, 90 Md. 363, 45 Atl. 206. " Beidelman v. Koch, 42 Ind. App. 423, 85 N. E. 977; Beroud v. Lyons, 85 Iowa 482, 52 N. W. 486; Toledo First Nat. Bank v. Central Chande- lier Co., 17 Ohio Cir. Ct. 443, 9 Ohio Cir. Dec. 807; Lewie v. Hall- man, 53 S. Car. 18, 30 S. E. 601. See also McRobert v. Bridget (Iowa), 149 N. W. 906; Harris v. Hirsch, 121 App. Div. 767, 106 N. Y. S. 631. See also Norton v. Lea (Tex. Civ. App.), 170 S. W. 267. "Adams v. Hopkins, 144 Cal. 19, 77 Pac. 712; Peugh v. Davis, 2 Mac- Arthur (D. C.) 14; Burnside v. 431 WHAT FACTS AEE CONSIDERED § 324 evidence that the grantee in the deed refused to take a mortgage indi- cates that the deed to Mm and his agreement to reconvey were not intended by him as a mortgage.^* Vague and uncertain evidence as to admissions of the grantee that the grantor had a right to redeem, when coupled with the grantor's temporary retention of possession and slight inadequacy of price, does not render the deed a mortgage, especially where the grantor was in- formed that the deed was an actual conveyance.^^ Evidence of the conduct of the parties at the time of the transaction and subsequently, must be clear and convincing, in order to establish that the deed was intended as a mortgage.^" It is said in some cases that parol evidence of an agreement that a conveyance should operate as security, should be supported by other facts and circumstances which are incompatible with the idea of a purchase, and leave no fair doubt that a security only was intended.^'' "Where a husband and wife made a conveyance absolute in terms of property belonging to the wife, the husband conducting the negotia- tion with the grantee, the intent of the wife in delivering the deeds governs as to the nature of the transaction. If her understanding was that the deed was only a security for her husband's debt, then the transaction is a mortgage, whatever may have been the intention as between the husband and his creditor before the instrument was de- livered.^* But on the question whether a deed absolute, executed by a dece- Terry, 45 Ga. 621; Helbreg v. Schu- But see Sowell v. Barrett, 45 N. mann, 150 111. 12, 37 N. E. 99, 41 Car. 50; Allen v. McRae, 39 N. Car. Am. St. 339; Darst v. Murphy, 119 325. 111. 343, 9 N. E. 887; Bartling v. "Bacon v. National &c. Bank, 191 Brasuhn, 102 111. 441; Ruckman v. 111. 205, 60 N. E. 846; Bentley v. Alwood, 71 111. 155; Reigard v. Mc- O'Bryan, 111 111. 53; Flagg v. Neil, 38 III. 400; WMtcomb v. Suth- Mann, 14 Pick. (Mass.) 467; Gaz- er land, 18 III. 578; Williams v. ley v. Herring (Tex.), 17 S. W. 17; Bishop, 15 111. 553; Purviance v. Conner v. Clapp, 37 Wash. 299, 79 Holt, 3 Gil. (111.) 394; McLaughlin Pac. 929; Becker v. Howard, 75 V. Royce, 108 Iowa 254, 78 N. W. Wis. 415, 44 N. W. 755. See also 1105; Beroud v. Lyons, 85 Iowa Vincent v. Walker, 86 Ala. 333, 5 482, 52 N. W. 486; Hoskins v. Hos- So. 465. kins, 27 Ky. L. 980, 87 S. W. 320; "Edwards v. Wall, 79 Va. 321. Phoenix v. Gardner, 13 Minn. 430; »« Bartling v. Brasuhn, 102 111. Freeman v. Wilson, 51 Miss. 329; 441. Jones V. Rush, 156 Mo. 364, 57 S. " Blackwell v. Overby, 6 Ired. Eq. W. 118; Haussknecht v. Smith, 161 (N. Car.) 68; Kelly v. Bryan, 6 N. Y. 663, 57 N. E. 1112; Wollen- Ired. Eq. (N. Car.) 283. The intent berg v. Minard, 37 Ore. 621, 62 Pac. at the time of delivery of the deed 532; Tompkins v. Merriman, 6 governs. Sanders v. Ayres, 63 Kulp (Pa.) 543; Dupree v. Estelle, Nebr. 271, 88 N. W. 526. 72 Tex. 575, 10 S. W. 666; Sadler v. ''Davis v. Brewster, 59 Tex. 93, Taylor, 49 W. Va. 104, 38 S. B. 583. revg. 56 Tex. 478. § 325 PAEOL EVIDENCE 433 dent in his lifetime, was intended as a mortgage, evidence of conver- sations of the grantor with a third person, had after the execution of the deed, tending to show its intent, is not admissible.^® Under the general rule that a party to a contract will be held to the construction that Ms own actions have put upon it, a party to an absolute deed, having treated it as a mortgage, is bound by such construction.^" Thus, where a father conveyed land to his daughter subject to a mort- gage, and a subsequent agreement between him and the mortgagee contained a recital that the daughter was the owner of the equity of redemption, such recital showed, in absence of evidence to the con- trary, that the deed was intended to be absolute and that the daughter was the actual owner.^'- § 325. Evidence of continuing debt. — Evidence of the continuance of the debt, such as the payment of interest upon it, or the extension of the time of payment, is generally conclusive of the character of the original transaction as a mortgage.^^ It shows either that the pre- existing debt was not surrendered or canceled at the time of the con- veyance, or, in case there was no such debt, it shows that one was then created. ^^ If the mortgagee retains the evidence of a pre-existing indebtedness, and receives rent from the mortgagor, this will be re- garded as payment of interest and as evidence of a mortgage.^* Parol evidence is admissible to show the existence of the debt to be secured by the conveyance alleged to be a mortgage.^' Although no note or other evidence of indebtedness is given, a loan of a certain sum raises an indebtedness, and a deed executed to secure such a loan, with "Jones V. Jones, 17 N. Y. S. 905. transaction be the taking or hold- "" Ferguson v. Boyd (Ind. App.), ing of land for the security of a 79 N. E. 549, 81 N. E. 71 (citing loan or debt, it is in equity a mort- cases). gage, and if necessary the subse- ^Braun v. Vollmer, 89 App. Div. quent conduct of the parties, with 43, 85 N. Y. S. 319. reference to the matter, may be '^Reeves v. Abercrombie, 108 Ala. examined to ascertain their true 535, 19 So. 41; Turner v. Wilkin- intent, as the giving of a note for son, 72 Ala. 361; Ahern v. Mc- the money or receiving part pay- Carthy, 107 Cal. 382, 40 Pac. 482; ment or interest on the same. Hall V. Arnott, 80 Cal. 348, 22 Pac. Sandling v. Kearney, 154 N. Car. 200; Montgomery v. Spect, 55 Cal. 596, 70 S. E. 942; Campbell v. 352; Westlake v. Horton, 85 111. Worthington, 6 Vt. 448. 228; Eaton v. Green, 22 Pick. "■ Farmer v. Grose, 42 Cal. 169; (Mass.) 526; Klein v. McNamara. Gilchrist v. Beswick, 33 "W. Va. 168, 54 Miss. 90; Riley v. Starr, 48 Nebr. 10 S. E. 371. 243, 67 N. W. 187; Budd v. Van " Ennor v. Thompson, 46 111. 214. Orden, 33 N. J. Eq. 143; Ruffler v. ^ Locke v. Moulton, 96 Cal. 21, Womack, 30 Tex. 332 ; Lawrence v. 30 Pac. 957 ; People v. Irwin, 14 Cal. Du Bois, 16 W. Va. 443. See ante 428; McNamara v. Culver, 22 Kans. § 265. However disguised may be 661. But see Thomas v. McCor- the terms, if the real object of the mack, 9 Dana (Ky.) 108. 433 WHAT FACTS AKE CONSIDERED § 325 a privilege of redemption during the grantor's lifetime, will be con- sidered a mortgage.^" The indebtedness secured by an absolute deed intended as a mortgage, although not specified in the deed or in any contemporaneous writing, and whether a present or future obligation, may be shown by parol evidence.^' Where there is no bond to recon- vey nor any written evidence to fix the amount of an indebtedness se- cured by an absolute deed it may be shown by parol evidence that the deed was given to secure an indebtedness already existing to the amount expressed as a consideration, and also to secure future ad- vances.^^ The taking of judgment for the consideration money is evi- dence that an absolute deed was intended to be a mortgage.-* Of course, where there is no written acknowledgment of a debt or express promise to pay, the party who attempts to impeach the deed is obliged to make out his proofs by other and less decisive means. The absence of such evidence of debt is far from being conclusive that the transaction was a sale.^" Formal mortgages are sometimes made with- out any personal liability on the part of the mortgagor. Moreover, when it is considered that the occasion for any inquiry in such case, as to the nature of the transaction, arises from the adoption of forms and outward appearances supposed to differ from the fact, it is hardly reasonable that the absence of a written contract of debt should be re- garded as of more significance than the absence of a formal defea- " Halbert v. Turner, 233 111. 531, occasion now to decide whether the 84 N. E. 704. See also Jones v. Gil- debt must be such that it could be lett, 142 Iowa 506, 118 N. W. 314, enforced by action against the debt- 121 N. W. 5; Brant v. Robertson, 16 or; the tendency of later cases Mo. 129; Graham v. Stevens, 34 Vt. seems to be against it. But all 166, 80 Am. Dec. 675. agree that there must be a debt or " Anglo-Californian Bank v. Cerf, loan to be secured, that the rela- 147 Cal. 384, 81 Pac. 1077. tion of debtor and creditor must =* Hester v. Gairdner, 128 Ga. 531, exist between the grantor and 58 S. E. 165. See also Huntington grantee, in order to lay the founda- V. Kneeland, 187 N. Y. 563, 80 N. tion for converting an absolute deed E. 1111. See post §§ 352, 365, 367a, in form into a mere security. In 374. this case there was no note or bond, "^Hamet v. Dundass, 4 Pa. St. or evidence of debt, executed by 178. "In all this class of cases," the defendants; and though this is says Chief Justice Poland, in Rich by no means conclusive, still it is V. Doane, 35 Vt. 125, "one principle a circumstance favorable to the has universally been recognized, orator, as, if the parties intended that, in order to convert a convey- the conveyance merely as a secur- ance absolute upon its face into a ity for a loan or debt, it would have mortgage, or security merely, there been natural that the ordinary evi- must be a debt to be secured. Some dence of a debt should have been of the cases go so far as to hold required and given." that there must be a debt in such 2" Russell r. Southard, 12 How. form that it can be enforced by (U. S.) 139, 13 L. ed. 927; Robin- action against the debtor, while son v. Farrelly, 16 Ala. 472; Miller others have denied it. We have no v. Green, 37 111. App. 631, affd. 138 28 — Jones Mtg. — Vol. I. § 326 PAROL EVIDENCE 434 sance.^^ But the burden of proof is upon the grantor in an action to redeem to show that the relation of debtor and creditor existed be- tween the grantor and grantee after the delivery of the deed.*^ A mortgage in the form of an absolute conveyance is quite fre- quently and properly taken when the amount of the debt to be secured is uncertain, and depends wholly or in part upon future advanees.^^ § 326. Satisfaction or survival of the debt — Burden of proof.^* — When the transaction is shown to have been based upon a pre-existing debt, the question to be settled is, whether the intention of the parties was to cancel that debt or to secure it. This is a question of fact, for the determination of which not only the negotiations had at the time of the conveyance, but also the subsequent acts of the parties in rela- tion to it, are to be considered. The mere fact that there was a debt at the time is not conclusive that the conveyance was a mortgage for its security. It can hardly be said that it raises a presumption of a mortgage, though the courts have generally manifested a disposition to construe all conveyances coupled with a stipulation for a reconvey- ance at a future day as mortgages. But whatever presumption of this kind there may be, it is readily repelled by any facts showing that the debt was surrendered and canceled at the time of the conveyance. The burden is then upon the grantor to show that the deed is not to have effect according to its terms.^^ The fact that the grantor's note or other written evidence of an existing debt, was canceled by the grantee or surrendered to the grantor without a written renewal, is strong evi- dence that the parties regarded the debt as extinguished and the deed as a conditional sale.^" 111. 565, 28 N. E. 837; Flagg v. Mann, sert v. Bogk, 7 Mont. 585, 19 Pac. 14 Pick. (Mass.) 467; Morris v. 281; Hogarty v. Lynch, 6 Bosw. Budlong, 78 N. Y. 543; Brown v. (N. Y.) 138; Bckford v. De Kay, 8 Dewy, 1 Sandf. Ch. (N. Y.) 56. Paige (N. Y.) 89; Baisch v. Oake- =^Per Wells, J., in Campbell v. ley, 68 Pa. St. 92; Lewis v. Bayliss, Dearborn, 109 Mass. 130, 12 Am. 90 Tenn. 280, 16 S. W. 376; Snavely Rep. 671. V. Pickle, 29 Grat. (Va.) 27; Mathe- '^McCormick v. Herndon, 67 Wis. ney v. Sandford, 26 W. Va. 386. 648, 31 N. W. 303; Helms T. Chad- For burden of proof see post § 335. bourne, 45 Wis. 60. "=Kahn v. Weill, 42 Fed. 704; =» Abbott V. Gregory, 39 Mich. 68. Adams v. Pilcher, 92 Ala. 474, 8 *'For full discussion of satisfac- So. 757; Locke v. Palmer, 26 Ala, tion and survival of debt see ante 312; Waite v. Dimick, 10 Allen §§ 265, 267, 269. (Mass.) 364; Harmon v. Grants ==Manasse v. Dinkelspiel, 68 Cal. Pass Banking &e. Co., 60 Ore. 69, 404, 9 Pac. 547; Montgomery v. 118 Pac. 188; Ewing v. Keith, 16 Spect, 55 Cal. 352; Ford v. Irwin, Utah 312, 52 Pac. 4. See also Mil- 18 Cal. 117, 14 Cal. 428; Rice v. ler v. Green, 37 111. App. 631 (can- Dole, 107 111. 275; Dillon v. Dillon, celation without delivery); Holmes 24 Ky. L. 781, 69 S. W. 1099; Gas- v. Grant, 8 Paige (N. Y.) 243. This 435 WHAT FACTS ARE CONSIDERED § 326 If the transaction was based upon a mortgage previously existing between the parties, and the mortgage notes were given up and no other evidences of debt were taken in their place, and the mortgagor was credited with the amount of the mortgage notes upon his making an ab- solute conveyance of the mortgaged land to the mortgagee, the pre- sumption is strong, if not conclusive, that such absolute conveyance was not intended to operate as a mortgage.^ ^ It is wholly improbable that a creditor, already having a mortgage to secure his demand, should take another mortgage in the form of an absolute conveyance of the same property, for the same debt, with- out any apparent advantage. Even in case a mortgagor gives an ab- solute deed of the mortgaged land, under a parol agreement that the mortgagee shall sell the land, deduct from the proceeds the amount of the mortgage debt, and pay the residue to the mortgagor, the deed does not thereby become a mortgage. After making such a convey- ance, the mortgagor had no further title to or interest in the land as such, his only interest being in the proceeds to be obtained on a sale of the land by the former mortgagee.^^ Although the securities are not surrendered, if the debt is absolutely extinguished, a simple right to repurchase does not make the convey- ance a mortgage.^^ Whether the transaction is a mortgage or not is determined by the answer to the inquiry, whether it was the intention of the parties to secure the payment of the debt or to extinguish it.*" If the object of the parties was to satisfy the debt, the conveyance must necessarily vest the estate absolutely in the grantee, and it can not of course take effect as a mortgage,*^ even if the conveyance contains a circumstance is not conclusive, justify the setting aside of such a Conant v. Riseborough, 139 111. 383, transaction. See also Goree v. 28 N. E. 789; Sanders v. Ayres, 63 Clements, 94 Ala. 337, 10 So. 906; Nebr. 271, 88 N. W. 526. Peagler v. Stabler, 91 Ala. 308, 9 "Adams v. Pilcher, 92 Ala. 474; So. 157. 8 So. 757. In Stoutz v. Rouse, 84 ''Wilson v. Parshall, 129 N. Y. Ala. 309, 4 So. 170, it was held that 223, 29 N. E. 297, 7 N. Y. S. 479. a conveyance of the property to the '' Baxter v. Willey, 9 Vt. 276, 31 mortgagee in payment of the mort- Am. Dec. 623. gage debt, with the right to redeem "Todd v. Campbell, 32 Pa. St. within two years from the date of 250; Bigelow v. Topliff, 25 Vt. 273, the deed, in like manner and upon 60 Am. Dec. 264; Toler v. Pender, the same terms and conditions as 1 Dev. & B. Eq. 445. See also Hall if the property had been sold under v. Arnott, 80 Cal. 348, 22 Pac. 200; a decree of the chancery court, was McDonald v. Kellogg, 30 Kans. 170, a sale with the privilege of repur- 2 Pac. 507; Allegheny R. &c. Co. v. chase within two years, having the Casey, 79 Pa. St. 84; Loving v. Mil- effect to reduce the equity of re- liken, 59 Tex. 423. See ante § 265. demption to a statutory right of re- " Elston v. Chamberlain, 41 Kans. demption; and that mere inade- 354, 21 Pac. 259; Carter v. Wil- Quacy of consideration will not liams, 23 La. Ann. 281; Hoopes v. § 327 PAROL EVIDENCE 436 redemption clause.*'' But the fact that the evidence of the indebted- ness is retained after the conveyance is strong evidence that the debt was not extinguished and that a mere security was intended.*^ § 327. Actual sale after application for loan. — The transaction may have been a sale, although the application of the grantor was in the first place for a loan. Of course, where an absolute conveyance or a deed of trust is executed with the understanding between the par- ties that the title is to be transferred forever from the grantor to the grantee, his heirs and assigns, the deed is not a mortgage but a sale.** In such a ease, the person applied to having refused to deal except as a purchaser, and a conveyance having been made to him without his giving any contract to reconvey, the court refused, after a long lapse of time, to convert the transaction into a mortgage, upon evidence of loose conversations to the effect that the grantee would reconvey upon repayment, although coupled with evidence of inadequacy of consider- ation.*' § 328. Continued possession of grantor. — The continued possession of the grantor is also evidence tending to show that the conveyance was a mortgage.*" This fact alone is not very important, but adds Bailey, 28 Miss. 328; Slee v. Man- 632, 71 S. E. 1075; Bashinski v. hattan Co., 1 Paige (N. Y.) 48. Swint, 133 Ga. 38, 65 S. E. 152; ^ West V. Hendrix, 28 Ala. 226. Spencer v. Schuman, 132 Ga. 515, «Eniior v. Thompson, 46 111. 214; 64 S. E. 466; Askew v. Thompson, Wright V. Mahaftey, 76 Iowa 96, 40 129 Ga. 325, 58 S. B. 854; Clark v. N. W. 112; McMillan v. Bissell, 63 Finlon, 90 111. 245; Strong v. Shea, Mich. 66, 29 N. W. 737. 83 111. 575; Gibson v. Eller, 13 Ind. ■" McDonald v. Kellogg, 30 Kans. 124; Ingalls v. Atwood, 53 Iowa 283, 170, 2 Pac. 507, per Valentine, J. 5 N. W. 160; Bames v. Woodson, «De France v. De France, 34 Pa. 120 La. 1031, 46 So. 13; Hester v. St. 385; Albany &c. Canal Co. v. Powell, 120 La. 406, 45 So. 372; Crawford, 11 Ore. 243, 4 Pac. 113. Franklin v. Sewall, 110 La. 292, 34 '^Nelson v. Wadsworth, 171 Ala. So. 448; Jameson v. Emerson, 82 603, 55 So. 120; Parks v. Parks, 66 Maine 359, 19 Atl. 831; Thompson Ala. 326; Crews v. Threadgill, 35 v. Banks, 2 Md. Ch. 430; Campbell Ala. 334; Prefumo v. Russell, 148 v. Dearborn, 109 Mass. 130, 12 Am. Cal. 451, 83 Pac. 810; Daubenspeck Rep. 671; Stevens v. Hulin, 53 V. Piatt, 22 Cal. 330; Berry v. Wil- Mich. 93, 18 N. W. 569; Pidcock v. liams, 141 Ga. 642, 81 S. E. 881. In Swift, 51 N. J. Eq. 405, 27 Atl. 470; Georgia parol evidence Is held in- Luesenhop v. Einsfeld, 93 App. Div. admissible to convert an absolute 68, 87 N. Y. S. 268; Robinson v. deed into a mortgage, where pos- Willoughby, 65 N. Car. 520; Steator session has been surrendered to the v. Jones, 10 N; Car. 423; Steel v. grantee, but under the Civil Code Black, 3 Jones Eq. (N. Car.) 427; of 1910, § 3258, a deed by a grantor Kemp v. Earp, 7 Ired. Eq. (N. remaining in possession may be Car.) 167; Sellers v. Stalcup, 7 proved by parol to be a mortgage. Ired. Eq. (N. Car.) 13; O'Toole v. Lowe V. Plndley, 141 Ga. 380, 81 S. Omlie, 8 N. Dak. 444, 79 N. W. 849; E. 230; Mercer v. Morgan, 136 Ga. McGill v. Thorne, 70 S. Car. 65, 48 437 WHAT TACTS ARE CONSIDERED § 329 weight to other considerations which tend to this conclusion. It is rebutted by proof of an agreement by the grantor to pay rent.*^ That the grantor continues to pay the taxes on the land conveyed is a fact to be considered in support of his claim that the conveyance was intended as a mortgage only.*^ On the other hand, the fact that the grantee has entered into pos- session and made improvements strengthens the presumption that the conveyance is absolute.*" Thus, where a grantee and his successors, relying upon their absolute ownership of the premises under the orig- inal conveyance and a subsequent release by the grantor, incurred ad- ditional expense and paid taxes and assessments so that it would be impossible to restore them to their original situation, the grantor could not set up the original conveyance as a mere mortgage.'^'' § 329. Inadequacy of price. — Inadequacy of price is also a cir- cumstance tending to show that the transaction is a mortgage rather than a sale, just as it is when there is a written agreement for a re- conveyance,^^ but this fact alone does not authorize a court to declare S. E. 994; Lewie v. Hallman, 53 S. Car. 18, 30 S. E. 601; Lewis v. Bay- less, 90 Tenn. 280, 16 S. W. 376; Ruffier V. Womack, 30 Tex. 332; Azzalia v. Le Claire, 23 Utah 401, 64 Pac. 1106; Wright v. Bates, 13 Vt. 341; Tuggle v. Berkeley, 101 Va. 83, 43 S. E. 199; Edwards v. Hall, 79 Va. 321; Hursey v. Hursey, 56 W. Va. 148, 49 S. E. 367; Furgu- son V. Bond, 39 W. Va. 561, 20 S. E. 591; Gilchrist v. Beswick, 33 W. Va. 168, 10 S. E. 371; Kerr v. Hill, 27 W. Va. 576; Matheney v. Sand- ford, 26 W. Va. 386; Vangllder v. Hoffman, 22 W. Va. 1; Hoffman v. Ryan, 21 W. Va. 415; Lawrence v. Du Bois, 16 W. Va. 443; Davis v. Demming, 12 W. Va. 246; Ogle v. Adams, 12 W. Va. 213; Cotterell v. Purchase, Cas. temp. Talbot, 61; Lincoln v. Wright, 4 De Gex & J. 16. See also Nicholson v. Hayes, 174 Fed. 653, 98 C. C. A. 407. See ante §§ 255, 274 and post § 597. In Ver- mont parol testimony is admissible to show that a deed absolute in terms was in fact made as security for money loaned, if the grantor has remained In possession, and the title has continued in the grantee. Crosby v. Leavitt, 50 Vt. 239. See also Mussey v. Bates, 60 Vt. 271, 14 Atl. 457; Morgan v. Wal- bridge, 56 Vt. 405; Hills v. Loomis, 42 Vt. 562; Wing v. Cooper, 37 Vt. 169; Rich v. Doane, 35 Vt. l25; Bigelow V. Topliff, 25 Vt. 273, 60 Am. Dec. 264; Hyndman v. Hynd- man, 19 Vt. 9, 46 Am. Dec. 171; Conner v. Chase, 15 Vt. 764; Wright V. Bates, 13 Vt. 341; Mott v. Harrington, 12 Vt. 199; Baxter V. Willey, 9 Vt. 276, 31 Am. Dec. 623; Campbell v. Worthington, 6 Vt. 448. "Banner Land Co. v. Insurance Co., 77 Ala. 184. "Bocock V. Phipard, 5 N. Y. S. 228. ^"Woodworth v. Carman, 43 Iowa 504. See also Blake v. Taylor, 142 111. 482, 32 N. E. 401. "Luesenhop v. Einsfeld, 93 App. Div. 68, 87 N. Y. S. 268. "Russell V. Southard, 12 How. (U. S.) 139, 13 L. ed. 927; Conway V. Alexander, 7 Cranch (U. S.) 218, 3 L. ed. 321; Morris v. Nixon, 1 How. (U. S.) 118, 11 L. ed. 69; Nelson v. Wadsworth, 171 Ala. 603, 55 So. 120; Hubert v. Sistrunk (Ala.), 53 So. 819; Rodgers v. Burt, 157 Ala. 91, 47 So. 226; Glass v. Hieronymus, 125 Ala. 140, 28 So. 71, 82 Am. St. 225; Martin v. Martin, 329 PAROL EVIDENCE 438 a deed absolute upon its face to be a mortgage/" and other circum- stances may render this of little or no. weight. ^^ Inadequacy of price. 123 Ala. 191, 26 So. 525; Williams V. Reggan, 111 Ala. 621, 20 So. 614; Adams v. Pilcher, 92 Ala. 474, 8 So. 757; Peagler v. Stabler, 91 Ala. 308, 9 So. 157; Vincent v. Walker, 86 Ala. 333, 5 So. 465; Perdue v. Bell, 83 Ala. 396, 3 So. 698; Douglass v. Moody, 80 Ala. 61; Rapier v. Gulf City Paper Co., 77 Ala. 126; Turner V. Wilkinson, 72 Ala. 361; Pearson V. Seay, 35 Ala. 612; Crews v. Threadgill, 35 Ala. 334; West v. Hindsey, 28 Ala. 226; Husheon v. Husheon, 71 Cal. 407, 12 Pac. 410; Pierce v. Robinson, 13 Cal. 116; Butsch V. Smith, 40 Colo. 64, 90 Pac. 61; Elliott V. Connor, 63 Fla. 408, 58 So. 241; Matthews v. Porter, 16 Fla. 466; Chapman v. Ayer, 95 Ga. 581, 23 S. E. 131; Rodgers v. Moore, 88 Ga. 88, 13 S. E. 962; Pope v. Marshall, 78 Ga. 635, 4 S. E. 116; Helm V. Boyd, 124 111. 370, 16 N. E. 85; Rue v. Dole, 107 111. 275; Carr V. Rising, 62 111. 14; Turpie v. Lowe, 114 Ind. 37, 15 N. E. 834; Davis v. Stonestreet, 4 Ind. 101; Grubb v. Brendel, 52 Ind. App. 531, 100 N. E. 872; Calahan v. Dunker, 51 Ind. App. 436, 99 N. E. 1021; White v. Redenbaugh, 41 Ind. App. 580, 82 N. E. 110; Fort v. Colby (Iowa), 144 N. W. 393; Bigler v. Jack, 114 Iowa 667, 87 N. W. 700; Conlee v. Keying, 94 Iowa 734, 62 N. W. 678; Caldwell v. Meltveldt, 93 Iowa 730, 61 N. W. 1090; Bridges v. Linder, 60 Iowa 190, 14 N. W. 217; Wilson Y. Patrick, 34 Iowa 362; Trucks v. Lindsey, 18 Iowa 504; Gossum v. Gossum (Ky.), 15 S. W. 1057; Old- ham V. Halley, 2 J. J. Marsh. (Ky.) 113; Fulwiler y. Roberts, 26 Ky. L. 297, 80 S. W. 1148; Burch v. Nicho- las, 26 Ky. L. 264, 80 S. W. 1132; Trimble v. McCormick, 12 Ky. L. 857, 15 S. W. 358; Eames v. Wood- son, 120 La. 1031, 46 So. 13; Rester V. Powell, 120 La. 406, 45 So. 372; Bonnette v. Wise, 111 La. 855, 35 So. 953; Reed v. Reed^ 75 Maine 264; Thompson y. Banks, 2 Md. Ch. 430; Campbell v. Dearborn, 109 Mass. 130, 12 Am. Rep. 671; Schmidt v. Barclay, 161 Mich. 1, 125 N. W. 729; Carveth v. Winegar, 133 Mich. 34, 94 N. W. 381; Klein V. McNamara, 54 Miss. 90; Free- man V. Wilson, 51 Miss. 329; Brightwell v. McAfee, 249 Mo. 562, 155 S. W. 820; Donovan v. Boeck, 217 Mo. 70,. 116 S. W. 543; Mooney V. Byl-ne, 163 N. Y. 86, 57 N. E. 163; Lawrence v. Farmers' L. &c. Co., 13 N. Y. 200; Brown v. Dewey, 2 Barb. (N. Y.) 28; Robinson v. Cropsey, 6 Paige (N. Y.) 480; Steel v. Black, 56 N. Car. 427; Sellers v. Stalcup, 43 N. Car. 13; Kemp v. Earp, 42 N. Car. 167; Streator v. Jones, 10 N. Car. 423; Forester v. Van Auken, 12 N. Dak. 175, 96 N. W. 301; Wagg v. Herbert, 19 Okla. 525, 92 Pac. 250; Harmon v. Grants Pass Banking &c. Co., 60 Ore. 69, 118 Pac. 188; Kinney v. Smith, 58 Ore. 158, 113 Pac. 854; Overton v. Bige- low, 3 Yerg. (Tenn.) 513; Norton V. Lea (Tex. Civ. App.), 170 S. W. 267; Temple Nat. Bank v. Warner, 92 Tex. 226, 47 S. W. 515; Gray v. Shelby, 83 Tex. 405, 18 S. W. 809; Gibbs V. Penny, 43 Tex. 560; Rich V. Doane, 35 Vt. 125; Tuggle v. Berkeley, 101 Va. 83, 43 S. E. 199; Hesser v. Brown, 40 Wash. 688, 82 Pac. 934; Gilchrist v. Beswick, 33 W. Va. 168. 10 S. E. 371; Kerr v. Hill, 27 W. Va. 576; Vangilder v. Hoffman, 22 W. Va. 1; Lawrence v. Du Bois, 16 W. Va. 443; Davis v. Demming, 12 W. Va. 246. See also Russell V. Southard, 12 How. (U.' S.) 139, 13 L. ed. 927; Simpson v. Denver &c. Bank, 93 Fed. 309, 35 C. C. A. 306 (consideration less than half the value of property). See ante § 275. ""Lynch v. Lynch, 22 Cal. App. 653, 135 Pac. 1101; Walker v. Farmers' Bank (Del.), 14 Atl. 819; Story V. Springer, 155 111. 25, 39 N. E. 570, affg. 43 111. App. 495; Pierce V. Traver, 13 Nev. 526; Coles v. Perry, 7 Tex. 109. See also Rodgers V. Burt, 157 Ala. 91, 47 So. 226. ""Matheney v. Sandford, 26 W. Va. 386; Lynch v. Lynch, 22 Cal. App. 653, 135 Pac. 1101; Harris v. Hirsch, 121 App. Div. 767, 106 N. Y. S. 631. 439 WHAT FACTS ARE CONSIDERED § 330 to be of controlling effect, must be gross.^* On the other hand the fact that the amount paid by the vendee was the entire value of the prop- erty, is inconsistent with the idea that a mortgage was intended.^'^ § 330. Delay in claiming absolute title. — Delay in asserting an absolute deed to be a mortgage has not the same effect upon the rights of the parties that attends delay in seeking to enforce in equity the performance of an executory contract.^^ Once a mortgage always a mortgage is the maxim of the law, and payment does not stand on the footing of performance in equity. The character of the deed being iixed by the evidence as conditional, the mortgagor has the same time to make payment that any other debtor has. The right to foreclose and the right to redeem are reciprocal, and if one is barred the other is also barred. ^^ The only effect that delay can have in such a case is in its bearing 'on the primary question of mortgage or no mortgage. The poverty of the mortgagor, and many other circumstances, may sufficiently explain this. No lapse of time short of that which is suffi- cient to bar the action will prevent the introduction of parol evidence to show a deed was "intended as a mortgage."^* An absolute deed will be construed as a mortgage where the grantor continued in possession and control of the property, treating it as his own, and the parties continued to deal with each other as though the title had not passed.^" But lapse of time, in connection with other evidence, is a circum- stance to be considered.'" When, for more than seven years the mort- " Lynch v. Lynch, 22 Cal. App. N. E. 650; Green v. Capps, 142 111. 653, 135 Pac. 1101; Hemsted v. Hem- 286, 31 N. E. 597. sted, 150 Iowa 635, 130 N. W. 413; «Mott v. Fiske, 155 Ind. 597, 58 Harris v. Hlrsch, 121 App. Div. 767, N. E. 1053; Andlng v. Davis, 38 106 N. Y. S. 631. Inadequacy Miss. 574, 77 Am. Dec. 658. though gross, was held not to be ™ Richmond v. Richmond, Fed. conclusive in Donovan v. Boeck, Cas. No. 11801. 217 Mo. 70, 116 S. W. 543; Elliott «» Downing v. Woodstock Iron V. Maxwell, 7 Ired. Eq. (N. Car.) Co., 93 Ala. 262, 9 So. 177; Schrad- 246; Forester v. Van Auken, 12 N. ski v. Albright, 93 Mo. 42, 5 S. W. Dak. 175, 96 N. W. 301. See also 807; Stevenson v. Saline Co., 65 Sahlin v. Gregson, 46 Wash. 452, Mo. 425; Landrum v. Union Bank, 90 Pac. 592. 63 Mo. 48; TuU v. Owen, 4 Y. & « Gannon v. Moles, 111 111. App. C. 192. See also Broaddus v. Potts, 19; Rathbone v. Maltz, 155 Mich. 140 Ky. 583, 131 S. W. 510 (deed 306, 118 N. W. 991; Powell v. Crow, thirty years old); Cobb v. Day, 106 204 Mo. 481, 102 S. W. 1024; Jef- Mo. 278, 17 S. W. 323. In the latter freys v. Charlton, 72 N. J. Eq. 340, case the plaintiff, after making a 65 Atl. 711. deed absolute in form, made no ™ Odenbaugh v. Bradford, 67 Pa. claim that it was a mortgage for St. 96. six years, during which time he "'Fitch v. Miller, 200 111. 170, 65 had paid no taxes, and the grantee § 330 PAROL EVIDENCE 440 gagor had claimed no ownership in the land and had not offered to pay the interest on the note or the annual taxes, such delay was con- sidered in holding a deed to be absolute."^ When the grantor had con- veyed by a warranty deed, and possession followed the deed through several successive grantees, parol evidence that a mortgage was in- tended has been refused. Length of time short of the period that will bar redemption affords a strong presumption against such a claim."^ A lapse of fourteen years from the time of the transaction has been considered a material circumstance."^ And where the bill to redeem was not filed until thirteen years after the conveyance, and it also ap- peared that more than seven years had elapsed since the grantee distinctly refused to recognize the grantor's claim of an equity of re- demption, and there was no suflBcient excuse for the delay, the laches was held to be such as to bar any right to relief."* It has been held that if the mortgagee himself could not have pleaded the period of limitations or laches his heirs and devisees could not do so."^ A bill to declare a deed, executed in 1886, to be a mort- gage, alleging that the grantor remained in possession until 1901, brought by the heirs of the grantor who died intestate in 1907, was held not to be demurrable on ground of laches."" Delay by the heirs of a grantor for eight years after the youngest heir came of age, to file a bill to remove an equitable mortgage as a cloud, which was seventeen years after the time allowed for redemption under the an- cestor's contract, will be held to constitnte laches. Laches in filing a bill to enforce, a right of redemption can not be excused upon the ground of ignorance of the contract upon which such right was based, where any examination of the records would have led to the discovery of such contract and any rights they might have had thereunder. In determining whether there has been laches in exercising a right of redemption, a court of equity is not necessarily controlled by the period of limitation as fixed in actions at law."' Laches in bringing an action to declare an absolute deed a mort- gage is a mixed question of law and fact, and is not generally de- had made improvements, without 111. 56. So a lapse of seven years, any protest on the part of the plain- De France v. De France, 34 Pa. St. tiff. It was held that a court of 385. equity would not interfere. " Maher v. Farwell, 97 111. 56. °'Hesser v. Brown, 40 Wash. 688, '"'McKenney v. Page, 146 Ky. 82 Pac. 934. 682, 143 S. W. 382. ""McCoy v. Gentry, 73 Ala. 105; "Nelson v. Wadsworth, 171 Ala. Conner v. Chase, 15 Vt. 764. 603, 55 So. 120 "^Goree v. Clements, 94 Ala. 337, "Fitch v. Miller, 200 111. 170, 65 10 So. 906; Maher v. Farwell, 97 N. E. 650. 441 WHAT FACTS ARE CONSIDERED 331 terminable by the court, upon demurrer, unless it is apparent that the delay was without excuse, and was prejudicial to the grantee."^ § 331. Conveyance by third person — Debtor's right to redeem. — In equity it is regarded as unnecessary that the conveyance should be made by the debtor. It is sufficient that he has an interest in the property, either legal or equitable. Haying such an interest, if he procure a conveyance of the property to one who pays the price of it, or makes an advance upon it, under an arrangement that he shall • be allowed to have the property upon repaying the money advanced, he has a right to redeem. The grantee in such case acquires title by his act, and as security for his debt, and therefore holds the title as his mortgagee. °° Thus, if a person advances for another, at his re- quest, the purchase-money of land which the latter contracts to buy, and the deed be made to the person who advances the money, he is as much a mortgagee as if the land had been conveyed to him di- rectly by the debtor,^" and parol evidence is admissible to prove the ■^ Salinger v. McAllister (Iowa), 146 N. W. 8. See also Beekman v. Hudson River R. Co., 35 Fed. 3; Bulkley v. Bulkley, 2 Day (Conn.) 363; Gay v. Havermale, 27 Wash. 390, 67 Pac. 804. ■=» Wright V. Shumway, 1 Biss. (U. S.) 23; Martin v. Pond, 30 Fed. 15; Hughes V. McKenzie, 101 Ala. 415, 13 So. 609; Nelson v. Kelly, 91 Ala. 569, 8 So. 690; Parmer v. Parmer, 88 Ala. 545, 7 So. 657; Terwilllger V. Ballard, 64 Fla. 158, 59 So. 244; First Nat. Bank v. Ashmead, 23 Fla. 379, 2 So. 657; Lindsay v. Mat- thews, 17 Fla. 575; Smith v. Cremer, 71 111. 185; Reigard v. Mc- Neil, 38 111. 400; Beatty v. Brum- mett, 94 Ind. 76; Rector v. Shirk, 92 Ind. 31; Stephenson v. Arnold, 89 Ind. 426; Bradford v. Helsell, 150 Iowa 732, 130 N. W. 908; McPher- son V. Hayward, 81 Maine 329, 17 Atl. 164; Stinchfield v. Milliken, 71 Maine 567; Union Sav. Bank v. Pool, 148 Mass. 203, 9 N. B. 545; Darling v. Darling, 123 Mich. 307, 82 N. W. 48; JefCery v. Hursh, 58 Mich. 246, 25 N. W. 176, 27 N. W. 7; Fisk v. Stewart, 24 Minn. 97; Pardee v. Treat, 82 N. Y. 385; Carr V. Carr, 52 N. Y. 251; Stoddard v. Whiting, 46 N. Y. 627; Murray v. Walker, 31 N. Y. 399; McBurney v. ,Wellman, 42 Barb. (N. Y.) 390; Balduff v. Griswold, 9 Okla. 438, 60 Pac. 223; Houser v. Lamont, 55 Pa. St. 311, 93 Am. Dec. 755; Tant v. Guess, 35 S. Car. 605, 16 S. E. 472; Muller V. Flavin, 13 S. Dak. 595, 83 N. W. 687; Lewis v. Bayliss, 90 Tenn. 280, 16 S. W. 376; Sweet v. Mitchell, 15 Wis. 641. See also Davis V. Clifton, 145 Ky. 173, 140 S. W. 161 (agreement to reconvey to debtor's wife) ; Ferry v. Miller, 164 Mich. 429, 129 N. W. 721 (agree- ment to reconvey to husband of grantor). See ante §§ 241, . 268, 323 '"Hidden v. Jordan, 21 Cal. 92; Strong V. Shea, 83 111. 575; Smith V. Knoebel, 82 111. 392; Hardin v. Fames, 5 Bradw. (111.) 153; Barnett V. Nelson, 46 Iowa 495; Brumfield V. Boutall, 24 Hun (N. Y.) 541; Hall V. O'Connell, 52 Ore. 164, 95 Pac. 717, decree modified on rehear- ing 96 Pac. 1070; Lucia v. Adams, 36 Tex. Civ. App. 454, 82 S. W. 335; Borrow v. Borrow, 34 Wash. 684, 76 Pac. 305; Beebe v. Wisconsin Mort- gage Loan Co., 117 Wis. 328, 93 N. W. 1103. See also Sterck v. Ger- mantown Homestead Co., 27 Pa. Super. Ct. 336. A delivery of deeds by the owner of property to one who advanced money to keep the land from sale, "to cover the debt" until redemption within a certain § 331 PAROL EVIDENCE 443 nature of such transaction as a mortgage.'^ If part only of the purchase-money be advanced by such grantee, he has a lien upon the vrhole land, and not merely upon an undivided interest in proportion to the amount of his advance.^^ Where a pur- chaser of land had paid part of the price and a third person advanced the balance as a loan, receiving a conveyance from the vendor as se- curity, under an agreement to convey to the purchaser upon repay- ment of the loan, the deed was held a mortgage as between the pur- chaser and the third person.'^ But where a mortgagor, to prevent foreclosure, conveyed the land by absolute deed to a third person, who agreed to pay the mortgage debt and reconvey the land to the mortgagor upon payment within a specified time, the transaction was held not to be a mortgage, but a sale with privilege of repurchase, especially since the mortgagor did not apply to the third person for a loan, and the third person did not propose to make a loan.'* ^.t law, when a trustee, at the request of the husband of the cestui que trust, and acting as her agent in fact, sold certain trust land to one who agreed to convey the land to the husband on his repaying the purchase-money, it was declared that the transaction did not consti- tute a mortgage, and could not be dealt with as such!'" In like man- ner, where one at the request of a debtor, whose land had been sold on execution, purchased the land, agreeing by parol with the debtor that, upon his paying the purchase-money and interest, he would con- period, or to be sold thereafter, is grantor, the mortgage creditor was a mortgage. Horton v. Murden, 117 still a mere mortgagee and not the Ga. 72, 43 S. E. 786. But it has owner of the absolute title. Lynch been held that a quitclaim deed v. Ryan, 132 Wis. 271, 112 N. W. from a mortgagor to a mortgagee, 427. given to avoid foreclosure, together "Hall v. O'Connell, 52 Ore. 164, with an agreement from the mort- 95 Pac. 717, decree modified on re- gagee to reconvey upon due pay- hearing 96 Pac. 1070; Borrow v. ment, was not an equitable mort- Borrow, 34 Wash. 684, 76 Pac. 305. gage, but an absolute conveyance. "Hidden v. Jordan, 21 Cal. 92. Bailey v. St. Louis Union Trust Co., " Sandling v. Kearney, 154 N. 188 Mo. 483, 87 S. W. 1003. Where Car. 596, 70 S. E. 942. the original conveyance was made "Hubert v. Sistrunk (Ala.), 53 under a parol trust, by which the So. 819. grantee was to hold the title for '" Pennsylvania Life Ins. Co. v. the grantor's benefit, subject to his Austin, 42 Pa. St. 257. The trans- order, and under the direction of action was held not to be a mort- the grantor the grantee conveyed gage, where a purchaser at a trus- the property to one who held a tee's sale at request of the owners, mortgage on the premises, to secure took title in his own name by deed the mortgage indebtedness and absolute in form agreeing to con- save foreclosure, the deed reciting vey to them at any time within five that It passed only such interest as years upon payment of the amount was received in the deed from the due. Lamberson v. Bashore, 167 443 WHAT TACTS AEE CONSIDEEED § 333 vey it to him, or, if the land should be sold for more than this, to pay the surplus to the debtor, it was held that this transaction did not constitute a mortgage, because the debtor had no interest in the land at the time of this agreement, and of the purchase made in conse- quence of it. The purchase was not conditional between such pur- chaser and his grantor, who alone was interested in the property at that time. There was no agreement that the land was, under any cir- cumstances, to revert to his grantor. But if one holding a bond or agreement for a deed, after paying a portion of the purchase-money, procure a third person to pay the balance, and the land is conveyed to him as security, he agreeing to reconvey within a certain time on payment of his advances, the transaction is a mortgage.^^ Such holder of the agreement for purchase has an interest in the land by reason of the payment made by him. If the person who procures another to purchase land, upon a verbal understanding that the purchaser will convey it to him upon being reimbursed the amount paid with interest, had no interest in the land either legal or equitable, the transaction is regarded as a mere con- tract of sale, and not a mortgage.'''' § 332. Purchase at judicial sale for benefit of equitable owner. — The rule which converts an absolute deed into a mortgage to conform with the intention of the parties to create a security, applies not only to voluntary conveyances by the grantor, but also to deeds received by purchasers at judicial sales, under an agreement with the debtor that the title should be held as security for a debt or loan, and be defeasible by payment of the money due.^* One who purchases at a foreclosure, execution, or other judicial sale, for the benefit of the equitable owner, and thus acquires the title at a price below the value of the property, may be deemed a trustee of the party for whom he has undertaken the purchase;'^ and parol evidence is admissible to Cal. 387, 139 Pac. 817. See ante 136 Pa. St. 175, 19 Atl. 958; Jones § 323. V. Pierce, 134 Pa. St. 533, 19 Atl. "McClintock v. McClintock, 3 689; Thacker v. Morris, 52 W. Va. Brewst. (Pa.) 76. 220, 43 S. E. 141, 94 Am. St. 928. " Caprez v. Trover, 96 III. 456. '" Green v. Maddox, 97 Ark. 397, "Sandling v. Kearney, 154 N. 134 S. W. 931; Sandfoss v. Jones, 35 Car. 596, 70 S. B. 942. See also San Cal. 481; Nichols v. Otto, 132 111. Jose Safe Deposit Sav. Bank v. Ma- 91, 23 N. E. 411; Union Mut. L. Ins. dera Bank, 121 Cal. 539, 54 Pac. 83; Co. v. Slee, 123 111. 57, 12 N. B. 543, Reitze v. Humphreys, 53 Colo. 171, 13 N. W. 222; McKihben v. Diltz, 125 Pac. 518; Klock v. Walter, 70 138 Ky. 684, 128 S. W. 1082, 137 111. 416; Smith v. Doyle, 46 111. 451; Am. St. 408; Martin v. Martin, 16 McKibben v. Diltz, 138 Ky. 684, 128 B. Mon. (Ky.) 8; Williams v. Will- S. W. 1082; Gaines v. Brockerhoff, iams, 8 Bush (Ky.) 241; McDon- § 332 PAROL EVIDENCE 444 prove that the purchaser agreed to take title merely as security, and to reconvey when the money was refunded, creating in effect a mort- gage.^" Such an agreement, although verbal merely, is not within the statute of frauds. The trust in such case arises or results upon the conveyance. It is a fraud to refuse to execute the agreement, and a court of equity will not permit the grantee to use the statute of frauds as an instrument of fraud. It would seem, however, that there can be no resulting trust unless the person claiming it has some interest in the property. "If A purchases an estate with his own money," says Chancellor Kent, "and takes the deed in the name of B, a trust re- sults to A because he paid the money. The whole foundation of the trust is the payment of the money, and that must be clearly proved. If, therefore, the party who sets up a resulting trust made no payment, he can not be permitted to show by parol proof that the purchase was made for his benefit or on his account. This would be to overturn the statute of frauds."*^ This distinction is illustrated by a case which was twice before the Supreme Court of Illinois. Land having been advertised for sale un- der a senior mortgage, the owner and the junior mortgagee arranged with a third person to bid the land ofE for the amount of both mort- gages, and the Junior mortgagee furnished the money to pay the amount due on the first mortgage, with the understanding that the owner might have further time in which to sell the land and pay ofE the amount due on both mortgages, with interest upon them. The transaction was held to amount to a mortgage, and to entitle the ough V. O'Neil, 113 Mass. 92; Reece «°La Cotts v. La Cotts (Ark.), v. Roush, 2 Mont. 586; Dickson v. 159 S. W. 1111; Nichols v. Otto, 132 Stewart, 71 Nebr. 424, 98 N. W. 111. 91, 23 N. E. 411; McKlbben v. 1085, 115 Am. St. 596; Snyder v. Diltz, 138 Ky. 684, 128 S. "W. 1082, Greaves (N. J.), 21 Atl. 291; Ryan 137 Am. St. 408; Dodge v. Brewer, v. Dox, 34 N. Y. 307, 90 Am. Dec. 31 Mich. 227; Dickson v. Stewart, 696; Brown v. Lynch, 1 Paige (N. 71 Nebr. 424, 98 N. W. 1085, 115 Am. Y.) 147; Davis v. Van "Wyck, 18 N. St. 596; Brown v. Johnson, 115 Wis. Y. S. 885; Sandling v. Kearney, 154 430, 91 N. W. 1016. N. Car. 596, 70 S. E. 942; Wilson "Botsford v. Burr, 2 Johns. Ch. V. Giddings, 28 Ohio St. 554; Adams (N. Y.) 405, followed in Magnus- V. Cooty, 60 Vt. 395, 15 Atl. 150; son v. Johnson, 73 111. 156; Perry Phelan v. Fitzpatrick, 84 Wis. 240, v. McHenry, 13 111. 227 and cases 54 N. W. 614; Swift v. Lumber Co., cited; Ranstead v. Otis, 52 111. 30; 71 Wis. 476, 37 N. W. 441; Hoile v. Holmes v. Holmes, 44 111. 186; Bailey, 58 Wis. 434, 17 N. W. 322. Stephenson v. Thompson, 13 111. But see Lamberson v. Bashore, 167 168; Robertson v. Robertson, 9 Cal. 387, 139 Pac. 817. The same Watts (Pa.) 32; Haines v. O'Con- rule applies in case of a purchase ner, 10 Watts (Pa.) 313, 36 Am. under like circumstances at a tax Dec. 180. sale. Nelson v. Kelly, 91 Ala. 569, 8 So. 690. See ante § 323. 445 WHAT FACTS AEE COKSIDEEED § 333 owner to a conveyance upon payment according to the understand- ing.*^ But when the case was first before the court, it did not appear that the owner had paid any portion of the purchase-money at the sale, and therefore the bill to enforce the trust was dismissed.*^ One who furnishes a purchaser at judicial sale the balance of the purchase-money, and who, upon demanding security, receives a con- veyance, directly or through an intermediary, is a mere mortgagee.** In like manner it may be shown that one purchasing at a sherifE's sale really purchased for the benefit of the debtor, and upon agreement to convey to him upon a subsequent repayment of the amount paid.*^ And one who, upon request of a debtor, takes an assignment of sherifE's certificates on a foreclosure sale, and gives back an agreement to reconvey for the amount paid for the certificates, which obligates the debtor to purchase and pay such amount, is considered a mort- gagee.*® Where a creditor who is beneficiary under a trust deed be- '"Klock v. Walter, 70 111. 416. See Illinois cases cited on rule that absolute conveyance as a security is a mortgage. ''Walter V. Klock, 55 111. 362. In Merrltt v. Brown, 19 N. J. Eq. 286, where the purchaser at a foreclos- ure sale agreed to allow the mort- gagor to repurchase within a given time, it was held that he was not entitled to relief after that time. He had paid nothing, and no trust resulted in his favor. « Dillon v. Dillon, 24 Ky. L. 781, 69 S. W. 1099. "= Smith V. Doyle, 46 111. 451; Beatty v. Brummett, 94 Ind. 76; McElroy v. Allfree, 131 I'owa 112, 108 N. W. 116, 117 Am. St. 412; Foster v. Rice, 126 Iowa 190, 101 N. W. 771; Roberts v. McMahan, 4 Greene (Iowa) 34; Price v. Evans, 26 Mo. 30 (where an agreement to reconvey in such case was regarded as a temporary privilege and not a mortgage, in view of the circum- stances of the case) ; Dickson v. Stewart, 71 Nebr. 424, 98 N. W. 1085, 115 Am. St. 596; Barkelew v. Taylor, 8 N. J. Eq. 206; Levy v. Brush, 45 N. Y. 589; Ryan v. Dox, 34 N. Y. 307, 90 Am. Dec. 696; Sah- ler V. Signer, 37 Barb. (N. Y.) 329; Brownlee v. Martin, 28 S. Car. 364, 6 S. B. 148; Robinson v. Lincoln Sav. Bank, 85 Tenn. 363, 3 S. W. 656; Guinn. v. Locke, 1 Head (Tenn.) 110; Schriber v. Le Clair, 66 Wis. 579, 29 N. W. 570, 889; Howe v. Carpenter, 49 Wis. 697, 6 N. W. 357; Saunders v. Gould, 124 Pa. St. 237, 16 Atl. 807; Logue's Appeal, 104 Pa. St. 136; Heath's Appeal, 100 Pa. St. 1; Jackman v. Ringland, 4 Watts & S. (Pa.) 149; Heister v. Mederia, 3 Watts & S. (Pa.) 384; Fox v. Heffner, 1 Watts & S. (Pa.) 372. These Pennsyl- vania cases are cited and approved in Gaines v. BrockerhofE, 136 Pa. St. 175, 19 Atl. 958, in which case it appeared that a debtor and a creditor, between whom business and friendly relations had existed for a long time, agreed that the creditor, who had obtained a judg- ment, was to bid in the debtor's land at the sheriff's sale, and that on payment of the judgment the land- should be reconveyed to the debtor. The debtor remained in possession of a part of the land without payment of rent, made val- uable improvements, and paid off an incumbrance. Other parts of the land were sold by the creditor, on consultation with and at prices fixed by the debtor. The creditor distinctly recognized this agree- ment by acts, declarations and a course of dealing through a series of years. It was held that the sheriff's deed was a mortgage. » Smith V. Hoff, 23 N. Dak. 37. § 333 PAEOL EVIDENCE 446 comes a purchaser under the form of a sale by the trustee, for a con- sideration equal to the debt and expenses of the sale, -which is far less than the fair value of the land, with an understanding that, if the debtor pays such sum within thirty days, such sale or conveyance is to be void, equity will treat such conveyance as a mere security for the debt, and will allow reasonable additional time to redeem the land, or will subject the land to public sale for payment of the debt, interest and expenses.*'' The trust may be supported, it would seem, even when the person who claims the benefit of the purchase has not actually paid any money toward the purchase, if under an arrangement with the pur- chaser he has abstained from bidding himself, so that the purchaser has obtained the property at a price much below its real value. The person for whom the property was bought under such an arrangement is considered as having an interest in it.** A transaction whereby one who is embarrassed conveys land to another, on his promise to obtain a loan for him to pay his debts from a building association, and apply the rents to the repayment of the loan, and to reconvey the land when the building association shall expire, is a mortgage and not a trust.*' Whenever there is ia fact an advance of money, to be returned within a specified time, upon the security of an absolute conveyance, the law converts the transac- tion into a mortgage, whatever may be the understanding of the parties.'" It does not matter that they may have called it a trust and accordingly executed a paper which they called a declaration of trust.'^ Even a sheriff's sale will be converted into a mortgage when it is made the means to carry out the agreement of the parties to raise money by way of loan, and the loan is made in consequence of it."^ §333. Assignment of a mortgage as collateral. — The same rules that determine the admissibility of parol evidence to establish an ab- solute deed as a mortgage are equally applicable to show that an as- signment of a mortgage, absolute in form, is in fact not a sale, but 135 N. "W. 772, Ann. Cas. 1914C, See also Sandling v. Kearney, 154 1072. N. Car. 596, 70 S. E. 942; Stein- "Thacker v. Morris, 52 "W. Va. ruck's Appeal, 70 Pa. St. 289; 220, 43 S. E. 141. Campbell v. Worthington, 6 Vt. ■"Marlatt v. Warwick, 18 N. J. 448. Eq. 108; Barkelew v. Taylor, 8 N. "Norris v. Schuyler, 4 N. Y. S. J. Eq. 206. 558; Connor v. Atwood, 4 N. Y. S. *» Danzelsen's Appeal, 73 Pa. St. 561. 65. See also Church v. Cole, 36 '^Sweetzer's Appeal, 71 Pa. St. Ind. 34. 264. ""Harper's Appeal, 64 Pa. St. 315. 447 WHAT PACTS AKE CONSIDERED § 334 only collateral security for a loan."^ Such evidence does not vary or contradict the writing, but establishes a limitation inherent in the transaction, and a court of equity vrill restrict it accordingly."'' The chief inquiry always is, whether a debt was created by the transac- tion and continued afterward. The character of security once having attached to the mortgage, this character continues through whatever changes it may undergo in the hands of the assignee; and attaches to money collected upon the mortgage, and to a title that has become absolute by foreclosure."^ § 334. Assignment of contract of purchase. — An assignment of a contract of purchase as security is a mortgage, and when the assignee has completed the payments, and taken a conveyance to himself, the relation of the parties remains the same. Under the principle, once a mortgage always a mortgage, the transaction retains that character until it is either foreclosed or redeemed."^ Although the assignment be absolute in form, it will be construed in equity as a mortgage,"^ if «'Pond V. Eddy, 113 Mass. 149; Briggs V. Rice, 130 Mass. 50. So the assignment of a lease for a term of years. Commercial Bank v. Pritcli- ard, 126 Cal. 600, 59 Pac. 130. See ante § 280 and post § 827. If the debt secured be a bond or other non- negotiable instrument, the second assignee would acquire only the in- terest of the first assignee. Bush V. Lathrop, 22 N. Y. 535. If the mortgage secures a negotiable note, the assignee secured under an ab- solute assignment, though for only a small part of the amount secured by the mortgage, may himself as- sign to another; and this second assignee for value before maturity, without notice of the limited inter- est of the assignor, may enforce it for the full amount. Briggs v. Rice, 130 Mass. 50. United States v. Sturges, 1 Paine (U. S.) 525. See post, § 827. " Pond V. Eddy, 113 Mass. 149. "= Pond V. Eddy, 113 Mass. 149. ^i-Hays V. Hall, 4 Port. (Ala.) 374, 30 Am. Dec. 530; Smith v. Cremer, 71 111. 185; Gamble v. Ross, 88 Mich. 315, 50 N. W. 379; Meigs V. McFarlan, 72 Mich. 194, 40 N. W. 246; Niggeler v. Maurln, 34 Minn. 118, 24 N. W. 369; Hackett v. Watts, 138 Mo. 502, 40 S. W. 113; Burrows v. Hoveland, 40 Nebr. 464, 58 N. W. 947; Scharman v. Schar- man, 38 Nebr. 39, 56 N. W. 704; Malloy V. Malloy, 35 Nebr. 224, 52 N. E. 1097; Lipp v. South Omaha Land Synd., 24 Nebr. 692, 40 N. W. 129; Russell's Appeal, 15 Pa. St. 319; Fredericks v. Corcoran, 12 Wkly. N. Cas. (Pa.) 60; Tant v. Guess, 35 S. Car. 605, 16 S. E. 472, 476 (quoting text); Roddy v. Elam, 12 Rich. Eq. (S. Car.) 343; Bray- ton V. Jones, 5 Wis. 117. See also Andrews v. Cone, 124 U. S. 720, 31 L. ed. 564, 8 Sup. Ct. 686; Laub v. Romans, 131 Iowa 427, 105 N. W. 102; Gilkerson v. Connor, 24 S. Car. 321; Washington Safe Deposit &c. Co. V. Lietzow, 59 Wash. 281, 109 Pac. 1021; Cooper v. Strauber, 50 Ore. 556, 89 Pac. 641 (contract transferred absolutely and not as security). The same rule applies to an assignment of a partial in- terest in such a contract. Northrup V. Cross, Seld. Notes (N. Y.) 111. "Fitzhugh V. Smith, 62 111. 486; Meigs V. McFarlan, 72 Mich. 194, 40 N. W. 246; Crawford v. Osmun, 70 Mich. 561, 38 N. W. 573; Brockway V. Wells, 1 Paige (N. Y.) 617; Love- joy V. Chapman, 23 Ore. 571, 32 Pac. 687. § 335 PAEOL EVIDENCE 448 it was intended as security. The burden of proving that such an as- signment was intended as a mortgage is upon the assignor.'^ Parol evidence is admissible to prove that an assignment of rights under contract for the purchase of land was not an absolute convey- ance, but a mere security; and all facts and circumstances evidencing the mutual intention of the parties will be considered, including their declarations concerning repayment, improvement of the property, and disposition of the rents and profits.^" An informal assignment by a purchaser of land at a judicial sale, to a third person in consideration of the latter having become surety for the payment of the bonds for the purchase-money, may be shown by parol evidence to have been made for the purpose of protecting the surety and not as an absolute conveyance, especially where such assignment did not embrace the entire antecedent parol agreement.^ § 335. Burden of proof — Strictness of proof. — The presumption is that an absolute conveyance is what it purports on its face to be,^ and the burden of proof that the instrument is a mortgage or security for a debt rests upon the grantor or other party who makes that con- tention.' Therefore, he is required to make strict proof of the fact. ''Morris v. Nyswanger, 5 S. Dak. Bachrach v. Bachrach, 111 Va. 232, 307, 58 N. "W. 800. 68 S. E. 985; Beverly v. Davis »°Laub V. Romans, 131 Iowa 427, (Wash.), 140 Pac. 696; Mittlesteadt 105 N. W. 102 and cases cited. v. Johnson, 75 Wash. 550, 135 Pac. * Crockett's Guardian v. Waller, 214; Johnson v. National Bank of 29 Ky. L. 1155, 96 S. W. 860. Commerce, 65 Wash. 261, 118 Pac. ^Rodgers v. Burt, 157 Ala. 91, 47 21; Dempsey v. Dempsey, 61 Wash. So. 226; Rushton v. Mclllvene, 88 632, 112 Pac. 755. Ark. 299, 114 S. W. 709; Ahem v. 'Birmingham Lot Co. v. Taylor McCarthy, 107 Cal. 382, 40 Pac. 482; (Ala.), 62 So. 521; Jones v. Ken- Heaton v. Gaines, 198 111. 479, 64 nedy, 138 Ala. 470, 35 So. 465; Mc- N. B. 1081; Williams v. Williams, Iver v. Roberts (Ark.), 165 S. W. 180 111. 361, 54 N. E. 229; Martinet 273; Strong v. Taylor (Ark.), 158 V. Duff, 178 111. App. 199; Gray v. S. W. 123; Edwards v. Bond, 105 Hayhurst, 157 111. App. 488; Betts Ark. 314, 151 S. W. 243; Grummer V. Betts, 132 Iowa 72, 106 N. W. v. Price, 101 Ark. 611, 143 S. W. 928; Punk v. Harshman, 110 Md. 95; Hays v. Emerson, 75 Ark. 551, 127, 72 Atl. 665; Crane v. Read, 172 87 S. W. 1027; Bryant v. Broadwell, Mich. 642, 138 N. W. 223; Kellogg 140 Cal. 490, 74 Pac. 33; Black Eagle V. Northrup, 115 Mich. 327, 73 N. Oil Co. v. Belcher, 22 Cal. App. 258, W. 230; Harmon v. Grants Pass 133 Pac. 1153; Butsch v. Smith, 40 Banking &c. Co., 60 Ore. 69, 118 Pac. Colo. 64, 90 Pac. 61; Davis v. Hop- 188; Elliott V. Bozorth, 52 Ore. 391, kins, 18 Colo. 153, 32 Pac. 70; Perot 97 Pac. 632; Williams v. McManus, v. Cooper, 17 Colo. 80, 28 Pac. 391, 90 S. Car. 490, 73 S. B. 1038; Shiver 31 Am. St. 258; Armor v. Spauld- V. Arthur, 54 S. Car. 184, 32 S. E. ing, 14 Colo. 302, 23 Pac. 789; Town- 310; McLean v. Ellis, 79 Tex. 398, send v. Peterson, 12 Colo. 491, 21 15 S. W. 394; Hill v. Saunders, 115 Pac. 619; Bohm v. Bohm, 9 Colo. Va. 60, 78 S. E. 559; Batchelder v. 100, 10 Pac. 790; Whitsett v. Ker- Randolph, 112 Va. 296, 71 S. E. 533; show, 4 Colo. 419; Fetta v. Vande- 449 WHAT FACTS AKB CONSIDERED 335 Having deliberately given the transaction the form of a bargain and sale, slight and indeiinite evidence should not be permitted to change its character.* The proof must be clear, unequivocal, and convincing.^ vier, S Colo. App. 419, 34 Pac. 168; Mitchell V. Mason, 65 Fla. 208, 61 So. 579; Elliott v. Connor, 63 Pla. 408, 58 So. 241; Deadman v. Yantis, 230 111. 243, 82 N. E. 592, 120 Am. St. 291; Rankin v. Rankin, 216 111. 132, 74 N. E. 763; Gannon v. Moles, 209 111. 180, 70 N. E. 689; Heaton v. Gaines, 198 111. 479, 64 N. B. 1081, affg. 100 111. App. 26; Martinet V. Duff, 178 111. App. 199; Barto- leth V. Hoerner, 154 III. App. 336; Belinski v. National Brew. Co., 124 111. App. 45; Grubb v. Brendel, 52 Ind. App. 531, 100 N. E. 872; Fort V. Colby (Iowa), 144 N. W. 393; Ridings v. Marengo Sav. Bank, 147 Iowa 608, 125 N. W. 200; Betts v. Betts, 132 Iowa 72, 106 N. W. 928; Jennings v. Demmon, 194 Mass. 108, 80 N. E. 471; Schmidt v. Barclay, 161 Mich. 1, 125 N. W. 729; Miller v. Peter, 158 Mich. 336, 122 N. W. 780; Kellogg v. Northrup, 115 Mich. 327, 73 N. W. 230; Tilden v. Street- er, 45 Mich. 533, 8 N. W. 502; Bright-well v. McAfee, 249 Mo. 562, 155 S. W. 820; Powell v. Crow, 204 Mo. 481, 102 S. W. 1024; Gibson v. Morris State Bank (Mont), 140 Pac. 76; Mealey v. Howard, 79 N. J. Eq. 93, 81 Atl. 1108; Lake v. Weaver (N. J.), 70 Atl. 81; Winters v. Earl, 52 N. J. Eq. 52, 28 Atl. 15; Fuller- ton V. McCurdy, 55 N. Y. 637; North- western Fire &c. Ins. Co. v. Lough, 13 N. Dak. 601, 102 N. W. 160; Beall V. Beall (Ore.), 135 Pac. 185; Har- mon V. Grants Pass Banking &c. Co., 60 Ore. 69, 118 Pac. 188; Elliott V. Bozorth, 52 Ore. 391, 97 Pac. 632; Haines v. Thomson, 70 Pa. St. 434; Todd V. Campbell, 32 Pa. St. 250; Miller v. Price, 66 S. Car. 85, 44 S. E. 584; Commercial &c. Bank v. Cassem (S. Dak.), 145 N. W. 551; Lowry v. Carter, 46 Tex. Civ. App. 488, 102 S. W. 930; Irvin v. John- son, 44 Tex. Civ. App. 436, 98 S. W. 405; McLean v. Ellis, 79 Tex. 398, 15 S. W. 394; Miller v. Ytur- ria, 69 Tex. 549, 7 S. W. 206; Mot- ley V. Carstairs, 114 Va. 429, 76 S. E. 948; Holladay v. Willis, 101 Va. 274, 43 S. E. 616; Dempsey v. Demp- 29 — Jones Mtg. — Vol. I. sey, 61 Wash. 632, 112 Pac. 755; Fridley v. Somerville, 60 W. Va. 272, 54 S. E. 502; Coates v. Marsden, 142 Wis. 106, 124 N. W. 1057. The uncorroborated testimony of the grantor's agent alone held insuffi- cient to prove an agreement that an absolute deed should operate as a trust deed. Gerhardt v. Tucker, 187 Mo. 46, 85 S. W. 552. See ante § 326. ■■Knowles v. Knowles, 86 111. 1; Sharp V. Smitherman, 85 111. 153; Magnusson v. Johnson, 73 111. 156; Smith V. Cremer, 71 111. 185; Price V. Karnes, 59 111. 276; Parmelee v. Lawrence, 44 111. 405; Dwen v. Blake, 44 111. 135; Taintor v. Keyes, 43 111. 332; Bass v. Bell, 64 S. Car. 177, 41 S. E. 893 (vague and Indefi- nite conversation concerning agree- ment to reconvey) ; Hansen v. Abrams, 76 Wash. 457, 136 Pac. 678; Hudkins v. Crim (W. Va.), 78 S. E. 1043. ^Cadman v. Peter, 118 U. S. 73, 30 L. ed. 78, 6 Sup. Ct. 957; Coyle V. Davis, 116 U. S. 108, 29 L. ed. 583, 6 Sup. Ct. 314; Howland v. Blake, 97 U. S. 624, 7 Biss. 40; Peugh V. Davis, 96 U. S. 332, 25 L. ed. 775, 2 MacArth. (D. C.) 14; Bogk V. Gassert, 149 U. S. 17, 37 L. ed. 631, 13 Sup. Ct. 738; Jones v. Brit- tan, 1 Woods. (IT. S.) 667; Satter- field V. Malone, 35 Fed. 445; Trib- ble V. Singleton, 158 Ala. 308, 48 So. 481; Harrison v. Maury, 157 Ala. 227, 47 So. 724; Thornton v. Pinck- ard, 157 Ala. 206, 47 So. 289; Rod- gers V. Burt, 157 Ala. 91, 47 So. 226; Harper v. T. N. Hays Co., 149 Ala. 174, 43 So. 360; Jones v. Kennedy, 138 Ala. 502, 35 So. 465; Downing V. Woodstock Iron Co., 93 Ala. 262, 9 So. 177; Peagler v. Stabler, 91 Ala. 308, 9 So. 157; Knaus v. Dre- her, 84 Ala. 319, 4 So. 287; Cosby V. Buchanan, 81 Ala. 574, 1 So. 898; Mitchell V.' Wellman, 80 Ala. 16; Marsh v. Marsh, 74 Ala. 418; Turner V. Wilkinson, 72 Ala. 361; Parks v. Parks, 66 Ala. 326; Phillips v. Croft, 42 Ala. 477; Parish v. Gates, 29 Ala 254; Mclver v. Roberts (Ark.), 165 § 335 PAROL EVIDENCE 460 S. W. 273; Ford v. Nunnelley (Ark.). 165 S. W. 291; Prickett v. Williams (Ark.), 161 S. W. 1023; La Cotts V. La Cotts (Ark.), 159 S. W. 1111; Gates v. McPeace, 106 Ark. 583, 153 S. W. 797; Edwards v. Bond, 105 Ark. 314, 151 S. W. 243; Grum- mer v. Price, 101 Ark. 611, 143 S. "W. 95; Griffin v. Welch, 88 Ark. 336, 114 S. W. 710; Rushton v. McIU- vene, 88 Ark. 299, 114 S. W. 709; Reynolds v. Blanks, 78 Ark. 527, 94 S. W. 694; Hays V. Emerson, 75 Ark. 551, 87 S. W. 1027; Harman v. May, 40 Ark. 146; Williams v. Cheatham, 19 Ark. 278; Gouts v. Winston, 153 Cal. 686, 96 Pac. 357; Renton v. Gib- son, 148 Cal. 650, 84 Pac. 186; Emery V. Lowe, 140 Cal. 379, 73 Pac. 981; Blair v. Squire, 127 Cal. 18, 59 Pac. 211; Falk v. Wittram, 120 Cal. 479, 50 Pac. 707, 65 Am. St. 184; Ahern V. McCarthy, 107 Cal. 382, 40 Pac. 482; Penney v. Simmons, 99 Cal. 380, 33 Pac. 1121; Mahoney v. Bost- wick (Cal.), 30 Pac. 1020; Henly v. Hotaling, 41 Cal. 22; Davis v. Pur- sel (Colo.), 134 Pac. 107; Baird v. Baird, 48 Colo. 506, 111 Pac. 79; Putsch V. Smith, 40 Colo. 64, 90 Pac. 61; Perot v. Cooper, 17 Colo. 80, 28 Pac. 391, 31 Am. St. 258; Armor v. Spaulding, 14 Colo. 302, 23 Pac. 789; Townsend v. Peterson, 12 Colo. 491, 21 Pac. 619; Whitsett v. Kershow, 4 Colo. 419; Persse v. Atlantic-Pa- cific R. Tunnel Co., 5 Colo. App. 117, 37 Pac. 951; Adams v. Adams, 51 Conn. 544; Walker v. Bank, 8 Houst. (Del.) 258, 14 Atl. 819, 10 Atl. 94; Hall V. Livingston, 3 Del. Ch. 348; Niemau v. Mitchell, 2 App. (D. C.) 195; Hayward v. Mayse, 1 App. (D. C.) 133; Balloch v. Hooper, 6 Mac- Arth. (D. C.) 421; Matthews v. Por- ter, 16 Fla. 466; Bergen v. Johnson, 21 Idaho 619, 123 Pac. 484; Deadman V. Yantis, 230 111. 243, 82 N. B. 592. 120 Am. St. 291 (clear and convinc- ing evidence) ; Gannon v. Moles, 209 111. 180, 70 N. E. 689; Heaton v. Gaines, 198 111. 479, 64 N. E. 1081. affg. 100 111. App. 26; Williams v. Williams, 180 111. 561, 54 N. E. 229; Strong v. Strong, 126 111. 301, 27 111. App. 148; Helm v. Boyd, 124 111. 370, 16 N. E. 85; Darst v. Murphy, 119 111. 343, 9 N. B. 887; Bailey v. Bailey, 115 111. 551, 4 N. B. 394; Workman v. Greening, 115 111. 447; Bartling v. Brasuhn. 102 111. 441; Maher v. Farwell, 97 III. 56; Han- cock V. Harper, 86 111. 445; Low v. Graff, 80 111. 360; Price v. Karnes, 59 111. 276; Knockamus v. Shepard, 54 111. 500; Shays v. Norton, 48 111. 100; Martinet v. Duff, 178 111. App. 199; Hoglund v. Royal Trust Co., 159 111. App. 390; Gray v. Hayhurst, 157 111. App. 488; Hill v. Viele, 128 111. App. 5; Rankin v. Rankin, 111 111. App. 403; May v. May, 55 111. App. 488, affg. 158 111. 209, 42 N. E. 56; Rogers v. Beach, 115 Ind. 413, 17 N. E. 609; Voss v. Bller, 109 Ind. 260, 10 N. E. 74; Cox v. Rat- cliffe, 105 Ind. 374, 5 N. E. 5; Pox V. Fraser, 92 Ind. 265; Lucas v. Hen- drix, 92 Ind. 54; Landers v. Beck, 92 Ind. 49; Herron v. Herron, 91 Ind. 278; Parker v. Huhble, 75 Ind. 580; Conwell v. Evill, 4 Blackf. (Ind.) 67; Cold v. Beh, 152 Iowa 368, 132 N. W. 73; Krebs v. Lauser, 133 Iowa 241, 110 N. W. 443; Betts V. Betts, 132 Iowa 72, 106 N. W. 928; Wright v. Wright, 122 Iowa 549, 98 N. W. 472; McLaughlin v. Royce, 108 Iowa 254, 78 N. W. 1105; Haggerty v. Brower, 105 Iowa 395, 75 N. W. 321; England v. England. 94 Iowa 716. 61 N. W. 920; Baird V. Reinghaus. 87 Iowa 167. 54 N. W. 148; Langer v. Merservey, 80 Iowa 159, 45 N. W. 732; Wright v. Ma- haffey, 76 Iowa 96; Ensminger v. Ensminger, 75 Iowa 89, 39 N. W. 208, 9 Am. St. 462; Corliss v. Con- able, 74 Iowa 58, 36 N. W. 891; Al- len V. Fogg, 66 Iowa 229, 23 N. W. 643; Knight v. McCord, 63 Iowa 429, 19 N. W. 310; Kibby v. Harsh, 61 Iowa 196, 16 N. W. 85; Woodworth V. Carman, 43 Iowa 504; Crawford V. Taylor, 42 Iowa 260; Zuver v. Lyons, 40 Iowa 510; Green v. Turn- er, 38 Iowa 112; Hyatt v. Cochran, 37 Iowa 309; Wilson v. Patrick, 34 Iowa 362; Key v. McCleary, 25 Iowa 191; Holliday v. Arthur, 25 Iowa 19; Childs v. Griswold, 19 Iowa 362; Sunderland v. Sunderland, 19 Iowa 325; Gardner v. Weston, 18 Iowa 533; Cooper v. Skeel, 14 Iowa 578; Atkins V. Faulkner, 11 Iowa 326; Corbit V. Smith, 7 Iowa 60; Noel v. Noel, 1 Iowa 423; Reeder v. Gor- such, 55 Kans. 553, 40 Pac. 897; Winston v. Burnell, 44 Kans. 367, 24 Pac. 477, 21 Am. St. 289; Stoke- ley V. Flanders (Ky.), 128 S. W. 608; Runyon v. Pogue (Ky.). 42 S. 451 WHAT FACTS AEE CONSIDERED § 335 W. 910; Bradley v. Merrill, 88 Maine 319, 34 Atl. 160; Libby v. Clark, 88 Maine 32, 33 Atl. 657; Jameson V. Emerson, 82 Maine 359, 19 Atl. 831; Knapp v. Bailey, 79 Maine 195, 9 Atl. 122; Reed v. Reed, 75 Maine 264; Stinchfield v. Millikeri, 71 Maine 567; Rowell v. Jewett, 69 Maine 293; Richardson v. Wood- bury, 43 Maine 206; Funk v. Harsh- man, 110 Md. 127, 72 Atl. 665; Coch- rane V. Price (Md.), 8 Atl. 361; Far- ringer V. Ramsay, 2 Md. 365; Com- monwealth V. Reading Sav. Bank, 137 Mass. 431; Smith v. Smith, 177 Mich. 268, 143 N. W. 86; Dalton v. Mertz, 173 Mich. 153, 138 N. W. 1055; Rathbone v. Maltz, 155 Mich. 306, 118 N. W. 991; Sowles v. Wil- cox, 127 Mich. 166, 86 N. W. 689; Tilden v. Streeter, 45 Mich. 533, 8 N. W. 502; Johnson v. Van Velsor, 43 Mich. 208, 5 N. W. 223; Case v. Peters, 20 Mich. 298; Stitt v. Rat Portage Lumber Co., 96 Minn. 27, 104 N. W. 561; A. J. Dyer Pine Land Co. v. Whiteman, 92 Minn. 55, 99 N. W. 362; Williams v. Stratton, 18 Miss. 418; Brightwell v. McAfee, 249 Mo. 562, 155 S. W. 820; Rinkel V. Lubke, 246 Mo. 377, 152 S. W. 81; Gerhardt v. Tucker. 187 Mo. 46, 85 S. W. 552; Jones v. Rush, 156 Mo. 364, 27 S. W. 118; Cobb v. Day, 106 Mo. 278, 17 S. W. 323; Worley v. Dryden, 57 Mo. 226; Quick v. Turner, 26 Mo. App. 29; Gibson v. Morris State Bank (Mont), 140 Pac. 76; Gassert v. Bogk, 7 Mont. 585, 19 Pac. 281, 1 L. R. A. 240; O'Hanlon v. Barry, 87 Nebr. 522, 127 N. W. 860; Wilde v. Homan, 58 Nebr. 634, 79 N. W. 546; Huston v. Canfield, 57 Nebr. 345, 77 N. W. 763; Stall V. Jones, 47 Nebr. 706, 66 N. W. 653; Kemp v. Small, 32 Nebr. 318, 49 N. W. 169; Tower v. Fetz, 26 Nebr. 706, 42 N. W. 884, 18 Am. St. 795; Eiseman v. Gallagher, 24 Nebr. 79, 37 N. W. 941; Newman v. Ed- wards, 22 Nebr. 248, 34 N. W. 382; McHugh V. Smiley, 17 Nebr. 626, 24 N. W. 277; Deroin v. Jennings, 4 Nebr. 97; Schade v. Bessinger, 3 Nebr. 140; Wilson v. Richards, 1 Nebr. 342; Fahay v. State Bank, 1 Nebr. (unofe.) 89, 95 N. W. 505; Pierce v. Traver, 13 Nev. 526; Bing- ham V. Thompson, 4 Nev. 224; Reich V. Cochran, 102 N. Y. 827. affd. 139 App. Div. 931, 124 N. Y. S. 1127; Richardson v. Beaber, 62 Misc. 542, 115 N. Y. S. 821; In re Holmes, 79 N. Y. S. 592; Sidway v. Sidway, 7 N. Y. S. 421; Haas v. Nanert, 19 N. Y. St. 472, 2 N. Y. S. 723; Shattuck V. Bascom, 55 Hun (N. Y.) 14; Er- win V. Curtis, 43 Hun (N. Y.) 292; Marks v. Pell, 1 Johns. Ch. (N. Y.) 594; Holmes v. Grant, 8 Paige (N. Y.) 243; Watkins v. Williams, 123 N. Car. 170, 31 S. E. 388; Hlnton v. Pritchard, 107 N. Car. 128, 12 S. E. 242; McNair v. Pope, 100 N. Car. 404, 6 S. E. 234; Smiley v. Pearce, 98 N. Car. 185, 3 S. B. 631; Williams V. Hodges, 95 N. Car. 32; Leggett v. Leggett, 88 N. Car. 108; Moore v. Ivey, 8 Ired. Eq. (N. Car.) 192; Brown v. Carson, Busb. Eq. (N. Car.) 272; Clement v. Clement, 1 Jones Eq. (N. Car.) 184; Adams v. Mclntyre, 22 N. Dak. 337, 133 N. W. 915; Miller v. Smith, 20 N. Dak. 96, 126 N. W. 499; Smith v. Jensen, 16 N. Dak. 408, 114 N. W. 306; Wells r. Geyer, 12 N. Dak. 316, 96 N. W. 289; Forester v. Van Auken, 12 N. Dak. 175, 96 N. W. 301; Little v. Braun, 11 N. Dak. 410, 92 N. W. 800; McGuin V. Lee, 10 N. Dak. 160, 86 N. W. 714; Jasper v. Hazen, 4 N. Dak. 1, 58 N. W. 454; Devore v. Woodruff, 1 N. Dak. 143, 45 N. W. 701; Kemper v. Campbell, 44 Ohio St. 210, 6 N. E. 566; Shaw v. Wal- bridge, 33 Ohio St. 1; Wilson v. Gid- dings, 28 Ohio St. 554; Slutz v. De- senberg, 28 Ohio St. 371; Mathews V. Leaman, 24 Ohio St. 615; Cot- terell v. Long, 20 Ohio 464; Mar- shall V. Stewart, 17 Ohio 356; Stall V. Cincinnati, 16 Ohio St. 169; Miller v. Stokely, 5 Ohio St. 194; Miami Exporting Co. v. Bank of United States, Wright (Ohio) 249; Beall V. Beall, 67 Ore. 33, 135 Pac. 186; Bickel v. Wessinger, 58 Ore. 98, 113 Pac. 34; Hall v. O'Connell, 52 Ore. 164, 95 Pac. 717, decree modi- fied on rehearing 96 Pac. 1070; Os- good V. Osgood, 35 Ore. 1, 56 Pac. 1017; Albany &c. Canal Co. v. Craw- ford, 11 Ore. 243, 4 Pac. 113 ; Barber V. Lefavour, 176 Pa. St. 331, 35 Atl. 202; Wallace v. Smith, 155 Pa. St. 78, 25 Atl. 807, 35 Am. St. 868; Pan- cake V. Cauffman, 114 Pa. St. 113, 7 Atl. 67; Lance's Appeal, 112 Pa. St. 456, 4 Atl. 375; Logue's Appeal, 104 Pa. St. 136; Hartley's Appeal, 103 Pa. St. 23; Nicolls v. McDonald, 101 § 335 PAROL EVIDENCE 452 There must be a clear preponderance of evidence." As a general rule, the uncorroborated testimony of a single witness, whether the Pa. St. 514; Stewart's Appeal, 98 Pa. St. 377; Rowand v. Finney, 96 Pa. St. 192; Haines v. Thompson, 70 Pa. St. 434; Todd v. Campbell, 32 Pa. St. 250; Porter r. Mayfleld, 21 Pa. St. 263; Banks v. Frith, 97 S. Car. 362, 81 S. E. 677; Williams v. McManus, 90 S. Car. 490, 73 S. E. 1038; Miller V. Price, 66 S. Car. 85, 44 S. E. 584; Arnold v. Mattison, 3 Rich. Eq. (S. Car.) 153; Sellers v. Sellers (Tenn.), 53 S. W. 316; Slawson v. Denton (Tenn.), 48 S. W. 350; Nick- son V. Toney, 3 Head (Tenn.) 655; Haynes v. Swann, 6 Heisk. (Tenn.) 560; Lane t. Dickerson, 10 Yerg. (Tenn.) 373; Hickman v. Quinn, 6 Yerg. (Tenn.) 96; Hammonds v. Hopkins, 3 Yerg. (Tenn.) 525; Over- ton V. Bigelow, 3 Yerg. (Tenn.) 513; Harrison v. Hogue (Tex. Civ. App.), 136 S. W. 118; Frazer v. Seureau (Tex. Civ. App.), 128 S. "W. 649; Stringfellow v. Braselton, 54 Tex. Civ. App. 1, 117 S. W. 204; Rotan v. Turner, 46 Tex. Civ. App. 534, 102 S. W. 932; Lowry v. Carter, 46 Tex. Civ. App. 488, 102 S. W. 930; Irvin V. Johnson, 44 Tex. Civ. App. 436, 98 S. "W. 405; Goodbar v. Bloom, 43 Tex. Civ. App. 434, 96 S. W. 657; Miller v. Yturria, 69 Tex. 549, 7 S. W. 206; Brewster v. Davis, 56 Tex. 478, 59 Tex. 93; Markham v. Ca- rothers, 47 Tex. 21; Hughes v. De- laney, 44 Tex. 529; Gazley v. Her- ring (Tex.), 17 S. W. 17; Hill v. Saunders, 115 Va. 60, 78 S. E. 559; Motley V. Carstairs, 114 Va. 429, 76 S. B. 948; Batchelder v. Randolph, 112 Va. 296, 71 S. E. 533; Bachrach v. Bachrach, 111 Va. 232, 68 S. B. 985; Holladay v. Willis, 101 Va. 274, 43 S. E. 616; Edwards v. Wall, 79 Va. 321; Beverly v. Davis (Wash.), 140 Pac. 696; Hansen v. Abrams, 76 Wash. 457, 136 Pac. 678; Mittle- steadt V. Johnson, 75 Wash. 550, 135 Pac. 214; Hoover v. Bouffleur, 74 Wash. 382, 133 Pac. 602; Kegley v. Skillman, 68 Wash. 637, 123 Pac. 1081; Johnson v. National Bank, 65 Wash. 261, 118 Pac. 21; Washington Safe Deposit &c. Co. v. Lietzow, 59 Wash. 281, 109 Pac. 1021; Sahlin v. Gregson, 46 Wash. 452, 90 Pac. 592; Reynolds v. Reynolds, 42 Wash. 107, 84 Pac. 579; Way v. Mayhugh, 57 W. Va. 175. 50 S. E. 724; Kerr v. Hill, 27 W. Va. 576; Vangilder v. Hoffman, 22 W. Va. 1; Becker v. Howard, 75 Wis. 415, 44 N. W. 755; McCormick v. Herndon, 67 Wis. 648, 31 N. W. 303; Schriber v. Le Clair, 66 Wis. 579, 29 N. W. 570, 889; Rockwell V. Humphrey, 57 Wis. 410, 15 N. W. 394; Sable v. Maloney, 48 Wis. 331, 4 N. W. 479; Smith v. Crosby, 47 Wis. 160, 2 N. W. 104; Butler v. Butler, 46 Wis. 430, 1 N. W. 70; McClellan v. Sanford, 26 Wis. 595; Kent v. Lasley, 24 Wis. 654; Harrison v. Bank, 17 Wis. 340; Fowler v. Adams, 13 Wis. 458; Lake V. Meacham, 13 Wis. 355; Newton v. HoUey, 6 Wis. 592; Hunter v. Maanum, 78 Wis. 656, 48 N. W. 51. The rule stated in these cases is as follows: "To convert a deed abso- lute into a mortgage, the evidence should be so clear as to leave no substantial doubt that the real in- tention of the parties was to execute a mortgage." The rule in Texas is an exception to the general rule. It is held to be error to require clear and satisfactory proof. Wallace v. Berry (Tex.), 18 S. W. 595. This rule is applicable only to cases in which it is sought to establish a trust upon the declarations or evi- dence of the trustee, as in Moreland V. Barnhart, 44 Tex. 275. It is error to instruct a jury that they can not find a deed absolute on its face to be a mortgage, unless the fact that it was so intended should be estab- lished by two witnesses, or by one witness and strong corroborating circumstances. Pierce v. Fort, 60 Tex. 464. See ante § 260. "Nelson v. Wadsworth (Ala.), 61 So. 895; Morton v. Allen (Ala.), 60 So. 866; Hopper v. Jones, 29 Cal. 18; Eames v. Hardin, 111 111. 634; Miner v. Hess, 47 111. 170; Knight v. Mc- Cord, 63 Iowa 429, 19 N. W. 310; Gardner v. Weston, 18 Iowa 533; Winston v. Burnell, 44 Kans. 367, 24 Pac. 477, 21 Am. St. 289; Stock- bridge Iron Co. V. Hudson Iron Co., 107 Mass. 290; Btheridge v. Wisner, 86 Mich. 166, 48 N. W. 1087; Mc- Millan V. Bissell, 63 Mich. 66, 29 N. 453 WHAT FACTS ARE COKSIDEEED § 335 grantor or another, is not sufficient to convert an absolute deed into a mortgage.^ The unsupported testimony of the plaintiff, contradicted by the defendant, is insufficient to convert an absolute deed into a mortgage.* The fact that the grantor understood the transaction to be a mortgage is not alone sufficient to prove it to be so.'' If the evi- dence is doubtful and unsatisfactory, if it fails to overcome the strong presumption arising from the terms of the absolute deed by testimony entirely clear and convincing beyond reasonable controversy, the deed must have effect in accordance with its terms. ^° "The security of titles and sound public policy require that a party alleging that a deed, ab- solute in form, is nevertheless a mortgage, should show it by very sat- isfactory evidence ; and where he attempts to show it by oral evidence, his proof should amount to more than a mere guess or surmise, or even inferences which are just as consistent with one theory of the deed as the other."^^ When there is a substantial conflict in the evi- dence, a mere preponderance is not sufficient to warrant a change in the character of a deed or other solemn instrument of writing. ^^ One who has assigned a contract for the purchase of real estate, and W. 737; Sloan v. Becker, 34 Minn. 491, 26 N. W. 730; Harmon v. Grants Pass Banking &c. Co., 60 Ore. 69, 118 Pac. 188; McCIellan v. Sanford, 26 Wis. 595; Kent v. Lasley, 24 Wis. 654. ' Hubbard v. Stetson, 3 MacArthur (D. C.) 113; Blake v. Taylor, 142 111. 482, 32 N. E. 401; Arnold v. Matti- son, 3 Rich. Eq. (S. Car.) 153; Muckelroy v. House, 21 Tex. Civ. App. 673, 52 S. W. 1038; Hamilton V. Flume, 2 Tex. Unrep. Cas. 694. See also Beckett v. Allison, 188 Pa. St. 279, 314, 41 Atl. 623; Yates v. Caswell (Tex. Civ. App.), 126 S. W. 914; Pierce v. Fort, 60 Tex. 464. ' Blake v. Taylor, 142 111. 482, 32 N. E. 401. "Andrews v. Hyde, 3 Cliff. (U. S.) 516; Jones v. Brittan, 1 Woods (U. S.) 667; Douglass v. Moody, 80 Ala. 61; tleeder v. GlDrsuch, 55 Kans. 553, 40 Pac. 897; Phoenix v. Gardner, 13 Minn. 430; Holmes v. Fresh, 9 Mo. 201; Wilson v. Parshall, 129 N. Y. 223, 29 N. E. 297; Jones v. Jones, 17 N. Y. S. 905. ^^Howland v. Blake, 97 U. S. 624; Shattuck V. Bascom, 9 N. Y. 934. Per Barker, P. J. "Many of the cases hold that, upon the unsup- ported evidence of an interested witness, a decree declaring a deed absolute in terms to be only an in- strument for the security of a debt can not be sustained. In other cases it is held that, where the evidence of a party rests chiefly in the evi- dence of one witness, and that is disputed by a witness equally cred- ible, a case for relief is not made out." Thus an absolute deed will not be declared a mortgage on the "unsupported testimony of the grantor. Adams v. Pilcher, 92 Ala. 474, 8 So. 757; Wilson v. Parshall, 129 N. Y. 223, 29 N. E. 297, affg. 7 N. Y. S. 479. As stated by Mr. Justice Graves in Tilden v. Streeter, 45 Mich. 540, 8 N. W. 502, "a party seeking to modify the operation of the instrument, and prove himself entitled, against the terms of his own deed, to an equity of redemp- tion, is not only bound to make out that the transaction was, in truth and justice, nothing more than the giving of security, but is required to do so by a force of evidence suf- ficient to command the unhesitating assent of every reasonable mind." "Wilson V. Parshall, 129 N. Y. 223, 29 N. E. 297, per Earl, J. " Perot V. Cooper, 17 Colo. 80, 28 Pac. 391. 335 PAROL EVIDENCE 454 permitted the assignee to take an absolute deed from the owner, can not be allowed to redeem upon an allegation, without proof, that the transaction was ia fact a mortgage, and that he assented to it upon the confidence that it would be so treated by his creditor.^^ Testi- mony of admissions by the grantee, made subsequently to the con- veyance, that the conveyance was intended as a mortgage, may, with corroborating circumstances, be suflBcient to establish the fact;'^* but alone is not sufficient.^° When, however, it is once admitted that the deed was made merely to secure a debt, and the question is, what is the amount of the debt, the burden is upon the grantee fo show it.^° "Hogarty v. Lynch, 6 Bosw. (N. Y.) 138. "Bentley v. Phelps, 2 Woodb. & M. (U. S.) 426; Mclntyre v. Hum- phreys, 1 Hoff. Ch. (N. Y.) 31. "RosB V. Brusie, 64 Cal. 245; Nicolls V. McDonald, 101 Pa. St. 514; Todd t. Campbell, 32 Pa. St. 250. '» Freytag v. Hoeland, 23 N. J. Eq. 36. It was admitted that the deed, though absolute on Its face, was given as security only, and there- fore a mortgage. The plaintiff, who sought to recover the property, claimed that it was security for $700 only; the defendant claimed that it was security not only for that sum, but for previous advances of about $5,300. The plaintiff de- nied that these advances were made to him or on his credit, and said that the advances were made to his wife and daughter for a different consideration. The circumstances of the case, in the language of the chancellor, are "novel and peculiar." Hoeland was a butcher, and fol- lowed his trade at Newark, and afterward in California and Nevada. He also speculated in mining rights in the latter states. He prospered and had money. Freytag was a car- penter; he worked at his trade in Newark, where Hoeland boarded for a time in his family. At this time either Mrs. Freytag proposed to Hoeland, or Hoeland proposed to Mrs. Freytag, to elope together. Each said the offer came from the other, and it was virtuously rejected by the party testifying. The result was that Hoeland changed his boarding place, and Mr. Freytag, in an encounter with him, got a wound over his eye, the scar of which he still bore. But notwithstanding these inharmonious circumstances, Hoeland was again received as a boarder by Mrs. Freytag, with whom he was on very friendly and confidential terms. Katinka, the daughter of the Freytags, was growing up toward womanhood, and Hoeland took a fancy to her, and proposed to make her his wife when the proper time should arrive. In this 'he had the support of the mother. Katinka submitted passively, though it did not appear that she ever engaged herself to him. Freytag was an easy-going, submissive man, who did not get on in the world. Kat- inka had some talent for music, and took lessons to fit her for taking part in concerts and the opera. Hoeland, at the solicitation of the mother and daughter, furnished them with money. In 1868 the Freytags went to Europe; Freytag returned, but the mother and daugh- ter went to Milan, and remained for Katinka's musical education. There Hoeland sent money to them, at the earnest request of the daugh- ter, who in one of her letters almost promised to come back to him at San Francisco. The correspondence and all the arrangements were con- ducted without consulting Freytag. "It would not be strange," said the chancellor, "if a young woman of promise, however humble her or- igin, who had taken lessons of mas- ters of music, especially in Italy, 455 WHAT FACTS ARE CONSIDERED 336 The general rule above stated is not, however, applied with uni- form strictness to all cases. Wherever the transaction is between par- ties whose relations are of a close fiduciary character, the party seeking to have the absolute deed declared to be a mortgage is not held to the same exactitude and strictness of proof, nor is the testimony offered in support of the bill to be viewed with the same scrutiny, as in those cases where the parties deal with each other at arms' length.^^ Whether the evidence is of such character and strength as to show that the absolute deed was intended as a mortgage is a question for the trial court to determine,^* but the determination of facts and cir- cumstances as evidence of intention to create a security, has frequently been held a question for the jury, particularly where the evidence is conflicting.^^ '§ 336. Rights of grantor — Payment prerequisite to redemption. — When it has been proved that a deed absolute in form was intended as a mortgage, the respective rights of the parties will be determined by the law governing the relations between mortgagor and mort- where the art has reached its high- est cultivation, should show some reluctance to fulfil an engagement made for her in childhood, and marry a practical butcher far older than herself, and live with him in Nevada or California. Some indica- tions of this feeling, or perhaps a conclusion that mother and daugh- ter had been using his attachment and hopes to obtain his money with- out any regard to fulfilling his ex- pectations, seemed to have aroused Hoeland to his situation, and to have changed his course regarding them." In the summer of 1869, Hoeland was in Jersey City; Freytag saw . him, and, being pressed for money, applied to him for a loan, which was at first refused. Afterward he consented to advance $700, on re- ceiving an absolute conveyance of a house and lot subject to a mort- gage of $8,000, but worth twice that sum; and such was the arrange- ment made. Hoeland claimed that the conveyance secured the ad- vances to the mother and daugh- ter, who were still in Europe. The chancellor held that the burden was upon the grantee to show that more than the $700 was secured; and that there was no proof that any further sum was secured. "Lindsay v. Lindsay (Colo.), 27 Pac. 877, per Bissell, J.; Bohm v. Bohm, 9 Colo. 100, 10 Pac. 790. " Brlson v. Brison, 90 Cal. 323, 27 Pac. 186; Cochrane v. Wilson (Tex.), 160 S. W. 593; Fridley v. Somerville, 60 W. Va. 272, 54 S. E. 502; Mahoney v. Bostwick, 96 Cal. 53, 30 Pac. 1020. In the latter case De Haven, J., said: "That court ought always to be governed, in weighing the evidence and reaching its conclusion as to the facts, by this rule, which requires the plain- tiff In an action like this to present a case free from doubt, and, unless the evidence is such as to leave in the mind of the trial judge a clear and satisfactory conviction that the instrument which in form is a deed was intended by all the parties thereto as a mortgage, the finding should be against the plaintiff." ^° Tappen v. Eshelman, 164 Ind. 338, 73 N. E. 688; Culbreth v. Hall, 159 N. Car. 588, 75 S. E. 1096; Kell- nerv. Randle (Tex. Civ. App.), 165 S. W. 509; Bradford v. Malone, 33 Tex. Civ. App. 349, 77 S. W. 22. See also Reich v. Dyer, 180 N. Y. 107, 72 N. E. 922; Johnson v. "Woodworth, § 336 PAROL EVIDENCE 456 gagee.^" The grantor has the right to redeem, by paying the amount secured with interest, and may enforce the right at any time before foreclosure, even after the time stipulated for payment, and although the conveyance provides for forfeiture for nonpayment at such time.^* The grantor on redeeming or seeking a reconveyance must comply with his agreement, and pay the amount due.^^ On the principle that "he who seeks equity must do equity," a grantor, who seeks to re- deem land from a conveyance made to secure the performance of a verbal agreement to pay a certain sum of money in gold coin, should be held to a full compliance with the terms of his agreement, as a con- dition precedent to a reconveyance.^^ On this ground it has been held that, although a loan upon land has been put in the form of an absolute deed and an agreement to re- convey, for the purpose of covering up a contract for usurious inter- est, the mortgagor is not entitled to the statutory penalties or for- feitures for usury, but must pay on redeeming the amount of the original loan, with legal interest.^* Equity will not relieve a grantor on his own application from the consequences of an absolute deed made to protect his property from his creditors.^^ The grantor by absolute deed may sell and convey or mortgage his equity of redemption; and subsequent purchasers or incumbrancers may redeem.^° In the absence of an express agreement in regard to possession, it 134 App. Div. 715, 119 N. Y. S. 146; Upon payment of tlie debt and satis- Brown V. Grossman, 206 N. Y. 471, faction of conditions, the grantor is 100 N. E. 42. entitled to a reconveyance of the ^ Sheppard v. Wagner, 240 Mo. property. Farrls v. King, 27 Ark. 409, 144 S. W. 394, 145 S. W. 420; 404. Carr V. Carr, 52 N. Y. 251; Ylngling ^ White v. Lucas, 46 Iowa 319; v. Redwine, 12 Okla. 64, 69 Pac. 810. Westfall v. Westfall, 16 Hun (N. Y.) ^'^ Carter v. Gunn, 64 Ga. 651; Al- 541; Kemper v. Campbell, 44 Ohio len v. Frost, 62 Ga. 659; Phlnizy St. 210, 6 N. B. 566. Payment must V. Clark, 62 Ga. 623; West v. Ben- include all amounts due the grantee, nett, 59 Ga. 507; Jackson v. Lynch, Saunders v. Savage (Tenn.), 63 S. 129 III. 72, 21 N. E. 580, 22 N. E. W. 218. 246; Roberts v. Richards, 36 111. ^Cowing v. Rogers, 34 Cal. 648; 339; Keithley v. Wood, 47 111. App. Jeffery v. Robbins, 167 111. 375, 47 102, afed. 151 111. 566, 38 N. E. 149, N. E. 725. 42 Am. St. 265; Thompson V. Banks, =*Heacock v. Swartwout, 28 III. 3 Md. Ch. 138; Doty v. Norton, 133 291. App. Div. 106, 117 N. Y. S. 793; ^Arnold v. Mattison, 3 Rich. Eq. BaldufC V. Griswold, 9 Okla. 438, 60 (S. Car.) 153; Hassam v. Barrett, Pac. 223; England v. Codrington, 1 115 Mass. 256. See ante § 283. Eden 169, 28 Eng. Reprint 649. The "= Hillock v. Frizzle, 10 N. Brunsw. grantor can require only a recon- 655; O'Reilly v. Wilkes, 8 Can. L. veyance of the interest originally J. 135. See also Moore v. Universal conveyed by the mortgage. Hall v. Elevator Co., 122 Mich. 48, 80 N. W. Arnott, 80 Cal. 348, 22 Pac. 200. 1015. 457 WHAT FACTS AEE CONSIDEEBD § 337 has generally been held that the grantor can not hold possession against the demand of the grantee; since an absolute deed, though given as security, must be regarded as vesting both the legal title and right of possession in the grantee.^' The grantee, as a mortgagee in possession, must account to the grantor for rents and profits.^* § 337. Rights of judgment creditors. — A grantor by absolute deed has no interest in the land, at law; he has only an equity to redeem by performing the agreement of defeasance; and such an equity is hot an estate in the land to which a judgment lien can attach, or which can be sold under execution at law.^" But in equity, a judg- ment creditor may show the character of his debtor's conveyance for the purpose of rendering the equity of redemption available as assets for satisfaction of his demands.**" A judgment creditor having purchased his debtor's land at a sale under execution issued upon his judgment, may show that an absolute conveyance of the land made by his debtor was in fact a mortgage, and he is entitled to a conveyance of it upon paying any balance due upon the mortgage.^^ And without having made a purchase upon execution. "'Richards v. Crawford, 50 Iowa 494; Burdick v. Wentwortli, 42 Iowa 440; Jeffery v. Hursh, 42 Mich. 563, 4 N. W. 303; Bennett v. Robinson, 27 Mich. 26. But see Le Conte v. Pennock, 61 Kans. 330, 59 Pac. 641; Connolly v. Giddings, 24 Nebr. 131. 37 N. W. 939; Murray v. "Walker, 31 N. Y. 399. In Indiana it is held that the grantee under an absolute deed has only a prima facie right to pos- session, but proof that the deed is a mortgage is a good defense to an action to enforce such right. Cox V. Ratclifee, 105 Ind. 374, 5 N. E. 5. =« Ha worth v. Taylor, 108 111. 275; Tedens v. Clark, 24 111. App. 510; Kinkead T. Peet, 153 Iowa 199, 132 N. W. 1095; Fultz v. Peterson, 78 Miss. 128, 28 So. 829. '"Loring v. Melendy, 11 Ohio 355; Baird v. Kirtland, 8 Ohio 21; Mc- Cabe V. Thompson, 6 Grant Ch. (U. C.) 175; McDonald v. McDonell, 2 Grant Err. & App. (U. C.) 393. But see Parrott v. Baker, 82 Ga. 364, 9 5 W 1068 =°r)e Wolf V. Strader, 26 111. 225, 79 Am. Dec. 371; Allen v. Kemp, 29 Iowa 452; Macauley v. Smith, 132 N. Y. 524, 30 N. E. 997; Manufac- turers' Bank v. Rugee, 59 Wis. 221, 18 N. W. 251. See also Andrus v. Burke, 61 N. J. Eq. 297, 48 Atl. 228. It has been held that the grantee in an absolute deed intended as a mort- gage, must carefully and truly dis- close the nature . of his security, when questioned by a creditor of the mortgagor, and an untruthful, material statement, or unfair con- cealment will postpone such secur- ity to that of a subsequent attach- ing creditor. Geary v. Porter, 17 Ore. 465, 21 Pac. 442. Such a con- veyance may also work a fraud upon other creditors of the grantor, by putting his property out of their reach, or hindering them in en- forcing their claims, and thus be voidable as to them. Fuller &c. Co. v. Gaul, 85 111. App. 500, affd. 185 111. 43, 56 N. Y. 1077. See also Lynch V. Raleigh, 3 Ind. 273. But a deed made to defraud creditors may be avoided only by them, and equity will not aid the grantor himself, but will refuse to declare his deed a mortgage. Kitts v. Willson, 130 Ind. 492, 29 N. E. 401; Patnode v. Dar- veau, 112 Mich. 127, 70 N. W. 439, 71 N. W. 1095. "Judge V. Reese, 24 N. J. Eq. 387; Vandegrift v. Herbert, 18 N. J. Eq. § 338 PAEOL EVIDENCI) 458 a creditor of the grantor may show that such absolute deed is really a mortgage, and may enforce a judgment against the property or the proceeds of it to the extent of the surplus, after satisfying the debt for the security of which it was conveyed.'" A judgment obtained against the grantor by a creditor, after the making of an absolute deed which is really a mortgage, becomes a lien upon the equity of redemption, just as it would if a formal mortgage had been given.'* On the other hand, a creditor of the grantee who levies upon land held by the latter under an absolute deed which is really a mortgage,, can obtain no higher or better title than the grantee himself had. The mortgagor is entitled to redeem the land upon payment of the mort- gage debt.'* § 338. Parol waiver of defeasance by mortgagor. — ^By an inde- pendent parol agreement the mortgagor may waive his rights un- der a deed which was originally in effect a mortgage, and if this agreement is supported by a consideration, or is partially acted on by the parties or fully performed, the mortgagor is estopped to deny the grantee's absolute title.'° The grantee has the legal title already, and the grantor may cut off all right to redeem, by a receipt of an adequate consideration therefor and an informal release of all his interest in the property.'* But the new agreement must not only 466; Clark v. Condit, 18 N. J. Eq. absolute conveyance'wlth an option 358; Van Buren v. Olmstead, 5 to repurchase. On such Issues the Paige (N. Y.) 9. intention of the parties and the fair- '^ Dwen V. Blake, 44 111. 135 ; De ness of the transaction will be con- Wolf V. Strader, 26 111. 225, 79 Am. sidered. The form of conveyance is Dec. 371; Allen v. Kemp, 29 Iowa not controlling, and parol evidence 452. is admissible to show the real agree- " Christie v. Hale, 46 111. 117. ment. Miller v. Smith, 20 N. Dak. ** Leech v. Hillsman, 8 Lea 96, 126 N. W. 499. But see Cramer (Tenn.) 747. V. Wilson, 202 111. 83; Van Keuren =» McMillan t. Jewett, 85 Ala. 476, v. McLaughlin, 19 N. J. Eq. 187; 5 So. 145; Deadman v. Yantis, 230 UUman v. Devereux, 46 Tex. Civ. 111. 243, 82 N. E. 592; Cramer v. App. 459, 102 S. W. 1163. A deed Wilson, 202 111. 83, 66 N. E. 869; executed as a mortgage can not pass Haggerty v. Brower, 105 Iowa 395, title to the mortgagee by the party 75 N. W. 321; Vennum v. Babcock, subsequently canceling the evidence 13 Iowa 194; SchoU v. Hopper, 134 of indebtedness, and making a parol Ky. 83, 119 S. W. 770; Sears v. Gil- agreement that the deed shall con- man, 199 Mass. 384, 85 N. E. 466; vey the absolute title. Keller v. Kir- Trull V. Skinner, 17 Pick. (MSss.) by, 34 Tex. Civ. App. 404, 79 S. W. 213; Shaw v. Walbridge, 33 Ohio St. 82. See ante §§ 251, 252, and post 1; Jordan v. Katz, 89 Va. 628, 16 § 711. S. E. 866; Phelps v. Seely, 22 Gratt. '•Scanlan v. Scanlan, 134 111. 630, (Va.) 573. See also Hutchinson t. 25 N. E. 652. "Where a mortgage is Page, 246 111. 71, 92 N. E. 571. A in the form of an absolute convey- security contract in the nature of ance, a bona fide agreement between a mortgage may be changed into an the parties to vest the entire estate 459 WHAT FACTS AEE CONSIDERED § 338 be founded upon adequate consideration, but must be fair and rea- sonable in its terms and free from fraud and undue influenee.^^ A subsequent parol agreement that the grantor shall not redeem, but that his deed to the grantee shall be indefeasible, must be clearly established by the evidence to cut off the right of redemption. If the evidence of such settlement and agreement is conflicting, with the weight in favor of the grantor, the relief will be granted on payment of the debt and interest in fuU.^^ The person having the right to redeem may release his right by abandoning possession and all claim to the property, and his aban- donment may be regarded as a foreclosure by the mortgagee in whom is the legal title.^^ An absolute deed which was in effect a mortgage was subject to a prior trust deed which the grantee had not assumed to pay. The grantor afterward informed the grantee that he could not pay this incumbrance, and that he elected to abandon the property, and the grantee thereupon bought in the property at the trustee's sale. He acquired good title thereby, since, after the grantor elected to abandon the property, there was no longer any confidential relation between them.''" A mortgagor who abandons his right to redeem from an absolute conveyance, and elects to treat the conveyance as an absolute deed instead of a mortgage, is bound by such election, and can not after- ward redeem.''^ He may also verbally waive his right of redemption in favor of another person, and after a long acquiescence in the trans- action, the other in the meantime having redeemed the land and improved it, he will not be allowed to redeem from him.*^ When the in the mortgagee will be sustained, "Adams v. Cooty, 60 Vt. 395, 15 and the execution of a formal deed Atl. 150. will not be required, provided the *" Turner v. Littlefleld, 142 111. 630, transaction is fair, and not attended 32 N. B. 522. with oppression or fraud or undue " Maxfield v. Patchen, 29 111. 39. influence and the mortgagee has not " Carpenter v. Carpenter, 70 111. availed himself of his position to 457. The plaintiff in this case, hav- obtain an advantage over the mort- ing been unsuccessful in a love mat- gagor." Per Baker, J. See also Sey- ter with a girl in the neighborhood, mour V. Mackay, 126 111. 341, 18 N. started for California, and when he E. 552; Carpenter v. Carpenter, 70 reached Chicago, on the road, he 111. 457; West v. Reed, 55 111. 242. wrote to his father to redeem the "McMillan v. Jewett, 85 Ala. 476, land and it should be his; that he 5 So. 145; Cassem v. Heustis, 201 would never return from California 111. 208, 66 N. E. 283, 94 Am. St. 160. until he was able to set his heel See also Miller v. Smith, 20 N. Dak. up the neck of the Gnil tribe 96, 126 N. "W. 499; Wagg v. Herbert, (relatives of the girl). The father 19 Okla. 525, 92 Pac. 250. See ante redeemed the land, sold it, and in- §§ 251, 252. vested the proceeds in other land. ^Marshall v. Williams, 21 Ore. It was held that the father was not 268, 28 Pac. 137 liable to account, especially after § 339 PAEOL . EVIDENCE 460 grantee goes into possession and makes valuable improvements, and with the knowledge of the grantor, sells the property, the latter is es- topped to claim that his deed was a mortgage.*^ In any event redemp- tion must be made within the time allowed by the statute of limita- tions.** § 339. Grantee's rights against third persons. — As to third per- sons the grantee may exercise all the rights of an absolute owner*^ whether the transaction be a mortgage or a conditional sale. A bona fide purchaser takes the land discharged of the grantor's equity of redemption. A creditor of the grantee may levy upon the land as the grantee's property.*^ If the grantee makes a mortgage of such land to one who has no notice that his title is not absolute in fact as well as in form, the grantor is of course estopped to claim title as against such mortgagee. The grantor's right of redemption is subject to such mortgage.*^ In such ease the grantee is held out to the world as the owner of the land, and innocent persons are at liberty to deal with him as such owner. The rule in equity that, where one of two inno- cent persons must suffer by the fraud of a third person, he who trusted the third person and placed the means in his hands to commit the wrong must bear the loss, is applicable. The grantor, in order to main- tain an action for rent, can not show that his deed was intended as a mortgage, and that he is entitled to the position and rights of a mort- gagor in possession.*^ A grantee by an absolute deed which shows no defeasance, nor any right to one, is entitled to the possession of the property in law;*' for the mortgagor at most has only an equity. But if the papers show a a lapse of eighteen years unex- Groton Savings Bank v. Batty, 30 plained. N. J. Eq. 126, 19 Alb. L. J. 340; ■■' Woodworth v. Carman, 43 Iowa Meehan v. Forrester, 52 N. Y. 277; 504; Pratt v. Jarvls, 8 Utah 5, 28 Fiedler v. Darrin, 59 Barb. (N. Y.) Pao. 869. 651; Westfall v. Westfall, 16 Hun "Westfall V. Westfall, 16 Hun (N. (N. Y.) 541; Kemper v. Campbell, Y.) 541. 44 Ohio St. 210, 6 N. B. 566; Pan- ^= Wyman V. Babcock, 2 Curtis (U. cake v. Cauffman, 114 Pa. St. 113, S.) 386; Turner v. Wilkinson, 72 7 Atl. 67; Sweetzer v. Atterbury, Ala. 361; Pico v. Gallardo, 52 Cal. 100 Pa. St. 18; Hills v. Loomis, 42 206; McCarthy v. McCarthy, 36 Vt. 562. Conn. 177; Jenkins v. Rosenberg, "Parrott v. Baker, 82 Ga. 364, 9 105 111. 157; Weide v. Gehl, 21 Minn. S. E. 1068. 449; Gentry v. Gamblin, 79 Miss. "'Turman v. Bell, 54 Ark. 273, 15 437, 28 So. 809; Digby v. Jones, 67 S. W. 886; Lawrence v. Guaranty Mo. 104, 18 Am. L. Reg. (N. S.) Invest. Co., 51 Kans. 222, 32 Pac. 132; Gruber v. Baker, 20 Nev. 453, 816. 23 Pac. 858; Brophy Min. Co. v. '"Abbott v. Hanson, 24 N. J. L. Erophy &c. Min. Co., 15 Nev. 101; 493 Frink v. Adams, 36 N. J. Eq. 485; "Jeffery v. Hursh, 42 Mich. 563, 461 WHAT FACTS ARE CONSIDEEED § 339 defeasance, or an arrangement which amounts to a defeasance, and the mortgagor is left in possession, the mortgagee can not, in a state where the mortgagor is entitled to possession until foreclosure, recover possession.'" A mortgagor who has delivered possession to the gran- tee can not recover possession from him without paying the debt and redeeming the mortgage. But if the mortgagor has not delivered pos- session to the grantee, he can recover the land from one who is not the grantee and does not hold under him, without redeeming.'^ A purchaser who has knowledge that his grantor, though holding the estate by_ an absolute conveyance, nevertheless is in fact only a mortgagee, acquires a defeasible estate only, and it is defeasible upon the same terms as it was in the hands of the original grantee.'^ Pos- session by the equitable owner is notice of his rights to a purchaser,'^ and if the holder of the legal title holds it as security for a usurious loan, a purchaser from him acquires no better title than the grantor had.^* And so a purchaser who has paid no valuable consideration for his conveyance occupies a position no better than his grantor.^'* A mortgage was made of certain mills to secure the sum of four thousand dollars ; and the mortgagor also conveyed to the mortgagee other land absolutely, as security for a further sum of six thousand dollars. The mortgagee assigned the mortgage and conveyed the land to a third person, who had notice of the character of the prior conveyance. This assignee foreclosed the mortgage upon the mills, and purchased them upon the sale. He then mortgaged the mills and the other lands to the former mortgagee ; and it was held that this mortgage was a lien upon the other lands only to the extent of the original loan upon them of six thousand dollars, upon the payment of which sum the original owner was entitled to redeem.'^" One who deals with an agent is bound to know his authority, and if he takes a deed executed to him by the principal he is bound to know 4 N. W. 303; Bennett v. Robinson, Graham v. Graham, 55 Ind. 23; Rad- 27 Mich. 26; Wetherbee t. Green, 22 ford v. Folsom, 58 Iowa 473, 12 N. Mich. 311, 7 Am. Rep. 653. W. 536; Eiseman v. Gallagher, 24 ™ Ferris v. Wilcox, 51 Mich. 105, Nebr. 79, 37 N. W. 941; Houser v. 16 N. W. 252, 47 Am. Rep. 551. Lament, 55 Pa. St. 311, 93 Am. Dec. =' Parker v. Hubble, 75 Ind. 580. 755; Tant v. Guess, 35 S. Car. 605, "2 Kendall v. Davis, 55 Ark. 318, 16 S. E. 472 (quoting text); Zane 18 S. "W". 185; Le Comte v. Pennock, v. Fink, 18 W. Va. 693; Lawrence v. 61 Kans. 330, 59 Pac. 641. Du Bois, 16 W. Va. 443. See ante '=' See post i 586. §§ 254, 255. "Amory v. Lawrence, 3 Cliff. (IT. '=> Lawrence v. Du Bois, 16 W. Va. S.) 523; Kuhn v. Rumpp, 46 Cal. 443. 299; Jenkins v. Rosenberg, 105 111. ""Turman v. Bell, 54 Ark. 273, 15 157; Bartling v. Brasuhn, 102 111. S. "W. 886; "Williams T. Thorn, 11 441; femith v. Knoebel, 82 111. 392; Paige (N. Y.) 459. 340 PAEOL EVIDENCE 463 the conditions imposed upon the agent as to the delivery of the deed. Where a married woman executed a deed absolute in form of her own property, and delivered it to her husband to be delivered as security for a certain amount, and the husband delivered the deed to the grantee in payment for a larger sum he owed the grantee, who was aware of the purpose for which the deed was made, the deed could be held for no other purpose.^^ § 340. Once a mortgage always a mortgage. — If originally taken as a mortgage, nothing but a subsequent agreement of the parties can change its character, and deprive the mortgagor of his right of redemp- tion; and even such an agreement can not change its character as to intervening interests.^' This right can not be waived or abandoned by any stipulation of the parties made at the time, even if embodied in the mortgage.^" Neither the failure of the mortgagor to pay the debt, nor any act or intent of the mortgagee can convert a deed originally intended as a mortgage into an absolute conveyance in the absence of a subsequent superseding contract.^" If not intended as a security in the beginning, but as an absolute or conditional sale, no subsequent " Gilbert v. Deshon, 107 N. Y. 324, 14 N. E. 318. «« Morris v. Nixon, 1 How. (U. S.) 118; Peagler v. Stabler, 91 Ala. 308, 9 So. 157; McKinstry v. Conly, 12 Ala. 678; Elliott v. Connor, 63 Fla. 408, 58 So. 241; Connor v. Connor, 59 Fla. 467, 52 So. 727; Ferguson v. Boyd (Ind. App.), 79 N. E. 549, 169 Ind. 537, 81 N. E. 71; Loeb v. Mc- Alister, 15 Ind. App. 643, 41 N. E. 1061, 44 N. E. 378; Haggerty v. Brewer, 105 Iowa 395, 75 N. W. 321; Stratton v. Rotrock, 84 Kans. 198, 114 Pac. 224; Le Comte v. Pennock, 61 Kans. 330, 59 Pac. 641; Hawes v. Williams, 92 Maine 483, 43 Atl. 101; McPherson v. Hayward, 81 Maine 329, 17 Atl. 164; Reed v. Reed, 75 Maine 264; Clark v. Landon, 90 Mich. 83, 51 N. W. 357; Batty v. Snook, 5 Mich. 231; Sheppard v. Wagner, 240 Mo. 409, 144 S. W. 394; Vanderhaize v. Hugues, 13 N. J. Eq. 244; Macauley v. Smith, 132 N. Y. 524, 30 N. E. 997; Carr v. Carr, 52 N. Y. 251; Horn v. Keteltas, 46 N. Y. 605; Murray v. Walker, 31 N. Y. 400; Elliott v. Wood, 53 Barb. (N. Y.) 285; Tlbbs v. Morris, 44 Barb. (N. Y.) 138; Parsons v. Mumford, 3 Barb. Ch. (N. Y.) 152; Clark v. Henry, 2 Cow. (N. Y.) 324; Buna- cleugh V. Poolman, 3 Daly (N. Y.) 236; Remsen v. Hay, 2 Bdw. Ch. (N. Y.) 535; Cooper v. Whitney, 3 Hill (N. Y.) 95; Henry v. Davis, 7 Johns. Ch. (N. Y.) 40; Marks v. Pell, 1 Johns. Ch. (N. Y.) 594; Will- lams V. Thorn, 11 Paige (N. Y.) 459; Palmer v. Gurnsey, 7 Wend. (N. Y.) 248; Wilson v. Glddings, 28 Ohio St. 554; Poston v. Jones, 122 N. Car. 536, 29 S. B. 951; Tant V. Guess, 35 S. Car. 604, 16 S. E. 472; Brownlee v. Martin, 2 S. Car. 392; Clambey v. Copland, 52 Wash. 580, 100 Pac. 1031; Hudkins v. Grim (W. Va.), 78 S. E. 1043; Hursey v. Hursey, 56 W. Va. 148, 49 S. E. 367. An absolute deed executed in blank. Intended to operate as a mortgage is not altered in Its character be- cause the grantee holds it in trust for others. Strong v. Gambler, 155 App. Div. 294, 140 N. Y. S. 410. See ante §§ 251, 263. " Peugh V. Davis, 96 U. S. 332, per Field, J.; Turpie v. Lowe, 114 Ind. 37, 15 N. E. 834. See ante § 251 and cases cited. ""Stratton v. Rotrock, 84 Kans. 198, 114 Pac. 224. 463 WHAT PACTS AEE CONSIDERED § 340 event, short of a new agreement between the parties, can convert it into a mortgage."* The maxim, "once a mortgage always a mortgage," applies to such a deed; and if a purchaser take a conveyance from the grantee, with a knowledge that the grantor claims an interest in the property, he takes it charged with the same equities with which it was charged in the hands of the mortgagee."^ But this maxim was never intended, and has never been construed, to prevent a mortgagee, by subsequent contract, from purchasing the equity of redemption, or from obtain- ing a release of it, for an adequate consideration.^^ The mortgagor may make a subsequent release of the equity of re- demption, but an adequate consideration is necessary to support it. It must be for a consideration that would be deemed reasonable if the transaction were between other parties. The transaction must in all respects be fair, with no unconscientious advantage taken by the mort- gagee.°* Such a release will not be inferred from equivocal circum- stances and loose expressions. It must appear by a writing importing in terms a transfer of the mortgagor's interest, or such facts must be shown as will estop him afterward to assert any interest."^ In de- termining whether an instrument of uncertain import in itself was intended to operate as a release, the fact that the value of the prop- erty was at the time greatly in excess of the amount then paid, and of that originally secured, and the fact that the mortgagor retained possession of the land and cultivated it, are strong evidence tending to show that a release was not intended."" A mere agreement of sale between the parties executed long after "Reed v. Reed, 75 Maine 264; "'Peagler v. Stabler, 91 Ala. 308, Buse v. Page, 32 Minn. Ill, 19 N. W. 9 So. 157. See also Hutchison v. 736, 20 N. W. 95; Finck v. Adams, Page, 246 III. 71, 92 N. E. 571; Dead- 36 N. J. Eq. 188; Kearney v. Ma- man v. Yantis, 230 111. 243, 82 N. E. comb, 16 N. J. Eq. 189; Clark v. 592; Cassem v. Heustis, 201 111. 208, Henry, 2 Cow. (N. Y.) 324; Good- 66 N. E. 283, 94 Am. St. 160; Scholl bar v. Bloom, 43 Tex. Civ. App. 434, v. Hopper, 134 Ky. 83, 119 S. W. 770; 96 S. W. 657. Sears v. Oilman, 199 Mass. 384, 85 "2 French v. Burns, 35 Conn. 359; N. E. 466; Miller v.- Smith, 20 N. Connor v. Connor, 53 Fla. 467, 52 So. Dak. 96, 126 N. "W. 499; Ullman v. 727; Doyle v. Ringo (Ind.), 102 N. Devereux, 46 Tex. Civ. App. 459, 102 E. 18; Ferguson v. Boyd (Ind. S. "W. 1163. See ante § 251. App.), 79 N. E. 549, 169 Ind. 537, "Linnell v. Lyford, 72 Maine 280; 81 N. B. 71 (citing text) ; Green- Marshall v. Thompson, 39 Minn. 137, wood Bldg. Assn. v. Stanton, 28 Ind. 39 N. "W. 309; Niggeler v. Maurin, App. 548; Loeb v. McAlister, 15 Ind. 34 Minn. 118, 24 N. "W. 369; Ford v. App. 643, 41 N. E. 1061, 44 N. E. Olden, L. R. 3 Bq. Cas. 461. 378; Vanderhaize v. Hugues, 13 N. "Peugh v. Davis, 96 U. S. 332. J. Eq. 244; Wilson v. Glddings, 28 ""Peugh v. Davis, 96 U. S. 332; Ohio St. 554; Hudkins v. Crim (W. Walker v. Farmers' Bank, 8 Houst. Va.), 78 S. E. 1043. (Del.) 258, 14 Atl. 819. § 341 PAEOL EVIDENCE '464 the deed intended as a mortgage, without any new consideration, does not alter the character of the original transaction.*' A subsequent agreement which allowed the grantor in an absolute deed intended as a mortgage, to have the use and possession of the land conveyed so long as the grantee and his heirs desired, free from rent, in consider- ation of paying for repairs and taxes, was held not to alter the orig- inal character of the transaction.*^ § 341. Grantee's liability for mortgaged land sold by him. — Al- though a grantee in an absolute deed intended as a mortgage has the power to convey it by a good indefeasible title to a purchaser without notice, yet he is liable to the mortgagor for the value of the land so convej^ed; and he can not defend an action to recover such value by showing that the mortgagor's title was invalid, and that the legal title has since been bought in by the purchaser. The imperfec- tion of the title did not justify his placing it beyond the reach of the mortgagor. It is the duty of the mortgagee upon receiving payment to restore the land, without regard to the condition of the title, in no worse condition, so far as his own acts could affect it, than it was when he received it. But in estimating the value of the land sold, the sum paid for an outstanding title, although paid by the purchaser and not by the mortgagee, may be deducted from the value of the land."" According to some decisions the measure of damages against the grantee, where he is not chargeable with actual fraud, is the full value of the land at the time he sold it, without regard to the price actually received.'" Under other authorities, the grantee will be required to account to the owner of the equity of redemption for all that he re- ceived above the amount of the debt originally secured by the deed.'^ Under this rule the grantee who has sold the land, is liable for the proceeds of the sale, deducting the amount due him and a reasonable compensation for effecting the sale.'^ He is not allowed to show that =' Hursey V. Hursey, 56 W. Va. 148, Y.) 311; 4 Abb. Dec. (N. Y.) 473, 49 S. E. 367. 5 Abb. Pr. (N. S.) (N. Y.) 286, 36 ™ Brown v. Spradlin, 136 Ky. 703, How. Pr. 463. 125 S. W. 150. ■"■ Shillaber v. Robinson, 97 U. S. ""Adkins v. Lewis, 5 Ore. 292. 68, 24 L. ed. 967; Sheldon v. Brad- ™Gibbs V. Meserve, 12 111. App. ley, 37 Conn. 324; Crassen v. Swove- 613; Enos v. Sutherland, 11 Mich, land, 22 Ind. 427; Linnell v. Lyford, 538; Wilson v. Drumrite, 24 Mo. 72 Maine 280; Cornell t. Pierson, 304; Hausknecht v. Smith, 11 App. 8 N. J. Eq. 478. Div. 185, 42 N. Y. S. 611; Bissell v. "Van Dusen v. Worrell. 4 Abb. Bozman, 17 N. Car. 229. See also App. Deo. 473; Boothe t. Fiest, 80 Van Dusen v. Worrell, 3 Keyes (N. Tex. 141, 15 S. W. 799, value at time 465 WHAT FACTS AEE CONSIDEEED § 341 the price received in consequence of liberal terms of payment, or for any other reason, is in excess of the market value of the lands. '^ If a creditor has taken an absolute title to real estate of his debtor as security which is subject to a mortgage and buys the property at a foreclosure sale under the mortgage, he holds the land subject to the original trust, and if he sells it he is accountable to the debtor for the proceeds less the amount paid by him in acquiring the mortgage title.'* When the grantee has wrongfully conveyed the property, the grantor may at his election claim the proceeds of the sale,'^ or the value of the land at the time when the debtor's right to have it re- stored to him is established.'" But in a suit for the proceeds it is not necessary for the plaintiff to make a tender, as the grantee by the sale has put it out of his power to convey.'' If the grantee in an absolute deed intended as a mortgage ex- changes the land with the consent of the mortgagor for other land, the latter is confined to his right of redemption of the property taken on exchange.'* If the grantee has mortgaged the land to one having no notice of the grantee's defeasible title, the grantor's rights are postponed to the lien of the mortgage. The grantor's rights are not extinguished, and the mortgagee, after having notice of the grantor's rights, must make the grantor a party to his foreclosure suit, or he will not be bound by the decree. The grantor in such case may redeem from the foreclosure sale by paying the mortgage debt.'" The statute of limitations applicable to actions of assumpsit applies to an action for an excess of proceeds of a sale of such land above the mortgage debt. A suit to recover the land or to redeem would not be barred by a lapse of time shorter than that which would bar an action of ejectment at law. But a claim to the proceeds of a sale is not a claim to real property, but only for the recovery of money. The statute of limitations applies to proceedings in equity only by of trial; Jackson v. Stevens, 108 538; Mooney v. Byrne, 163 N. Y. 86, Mass. 94, in an action for money 57 N. B. 163; Hart v. Ten Eyck, 2 had and received; Heister v. Ma- Johns. Ch. (N. Y.) 62, 117; Vander- deria, 3 Watts & S. (Pa.) 384; hoven v. Romaine, 56 N. J. Eq. 1, Barkelew v. Taylor, 8 N. J. Eq. 206. 39 Atl. 129. "Budd V. Van Orden, 53 N. J. "Davis v. Van Wyck, 64 Hun Eq. 143. (N. Y.) 186, 18 N. Y. S. 885. "Kilgour V. Scott, 101 Fed. 359. "Over v. Carolus, 171 111. 552, 49 '=Meehan v. Forrester, 52 N. Y. N. E. 514. 277. ™Turman v. Bell, 54 Ark. 273, 15 ™Enos V. Sutherland, H Mich. S. W. 886. 30— Jones Mtg.— Vol. I. § 343 PAEOL EVIDENCE 466 analogy; and the analogous case at law is an action of assumpsit, or an action of account, and not an action of ejectment.'" The statute of limitations does not run in favor of a grantee iu a deed absolute on its face, but intended to be a mortgage. His pos- session is not adverse.'^ But the grantor may lose his right by laches.'^ i§ 342. Redemption in equity — Grantee's right to relief. — A bUl in equity may be maintained to redeem, as from a mortgage, land which the defendant holds by deed from the plaintiff, upon evidence that the deed, though absolute in form, was really taken as security for a loan.'^ Under the rule that "he who seeks equity must do equity," the grantor must fulfil, or offer to fulfil, all the obligations of a mortgagor.** The bill must necessarily admit the existence of a debt on the part of the grantor to the grantee. If the bill be for account- ing and not one to redeem, it is not bad for failing to allege a tender of the amount due.*'* But it is not generally considered necessary that the grantor should include in his bill a tender or offer to pay the money admitted to be due or to be ascertained upon an accounting.*" If the amount of the debt is not agreed upon, and is uncertain, the amount should be ascertained by proper proceedings. The decree is for a reconveyance of the land upon the payment, within a time '"Amory v. Lawrence, 3 Cliff. (U. not necessary to ask reformation of S.) 523; Hancock v. Harper, 86 111. the deed before filing a bill to re- 445; Mills v. Mills, 115 N. Y. 80, 21 deem, since a deed given to secure N. E. 714, revg. 47 Hun (N. Y.) 631. a debt is considered a mortgage. But see Hunter v. Hunter, 50 Mo. Rogan v. Walker, 1 Wis. 527. Where 445. it is not necessary to reform a deed, ''Wyman v. Babcock, 2 Curtis the fact that it is a mortgage may (U. S.) 386; affd. in Babcock v. be shown at law. Barchent v. Sny- Wyman, 19 How. (U. S.) 289; But- der, 128 Wis. 423, 107 N. W. 329. ler V. Hyland, 89 Cal. 575, 26 Pac. ''Cowing v. Rogers, 34 Cal. 648; 1108. Heacock v. Swartwout, 28 111. 291. '"Miller v. Smith, 44 Minn. 127, For other conaitions precedent to 46 N. W. 324; Becker v. Howard, relief, see Holden Land &c. Co. v. 75 Wis. 415, 44 N. W. 755. Interstate Trading Co., 87 Kans. 221, ''Collins V. Gregg, 109 Iowa 506, 123 Pac. 733. 80 N. W. 562. If the grantee refuses " Brown v. FoUette, 155 Ind. 316, to recognize the instrument as a 58 N. E. 197. mortgage, and will not permit re- '" Taylor v. Dillenburg, 168 111. demption by payment, the grantor 235, 48 N. E. 41; Dwen v. Blake, 44 may bring a bill in equity to declare 111. 135; Barnard v. Cushman, 35 the deed a mortgage and to compel 111. 451; Brown v. Follette, 155 Ind. the grantee to permit redemption 316, 58 N. E. 197 ; Tucker v. Wither- and to reconvey to the grantor; but bee, 130 Ky. 269, 113 S. W. 123; a bill can not be maintained merely Marvin v. Prentice, 49 How. Pr. (N. to ascertain whether the relation of Y.) 385. See also Bone v. Lansden, mortgagor and mortgagee exists. 85 Ala. 562, 6 So. 611. Micou V. Ashurst, 55 Ala. 607. It is 467 WHAT FACTS ARE CONSIDERED § 342 named, of the amount which may be found due the grantee, or upon compliance with such terms as the court may impose, and that in default of such payment the bill be dismissed.*' The delivery of a deed absolute in form invests the grantee with the legal title, even though the transaction is converted into an equitable mortgage by the subsequent execution of an unsealed agree- ment to reconvey; and no afBrmative action to divest the mortgagor of his right of redemption is necessary to invest the mortgagee with full legal title.** It is usually the grantor who seeks relief in equity to have an abso- lute deed declared a mortgage, but the grantee may also have this relief in a proper case.*' And the grantee may also maintain an action in foreclosure of the deed as a mortgage.'" Thus, where an absolute conveyance was made by a confidential agent and adviser to his principal, and the latter claimed that the conveyance was taken as security for a loan, though the former claimed that it was a sale, the court declared that the burden of sustaining the validity and good faith of the dealing was upon the agent ; and gave relief by decreeing a rescission of the sale, and payment by the agent of the money ob- tained with interest, upon the principal's tendering to the agent a deed properly executed reconveying the land to him. The court further directed that execution should issue against the agent for the amount of the loan if the money should not be paid.'^ If the debt for which an absolute conveyance has been made as security be canceled, the grantor may be required to reconvey- the land in an action brought for that purpose.'^ "Chicago &c. Rolling Mill Co. v. «> Bryan v. Cowart, 21 Ala. 92; Scully, 141 111. 408, 30 N. E. 1062; Kellogg v. Northrup, 115 Mich. 327, Westlake v. Horton, 85 111. 228; Mc- 73 N. "W. 230; McMillan v. Bissell. Donough v. Squire, 111 Mass. 217; 63 Mich. 66, 29 N. "W. 737 (bill by Campbell v. Dearborn, 109 Mass. grantee's executors). 130, 12 Am. Rep. 671. In South Car- ""Bryan v. Cowart, 21 Ala. 92; ollna it is said that the mortgagor Reid v. McMillan, 189 111. 411, 59 N. is entitled to a reference to have B. 948; Herron v. Herron, 91 Ind. the amount of the debt ascertained, 278; Kellogg v. Northrup, 115 Mich, and to a decree for the sale of the 327, 73 N. W. 230; McMillan v. Bis- premises for its payment, and for sell, 63 Mich. 66, 29 N. W. 737; the payment of the surplus, if any, Yingling v. Redwine, 12 Okla. 64, to the mortgagor. Carter v. Evans, 69 Pac. 810; White v. Daniell, 141 17 S. Car. 458. That the grantor Wis. 273, 124 N. W. 405. may be required to pay other debts " Tappan v. Aylsworth, 13 R. I. due from him to the holder of the 582. legal title, though not unsecured, "^Blazy v. McLean, 12 N. T. S. see post §§ 360, 1083. 672. «» Fitch V. Miller, 200 111. 170, 65 N. E. 650. § 342a PAROL EVIDENCE 468 But the grantor, while standing in the position of a mortgagor, can not maintain a suit to quiet the title in himself. He can quiet a mortgage upon his property only by paying it. A decree in such a suit, quieting the title to the lant' in the grantor against a purchaser from the grantee, "except as a mortgagee thereof having a mort- gagee's interest therein, to be determined by a proper suit of fore- closure," is erroneous.'^ § 342a. Bona fide purchasers from grantee. — A purchaser from such grantee is not a bona fide purchaser without notice until he has paid all the purchase-money, and therefore he is not entitled to hold the land for which he has made part payment as against the mort- gagor, even though he had no notice that the deed was a mortgage; but he is entitled to be reimbursed the part payment he has actually made before the property can be taken from him.** The grantee who has conveyed the land to a bona fide parchaser so that there can be no redemption of the land is liable to a judgment for redemption in money.*'' An absolute conveyance intended as a mortgage will retain its character in the hands of subsequent pur- chasers with notice of the rights of the parties; and hence, if a pur- chaser from the original grantee knew the nature of the transaction, or knew of facts sufHcient to put him on inquiry, he can not claim to be the absolute owner, but the mortgagor may redeem from him, as well as from the grantee."" But where the third person has pur- chased in good faith for a valuable consideration, relying on the "^ Brandt v. Thompson, 91 Cal. upon tlie land itself, and the 458, 27 Pac. 763. Such a decree first land could be sold upon execution; undertakes to quiet the grantor's and also that the judgment creditor title, and then disturbs it again by might, in aid of his execution, main- declaring the purchaser's right to tain an action to have the absolute foreclose. If the purchaser's debt deed of his debtor declared to be should become barred by the statute a mortgage, of limitations, then, by this decree, "^ See post § 1060a. the grantor would have his title =" Union Mut. Life Ins. Co. v. Slee, quieted without paying the mort- 123 111. 57, 13 N. E. 222; Smith v. gage debt, the very thing which Knoebel, 82 111. 392; Shaver v. equity says can not be done. The Woodward, 28 111. 277; Brown v. grantor can have no remedy in the Gaffney, 28 111. 149; Howat v. premises without paying or tender- Howat, 101 111. App. 158; Hurst v. ing the amount due on the mort- Beaver, 50 Mich. 612, 16 N. W. 165; gage. Per McFarland, J. Eiseman v. Gallagher, 24 Nebr. 79, "Macauley v. Smith, 132 N. Y. 37 N. W. 941; Smith v. Jensen, 16 524, 30 N. E. 997, 10 N. Y. S. 578, N. Dak. 408, 114 N. W. 306; Erick- reversed. In this case it was held son v. Hammond, 135 Wis. 573, 116 that a creditor of this mort- , N. W. 244. See also Baumgartner gagor might attach the land, and v. Corliss, 115 Minn. 11, 131 N. W. the judgment which followed the 638. attachment became a specific lien 469 WHAT FACTS AKE CONSIDEEED § 342c- apparent absolute title of the original grantee, without notice of the defeasance agreement, he takes an indefeasible title, and the original grantor has no right of redemption against him."^ § 342b. Liability of mortgagee under absolute deed on exchange of land. — If a mortgagee by an absolute deed, the defeasance not being recorded, exchanges the land for other land which is conveyed to him, and he afterward sells the land conveyed to him in exchange, he is chargeable, at the mortgagor's election, with the value of the land taken in exchange instead of the price at which he sold it. If the mortgagee, who is in such case a trustee, has sold the land for less than its value, it is properly his own loss. By choosing to dispose of the land as his own, the mortgagee could not rid himself of respon- sibility in respect to the price obtained."^ § 342c. Effect of absolute deed in vesting title and right of pos- session — Compensation for improvements. — In some states, though the mortgage is by a deed absolute in form, the grantee acquires no legal title to the land. The deed is a mere security, just as a formal mortgage is in the same states. ^^ The grantee can acquire the legal title only by a subsequent conveyance by the grantor, or by purchase upon a foreclosure sale under the mortgage. The mortgagee under such absolute deed has no right of possession except under the condi- tions which would give a formal mortgagee the right of possession.' ■"Jenkins v. Rosenterg, 105 111. 75 Cal. 271, 17 Pac. 225; Ray- 157; Maxfleld v. Patchen, 29 III. 39; nor v. Drew, 72 Cal. 307, 13 Pac. Jolivet V. Chaves, 125 La. 923, 52 So. 866; Healy v. O'Brien, 66 Cal. 517, 99; Tufts v. Tapley, 129 Mass. 380; 6 Pac. 386; Taylor v. McLain, 64 Kemp v. Small, 32 Nebr. 318, 49 N. Cal. 513, 2 Pac. 399. When an abso- W. 169; Gruber v. Baker, 20 Nev. lute deed is declared to be a mort- 453, 23 Pac. 858, 9 L. R. A. 302; gage, the mortgagor's equity can not Murphy v. Plankinton Bank, 13 S. be cut off by a decree divesting him Dak. 501, 83 N. W. 575. See post of it unless he shall pay the sum § 1060a. But it has been held that found due within a time limited, the existence of an innocent pur- but the title remains in him until chaser, who has made improve- divested by foreclosure and sale. ments, will not prevent declaring a Byrne v. Hudson, 127 Cal. 254, 59 warranty deed to be a mortgage, as Pac. 597; First Nat. Bank v. Ash- the purchaser can be allowed for mead, 23 Fla. 379, 2 So. 657; First the improvements. Carveth v. Wine- Nat. Bank v. Kreig, 21 Nev. 404, 32 gar, 133 Mich. 34, 94 N. W. 381. Pac. 641; Odell v. Montross, 68 N. ''Darling v. Harmon, 47 Minn. Y. 499; Adair v. Adair, 22 Ore. 115, 166, 94 N W. 686. 29 Pac. 193; Cumps v. Kiyo, 104 »» Prefumo V. Russell, 148 Cal. 451, Wis. 656, 80 N. W. 937; Howe v. 83 Pac. 810; Murdock v. Clarke, 90 Carpenter, 49 Wis. 697, 6 N. W. 357; Cal 427 27 Pac. 275; Hall v. Arnott, Brinkman v. Jones, 44 Wis. 498. 80 Cal. 348, 22 Pac. 200; Smith v. ^ Smith v. Smith, 80 Cal. 323, 21 Smith, 80 Cal. 323, 21 Pac. 4, 22 Pac. 4. A grantee under a convey- Pac. 186, 549; Booth y. Hoskins, ance absolute in form has no great- § 342c PAROL EVIDENCE 470 Moreover, although such grantee, by a defeasance, has agreed to con- vey the title to the grantor on payment of the debt, a bill for specific performance will not lie, since, by a decree for the grantor therein, he would not obtain the title which the grantee agreed to convey.^ But in other states, in which a formal mortgage is held not to pass the legal title, a deed absolute in form, intended to operate as a mort- gage, does pass such title.^ In states where an absolute conveyance intended as security vests the legal title in the grantee, no action is necessary to divest the grantor of his equitable right to redeem.* A grantee in possession under an absolute deed intended as a mort- gage, is in the position of a mortgagee in possession, and is not ordi- narily entitled to reimbursement for improvements made by him on the land.= er rights than an ordinary mort- gagee, and therefore is not entitled to possession, if not stipulated for or voluntarily conceded by the grantor. Cox v. Ratcliffe, 105 Ind. 374, 5 N. E. 5; Radford v. Folsom, 58 Iowa 473, 12 N. W. 536; Le Comte V. Pennock, 61 Kans. 330, 59 Pac. 641 ; Meighen v. King, 31 Minn. 115, 16 N. W. 702; Connolly v. Gid- dings, 24 Nebr. 131, 37 N. W. 939; Murray v. Walker, 31 N. Y. 399; Van Vleck v. Enos, 88 Hun 348, 68 N. Y. St. 572, 34 N. Y. S. 754. See also Richards v. Crawford, 50 Iowa 494; Burdlck v. Wentworth, 42 Iowa 440. But see Locke v. Moulton, 96 Cal. 21, 30 Pac. 957; Pico v. Gal- lardo, 52 Cal. 206. ^ Franz v. Orton, 75 111. 100; Adair v. Adair, 22 Ore. 115, 29 Pac. 193. 2 Woodward v. Jewell, 140 U. S. 247, 11 Sup. Ct. 784; McLaren T. Clark, 80 Ga. 423, 7 S. E. 230; Thaxton r. Roberts, 66 Ga. 704; Woodson V. Veal, 60 Ga. 562; Lackey V. Bostwick, 54 Ga. 45. When a deed absolute is declared to be a mort- gage, a special judgment may be ex- tended subjecting the property to the payment of the debt. Jewell v. Walker, 109 Ga. 241, 34 S. E. 337. See ante § 26. Haggerty v. Brower, 105 Iowa 395, 400, 75 N. W. 321; Richards v. Crawford, 50 Iowa 494; Bordick v. Wentworth, 42 Iowa 440; Farley v. Goocher, 11 Iowa 570; JefCery v. Hursh, 42 Mich. 563, 4 N. W. 303; Gallagher v. Giddings, 38 Nebr. 222, 49 N. W. 1126. "The legal title in such an equitable mortgage being in the grantee, where the grantor brings an action to redeem the premises, and his petition Is dismissed by reason of his default in making payments by the day set in the decree for redemption, and no privilege is given to bring an- other action, the grantor's right of redemption is thereby extinguished. It constitutes a complete bar to any further litigation of the same sub- ject between the same parties and privies." Per Norval, J. "Smith V. Murphy, 58 Ala. 630; Fitch V. Miller, 200 111. 170, 65 N. B. 650; West v. Frederick, 62 111. 191; Brophy Min. Co. v. Brophy &c. Gold Min. Co., 15 Nev. 101. See also Lind- bergv. Thomas, 137 Iowa 48, 114 N. W. 562; Bailey v. Frazler, 62 Ore. 142, 124 Pac. 643; Frazer v. Seu- reau (Tex. Civ. App.), 128 S. W. 649. But see Moisant v. McPhee, 92 Cal. 76, 28 Pac. 46; Smith v. Smith, 80 Cal. 323, 21 Pac. 4, 22 Pac. 186; Jackson v. Lodge, 36 Cal. 28; State First Nat. Bank v. Ashmead, 23 Fla. 379, 2 So. 657. 'Malone v. Roy, 107 Cal. 518, 40 Pac. 1040; Mahoney v. Bostwick, 96 Cal. 53, 30 Pac. 1020, 31 Am. St. 175; Halbert v. Turner, 233 111. 531, 84 N. E. 704; Miller v. Curry, 124 Ind. 48, 24 N. E. 219. See also Foley V. Foley, 15 App. Div. 276, 44 N. Y. S. 588; Harpers' Appeal, 64 Pa. St. 315. See post § 779. 471 WHAT FACTS AEB CONSIDERED § 342d § 342d. Redemption by grantor after conveyance by grantee to a bona fide purchaser. — The grantor in an absolnte deed which is in fact a mortgage may maintain a suit for redemption against the grantee although the latter has conveyed the land to a bona iide pur- chaser so that it can not be reached, and although an action against the grantee to recover for money had and received would be barred by the statute of limitations; and the court will substitute a judgment for redemption in money to the amount of the actual value of the land, for a judgment of redemption in land. The Court of Appeals of New York, in a decision to this effect, said: "Guided by the cardinal principle that the wrongdoer shall make nothing from his wrong, equity so molds and applies its plastic remedies as to force from him the most complete restitution which his wrongful act will permit." "When he can not restore the land it will compel him to restore that which stands in his hands for the land, and will not per- mit him to assert that it is not land when the assertion would be profitable to himself but unjust to the one whom he wronged. He can not escape by offering to pay what he received on selling the lands, but must pay the value at the time of the trial. * * * It is the wrongful conveyance by the mortgagee in possession, under a deed absolute on its face, that enables a court of equity to hold on to the case after ordinary redemption has been shown to be impossible, and to allow such a redemption against the wrongdoer as will prevent him from gaining by his wrong, and will give the plaintiff her due as nearly as may be."'' When, however, the grantor and equitable owner of land under a deed intended to operate as a mortgage, knowing the circumstances, permits a bona fide purchaser to deal with the actual mortgagee as owner, the grantor is estopped to claim relief against such purchaser.^ ° Enos V. Sutherland, 11 Mich. 538, 204; Van Dusen v. Worrell, 4 Abb. citing May v. Le Claire, 11 Wall. Ct. App. Dec. 473. (U. S.) 217; Budd v. Van Orden, 33 'Mooney v. Byrne, 163 N. Y. 86, N. J. Eq. 143; Hart v. Ten Eyck, 2 57 N. E. 163. Johns. Ch. (N. Y.) 62,108; Miliary. 'Richardson v. Beaber, 62 Misc. McGuckln, 15 Abb. N. Cas. (N. Y.) 542, 115 N. Y. S. 821. CHAPTEE IX DEBT SECUEED I. Description of the Dehtj §§ 343-363 II. Future Advances, §§ 364-378 III. Mortgage of Indemnity, §§ 379-387 IV. Mortgages for Support, §§ 388-395 I. Description of the Debt Section Section 343. General description of debt suf- 353. Note or bond not necessary to ficient. validity of deed of trust or 344. Stating atnount of debt secured. mortgage. 345. Debt must come fairly within 354. Effect of clerical error in de- terms used. scribing debt. 346. Particular debts or obligations 355. Extension of lien by renewal secured. or extension of secured debt. 347. Recital of antecedent debt. 356. Several mortgages for one debt, 348. Where mortgage given for and one mortgage for several greater or less sum than ac- debts. tual debt. 357. Effect of enlarging or extend- 349. Note described in mortgage. ing debt or obligation se- 350. Effect of variance between note cured. and description thereof in 358. Taxes and assessments, mortgage. 359. Solicitor's fee. 351. Note and mortgage construed 360. Lien limited to debt secured. together. 361. Increasing the rate of interest. 352. Identity of note and amount 362. Redelivery for a new obligation. thereof shown by parol evi- 363. How recorded mortgage may be dance. made to secure further sum. 352a. Parol proof of debt where mortgage is in form an ab- solute conveyance. § 343. General description of debt sufficient. — It is not essential that the mortgage itself should contain a description of the debt intended to be secured. It is not essential that there be a note or bond or other obligation separate from the mortgage.^ Nor does a failure to state the amount of the debt render the mortgage void.- ^ O'Connor v. Nadel, 117 Ala. 595, Spedden v. Sykes, 51 Wash. 267, 98 23 So. 532; Schierl v. Newberg, 102 PaC. 752. See ante § 70. Wis. 552, 78 N. W. 761. See also = Robinson v. Williams, 22 N. Y. Lee V. Fletcher, 46 Minn. 49, 48 N. 380; Spedden v. Sykes, 51 Wash. W. 456, 12 L. R. A. 171; Nazro v. 267, 98 Pac. 752. See ante § 70 and Ware, 38 Minn. 443, 38 N. W. 359; post § 515. 472 473 DESCRIPTION OF THE DEBT § 343 It is only necessary that there be a debt or a duty to be performed, either present or to arise in the future;^ and that this be recited in the mortgage. This need not be evidenced by any writing. The nature and amount of the indebtedness secured may be expressed in terms so general that subsequent purchasers and attaching creditors must look beyond the deed to ascertain both the existence and amount of the debt.* Even a deed absolute in form, if in fact intended by the parties as a security for subsequent advances or liabilities to be assumed by the grantee in the grantor's behalf,^ is a valid security against judgment or execution creditors, or other incumbrancers, although such inten- tion does not appear upon the deed, or by any evidence in writing. Though the amount of the debt be left blank, this may be supplied by parol evidence." Where a mortgage is given to indemnify one who becomes a surety upon a bond in which the mortgagor is principal, a misdescription of the particular bond may be corrected by parol testimony so as to identify the bond described in the mortgage with the one upon which the mortgagee became surety, and the mere misdescription of the bond will not have the effect to render the mortgage invalid as a lien upon the property described, either as to the mortgagor himself or his vendees.' All the description required to be made of the debt is a general one, which will put those interested upon inquiry.^ A condition to = Knight V. Coleman, 117 Ala. 266, « Burnett v. "Wright, 135 N. Y. 543, 22 So. 974; Stuyvesant v. Western 32 N. E. 253. See also Ladd v. Look- Mtg. &c. Co., 22 Colo. 28, 43 Pac. 144; out Mt. Distilling Co., 147 Ala. 173, Brookings v. White, 49 Maine 476; 40 So. 610; Dunn v. Burke, 139 111. Gassert v. Bogk, 7 Mont. 585, 19 App. 12. Pac. 281. See also Carpenter v. 'Emerson v. Knight, 130 Ga. 100, Plagge, 192 111. 82, 61 N. B. 530; 60 S. E. 255. Perkins v. Trinity Realty Co., 69 N. * Curtis v. Flinn, 46 Ark. 70; Beach J. Eq. 723, 61 Atl. 167; Huntington v. Osborne, 74 Conn. 405, 50 Atl. 1019; V. Kneeland, 102 App. Div. 284, 92 Bouton v. Doty, 69 Conn. 531, 37 Atl. N. Y S. 944. 1064; Hubbard v. Savage, 8 Conn. 'Ricketson v. Richardson, 19 Cal. 215; Boyd v. Ratcliffl, 140 Ind. 393, 330; Gardner v. Cohn, 191 111. 553, 39 N. E. 860, 49 Am. St. 203; Winn 61 N. E. 492; Burnett v. Wright, v. Lippincott Inv. Co., 125 Mo. 528, 135 N Y. 543, 32 N. E. 253;' Keagy 28 S. W. 998; Williams v. Moniteau V. Trout, 85 Va. 390, 7 S. E. 329. Nat. Bank, 72 Mo. 292; Hogdon v. See ante § 70, and post § 579. Shannon, 44 N. H. 572; Hurd v. "Gibson v. Seymour, 4 Vt. 518; Robinson, 11 Ohio St. 232; Patter- approved in Seymour v. Darrow, 31 son v. Johnston, 7 Ohio 225; Mc- Vt. 122. See also Anglo-Californian Daniels v. Colvin, 16 Vt. 300, 42 Am. Bank v. Cerf, 147 Cal. 384, 81 Pac. Dec. 512; GofC v. Price, 42 W. Va. 1077; Huntington v. Kneeland, 105 384, 26 S. E. 287. App. Div. 629, 93 N. Y. S. 845. § 343 DEBT SECURED 474 pay the mortgagee "what I may owe him on book" may cover not only the present but the future indebtedness of the mortgagor, at least until the mortgagee should receive express notice of subsequent in- cumbrances or interests, and he is not bound to watch the registry for subsequent conveyances. And so a mortgage to secure the pay- ment of one thousand five hundred dollars, which the mortgagor owed on book account, and by several notes, without specifying the, amount or date of any particular note, sufficiently describes the debt.' A mortgage to secure a claim on book account for goods sold and deliv- ered, in about the sum of five thousand dollars, is sufficient to secure the mortgagee's actual claim not exceeding that sum.^° A mortgage •conditioned to pay the mortgagee "all the notes and agreements I now owe or have with him," may secure the mortgagee for payments made as an indorser for the mortgagor under an existing agreement.^^ A condition to pay "all sums that the mortgagee may become liable to pay by signing or otherwise" is not too indefinite, and includes any legal liability he may incur for the mortgagor. ^^ A mortgage securing a definite sum and all other claims due to two mortgagees was held to include the debts due to one of them indi- vidually as well as the debts due to them jointly, where it appeared that it was the intention of the parties to secure the individual as well as the joint debts.^^ But a mortgage expressly providing that it se- cures a certain indebtedness can not be made to cover other debts or obligations.^^ The consideration named in a mortgage does not limit the debt secured when it appears on the face of the mortgage that it was in- tended to secure several notes together amounting to a much larger sum than that named for the consideration.^^ A mortgage may be made to secure an annuity ; and if no principal sum or obligation other than the annual payment be named, and the power to sell or foreclose is only in the event of default in the pay- ° Merrills v. Swift, 18 Conn. 257, more than one meaning. And in 46 Am. Dec. 315. See also Shirras such cases, it is always allowable V. Caig, 7 Cranch (U. S.) 34, 3 L. to take into consideration the situa- ed. 260; Truscott v. King, 6 Barb, tion of the parties and the circum- (N. Y.) 346; Stuyvesant v. Hall, 2 stances under which the writing Barb. Ch. (N. Y.) 151. was made, in order to ascertain its "Curtis V. Flinn, 46 Ark. 70; true meaning." See also Boody v. Lewis V. De Forest, 20 Conn. 427. Davis, 20 N. H. 140, 51 Am. Dec. " Seymour v. Darrow, 31 Vt. 122. 210. " Soule V. Albee, 31 Vt. 142. " Briggs v. Steele, 91 Ark. 458, "Snow V. Pressey, 85 Maine 408, 121 S. W. 754. 27 Atl. 272. "It often happens," say " Shoemake v. Smith, 80 Iowa the court, "that the language of a 655, 45 N. W. 744. written contract is susceptible of 475 DESCEIPTION OF THE DEBT § 344: ment of the annual sums, then the mortgagor is not entitled to redeem or to extinguish the annuity by the payment of a principal sum.^" § 344, Stating amount of debt secured. — It is not generally neces- sary that the amount of the debt be stated in the mortgage, whether the sum to be certain or uncertain." But it is better conveyancing to state the amount of an ascertained debt. When the mortgage is given to secure future advances, it is of course not practicable to state in the mortgage itself anything more than a limit to which such advances may reach ; and while such a limit is required by some courts, it is generally held to be sufficient that the mortgage sets forth the foundation of such liability, or such data as will put any one inter- ested upon the track to find out the extent of the liability. Moreover, when the mortgage is given to secure a debt, the amount of which is not ascertained, it is sufficient if the mortgage contains such facts about it as will lead an interested party to ascertain the real state of the incumbrance. But if the mortgage is given to secure an ascer- tained debt, the amount of that debt ought to be stated; and accord- ingly it has been held that a mortgage given to secure an existing debt of a fixed amount, which is described in the condition of the mortgage only as a note due from the mortgagor to the mortgagee, of a certain date, payable on demand with interest, without specifying the amount, is not a valid security against subsequent incumbrances.^^ This is 1° Northern Cent. R. Co. v. Her- debts, under that general descrip- ing, 93 Md. 164, 48 Atl. 461. tion, would have very little addi- " Curtis V. Flinn, 46 Ark. 70; tional restraint from the fact that Pike V. Collins, 33 Maine 38; Som- the date and time were given. It ersworth Sav. Bank v. Roberts, 38 Is said that there is enough to put N. H. 22. a person on inquiry, and that is all ^*Hart v. Chalker, 14 Conn. 77. a court of equity requires. That Chief Justice Williams, delivering principle, however, we do not think the opinion of the court, said: is applicable to cases of this class, "Whether this omission was owing where there is a certain known debt, to design or accident, we are not in- If It is to be adopted as a general formed. In either case the eflEect rule, it would overturn all the cases would be the same; and the public in which this court have held that would not have that Information the description was too indefinite." which it was intended should be The cases cited by the Chief Justice given, and which, if generally neg- in this connection are: St. John v. lected, would make our records of Camp, 17 Conn. 222; Booth v. Bar- little value. Indeed, if such a gen- num, 9 Conn. 286, 23 Am. Dec. 339; eral description is good, it would BoUes v. Chauncey, 8 Conn. 390; seem as if it were enough to say. Crane v. Deming, 7 Conn. 387; Petti- 'This mortgage is intended to secure bone v. Griswold, 4 Conn. 158, 10 any debt due;' for there would be Am. Dec. 106. The rule Is the same little more danger, in that case, of in Illinois: Metropolitan Bank v. substituting fictitious debts, than In Godfrey, 23 111. 579, 604; Batten- thls where the sum Is omitted; for hausen v. Bullock, 11 Bradw. (111.) he who would substitute fictitious 344 DEBT SECUEED ^76 required, not by any specific provision of the registry law, but the spirit of the system requires that the record should disclose, with as much certainty as the nature of the case will admit of, the real state of the incumbrance. A mortgage describing as an absolute indebtedness a note given as security for a contingent liability assumed by the mortgagee, such as that of an indorser, is not good against a bona fide purchaser of the land without notice.^' A reference to a note without specifying its contents is not sufficient to put subsequent purchasers upon inquiry.^" But it is held that a recorded mortgage is not deprived of its effect as constructive notice by the fact that the principal of the note is not expressly stated, where such amount can be readily calculated from other data given in the mortgage.^"^ Some of the Connecticut and Illinois cases require a degree of 655, affd. Bullock v. Battenhousen, 108 111. 28. A similar decision was made in a Kentucky case. Pearce v. Hall, 12 Bush (Ky.) 209. The condition was for the payment of a note fully de- scribed, with the exception that the amount was not set out, nor was there anything in the conveyance from which any inference whatever as to the amount could be drawn. It was held that a subsequent attach- ing creditor had precedence. Mr. Justice Lindsay said: "We are sat- isfied that a mortgage, to be good against a purchaser for a valuable consideration, or a creditor, must not only be lodged for record in the proper office, but must, as far as is reasonably practicable, set out the amount of the debt for the payment of which the parties intend it as a security. We do not mean to inti- mate that an omission to state the date of the note, or the time at which it will fall due, or the precise amount of the debt, even when the amount is ascertained, is essential to make the mortgage valid; but to hold the omission in this case im- material would be in effect to say that a mortgage need only show that the mortgagor is Indebted to the mortgagee, and that purchasers and creditors must, upon that recital, ascertain for themselves, as best they can, the amount of the indebt- edness." In Maryland no mortgage Is valid except as between the parties there- to, unless there be indorsed thereon an oath or affirmation of the mort- gagee that the consideration in said mortgage is true and bona fide as therein set forth; this affidavit may be made at any time before the mortgage Is recorded, and the affida- vit must be recorded with the mort- gage. The affidavit may be made by one of several mortgagees, or by an agent of the mortgagee; and the agent must, in addition to the af- fidavit above mentioned, make affida- vit that he is agent of the mort- gagee. The president or other officer of a corporation, or the exec- utor of the mortgage, may make such affidavit. R. Code Md. 1878, p. 389, §§ 35, 36. The fact that the oath was taken can only be estab- lished by a formal indorsement upon the mortgage; it is not the subject of parol proof. The record of the mortgage without the affidavit is not constructive notice. ReifE v. Eshle- man, 52 Md. 582. The affidavit need not be In the words prescribed by statute, but it is sufficient that it is of equivalent import and effect. Stanhope v. Dodge, 52 Md. 483. ^ Stearns v. Porter, 46 Conn. 313. ^ Harper v. Edwards, 115 N. Car. 246, 20 S. E. 392. ^ Gardner v. Cohn, 191 111. 553, 61 N. E. 492. 477 DESCEIPTION OF THE DEBT § 345 strictness in describing the indebtedness not required elsewhere.^^ It is generally sufficient if it appears that the debt is secured, and that the amount of it may be ascertained by reference to other in- struments, or by inquiry otherwise. Accordingly it is held, contrary to the decisions above noticed, that a reference in a mortgage to a note or bond secured by it, without specifying its contents, is sufficient to put subsequent purchasers upon inquiry as to the contents of the note or bond, and to charge them with notice to the same extent as if the amount and terms of the note or bond had been fully set forth.^^ It is not even necessary that the amount of the note should be specified in the mortgage, when it is otherwise fully and accurately described.^* The description of the debt must be correct as far as it goes, so as to inform creditors and subsequent purchasers what amount is charged on the land, and must be full enough to direct attention to the sources of correct information, and be such a description of the debt as not to mislead or deceive as to its nature or amount.^^ A description of a mortgage note which gives its datcj the names of the maker and payee, the date of its maturity, and the rate and times of payment of interest, though the amount of the note be not stated, is a sufficient description to identify the note, and the recording of the mortgage gives notice to a subsequent purchaser of the existence of the lien and of the amount of it.^* § 345. Debt must come fairly within terms used. — A mortgage to secure all the debts due from the grantor to the grantee, and all lia- '"'The earlier cases in Connect- 115 N. Car. 246, 20 S. B. 392; Sey- icut are not supported by the mour v. Darrow, 31 Vt. 122; Van- later decisions in that state. Utley meter v. Vanmeter, 3 Grat. (Va.) v. Smith, 24 Conn. 290, 63 Am. Dec. 148. 163; Hurd v. Robinson, 11 Ohio St. ''"Fetes v. O'Laughlin, 62 Iowa 532. 232. But the requirements as to 17 N. "W. 764; Somersworth Sav. stating the debt still are that the Bank v. Roberts, 38 N. H. 22. nature and amount of the indebted- ^ Bowen v. RatclifE, 140 Ind. 393, ness shall be stated with all reason- 39 N. E. 860, 49 Am. St. 203; GofE able certainty. Subsequent incum- v. Price, 42 W. Va. 384, 26 S. E. 287. brancers have a right to know, with '*' Fetes v. O'Laughlin, 62 Iowa 532, all the certainty the case admits of, 17 N. W. 764. In Battenhausen v. the amount already secured on the Bullock, 11 Bradw. (111.) 665, it was property, and the nature of the in- claimed that the record of a mort- debtedne'ss so secured. Hill v. gage which does not state the Banks, 61 Conn. 25, 23 Atl. 712. amount of the debt secured, though ^ Pike V. Collins, 33 Maine 38. See the note given for it is otherwise also Shirras v. Caig, 7 Cranch (U. fully described, is not notice of any S.) 34, 3 L. ed. 260; Merrills v. incumbrance, and does not put a Swift, 18 Conn. 257, 46 Am. Dec. subsequent purchaser upon inquiry 315; Barker v. Barker, 62 N. H. 366; as to the amount of the incum- Farr v. Doxtater, 29 N. Y. St. 531, 9 brance. This case should not be re- N. Y. S. 141; Harper v. Edwards, lied upon elsewhere as an authority. § 345 DEBT SECURED 478 bilities of the latter as surety for the former, is valid without a more particular description.^^ But when it is attempted to describe the debts secured, to entitle a debt to the benefit of the security it must come fairly within the terms used in the mortgage. The debt de- scribed in the mortgage is the debt secured.^^ Usually all that is required is that the debt be suflQciently described and limited in the mortgage, so that it may be recognized and distin- guished from other debts or obligations.^' But a statement in a mortgage of the amount of the debt secured is not conclusive in that regard, and the mortgagor may show that the lien was for a less sum,^" or even that the mortgage lien was given for a different purpose than that stated therein.'^ A reference to a larger amount in an unexe- cuted agreement between the parties can not control the description in the mortgage.^^ A mortgage which correctly described other debts and then men- tioned "a note or notes for about three hundred fifty dollars," was held not to' include six notes amounting to over one thousand five hun- dred dollars.^^ In like manner, a mortgage securing "an account for about fifty dollars" does not include accounts exceeding nine hundred dollars.^* A mortgage to secure a gross sum, which the mortgagee was at liberty to furnish in materials toward the erection of a house "Michigan Ins. Co. v. Brown, 11 626, 12 S. W. 534; Paine v. Benton, Mich. 265; Vanmeter v. Vanmeter, 3 32 Wis. 491. Grat. (Va.) 148. See also Machette =°Huckaba v. Abbott, 87 Ala. 409, V. Wanless, 1 Colo. 225; Huntington 6 So. 48; Louisville Banking Co. v. V. Kneeland, 102 App. Div. 284, 92 Leonard, 90 Ky. 106, 11 Ky. L. 917, N. Y. S. 944; Spedden v. Sykes, 51 13 S. W. 521; Ruloft v. Hazen, 124 Wash. 267, 98 Pac. 755. Mich. 570, 83 N. W. 370; Nazro v. =* Flower v. O'Bannon, 43 La. Ann. Ware, 38 Minn. 443, 38 N. W. 359; 1042, 10 So. 376. See also Mantle v. Burnett v. Wright, 135 N. Y. 543, 32 Dabney, 44 Wash. 193, 87 Pac. 122. N. B. 253; Mackey v. Brownfleld, 13 "= Hughes v. Edwards, 9 Wheat. Serg. & R. (Pa.) 239. (U. S.) 489, 6L. ed. 146; Ray V. Hal- "'Saunders v. Dunn, 175 Mass. lenbeck, 42 Fed. 381; Moran v. Gar- 164, 55 N. E. 893; Hannan v. Han- demeyer, 82 Cal. 96, 23 Pac. 6; King nan, 123 Mass. 441, 25 Am. Rep. 121; V. Kilbride, 58 Conn. 109, 19 Atl. Wearse v. Peirce, 24 Pick. (Mass.) 519; Hough v. Bailey, 32 Conn. 288; 141; Holsman v. Boiling Spring Walker v. Doane, 131 111. 27, 22 N. Bleaching Co., 14 N. J. Eq. 335; E. 1006; Kellogg v. Frazier, 40 Iowa Baird v. Baird, 145 N. Y. 659, 40 N. 502; Partridge v. Swazey, 46 Maine E. 222, 28 L. R. A. 375; Hill v. 414; Boyd v. Parker, 43 Md. 182; Hoole, 116 N. Y. 299, 22 N. E. 547, Warner v. Brooks, 14 Gray (Mass.) 5 L. R. A. 620. 107; Johns v. Church, 12 Pick. '^'Turnbull v. Thomas, 1 Hughes (Mass.) 557, 23 Am. Dec. 651; Aull (U. S.) 172. V. Lee, 61 Mo. 160; Gilman v. Moody, »= Storms v. Storms, 3 Bush (Ky.) 43 N. H. 239; Robertson v. Stark, 67. 15 N. H. 109; Bank of Buffalo v. "Storms v. Storms, 3 Bush (Ky.) Thompson, 121 N. Y. 280, 24 N. E. 67. 473; Williams v. Silliman, 74 Tex. 479 DESCRIPTION OF THE DEBT § 346 for the mortgagor, does not cover a collateral liability assumed by the mortgagee as surety or guarantor for the mortgagor. ^^ A mortgage executed to secure a note for five thousand dollars payable in six months does not secure a note for three thousand dollars payable in thirty days, if the latter note was given in a nevir and independent transaction upon the failure of negotiations for a loan of the first- mentioned sum.^" A mortgage which expressly recites that it is given to secure the prompt payment of rent according to the terms of a certain written lease, and names the amount secured, which amount corresponds with the amount agreed in the lease to be paid as rent, does not secure rents which become due after the expiration of such lease under a tenancy arising by implication of law from holding over after such lease expired.^^ § 346. Particular debts or obligations secured. — A mortgage to secure an unliquidated debt, as, for instance, an open book account, is good."^ So is a mortgage to secure an agreement of indemnity or any other agreement.^" So is a mortgage by a trustee to secure the payment of the moneys in his hands belonging to the trust estate, the amount of which is then unascertained. So is a mortgage to secure the fidelity of an agent or factor;^" or a mortgage to secure any '= Doyle V. White, 26 Maine 341, 45 statute requires that the debt shall Am. Dec. 110. A mortgage to se- be expressed in the mortgage, it can cure the payment of dues to a build- not be made to cover unliquidated ing association does not secure the damages. Bethlehem v. Annis, 40 payment of a sum in addition there- N. H. 34, 77 Am. Dec. 700. See also to, there being no express agree- Shirras v. Caig, 7 Cranch (U. S.) ment to pay such additional sum. 34, 3 L. ed. 260; United States v. Whipperman v. Smith, 93 Ind. 275. Sturges, 1 Paine (TJ. S.) 525, Fed. =" Walker v. Carleton, 97 111. 582. Cas. No. 16414; Merrills v. Swift, 18 A mortgage conditioned as security. Conn. 257, 46 Am. Dec. 315; Emery in addition to the principal sum v. Owings, 7 Gill (Md.) 488, 48 Am. named, "for all further advances to Dec. 580 ; Barker v. Barker, 62 N. H. the mortgagor by the mortgagee 366; Farr v. Doxtater, 29 N. Y. St. that may exist, arise, or be con- 531, 9 N. Y. S. 141; De Mott v. Ben- tracted before the satisfaction here- son, 4 Edw. Ch. (N. Y.) 297; Esterly of," does not secure a subsequent v. Purdy, 50 How. Pr. (N. Y.) 350; note, indorsed by the mortgagor, Seymour v. Darrow, 31 Vt. 122; Van- and by. him transferred to the meter v. Vanmeter, 3 Grat. (Va.) mortgagee. The mortgagee could 148; Fisher v. Otis, 3 Pin. (Wis.) go out and buy up the notes of third 78, 3 Chand. 83. parties, upon which the mortgagor ^»Cook v. Bartholomew, 60 Conn, was a simple indorser, and hold 24, 22 Atl. 444. See also Cazort &c. them as secured by that mortgage. Co. v. Dunbar, 91 Ark. 400, 121 S. Moran v. Gardemeyer, 82 Cal. 96, 23 W. 270; Emerson v. Knight, 130 Ga. Pac. 6. See post § 378. 100, 60 S. K 255; Fidelity &c. Co. v. "Fields V. Mott, 9 N. Dak. 621, 84 Oliver, 57 Wash. 31, 106 Pao. 483. N. W. 555. " Stoughton v. Pasco, 5 Conn. 442, =• In New Hampshire, where a 13 Am. Dec. 72. § 346 DEBT SECURED 480 balance that may remain after application to the debt of moneys that may be collected upon other securities held by the creditor;*^ or a mortgage to secure all the indebtedness of the mortgagor to the mort- gagee;*^ or to secure the payment of a debt which existed before the making of a mortgage.*^ But a mortgage to secure a particular debt can not be extended by subsequent parol agreement to secure other debts.** The obligation may consist of an implied promise of the mortgagor to pay the money loaned him by the mortgagee.*^ A de- scription of a debt secured by the mortgage as a certain sum, "or thereabout," is sufficient to put a person upon inquiry as to the amount of the incumbrance, and the mortgage is good for a sum not very materially larger than that mentioned.*' Although a mortgage be given for a definite sum, it is competent to prove by parol that it was given to secure an open account, the balance of which is continually varying,*' or to secure payment to be made in materials under a prior agreement between the parties.*' A mort- gage to secure future and contingent debts is good against a prior unregistered mortgage.** If a mortgage be given to secure an unliquidated debt, or an unad- justed account, or balance of account, the burden is upon the holder of it to produce the accounts and prove what is due.°" A sum to be ascertained by an award may be secured by mortgage. But where it was provided that the referees, taking certain data stated in the mort- gage as their rule or guide, should make their award and return it in writing to the parties within thirty days after their appointment, the award having failed by reason of the misconduct of the arbitrators, it was held that the mortgage was security for the amount of an award « Clarke v. Bancroft 13 Iowa 320. Huntington y. Kneeland, 187 N. Y. *" Hoye v. Burford, 68 Ark. 256, 57 563, 80 N. E. 1111. S. W. 795. «■ Todd v. Todd, 164 Cal. 255, 128 "'Morse v. Godfrey, 3 Story (U. Pac. 413. S.) 364, Fed. Cas. No. 9856; Gafeord "Booth v. Barnum, 9 Conn. 286, V. Stearns, 51 Ala. 434; Rea v. Wil- 23 Am. Dec. 339. son, 112 Iowa 517, 84 N. "W. 539; "Esterly v. Purdy, 50 How. Pr. Chaffee v. Atlas Lumber Co., 43 (N. Y.) 350; quoted with approval Nebr. 224, 61 N. W. 637, 47 Am. St. in Moses v. Hatfield, 27 S. Car. 324, 753; Mingus v. Condit, 23 N. J. Eq. 3 S. B. 538. 313; Delancey v. Stearns, 66 N. Y. «Rees v. Logsdon, 68 Md. 95, 11 157. See post § 460. Atl. 708. "Hester v. Gairdner, 128 Ga. 531, *» Moore v. Ragland, 74 N. Car. 58 S. B. 165; Leger v. Leger, 118 La. 343. 322, 42 So. 951; Hayhurst v. Morln, "De Mott v. Benson, 4 Bdw. Ch. 104 Maine 169, 71 Atl. 707. But see (N. Y.) 297. 481 DESCRIPTION OF THE DEBT § 348 to be made in this manner, and that the mortgagees could not have relief in equity upon a bill for a sale of the mortgaged property.^^ § 347. Recital of antecedent debt. — ^Whether a mortgage given to secure an antecedent debt entitles the mortgagee to the position of a purchaser for value is a question elsewhere considered/^ upon vehich the adjudications are not in harmony. A recital in the mortgage that the mortgagor is indebted to the mortgagee in a certain sum, for which "he has given his checks," does not imply that the mortgage was given for an antecedent debt.^^ § 348. Where mortgage given for greater or less sum than actual debt. — A mortgage given as security for a part of the indebtedness of the mortgagor to the mortgagee, such as one given to secure the sum of three thousand dollars when the mortgagor was indebted to the mortgagee in the sum of ten thousand dollars and upward, the balance of an account current between them, can not be objected to on the ground that the mortgagee could not, under the recording system, be allowed to take a mortgage to secure a part of the debt, and hold it as a valid security on the property until the whole debt is paid. The objection was not to any uncertainty in the debt intended to be .secured, but rather to the application of subsequent payments made by the debtor, without any specific direction at the time as to their appli- cation. But it was held that the payments were properly applicable to the unsecured part of the debt, and that the mortgage remained a valid security for the remainder of the debt.^* But where a mortgage specifies the amount secured thereby, the presumption is, in the ab- sence of special indemnity covenants, that the mortgage was given only as security for the sum named."^ A mortgage given for a greater sum than the amount due, without fraudulent intent, is valid to the extent of the actual debt.'*" In such case the mortgagor may show that the lien was for a less sum than that expressed in the mortgage." "Emery v. Owings, 7 Gill (Md.) N. W. 359; Gordon v. Preston, 1 488, 48 Am. Dec. 580. Watts (Pa.) 385, 26 Am. Dec. 75. "^See post §§ 459, 460. See also Mutual Loan Assn. v. Tyre =^ Winchester v. Baltimore &c. R. (Del.), 81 Atl..48. Co., 4 Md. 231. See also Tennis Coal " Huckaba v. Abbott, 87 Ala. 409, Co. v. Asher, 143 Ky. 223, 136 S. W. 6 So. 48; Louisville Banking Co. v. 197. Leonard, 90 Ky. 106, 11 Ky. L. 917. "Chester v. Wheelwright, 15 13 S. W. 521; Felder v. Leftwioh, Conn. 562. 123 La. 931, 49 So. 645; Ruloff v. '"BergdoU v. Sopp, 232 Pa. 21, 81 Hazen, 124 Mich. 570, 83 N. W. 370; Atl 62 Nazro v. Ware, 38 Minn. 443, 38 N. "Nazro v. Ware, 38 Minn. 443, 38 W. 359; Burnett v. Wright, 135 N. 31— Jones Mtg. — Vol. I. § 349 DEBT SECURED 483 § 349. Note described in mortgage. — The description of the note secured need not be made with the utmost particularity, but only so that it may be reasonably identified.^' Thus it is sufficient for the mortgage to recite that it is given to secure ten promissory notes of a specified date, without stating when the notes become due and what amount they call for.°' A condition to secure "all and any notes the said grantees may hold against me" is sufficient.*" But a mere refer- ence to a note without specifying its contents is not sufficient to put subsequent purchasers on inquiry. °^ The note may be described ac- cording to its tenor and effect.^^ The omission to state in the mortgage the amount of the note se- cured is not fatal. *^ An omission to state the date of a note, or the date of maturity, or the precise amount of the debt when its amount is ascertained will not render the description faulty for uncertainty.** The omission in the mortgage of the words "or order," in describing a note payable to the mortgagee or order, is not such a variance as to render the note inadmissible in evidence."^ A mortgage conditioned to pay a note in a certain penal sum, when in fact the note was without penalty, is not invalid for want of reason- able certainty. The whole sum of the penalty may be due, and no one could be misled except through his own negligence to make in- quiry as to the amount due."* A condition that the mortgage shall be void upon the payment of the notes described in another mortgage, referred to by date and record in another county of the state, suffi- ciently indicates the amount secured, and is valid.*'' A mortgage is sufficient which refers to a note which had been made out but not signed, and which, by mistake or fraud, never was signed, though it was agreed that it should be executed.*' Y. 543, 32 N. E. 253; Mackey v. AuU v. Lee, 61 Mo. 160; Somers- Brownfield, 13 Serg. & R. (Pa.) 239. worth Sav. Bank v. Roberts, 38 N. ^Wincliell v. Coney, 54 Conn. 24; H. 22. "Webb V. Stone, 24 N. H. 282. See ■« Wilson v. Vaughn, 61 Miss. 472. also Bowen v. RatclifE, 140 Ind. 393, " In re Farmers' Supply Co., 170 39 N. B. 860, 49 Am. St. 203. See Fed. 502; Utley v. Smith, 24 Conn, ante § 71. 290, 63 Am. Dec. 163; Babcock v. ''^ Hollenbeck v. Woodford, 13 Ind. Lisk, 57 111. 327; Merrill v. Elliott, App. 113, 41 N. E. 348. 55 111. App. 34; Pearce v. Hall, 12 ""Magirl v. Magirl, 89 Iowa 342, 56 Bush (Ky.) 209. N. W. 510; Page v. Ordway, 40 N. H. "'Hough v. Bailey, 32 Conn. 288. 253. «» Prink v. Branch, 16 Conn. 260. " Harper v. Edwards, 115 N. Car. "' Kellogg v. Frazier, 40 Iowa 502. 246, 20 S. E. 392. ««Volmer v. Stagerman, 25 Minn. ™ Allen V. Lathrop, 46 Ga. 133; 234. Hoskins v. Cole, 34 111. App. 541; 483 DESCRIPTION OF THE DEBT § 350 A mortgage conditioned to pay whatever sum the mortgagor might owe the mortgagee, either as maker or indorser of any notes or bills, bonds, cheeks, over-drafts, or securities of any kind given by him, according to the conditions of any ^ueh writings obligatory, executed by him to the mortgagee as collateral security, secures only such debts as are evidenced by writing.'^' The recitals in a mortgage are competent evidence against the mort- gagor to prove the consideration of the note described in it.'" It will be presumed that a "note," referred to in a mortgage or deed of trust, is not under seal.''^ When the validity of the mortgage is attacked by a creditor or a pur- chaser, parol evidence is admissible to show the real consideration, and what note was actually intended to be described.''^ As the note is the evidence of the debt and the mortgage the security therefor, there is no debt secured by the mortgage where no note is executed as pre-' scribed in the mortgage.^^ § 350. Effect of variance between note and description thereof in mortgage. — It is not necessary that all the particulars of the note or other obligation secured by a mortgage should be specified in the conditions of it, in order to identify it as the note intended to be se- cured. If the paper offered in evidence agrees with the description contained in the mortgage so far as that goes, only in that this descrip- tion is not complete, the possession and production of the instrument are prima facie evidence that it is the same mentioned in the condi- tion. If, however, the description in the condition varies from the paper offered in evidence in certain particulars, then the mere pos- session of it might not furnish even prima facie evidence that it is the obligation intended to be secured.''* It is only necessary that the mortgage should state correctly sufficient facts to identify the paper with reasonable certainty ; and then, if some particulars of the descrip- tion do not correspond precisely with the instrument produced, it is not material.''* ■^^ Walker v. Paine, 31 Barb. (N. " Robertson v. Stark, 15 N. H. 109. Y.) 213. See also Colby v. Everett, 10 N. H. "Warner v. Brooks, 14 Gray 429; Weber v. lUing, 66 Wis. 79, 27 (Mass.) 107. See post §§ 1223, 1225. N. W. 834. "Jackson v. Sackett, 7 Wend. (N. "This is illustrated by the case Y.) 94; Walker v. McConnico, 10 of a mortgage to secure "a certain Yerg. (Tenn.) 228. promissory note made and delivered " Nazro v. Ware, 38 Minn. 443, 38 on or about the eighth day of Au- N. W. 359. gust, 1867, * * * payable on or "Leader Pub. Co. v. Grant Trust about one year from date, to the N. &c. Co., 174 Ind. 192, 91 N. E. 498. W. U. P. Company," signed by three § 350 DEBT SECURED 484: While a mortgage may modify the contract, an irreconcilable con- tradiction by the mortgage of the terms of the notes can not be al- lowed to affect the contract as shown by the notes. The indebtedness is represented by the notes which constitute the primary contract. To these the mortgage is collateral, and to them it refers only for the purpose of identification of the debt and contract.'" When a note agrees in some respects with the description, but varies in others, it may be proved by parol to be the one intended in the mortgage.^' Thus, a variance of the note offered in connection with the mortgage from the description in the condition, in that the note is payable with interest annually, whereas the mortgage describes the note as payable with interest, is not a material one.''^ If, however, the note pro- duced be totally variant from that described in the mortgage, such evidence is inadmissible in an action at law.''' It is no objection to the validity of a mortgage that it does not state the names of the holders of the notes secured, when they are otherwise identified; and such a mortgage, when duly recorded, is notice to subsequent purchasers of the property of the existence of the notes intended to be secured, and they are bound by the legal effect of the incumbrance.^" A mortgage for the payment of a debt, according to the condition of a bond recited in the mortgage, will not be avoided in equity for the reason that the day of payment of the bond has already passed. At law, the condition being impossible, the deed would be regarded as absolute; but in equity it is a security merely like an ordinary mortgage.*'- Where a mortgage was conditioned for the payment of a sum of persons, for a sum named. In a fore- "Whitney v. Hale, 67 N. H. 385, closure suit, the note produced was 30 Atl. 417; Boody v. Davis, 20 dated August 6, 1867, payable on or N. H. 140, 51 Am. Dec. 210; Mc- before September 1, 1868, to the Kinster v. Babcock, 26 N. Y. 378; Northwestern Union Paclcet Com- Harper v. Edwards, 115 N. Car. 246, pany, at the National Bank of La 20 So. 392; Hurd v. Robinson, 11 Crosse, and was for the same sum Ohio St. 232. and signed by the same persons '"Ferris v. Johnson, 136 Mich. 227, named in the mortgage; but there 98 N. W. 1014. was a condition inserted that it " Williams v. Hinton, 35 Maine might be paid by the delivery of a 547; Sweetser v. Lowell, 33 Maine barge in lieu of money. The note 446; Cushman v. Luther, 53 N. H. was admitted in evidence as suflS- 562; Melvin v. Fellows, 33 N. H. 401; ciently identified by the descrip- Stanford v. Andrews, 12 Heisk. tion in the mortgage. Paine v. Ben- (Tenn.) 664. ton, 32 Wis. 491. Ogborn v. Eliason, "Webb v. Stone, 24 N. H. 282. 77 Ind. 393. See also Partridge v. ™ Follett v. Heath, 15 Wis. 601. Swazey, 46 Maine 414; Williams v. '"Boyd v. Parker, 43 Md. 182. Hilton, 35 Maine 547, 68 Am. Dec. »' Hughes v. Edwards, 9 Wheat 729; Johns v. Church, 12 Pick. (U. S.) 489, 6 L. ed. 142. (Mass.) 557, 23 Am. Dec. 651; 485 DESCRIPTION OF THE DEBT § 351 money on a day named, the year being left blank, according to the tenor of a promissory note for that sum, and the note was never made, and only a small part of the money loaned, for which a receipt was given, it was considered that the bargain was incomplete, and the mortgage of no effect. It was regarded as never having been executed for the purpose of having efEect according to its tenor.^^ The mortgage need not set forth a literal copy of the note secured by it. If the amount of the note is stated, it does not matter that other important particulars are omitted.*^ It is sufficient to describe its legal effect.** The condition of a mortgage to secure the payment "of fifty dollars in sixty days from the date hereof, meaning and in- tending the legal claims and demands the mortgagee has against me," is not void for uncertainty; the true construction of it being that it secures the payment of the sum due, not exceeding that amount.*" § 351. Note and mortgage construed together. — The note and mort- gage are construed together.*" When there is any uncertainty as to the amount secured by the mortgage, the notes referred to in it are competent evidence to explain the language as against the mortgagor, or one who purchased the equity of redemption with notice of the notes intended to be secured ; as when the mortgage described the debt as "two promissory notes, bearing even date herewith, for the sum of five hundred dollars, one payable in 1853, and the other in 1853," and the notes were for five hundred dollars each. Such evidence is not contradictory to the language of the mortgage, but explanatory.*^ Where a mortgage described a bond secured by it as of a certain sum, a bond for a smaller sum, and dated one day later, may be shown in evidence to have been substituted for the bond described, and, in an action to foreclose, judgment may be rendered for the amount of the latter bond.** °= Parker v. Parker, 17 Mass. 370. v. Lake View Town Co. (Cal. App.), ''King V. Kilbride, 58 Conn. 109, 86 Pac. 727; Spesard v. Spesard, 75 19 Atl. 519. Kans. 87, 88 Pac. 576; Kingsley v. " AuU V. Lee, 61 Mo. 160. Anderson, 103 Minn. 510, 115 N. W. »=Machette v. Wanless, 1 Colo. 642; Bartels v. Davis, 34 Mont. 285, 225; Michigan Ins. Co. v. Brown, 11 85 Pac. 1027; Security Trust &c. Co. Mich. 266; North v. Crowell, 11 N. v. Ellsworth, 129 Wis. 349, 109 N. W. H. 251. 125. '°Lockrow V. Cline, 4 Kans. App. "McDonald v. Second Nat. Bank, 716, 46 Pac. 720; Kansas Loan &c. 106 Iowa 517, 76 N. "W. 1011; Crafts Co. v. Gill, 2 Kans. App. 488, 43 Pac. v. Crafts, 13 Gray (Mass.) 360; 991; Cabell V. Knote, 2 Kans. App. 68, Moses v. Hatfield, 27 S. Car. 324, 3 43 Pac. 309. See also Trinity County S. E. 538. Bk. V. Haas, 151 Cal. 553, 91 Pac. »» Baxter v. Mclntire, 13 Gray 385; Meyer v. "Weber, 133 Cal. 681, (Mass.) 168. 65 Pac. 1110; San Gabriel Val. Bank § 351 DEBT SECURED 486 The note and mortgage may supplement each other in stating the debt secured f as -where the mortgage states the rate of interest, which is omitted from the note/" or where the note provides for interest at ten per cent, per annum, and the mortgage provides for the same rate of interest payable annually;"^ and, inasmuch as the mortgage provides for something respecting which the note was silent, the mort- gage governs the contract in this respect."^ But where a mortgage provides for the payment of a certain sum with interest, and recites that upon such pa3mient the deed, as well as a promissory note for the amount stated, with interest, shall be void, but the note makes no men- tion of interest, parol evidence is admissible to show that the note was the only debt secured by the mortgage.'^ If there is a conflict be- tween the note and the mortgage as to the amount of interest recover- able upon default of payment, the terms of the note control."* The note and mortgage may supplement each other in other ways."' Thus, if the mortgage provides that upon any default in the pay- ment of interest the whole mortgage debt shall become due, a note representing the mortgage debt, though it does not contain this pro- vision, becomes due upon such default, and a personal judgment may be rendered against the maker of the note for the deficiency after applying the amount obtained from a sale of the mortgaged prop- erty."" A like provision in the mortgage note affects the mortgage from which it is omitted."' ™ Wheeler &c. Mfg. Co. v. Howard, See also Mowry v. Sanborn, 68 N. Y. 28 Fed. 741 ; Chambers v. Marks, 93 153. Ala. 412, 9 So. 74; Hill v. Banks, 61 »= Hampden Cotton Mills T. Pay- Conn. 25, 23 Atl. 712; Leedy v. Nash, son, 130 Mass. 88. 67 Ind. 311; Cleavenger v. Beath, 53 "New England Mtg. Sec. Co. v. Ind. 172; Swearingen v. Labrier, 93 Casebler, 3 Kans. App. 741, 45 Pac. Iowa 147, 61 N. W. 431, 26 L. R. A. 452. 765; Dean v. Ridgway, 82 Iowa 757; »= Wheeler &c. Mfg. Co. v. Howard, Clayton v. Whitaker, 68 Iowa 412, 28 Fed. 741; Commercial Exchange 27 N. W. 296; Stanclift v. Norton, Bank v. McLeod, 67 Iowa 718, 25 N. 11 Kans. 218; Stowe v. Merrill, 77 W. 894; Shores v. Doherty, 65 Wis. Maine 550, 1 Atl. 684; Lantry v. 153, 26 N. W. 577. French, 33 Nebr. 524, 5 N. W. 679; »= Gregory v. Marks, 8 Biss. (U. McCaughrin v. Williams, 15 S. Car. S.) 44, Fed. Cas. No. 5802. Opposed 505; Evenson v. Bates, 58 Wis. 24, to this is the decision in Hutchin- 15 N. W. 837. son v. Benedict, 49 Kans. 545, 31 ™ Elliott V. Deason, 64 Ga. 63. Pac. 147, where it was held that the "■ Richards v. Holmes, 18 How. (U. terms of the note must govern in S.) 143, 15 L. ed. 304; Winchell v. such case, on the ground that the Coney, 54 Conn. 24, 5 Atl. 354; mortgage is but an Incident of the Bangs V. Fallon, 179 Mass. 77, 60 N. debt evidenced by the note. See E. 403; May v. Gates, 137 Mass. 389; post § 1179. Jarvis v. Fox, 90 Mich. 67, 51 N. W. »' Fletcher v. Daugherty, 13 Nebr. 272. 224, 13 N. W. 207. °^ Dobbins v. Parker, 46 Iowa 357. 487 DESCRIPTION OF THE DEBT § 351 The negotiable character of a note or bond is not affected by a re- cital therein that it is according to the conditions of a mortgage, where the terms of the latter instrument, construed with the note or bond, would not affect the essential elements of negotiability.^' The debt stated in the note as one sum may be changed by the mortgage into several sums which are charged upon particular lots, so that the mortgagor may pay any one of these sums within the time stated, and become entitled to a discharge of the lot on which such sum was made a charge.'® The notes secured are prima facie evidence of the amount of the mortgage debt.^ Where three papers instead of two are employed to express the mort- gage contract these are all to be construed together ; as where the three papers were a mortgage, a promissory note payable on demand and an agreement by which payment, so far at least as it related to a fore- closure of the mortgage, was postponed until the decease of the mort- gagor, or until he should make default in paying the monthly instal- ments or keeping the buildings reasonably insured for the mort- gagee's benefit. "Construing the note and mortgage as embracing the contemporaneous agreement,^ the note is payable, with interest month- ly, at the rate named on demand after the decease of the mortgagor if the interest is paid when due, and if not, on demand after a default in the payment of interest; and the mortgage secures the payment of the note and the performance of the mortgagor's agreement in respect to insurance. The mortgage could not be foreclosed so long as the mortgagor made payments and kept up the insurance according to his agreement."^ Where the note and mortgage are at variance in some particular it has been held that the terms of the note shall govern inasmuch as the note is the principal obligation and the mortgage merely an incident thereto; as where a note drawing interest at seven per cent, provided that upon default in the payment of interest the entire principal shall at the option of the holder become due and twelve per cent, interest "'Farmer v. First Nat. Bank, 89 Cunningham v. McDonald, 98 Tex. Arlt. 132, 115 S. W. 1141, 131 Am. 316, 83 S. W. 372; Tliorp v. Minde- St. 79; Hunter v. Clarke, 184 111. man, 123 Wis. 149, 101 N. "W. 417, 68 158, 56 N. E. 297, 75 Am. St. 160; L. R. A. 146, 107 Am. St. 1003. Bank of Carroll v. Taylor, 67 Iowa " Barge v. Klausman, 42 Minn. 572 25 N. W. 810; Brooke v. Struth- 281, 44 N. W. 69. ers, 110 Mich. 562, 68 N. W. 272, 35 ^ Ording v. Burnet, 178 111. 28, 52 L. R. A. 536; Dutton v. Ives, 5 Mich. N. E. 851. 615; Blumenthal v. Jassoy, 29 Minn. ^Hill v. Huntress, 43 N. H. 480. 177, 12 N. W. 517; Bradbury v. Kin- 'Sanborn v. Ladd, 69 N. H. 222, ney, 63 Nebr. 754, 89 N. W. 257; 223, 39 Atl. 1072, per Chase, J. § 353 DEBT SECURED 488 shall be paid from that time, but the mortgage provided that on such default interest should be computed at twelve per cent, from the date of the note, it was held that interest should be computed in ac- cordance with the note.* § 352. Identity of note and amount thereof shown by parol evi- dence. — ^While it is true that a written contract can not be contra- dicted or varied by parol evidence, yet such evidence is competent to apply a written contract to its proper subject-matter.^ Thus parol evidence is admissible to identify a note, and show that the note pro- duced is the one referred to in the mortgage." Such evidence has been admitted to show that a mortgage made to Ebenezer Hall 3d, conditioned for the payment of a note of the same date, in fact se- cured a note to Ebenezer Hall which was dated several months earlier.'' In the same case, a further discrepancy of one thousand years in the date of the note was considered so palpably a mere clerical mistake that no explanation of it was required. In general it may be said that a mortgage is not invalid, either between the parties, or as to third persons, on account of uncertainty in the description of the debt, when, upon the ordinary principle of allowing extrinsic evidence to apply a written contract to its proper subject-matter, the debt intended to be secured can be shown.* Very considerable latitude has been allowed in admitting evidence to show that securities offered at the trial of an action to foreclose a mortgage are really substitutes for those described in it; and they have been held to be secured by it, although not corresponding in any *Keys V. Lardner, 55 Kans. 331, 61 Mo. 160; Bell v. Fleming, 12 N. J. 40 Pac. 644. Eq. 13; Jackson v. Bowen, 7 Cow. "Jones V. Guaranty &c. Co., 101 IT. (N. Y.) 13. See also Shoemaker v. S. 622, 25 L. ed. 1030; Emerson v. Smith, 80 Iowa 655, 45 N. W. 744; Knight, 130 Ga. 400, 60 S. E. 255; Mossop v. Creditors, 41 La. Ann. Moses V. Hatneld, 27 S. Car. 324, 3 296, 6 So. 134; Blair v. Harris, 75 S. E. 538. See also in this connec- Mich. 167, 42 N. "W. 790; Caldwell tion Hester v. Gairdner, 128 Ga. 531, v. Sisson, 150 Mo. App. 547, 131 S. 58 S. E. 165; Bowen v. RatclifE, 140 W. 140; McAteer v. MoAteer, 31 S. Ind. 393, 39 N. E. 860, 49 Am. St. Car. 313, 9 S. B. 966. See post 203; Spedden v. Sykes, 51 Wash. 267, §§ 367, 384. 98 Pac. 752. 'Hall v. Tufts, 18 Pick. (Mass.) ° Jones V. Guaranty &c. Co., 101 U. 455. S. 622, 25 L. ed. 1030; Duval v. Mc- « Clark v. Hyman, 55 Iowa 14, 7 N. Loskey, 1 Ala. 708; Stowe v. Merrill, W. 386, 39 Am. Rep. 160; Gill v. 77 Maine 550, 1 Atl. 684; Hall v. Pinney, 12 Ohio St. 38; Hurd v. Rob Tay, 131 Mass. 192; Goddard v. inson, 11 Ohio St. 232; Tousley v. Sawyer, 9 Allen (Mass.) 78; Johns Tousley, 5 Ohio St. 78. See also In V. Church, 12 Pick. (Mass.) 557„ 23 re Farmers' Supply Co., 170 Fed. Am. Dec. 651; Nazro v. Ware, 38 502. Minn. 43, 38 N. W. 359; AuU v. Lee, 489 DESCRIPTION OF THE DEBT § 352a particular with those described m the mortgage.® But it has been held that where there is a totally false description of the note intended to be secured, parol evidence is inadmissible to identify the note in an action at law.^" A mortgage which recited that it was given to secure the payment of a note described, "and also in consideration of the further sum of five hundred dollars," paid to the mortgagor, was held to be security for the sum of five hundred dollars in addition to the note. Parol evidence of this further indebtedness of five hundred dollars was al- lowed, as not enlarging the terms of the mortgage, but simply showing the true amount. A mortgage conditioned to pay a certain sum, and also to secure a bond, the condition of which covers all liabilities of the debtor to the mortgagee, is construed to cover all indebtedness under the bond, the amount and nature of which may be shown by parol. ^^ In some jurisdictions, however, the statute requires that the amount of the debt intended to be secured be specifically stated in the mortgage. ^^ § 352a. Parol proof of debt where mortgage is in form an absolute conveyance. — In case the mortgage is in the form of an absolute con- veyance for a nominal consideration, the debt secured may be shown by any competent written or parol evidence. In the absence of any proof of intention to limit the security, it might be presumed that such a deed is security for all sums due from the grantor to the grantee. In South Carolina the rule has been held to be, that the grantor shall not be permitted to redeem except upon paying whatever he may owe to the person holding the legal title, both the debt which the absolute conveyance was given to secure and all other debts, whether secured or unsecured, which the grantor may owe at the time he seeks to re- deem such conveyance to the person who holds the title.^^ But if the "Baxter v. Mclntire, 13 Gray When a mortgagee, holding a for- (Mass.) 168, per Dewey, J.; Gunn v. mal, legal mortgage, undertakes to Jones, 67 Ga. 398. enforce his rights thereunder, he is "Follett v. Heath, 15 Wis. 601. proceeding to enforce rights resting "Babcock v. Lisk, 57 111. 327; in contract, and hence he is confined New Hampshire Bank v. Willard, 10 to the terms of the contract, as N. H. 210. See also Felder v. Left- agreed upon by the parties at the wich, 123 La. 931, 49 So. 645. time the contract was entered into "Page V. Ordway, 40 N. H. 253. in the solemn form of a mortgage. See also Mans v. McKellip, 38 Md. He can not, therefore, be permitted 231. to show that his mortgage, which '" Walker v. Walker, 17 S. Car. 329, was originally intended to secure qualified by O'Neill v. Bennett, 33 S. one debt, has, by a subsequent parol Car. 243, 11 S. B. 727, and Lake v. agreement, been so extended as to Shumate, 20 S. Car. 23. "The rea- cover another debt, not contem- son for the distinction is this: plated by the parties at the time the § 353 DEBT SECURED 490 deed is given and accepted as security for a particular debt or loan, the better rule is that it can not be held as security for any other debt, and the restriction of the security to the particular debt may be proved by parol.^* Where there is nothing in a -written contract to reconvey, to show the amount of the debt, parol evidence is admissible to show that the deed was given to secure existing indebtedness of the amount stated as a consideration for the deed and for future advances.^^ i§ 353. Note or bond not necessary to validity of deed of trust or mortgage. — ^A deed of trust or mortgage is valid without any note or bond, although it purports to secure a note or bond, and substantially describes it.^^ It is not necessary that there should be any personal liability on the part of the mortgagor for the debt secured by the mortgage.^^ An alteration of the note secured not fraudulently made, though it may destroy the written evidence of the debt, does not aflEect the mortgage.^' But it has been held that an alteration of the note which contract which he Is seeking to en- force was entered into. But where, as in this case, one who holds the legal title to a tract of land under an absolute conveyance, seeking to enforce his legal rights thereunder, is met by a showing on the part of his grantor that, although he holds the legal title, equity will not per- mit him to enforce it, because at the time it was executed such paper was not intended to operate as an abso- lute conveyance, but was intended merely as a security for the pay- ment of a debt, and hence if the paper were allowed the effect of an absolute conveyance it would oper- ate as a fraud, it is not a question of contract, but one of pure equity; and the maxim that he who seeks equity must himself do equity ap- plies." Per Mclver, C. J., in Levi V. Blackwell, 35 S. Car. 511, 15 S. E. 243. See post § 1084. See also Ja- coby V. Funkhouser, 147 Ala. 254, 40 So. 291. "McKee v. Jordan, 50 N. J. Eq. 306, 24 Atl. 398. In this case the conveyance which was made by a mother to secure a loan to her son and constituted the son's apparent authority, did not bear on its face authority to pledge It for any par- ticular sum, but, at the time of its delivery, the mortgagee had explicit notice that the son's authority was limited, or intended to be limited, to an authority to pledge for $600. Defendant chose, in the face of this notice,' to accept and rely upon the son's false statement that his mother had authorized him to pledge it for $850. In so doing, he relied upon the statement of the son, and not on the apparent authority of the pos- session of the deed. He was not mis- led by that or any act of the com- plainant, and can not, therefore, cast upon her his loss. The case is dis- tinguishable from Moore v. Metro- politan Nat. Bank, 55 N. Y. 41, cited and relied upon by the mortgagee. " Hester v. Gairdner, 128 Ga. 531, 58 S. E. 165. "Baldwin v. Raplee, 4 Ben. (U. S.) 433, Fed. Gas. No. 801; Bradley V. Merrill, 88 Maine 319, 34 Atl. 160; Mitchell V. Burnham, 44 Maine 286; Smith V. People's Bank, 24 Maine 185; Goodhue v. Berrien, 2 Sandf. Ch. (N. Y.) 630. "Mills V. Darling, 43 Maine 565; Cook V. Johnson, 165 Mass. 245, 43 N. E. 96, citing Campbell v. Dear- born, 109 Mass. 130, 12 Am. Rep. 671; Rice v. Rice, 4 Pick. (Mass.) 349; Glover v. Payn, 19 Wend. (N. Y.) 518. "Clough V. Seay, 49 Iowa 111; Mersman v. Werges, 112 U. S. 139, 491 DESCEIPTION OF THE DEBT § 353 destroys it, whether made fraudulently or not, will defeat an action on the mortgage.^* The mortgage debt exists independently of the note. The inquiry is. Does the debt exist? If it does, it is not essen- tial that there should be any evidence of it beyond what is furnished by the recitals of the deed.^" The validity of a mortgage does not depend upon the description of the debt contained in the deed, nor upon the form of the indebtedness, whether it be by note or bond, or otherwise ; it depends rather upon the existence of the debt it is given to secure.^^ Since the mortgage secures the debt, and not the evi- dence thereof, it is unaffected by changes in the form of such evi- denced^ But the mortgage creates no lien unless the note secured evidences a debt.^^ If a note and mortgage be made and the mortgage recorded, the de- struction of the note by agreement pending further negotiations and the making of a new note of the same description do not invalidate the mortgage.^* Although there be no note or bond, and no time is speci- fied for the payment of the mortgage debt, the mortgage, if given to secure a debt that actually exists, is valid, and may be enforced imme- diately.''^ A mortgage to secure a note thereto attached is binding though the note attached is not signed. The note may be read in evi- dence as a part of the mortgage.^" Though the note has been given by an executor under authority conferred by a will to mortgage real estate to obtain money for the payment of the testator's debts, and only imports the executor's per- sonal liability, still the mortgage, being a pledge of the property by 28 L. ed. 641, 5 Sup. Ct. 65; Souza tis, 7 N. Y. 466; Coutant v. Servoss, V. Lucas (Cal. App.), 100 Pac. 115; 3 Barb. (N. Y.) 128: Griffin v. Crans- Vogle V. Ripper, 34 111. 100, 85 Am. ton, 1 Bosw. (N. Y.) 281; Jackson Dec. 298; Edington v. McLeod, 87 v. Bowen, 7 Cow. (N. Y.) 13. Quoted Kans. 426, 124 Pac. 163, 41 L. R. A., with approval in Moses v. Hatfield, (N. S.) 230, Ann. Cas. 1913 E, 243; 27 S. Car. 324, 3 S. E. 538. Wilson V. Hayes, 40 Minn. 531, 42 ^^Willette v. Gifford, 46 Ind. App. N. "W. 467, 4 L. R. A. 196, 12 Am. 185, 92 N. E. 186. St. 754; Smith v. Smith, 27 S. Car. ''McCourt v. Peppard, 126 "Wis. 166, 3 S. E. 78, 13 Am. St. 633. 326, 105 N. W. 809. ''Tate v. Fletcher, 77 Ind. 102; ^ Parks v. Frahm, 54 Kans. 676, Sherman v. Sherman, 3 Ind. 337. 39 Pac. 185. ™Eacho v. Cosby, 26 Grat. (Va.) ^"Carnall v. Duval, 22 Ark. 136; 112. See also Flagg v. Mann, 2 Brookings v. White, 49 Maine 479; Sumn. (TJ. S.) 486, Fed. Cas. No. McCaughrln v. Williams, 15 S. Car. 4847; Goodhue v. Berrien, 2 Sandf. 515, 516 (quoting text). But see Ch. (N. Y.) 630; Burger v. Hughes, Coleman v. Fisher (Ark.), 41 S. 5 Hun (N. Y.) 180. W. 49. "'Hodgdon v. Shannon, 14 N. H. =»McFadden v. State, 82 Ind. 558. 572; Farmers' Loan &c. Co. v. Cur- § 354 DEBT SECURED 493 him as executor, and the money having been obtained and used by him for the estate, would be enforcible.''' If a mortgage be taken to secure the payment of an account for present and future advances, a note for a part of such advances is entitled to a proportionate part of the mortgage security.^' § 354. Effect of clerical error in describing debt. — The lien of a mortgage is not affected by a clerical inaccuracy in the description of the debt ; as, for instance, in the date of the note secured, or in time of its payment.^' A slight mistake in the copy of a note embodied in the mortgage given to secure it is not fatal to the validity of the mortgage, vrhen it is apparent that the debt and note sued on are the debt and note referred to in the mortgage.'" Defects in the descrip- tion of mortgage notes which can be readily remedied by parol evi- dence are immaterial.'^ The amount of the bond secured by a mortgage having been left blank, and the mortgage having been recorded without the blank being filled, the mortgagor afterward executed a writing under seal, stating that the sum, two thousand dollars, was omitted, and should have been inserted, and this writing was attached to the page on which the regis- try was made. This was held to be a sufiQcient record as against a subsequent mortgage.'^ Moreover, if the amount of the mortgage debt be left blank, this may be supplied by parol or other extrinsic evidence.'' A mistake in describing the mortgage note does not ordi- narily invalidate the security.'* A mortgage which describes the note it secures by giving the date, the amount, the time of payment, and the rate of interest, is sufficient without giving the names of the makers." Parol evidence is admissible to prove that the note pro- duced is the note intended to be described.'" A mistake in the amount secured by a deed of trust, even to the extent of one-half thereof, does not vitiate the deed if it does not assume to state the amount with accuracy, and the claim is one of that character about which the party might well be mistaken as to what the indebtedness was." " Iowa Loan &c. Co. v. Holder- "' Burnett v. Wright, 135 N. Y. 543, baum, 86 Iowa 1, 52 N. W. 549. 32 N. B. 253. 2* Adger v. Prlngle, 11 S. Car. 527. " Porter v. Smith, 13 Vt. 492. =» Tousley v. Tousley, 5 Ohio St. ""^ Ogborn v. Bliason, 77 Ind. 393. 78. See post § 515. ^ Williams v. Hilton, 35 Maine ="" Moore v. Russell, 133 Cal. 297, 65 547, 58 Am. Dec. 729; Bourne v. Lit- Pac. 624, 85 Am. St. 166. tlefleld, 29 Maine 302; Nazro v. "Williams v. Moniteau Nat. Bank, Ware, 38 Minn. 443, 38 N. W. 359. 72 Mo. 292; Aull v. Lee, 61 Mo. 160. "Bumpas v. Dotson, 7 Humph. ""Lambert v. Hall, 7 N. J. Eq. 410, (Tenn.) 310, 46 Am. Dec. 81. 651. 493 DESCEiPTioisr of the debt § 355 A description in a deed of trust oi the debt secured, as being a note signed by the maker and indorsed by another, may be corrected in equity so as to cover a bond signed by the principal, and also signed by a surety as such.^^ But ordinarily it is not necessary to first cor- rect the mortgage before introducing parol evidence to show the real consideration.^" § 355. Extension of lien by renewal or extension of secured debt. — The renevfal of the original note of the mortgagor does not affect the security,*" nor does an extension of the time of payment waive other terms and conditions of the mortgage,''^ except by initiating a new period for the statute of limitations.*^ But it is provided by statute in some states that where the debt is renewed the mortgage must also be renewed, and such renewal of the mortgage must be in writing.*^ No change in the form of the debt will release the mortgage lien so long as the identity of the debt can be traced.** A mortgage to secure a note described, "and any renewals thereof," secures such renewals and interest added.*** But a mortgage given to secure the payment at maturity of the notes of another does not secure renewal notes substituted in place of them. The mortgagor stands in the relation of surety for the debtor, and his obligation can not be continued without his consent.*" It is questioned whether a mortgage can be modified by substitut- ing for a part of the bond secured by it a due bill payable at a differ- ent time, and to a different person ; it certainly can not be so changed ''In re Clarke, 2 Hughes (U. S.) or extended only by writing, exe- 405, Fed. Cas. No. 2843. cuted with the formalities required '"Nazro v. Ware, 38 Minn. 443, 38 in the case of a grant of real prop- N. W. 359. erty. Wells v. Harter, 56 Cal. 342. "» Walters v. Walters, 73 Ind. 425; See post §§ 924-942, 1207. Kidder V. Mcllhenny, 81 N. Car. 123; "Brockway v. McClun, 243 111. Hyman v. Devereux, 63 N. Car. 624; 196, 90 N. E. 374. McCaughrin v. Williams, 15 S. Car. *' Wilcox v. Gregory, 135 Cal. 217, 505; Enston v. Friday, 2 Rich. L. 67 Pac. 139; Newhall v. Hatch, 134 (S. Car.) 427; Bank of South Caro- Cal. 269, 66 Pac. 266; Southern Pac. Una V. Rose, 1 Strob. Eq. (S. Car.) Co. v. Prosser, 122 Cal. 413, 55 Pac. 257; Lover v. Bessenger, 9 Baxt. 145; London &c. Bank v. Bandmann, (Tenn.) 393; Williams v. Starr, 5 120 Cal. 220, 52 Pac. 583, 65 Am. St. Wis. 534. In California the renewal 179. of the note or other contract for the *" Cal. Civ. Code, § 2922 ; Moore t. payment of the mortgage debt does Gould, 151 Cal. 723, 91 Pac. 616. not create a new mortgage after the ** Gribben v. Clement, 141 Iowa original mortgage has been barred 144, 119 N. W. 596, 133 Am. St. 157. by the statute of limitations; for the ""Barbour v. Tompkins, 31 W. Va. Civil Code, § 2922, provides that a 410, 7 S. E. 1. mortgage can be created, renewed, "° Ayres v. Wattson, 57 Pa. St. 360. § 356 DEBT SECURED 494 and the security transferred to the due bill, except upon a clear show- ing that such was the agreement when the exchange was made.*' If a deed is made to secure a particular debt, it can not be extended by a subsequent parol agreement so as to secure other debts. This may be done by written contract.*' But a subsisting mortgage may, by agreement of the mortgagor, be made security for a further or other debt than that for which it was originally given.*^ By a parol agreement, a mortgage can not be so altered in its operation as to stand as security for a new debt, different in character and amount from that mentioned in the instrument, payable at a dif- ferent time and to another person, especially where the conduct of the parties at the time of the transaction evidenced no such understand- ing.^" An agreement that a promissory note shall be substituted for notes of a larger amount already secured by a mortgage, and if paid at maturity shall be considered a payment and discharge pro tanto of those notes of the mortgage, and that the mortgage shall be held as collateral security for the new note, and not be discharged or can- celed until that is paid, does not create a lien upon the mortgaged property to secure its payment. The note is not given in renewal or consolidation of the mortgage notes, or any of them. The relation of the parties is not changed. No new right in the mortgaged prop- erty is given, and no new lien is created.^'^ § 356. Several mortgages for one debt, and one mortgage for sev- eral debts. — ^When several mortgages are made of distinct parcels of land to secure one and the same debt, they constitute in effect one mortgage, and their unity is determined by the debt secured.^^ Parol evidence is admissible for this purpose, and, whether the debt be de- scribed in the same way in the different mortgages or not, it may be shown that they are only additional security for the same debt.^^ A mortgage given to secure separate debts to several persons is several ■" Tucker v. Alger, 30 Mich. 67. "Howe v. Wilder, 11 Gray (Mass.) ** Johnson v. Anderson, 30 Ark. 267. This agreement was regarded 745; Hester v. Gairdner, 128 Ga. 531, the same as if the mortgagee had 58 S. E. 165; Pierce v. Parrish, 111 said, "Give me your note for $600; Ga. 725, 37 S. E. 79; Wylly v. if paid, I will indorse it on the mort- Screven, 98 Ga. 213, 25 S. E. 435; gages; if not, the mortgages are to Huntington v. Kneeland, 102 App. stand as they are." Div. 284, 92 N. Y. S. 944; Stoddard "'Franklin v. Gorham, 2 Day V. Hart, 23 N. Y. 556. (Conn.) 142, 2 Am. Dec. 86; West- <■» State Mut. Bldg. &c. Assn. v. erly Sav. Bank v. Stillman Mfg. Co., Millvllle Imp. Co., 76 N. J. Bq. 336, 16 R. I. 497, 17 Atl. 918. See ante 70 Atl. 300. § 135. ■» Morris v. Alston, 92 Ala. 502, 9 "'Anderson v. Davies, 6 Munf. So. 316. (Va.) 484. 495 DESCRIPTION OF THE DEBT § 357 in its nature, as much as if several instruments had been simultane- ously executed."* But it has been held that where notes due originally to diiJerent persons are secured by a single mortgage, no priority of payment out of the mortgage fund is given to the debt first maturing, but the pro- ceeds are to be distributed pro rata.'" Where a mortgage covering several separate lots is given to secure several separate debts and dis- tinct sums of money, the instrument is in legal efEect a separate and distinct mortgage on each lot to secure several separate and distinct sums of money. "° § 357. Effect of enlarging^ or extending debt or obligation secured. — A mortgage for a specific sum can not be enlarged or extended to cover other debts or further advances,"'' as against others who have acquired rights in the property. Neither can the mortgagor as against them increase the charge upon the land by confessing judg- ment, and thus compounding the interest,"^ or by making the debt payable in gold coin instead of currency,"' or by increasing the rate of interest."" The mortgage being given to secure a certain debt is valid for that purpose only ; but whatever may be the form of th& debt, if it can be traced, the security for it remains good.*^ A mortgage securing a note stated to be for a definite sum when in fact the note " Gardner v. Diederichs, 41 III. Beekman Fire Ins. Co. v. First M. 158; Burnett v. Pratt, 22 Pick. E. Church, 29 Barb. (N. Y.) 658, 18 (Mass.) 556; Thayer v. Campbell, 9 How. Pr. 431; Merchants' State Mo. 280; Eccleston v. Clipsham, 1 Bank v. Tufts, 14 N. Dak. 238, 103 Saund. 153. N. W. 760, 116 Am. St. 682; Webb "= Fielder v. Varner, 45 Ala. 429; v. Crouch, 70 W. Va. 580, 74 S. E. Chaplin v. Sullivan, 128 Ind. 50, 27 730, Ann. Cas. 1914A, 728. See post N. E. 425; Shaw v. Newsom, 78 Ind. § 947. 335; Goodall v. Mopley, 45 Ind. "'McGready v. McGready, 17 Mo. 355; Coons v. Clifeord, 58 Ohio St. 597. 480, Bl N. E. 39. »»Belloc v. Davis, 38 Cal. 242; =° Mason v. Goodnow, 41 Minn. 9, Taylor v. Atlantic &c. R. Co., 55 42 N. W. 482; Hull v. King, 38 How. Pr. (N. Y.) 275. See also Minn. 349, 37 N. W. 792. Poett v. Stearns, 31 Cal. 78. "Large v. Van Doren, 14 N. J. ""Burchard v. Frazer, 23 Mich. Eq. 208; Stoddard v. Hart, 23 N. Y. 224. 556; Townsend v. Empire Stone "Van Wagner v. Van Wagner, 7 Dressing Co., 6 Duer (N. Y.) 208, N. J. Eq. 27; Patterson v. Johnston, and cases cited. See also Briggs v. 7 Ohio 225. See also Wilkerson v. Steel, 91 Ark. 458, 121 S. W. 754; Tillman, 66 Ala. 532; Deuser v. Langerman v. Puritan Dining Room Walkup, 43 Mo. App. 625; Prescott Co., 21 Cal. App. 637, 132 Pac. 617; v. Hayes, 43 N. H. 593; Jagger Iron Provident Mut. Bldg. &c. Assn. v. Co. v. Walker, 76 N. Y. 521; Chap- Shaffer, 2 Cal. App. 216, 83 Pac. man v. Jenkins, 31 Barb. (N. Y.) 274; Lewter v. Price, 25 Fla. 574, 164; McCaughrin v. Williams, 15 S. 6 So. 439; Tunno v. Robert, 16 Fla. Car. 505. See post §§ 924-942. 738; Perrin v. Kellogg, 38 Mich. 720; § 357 DEBT SECURED 496 given is for a larger sum is a security only for the smaller sum recited in the mortgage."^ A mortgage given to secure future advances, not to exceed a certain amount, is valid, and is a lien on the mortgaged property for advances not exceeding the amount specified.* ■'' But a mortgage reciting that it was given for a note and "such future advances" as may be made during a given year secures the note only."* As against the mortgagor, his agreement that the mortgage shall stand as security to the mortgagee for further advances, although it be oral only, is valid, and after the advances have been made upon the faith of it, a court of equity will not allow the mortgagor to redeem without performing it.*° It will apply to him the maxim, that he who seeks equity must do equity. It will also apply the same rule to any one claiming under him with notice. Therefore, where the as- signees in insolvency of the mortgagor have conveyed the equity of redemption to his wife, without consideration and with notice of such agreement, a court of equity will decline to aid her to redeem the mort- gage in violation of this contract."" So, in answer to a bill ia equity by an assignee in bankruptcy to redeem a mortgage, it is competent for the holder of the mortgage to show that the bankrupt had, for a valuable consideration, orally agreed that a mortgage made by him to another person, and paid in large part, should not be discharged, but should be assigned to the creditor as security for further loans and debts. Such oral agreement could not be set up against a subsequent mortgagee, or against an attaching creditor; nor could it be set up against the mortgagor or his assignee in a suit at law, but it may be in equity."^ In Pennsylvania the courts do not tolerate an oral mortgage or secret lien ; and therefore a mortgage given by tenants in common to secure a partnership debt can not, after payment, be kept alive as security for an individual debt of one of them."* "' Sohroeder v. Bobbitt, 108 Mo. ferred to and distinguished lu 289, 18 S. W. 1093. See also Abert O'Neill v. Bennett, 33 -S. Car. 243, V. Kornfeld, 128 App. Div. 547, 112 11 S. E. 727. See also Hayhurst v. N. Y. S. 884; BergdoU v. Sopp, 232 Morin, 104 Maine 169, 71 Atl. 707. Pa. 21, 81 Atl. 62. See post § 947. '^Du Bois V. First Nat. Bank, 43 ™ Stone v. Lane, 10 Allen (Mass.) Colo. 400, 96 Pac. 169; Perkins &c. 74. See also Brooks v. Brooks, 169 Co. V. Drew (Ky.), 122 S. W. 526. Mass. 38, 47 N. E. 448; Joslyn v. ■" Benton-Shingler Co. v. Mills, 13 Wyman, 5 Allen (Mass.) 62; Crafts Ga. App. 632, 79 S. B. 755. v. Crafts, 13 Gray (Mass.) 360. "^Sheats v. Scott, 133 Ala. 642, "Upton v. National Bank, 120 32 So. 573; Walker v. Walker, 17 Mass. 153. S. Car. 329, 337. This case is re- «» Thomas' Appeal, 30 Pa. St. 378, 497 DESCEIPTION OF THE DEBT § 358 § 358. Taxes and assessments."' — There is an apparent exception to the rule that the mortgage debt can not, as against third persons, be increased after the execution of the mortgage ; and that is, that money paid by the mortgagee, to redeem the premises from a tax sale, or from any charge which is a paramount lien upon the property, becomes a part of the mortgage debt, and may be enforced by foreclosure.'" But a mortgagee, whether in or out of possession, can not acquire a tax title and hold it for the purpose of destroying the title of his mort- gagor.'^ In the absence of a covenant, a mortgagee who has a mere lien is under no duty to pay taxes, and although the mortgage contains a provision authorizing the mortgagee to pay the taxes upon the mort- gagor's failure so to do does not obligate him to pay the same.'^ The mortgage is usually so drawn that in terms it includes under the security any payments that may be made by the mortgagee in conse- quence of any default of the mortgagor. But without any such pro- vision, the payment by the mortgagee of charges which are a prior lien, and the removal of which is essential to his own protection and safety, gives him in equity not only a right to retain the amount paid out of the proceeds of the land when sold upon foreclosure, as against the mortgagor,'^ but also preference by way of subrogation over even prior incumbrancers who have been protected by such payment.'* Prior to the sale for taxes the mortgagee of the premises may pay the taxes and thereby acquire by a species of subrogation a lien for the reversing 3 Phila. (Pa.) 62, under day they become delinquent. Na- name Pechin v. Brown, dissenting tional Life Ins. Co. v. Butler, 61 opinion, p. 99; and to same effect Nebr. 449, 85 N. W. 437. see O'Neill v. Capelle, 62 Mo. 202. " Shepard v. Vincent, 38 Wash. "See ante § 77, and post § 1134. 493, 80 Pac. 777. But see Jones v. •° Windett v. Union Mut. Ins. Co., Black, 18 Okla. 344, 88 Pac. 1052. 144 U. S. 581, 36 L. ed. 551, 12 Sup. "Jones v. Black, 18 Okla. 344, 88 Ct. 751; Hill v. Bldred, 49 Cal. 398; Pac. 1052. Mix V. Hotchkiss, 14 Conn. 32; "Dale v. McBvers, 2 Cow. (N. Robinson v. Suiter, 85 Ga. 875, '11 Y.) 118; Rapelye v. Prince, 4 Hill S. E. 887; Parsons v. Gas Light Co., (N. Y.) 119, 40 Am. Dec. 267; Sil- 108 111. 380; Hall v. Gould, 79 111. ver Lake Bank v. North, 4 Johns. 16; Wright v. Langley, 36 111. 381; Ch. (N. Y.) 370. Contra, Savage v. Robinson v. Ryan, 25 N. Y. 320; Scott, 45 Iowa 130. But a later case Kortright v. Cady, 23 Barb. (N. Y.) in Iowa leaves the question in doubt 490, 5 Abb. Pr. (N. Y.) 358; Paure in that state. Barthell v. Syverson, V. Winans, Hopk. (N. Y.) 283, 14 54 Iowa 160, 6 N. W. 178. See also Am. Dec. 545; Burr v. Veeder, 3 Sanborn Co. v. Alston, 153 Mich. Wend. (N. Y.) 412; Worcester v. 463, 117 N. W. 625; Sands v. Kau- Boston, 179 Mass. 41, 60 N. E. 410; kauna Water Power Co., 115 Wis. Skilton V. Roberts, 129 Mass. 306. 229, 91 N. W. 679. An agreement to pay taxes before "Cook v. Kraft, 3 Lans. (N. Y.) they become delinquent is not ful- 512. See post § 1080. But see Man- filled by paying the taxes on the ning v. Tuthill, 30 N. J. Eq. 29. 32 — Jones Mtg. — Vol. I. § 358 DEBT SECURED 498 amount so paid which in respect to priority occupies the same position as the tax lien.'^ But in Connecticut it is held that a mortgagee in a mortgage containing no condition as to the payment of taxes and assessments, who, on account of his mortgagor's failure to pay taxes, pays the same in order to protect his security, is not thereby subro- gated to the state's rights or remedies for the enforcement of such taxes, so as to be entitled to a foreclosure of the title to the prem- ises under the tax lien.^^ Even after a foreclosure sale the mortgagee may pay outstanding taxes upon the property, or may redeem it from tax sales in order to give a clear title to the purchaser, and his right to take such pay- ments out of the proceeds of the sale is the same that it would have been had he made the payments before the sale.'^ In Vermont, however, it is held that mortgagees who have obtained a decree of foreclosure are not justified in paying taxes assessed on the mortgaged premises before the equity of redemption expires, and after redemption by the mortgagor can not recover from him the amount so paidJ* If, however, the mortgage contains no covenant for the payment of taxes, and the mortgagor conveys the equity of redemption, the grantee assuming the mortgage, and afterward the property becomes incumbered by taxes which the mortgagee is forced to pay, upon a foreclosure of the mortgage, in determining the deficiency for which the mortgagor is liable, the amount paid by the mortgagee for taxes can not be deducted from the proceeds of the sale, because the mort- gagor is not bound to pay the taxes after his conveyance.'" Taxes and assessments upon mortgaged lands, whether ordinary taxes, or assessment for sewers or the like, and water rates, are preferred debts under the bankrupt and insolvent laws. If, therefore, such taxes and assessments be laid upon mortgaged land before the bankruptcy of the owner, they should be paid by the assignee in full out of the estate in his hands in exoneration of the mortgage.^" If the mort- gaged premises be foreclosed and purchased by the mortgagee, he is "Farmer v. Ward, 75 N. J. Bq. "Marshall v. Davles, 16 Hun (N. 33, 71 Atl. 401; Dunsmulr v. Port Y.) 606. The term "assessments" Angeles Gas &c. Co., 30 Wash. 586, includes assessments for sewers, 71 Pac. 9. paving and all betterments in gen- " Sperry v. Butler, 75 Conn. 369, eral which may be lawfully made a 53 Atl. 899. tax upon the property of abutting "Gormley t. Bunyan, 138 U. S. owners. National Life Ins. Co. v. 623, 34 L. ed. 1086, 11 Sup. Ct. 453. Butler, 61 Nebr. 449, 85 N. W. 437. "Fulton V. Aldrich, 76 Vt. 310, «° In re Moller, 8 Ben. (U. S.) 526, 57 Atl. 108. Fed. Cas. No. 9699. 499 DBSCEIPTION OF THE DEBT § 359 still entitled, upon application to the bankruptcy court, to have an order directing the assignee to pay the taxes in full out of the bank- rupt's estate. Although the law makes the taxes a lien upon the prem- ises in respect of which they are levied and made, yet they are per- sonal debts of the owner of the premises, and can be collected from his personal property. If the taxes be not paid, and the land be sold to pay them, the sale would be a sale to satisfy a liability of the bank- rupt. ISTo formal proof of the debt is necessary before granting such application. If the remedy upon the mortgage is barred by the statute of limita- tions, a claim of the mortgagee for taxes paid on the mortgaged land can not be enforced against it. The claim for taxes, which is merely incidental to the mortgage, falls with the mortgage.*^ A water tax which becomes due upon the mortgaged premises after an adjudication of bankruptcy should be paid by the assignee as a part of the proper expenses of his administration.'^ '§ 359. Solicitor's fee. — In addition to the mortgage debt, the mort- gage may be made to secure the payment of a reasonable fee of a solicitor in case of a foreclosure of the mortgage.'^ Such a fee is in- tended as an indemnity to the mortgagee for expenditures necessarily made to protect his interests.'* The amount of such fee may be specified in the mortgage or left to the discretion of the court.*' Such fees become part of the mortgage debt,'" and the stipulation becomes binding as soon as the mortgage is placed in an attorney's hands, though he has done nothing toward collecting the debt secured. Where the mortgage provides for the recovery of a certain per cent, of the amount due as attorney's fees it is the duty of the court to make the allowance accordingly." "Where the note secured by the ^^Hill V. Townly, 45 Minn. 167, 90 N. E. 748, Wilson v. Ott, 173 Pa. 47 N. W. 653; Spencer v. Devering, St. 253, 34 Atl. 23, 51 Am. St. 767. 8 Minn. 461. '°By some courts it is held to *nn re MoUer, 8 Ben. (U. S.) 526, be in the discretion of the court Fed. Cas. No. 9699. to malie a reasonable and just al- *' Bronson v. La Crosse &c. R. Co., lowance, without regard to the 2 Wall. (U. S.) 283, 17 L. ed. 725; amount specified in the mortgage. Hewitt V. Dean, 91 Cal. 5, 27 Pao. Moran v. Gardemeyer, 82 Cal. 96, 423; Hitchcock v. Merrick, 15 Wis. 23 Pac. 6. See also Peachy v. Wit- 522; Rice v. Cribb, 12 Wis. 179. ter, 131 Cal. 316, 63 Pac. 468; Avery See also Wells v. American Mtg. v. Maude, 112 Cal. 565, 44 Pac. 1020. Co., 109 Ala. 430, 20 So. 136; Huber "'Hayward v. Hayward, 114 La. V. Brown, 243 111. 274, 90 N. E. 748; 476, 38 So. 424. Scott V. Carl, 24 Pa. Super. Ct. 460. " Cooper v. Bank of Indian Terri- See post §§ 635, 1606. But see Sage tory, 4 Okla. 632, 46 Pac. 475 Hay- V. Riggs, 12 Mich. 313. wood v. Miller, 14 Wash. 660, 45 "Huber v. Brown, 243 111. 274, Pac. 307. § 360 DEBT SECURED 500 mortgage in express terms contracts to pay a stipulated and definite sum as attorney's fees for the foreclosure of such mortgage, it is proper for the court to decree such stipulated sum as an attorney's fee, without proofs as to its reasonableness.^' The stipulation may be en- forced as well against subsequent purchasers and incumbrancers as against the mortgagor himself." Such fee is presumed to be in addi- tion to the taxable costs allowed by law.^" Such a stipulation, if not unreasonable in amount, has been regarded as imposing a penalty, rather than as giving compensation to the mortgagee for expenses in- curred in consequence of the mortgagor's default."^ Equity will not relieve against such a contract fairly entered into, unless, under the color of a provision for the costs and expenses of enforcing the mortgage lien, an unreasonable and oppressive exaction be made of the debtor, so that the stipulation amounts in fact to a penalty which he incurs by his default. In such case equity will interpose her shield to protect the debtor."^ If, however, the pro- vision be a reasonable compensation to the mortgagee for expenses that may be incurred by the default of the mortgagor, it is a proper addition to the mortgage debt, and it is not collected as costs, but is a part of the judgment to which the mortgagee is entitled."^ The lien of the mortgage covers such a provision as much as the debt itself; and it also attaches to the costs of suit, and to expenses necessarily in- curred in enforcing the mortgage, although not specially provided for.»* § 360. Lien limited to debt secured. — The mortgagee can not tack to his mortgage any debt not secured thereby, and require its payment by the mortgagor as a condition to his right to redeem."^ It is pre- sumed that the consideration recited in the mortgage is the amount of '^Carhart v. Allen, 56 Fla. 763, the court declared five per cent, to 48 So. 47. be unreasonable, and suggested that «» Pierce v. Kneeland, 16 Wis. 672, two per cent, would be ample. 84 Am. Dec. 726. '^ Daly v. Maitland, 88 Pa. St. 384. "> Easton V. Woodbury, 71 S. Car. See also Scott v. Carl, 24 Pa. Super. 250, 50 S. E. 790; Hitchcock v. Mer- Ct. 460. rick, 15 Wis. 522. "^ Daly v. Maitland, 88 Pa. St. 384. " Daly V. Maitland, 88 Pa. St. 384, But see Alexandria v. Saloy, 14 La. 13 West. Jur. 204, 32 Am. Rep. 457, Ann. 327. overruling Robinson v. Loomis, 51 " Hurd v. Coleman, 42 Maine 182. Pa. St. 78, which declared the stipu- " Edwards v. Dwight, 68 Ala. 389 ; lation not to be a penalty. See also Schlffer v. Feagin, 51 Ala. 335; Renshaw v. Richards, 30 La. Ann. Barthell v. Syverson, 54 Iowa 160, 398. The stipulation in these latter 6 N. W. 178; Bacon v. Cottrell, 13 cases was five per cent. But in Minn. 194. See also Briggs v. Daly v. Maitland, 88 Pa. St. 384, Steele, 91 Ark. 458, 121 S. W. 754. where the mortgage was for $14,000, See post § 1081. 501 DESCRIPTION' OF THE DEBT § 361 the debt.°° A mortgage executed to secure the payment of notes of a definite amount can not, after the payment of the notes, be made avail- able to secure further advances, unless it is so provided in the mort- gage, or by a legal contract between the parties."' Where a mortgage is given by a husband and vp^ife to secure a certain note signed by the husband and such note is paid in full, the husband may not without the consent of his wife agree that the mortgage shall stand security for another debt."^ Where the mortgage is given as security for a certain debt, the parties may subsequently agree that it shall stand as security for other debts."" A verbal agreement is generally held in- sufficient for that purpose.^ But when such was the purpose of the mortgage in the beginning, there is no objection that it secures an existing demand and also future advances.^ A penalty of twenty per cent, imposed by statute for omitting prompt payment of school money loaned upon mortgage is not a lien under the mortgage, but is imposed upon the borrower only.^ Under a mortgage to a building association, expressly securing only monthly payments, the payment of fines and other dues to the association is not secured.* § 361. Increasing the rate of interest. — The parties to a mortgage can not, as against subsequent purchasers or incumbrancers, stipulate by an unrecorded agreement for a higher rate of interest than that provided in the mortgage as recorded, nor can they by such means incorporate into the mortgage any additional indebtedness.^ The in- terest can not be changed from currency to gold, which is then at a premium.' A subsequent mortgagee or purchaser has the right to redeem by paying the amount due according to its terms.' But the owner of the equity of redemption may bind himself and charge the ""Cady V. Burgess, 144 Mich. 523, 61 N. E. 530; Nortli v. Crowell, 11 108 N. W. 414. N. H. 251. See post § 1078. »' Johnson v. Anderson, 30 Ark. =■ Bradley v. Snyder, 14 111. 262, 745; Brooks v. Brooks, 169 Mass. 58 Am. Dec. 564. 38, 47 N. E. 448. See also Ladd v. < Hamilton Bldg. Assn. v. Rey- Lookout Mt. Distilling Co., 147 Ala. nolds, 5 Duer. (N. Y.) 671. 173, 40 So. 610. "Bunker v. Barron, 79 Maine 62. "' Mantle v. Dabney, 44 Wash. 193, See also Havens v. Jones, 45 Mich. 87 Pae. 122. 253, 7 N. W. 818; Smith v. Graham, =» Huntington v. Kneeland, 102 34 Mich. 302; Spear v. Hadden, 31 App. Div. 284, 92 N. Y. S. 944, 16 Mich. 265 Burchard v. Frazer, 23 Ann. Cas. (N. Y.) 13. Mich. 224; Bassett v. McDonel, 13 » Levi V. Blackwell, 35 S. Car. 511, Wis. 444. 15 S. E. 243; O'Neill v. Bennett, 33 "Taylor v. Atlantic &c. R. Co., 55 S. Car. 243, 11 S. E. 727; Lindsay v. How. Pr. (N. Y.) 275. Garvin, 31 S. Car. 259, 9 S. E. 862. ' Gardner v. Emerson, 40 111. 296. '^ Carpenter v. Plagge, 192 111. 82, § 363 DEBT SECUEED 503 land for the payment of an increased rate of interest by an agreement in writing.^ There must be, however, a consideration to support his agreement. Future indulgence of the debtor for an indefinite period, his debt being already due, is consideration enough.' A stipulation in a mortgage that interest at a higher rate than that reserved upon making the loan shall be paid after a default in payment of the prin- cipal or interest is binding and may be enforced.^" § 362. Redelivery for a new obligation. — A mortgage which has been satisfied and delivered up to the mortgagor, without being can- celed, may be again delivered by him as a valid security for another debt, by agreement of the parties, if there are no intervening rights. The delivery of the security gave it efScacy in the beginning; and if, after having used it for one purpose, the mortgagor redelivers it for another purpose, the redelivery gives it vitality again, except as against intervening interests.^'^ The mortgage may not be assigned, however, to a third person as security for a new loan to the mortgagor as against a subsequent mortgagee having no notice of the agreement.^- Also where a note secured by a mortgage has been paid in full and delivered with the mortgage to the mortgagor it operates as. a full satisfaction of the mortgage, and an assignment and delivery of the note and mortgage by the original mortgagee to another creditor of the mortgagor, as a security for debt, under a parol arrangement between all the parties, does not revive the original mortgage or create any valid lien.*^^ § 363. How recorded mortgage may be made to secure further sum. — A mortgage already recorded may be made to secure a further sum, by an indorsement upon the mortgage executed and acknowl- edged with the usual formalities of a deed, and recorded with a proper reference to the record of the mortgage. This has been done where the mortgage was given to secure an acceptor of drafts, and by such an indorsement it was made to apply in all of its provisions and terms as security for other drafts. The record of the indorsement made a « Smith V. Graham, 34 Mich. 302. "Underhill v. Atwater, 22 N. J. 'Taylor v. Thomas, 61 Ga. 472. Bq. 16, per Zabriskie Ch. See ante '"Pawtucket Ins. Co. v. Landers, § 338 and post §§ 947, 948, where 5 Kans. App. 623, 47 Pac. 621; Shel- the subject is more fully considered. don V. Pruessnor, 52 Kans. 579, 35 " Bogert v. Striker, 148 N. Y. 194, Pac. 201. But in Nebraska such 42 N. E. 582, 51 Am. St. 684. a provision is regarded as being in ^ Bailey v. Rockafellow, 57 Ark. the nature of a penalty and will not 216, 21 S. "W. 227; Thompson v. ba enforced; Connecticut Mut. Ins. George, 86 Ky. 311, 9 Ky. L. 588, Co. V. Westentroff, 58 Nebr. 379, 78 5 S. W. 760. N. W. 724. See post § 1141. 503 FUTURE ADVANCES 364 valid extension of the condition of the mortgage as first made and recorded to the further liahility incurred by the mortgagee." And it has been held that an oral agreement between the mortgagor and the mortgagee to allow the mortgage to stand as security for an addi- tional sum advanced by the mortgagee to the mortgagor will be en- forced in equity where there are no intervening rights of third per- sons. II. Future Advances Section 364. In general. 365. English and American doctrine compared. 366. Statutory requirements. 367. Degree of certainty requisite in describing future liabilities. 367a. Parol evidence to identify fu- ture advances. 368. Advances made after notice of subsequent liens. 369. Theory where mortgagee is not bound to make advancements. 370. Mortgage for obligatory ad- vances. 371. Hopkinson v. Rolt. 372. Notice of subsequent liens de- pending on the registry acts only. Section 373. Priority of recorded mortgage expressed to cover future ad- vances. 374. Necessity for specifying that future debts are to be se- cured. 375. Form of agreement for ad- vances. 376. Necessity for stating amount and time for making advance- ments. 377. Limitations of security must be observed. 378. Where part only of advances have been made. § 364. In general. — There has been much diversity of opinion among courts and law-writers on the question of the validity of mort- gages to secure futiire advances, and as to the rights of mortgagees un- der such mortgages against subsequent purchasers and incumbrancers. Formerly such mortgages were regarded with jealousy, but their va- lidity is now fully recognized and established.^ And so a deed of trust in the nature of a mortgage may be a valid security for future debts. ^ Although the record must show the existence of the mortgage in or- der to avail anything as a notice, yet it is generally conceded that it need not show the exact amount of the incumbrance. But while ac- cording to some authorities the limit of these advances should be named, so that an inquirer may know that the incumbrance can not " Choteau v. Thompson, 2 Ohio drews, J. See also Straeffer v. Rod- St. 114. See also Sheats v. Scott, man, 146 Ky. 1, 141 S. W. 742, Ann. 133 Ala. 642, 32 So. 573. Cas. 1913C, 549; Heal v. Evans "Langerman v. Puritan Dining Creek Coal &c. Co., 71 Wash. 225, Room Co., 21 Cal. App. 637, 132 128 Pac. 211. Pac. 617. ''Dlggs V. Fidelity &c. Co., 112 ^ Ackerman v. Hunsicker, 85 N. Md. 50, 75 Atl. 517. Y. 43, 39 Am. Rep. 641, per An- § 364: DEBT SECURED 504 exceed a certain amount,' according to others there is no necessity for limiting the amount of the intended advances in any way, if the mort- gage shows that future advances are covered by it,* and this is true as between tlie original parties even though the making of such ad- vances is left to the option or discretion of the mortgagee.' Generally the amount intended to be advanced need not be stated, provided it can be otherwise ascertained by the description." But even where a limitation is necessary in order to constitute a continuing security which will not be aflEeeted by subsequent convey- ances, a recorded mortgage for an unlimited sum is notice to a subse- quent incumbrancer as to all sums advanced upon the mortgage before the subsequent lien attaches.'' Moreover, the record of the subsequent mortgage is no notice to such prior mortgagee that any subsequent lien has attached.* The subsequent mortgagee can limit the credit that may be safely given under the mortgage for future advances only b)' giving the holder of it express notice of his lien, and a notice also that he must make no further advances on the credit of that mortgage." The mortgage will then stand as security for the real equitable claims of the mortgagee, whether they existed at the date of the mortgage or arose afterward, but prior to the receipt of such notice.^" If such mortgagee is not under any obligation to make advances, and after notice of a subsequent mortgage does make further advances, to the extent of such advances the subsequent mortgagee has the right of precedence.^^ But if such mortgagee is under obligation to make the > 'In re Young's Estate, 3 Md. Ch. Cranch (U. S.) 73, 2 L. ed. 370; 461; Bell v. Fleming, 12 N. J. Eq. Crane v. Deming, 7 Conn. 387; Al- 13, 490; Beekman v. Frost, 18 len v. Lathrop, 46 Ga. 133; Farr v. Johns. (N. Y.) 544, 9 Am. Dec. 246. Doxtater, 29 N. Y. St. 531, 9 N. Y. See also Du Bois v. First Nat. Bank, S. 141. 43 Colo. 400, 96 Pac. 169; Benton- 'Freiberg v. Magale, 70 Tex. 116, Shingler Co. v. Mills, 13 Ga. App. 7 S. W. 684. 632, 79 S. E. 755; Perkins &c. Co. V. 'Schmidt v. Zahrndt, 148 Ind. Drew (Ky.), 122 S. W. 526. 447, 47 N. E. 335; Robinson v. Wil- * Lovelace v. Webb, 62 Ala. 271; liams, 22 N. Y. 380. See post § Tapia v. Demartini, 77 Cal. 383, 19 372. Pac. 641; Witczinski v. Bverman, 'Ward v. Cooke, 17 N. J. Eq. 93; 51 Miss. 841; Ackerman v. Hun- McDaniels v. Colvin, 16 Vt. 300, 42 sicker, 85 N. Y. 43, 39 Am. Rep. Am. Deo. 512. See post § 371. 641. See also Cazort &c. Co. v. Dun- >" Ripley v. Harris, 3 Biss. (U. S.) bar, 91 Ark. 400, 121 S. W. 270; 199; Buchanan v. International Langerman v. Puritan Dining Room Bank, 78 111. 500; Nelson v. Boyce, Co., 21 Cal. App. 637, 132 Pac. 617; 7 J. J. Marsh. (Ky.), 401, 23 Am. Huntington v. Kneeland, 187 N. Y. Dec. 411; Farnum v. Burnett, 21 563, 80 N. E. 1111. N. J. Eq. 87; Speer v. Whitfield, 10 ° Langerman v. Puritan Dining N. J. Eq. 107. Room Co., 21 Cal. App. 637, 132 Pac. « Frye v. Bank of Illinois, 11 111. 617. 367; Spader v. Lawler, 17 Ohio 371, ''United States v. Hooe, 3 49 Am. Dec. 461. This decision was 505 FUTUKE ADVANCES § 365 • advances, he is entitled to the security, whatever may be the incum- brances subsequently made upon the property, and whether he has notice of them or not.^^ § 365. English and American doctrine compared. — Mortgages to secure future advances have always been sanctioned by the common law. An early case is thus stated in Viner's Abridgement: A mort- gages to B for a term of years to secure a certain sum of money already lent to the mortgagor, as also such other sums as should thereafter be lent or advanced to him. Afterward A makes a second mortgage to C for a certain sum, with notice of the first mortgage, and then the first mortgagee, having notice of the second mortgage, lends a further sum. The question was, upon what terms the second mortgagee should be allowed to redeem the first; and Cowper, the Lord Chancellor, held that he should not redeem without paying all that was due, as well the money lent after as that lent before the second mortgage was made; "for it was the folly of the second mortgagee, with notice, to take such a security."^^ This case, however, was critically examined by Lord Chancellor Campbell, before the House of Lords, in the case of Hop- kinson v. Eolt,^* and he declared the representation made by the re- porters, that the first mortgagee had notice of the second mortgage, to be without foundation. The doctrine supposed to have been laid down in Gordon v. Graham is declared unsound, and is overruled ; and the doctrine in England is therefore settled, that a first mortgagee can not claim the benefit of the security for optional advances made by him after notice of a second mortgage upon the property.^^ This question is examined elsewhere f^ and these two cases are referred to in this connection as the leading cases in England upon the subject, and as showing that future advances may be secured if the mortgage be properly made for that purpose.^^ In this country, mortgages made in good faith for the purpose of securing future debts have generally been sustained, both in the early based somewhat upon the effect of ^^The opinion of the court was the statute of that state relating to delivered to this effect by Lords mortgages. Ladue v. Detroit &o. Campbell and Chelmsford; but Lord R. Co., 13 Mich. 380, 87 Am. Dec. Cranworth gave a dissenting opin- 759. , ion, to the effect that the law was " See post § 372. recently laid down by Lord Cowper, " Gordon v. Graham, 7 Vin. Abr. as reported. 52, pi. 3, 2 Eq. Cas. Abr. 598. "See post §§ 368-374. "9 H. L. Cas. 514, 7 Jur. (N. S.) "Burgess v. Eve, L. R. 13 Eq. 1209. The English cases are care- 450; Daun v. London Brewery Co., fully reviewed in Rolt v. Hopkin- L. R. 8 Eq. 155; Menzies v. Light- son, 25 Beav. 461. foot, L. R. 11 Eq. 459. § 365 DEBT SECURED 506 and in the recent cases.^* Sucli a mortgage is valid even as against creditors and subsequent purcliasers.^^ It does not matter that the "National Bank v. Whitney, 103 U. S. 99, 26 L. ed. 443; Jones v. Guaranty &c. Co., 101 U. S. 622, 25 L. ed. 1030, 2 Fed. 747; Schulze v. Bolting, 8 Biss. (U. S.) 174; Ripley V. Harris, 3 Biss. (U. S.) 199; Shir- ras V. Caig, 7 Cranch (U. S.) 34, 3 L. ed. 260; United States v. Hooe, 3 Cranch (U. S.) 73, 2 L. ed. 370; Lawrence v. Tucker, 23 How. (U. S.) 14, 16 L. ed. 474; Schuelenburg V. Martin, 1 McCrary (U. S.) 348; Leeds v. Cameron, 3 Sum. (U. S.) 488; London &c. Bank v. Band- mann, 120 Cal. 220, 52 Pac. 583, 65 Am. St. 179, construing Civ. Code, § 2922. Hendon v. Morris, 110 Ala. 106, 20 So. 27; Forsyth v. Freer, 62 Ala. 443; Moore v. Terry, 66 Ark. 393. Where the mortgage was to secure the sum of $100, due at a time fixed "and all other indebted- ness which may then be due." Brewster v. Clamflt, 33 Ark. 72; Du Bois V. First Nat. Bank, 43 Colo. 400, 96 Pac. 169; Hubbard v. Sav- age, 8 Conn. 215; Collins v. Carlile, 13 111. 254; Louisville Banking Co. V. Leonard, 90 Ky. 106, 13 S. W. 521; New Orleans Nat. Bkg. Assn. V. Le Breton, 120 TJ. S. 765, 30 L. ed. 821, 7 Sup. Ct. 772. The La. Civil Code, art. 3292, provides that a mortgage may be given for an ob- ligation which has not yet risen into existence, as when a man grants a mortgage by other way of security lor indorsement which an- other promises to mak-e for him. Bunker v. Barron, 93 Maine 87, 44 Atl. 372; Doyle v. White, 26 Maine 341, 45 Am. Dec. 110; Diggs v. Fi- delity .&c. Co., 112 Md. 50, 75 Atl. 517; Brooks v. Lester, 36 Md. 65; Taft V. Stoddard, 142 Mass. 545, 8 N. E. 586; Hall v. Tay, 131 Mass. 192; Goddard v. Sawyer, 9 Allen (Mass.) 78; Commercial Bank v. Cunningham, 24 Pick. (Mass.) 270, 35 Am. Dec. 322; Citizens' Sav. Bank v. Kock, 117 Mich. 225, 75 N. W. 458; Drummer v. Smedley, 110 Mich. 466, 68 N. W. 260; New- kirk V. Newkirk, 56 Mich. 525, 23 N. W. 206; Brackett v. Sears, 15 Mich. 244; Madigan v. Mead, 31 Minn. 94, 16 N. W. 539; Foster v. Reynolds, 38' Mo. 553; Reeves v. Evans (N. J. Eq.), 34 Atl. 477; Grif- fin V. New Jersey Oil Co., 11 N. J. Eq. 49; Ackerman v. Hunsicker, 85 N. Y. 43, 39 Am. Rep. 641; Fassett V. Smith, 23 N. Y. 252; Truscott_v. King, 6 N. Y. 147; James v. Morey, 2 Cow. (N. Y.) 246, 292. 14 Am. Dec. 475; BrinckerhofE v. Lansing, 4 Johns. Ch. (N. Y.) 65, 8 Am. Dec. 538; Union Nat. Bank v. Moline, 7 N. Dak. 201, 73 N. W. 527; Hendrix V. Gore, 8 Ore. 406; Farrabee v. Mc- Kerrihan, 172 Pa. St. 234, 33 Atl. 683, 51 Am. St. 374; Garber v. Henry, 6 Watts (Pa.) 57; Seaman V. Fleming, 7 Rich. Eq. (S. Car.) 283; Klein v. Glass, 53 Tex. 37; Keyes v. Bump, 59 Vt. 391, 69 Atl. 598; McDaniels v. Colvin, 16 Vt. 300, 42 Am. Dec. 512; Heal v. Evans Creek Coal &c. Co., 71 Wash. 225, 128 Pac. 211; McCarty v. Chalfant, 14 W. Va. 531. See also Straeffer V. Rodman, 146 Ky. 1, 141 S. W. 742, Ann. Cas. 1913Ci 549; Perkins &c. Co. V. Drew (Ky.), 122 S. W. 526; Lamm v. Armstrong, 95 Minn. 434, 104 N. W. 304, 111 Am. St. 479; Huntington v. Kneeland, 187 N. Y. 563, 80 N. E. 1111; Merchants' State Bank v. Tufts, 14 N. Dak. 238, 103 N. W. 760, 116 Am. St. 682; Tink- ham T. Wright (Tex. Civ. App.), 163 S. W. 615; Openshaw v. Dean (Tex. Civ. App.), 125 S. W. 989; Jones on Chattel Mortgages, §§ 94-98. "Jones V. Guaranty &c. Co., 101 U. S. 622, 25 L. ed. 1030; Shirras v. Caig, 7 Cranch (U. S.) 34, 3 L. ed. 260; United States v. Hooe, 3 Cranch (U. S.) 73, 2. L. ed. 370; Tully V. Harloe, 35 Cal. 302, 95 Am. Dec. 102; Boswell v. Goodwin, 31 Conn. 74, 81 Am. Dec. 169; Collins V. Carlisle, 13 111. 254; Commercial Bank v. Cunningham, 24 Pick. (Mass.) 270, 35 Am. Dec. 322; Sum- mers V. Roos, 42 Miss. 749, 2 Am. Rep. 653; Robinson v. Williams, 22 N. Y. 380; Kramer v. Farmers' &c. Bank, 15 Ohio 253; Nlcklin v. Betts Spring Co., 11 Ore. 406, 5 Pac. 51, 50 Am. Rep. 477; McDaniels v. Col- vin, 16 Vt. 300, 42 Am. Dec. 512. 507 FUTURE ADVANCES § 366 future advances are to be made to a third person, or for his benefit at the request of the mortgagor.^" Neither is the validity of a mortgage to secure future advances affected by the fact that the advances are to be made in materials for building instead of money.^^ A mortgage is not fraudulent because it is given for a larger amount than the actual loan made at the time, with a view to its covering future loans up to the amount of the mortgage. ^^ § 366. Statutory requirements. — In some states there are statutory provisions, requiring the debt secured to be described in the mortgage, which restrict the right to make mortgages for future advances. Thus, in Maryland it is provided by statute that no mortgage or deed in the nature of a mortgage, shall be a lien or charge on any estate or prop- erty for any other or different principal sum or sums of money than appear on the face of the mortgage, and are specified and recited in it, and particularly mentioned and expressed to be secured thereby at the time of executing it ; and further, that no mortgage, or deed in the na- ture of a mortgage, shall be a lien or charge for any sum or sums of money to be loaned or advanced after the same is executed, except from the time said loan or advance is actually made; and that no mortgage to secure such future loans or advances shall be valid unless the amount or amounts of the same, and the times when they are to be made, shall be specifically stated in said mortgages.^^ A mortgage to secure future advances not to exceed a limited amount may be enforced to the amount of the advances made upon it within that limit, although such advances were made after the mortgagee had received notice of a Junior incumbrance.^* The statute requiring the amount to be stated is a modification of the common law, under which the mortgage would be equally valid without such limitation. In New Hampshire it is provided that no conveyance in writing of =°Maflatt V. Rynd, 69 Pa. St. 380, stars to secure the payment to the and cases cited. latter of debts contracted by the ^ Tapia v. Demartini, 77 Cal. 383, former for malt and other material 19 Pac. 641; Doyle v. White, 26 used in the making of malt liquors. Maine 341, 45 Am. Dec. 110; Brooks This amendment and addition to V. Lester, 36 Md. 65. See also Mil- the Code does not apply to Anne ler V. Ward (Maine), 88 Atl. 400. Arundel, Baltimore, St. Mary's and '^ Allen V. Fuget, 42 Kans. 672, 22 Prince George's counties. Pac. 725. See also Baltimore High Grade =«Ann. Code 1911, art. 66, § 2, p. Brick Co. v. Amos, 95 Md. 571, 52 1518. This restriction does not ap- Atl. 582, 53 Atl. 148, for an extended ply to mortgages to indemnify the discussion of this statement. And mortgagee against loss from being see Maus v. McKellip, 38 Md. 231. Indorser or security, nor to any "Wilson v. Russell, 13 Md. 494, mortgage given by brewers to malt- 71 Am. Dec. 645. § 366 DEBT SECDEED 508 any lands shall be defeated, or any estate incumbered by any agree- ment, unless it is inserted in the condition of the conveyance and made a part thereof, stating the sum of money to be secured, or other thing to be performed.^^ And it is also provided that no estate conveyed in mortgage shall be holden by the mortgagee for the pajonent of any sum of money, or the performance of any other thing, the obligation or liability to the payment or performance of which arises, is made, or contracted after the execution and delivery of such mortgage.^" It is held, however, that a mortgage executed in good faith, conditioned to secure a definite sum, part of the consideration of which is the agreement of the mortgagee to pay certain sums to and for the use of the mortgagor, and to perform certain labor for the mortgagor, is neither prohibited nor fraudulent as against the creditors of the mort- gagor.^^ But the court did not wish to be understood as holding that a mortgage given to secure an absolute note, intended as a security for advances thereafter to be made, would be valid if at the time of the execution of the mortgage the amount of the advances was not agreed upon, or the mortgagee was under no obligation to make them. Under this statute the mortgage may be void as to the part of the consider- ation which is altogether future, but valid for the part which was a debt at the time the mortgage was executed.^' In Georgia a mortgage may be made to secure future advances not limited in amount,^^ although the statute of the state provides that ^ A mortgage to secure the mort- given for an existing debt, as se- gagee from loss on account of an curity for future advances, is not indorsement of the mortgagor's within the prohibition of the stat- note is not invalid because made ute. Lime Rock Nat. Bank v. Mow- to secure a debt "contracted after ry, 68 N. H. 598, 22 Atl. 555. Gen. the execution and delivery of the Stat. ch. 122, §§ 2, 3; Gen. Laws mortgage." Pub. Stats, of New 1878, ch. 136, §§ 2, 3; Pub. Stats. Hampshire, 1901, ch. 138, § 3. A 1901, ch. 139, §§ 2, 3. mortgage executed as security for "' Stearns v. Bennett, 48 N. H. an indorsement which was not 400. A mortgage conditioned to se- made till the following day is not cure a note the consideration of a given to secure future advances. It part of which is a credit of an also secures renewals of the paper agreed sum by the mortgagee, on originally indorsed. Stavers v. his books, to the mortgagor, is not Philbrick, 68 N. H. 379, 36 Atl. 16. prohibited. Abbot v. Thompson, 58 See also Fessenden v. Taft, 65 N. N. H. 255. H. 39, 17 Atl. 713; Weed v. Barker, ^ Leeds v. Cameron, 3 Sumn. (U. 35 N. H. 386. S.) 488; Johnson v. Btciswdson, 38 ^A mortgage made in part to N. H. 353; New Hampshire 'Baak v. secure a fixed sum of money agreed Willard, 10 N; H. 210. to be paid by the mortgagee on the » Allen v. LathrOp, 46 Ga. 133. happening of a definite contingency The debt was described as advances is not within this prohibition. Fes- in supplies and money for the pur- senden v. Taft, 65 N. H. 39, 17 Atl. pose of carrying on the farm for 713. The assignment of a mortgage the year 1870. 509 FUTURE ADVANCES § 367 a mortgage shall "specify the debt to secure which it is given."^" So long as the means for determining the amount of the debt are pointed out, it is immaterial that the amount is not stated, or is from its very nature indefinite.*^ But it has been held that a mortgage reciting that it was given for a note and "such future advances" as may be made during a given year is valid only as security for the note.''^ In construing the California Civil Code, section 3923, providing that "a mortgage can be created, renewed or extended only by writing exe- cuted with the formalities required in the case of a grant to real prop- erty^' the court held that the term "extended" refers to the broadening of the security to cover additional advances, and does not apply to a mortgage securing a present debt and advances for which new notes afterward were given.** § 367. Degree of certainty requisite in describing future liabilities. — Future liabilities intended to be secured should be described with reasonable certainty. If the nature and amount of the incumbrance is so described that it may be ascertained by the exercise of ordinary discretion and diligence, this is all that is required.^* On this prin- ciple a mortgage for the payment of such sums of money as the mort- gagee might advance, in pursuance of an agreement mentioned in the condition of a certain bond given by the mortgagee to the mortgagor of even date, contains reasonable notice of the incumbrance.*^ A mortgage securing future advances, although its purpose does not appear upon its face, is good if the amount of the advances is within the sum named as the amount secured.*^ A mortgage for two hundred dollars was executed as a basis of credit to that extent for goods which '"Civ. Code 1910, § 3257. wold, 4 Conn. 158, 10 Am. Dec. 106; =■» Allen V. Lathrop, 46 Ga. 133. Shepard v. Shepard, 7 Conn. 387; '" Benton-Shingler Co. v. Mills, 13 Stoughton v. Pasco, 5 Conn. 442. Ga. App. 632, 79 S. E. 755. See also Collier v. Faulk, 69 Ala. ^ London &c. Bank v. Bandmann, 58; Brewster v. Clamfit, 33 Ark. 72; 120 Cal. 220, 52 Pac. 583, 65 Am. St. Crane v. Darning, 7 Conn. 387; First 179. Nat. Bank v. Morsell, 1 MacArth. (D. '^Shirras v. Caig, 7 Cranch (U. C.) 155; Allen v. Lathrop, 46 Ga. S.) 34, 3 L. ed. 260; United States 133; Louisville Banking Co. v. V. Hooe, 3 Cranch (U. S.) 73, 2 L. Leonard, 90 Ky. 106, 13 S. W. 521; ed. 370; United States v. Sturges, 1 Farr v. Doxtater, 29 N. Y. St. 531, Paine (U. S.) 525; Beach v. Os- 9 N. Y. S. 141. borne, 74 Conn. 405, 50 Atl. 1019, '= Crane v. Doming, 7 Conn. 38. 1118; Bouton v. Doty, 69 Conn. 531, "'Du Bois v. First Nat. Bank, 43 37 Atl. 1064; Hubbard v. Savage, Colo. 400, 96 Pac. 169; Dummer v. 8 Conn. 215. This case did away Smedley, 110 Mich. 466, 68 N. "W. with the doubt with which such 260, 38 L. R. A. 490; Reeves v. mortgages were spoken of in the Evans (N. J. Eq.), 34 Atl. 477. earlier cases of Pettibone v. Gris- 367 DEBT SECURED 510 the mortgagee might sell to the mortgagor, with the understanding that the mortgagor should make such payments that the balance against him should at no time exceed that amount. An account was opened and continued for some years. It was held that the condition of the mortgage was not exceptionable as not disclosing with sufficient certainty the nature and extent of the incumbrance.^^ Where the con- dition of a deed was, that "in case the grantor pays to the grantee the sum of one thousand six hundred dollars, with interest, on or before the first of January, 1843, then this deed shall be void and of no effect, otherwise to remain in full force," and the grantor then owed the grantee about one thousand one hundred dollars, and it was agreed that the grantee should advance him a further sryn to make up the "Mix V. Cowles, 20 Conn. 420. The Supreme Court of the United States In Townsend v. Todd, 91 U. S. 452, 23 L. ed. 413, in a case aris- ing in Connecticut, followed the de- cisions of that state upon this point. After referring to the earlier de- cisions of that state, the court said: "In Mix V. Cowles, 20 Conn. 420, and Potter V. Holden, 31 Conn. 385, the Supreme Court of that state held to its principles in words, but in effect considerably relaxed the rule. If those cases stood alone, or if there was no later case, there would be some room for doubt what the rule should be. The somewhat re- cent case, however, of Bramhall v. Flood, 41 Conn. 72, fully and dis- tinctly reasserts the rule laid down in the earlier cases. It is there held that the mortgage must truly describe the debt Intended to be se- cured, and that it is not sufficient that the debt be of such a charac- ter that it might have been secured by the mortgage had it been truly described. . In most of the states a mortgage like the one before us, reciting a specific indebtedness, but given in fact to secure advances or indorsements thereafter to be made, is a valid security, and would be good to secure the $6,000 actually advanced before other incumbrances were placed upon the property." Where the mortgagor, being in- solvent, made a mortgage to secure a note of $2,600 to a creditor to whom he was indebted in the sum of $1,500, and who was surety for him in the sum of $1,100 more, the mortgage was held a valid security for the $1,500, but, as against the mortgagor's creditors, not for the part which was intended to indem- nify the mortgagee against his lia- bilities as surety, because that is a claim' not described in the mort- gage; and the real nature of the transaction should appear in the condition of the mortgage. San- ford V. Wheeler, 13 Conn. 165, 33 Am. Dec. 389. On this principle the same court held, in North v. Belden, 13 Conn. 376, 35 Am. Dec. 83, that a mort- gage to secure a note of $500, when in fact the mortgage was intended as security for such indorsements as the mortgagee might make for the mortgagor to that amount, and which were actually made and the notes paid by the mortgagee, was not valid against subsequent incum- brances. And so a condition to pay all notes which the mortgagee might indorse or give for the mort- gagor, and all receipts which the mortgagee might hold against the mortgagor, was held to be too in- definite and uncertain to make the mortgage valid against subsequent parties in interest. There is nothing to limit the lia- bility, or to give others the means of finding out the extent of it. Pet- tibone v. Griswold, 4 Conn. 158, 10 Am. Dec. 106. These Connecticut cases, however, are without general support else- where. 511 FUTURE ADVAXCES § 367 full amount of the mortgage, it was held that the condition sufficiently described the nature and character of the indebtedness to be secured to constitute a valid security against subsequent incumbrances.^' A mortgage conditioned for the payment of all sums due and to become due is sufficiently certain.^" And this is true although the description given for the main indebtedness be insufficient.*" A mortgage to "se- cure all past indebtedness due and owing" from the mortgagor to the mortgagee is sufficiently certain.*^ A mortgage conditioned to pay the mortgagee "what I may owe him on book" was construed to refer to future accruing accounts, upon its appearing that there was no account subsisting between the parties when the mortgage was given.*^ Upon its appearing that the mortgage was given in part to cover future advances, the burden is upon the mortgagee to show what advances have been made.*^ But it is not to be inferred that it is generally essential that the amount of the intended advances should be stated, or in any way lim- ited. On the contrary, by the weight of authority, mortgages to se- cure indefinite future advances are valid.** It is necessary, however, that the debt reasonably conform to the particulars of the description, in order to be covered by the mortgage.*^ A mortgage for future advances may be made a continuing security for advances made at any time, so that when advances have been made to the amount limited by the mortgage, and these are paid either wholly or in part, the mortgage will continue as a security for new advances within the limit named.*" A mortgage given to secure pay- »» Bacon v. Brown, 19 Conn. 29. St. 531, 9 N. Y. S. 141; Keyes v. ™Steckel v. Standley, 107 Iowa Bump, 59 Vt. 391, 9 Atl. 598. See 694, 77 N. W. 489; Michigan Insur- also Seymour v. Darrow, 31 Vt. 122. ance Co. v. Brown, 11 Mich. 266. See post §§ 373-375. See also Bowen v. Ratcliff, 140 Ind. ^° Moran v. Gardemeyer, 82 Cal. 393, 39 N. E. 860, 49 Am. St. 203. 96, 23 Pac. 6; Walker v. Rand, 131 ^° Bowen v. Ratcliff, 140 Ind. 393, 111. 27, 22 N. E. 1006; Babcock v. 39 N. E. 860, 49 Am. St. 203. Lisk, 57 III. 327; Storms v. Storms, "Machette v. Wanless, 1 Colo. 3 Bush (Ky.) 77; Doyle v. White, 225. See also Farabee v. McKerrl- 26 Maine 341, 45 Am. Dec. 110; han, 172 Pa. St. 234, 33 Atl. 583, 51 Hall v. Tufts, 18 Pick. (Mass.) 455; Am. St. 734. Bank of Buffalo v. Thompson, 121 ^"McDaniels v. Colvin, 16 Vt. 300. N. Y. 280, 24 N. E. 473; Walker v. 42 Am. Dec. 512. Paine, 31 Barb. (N. Y.) 213. ^ Fisher V. Otis, 3 Pin. (Wis.) 78, *■= Douglass v. Reynolds, 7 Pet. 3 Chand. 83. (U. S.) 113, 8 L. ed. 626; Shirras ^"Brewster V. Clamfit, 33 Ark. 72; v. Caig, 7 Cranch (U. S.) 34, 3 Jarratt v. McDaniel, 32 Ark. 598. L. ed. 260; United States v. Hooe, See also Merrills v. Swift, 18 Conn. 3 Cranch (U. S.) 73, 2 L. ed. 370; 257, 46 Am. Dec. 315; Citizens' Sav. Lawrence v. Tucker, 23 How. (U. Bank v. Kock, 117 Mich. 118, 75 N. S.) 14, 16 L. ed. 474; Courier-Jour- W. 444; Barker v. Barker, 62 N. nal Job Printing Co. v. Schaeffer- H. 366; Farr v. Doxtater, 29 N. Y. Meyer Brew. Co., 101 Fed. 699; § 367a DEBT SECURED 513 ment for goods, which the mortgagee might thereafter sell to the mortgagor, gives the mortgagee an implied authority to continue to sell goods to the mortgagor under the security of the mortgage, as in the case of a continuing guaranty ; but the authority is revoked by the death of the mortgagor.*' A mortgage to secure future advances is valid for advances not exceeding the sum specified, though by mistake the mortgage recites that it is for a debt already accrued.** § 367a. Parol evidence to identify future advances. — Parol evi- dence is admissible to identify the future advances intended to be se- cured by a mortgage. Though the mortgage on its face is for the pay- ment of a specific sum of money, parol evidence is admissible to show that it was really intended to secure future advances to be made from time to time.*' Where the description is not sufficiently particular to make the identification of the advances sure, parol evidence is admis- sible to connect such advances with the mortgage, and supply the de- ficiencies of the description. The amount as well as the purpose of the security may be thus established.^" A mortgage made by a married woman as security for sales of goods to be made by the mortgagee to her husband may be shown by parol evidence to have been intended to secure sales made to the husband by a firm of which the mortgagee was a member.^^ § 368. Advances made after notice of subsequent liens. — The early English decisions, and some authorities in this country, hold that a mortgage for future advances is a first lien on the property as to all advances secured by the mortgage, no matter when made, and this without reference to the question whether the mortgagee was obligated by contract to make further advances or whether he knew of the in- Brown V. Kiefer, 71 N. Y. 610; Rob- Pac. 251; Du Bois v. First Nat. inson v. Williams, 22 N. Y. 380; Bank, 43 Colo. 400, 96 Pac. 169. See Kramer v. Trustees, 15 Ohio 253; ante § 352. Shores v. Doherty, 65 Wis. 153, 26 '"Du Bois v. First Nat. Bank, 43 N. W. 577; Jones on Chattel Mort- Colo. 400, 96 Pac. 169; Hestei- v. gages, § 94. Gairdner, 128 Ga. 531, 58 S. e5. 165; " Hyland v. Habich, 150 Mass. 112, Ackerman v. Hunsicker, 85 N. Y. 22 N. E. 765, 15 Am. St. 174. 43, 39 Am. Rep. 621; Bank of Utica ■"» Perkins &c. Co. v. Drew (Ky.), v. Finch, 3 Barb. Ch. (N. Y.) 293, 122 S. W. 526. 49 Am. Dec. 175; Craig v. Tappin, "Shirras v. Caig, 7 Cranch (U. 2 Sandf. Ch. (N. Y.) 78. S.) 34, 3 L. ed. 260; Wilkerson v. "Hall v. Tay, 131 Mass. 192, En- Tillman, 66 Ala. 532; Louisville dicott, J., said: "We can see no Banking Co. v. Leonard, 90 Ky. 106, reason why, in the absence of any 13 S. W. 521; MoKinster v. Bab- specific statement in the mortgage cock, 26 N. Y. 378. See also Barn- as to the character of the advances, hart V. Edwards, 115 Cal. xvii, 47 parol evidence may not be Intro- •313 FUTURE xiDVANCES § 368 ferior lien.''^ But the later English decisions and a majority of the f-nses in this country adhere to the rule that a subsequent lien will take precedence over the mortgage as to all advances made after the mort- gagee had notice of the prior incumbrance. °^ As will be presently no- ticed, this general proposition is subject to qualifications; but when- ever a subsequent mortgage has precedence, as a general rule a subse- quent judgment has precedence under like circumstances;^-' but a mortgage for future unlimited advances is good against all advances made before recovery of the judgment.''^ A mortgage given to secure advances has priority over a subsequent judgment against the mortgagor as to all advances made before the mortgagee has notice of the judgment and as to subsequent renewal notes given for such advances. In such a case verbal notice of the ex- istence of the judgment is sufficient.^" Advances covered by a mortgage have preference over the claims of junior incumbrancers, who have become such with notice of an agree- ment under the mortgage for the advances.^' Mortgages to secure fu- ture advances or liabilities are valid and fixed securities against sub- sequent purchasers, or attaching creditors of the mortgagor, although the advances are made or the liabilities assumed after the record of such later deeds or attachments; and although it is optional with the duced to identify and prove what 17 Ohio 371, 49 Am. Dec. 461. See advances were in fact intended by also Tapia v. Demartini, 77 Cal. 383, the parties. It is competent for the 11 Am. St. 288, 19 Pac. 641; Bos- purpose of showing the actual con- well v. Goodwin, 31 Conn. 74; Cen- sideration. There certainly would tral Trust Co. v. Continental Iron be no objection to it if the mort- "Works, 51 N. J. Eq. 605, 28 Atl. gage had been made in the same 595, 40 Am. St. 539; Griffin v. New terms to the firm by name. And if Jersey Oil Co., 11 N. J. Eq. 49; Ack- made to one of the firm for the erman v. Hunsicker, 85 N. Y. 43, benefit of the firm, and In conse- 39 Am. Rep. 621; Reynolds v. Web- quence thereof the advances were ster, 71 Hun 378, 55 N. Y. St. 6, 24 made by the firm, evidence of the N. Y. S. 1133; Wisconsin Planing actual advances made by the firm Mill Co. v. Schuda, 72 Wis. 277, 39 would be competent." N. W. 558. ^^ Rowan v. Sharp's Rifle Mfg. Co., •" Brinkerhoff v. Marvin, 5 Johns. 29 Conn. 282; Brinkmeyer v. Hel- Ch. (N. Y.) 320; Goodhue v. Ber- bling, 57 Ind. 435; Brinkmeyer v. rien, 2 Sandf. Ch. (N. Y.) 630; Yel- Browneller, 55 Ind. 487; Wilson v. verton v. Sheldon, 2 Sandf. Ch. (N. Russell, 13 Md. 494, 71 Am. Dec. Y.) 481; Craig v. Tappin, 2 Sandf. 645; Witczinski v. Everman, 51 Ch. (N. Y.) 78. Miss. 841; Gordon v. Graham, 7 Vin. '= Robinson v. Williams, 22 N. Y. Abr. 52, 2 Eq. Cas. Abr. 598. 380. ^'Frye v. Bank of Illinois, 11 111. ^"Schmidt v. Hedden (N. J. Eq.), 367; Hughes v. Worley, 1 Bibb 38 Atl. 843. (Ky.) 200; Bell v. Fleming, 12 N. "Truscott v. King, 6 N. Y. 147; J. Eq. 13, 490; Hall v. Grouse, 13 Kramer v. Farmers' &c. Bank, 15 Hun. (N. Y.) 557; Todd v. Outlaw, Ohio 253. 79 N. Car. 235; Spader v. Lawler, 33— Jones Mtg.— Vol. I. § 369 DEBT SECURED 514 mortgagee whether he will make such advancements or assume such liabilities or not, if they are made or assumed in good faith, and with- out notice of any subsequent intervening incumbrance.^* § 369, Theory where mortgagee is not bound to make advance- ments. — But where the mortgagee is not bound to make the advances or assume the liabilities, and he has actual notice of a later incum- brance upon the property for an existing debt or liability, such later incumbrance will take precedence of the mortgage as to all advances made after such notice.''" Whether constructive notice by the record of tJie later incumbrance should have the same efEect as actual notice, and whether the option of the mortgagee to make the advances should operate to give the mortgage effect as to subsequent incumbrances only from the time the advances are in fact made, are questions upon which the cases are not agreed."" There are cases which hold that a mortgagee is not affected with knowledge of a subsequent mortgage ox other incumbrance, within the rule, by the recording of such mort- gage, but that he may with safety make advances imtil he has actual knowledge of such subsequent incumbrance."^ And there are other de- cisions to the effect that,- even though advances are made with knowl- edge of an incumbrance accruing since the date of the mortgage in favor of third persons, they take precedence thereof, provided the mak- '" Shirras v. Caig, 7 Crancli (U. Co. v. Suess, 54 Nebr. 379, 74 N. W. S.) 34, 3 L. ed. 260; Conard v. At- 620; Williams v. Gilbert, 37 N. J. lantic Ins. Co., 1 Peters (U. S.) 386, Eq. 86; Sayre v. Hewes, 32 N. J. 7 L. ed. 189; Crane v. Deming, 7 Bq. 652; Ackerman v. Hunslcker, Conn. 387; Schmidt v. Zahrndt, 148 85 N. Y. 43, 39 Am. Rep. 621; Union Ind. 447, 47 N. E. 335; Anderson v. Nat. Bank v. Milburn &c. Co., 7 N. Listen, 69 Minn. 82, 72 N. W. 52; Dak. 201, 73 N. W. 527; National Williams v. Gilbert, 37 N. J. Eq. 84; Bank v. Gunhouse, 17 S. Car. 489; Sayre v. Hewes, 32 N. J. Eq. 652; Seaman v. Fleming, 7 Rich. Eq. (S. Ward V. Cook, 17 N. J. Eq. 99; Trus- Car.) 283; McDaniels v. Colvin, 16 cott V. King, 6 Barb. (N. Y.) 346; Vt. 300, 42 Am. Dee. 512; Home Sav. Union Nat. Bank v. Milburn &c. Co., &c. Assn. v. Burton, 20 Wash. 688, 7 N. Dak. 201, 73 N. W. 527; Me- 56 Pac. 940. Daniels v. Colvin, 16 Vt. 300, 42 ™ See post § 372. Am. Dec. 512. « Savings &c. Soc. v. Burnett, 106 ■^ Ripley v. Harris, 3 Biss. (U. Cal. 514, 39 Pac. 922; Frye v. Bank S.) 199; Tapia v. Demartini, 77 Cal. of Illinois, 11 111. 367; Nelson v. 383, 19 Pac. 641, 11 Am. St. 288; Boyce, 7 J. J. Marsh. (Ky.) 401, 23 Boswell V. Goodwin, 31 Conn. 74, 81 Am. Dec. 411; Ward v. Cooke, 17 Am. Dec. 169; Schmidt v. Zahrndt, N. J. Eq. 93; Ackerman v. Hun- 148 Ind. 447, 47 N. E. 335; Brink- sicker, 85 N. Y. 43, 39 Am. Rep. 621; meyer v. Browneller, 55 Ind. 487, Union Nat. Bank v. Milburn &c. 4 Cent. L. J. 370; Ladue v. Detroit Co., 7 N. Dak. 201, 73 N. W. 527; &c: R. Co., 13 Mich. 380 and cases McDaniels v. Colvin, 16 Vt. 300, 42 cited; Schmidt v. Hedden (N. J. Am. Dec. 512. Eq.), 38 Atl. 843; Omaha Coal C. &c. 515 FDTUEE ADVANCES § 370 ing of such advances was not optional with the mortgagee, but he was bound by contract to make them.''^ Where, however, by the terms of the mortgage the advances are to be made within a limited time, it is a valid security for only those lia- bilities which arise within that time.^'' A mortgage was made to secure the mortgagee for his liability as indorser of such notes as the mort- gagor might desire him to indorse within a certain time and amount, and at his option to do so. A second mortgage in similar terms was made to another indorser. It was held that the first mortgagee, for such indorsements as he made after actual notice of the incumbrance of the second mortgage, and of the indorsements made under the se- curity of it, should be postponed to such claims under the second mortgage. *'■' The principle of the decision is, that the mortgagee not being bound by his contract to make the indorsements or future ad- vances, the equity of a junior incumbrancer for an existing debt, or of an attaching creditor, will intervene and take precedence of any ad- vances made or liabilities incurred after actual notice of the subsequent lien. Such junior incumbrancer or creditor acquires a lien upon the property as it then is, and as it is optional with the prior mortgagee whether he will advance or indorse any further, he is not allowed know- ingly to prejudice the rights of subsequent incumbrancers, or destroy their lien, by adding voluntarily to his own incumbrance. They have an equity superior to his right to make further advances. § 370. Mortgage for obligatory advances. — ^A mortgage for obliga- tory advances is a lien from its execution. If by the terms of the mortgage an obligation is imposed upon the mortgagee to make the advances, the mortgage will remain security for all the advances he is required to make, although other incumbrances may be put upon the property before they are made, and he has knowledge of such incum- brances."^ Thus, where a railroad company made a mortgage to a trus- "= Ripley V. Harris, 3 Biss. (U.S.) Boswell v. Goodwin, 31 Conn. 74, 199, Fed. Cas. No. 11853; Boswell 81 Am. Dec. 169; Rowan v. Sharp's V. Goodwin, 31 Conn. 74; Brink- Rifle Mfg. Co., 29 Conn. 282; Crane meyer v. Browneller, 55 Ind. 487; v. Deming, 7 Conn. 387; Richards Heintze v. Bentley, 34 N. J. Eq. v. Waldron, 20 D. C. 585; Schmidt 562. V. Zahrndt, 148 Ind. 447, 47 N. E. =° Miller V. Whittier, 36 Maine 335; Brlnkmeyer v. Helbling, 57 577; Burt v. Gamble, 98 Mich. 402, Ind. 435; Brinkmeyer v. Brownel- 57 N. W. 261. Compare Bryce v. ler, 55 Ind. 4'87; Wilson v. Russell, Massey, 35 S. Car. 127, 14 S. E. 13 Md. 494, 71 Am. Dec. 645; Com- 768. mercial Bank v. Cunningham, 24 "Boswell V. Goodwin, 31 Conn. Pick. (Mass.) 270, 35 Am. Dec. 322; 74. Griffin v. Burtnett, 4 Bdw. Ch. (N. °= Lovelace v. Webb, 62 Ala. 271; Y.) 673; Ackerman v. Hunsicker, § 370 DEBT SECURED 516 tee upon all its property then owned, or afterward to be acquired, to se- cure bonds which the company had agreed to issue to a contractor in part payment for the building of its road, it was held that the mortgage took precedence of a lien for material afterward furnished the company and used upon the road, although the advances were made after notice of the materialman's claim of a lien."" In such case the mortgagee's lien as to all the advances made by him will be superior to subsequent liens, whether the subsequent liens may have attached either before or after such advances were made, and without regard to whether the mortgagee had notice or not of the existence of such subsequent incumbrances, either before or after making future ad- vances. Upon a first mortgage to secure a building loan of twenty thousand dollars a bank advanced fifteen thousand dollars and retained five thousand dollars, under an agreement with the mortgagor that the latter sum should not be paid "until the said building shall be in such progress to completion that the mortgagee shall deem it safe to ad- vance said balance." A second mortgagee acquired the equity in the property by foreclosure, and brought a bill to redeem from the first mortgage.. The bank had paid out the whole of the five thousand dol- lars retained by it upon orders from the mortgagor, leaving the amount of four hundred and fifty dollars due to it for interest. It was contended by the second mortgagee that the bank ought to have applied the amount of four hundred and fifty dollars to the pa3rment of this interest from the five thousand dollars retained by it, and could not require that sum to be paid by the second mortgagee in redeeming from the bank's mortgage. It was held that the bank could not be compelled to make such set-off."^ Where a mortgage was made to secure advances for improving the 21 Hun (N. Y.J 06, 85 N. Y. 43, 39 debt will be compelled to resort Am. Rep. 621; Moroney's Appeal, first to that on which the subse- 24 Pa. St. 372; Lyle v. Ducomb, 5 quent incumbrancer has no lien. Binn. (Pa.) 585; Nelson v. Iowa The case relates rather to the ap- Eastern R. Co., 8 Am. Railroad Rep. plication of the proceeds of the 82. See also Witczinski v. Ever- mortgage loan itself. What the ef- man, 51 Miss. 841. feet, if any, would have been if the '" Nelson v. Iowa Eastern R. Co., second mortgagee upon taking their 8 Am. Railroad Rep. 82. mortgage had notified the bank of " Tillinghast v. North End Sav- that fact, and had notified it not ings Bank, 178 Mass. 458, 459, 59 to pay over to the mortgagor the N. B. 1016. Mr. Justice Morton $5,000 or any part thereof, or if said: "The case is not, therefore, they had given such notice to the a case for the application of the bank immediately upon the fore- rule that a prior incumbrancer hav- closure, we need not consider, as ing two or more securities for his no such notice was given. No doubt sir FUTDKE ADVANCES § 371 premises, an advancement made after a sale of the property under exe- cution was held superior to the purchaser's title."^ § 371. Hopkinson v. E,olt.^° — The question in this case was accu- rately and tersely stated by Lord Chancellor Chelmsford in the judg- ment appealed from : "A prior mortgage for present and future ad- vances; a subsequent mortgage of the same description; each mortga- gee has notice of the other's deeds; advances are made by the prior mortgagee after the date of the subsequent mortgage, and with full knowledge of it: is the prior mortgagee entitled to priority for these advances over the antecedent advance made by the subsequent mort- gagee?" In Gordon v. Graham'" this question was answered affirma- tively; but the House of Lords overruled this case, and answered the question in the negative. Lord Chancellor Campbell forcibly presents the argument for this view of the question/^ Some American authori- tlie bank could have offset the ?450 against the interest due it if the mortgagor had agreed that it might. Whether it could have done so if they did not agree, it is not neces- sary to decide." "" Rowan v. Sharp's Rifle Mfg. Co., 29 Conn. 282; Gerrity v. Wareham Sav. Bank, 202 Mass. 214, 88 N. E. 1084. "=9 H. L. C. 514. "This decision had previously heen questioned by Mr. Coventry, in a note to Powell on Mtg. 534, note (e), and by Lord St. Leonards, 2 Dru. & War. 431, 6 H. L. C. 589. See ante § 365. "Hopkinson v. Rolt, 9 H. L. C. 514. "The first mortgagee is se- cure as to past advances, and he is not under any obligation to make any further advances. He has only to hold his hand when asked for a further loan. Knowing the ex- tent of the second mortgage, he may calculate that the hereditaments mortgaged are an ample security to the mortgagees; and if he doubts this, he closes his account with the mortgagor, and looks out for a better security. The benefit of the first mortgage is only lessened by the amount of any interest which the mortgagor afterwards conveys to another, consistent with the rights of the first mortgagee. Thus far the mortgagor is entitled to do what he pleases with his own. The consequence certainly is, that after executing such a mortgage as we are considering, the mortgagor, by executing another such mortgage, and giving notice of it to the first mortgagee, may at any time give a preference to the second mort- gagee as to subsequent advances, and, as to such advances, reduce the first mortgagee to the rank of puisne incumbrancer. But the first mortgagee will have no reason to complain, knowing that this is his true position, if he chooses volun- tarily to make further advances to the mortgagor. The second mort- gagee can not be charged with any fraud upon the first mortgagee, in making the advances, with notice of the first mortgage; for, by the hypothesis, each has notice of the security of the other, and the first mortgagee is left in full possession of his option to make or refuse fur- ther advances, as he may deem it prudent. The hardship upon bank- ers from this view of the subject at once vanishes when we consider that the security of the first mort- gage is not impaired without no- tice of a second, and that, when this notice comes, the bankers have only to consider, as they do, as often as they discount a bill of ex- change, what is the credit of their customer, and whether the proposed transaction is likely to lead to profit or to loss." § 372 DEBT SECURED 518 ties, however, lean toward the rule laid down in the case of Gordon v. Graham.'''' § 372. Notice of subsequent liens depending on the registry acts only. — A prior mortgagee is affected only by actual notice of a subse- quent mortgage, and not by constructive notice from the recording of the second mortgage, and for all advances made by such mortgagee before receiving such notice of a subsequent incumbrance his mort- gage is a valid security. Such, it is conceived, is the rule supported by reason and the weight of authority.'^ These authorities seem to pro- ceed upon the theory that the mortgage as against subsequent incum- brances becomes a lien for the whole sum advanced from the time of its execution and record, and not from each separate amount advanced from the time of such advancement. Where a person having mortgaged land to secure a present loan, and also future advances, afterward declared a homestead upon it, and subsequently obtained further advances without disclosing the fact that he had declared a homestead, the mortgagee was protected as to such advances made on the faith of the security.^* The recording of the declaration is not notice to the prior mortgagee. Nothing short of actual notice to the mortgagee of such declaration would aSect him. It is elsewhere observed that the recording acts give notice to subse- quent purchasers and incumbrancers, and do not affect those whose rights are already fixed by the previous record of their own deeds.'^ "7 Vln. Abr. 52, pi. 3, 2 Eq Cas. N. T. 166; Livingston v. Mclnlay, Abr. 598; Brinkmeyer v. Helbling, 57 16 Johns. (N. Y.) 165; Union Nat. Ind. 435; Brinkmeyer v. Brownel- Bank v. Molina, 7 N. Dak. 201, 73 ler, 55 Ind. 487; Wilson v. Russell, N. W. 527 (wbere this matter is 13 Md. 494, 71 Am. Dec. 640; Witc- fully and ably discussed) ; McDan- ziniski v. Everman, 51 Miss. 841. iels v. Colvin, 16 Vt. 300, 42 Am. ™ Tapia v. Demartini, 77 Cal. 383, Dec. 512 ; McCarty v. Chalfant, 15 19 Pac. 641, 11 Am. St. 288; Rowan W. Va. 514, 548, per Haymond, J., V. Sharp's Rifle Mfg. Co., 29 Conn, but point not decided. See also 282 (in the latter case, however, the Shirras v. Caig, 7 Cranch (U. S.) advances were obligatory) ; Schmidt 34, 3 L. ed. 260; Savings &c. Soc. V. Zahrndt, 148 Ind. 447, 47 N. B. v. Burnett, 106 Cal. 514, 39 Pac. 335; Brinkmeyer v. Browneller, 55 922; Crane v. Deming, 7 Conn. 387; Ind. 487; Nelson v. Boyce, 7 J. J. Frye v. Bank of Illinois, 11 111. Marsh. (Ky.) 401, 23 Am. Dec. 411; 367; Burdett v. Clay, 8 B. Mon. Bunker v. Barron, 93 Maine 87, 44 (Ky.) 287; "Williams v. Gilbert, 37 Atl. 372; Wilson v. Russell, 13 Md. N. J. Eq. 84; Griflln v. New Jersey 494, 71 Am. Dec. 645; Central Trust Oil Co., 11 N. J. Eq. 49; Reynolds Co. V. Continental Iron Works, 51 v. Webster, 71 Hun 378, 55 N. Y. N. J. Eq. 605, 28 Atl. 595; Ward St. 6, 24 N. Y. S. 1133; Pennock v. V. .Cooke, 17 N. J. Eq. 93; Acker- Copeland, 1 Phila. (Pa.) 29. man v. Hunslcker, 85 N. Y. 44, 39 "In re Haake, 7 N. Bank. R. 61, Am. Rep. 621; Robinson v. Wil- 2 Sawyer, 231. liams, 22 N. Y. 380; Truscott v. "See article on this subject, 11 King, 6 Barb. (N. Y.) 147, 346, 6 Am. Law Reg. (N. S.) 273, by Judge 519 FUTURE ADVANCES § 373 Whether the mortgage intended to secure future advances discloses the nature of the transaction or not, there is no good reason why it should not remain a valid security for all advances that may be made until the mortgagee receives actual notice of subsequent claims upon the property. The burden of ascertaining the amount of an existing incumbrance should rest upon him who takes a conveyance of the property subject to the mortgage. He has notice by the record of the existence of a mortgage for the full amount of the intended advances ; and if he wishes to stop the advances where they are at the time of re- cording his subsequent deed, it is only reasonable to require him to give actual notice of his claim upon the property ; otherwise he should not be heard to complain that the prior incumbrance amounts at any fu- ture time to the full sum for which it appeared of record to be an incumbrance. '° Nevertheless, there are some authorities to the effect that the first mortgagee has constructive notice of the second mortgage from the record of it.''^ These decisions are based upon the theory that a mortgage is only security for the payment of money, and when there was no money due there could be no mortgage, and hence a mortgage could have no effect as to third parties unless the record disclosed what amount is actually secured. This position is supported by Mr. Justice Christiancy, of Michigan, in an elaborate opinion, in which a mortgage for future optional advances is treated as effectual only from the time the advances are actually made.'^ Mitchell, the learned editor, who "Spader v. Lawler, 17 Ohio 371, in conclusion remarks: "So far as 49 Am. Dec. 461, by a divided court; we may venture a personal opin- Frye v. Bank of Illinois, 11 111. 367; ion, therefore, we think the rule. Stone v. Welling, 14 Mich. 514; that the recording of the second Griffin v. New Jersey Oil Co., 11 N. mortgage is not notice to the first J. Eq. 49; Ketcham v. Wood, 22 mortgagor, is supported by the bet- Hun (N. Y.) 64; Bank of Montgom- ter reasons, and that the weight of ery County's Appeal, 36 Pa. St. 170, authority is still in its favor, sub nominee Parker v. Jacoby, 3 though we are bound to concede Grant's Cas. (Pa.) 300; Ter-Hoven v. that of late there is an apparent Kerns, 2 Pa. St. 96. See also Col- tendency to the opposite rule." lins v. Carlile, 13 111. 254; Ladue v. See post § 562. Detroit &c. R. Co., 13 Mich. 380, 87 "Lovelace v. Webb, 62 Ala. 271, Am. Dec. 759; Nicklin v. Betts an important case. A mortgage Spring Co., 11 Ore. 406, 5 Pac. 1, which expressly provides that it 50 Am. Rep. 477. This question shall secure any future Indebted- was discussed but not decided in ness of the mortgagor to the mort- Boswell v. Goodwin, 31 Conn. 74, gagee on account of sales of goods, 81 Am. Dec. 169, 12 Am. Law Reg. or that may arise in any other man- 79, note by Judge Redfield. See ner, will secure the payment of also 11 Am. Law Reg. 1 debts of the mortgagor of a differ- "Ladue v. Detroit &c. R. Co., 13 ent nature from the debts which Mich. 380, 87 Am. Dec. 759. the mortgage was primarily given In this case Judge Christiancy to secure. Freiberg v. Magale, 70 says: "The instrument can only Tex. 116, 7 S. W. 684. take effect as a mortgage or incum- § 373 DEBT SECURED 520 When there is no obligation upon the mortgagee to make the ad- vances, and the amount of them and the times when they are to be made are not agreed upon, gome authorities hold that the mortgage is a lien, as against intervening incumbrances, only from the time the advances upon it are made, and not from the time of the execution of the mortgage.''* This was the decision with reference to a mortgage given to secure the payment of notes and bills to be discounted for the mortgagor, and for all liabilities of every kind he might be under to the mortgagee.^" When a mortgage is given to secure future accommo- dation indorsements, the amount of which is wholly undefined, a sub- Sequent mortgage or deed taken in good faith is held to have prece- dence over the prior mortgage as to any indorsements made after- ward.^^ But the better authorities are against that view. A mortgage to secure future advances is a conveyance within the recording acts, and brance from the time when some debt or liability shall be created, cr some binding contract is made, which is to be secured by it. Until this takes place, neither the land, nor the parties, nor third persons, are bound by it. It constitutes, of itself, no binding contract. Either party may disregard or repudiate it at his pleasure. It is but a part of an arrangement merely contem- plated as probable, and which can only be rendered effectual by the future consent and further acts of the parties. It is but a kind of con- ditional proposition, neither bind- ing nor intended to bind either of the parties, till subsequently as- sented to or adopted by both." As to the inconvenience which is supposed to result to the first mort- gagee by requiring him to examine the record every time he makes ad- vances upon such a mortgage, the learned judge says: "It is, at most, but the same Inconvenience to which all other parties are com- pelled to submit when they lend money on the security of real es- tate — the trouble of looking to the value of the security. But, in truth, the inconvenience is very slight. Under any rule of decision, they would be compelled to look to the record title when the mortgage is originally taken. At the next advance they have only to look back to this period; and for any future advance, only back to the last, which would generally be but the work of a few minutes, and much less inconvenience than they have to submit to in their ordinary daily business in making inquiries as to the responsibility, the signatures, and identity of the parties to com- mercial paper. But if there be any hardship, it is one which they can readily overcome by agreeing to make the advances; in other words, by entering into some contract for the performance of which, by the other party, the mortgage may op- erate as a security. They can hardly be heard to complain of it as a hardship, that the courts re- fuse to give them the benefits of a contract which, from prudential or other considerations, they were un- willing to make, and did not make until after the rights of other par- ties have intervened. Courts can give effect only to the contracts the parties have made, and from the time they took effect." Gillam v. Barnes, 123 Mich. 119, 82 N. W. 38. ™Nicklin v. Betts Spring Co., 11 Ore. 406, 5 Pac. 1, 50 Am. Rep. 477. ""McClure v. Roman, 52 Pa. St. 458; Bank of Montgomery County's Appeal, 36 Pa. St. 170; Parker v. Jacoby, 3 Grant's Cas. (Pa.) 300. "'Babcock V. Bridge, 29 Barb. (N. Y.) 427. 521 FUTUEE ADVANCES § 373 the record is notice to subsequent purchasers and incumbrancers, who are thereby put upon inquiry as to the extent of the advance made and to be made. The mortgage is a potential lien for the full amount of the advances contemplated, and through the record subsequent pur- chasers and incumbrancers have notice of the extent and purpose of the mortgage.*^ § 373. Priority of recorded mortgage expressed to cover future ad- vances. — The rule that a recorded mortgage expressed to cover future advances has priority in all cases over subsequent conveyances and in- cumbrances, has full support in recent discussions, and must novf be re- garded as a settled rule of law. Notwithstanding all the distinctions and refinements which have been introduced into the law on this subject by the many conflicting adjudications upon it, there is strong reason and authority for the rule that a mortgage to secure future advances, which on its face gives information enough as to the extent and pur- pose of the contract, so that any one interested may by ordinary dili- gence ascertain the extent of the incumbrance, whether the extent of the contemplated advances be limited or not, and whether the mortga- gee be bound to make the advances or not, will prevail over the super- vening claims of purchasers or creditors, as to all advances made with- in the terms of such mortgage, whether made before or after the claims of such purchasers or creditors arose, or before or after the mortgagee had notice of them. If the mortgage contains enough to show a contract between the parties, that it is to stand as a security to the mortgagee for such indebtedness as may arise from the future dealings between the parties, it is sufBcient to put a purchaser or in- cumbrancer on inquiry, and if he fails to make it he is not entitled to "^Ackerman v. Hunsicker, 85 N. plaintiff's mortgage was an instru- Y. 43, 39 Am. Rep. 621. Per An- ment capable of being recorded un- drews, J.: "It is claimed, bow- der the statute before any liability ever, that the mortgage did not be- had been incurred. It is the gen- come an actual lien or incumbrance eral practice to record mortgages until the advances were made, and and docket judgments taken to se- .that as to each advance it became cure future advances and contem- in effect a new mortgage as of the plated liabilities before an actual time when such advance was made, indebtedness arises. On being re- and that as to indorsements made corded, the record is notice to sub- subsequent to the docketing of the sequent purchasers and incum- judgments, the mortgage must be brancers, and they are put upon in- deemed a subsequent lien. It is quiry, and have the means of ascer- manifestly true that the mortgage taining to what extent advances did not become enforceable by the have been made, and by notice to plaintifiE until he had incurred lia- prevent further advances to their bility as an indorser. But the prejudice." § 373 DEBT SECUEED 523 protection as a bona fide purchaser.'^ Such a mortgage is considered as good against subsequent incumbrances to the full amount of the advances provided for, or even verbally agreed for, and the mortgagee "is held to have a right to rely upon it, and to make such advances with- out regard to what other incumbrances may afterward have been put upon the property.** This view of the doctrine of mortgages to secure future advances is strongly expressed by Mr. Justice Campbell ia a comparatively recent case in Mississippi.*' == Tapia v. Demartini, 77 Cal. 383, 19 Pac. 641, 11 Am. St. 288; Acker- man v. Hunsicker, 85 N. Y. 43, 39 Am. Rep. 621. See also Staniels v. Whitclier, 72 N. H. 451, 57 Atl. 678. '^ Tapia V. Demartini, 77 Cal. 383, 19 Pac. 641, 11 Am. St. 288; Lewis V. Hartford Silk Mfg. Co., 56 Conn. 25, 12 Atl. 637; Louisville Banking Co. V. Leonard, 90 Ky. 106, 13 S. W. 521; Ackerman v. Hunsicker, 85 N. Y. 43, 39 Am. Rep. 621; Freiberg V. Magale, 70 Tex. 116, 7 S. W. 684; Keyes v. Bump, 59 Vt. 391, 9 Atl. 598. '^ Witczinski v. Everman, 51 Miss. 841. The court say: "There has been much diversity of views between courts and law-writers on the ques- tion of the validity of mortgages for future advances, and the rights of mortgagees in such mortgages as against purchasers and junior in- cumbrancers of the mortgaged prop- erty. Some have held that a mort- gage which does not specify that for which it is given so distinctly as to give definite Information on the face of the mortgage of what it secures, so as to render it un- necessary for the inquirer to look beyond the mortgage and seek in- formation aliunde, is void as against creditors and purchasers. Others have held that a mortgage for fu- ture advances is valid as to all ad- vances made under it before notice by the mortgagee of the superven- ing rights of purchasers or incum- brancers. Others have announced that a mortgage for future ad- vances to be made, or liability to be incurred, when duly recorded, is valid as a security for indebtedness incurred under it, in accordance with its terms. "There have been suggested modi- fications of these views, and a dis- tinction has been drawn between mortgages in which the mortgagee is obligated to advance a given sum and those in which he is not so bound. We decline to follow the devious ways to which we are pointed by conflicting adjudications and suggestions, and prefer to pur- sue the plain path in which prin- ciple directs us, and will declare the rule to be observed in the courts of this state on the subject under consideration, which, strangely enough, has not been heretofore de- cided in this state. A mortgage to secure future advances, which on its face gives information as to the extent and purpose of the contract, so that a purchaser or junior cred- itor may, by an inspection of the record, and by ordinary diligence and common prudence, ascertain the extent of the incumbrance, will prevail over the supervening claim of such purchaser or creditor as to all advances made by the mortgagee within the terms of such mortgage, whether made before or after the claim of such purchaser or creditor arose. It is not necessary for a mortgage for future advances to specify any particular or definite sum which it is to secure. It is not necessary for It to be so completely certain as to preclude the necessity of all extraneous Inquiry. If it con- tains enough to show a contract that it is to stand as a security to the mortgagee for such indebtedness as may arise from future dealings be- tween the parties, it is sufficient to put a purchaser or incumbrancer on inquiry, and, if he fails to make it in the proper quarter, he can not claim protection as a bona fide pur- chaser. The law requires mortgages 523 FUTURE ADVANCES 374 Even though no specific sum be named in the mortgage as to wliat future advances it was intended to secure, if the instrument on its face gives information as to the extent and purpose of the contract between the parties, that it is to stand as security for future advances, it will be sufficient to put a subsequent incumbrancer on notice of prob- able future dealings between the parties afEecting the mortgaged property, and the duty of investigating the extent of liability that may attach to the property by reason of the mortgage devolves upon such incumbrancer.*" § 374. Necessity for specifying that future debts are to be secured. — It is not necessary that the mortgage should express on its face that it is given to secure future advances. It may be given for a specific sum, and it will then be security for a debt to that amount.*'' This to be recorded for the protection of creditors and purchasers. When re- corded, a mortgage is notice of Its contents. If it gives information that it is to stand as security for all future indebtedness to accrue from the mortgagor to the mort- gagee, a person examining the rec- ord is put upon inquiry as to the state of dealing between the par- ties, and the amount of indebtedness covered by the mortgage, and is duly advised of the rights of the mortgagee, by the terms of the mortgage, to hold the mortgaged, property as security to him for such indebtedness as may accrue to him. Thus informed, it is the folly of any one to buy the mortgaged property, or take a mortgage on it, or give credit on it; and if he does so, his claim must be subordinated to the paramount right of the senior mortgagee, who, in thus securing himself by mortgage, and filing it for record as required by law, has advertised the world of his para- mount claim on the property cov- ered by his mortgage, and is enti- tled to advance money and extend credit according to the terms of his contract thus made with the mort- gagor, who can not complain, for such is his contract; and third per- sons afterward dealing with him can not be heard to complain, for they are affected with full notice, by the record, of what has been agreed on by the mortgagor and mort- gagee." Followed in Gray v. Helm, 60 Miss. 131. Quoted and followed in Lovelace v. Webb, 62 Ala. 271. ^ Savings &c. Soc. v. Burnett, 106 Cal. 514, 39 Pac. 922; Tapia v. De- martini, 77 Cal. 383, 19 Pac. 641, 11 Am. St. 288. " Huckaba v. Abbott, 87 Ala. 409, 6 So. 48; Forsyth v. Preer, 62 Ala. 443; Tapia v. Demartini, 77 Cal. 383, 19 Pac. 641, 11 Am. St. 288; Tully V. Harloe, 35 Cal. 302, 95 Am. Dec. 102; Richards v. Waldron, 20 D. C. 545; Yock Kee v. Hilo Mer- cantile Co., 13 Hawaii 426; Darst V. Gale, 83 111. 136; Collins v. Car- lisle, 13 111. 254; Louisville Banking Co. V. Leonard, 90 Ky. 105, 13 S. W. 521; Morris v. Cain, 39 La. Ann. 712, 1 So. 797, 2 So. 418; Pickers- gill V. Brown, 7 La. Ann. 297; Witc- zinski v. Everman, 51 Miss. 841; Foster v. Reynolds, 38 Mo. 553; GrifBn v. New Jersey Oil Co., 11 N. J. Eq. 49; Murray v. Barney, 34 Barb. (N. Y.) 336; Bank of Utica V. Finch, 3 Barb. Ch. (N. Y.) 293, 49 Am. Dec. 175; Townsend v. Em- pire Stone Dressing Co., 6 Duer (N.- Y.) 208; Wescott v. Gunn, 4 Duer (N. Y.) 107; Walker v. Snediker, Hoff. (N. Y.) 145; Craig v. Tappin, 2 Sandf. Ch. (N. Y.) 78; Hendrix V. Gore, 8 Ore. 406; Moroney's Ap- peal, 24 Pa. St. 372; Moses v. Hat- field, 27 S. Car. 324, 3 S. E. 538 (quoting text) ; McCarty v. Chal- fant, 14 W. Va. 531. § 374 DEBT SECURED 524 definite sum will then limit the extent of the lien. There must be some limit to the amount which the mortgage is to secure, either by express limitation or by stating generally the object of the security. If the limit be not defined in any way, it can be good only for the advances made at the time, and such others as may afterward be made before any other incumbrances are made upon the- property mort- gaged.^* A mortgage which merely declares that it is to secure such advances as shall thereafter be made by the mortgagee to the mort- gagor, or such indebtedness as shall thereafter arise between them, should, it would seem, be held invalid either as against the policy of the law or as constituting evidence of fraud.'" The sum expressed by the mortgage may cover a present indebted- ness as well as future advances, and it is not necessary that the one should be separated from the other on the face of the mortgage."" The sum or amount named as the consideration of the mortgage is of no moment, as the mortgage stands as security for the amount of liability or indebtedness incurred under the contract for advances set forth in the condition of the mortgage. It is not essential even that any sum be named in the consideration clause."^ The consideration named in the mortgage does not limit the amount for which it may be security, if from the whole instrument it appears that it was intended to secure a future indebtedness beyond this amount."^ A mortgage which in terms secures a promissory note for a specified amount may actually be intended to secure future advances to that amount."* If in such case the mortgagee assigns the note before it is due to one taking it in good faith, and without notice that the note was given for future advances, the assignee takes it subject to no equities in favor of the mortgagor; but the latter must pay the full amount of the note upon redemption or foreclosure."* The fact that the mortgagee in assigning the note and mortgage assigns his "inter- ^'Passett V. Smith, 23 N. Y. 252; Am. Dec. 102; Summers v. Roos, Robinson v. Williams, 22 N. Y. 380. 42 Miss. 749, 2 Am. Rep. 653; Hen- ™Tully V. Harloe, 35 Cal. 302, 95 drix v. Gore, 8 Ore. 406; Evenson Am. Dec. 102; Pettibone v. Oris- v. Bates, 58 Wis. 94, 15 N. W. 837. wold, 4 Conn. 158, 10 Am. Dec. 106; "^Keyes v. Bump, 59 Vt. 391, 9 Garber v. Henry, 6 Watts (Pa.) 57. Atl. 598. But see Jarratt v. McDaniel, 32 "^ Citizens Sav. Bank v. Kock, 117 Ark. 598; Allen v. Lathrop, 46 Ga. Mich. 225, 75 N. W. 458. 133; Michigan Ins. Co. v. Brown, "^Bassett v. Daniels, 136 Mass. 11 Mich. 265; Witczinski v. Ever- 547. man, 51 Miss. 841; Robinson v. "Bassett v. Daniels, 136 Mass. Williams, 22 N. Y. 380. 547. "'Tully V. Harloe, 35 Cal. 302, 95 535 FUTURE ADVANCES § 375 est" in them, is not notice to the assignee that the mortgage was given to secure future advances."^ An absolute conveyance may be used to secure future advances, or to secure an existing debt and also future advances. The agreement to reconvey when the advances are repaid is suflBcient, although it ex- ists in parol only.'' If the mortgage specifies the amount intended to be secured thereby, parol evidence is generally admissible to identify the debts, and such evidence, if satisfactory, may extend the protec- tion of the mortgage over indebtedness created after its execution, but intended by the parties thereto to be secured thereby.'^ § 375. Form of agreement for advances. — According to the weight of authority, a mortgage to secure future advances may, without im- pairing its validity, be in the same form as if it were to secure pre- existing indebtedness. The agreement under which advances to a cer- tain amount are to be made need not be in writing, to be binding and effectual against subsequent liens, when it has been acted upon.°^ Thus, if a mortgage is made to secure future advances to be used in the con- struction of a building on the mortgaged land, and a mortgage for the contemplated amount is made and recorded, it has priority against a mechanic's lien for materials furnished in the construction of such building to the full amount of the mortgage, if the advances are actu- ally made to that amount, although the agreement under which they are made is verbal only.°° °=Bassett v. Daniels, 136 Mass. ecuted by her with lier husband to 547. secure an existing debt, and future "Pessler's Appeal, 75 Pa. St. 483; advances to the husband orally Harper's Appeal, 64 Pa. St. 315, agreed for, is not valid to cover 7 Phila. 276; Myers's Appeal, 42 Pa. such future advances. The incura- St. 518; Rhines v. Baird, 41 Pa. St. brance for future advances, being 256; Eellum v. Smith, 33 Pa. St. a mere oral agreement, constitutes 158. But see Metropolitan Bank v. a power in another to incumber the Godfrey, 23 111. 579. homestead at will, and is not a con- ""Kirby v. Raynes, 138 Ala. 194, veyance executed and acknowl- 35 So. 118, 100 Am. St. 39; Love- edged by husband and wife, as re- lace V. Webb, 62 Ala. 271; Tapia v. quired by statute, and is not en- Demartini, 77 Cal. 383, 19 Pac. 641, forcible. Merced Bank v. Rosen- 11 Am. St. 288; Tully v. Harloe, thai, 99 Cal. 39, 31 Pac. 849. See 35 Cal. 302, 95 Am. Dec. 102; Bacon also Langerman v. Puritan Dining V. Brown, 19 Conn. 29; Foster v. Room Co., 21 Cal. App. 637, 132 Reynolds, 38 Mo. 553. Pac. 617; Du Bois v. First Nat. "'Hendon v. Morris, 110 Ala. 106, Bank, 43 Colo. 400, 96 Pac. 169; 20 So. 27; Wilkerson v. Tillman, Reed v. Rochford, 62 N. J. Eq. 186, 66 Ala. 532; Forsyth v. Freer, 62 50 Atl. 70. Ala. 443; Tison v. People's Sav. "^ Piatt v. Griffith, 27 N. J. Eq. Loan Assn., 57 Ala. 323; Tapia v. 207. The court, citing Moroney's Demartini, 77 Cal. 383, 386, 19 Pac. Appeal, 24 Pa. St. 372. Macintosh 641, 11 Am. St: 288. But it has v. Thurston, 25 N. J. Eq. 242 (writ- been held that, as against the wife's ten agreement of the mortgagee to right of homestead, a mortgage ex- § 376 DEBT SECURED 526 If such agreement be in writing, it is not necessary that it should appear of record.^ But a parol agreement that a mortgage shall cover any indebtedness of the mortgagor to the mortgagee for goods after- ward to be purchased will not cover an indebtedness for goods pur- chased of the mortgagee by a partnership subsequently entered into by the mortgagor; for an indebtedness of the partnership is not within the terms of the original agreement.^ The agreement for the advances must be contemporaneous. A mort- gage can not be made available to secure future advances by any subse- quent parol agreement, in preference to the lien of a junior incum- brance.^ But where the agreement is oral, it seems to be in efieet abrogated by the creation of subsequent incumbrances without the knowledge of it, and after the mortgagor has executed subsequent con- veyances and incumbrances, the mortgagee seems to be no longer at lib- erty to make advances or permit the incurring of indebtedness upon the parol agreement.* § 376. Necessity for stating amount and time for making advance- ments. — The omission to state on the face of the mortgage the time when the first advances are to be made is not material. It is suflBcient that they are to be made from time to time, as the mortgagor may de- sire, during a specified period.^ The amounts of the several advances, and the times when they vrere actually made, and the object of the mortgage, may be shown by extrinsic proof, for in such case the proof does not contradict the mortgage, or alter its legal operation and effect in any way." Although the deed purports to be in consideration of a definite sum in hand paid at the time, it may be shown by parol evi- dence that the deed was made to secure advances made and to be made to that extent.'' furnlsli the money considered im- ner v. Breed, 29 Nebr. 720, 46 N. W. material in these cases) ; Taylor v. 286; Central Trust Co. v. Conti- La Bar, 25 N. J. Eq. 222. Fully sus- nental I. "W., 51 N. J. Eq. 605, 28 tained in Lovelace v. Webb, 62 Ala. Atl. 595, 40 Am. St. 539; Merchants' 271. State Bank v. Tufts, 14 N. Dak. 'Taylor v. Cornelius. 60 Pa. St. 238, 103 N. W. 760, 116 Am. St. 187; Moroney's Appeal, 24 Pa. St. 682. 372; Thomas v. Davis, 3 Phila. » Wilson v. Russell, 13 Md. 494, (Pa.) 171. 71 Am. Dec. 645. See also Ahern ''Parkes v. Parker, 57 Mich. 57, v. White, 39 Md. 409. 23 N. W. 458. "Hall v. Grouse, 13 Hun (N. Y.) 'Truscott V. King, 6 N. Y. 147, 557. 161, per Jewett, J.; Walker v. Sned- 'Huckaba v. Abbott, 87 Ala. 409, iker, Hoff. (N. Y.) 145; Hall v. 6 So. 48; Tapia v. Demartini, 77 Grouse, 13 Hun (N. Y.) 557. Gal. 383, 19 Pac. 641; Cole v. Albers, * Tapia v. Demartini, 77 Gal. 383, 1 Gill (Md.) 412; Foster v. Rey- 19 Pac. 641, 11 Am. St. 288; Wag- nolds, 38 Mo. 553; Moses v. Hat- 527 FDTDEE ADVANCES § 377 Parol evidence is also admissible to show that the mortgage was given to secure advances to be made by a party not named in the mort- gage.^ "When a mortgage has been given in terms to secure future advances and acceptances, and the mortgagee, in a suit to enforce the mortgage, produces drafts of the mortgagor upon him, there is no presumption that the drafts were drawn against funds of the drawer, but the burden is upon the mortgagor to show this if he makes the claim." Parties to a mortgage can not extend it to cover advances made after its execution, by a parol agreement made a few days after the making of the advances, based on no new or valuable consideration, and which was not made in pursuance of any understanding between the parties before the making of advances.^" § 377. limitations of security must be observed. — All limitations of the security must be observed. Although, as already seen, a mort- gage made in good faith to secure future debts expected to be con- tracted, or advances to be made in the course of dealing between the parties, is a good and valid security,^ ^ yet if limited by the terms of the mortgage, either as to amount or the time within which the ad- vances are to be made, or the nature of them, the limitation must be strictly observed; thus a mortgage to secure credits, indorsements or advances to be made within a limited time secures none made after- ward.^^ As a general rule, advances in excess of the amount of a mortgage are not secured by it.^^ Thus where at the same time with the mak- ing of a mortgage of land conditioned for the payment of two thou- fleld, 27 S. Car. 324, 3 S. E. 538, Am. Dec. 175; James v. Morey, 2 540. See also Du Bois v. First Nat. Cow. (N. Y.) 246, 292, 6 Jolins. Ch. Bank, 43 Colo. 400, 96 Pac. 169; Per- 417, 14 Am. Dec. 475; Walker v. kins &c. Co. v. Drew (Ky.), 122 S. Snediker, Hoff. (N. Y.) 145; Brinck- W. 526; Reed v. Rochford, 62 N. J. erhoff v. Lansing, 4 Johns. Cli. (N. Eg. 186, 50 Atl. 70. Y.) 65, 8 Am. Dec. 538; Yelverton »Hall V. Crouse, 13 Hun (N. Y.) v. Shelden, 2 Sandf. Cli. (N. Y.) 557. See also Craig v. Tappin, 2 481. See also Straeffer v. Rodman, Sandf. Ch. (N. Y.) 78; Blackmar 146 Ky. 1, 141 S. W. 742; Tinkham v. Sharp, 23 R. I. 412, 50 Atl. 852. v. "Wright (Tex. Civ. App.), 163 S. "Lewis v. Wayne, 25 Ga. 167. W. 615; Heal v. Evans Creek Coal "Hayhurst v. Morin, 104 Maine &c. Co., 71 Wash. 225, 128 Pac. 211. 169, 71 Atl. 707. "Miller v. Whittier, 36 Maine ^'Shirras v. Caig, 7 Cranch (U. 577; Burt v. Gamble, 98 Mich. 402, S.) 34, 3 L. ed. 260; United States 57 N. W. 261. V. Hooe, 3 Cranch (TJ. S.) 73, 2 L. "McComb v. Barcelona Apart- ed. 370; Commercial Bank v. Cun- ment Assn., 10 N. Y. St. 552, 56 ningham, 24 Pick. (Mass.) 270, 35 Hun 644, 10 N. Y. S. 546. See also Am. Dec. 322;- Bank of Utica v. Perkins &c. Co. v. Drew (Ky.), 122 Finch, 3 Barb. Ch. (N. Y.) 293, 49 S. W. 526. S 378 DEBT SECURED 528 sand two hundred dollars and interest, an agreement under seal was executed by the mortgagor and mortgagee, by which, after referring to the mortgage, the mortgagor agreed to finish a house on- the mort- gaged land, the mortgagee agreeing to furnish the material, and the mortgagor covenanted to pay the cost of the material and one thou- sand dollars for the land; it was then provided that the cost of the land and the cost of the material, "whether more or less than said two thousand two hundred dollars, shall be received in payment of said note and in discharge of said mortgage." It was held that the mortgagor was entitled to redeem the premises from the mortgage on paying the sum mentioned therein, although the sum due under the agreement was much larger.^* Where a building loan mortgage provided that the mortgagee should retain from the mortgagor the sum secured and apply same to the payment of liens created in the erection of a building, it was held that the mortgagee was not entitled to apply the money so retained to a purpose other than that specified in the mortgage.^^ Where a mort- gage was given to secure a note and further advances l.y the mortgagee and all other indebtedness of the mortgagor to the mortgagee, and authorized the mortgagee to pay incumbrances on the premises, it was held that the mortgagee could not buy up obligations of the mort- gagor disconnected from the mortgage or the premises, and hold the same as secured by such mortgage.^* A limitation in terms of the amount of the advances to be made may be controlled by other expressions in the mortgage as to the pur- pose of the advances; thus, where the controlling purpose was to se- cure advances suflBcient to enable the mortgagor to raise a crop of cot- ton, advances beyond the sum specified were protected.^'' If limited in amount and time, and the full amount be once ad- vanced and repaid, and further loans are made within the time lim- ited, these are covered by the mortgage as against subsequent pur- chasers.^* § 378. Where part only of advances have been made. — Where the mortgagee is under obligation to make future advances and fails to "Ford V. Davis, 168 Mass. 116, v. Shaffer, 2 Cal. App. 216, 83 Pac. 46 N. E. 435. 274; Moran v. Gardemeyer, 82 Cal. >= Tice V. Moore, 82 Conn. 244, 73 96, 23 Pac. 6. Atl. 133; Equitable Sav. &c. Assn. "Bell v. Radcliff, 32 Ark. 645. V. Hewitt, 67 Ore. 280, 135 Pac. 864; See also Du Bois v. First Nat. Bank, Brunswick Realty Co. v. University 43 Colo. 400, 96 Pac. 169. Inv. Co. (Utah), 134 Pac. 608. "Wilson v. Russell, 13 Md. 494, w Provident Mut. Bldg. &c. Assn. 71 Am. Dec. 645. 539 FUTURE ADVANCES 8 378 do so, if no other debt is secured by the instrument the mortgage is without consideration and can not be enforced for another purpose/" and if the mortgagee advance only a part of the sum contemplated in the mortgage, it is a valid security for so much as he does advance,^" and for so much only. For the advances actually made, the mortgage is good against the mortgagor's assignee in bankruptcy." Likewise if a mortgage be given for a loan and for the price of lands to be con- veyed, and the mortgagee wrongfully refuses to convey the land, the mortgage can be enforced only for the money advanced.^^ A mortgage was taken upon a building partly completed, the mort- gagee advancing a part of the money under an agreement to pay the balance of the loan thirty-five days after the completion of the build- ing, which was to be finished before a certain date, the agreement also providing that if the building should not be completed by the time agreed, the mortgagee might take charge of and complete the work, and the sums so expended should be considered a part of the balance to be advanced. The mortgagor by his own fault did not complete the building within the required time, and the mortgagee did not take charge of nor complete the work, and was not asked to, and did not offer to advance the balance of the mortgage, though he was always ready and able to advance the balance upon the completion of the building according to the agreement. It was held that the mortgagee was not entitled to interest on the money not advanced.^^ If the mortgagee fails or refuses to make any advances according to his agreement, and retains possession of the lands under an absolute deed intended as a mortgage, the mortgagor can not recover the amount of the promised advances. He can recover such special damages as "Mizner v. Kussell, 29 Mich. 229. court held that the trust deed did "Forsyth v. Freer, 62 Ala. 443; not secure the smaller note. Morris v. Cain, 39 La. Ann. 712, 1 This decision seems to be errone- So. 797, 2 So. 418; Watts v. Bon- ous. Craig, Scott and Sheldon, JJ., ner, 66 Miss. 629, 6 So. 187; Cole- dissenting, take the correct view man v. Galbreath, 53 Miss. 303; of the case when they say: "Equity Freeman v. Auld, 44 Barb. (N. Y.) regards substance, not form. The 14; Dart v. McAdam, 27 Barb. (N. substance of the transaction was Y.) 187. See, in this connection, that there was but $3,000 furnished, the case of Walker v. Carleton, 97 instead of $5,000, and the former III. 582, where a loan for $5,000 was accepted in lieu of the latter; had been agreed upon, and a note and the trust deed to the extent of and trust deed for that sum exe- $3,000 was valid and enforcible." cuted, and the deed recorded, when ^ Schulze v. Bolting, 8 Biss. (U. the lender was able to furnish only S.) 174. $3,000 of the amount, for which sum '^ Robinson v. Cromelein, 15 Mich, he took a separate note payable in 316. a short time. A majority of the ^Lewin v. Folsom, 171 Mass. 188. 50 N. E. 523. 34 — ^JoNES Mtg. — Vol. I. § 379 DEBT SECURED 630 have resulted from the mortgagee's refusal to make the advances ; but in ease no special damages are shown, the mortgagor can recover only nominal damages.^* Of course he can have the mortgage or convey- ance released. When a mortgage is an open one, as, for instance, one made by an absolute conveyance, or to secure undefined future advances, the mort- gagee is entitled to recover under it only so much as he shows affirma- tively to be due. Any doubt and uncertainty, it is said, should operate against the mortgagee and not in his favor.^^ III. Mortgage of Indemnity Cjection Section 379. Description of the indemnity. 384. How character and purpose of 380. What description of liability indemnity mortgage may be sufficient. shown. 381. Obligation covered by an indem- 385. Respective rights of principal nity mortgage. creditor and surety. 382. A continuing security. 386. Release of security by indem- 383. When indemnity mortgage bie- nity mortgagee. comes a lien. 387. Not after liability is fixed. § 379. Description of the indemnity. — Very much of what has already been stated, in regard to present and future debts secured by mortgages, is applicable to mortgages made to indemnify a mortgagee against liabilities incurred or to be incurred by him in behalf of the mortgagor.^ Mortgages of indemnity are perhaps most often given as security for liabilities to be incurred in the future, so that they are to this extent mortgages to secure future advances. Such mortgages generally declare the purpose for which they are given, and set out particularly the liabilities incurred or to be incurred by the mortgagee. But this is not essential. A mortgage given for a definite sum, with- out specifying the liabilities secured, may be shown by parol evidence to have been given to indemnify the mortgagee against his liability as an indorser or surety for the mortgagor.^ Thus, where a mortgage re- cited that the mortgagor was indebted to the mortgagee in a certain sum, "being for money advanced," and that the mortgage was made to secure the payment of such debt, the mortgagee was not precluded "♦Turpie v. Lowe, 114 Ind. 37, 15 34, 3 L. ed. 260; Lawrence v. Tucker, N. E. 834; Watts v. Bonner, 66 Miss. 23 How. (U. S.) 14, 16 L. ed. 474; 629, 6 So. 187. Hubbard v. Savage, 8 Conn. 215; ^ Kline v. McGuckin, 25 N. J. Eq. Simpson v. Robert, 35 Ga. 180; Me- 433. Klnster v. Babcock, 26 N. Y. 378; 1 Whitney v. Hale, 67 N. H. 385, Bank of Utica v. Finch, 3 Barb. Ch. 30 Atl. 417. (N. Y.) 293, 49 Am. Dec. 175. 'Shirras v. Caig, 7 Cranch (U. S.) 531 MOETGAGE OF INDEMNITY § 380 from showing that the real consideration of the mortgage was the in- dorsement by him of the mortgagor's note for that sum. "The ques- tion of consideration was raised by the defendant's proving, by the mortgagee, that no money was advanced to him upon the mortgage. It thus became proper, if not necessary, to show what the real consid- eration was, and this was all that was done. The plaintiff had a valid mortgage, as to the mortgagor." He would not be permitted to im- peach it by showing that the consideration was not money advanced to him, and shut out evidence of the true consideration.^ If the mortgage contains a general description sufficient to embrace the liability intended by the parties to be secured, and to put a person examining the records upon inquiry, and direct him to the proper source for more minute and particular information of the amount of the incumbrance, it is all that fair dealing demands.* "There can not be a more fair, bona fide, and valuable consideration than the draw- ing or indorsing of notes at a future period, for the benefit and at the request of the mortgagor; and nothing is more reasonable than the providing a sufficient indemnity beforehand."^ It is undoubtedly de- sirable that the. true consideration be fully stated, and when this is not done the instrument may be open to the suspicion that it was made to deceive the mortgagor's creditors; but the true consideration may in all cases be explained," and parol evidence is admissible to show if Where a mortgage is given to indemnify one who becomes a surety upon a bond in which the mortgagor is principal, a misde- scription of the particular bond will not render the mortgage invalid, either as to the mortgagor or his vendee, but the description may be corrected by parol testimony so as to identify the bond described in the mortgage with the one upon which the mortgagee became surety.^ § 380. What description of liability sufficient. — ^An indemnity mortgage is sufficient as such if the debt or obligation against which ' Per Marvin, J., in McKinster v. * Commercial Bank v. Cunning- Babcock, 26 N. Y. 378. ham, 24 Pick. (Mass.) 270, 35 Am. * Cazort &c. Co. v. Dunbar, 91 Ark. Dec. 322; Gardner v. Webber, 17 400, 121 S. W. 270; Hoye v. Burford, Pick. (Mass.) 407; McKinster v. 68 Ark. 256, 57 S. "W. 795; Curtis v. Babcock, 26 N. Y. 378. Flinn, 46 Ark. 70. ' Cutler v. Steele, 93 Micb. 204, 53 "Per Tilghman, C. J., in Lyle v. N. "W. 521. See also Emerson v. Ducomb, 5 Binn. (Pa.) 585. See also Knight, 130 Ga. 100, 60 S. E. 255; Duncan v. Miller, 64 Iowa 223, 20 Hester v. Galrdner, 128 Ga. 531, 58 N. W. 161; Adams v. Niemann, 46 S. E. 165; Bowen v. Ratcliff, 140 Ind. Mich. 135, 18 N. W. 719; Forbes v. 393, 39 N. E. 860, 49 Am. St. 203. McCoy, 15 Nebr. 632, 20 N. W. 17; 'Jones v. Guaranty &c. Co., 101 Williams v. Silliman, 74 Tex. 626, U. S. 622, 25 L. ed. 1030; Emerson v. 12 S. W. 534. Knight, 130 Ga. 100, 60 S. E. 255; § 380 DEBT SECIJKED 532 the mortgagee is intended to be protected is described with reasonable certainty.' A general description of the liability is sufiBcient. A mort- gage to indemnify an indorser for liability on notes to be indorsed within two years from the date of the mortgage, to an amount not exceeding sixteen thousand dollars at any one time, and a renewal of such notes, was sustained as against a purchaser from the mortgagee.^" A mortgage to indemnify one for indorsing "a note of two thousand dollars, made payable to the order of the grantor, and by him signed and indorsed," is not void for uncertainty. The note intended may be identified by parol evidence.^^ In like manner, as under a mortgage conditioned to indemnify the mortgagee for indorsements of certain notes payable at two banks specified, parol evidence is admissible to show what notes had been indorsed by the mortgagee and were intended to be secured.^^ A mortgage reciting that it was to secure the payment of a certain bond and collateral for a certain other mortgage, and that payments on the latter mortgage and all interest paid thereon should be credited to such former mortgage, also that on payment by the mortgagor of a certain sum, less than the mortgage debt, with interest, the holder of such former mortgage would discharge it, was not security for the entire debt, but only for the amount required to be paid for its dis- charge.^^ A condition to indemnify the mortgagee against liability as surety for the mortgagor, a certain sum being mentioned, be the debts more or less, covers all debts for which the mortgagee is surety, be they more or less.^* A mortgage conditioned to save the mortgagee harm- less for indorsing notes for the mortgagor, when thereafter requested, to the amount of seven thousand dollars, and also renewal notes, is Harlan County v. Whitney, 65 Nebr. this obiectlon, but it Is not; and al- 105, 90 N. "W. 993, 101 Am. St. 610. though our early decisions would " Cazort &c. Co. v. Dunbar, 91 Ark. hold them void for vagueness, our 400, 121 S. W. 270; Utley v. Smith, decisions for the last ten or fifteen 24 Conn. 290, 63 Am. Dec. 163; years have gone further, and estab- Ketchum v. Jauncey, 23 Conn. 123; lished the law to be liberal enough Lewis V. De Forest, 20 Conn. 427; to sustain mortgages quite as indef- Burdett v. Clay, 8 B. Mon. (Ky.) Inite and vague as the present." 287; Goddard v. Sawyer, 9 Allen "Goddard v. Sawyer, 9 Allen (Mass.) 78; Benton v. Sumner, 57 (Mass.) 78. N. H. 117; Gilman v. Moody, 43 N. "Barker v. Barker, 62 N. H. 366; H. 239; First Nat. Bank v. Byard, Benton v. Sumner, 57 N. H. 117; 26 N. J. Eq. 255. Melvin v. Fellows, 33 N. H. 401. "Utley V. Smith, 24 Conn. 290, 63 " Abert v. Kornfeld, 128 App. Div. Am. Dec. 163. The court, Ellsworth, 547, 112 N. Y. S. 884. J., said: "Were this an original " Orr v. Hancock, 1 Root (Conn.) question, it would be difficult, we 265. think, to sustain the deeds against 533 MOETGAGE OF INDEMNITY § 380 not invalid for uncertainty as against subsequent incumbrances.^' Nor is a mortgage invalid which is given to secure an "accommodation in- dorser and signer on sundry notes, drafts, and bills of exchange, now maturing in sundry banks, and in the hands of sundry individuals, to the amount of fifty thousand dollars, a particular description of which we are not able to give, or in whose hands they are."^* A recital in a mortgage that the mortgagee had indorsed two bills of exchange, when in fact he had indorsed only one, and had paid the other for the honor of the drawer, does not invalidate the security. '^^ A mortgage for a definite sum, but expressed to be "given to secure whatever in- debtedness may at any time exist from the mortgagor to the mortga- gee," does not restrict the indebtedness secured to such debts as may be contracted directly from the mortgagor to the mortgagee, but includes also any obligations the mortgagor may incur by indorsing the notes of another party. The terms of the mortgage are broad enough to cover any kind of indebtedness.^* A mortgage made to indemnify one against loss by reason of his becoming a surety for the mortgagor, which provides that the property shall be liable for "no more than five thousand dollars," is a limitation upon any increase of the debt secured above that amount, yet interest is recoverable as an incident to the debt.^" A mortgage made to secure indorsers upon a note contemplated to be discounted at a particular bank, and so expressed in the deed, is valid, although the note be discounted in a bank other than that named,, and is subsequently transferred to a third bank. A subsequent incum- brancer can not invalidate the mortgage for this reason, unless he can show that he was misled by this description, and advanced money upon the land, or acquired an interest in it after inquiry, and in the confi- dence that no such lien existed.^* A mortgage indemnifying a purchaser of land from loss by reason of a failure of title to a portion of it, covers the actual loss sustained by the purchaser from his eviction from such land.^^ But it has been held that in order for an indemnity mortgage to be valid against creditors, the aflBdavit must show that the mortgage was ^^Ketchum v. Jauncey, 23 Conn. "First Nat. Bank v. Byard, 26 123. See also Brander v. Bowmar, N. J. Eq. 255. 16 La. 370; Linton v. Purdon, 9 Rob. ^ Stafford v. Jones, 91 N. Car. 189. (La.) 482; Kramer v. Bank, 15 Ohio "» Patterson v. Johnston, 7 Ohio 253. 225. "Lewis V. De Forest, 20 Conn. "^ Ralston v. Effinger, 86 Va. 1008, 427. 11 S. E. 975. "Fetter v. Cirode, 4 B. Men. (Ky.) 482. § 381 DEBT SECUEED 534 taken in good faith to indemnify against any loss resulting from the liability stated in the mortgage. A mere statement that the claim on which the mortgagee is surety is just and unpaid was held not suffi- cient.^^ § 381. Obligation covered by an indemnity mortgage. — All limita- tions of the security must be observed. But if the sum for which the mortgage of indemnity is given be limited, the security can not be ex- tended beyond that amount. But on the other hand a mortgage con- ditioned to be void upon the pajonent of a certain sum upon a note of another for a much larger amount does not entitle the mortgagor to the benefit of payments upon the note by the promisor.^^ In order to create a liability upon a mortgage made to guarantee a contemplated loan to another, the loan must correspond with the recital of it in the mortgage.^* A mortgage made to secure one from all liability, which he may incur by reason of his becoming surety or indorser on the notes of the mortgagor, does not secure notes given to the mortgagee for money loaned by him, and as evidence of such loan;^^ and a mortgage con- ditioned for the pajTnent of all sums of money owing by the mortgagor to the mortgagee as maker or indorser of any notes, bills of exchange, bonds, checks, or securities of any kuid given by him, does not secure a debt not evidenced by an instrument in writing.^" A mortgage con- ditioned to secure a bank for all notes, bills, or checks which have been or shall be made, drawn, indorsed, or accepted by the mortgagor, or discounted by said bank for his benefit, and to pay all balances of account, and all sums of money due or owing by him to said bank on any account whatever, does not cover the indebtedness of a firm of which the mortgagor subsequently became a member.^^ § 382. A continuing security. — A mortgage given to indemnify an indorser or surety on a note is a continuing security for all renew- als of such note until it is finally paid.''* So long as the liability con- =^Blandy v. Benedict, 42 Ohio St. Y.) 213. See also Lauderdale v. 295; Nesbit v. Worts, 37 Ohio St. Hallock, 15 Miss. 622. 378. "Bank of Bufialo v. Thompson, ■" Popple V. Day, 123 Mass. 520. 121 N. Y. 280, 24 N. E. 473. " Thomas v. Olney, 16 III. 53. See ^ Chapman v. Jenkins, 31 Barb, also In re Griffiths, 1 Lowell (U. S.) (N. Y.) 164; Babcock v. Morse, 19 431; Ryan v. Shawneetown, 14 111. Barb. (N. Y.) 140; Brinckerhoff v. 20; Townsend v. Empire Stone Lansing, 4 Johns. Ch. (N. Y.) 65, 8 Dressing Co., 6 Duer (N. Y.) 208. Am. Dec. 538. The protection of a ^ Clark V. Oman, 15 Gray (Mass.) mortgage given to a mortgagee as 521. surety on the mortgagor's note ex- " Walker v. Paine, 31 Barb. (N. tends to a liability incurred by the 535 MOBTGAGE OF INDEIINITT § 383 tinues, the security continues also.^° Thus a bond and mortgage given to indemnify a surety will remain valid and enforcible, although by its terms the bond expires before the expiration of the contract on which the surety is bound.^" Although 'made for a definite sum to a bank to secure the liabilities of a firm for the payment of certain notes, the bank stipulating to discharge the mortgage when the mortgagors should cease to be under any liabilities to the bank, it is a valid se- curity for new notes given to the bank in renewal of the original notes, and subsequent purchasers can not object to it because the agreement of the bank was not recorded, or that the new notes were made or in- dorsed by a new firm, formed by taking in another partner.^^ When a particular liability for which an indemnity mortgage is given is paid off wholly or in part by the mortgagee, if so intended the mortgage will continue as a security for new liabilities arising within the limit fixed.^^ Under a mortgage given to secure the maker of accommoda- tion notes, and renewals of them from time to time, it is not necessary in order to constitute the new notes renewals, that they should be given for the same amounts and at the same periods as the original notes, or that each should be applied to discharge its immediate predecessor.^' But if the surety loans to the principal debtor the money to pay the original debt, and takes the debtor's own note, or that of his firm, for the amount, this is not a renewal of the original debt, but a new debt, to which a mortgage taken by the surety fof his indemnity does not at- tach.3* A mortgage to two persons, who were in fact copartners, though not so described in the mortgage, intended "as a continuing security and indemnity" for indorsements in any form incurred and to be incurred for the mortgagors, includes not merely such liabilities as were in- curred by the mortgagees jointly as copartners, but such as were in- curred by either of them, separately and individually.''^ A mortgage to secure a partnership against liability for indorsements embraces mortgagee jointly with the mort- ham, 24 Pick. (Mass.) 270, 35 Am. gagor for money borrowed to pay Dec. 322. The mortgage may prop- the original note. Nesbit v. Worts, erly provide in terms that it shall 37 Ohio St. 378. be a continuing security. Fassett '"'Hawkins v. May, 12 Ala. 673; v. Smith, 23 N. Y. 252. Mayer v. Grottendick, 68 Ind. 1 =^ Courier-Journal Job Printing Co. (quoting text). See also Courier- v. Schaefer-Meyer Brew Co., 101 Journal Job Printing Co. v. Schaef- Fed. 699, 41 C. C. A. 614. fer-Meyer Brew. Co., 101 Fed. 699; »=■ Gault v. McGrath, 32 Pa. St. 392. Hyland v. Habich, 150 Mass. 112, 22 "'Burson v. Andes, 83 Va. 445, 8 S. N. E. 765, 15 Am. St. 174. B. 249. "• Springs v. Brown, 97 Fed. 405. '= National Bank v. Bigler, 83 N. "Commercial Bank v. Cunning- Y. 51. § 383 DEBT SECUEED 536 such a liability for indorsements made in the name of the firm after the secret withdrawal of one of its members.' ° An assignment of a mortgage of indemnity carries only the right to recover the amount for which the mortgagee could then enforce it. The assignment is a limitation of the security to the amount then actually paid, and a reassignment of the mortgage does not restore the security for more than the amount for which it was a security before the assignment.^' A mortgage to indemnify a surety upon a guardian's bond extends to a renewal of the bond.'* § 383. When indemnity mortgage becomes a lien. — A mortgage of indemnity to a surety is a lien from the time of its execution and delivery, and not merely from the time when the mortgagee pays the debt on which he is surety,'^ and therefore it takes precedence of a conveyance made by the mortgagor, or of a Judgment rendered against him, after the execution of the mortgage and before the mortgagee has paid the debt so as to become entitled to enforce the security.*" It is sometimes said that a mortgage given to secure one who is ex- pected to make, indorse, or accept negotiable paper for the accommo- dation of another, is a lien from the time such liability is incurred;*^ but whenever there is a legal obligation to incur the liability the mort- gage is a lien from the time of its delivery.*^ When there is no obliga- tion to incur such future liabilities, the mortgage constitutes a lien from the time the liability is incurred, and is preferable to a judg- ment rendered afterward,*' but not to incumbrances made before ad- vances, of which the mortgagee had notice at the time of the ad- vances. An executor gave to his sureties a mortgage to indemnify them against "all loss, cost, damage, and expense which they could or might be put to by reason of their being sureties on his bond." The executor filed his account showing a certain balance in his hands. The court »" Buffalo City Bank v. Howard, 35 491, 10 So. 575; Watson v. Dickens, N. Y. 500. 20 Miss. 608. " O'Hara v. Baum, 88 Pa. St. 114. " Choteau v. Thompson, 2 Ohio St. ^Bobbitt V. Flowers, 1 Swan 114; Bank of Commerce Appeal, 44 (Tenn.) 511. Pa. St. 423; Bank of Montgomery "» Krutsinger v. Brown, 72 Ind. 466. County's Appeal, 36 Pa. St. 170. This case further holds that, of two " Taylor v. Cornelius, 60 Pa. St. indemnifying mortgages, that which 187; Lyle v. Ducomb, 5 Binn. (Pa.) is first executed and duly recorded 585. is the prior lien. « Kramer v. Farmers' &c. Bank, « Burdett V. Clay, 8 B. Mon. (Ky.) 15 Ohio 253; Hartley v. Kirlin, 45 287; State v. Hemingway, 69 Miss. Pa. St. 49. 537 MORTGAGE OF INDEMNITY § 384 approved the accouBt, and ordered the fund to be distributed. The executor -was at this time insolvent, and one of the sureties advanced the money to pay the legacies. These payments were made before suit was brought, and before any demand was made upon the sureties by the legatees. It was held that the surety was entitled to all the benefit of the mortgage as against an intervening judgment creditor who obtained judgment shortly after the mortgage was executed.** Where a mortgage is given to indemnify the mortgagee against loss on account of his becoming a surety of the mortgagor, and the con- templated contract of suretyship is never entered into, the mortgage fails for want of consideration, although the object of the proposed surety contract was to enable the mortgagor to secure funds with which to discharge a debt owed by him to the mortgagee.*" §384. How character and purpose of indemnity mortgage may be shown. — Parol evidence is admissible to show the true character of a mortgage, and for what purpose and what consideration it was given. Although it is for a definite sum, and secures the payment of notes for definite amounts, it may be shown that it is simply one of indemnity,*^ or for future advances.*^ When the object is simply to indemnify the mortgagee for a liability he has incurred or may incur, the amount of the mortgage, or of the mortgage notes, serves merely to limit the extent of the security. Upon the foreclosure of such a mortgage, the amount for which judgment is to be rendered is the amount the mortgagee has been compelled to pay under the liability « Smith V. Harry, 91 Pa. St. 119. W. 521; Harlan v. Whitney, 65 Nebr. See ante §§ 352, 367a. 105, 90 N. W. 993, 101 Am. St. 610; « Stone V. Palmer, 166 111. 463, 46 Bartlett v. Remington, 59 N. H. 364; N. E. 1080. Bayles v. Grossman, 5 Ohio Dec. 354; ■"' Jones V. Guaranty &c. Co., 101 Cole v. Satsop R. Co., 9 Wash. 487, U. S. 622, 25 L. ed. 1030; United 37 Pac. 700, 43 Am. St. 858; Paine v. States V. Sturges, 1 Paine (U. S.) Benton, 32 Wis. 491. A mortgage 525; Stearns v. Porter, 46 Conn. 313; reciting that it is given as "security Bishop V. Warner, 19 Conn. 460; for the payment of any and all notes, Simmons Hdw. Co. v. Thomas, 147 checks, and drafts indorsed hy [the Ind. 313, 46 N. E. 645; Mayer v. mortgagee] for the benefit or accom- Grottendick, 68 Ind. 1 (quoting modation of the mortgagor, or of text); Price v. Cover, 40 Md. 102; any iirm in which he is interested, Simons v. Bank, 93 N. Y. 269; Mer- or in any way connected," will be chants' Nat. Bank v. Hall, 83 N. Y. held to secure not only past but all 338; Agawam Bank v. Strever, 18 future indorsements, when it ap- N. Y. 502; Moses v. Hatfield, 27 S. pears that, at the time it was exe- Car. 324, 3 S. E. 538 (quoting text), cuted, there was but one indorse- See also Johnson v. Calnan, 19 Colo, ment outstanding, and that on a 168, 34 Pac. 905, 41 Am. St. 224; note of the mortgagor's firm. Farr Douglas V. Chatham, 41 Conn. 211; v. Doxtater, 9 N. Y. S. 141. Cutler V. Steele, 93 Mich. 204, 53 N. " McAteer v. McAteer, 31 S. Car. § 385 DEBT SECURED 538 for which he was secured, with interest from the date of the payment. The amount and date of the mortgage note are wholly disregarded in ascertaining this sum.** A distinction is taken between a mortgage conditioned to secure against a specific thing, and one of indemnity against damage by rea- son of the nonperformance of the thing specified. Where the indemnity provided is against a "charge" or "fixed legal liability," the obligee is to be saved from the thing specified, and the right of action becomes complete on the defendant's failure to do the particular thing he agreed to perform ; while, on the other hand, where the covenant is for indemnity only, and against resultant damages, these must be actually suffered before an action can be maintained.*' A mortgage given as a continuing security and indemnity for and against all liabilities the mortgagees had incurred or might thereafter incur for the mortgagor as indorsers, is not a mortgage of indemnity merely, but one of security as well, and therefore it is not essential to a recovery to show that damages have been sustained; but the right of the mortgagees to resort to the security arises when their liability is fixed.*^^ If a mortgage given to secure the mortgagee from loss by reason of his having become a surety upon a note executed by one of the mort- gagors stipulates that the mortgagors "will pay the sum of money above secured," a cause of action accrues to the mortgagee upon failure of the maker of the note to pay the note when it becomes due, without the mortgagee's first paying the note.^" § 385. Eespective rights of principal creditor and surety. — The principal creditor is entitled to the benefit of a mortgage given for the indemnity of a surety. "'^ Three joint indorsers of the paper of a manu- facturing company executed separate mortgages to a trustee under an agreement that, if either should pay more than his equal proportion of the notes indorsed, he should recover from each of the others the shares they ought respectively to contribute. It was held that the 313, 9 S. E. 966; Kaphan v. Ryan, 16 43 N. B. 644; Shaw v. Loud, 12 S. Car. 352. Mass. 447. «Vogan V. Caminetti, 65 Cal. 438; "Gunel v. Cue, 72 Ind. 34; Gilbert Athol Savings Banlt v. Pomroy, 115 v. "Wiman, 1 N. Y. 550, 49 Am. Dec. Mass. 573. See ante § 64. 359; Thomas v. Allen, 1 Hill (N. Y.) "Gilbert v. Wiman, 1 N. Y. 550, 145; Wilson v. Stilwell, 9 Ohio St. 49 Am. Dec. 359, as stated by Finch, 467, 75 Am. Dec. 477; Loosemore v. J., in National Bank v. Bigler, 83 Radford, 9 M. & W. 657. N. Y. 51. "Jones on Pledges, §§ 523-533. "aGote V. Hedgcock, 144 Ind. 415, 539 MORTGAGE OP INDEMNITY § 386 agreement and mortgages secured not merely equality of payment be- tween the sureties, but also secured the payment of the indorsed notes to the holders who might join with the trustee in enforcing the mort- gages.'*^ The principal creditor is not entitled to the benefit of a mortgage given to a surety until the liability of the latter is fixed.^^ If the in- dorser is discharged by the laches of the. creditor, he can not claim the benefit of the mortgage.^* The condition of such a mortgage is broken when the mortgagor fails to pay the debt at the time stipulated, so that the mortgagee is exposed to a suit.^^ He may then at once pro- ceed to foreclose the mortgage without notice or further action on his part.^" When the condition is to indemnify the mortgagee against the support of a third person, it is a sufficient breach that the mortgagee is compelled to pay for such support for a part of the time.^^ If the mortgage to the surety include a debt due to himself, as well as the debt for which he is liable as surety, as between himself and the principal creditor the latter is entitled to be first paid out of the pro- ceeds of the mortgage, on the groujid that such mortgagee is a quasi trustee for the creditor in respect of the indemnity thus obtained.^^ It is not a valid objection to an indemnifying mortgage that it includes security for debts due to the sureties themselves. The only difference this makes is that the debts for which the sureties are liable, and for which the mortgage was given by way of indemnity, must first be paid.^^ § 386. Release of security by indemnity mortgagee. — Under what circumstances one who has taken a mortgage solely for his own indem- nity may release the security does not seem to be determined. As against the principal creditor, who is entitled to the benefit of the se- curities held by the surety, it would seem at any rate that after a de- fault on the part of the principal debtor, and the liability of the surety had thus become fixed, he could not release the securities held by him. As against his own creditors, after he has become insolvent, it would also seem that he could not release a mortgage or other security held by him as indemnity."" If the mortgage held by him be anything "Seward v. Huntington, 26 Hun "Wliitton v. Whitton, 38 N. H. (N. Y.) 217. 127, 75 Am. Dec. 163. ^'Tilford v. James, 7 B. Mon. "'Ten Eyck v. Holmes, 3 Sandf. (Ky.) 336. Ch. (N. Y.) 428. " Tilford V. James, 7 B. Mon. ''" Simmons Hdw. Co. v. Thomas, (Ky.) 336. 147 Ind. 313, 46 N. B. 645. "= Shaw V. Loud, 12 Mass. 447. " "Woodville v. Reed, 26 Md. 179. ^ Butler V. Ladue, 12 Mich. 173. § 387 DEBT SECURED 540 more than one of indemnity, if, for instance, it in terms secures the original debt, he has no right to discharge it. An indorser of certain notes took from the maker of them a mort- gage as security from any loss the indorser might sustain from the nonpayment of the notes. The proviso was that the mortgagor should pay the notes at their maturity "to the holders of them," or to the indorser, should the latter be compelled to take them up; the mortga- gee subsequently released the mortgage before the notes were paid, and the mortgagor conveyed the premises to a purchaser. The holder of the mortgage notes then filed a bill to foreclose the mortgage ; and it was held that the mortgage was a security for the payment of the notes, as well as an indemnity to the indorser; that it inured to the benefit of any one in whose hands the notes might be, provided he is a bona fide holder of them; and that consequently the mortgagee had no power to release the mortgage, so as to deprive the holder of the notes of the benefit of this security."^ Where the surety himself has received such securities from the principal debtor on account of an obligation assumed, equity creates a quasi trust in relation thereto in favor of the creditor and cosureties until the debt is discharged. The surety has no right to discharge or defeat such trust.'^ § 387. Not after liability is fixed. — A mortgage given to indemnify a surety or indorser does not, in the first instance, attach to the debt; and whatever equity may arise in favor of the creditor with regard to the security arises afterward, and in consequence of the insolvency of the parties primarily holders for the debt. Until this equity arises, the surety has a right in equity as well as at law to release the security. Even after such insolvency the mortgagee may surrender the security, if he does it in good faith, and before any claim is made upon him for it. The application of it for the benefit of third persons can only be accomplished by the interposition of a court of equity, and in case the mortgagee still retains the security."* The general rule with respect to indemnity mortgages is that, where the instrument contains a promise to pay the obligations for which the mortgagee is liable as surety, the mortgage creates a trust, and an equitable lien for the full benefit of the principal creditor; and it makes no difference that such principal creditor did not act upon the <* Boyd V. Parker, 43 Md. 182. '^ Jones v. Quinnipiack Bank, 29 "^Albion State Bank v. Knicker- Conn. 25; Post v. Tradesmen's Bank, bocker, 125 Miob. 311, 84 N. W. 311; 28 Conn. 420; Thrall v. Spencer, 16 Union Nat. Bank v. Rich, 106 Mich. Conn. 139; Homer v. Savings Bank, 319, 64 N. W. 389. 7 Conn. 478; Simmons Hardware Co. 541 MOETGAGE OF INDEMNITY § 387 credit of sueli security in the first instance, or even know of its exist- ence.^^ There seems to be a distinction between those conveyances made by a principal to a surety both for the purpose of protecting him and to secure the payment of the debt and those executed merely to indemnify the sureties against liability. If the conveyances are made to the sure- ty for the purpose of securing the payment of the debt, the creditor has an interest therein which the surety can not destroy. But if the conveyance to the surety is only to indemnify him, then such security does not, in the first instance, attach to the debt, and whatever equity may arise in favor of the creditor with regard to the security arises afterward, and in consequence of the insolvency of the parties princi- pally liable for the debt. Until this equity arises the surety has a right in equity as well as at law to release the security. Even after such insolvency the mortgagee may surrender the security if he does it in good faith and before any claim is made upon him for it. The application of it for the benefit of third persons can only be accom- plished by the interposition of a court of equity, and in case the mort- gagee still claims security, or when he has conveyed it under circum- stances tending to show bad faith or collusion between him and the mortgagor.^^ But after the principal debtor has become insolvent, the surety can not make a valid agreement with the holder, or any party interested in one of the notes on which he is indemnified by the mortgage, that the security shall be first applied to such note ; the holders of all such, notes are entitled in equity to share in the property in proportion to their respective claims.*^ When a mortgage is given to indemnify an indorser, the creditor has an equitable claim to the security, and after the liability is fixed is entitled to have the mortgage assigned to him. This is the rule not only where the condition is that the mortgagor shall pay the debt, but also where it merely stipulates that he shall indemnify the surety."^ V. Thomas, 149 Ind. 313, 46 N. E. «^ Lewis v. De Forest, 20 Conn. 645. 427. "Griffis v. First Nat. Bank. 168 "New Bedford Inst, for Savings Ind. 546, 81 N. B. 490; Plaut v. v. Fairhaven Bank, 9 Allen (Mass.) Storey, 131 Ind. 46, 30 N. B. 886; 175; Riddle v. Bowman, 27 N. H. Durham v. Craig, 79 Ind. 117. 236; Phillips v. Thompson, 2 Johns. °= Daniel v. Hunt, 77 Ala. 567; Ch. (N. Y.) 418, 7 Am. Dec. 535; Dyer v. Jacoway, 76 Ark. 171, 88 S. Thornton v. Nat. Exchange Bank, 71 "W. 901; Steward v. Welch, 84 Maine Mo. 221; Aldrich v. Martin, 4 R. I. 308, 24 Atl. 860; Pool v. Doster, 59 520; Saylors v. Saylors, 3 Heisk. Miss. 258; Fertig v. Henne, 197 Pa. (Tenn.) 525. St. 560, 47 Atl. 840. § 388 DEBT SECUEED 543 Thus, a mortgage by the principal maker of a promissory note to his surety, conditioned that the principal will pay the note and save the surety harmless, creates a trust and an equitable lien for the holder of the note ; and even after the surety's liability to the holder of the note is barred by the statute of limitations, he holds the property subject to such trust and lien."* If he has foreclosed the mortgage, and obtained an absolute title to the property, the same trust still attaches to it."" This equitable lien binds the property, after a transfer of it by the mortgagee to one who has notice of the trust. The mortgage is treated as a mere security for the debt; and when the debt is assigned by the mortgagee, it carries with it in equity, as an incident, a right to have the estate appropriated for the payment of the debt in the hands of the assignee. To carry out and enforce this equity, the mortgagee is regarded as the trustee of those to whom he has assigned the debt se- cured by the mortgage, and can be compelled to appropriate it for their benefit.^" IV. Mortgages for Support Section Section 388. Whether strictly mortgages. 392. Persons who are to perform 389. Mortgagor's right of possession condition for support. implied. 393. Foreclosure. 390. Alternative condition. 394. Agreement for arbitration. 391. Where the support is to be fur- 395. Redemption. nished. § 388. Whether strictly mortgages. — It has sometimes been ques- tioned whether a deed conditioned for the support and maintenance of a person, or for the performance of any other duty, the damages for a breach of which are unliquidated, can be regarded as strictly a mortgage. Early definitions of mortgages are found by which no conditional conveyances are mortgages except such as are made for the security of a loan of money; others include all conveyances made as security for any debt; while the later doctrine generally is, that a conveyance conditioned for the performance of any contract is a mortgage.^ But in some of the cases it is said that many contracts, " Steward v. Welch, 84 Maine 308, Cook v. Bartholomew, 60 Conn. 24, 24 Atl. 860; Eastman v. Foster, 8 22 Atl. 444. See also Powers v. Mete. (Mass.) 19. Patten, 71 Maine 583; Gilson v. Gil- "" Eastman v. Foster, 8 Mete, son, 2 Allen (Mass.) 115; Hawkins (Mass.) 19. V. Clermont, 15 Mich. 511; Day v. '"Steward v. Welch, 84 Maine 308, Towns, 76 N. H. 200, 81 Atl. 405; 24 Atl. 860; Rice v. Dewey, 13 Gray Chase v. Peck, 21 N. Y. 581; Cole- (Mass.) 47. man v. Whitney, 62 Vt. 123, 20 Atl. iPer Bell, C. J., in Bethlehem v. 322, 9 L. R. A. 517. Annis, 40 N. H. 34, 77 Am. Dec. 700; 543 HORTGAGES FOR SUPPORT § 388 the performance of which may be secured by conveyances of land, have such peculiarities that the rules of law relating to mortgages can have but a very partial if any application to them.^ Where a warranty deed contained an agreement on the part of the grantee that, in consideration of the conveyance that he would pay a certain yearly amount to the grantors, and support and care for them during their lives, it was held that the deed did not become absolute until performance of the agreement, and that the grantors retained a lien or charge upon the land to secure such performance.^ Where the grantee accepts the deed and enters into possession of the premises he becomes bound by the agreement, and the provision for support is equivalent to a life annuity.* In New Hampshire, although it is provided by statute^ that "every conveyance of lands made for the purpose of securing the payment of money, or the performance of any other thing in the condition thereof stated, is a mortgage," it is held that a deed conditioned for Support, and implying the personal services of the mortgagor, is not a mort- gage. Neither the grantor nor the grantee, under such a deed, can assign his interest. The contract is for services to be rendered by the one person to the other in person. The former, having assumed a personal trust, can not substitute another person in his place to fulfil it." Upon his death, a sale of the estate by his administrator under license of court, subject to this duty, passes no title, and the pur- chaser can not maintain a bill to redeem.^ But it has occasionally been held that, in case of nonperformance of the stipulation for sup- port, the right of redemption by payment of adequate damages will be recognized.^ One who takes a mortgage for the support of himself and his wife is a trustee for his wife, and on his death and a breach of the condition of the mortgage the court will appoint a trustee to appropjiate the land for the purposes of the trust." And on the other ' Bethlehem v. Annis, 40 N. H. 34, « Flanders v. Lamphear, 9 N. H. 77 Am. Dec. 700, per Bell, C. J. See 201. See also Bethlehem v. Annis, also Soper v. Guernsey, 71 Pa. St. 40 N. H. 34, 77 Am. Dec. 700; East- 219. man v. Batchelder, 36 N. H. 141, 72 'Childs V. Rue, 84 Minn. 323, 87 Am. Dec. 295. But see Bodwell N. W. 918; Doesche v. Spratt, 61 Granite Go. v. Lane, 83 Maine 168, Minn. 326, 63 N. W. 736. 21 Atl. 829; Bryant v. Erskine, 55 * Hutchinson v. Hutchinson, 46 Maine 153; Austin v. Austin, 9 Vt. Maine 154; Exum v. Canty, 34 Miss. 420. 533; Spalding v. Hallenbeck, 30 ' Eastman v. Batchelder, 36 N. H. Barh. (N. Y.) 292; Shontz v. Brown, 141, 72 Am. Dec. 295. 27 Pa. St. 123. * Bethlehem v. Annis, 40 N. H. 34, = Gen. Stat, 1867, 253, eh. 122, 77 Am. Dec. 700; Henry v. Tupper, § 1; Gen. Laws 1878, ch. 136, § 1; 29 Vt. 358. Pub. Stats. 1901, ch. 139, § 1. ° Perkins v. Perkins. 60 N. H. 373. § 388 DEBT SECURED 544 hand, it is held that the person who is to receive the personal service can not assign the obligation and security to another, so as to enable such other person to enforce it, unless, perhaps, where there has been an actual breach and an entry for condition broken before the assign- ment.^" In Pennsylvania, upon somewhat different grounds, it is said that when a father conveys land to his son, and takes a reconveyance, con- ditioned for the faithful performance of covenants to support, al- though such reconveyance may be termed a mortgage, it is something more than a mortgage ; for in an ordinary mortgage, when the object of security is accomplished, the conveyance becomes void ; but if there be a breach of the condition to support, and the father in consequence takes possession, the son can not claim upon his father's death that the title should vest in him, notwithstanding he has failed to per- form his covenants. That would be no security that the son would perform his covenants, but an inducement for him to break them. It would enable him to throw o& all the trouble and responsibility of his contract, and, simply by waiting a few years without doing any- thing, get the property for nothing. Nothing can give effectual secur- ity for the performance of such covenants but the right to revest the entire estate upon a breach. The son, having broken his covenants to support his father during life, has no possible equity on his death to demand a reconveyance. A recovery in ejectment by the father after breach as effectually revests the title in him as would a re-entry for condition broken. ^^ But the courts generally treat as mortgages con- veyances conditioned for the support and maintenance of the mort- gagees. They are generally in such terms that the court can by an award of damages compensate the mortgagees for a nonperformance "Bryant v. Erskine, 55 Maine principle of justice, which has led 153; Bethlehem v. Annis, 40 N. H. courts of equity to establish the sys- 34, 77 Am. Dec. 700. In this case tern of relief from forfeitures in Chief Justice Bell said: "Wherever the case of mortgages, will not en- the condition, when broken, gives title a party to analogous relief In rise to no claim for damages what- cases where the design of the par- ever, or to a claim for unliquidated ties is to make a conveyance by damages, the deed is not to be re- way of security." garded as a mortgage in equity, but " Soper v. Guernsey, 71 Pa. St. as a conditional deed at common 219. The defeasance in this case law. It has the incidents of a mort- was : "Provided always, neverthe- gage only to a limited extent, and less, that if the said party of the the party, if relieved by a court of first part shall and does well, truly, equity from a forfeiture resulting and faithfully perform all and sin- from the nonperformance of the gular the aforesaid covenants, prom- condition, will not be relieved as in ises, and agreements unto the said cases of a mortgage. It is not, how- party of the second part, according ever, intended to say that the same to the true Intent and meaning 545 MORTGAGES FOE SUPPORT § 389 of the personal services ;^^ but it rests in the sound discretion of the court whether a forfeiture shall be relieved in this way.^^ Such a mortgage is not void for uncertainty in not defining the support to be furnished; for this will be construed to be such support as is proper and suitable for the person to be supported according to his station in life; and the amount required for such support can be ascertained with reasonable certainty.^* § 389. Mortgagor's right of possession implied. — Generally, when land has been conveyed to the mortgagor by the mortgagee, who has taken a mortgage of the same, conditioned for his support, there is a necessary implication, nothing appearing to the contrary, that the mortgagee is not to enter until there is a breach of the condition. ^° A conveyance made on condition of support may, upon proof of con- dition broken, be rescinded by a court of equity.^" The possession of the property is generally essential to the mortgagor to enable him to perform the condition. The mortgagee can not then maintain an action for possession until there has been a breach of condition. If a mortgage for the support of a person for life be followed by a lease of the same premises for life given by the mortgagor to the mortgagee, the lease is regarded as merely giving the mortgagee the possession and use of the premises. The lease does not extinguish the mortgage, but is merely ancillary to it, and its enjoyment may pro tanto operate as a satisfaction of the covenants of the bond or agree- ment for support.^'' Where a father conveyed a farm to his son in consideration that he should support his father and mother during their lives, and the son, fearing that the farm would be seized for a debt he owed, con- veyed it to his mother on her express oral promise to reconvey it to him so soon as the debt should be settled, and the debt was afterward thereof, without fraud or delay, then " Simpson v. Edmiston, 23 W. Va. this indenture and the estate here- 675. by granted shall become void." ^^ Bryant v. Erskine, 55 Maine "2 Greenl. Cruise 80, n; Hoyt v. 153; Brown v. Leach, 35 Maine 39; Bradley, 27 Maine 242; Borst v. Abele v. McGuigan, 78 Mich. 415, 44 Crommie, 19 Hun (N. Y.) 209; Aus- N. W. 398; Rhoades v. Parker, 10 N. tin V. Austin, 9 Vt. 420; Simpson v. H. 83; Flanders v. Lamphear, 9 N. Edmiston, 23 W. Va. 675. Chancel- H. 201; Dearborn v. Dearborn, 9 N. lor Phelps, in this case, said: "There H. 117. See ante § 80 and post is certainly no difllculty in making §§ 668, 702. compensation for past maintenance, "^ De Long v. De Long, 56 Wis. any more than in any case of a con- 514, 14 N. W. 591; Blake v. Blake, tract to perform services." Hiatt 56 Wis. 392, 14 N. W. 173. V. Parker, 29 Kans. 765. "Lashley v. Souder (N. J. Eq.), '^ Henry v. Tupper, 29 Vt. 258. 24 Atl. 919. 35 — Jones Mtg. — Vol. I. § 390 DEBT SECUKED 546 secured by the mother and finally paid, it was held that the conveyance to the mother was in efEect a mortgage to protect her interest, and therefore was not fraudulent as to the son's creditors.^^ § 390. Alternative condition. — ^When a mortgage is conditioned to pay a certain sum or to support the mortgagee, the mortgagor has his election which alternative he will take, and, if he elect to furnish support, he is entitled to possession of the premises in order to be enabled to comply with the condition he has chosen to perform. But having once made the election he can not revoke it. His election is also conclusive upon the mortgagee, who can not have the election in the beginning, and much less can he have part performance of one of the alternatives, and then claim the entire performance of the other.^* The election having been made, the mortgage becomes se- curity for the performance of the condition chosen as effectually as if that alone had been set forth.^" But a mortgage to secure the pay- ment of five hundred dollars in five years, "to be paid in furnishing the mortgagee," during that period, "a good and sufficient home and sup- port," does not give the mortgagor his election to pay the money.^^ Under a mortgage for support with an alternative condition to pay the mortgagee a sum of money if he should choose to leave the mort- gagor and be supported elsewhere, a person who supported the mort- gagee elsewhere during an illness while upon a visit, is not entitled to recover the money from the mortgagor, and the mortgaged property is not chargeable for the support of the mortgagee elsewhere, unless he was justified in leaving the mortgagor.''^ Where the mortgagee is the person designated in the mortgage to whom the support is to be furnished, he can not transfer his interest in the mortgage so as to give another the right to such support.''* § 391. Where the support is to be furnished.— "When no place is stipulated where the mortgagee is to receive support, he has a right to be supported wherever he may choose to live, provided he does not •'Powers V. Patten, 71 Maine 583; grantor shall have the election, for Abele v. McGuigan, 78 Mich. 415, 44 he is the first agent, by payment of N. W. S93. one or the delivery of the other." " Bryant v. Erskine, 55 Maine 153. 3 Bac. Ahr. Election, B, p. 309. "It is laid down as a general rule ™ Furbish v. Sears, 2 Cliff. (U. S.) that, in case an election is given of 454; Lindsay v. Bradley, 53 Vt. 682. two several things, he who is the =* Hawkins v. Clermont, 15 Mich, first agent, and ought to do the first 511. See also Evans v. Norris, 6 act, shall have the decision; as if Mich. 369. a man grants a rent of 20s. or a ^ Lindsey v. Bradley, 53 Vt. 682. robe to one and his heirs, the "^ Bryant v. Erskine, 55 Maine 153; 54:7 MORTGAGES FOR SUPPORT § 391 create any needless expense to the mortgagor.^* Wlien it is provided that the support is to be furnished on the granted premises, but that the mortgagor, with his family, may also reside there, the latter has no right to insist that the mortgagee shall become a part of his family or receive support at his table, and in the apartments occupied by him. A refusal to furnish such support in a separate room is a breach of the condition.'"* If the place where support is to be furnished is left ambiguous in the mortgage, parol evidence is admissible to explain the ambiguity, and show the intention of the parties.^" The condition of such a mortgage is broken by the mortgagor's de- clining to pay for the board of the mortgagee at a suitable place, although he make no special demand upon the mortgagor for such support.^^ A mortgage conditioned to provide a home in the house on the premises obliges the mortgagor, notwithstanding his removal from the premises, and the house becoming, by natural decay, and without his fault, much dilapidated and not worth repairing, to provide a home there, or to furnish an equivalent elsewhere, but does not oblige him to supply food, clothing, or fuel. The fact that the mortgagor actually furnished such supplies for some time after making the mort- gage does not afEect this construction.^* It is not sufficient proof of a breach of contract to support a per- son during life, to show that he left the house of the obligor and re- sided elsewhere for several years, but without at any time requesting him to fulfil his agreement, or in any way manifesting to him an in- tention or desire to hold him to the performance of the obligation.^' Where a mortgage by a son to his mother was conditioned "to pro- vide a horse for said Margery to ride to meeting and elsewhere, when necessary; find her firewood for one fire, to be drawn and cut at the door, fit for use ; give her a good cow, and keep said cow for her dur- Bethlehem v. Annis, 40 N. H. 34, 77 Atl. 528. For a provision which Am. Dec. 700. leaves it optional with the mort- "^Rowell V. Jewett, 69 Maine 293; gagee to reside with the mortgagor Wilder v. Whittemore, 15 Mass. 262; or to he supported in some other Thayer v. Richards, 19 Pick. (Mass.) place, see Dickinson v. Dickinson, 398; Flanders v. Lamphear, 9 N. H. 59 Vt. 678, 10 Atl. 821. 201; Borst v. Crommie, 19 Hun (N. ="Pettee v. Case, 2 Allen (Mass.) Y.) 209; Young v. Young, 59 Vt. 342, 546. 10 Atl. 528. ^Gihson v. Taylor, 6 Gray (Mass.) ^Huhhard v. Hubhard, 12 Allen 310. (Mass.) 586. See also Thayer v. ™ Jenkins v. Stetson, 9 Allen Richards, 19 Pick. (Mass.) 398; (Mass.) 128; Thayer v. Richards, 19 Powers V. Mastin, 62 Vt. 433, 20 Atl. Pick. (Mass.) 398; Rhoades v. Par- 105. ' ker, 10 N. H. 83. « Young V. Young, 59 Vt. 342, 10 § 393 DEBT SBOUEED 548 ing the natural life of her the said Margery," it was held that the de- struction of the house in which tlie mother lived with her son did not exempt him from the performance of the condition, and that he was bound to furnish the wood at such place as she should make her home, within a reasonable and convenient distance; that if the mortgagee was obliged to sell the cow in consequence of its not being properly- kept, it was not necessary, in order to charge him with- the cost of keeping a cow for the time subsequent to the sale, that the mortgagee should purchase a cow and tender her to the mortgagor to be kept.^° § 392. Persons who are to perform condition for support. — As al- ready stated, a mortgage for support is in its nature a contract for personal services, and, especially when by its terms the condition is to be performed by the mortgagor, his heirs, executors, or adminis- trators, the duty can not be transferred to a third person. Upon the death of the mortgagor, the condition must be kept by his heirs, execu- tors, or administrators, and the mortgaged property subject to this duty can not be disposed of by the administrator for the payment of the mortgagor's debts ;'^ and a creditor of the mortgagor can not levy upon the land and eject the mortgagor because he can not perform the condition.^^ Of course, the contract itself may determine the ques- tion whether the support must be furnished by the mortgagor person- ally or not. It would seem that, if the contract does not expressly or impliedly provide that it shall be fulfilled by the mortgagor himself, it may be performed by any one else. But aside from the terms of the contract, there seems to be some divergence of opinion as to the personal character of the obligation to support. Some courts allow compensation in damages for a breach of this condition.^* The mortgagor's interest in land mortgaged to secure the mort- gagee's support may be sold upon execution against the mortgagor, for he has an actual interest in the land so mortgaged. He owns it, subject to the mortgage. "If he could not assign or convey any right to perform the condition in the mortgage, he could divest '"Fiske V. Fiske, 20 Pick. (Mass.) Lamphear, 9 N. H. 201; White v. 499. Bailey, 65 W. Va. 573, 64 S. B. 1019, »' Ridley v. Ridley, 87 Maine 445, 23 L. R. A. (N. S.) 232; Fluharty 32 Atl. 1005; Bryant v. Brskine, 55 v. Fluharty, 54 W. Va. 407, 46 S. E. Maine 153; Bethlehem v. Annis, 40 199. N. H. 34, 77 Am. Dec. 700; Eastman '^ Ridley v. Ridley, 87 Maine 445, V. Batchelder, 36 N. H. 141, 72 Am. 32 Atl. 1005; Greenleaf v. Grounder, Dec. 295. See also Cross v. Carson, 86 Maine 298, 29 Atl. 1082. 8 Blatchf. (Ind.) 138, 44 Am. Dec. ^'Joslyn v. Parlin, 54 Vt. 670; 742; Thomas v. Record, 47 Maine Henry v. Tupper, 29 Vt. 358; Austin 500, 74 Am. Dec. 500; Flanders v. v. Austin, 9 Vt. 420. 549 MORTGAGES FOR SUPPORT § 393 himself of all his interest in the land. That interest was his own, to be disposed of as he saw fit. His grantee might not have acquired the right to perform the condition, but he acquired the land subject to the condition. If the condition should never be performed by the mortgagor, his grantee might lose the land. If the condition should be performed, the grantee of the mortgagor would hold the land free of the condition."^* § 393. Poreclosure. — A mortgage for the support of the grantee and his wife during their lives may be foreclosed by the administrator of the grantee, for a breach of condition occurring both before and after the grantee's death, although his widow does not join in the suit.''^ But where a mortgage was conditioned to support the mort- gagee during her lifetime, and there was no evidence of a breach of the condition, or of any demand for support other than what was fur- nished, it was held that the administrator of the mortgagee could not foreclose the mortgage for the benefit of persons who had boarded the mortgagee at the mortgagor's request. The mortgage was regarded as for the benefit of the mortgagee, and not for the benefit of those who might furnish her with support. Whatever claim they severally had for boarding and taking care of her at the mortgagor's request was against him personally, and not against her or her estate.'"' Where, upon the separation of husband and wife, the wife's brother, in consideration of a sum paid by the husband, agreed to support the wife without cost or expense to the husband, and to save him harmless from all charge for her support, and secured the agreement by a mort- gage, the wife, though not a party to the agreement, was allowed to enforce it, since it was made for her benefit.'^ Where the consideration of a deed is the grantee's mortgage on the premises conditioned that he will support the grantors, during life, no place being specified where such support shall be furnished them, they are not obliged to receive such support at the mortgagor's house, but are entitled to have it at such reasonable place as they may select ; and when, with knowledge of such selection, the mortgagor fails to furnish such support required by his contract, and declares his inten- tion not to do so, or pay for any support which may be furnished by others, the condition of the mortgage is broken, and an action of fore- '^ Bodwell Granite Co. v. Lane, 83 " Daniels v. Eisenlord, 10 Mich. Maine 168, 21 Atl. 829. 454. ^ Marsh v. Austin, 1 Allen (Mass.) " Coleman v. Whitney, 62 Vt. 123, 235. See also French v. Case, 77 20 Atl. 322. Mich. 64, 43 N. W. 1056. § 394 DEBT SECUEED 550 closure may be maintained for the reasonable value of the support provided by others, though it was provided without the request of the mortgagor or demand upon him to furnish the support required.^* Where a mortgage from a son to his parents, for their support, provides also for the use of a horse and buggy when they, or either of them, may desire it, there is a breach of the condition upon a failure to furnish it on a reasonable demand by either of them alone, and either of them may have a separate action for damages. The provision is not joint, but several. The damages allowed should cover the actual damage sustained. Wo decree can be made for future vio- lations of this provision. It is impossible to determine in advance what damages may result from a failure to perform the condition.^" An instrument under seal but not acknowledged, in which the maker agrees to support his father and mother during their natural lives, and as security for the fulfilment of the agreement conveys and grants to them, "each and severally, a life lien or dower, or lien of maintenance for life," in real estate, is a mortgage ; and upon a breach of the agreement, an action for possession of the premises may be sus- tained by the father alone.*" If the mortgagor give a bond in a fixed sum conditioned for the maintenance and support of the mortgagee, such sum will be regarded as a penalty, and the mortgage can not be treated as one to secure the payment of that sum absolutely, unless there be a stipulation that this sum shall be regarded as liquidated damages for any default.*^ Instead of a judgment of foreclosure and sale, in some states a judgment of strict foreclosure, or for rescinding of the conveyance, will be entered.*^ Where one of the conditions of a mortgage is that the mortgagor should remain in possession and support the mortgagee, the burden is upon the mortgagee to show a breach of the condition.*^ § 394. Agreement for arbitration. — Under a mortgage to secure the performance of a bond or contract conditioned to support the mortgagee, a stipulation "that, should either party be dissatisfied with the fulfilling of the above bond, it shall be submitted" to three per- =»Tuttle V. Burgett, 53 Ohio St. "Wright v. "Wright, 49 Mich. 624, 498, 42 N. E. 427, 30 L. R. A. 214, 14 N. W. 571; Bresnahan v. Bresna- 53 Am. St. 649. ban, 46 Wis. 385, 14 N. W. 571. '» Tucker v. Tucker, 24 Mich. 426, " Bresnahan v. Bresnahan, 46 "Wis. 35 Mich. 365. 385, 14 N. W. 571; Bogie v. Bogie, "Gilson V. Gilson, 2 Allen (Mass.) 41 "Wis. 209. 115. See also Lanfair v. Lanfair, 18 « Davis v. Poland, 99 Maine 345, Pick. (Mass.) 299. The judgment 59 Atl. 520. may be in the nature of a strict fore- closure. See post § 1556. 551 MORTGAGES FOR SUPPORT § 395 sons named, ''and their decision shall be final," does not prevent an action for breach of condition by the mortgagee. This comes within the general principle that an agreement for arbitration shall not de- prive one of his legal remedies.** If an award is made under such a stipulation, it is a debt subject to attachment by trustee process or garnishment by the creditors of the mortgagee.*^ § 395. Redemption. — Such a mortgage may be redeemed after breach.*^ It has been held, however, that no such right exists; that where the condition calls for the support of the mortgagee or some other person, the land can not be redeemed by the payment of a sum of money.*' A court of equity may grant relief from the forfeiture of a condition for the maintenance of the mortgagee when the for- feiture has been accidental or unintentional, and not attended with irreparable injury. But the granting of relief in such a case rests in the sound discretion of the court.*^ " Hill V. More, 40 Maine 515. See also Dickinson v. Dickinson, 59 Vt. 678, 10 Atl. 821. " Dickinson v. Dickinson, 59 Vt. 678, 10 Atl. 821. "Rowell V. Jewett, 69 Maine 293; Bryant v. Erskine, 55 Maine 153; Bethlehem v. Annis, 40 N. H. 34, 77 Am. Dec. 700. See also Hoyt v. Bradley, 27 Maine 242; Flske v. Fiske, 20 Pick. (Mass.) 499; "Wilder V. Whittemore, 15 Mass. 262; Austin v. Austin, 9 Vt. 420. •" Hawkins v. Clermont, 15 Mich. 511; Evans v. Norris, 6 Mich. 369; Soper V. Guernsey, 71 Pa. St. 219. « Henry v. Tupper, 29 Vt. 358, 375. Redfield, C. J., said: "We must all feel that cases of the character before the court should be received with something more of distrust, and relief afforded with more re- serve and circumspection, than in ordinary cases of collateral duties. And although we are not prepared to say that it must appear that in all cases the failure arises from sur- prise, or accident, or mistake, we certainly should not grant relief when the omission was wilful and wanton, or attended with suffering or serious inconvenience to the grantee, or there was any good ground to apprehend a recurrence of the failure to perform. * * * The case might occur where the re- fusal to afford dally support would be wanton or wicked; Indeed, where it might proceed from murderous intentions even; and it is even sup- posable that the treatment of those who were the objects of the services should be such as to subject the grantor to indictment for man- slaughter, or murder even, and pos- sibly to ignominious punishment and to death. To afford relief in such a case, for the benefit of the heirs, would be to make the court almost partakers in the offense. And the case, upon the other hand, is entirely supposable, and not of infrequent occurrence, where, through mere inadvertance, a tech- nical breach may have occurred In the nonperformance of some unim- portant particular, in kind or de- gree, where, through perhaps mere difference in construction, or error in judgment, one may have suffered a forfeiture of an estate at law of thousands of dollars in value, where the collateral service was not of a dollar's value, and attended with no serious inconvenience to the grantee. Not to afford relief in such case would be a discredit to the enlight- ened jurisprudence of the English nation, and those American states which have attempted to follow the same model." See also Soper v. Guernsey, 71 Pa. St. 219; Dunklee V. Adams, 20 Vt. 415, 1 Am. Dec. 44. See ante § 388. CHAPTBE X INSURANCE I. Insurable Interests of Mortgagor and Mortgagee, §§ 396-399 II. Insurance ly the Mortgagor for the Benefit of the Mortgagee, §§ 400-417 III. Insurance by the Mortgagee, §§ 418^21 IV. A Mortgage is not an Alienation, §§ 422-427 I. Insurable Interests of Mortgagor and Mortgagee Section Section 396. Nature of fire insurance con- 398. How long mortgagor's interest tract. remains insurable. 397. Insurable Interests. 399. When application should state incumbrance. § 396. Nature of fire insurance contract. — The fundaniental prin- ciple at the base of every contract of insurance affecting an interest in property is that of indemnity.^ Thus insurance against fire is a con- tract of indemnity with the assured against any loss he may sus- tain by the burning of the buildings. He must have some interest in the property insured, as ovirner, mortgagee, or otherwise, to make the contract effectual. If he never had any interest, or if at the time of the loss he had ceased to have any interest, he can not claim anything under the contract; for he has suffered no loss. He may upon trans- ferring his interest in the estate at the same time transfer the policy of insurance, and such transfer, being assented to by the underwriter, constitutes a new and original promise to the assignee to indemnify him. "But such undertaking," said Shaw, C. J., "will be binding, not because the policy is in any way incident to the estate or runs with the land, but in consequence of the new contract."^ * McDonald v. Black, 20 Ohio 185, Mut. Ins. Co., 2 N. Y. 210; Johannes 55 Am. Dec. 448< Castellain v. Pres- v. Phoenix Ins. Co., 66 Wis. 50, 27 ton, L. R. 11 Q. B. D. 380. N. W. 414, 57 Am. Rep. 249. See ^ Donnell v. Donnell, 86 Maine 518, also Palatine Ins. Co. v. O'Brien, 107 30 Atl. 67; Macomber v. Cambridge Md. 341, 68 Atl. 484, 16 L. R. A. (N. Mut. F. Ins. Co., 8 Cush. (Mass.) S.) 1055n; Morrison v. Tennessee 133; Wilson v. Hill, S Mete. (Mass.) M. &c. Ins. Co., 18 Mo. 262, 59 Am. 66; Murdock v. Chenango County Dec. 299n; Rogers v. Shawnee Fire 552 553 INSURABLE INTERESTS § 397 § 397. Insurable interests. — The mortgagor may insure the full value of the property, and recover the full amount insured, if at the time of the loss he had the right of redemption;^ and it matters not that the mortgagee has taken possession of the premises.* Neither does it matter that his right in equity has been seized and sold on exe- cution; his insurable interest continues so long as he has the right to redeem from such sale, and he may upon a loss recover the whole amount insured.^ The mortgagee and the mortgagor may both insure their separate interests at the same time.® Such insurance is not liable to the objec- tion of a double insurance, because to constitute this the two policies must be not only upon the same property, but also for the benefit of the same person, and for the same entire risk.' So where the mort- gagor and mortgagee insure their respective interests in property in different companies, each company is liable in case of loss according to the insurable interest of the insured in the property.' A trustee in a deed of trust in the nature of a mortgage in like man- ner has an insurable interest distinct from that of the grantor." A conveyance of the mortgaged property by the mortgagor in no way affects the mortgagee's right to insure his interest. '^^ Ins. Co., 132 Mo. App. 275, 111 S. (Mass.) 1, 54 Am. Dec. 683; Key v. W. 592; Cummings v. Cheshire Continental Ins. Co., 101 Mo. App. County Mut. P. Ins. Co., 55 N. H. 344, 74 S. "W. 162; Hanover Fire Ins. 457; Cross v. National F. Ins. Co., Co. v. Bohn, 48 Nebr. 743, 67 N. W. 132 N. Y. 133, 30 N. E. 390; Farm- 774, 58 Am. St. 719; Traders' Ins. ers' Ins. Co. v. Butler, 38 Ohio St. Co. v. Robert, 9 Wend. (N. Y.) 404; 128; Chrisman v. State Ins. Co., 16 Jones on Chattel Mortgages, § 100. Ore. 283, 18 Pac. 466; Steinmeyer v. 'Westchester F. Ins. Co. v. Fos- Steinmeyer, 64 S. Car. 413, 42 S. E. ter, 90 111. 121; Dick v. Franklin F. 184, 59 L. R. A. 319, 92 Am. St. 809. Ins. Co., 10 Mo. App. 376, 81 Mo. » Insurance Co. v. Stinson, 103 U. 103; . Boetcher v. Hawkeye Ins. Co., *' Lycoming F. Ins. Co. v. Jackson, 47 Iowa 253; Woodward v. Republic 83 111. 302, 25 Am. Rep. 386; Nor- P. Ins. Co., 32 Hun (N. Y.) 365. wich Fire Ins. Co. v. Boomer, 52 III. 442, 4 Am. Rep. 618. 559 FOE BENEFIT OF MOETGAGEE 400 in any way, the mortgagee is regarded as having an equitable lien upon the proceeds of the policy;^ and if his mortgage is duly recorded, the covenant for insurance is regarded by some authorities as running with the land, and as giving notice of the right to others, so that no subsequent assignment of the policy would affect his rights.^ It is immaterial in this respect whether the policy existed at the time of the mortgage, or was afterward taken out by the mortgagor.^ After the insurance company having the risk has been notified of such equi- table lien in favor of the mortgagee, it can not pay the loss to the mort- gagor, except at its peril, until the rights of the mortgagee shall have been adjusted.* The mortgagee in such case stands in the position of an assignee of a chose in action; he must enforce his rights in the name of the mortgagor, but his interest is sufficient to enable him to hold the proceeds against an attaching creditor or any subsequent as- signee. But these cases which support the claim of the mortgagee to insurance obtained by the mortgagor in his own name are regarded as resting upon special facts which justify the inference that the insur- ance in question was obtained by the mortgagor with the intent to ^Wheeler v. Insurance Co., 101 U. S. 439, 25 L. ed. 1055; In re Sands Ale Brew. Co., 3 Biss. (U. S.) 175; Eastern Milling &c. Co. v. Eastern Milling &o. Co., 125 Fed. 143; Nor- wich F. Ins. Co. V. Boomer, 52 111. 442, 4 Am. Rep. 618; Chipman v. Carroll, 53 Kans. 163, 35 Pac. 1109; Thomas v. Vonkapfe, 6 Gill & J. (Md.) 372; Providence County Bank v. Benson, 24 Pick. (Mass.) 204; Miller V. Aldrich, 31 Mich. 408; Ames v. Richardson, 29 Minn. 330; Hyde v. Hartford Fire Ins. Co., 70. Nebr. 503, 97 N. "W. 629, 113 Am. St. 796; Crom- well V. Brooklyn F. Ins. Co., 44 N. Y. 42, 4 Am. Rep. 641, per Earl, C; Dunlop V. Avery, 24 Hun (N. Y.) 509; Carter v. Rockett, 8 Paige (N. Y.) 437; Vernon v. Smith, 5 Barn. & Aid. 1. A provision that the mortgagor shall keep the building insured for the benefit of the mortgagee "to the amount of thousand dollars" is incomplete and does not bind the mortgagor to insure for any amount. The blank not being filled the mort- gage contains no agreement requir- ing the mortgagee to insure for any amount. McCaslin v. Advance Mfg. Co., 155 Ind. 298, 58 N. B. 67, citing Palmer v. Poor, 121 Ind. 135, 6 L. R. A. 469, 22'N. E. 984; Wielt- fong V. Schafer, 121 Ind. 264, 23 N. E. 91. See also American Ice Co. V. Eastern Trust &c. Co., 188 U. S. 626, 47 L. ed. 623, 23 Sup. Ct. 432; Eastern Milling &c. Co. v. Eastern Milling &c. Co., 125 Fed. 143; Hyde v. Hartford Fire Ins. Co., 70 Nebr. 503, 97 N. W. 629, 113 Am. St. 796; . " Traders' Ins. Co. v. Race (111.), tion from liability. The rights of 29 N. E. 846, affd. 142 111, 338, 31 a party insured can not be made to N. B. 392. When the case was last depend upon the arbitrary claim of before the court, it said: "The the Insurer." Citing Davenport v. right to subrogate, however, can not Ledger, 80 111. 574; Furlong v. Cox, be said to depend upon the naked 77 111. 293; Van Arman v. Bying- claim of appellants that there is ton, 38 111. 443. § 413a INSUEANCE 584 provision that in case of a payment of the loss to the mortgagee the insurer shall be entitled to an assignment of the mortgage, upon the happening of a loss and the assignment of the policy to the insurers, it will be a valid security in their hands if the mortgagor or owner of the property, to whom the policy was issued, has alienated the property prior to the loss, so that the policy has become void as to him, though saved from forfeiture as against the mortgagee. The principal party insured then has no right to claim the sum paid upon the loss as a payment on the mortgage debt.^^ A provision in a policy obtained by the mortgagor and payable to a mortgagee, that "no sale or transfer of the property insured shall vitiate the right of the mortgagee to recover in case of loss," as a neces- sary consequence, protects the mortgagee from the acts of any subse- quent purchaser o'r mortgagee, although those acts be in violation of provisions of the policy; as, for instance, a provision making the policy void if the assured should obtain further insurance without giving written notice to the insurance company and obtaining its con- sent. A necessary consequence of a sale of the property is, that the purchaser has a right to insure his interest; and the object of the stipu- lation being to avoid the defeat of the policy by any sale or transfer of the property, the fair interpretation of the stipulation is, that the mortgagee's right to recover shall not be vitiated by any of the natural consequences or incidents of a sale.^° Of course if a mortgagee, by an indorsement upon the policy, stands merely in the position of one to whom the policy is made payable, with- out any stipulation for his protection against the acts of the assured, his right to recover may be vitiated by the violation of any of the pro- visions of the policy by any owner or occupant of the premises.^' The mortgagee does not in such case become an assignee of the policy, and can recover only what the assured could recover. If a policy be as- signed to a mortgagee, and he gives a deposit note and becomes liable to assessments, a new contract of insurance is created, which is in effect an insurance of the mortgagee's interest, and in that case he is not affected by the subsequent acts of the party originally insured." « Springfield F. &c. Ins. Co. v. v. Manufacturers' Ins. Co., 8 Gray Allen, 43 N. Y. 389, 3 Am. Rep. 711. (Mass.) 28; Hale v. Mechanics' Mut. "City Five Cents Savings Bank F. Ins. Co., 6 Gray (Mass.) 169, 66 V. Pennsylvania F. Ins. Co., 122 Am. Dec. 410; Van Buren v. St. Jo- Mass. 165. seph County Village Ins. Co., 28 "Franklin Savings Institution v. Mich. 398. Central Mut. F. Ins. Co., 119 Mass. " Foster v. Equitable Mut. F. Ins. 240; Fogg V. Middlesex Mut. F. Ins. Co., 2 Gray (Mass.) 216. Co., 10 Cush. (Mass.) 337; Lorlng 585 FOE BENEFIT OF MORTGAGEE § 413b By a provision known as the "union mortgage clause" a stipulation is usually made that in case of loss the policy is made payable to the mortgagee, and that his interest as payee shall not be invalidated or aSected by any act or omission of the mortgagor.^'' Such clause in a policy operates as an independent insurance upon the mortgagee's in- terest, and gives him the same protection as if he had taken out a sep- arate policy, free from the conditions imposed upon the owner.^" ,'§ 413b. Condition against procuring other insurance. — A policy taken by a mortgagor for the benefit of the mortgagee provided that it should become void if the assured should, without the written con- sent of the insurers, obtain other insurance upon the property. The mortgagee, without the knowledge of the ijiortgagor and before de- fault, procured other insurance payable to himself as mortgagee. The insurers contended that the mortgagor's policy was rendered void by a breach of this condition; but it was held that there was no breach of the condition, although the policy contained a clause that the mort- gagor should keep the mortgaged buildings insured for the benefit of the mortgagee, who was authorized, in case of default, to procure insurance; for inasmuch as the mortgagor was not in default, the mortgageee, in procuring insurance, acted for himself, and not as the mortgagor's agent.^^ Where the policy is in the name of the mort- gagor, and is made payable to the mortgagee as his interest may ap- pear, a subsequent policy obtained by the mortgagor is in violation of the condition against procuring other insurance.^^ A mortgagee to whom loss in a policy is made payable, and who ac- cepts and retains a policy which shows on its face that the mortgagor "Lancashire Ins. Co. v. Board- N. E. 717; Magoun v. Fireman's man, 58 Kans. 339, 49 Pac. 92, 62 Fund Ins. Co., 86 Minn. 486, 91 N. Am. St. 621; Eliot Five Cents Sav. W. 5, 91 Am. St. 370; Burnham v. Bank v. Commercial Union Assur. Royal Ins. Co., 75 Mo. App. 394; Co., 142 Mass. 142, 7 N. E. 550; Phenix Ins. Co. v. Omaha Trust Ulster County Sav. Inst. v. Leake, Co., 41 Nebr. 834, 60 N. W. 133, 25 73 N. Y. 161, 29 Am. Rep. 115; L. R. A. 679; Eddy v. London As- Springfield F. &c. Ins. Co. v. Allen, sur. Corp., 143 N. Y. 311, 38 N. E. 43 N. Y. 389, 3 Am. Rep. 711. 307, 25 L. R. A. 686; Smith v. Union =» Syndicate Ins. Co. v. Bohn, 65 Ins. Co., 25 R. L 260, 55 Atl. 715, Fed. 165, 12 C. C. A. 531, 27 L. R. 105 Am. St. 882; Ormsby v. Phenix A. 614; Collinsville Sav. Soc. v. Ins. Co., 5 S. Dak. 72, 58 N. W. 301. Boston Ins. Co., 77 Conn. 676, 60 »Titus v. Glens Falls Ins. Co., Atl. 647, 69 L. R. A. 924. Compare 81 N. Y. 410. Glens Falls Ins. Co. v. Porter, 44 ^' Sias v. Roger Williams ms. Co., Fla. 568, 33 So. 473; Hartford F. 8 Fed. 187; Gillett v. Liverpool &c. Ins. Co. V. Olcott, 97 111. 439; Queen Ins. Co., 73 Wis. 203, 41 N. W. 78, Ins. Co. V. Dearborn Sav. &c. Assn., 9 Am. St. 784. 75 111. App. 371, affd. 175 111. 115, 51 § 414: INSURANCE 586 is insured, can not say that he is not afEected by the imputed knowl- edge of the mortgagor as to the issuance of a policy, for the purpose of avoiding the effect of other insurance procured by the latter.'^ But invalid insurance taken by the owner of the property in violation of this provision can not be considered in determining the right of the mortgagee when the policy provides that his interest shall not be in- validated by any act of the owner.^* § 414. When mortgagee may charge for insurance. — As between mortgagor and mortgagee, the duty to pay premiums rests primarily on the former,^' and the mere retention of policies by the latter will not render him liable unless he requested the issuance of the policies or receives the benefit thereof under circumstances raising an implied promise to pay.^^ But insurance effected by a mortgagee upon the mort- gaged estate, without any provision authorizing him or obligating the mortgagor to do so, can not be charged to the mortgagor.^^ Premiums paid by a mortgagee for insurance on the mortgaged property can not be recovered by him upon foreclosure, in the absence of a stipulation in the mortgage giving him this right.^' If the mortgage contains a condition that the mortgagor shall "keep the buildings standing on the land aforesaid insured against fire in a sum not less than two thousand five hundred dollars, for the benefit of the said mortgagee," and the mortgagor fails to insure, the mort- gagee may effect insurance, and is entitled to credit for the premiums paid by him.^" For a still stronger reason is this the case when the mortgage provides that upon the failure of the mortgagor to keep this condition, the mortgagee may insure.'"' The mortgagor, having failed to comply with his contract, can not take advantage of his own wrong ^'Holbrook v. Baloise F. Ins. Co., Pac. 315; Culver v. Brlukerhoff, 180 117 Cal. 561, 49 Pac. 555. 111. 548, 54 N. B. 585. ^Eddy V. London Assur. Corp., ''"Baker v. Jacobson, 183 111. 171, 143 N. Y. 311, 38 N. E. 307, 25 L. R. 55 N. E. 724; Powley v. Palmer, 5 A. 686. Gray (Mass.) 549. The insurance ^ Reid V. State Bank, 119 N. Y. in this case was payable to the S. 242; Muddle v. Van Slyke, 63 mortgagee "for whom it may con- Miso. 229, 118 N. Y. S. 473. cern." Barthell v. Syverson, 54- » Reid v. State Bank, 119 N. Y. S. Iowa 160, 6 N. "W. 178. See also 242. Harper v. Ely, 70 111. 581; Stinch- ''Nordyke v. Gery, 112 Ind. 535, field v. Milllken, 71 Maine 567; Le- 13 N. E. 683; Saunders v. Frost, 5 land v. Collver, 34 Mich. 418; Mc- Pick. (Mass.) 259, 16 Am. Dec. 394; Lean v. Burr, 16 Mo. App. 240; Fer- Faure v. Winans, Hopk. Ch. (N. guson v. Dickinson (Tex. Civ. App.), Y.) 283, 14 Am. Dec. 545; Dobson 138 S. W. 221. V. Land, 8 Hare 216, 4 De G. & S. =° Overby v. Payetteville Bldg. 575. &c. Assn., 81 N. Car. 56. See also ^ Miller v. Hunt, 6 Idaho 523, 57 Neale v. Albertson, 39 N. J. Eq. 382. 587 FOE BENEFIT OF MORTGAGEE § 415 and decline to pay the premium. The condition that the mortgagor should insure distinguishes the case from that class of cases where the mortgagee insures his own interest in the mortgaged premises; such insurance he must effect at his own expense. Then he is not holden to account for the proceeds. But when the mortgage gives the mortgagee the right to insure at the expense of the mortgagor, and he does so, and charges the premium to the mortgagor, the amount received from the insurance must be accounted for toward the payment of the mort- gage debt.^^ Although it may be difficult to prove that the mortgagee in any particular case effected the insurance under the provision of the mortgage and at the expense of the mortgagor, so that he is ac- countable for the proceeds, the difficulty is one brought upon the mortgagor by his own failure to perform his contract f and if he has no such proof he must take the mortgagee's word for it. But he can not charge for premiums paid for insurance to a larger amount than is stipulated for in the mortgage.^' The mortgagee will not be allowed for insurance effected by him- self, in the absence of any stipulation in the mortgage that the mort- gagor shall keep the property insured for the mortgagee's benefit or that premiums of insurance paid by the mortgagee shall be a charge upon the property.^* But if the mortgagee, at the request of the mort- gagor, takes out insurance on the mortgaged premises, and pays the premium, the amount of the premium so paid is a charge on the premises.^' § 415. Rule where condition not in form of direct covenant. — The rule is the same where the condition to keep insurance is not in the form of a direct covenant, as where the condition was,^° that if the grantor shall repay the loan, "and, until such payment, keep the build- ings standing on the land aforesaid insured against fire, in a sum not less than $350, for the benefit of the mortgagee, and payable to him in case of loss, at some insurance ofiice approved by him; or, in default thereof, shall, on demand, pay to said mortgagee all such sums of ''Pendleton v. Elliott, 67 Mich. Smith, 1 N. J. Eq. 121; Faure v. 235, 35 N. W. 97. Winans, Hopk. Ch. (N. Y.) 283, 14 '' Per Chief Justice Shaw, in Fow- Am. Dec. 545. ley V. Palmer, 5 Gray (Mass.) 549. '"Mix y^. Hotehkiss, 14 Conn. 32. ''Conover v. Grover, 31 N. J. Eq. '"Nichols v. Baxter, 5 R. I. 491. 539. The form of mortgage in this case "Pierce v. Faunce, 53 Maine 351; is the ordinary form used in Mass- Saunders v. Frost, 5 Pick. (Mass.) achusetts. See also Barthell v. 259, 16 Am. Dec. 394; Clark v. Syverson, 54 Iowa 160, 6 N. W. 178. § 416 isrsuHANCB 588 money as the said mortgagee shall reasonably pay for such insurance, with interest," then the deed should be void. In Connecticut it is provided by statute that premiums paid by the mortgagee of any property, for insuring his interest therein against loss by fire, shall be deemed to be a part of the mortgage debt, and shall be refunded to him before he can be required to release his title." § 416. Nature of liability of mortgagee charging for insurance. — A mortgagee charging for insurance is liable as an insurer. If he charges the mortgagor vrith the premiums for an insurance for a certain time as part of the loan, and undertakes to procure the in- surance, he is bound to keep the policies alive during that period, and he is himself liable as an insurer if, in consequence of his neglect to pay the premiums, the policies expire.^* The extent of the liability is the same as an insurance company's would have been had the pol- icies been continued by the payment of the premiums. § 417. Return premium. — ^A return premium upon a policy pro- cured by the mortgagor and assigned to the holder of a mortgage, which is subsequently paid by a purchaser of the equity of redemp- tion, in accordance with his agreement with the mortgagor to assume and pay it, belongs to the mortgagor, and he may recover the amount of it from any one else who collects it.^' But where a mortgagee took out a policy in which the mortgagor was named as the assured, but it was made payable in case of loss to the mortgagee, and it was stipulated that the assured might terminate the policy at any time, in which case the insurance company could retain a proportionate part of the premium, and shortly afterward the mortgagee sold the land under a power of sale, and the policy was canceled and a new one issued to the purchaser, without any rebate being paid to the mortgagee, it was held that the mortgagor could not recover the rebate of premium from the mortgagee. The mortgagor should either have surrendered the policy immediately before the sa]e with the mortgagee's consent, or should have sold the policy to the "Gen. Stat. 1875, p. 358. See »» Soule v. Union Bank, 45 Barb. English statute providing for add- (N. Y.) Ill, 30 How. Pr. 105. ing to tlie principal sum secured "» Merrifleld v. Balcer, 9 Allen premiums paid by the mortgagee (Mass.) 29; Felton v. Brooks, 4 for insurance, which, by the terms Gush. (Mass.) 203; Rafsnyder's Ap- of the deed, should be obtained by peal, 88 Pa. St. 436. the mortgagor, 23 & 24 Vict. ch. 145, §§ 11, 12. 589 INSURANCE BY MORTGAGEE § 418 purchaser and obtained the consent of the insurance company thereto." Upon a foreclosure sale a mortgagee to whom a policy has been transferred as collateral security for the mortgage debt is entitled to the deposit premium, when by the terms of the policy the insurable interest of both the mortgagee and mortgagor is divested, and the proceeds of the sale are insufficient to pay the mortgage debt.*^ III. Insurance ly the Mortgagee Section Section 418. Generai considerations. 420. Insurer subrogated to rights of 419. Effect of insurance of mort- mortgagee. gagee's interest. 421. King v. State Mutual Fire In- surance Co. § 418. General considerations. — Insurance obtained by the mort- gagee when the mortgage contains the usual covenant for insurance on the part of the mortgagor, and an agreement that, in ease of his failure to do so, the mortgagee or his representatives may make such insurance, and the mortgage shall secure the repayment of the premi- ums, is not necessarily presumed to be under this authority, especially if it be taken "on his interest as mortgagee."^ A mortgagee may in- sure his interest as mortgagee, and he may make such terms with the insurer as they may agree upon. When, therefore, the mortgagee pro- cures a policy with a provision that in case of loss the assured shall assign to the insurer an interest in the mortgage equal to the amount of loss paid, this provision is paramount to the contract between the mortgagor and mortgagee, and the insurer is entitled, upon payment of a loss under the policy, to an assignment of the mortgage ; and in an action to foreclose the mortgage the mortgagor can not claim an ap- plication of the amount of the insurance as payment upon the mort- gage.^ Such a case is distinguished from cases where there was no agreement in the policy obtained by the mortgagee as to subrogation. If there be nothing in the policy inconsistent with the contract be- tween the mortgagor and mortgagee, this contract may be regarded as an explanation of the policy obtained by the mortgagee; and' the policy will be regarded as having been obtained under the provisions of the mortgage and for the benefit of the mortgagor. Thus, in a case *' Parker v. Smith Charities, 127 ^Foster v. Van Reed, 70 N. Y. Mass. 499. 19, revg. 5 Hun (N. Y.) 321, 26 Am. "Rafsnyder's Appeal, 88 Pa. St. Rep. 544. 436. ^ Foster v. Van Reed, 70 N. Y. 19, 26 Am. Rep. 544. § 418 INSUEANCE 590 before the Court of Appeals in New York/ upon a policy effected under such a provision in the mortgage, Mr. Justice Andrews said: "The authority given in the mortgage was an authority to the mort- gagee to procure an insurance for the benefit of both parties. This is the fair interpretation. It was immaterial to the mortgagor whether the insurance was in his name or in the name of the mortgagee, if the avails of it in case of loss should apply in reduction of the debt. The mortgagee had no interest to procure an insurance limited to his own protection merely, where the expense was to be paid by the other party and was secured on the land." There is an implied obligation arising from the procuring of the insurance upon the request of the mortgagor, or at his expense, that the insurance money when paid shall be applied to the mortgage debt.* In construing a clause attached to an insurance policy which pro- vided that in case of loss under the policy, it should be paid to the mortgagee and if the insurer should claim that no liability existed as to the mortgagor, it should, upon such payment, be subrogated to the rights of the mortgagee under the mortgage to the extent of such payment, and should receive an assignment pro tanto of the mortgage security, it is held that in order for the insurer to avail itself of the right to be subrogated to the rights of the mortgagee, instead of apply- ing the payment of the loss toward the satisfaction of the mortgage, it is not suflBcient for it merely to claim that no liability existed on the policy as to the mortgagor, but it must allege and prove a state of facts which, under the contract of insurance, would entitle it to exemption from liability to the mortgagor.'^ Whenever the insurance has been effected at the request or by the authority, of the mortgagor, or at his expense, or under circumstances that would make him chargeable with the premium, he is entitled to have the money paid on the policy applied to the extinguishment of his debt." The insurance having been paid for by the mortgagor, though taken in the name of the mortgagee as if absolute owner, the fact that the mortgagor has paid the debt secured by the mortgage ^Waring v. Loder, 53 N. Y. 581. Kans. 235, 29 Pac. 161; Hare v. ^Holbrook v. American Ins. Co., Headley, 54 N. J. Eq. 545, 35 Atl. 1 Curtis (U. S.) 193; Clinton v. 445. Hope Ins. Co., 45 N. Y. 454; Buffalo "Honore v. Lamar F. Ins. Co., 51 Steam Engine Works v. Sun Mut. 111. 409; StinchHeld v. Milliken, 71 Ins. Co., 17 N. Y. 401. Maine 567; Pendleton v. Elliott, 67 "Sun Ins. Office v. Heiderer, 44 Mich. 496, 35 N. W. 97; Nelson v. Colo. 293, 99 Pac. 39; Traders' Ins. Insurance Co., 43 N. J. Bq. 256, 11 Co. V. Race, 142 111. 338, 31 N. E. Atl. 681. 392; Home Ins. Co. v. Marshall, 48 591 INSURANCE BY MOETGAGBB § 419 does not prevent a recovery for a loss against the insurers. The mort- gagor in such case is the beneficial party, and has the right to recover in the name of the mortgagee/ Where a mortgagee holding a mortgage containing the usual insur- ance clause obtained, at the expense of the mortgagor, a policy insuring him as mortgagee, and afterward, upon taking an additional mort- gage upon the same property, also containing the insurance clause, applied for a new policy to cover both amounts, and a policy was issued which contained an additional clause providing that the insur- ance company should only be liable for any deficiency that might remain after the mortgagee had exhausted his primary security, and this clause was not noticed till after a loss occurred, it was held that the insertion of this clause was a fraud upon the mortgagee, and that the policy should be reformed by striking out this clause.^ Where a mortgage provides that the mortgagee may insure the property and charge the premium paid for insurance in case the mort- gagor fails to insure, the mortgagee is not chargeable with want of ordinary care in the selection of an insurance company; and in case the property is burned and the insurance company proves insolvent the mortgagee is not chargeable with negligence. Such facts consti- tute no defense to the enforcement of the mortgage debt, the provision of the mortgage not being a covenant to insure on the part of the mortgagee which the mortgagors could bring into force by their own default, but merely an option, in the exercise of which the mortgagee acted as agent for the mortgagors, and its action was ratified by the repayment of the premium without objection to the company selected, of which the mortgagors were chargeable with notice if they failed to make inquiry." § 419. Effect of insurance of mortgagee's interest. — A mortgagee of real estate has an insurable interest therein, which he may insure on his own account ; and when he does so he insures, not the real estate, but his interest therein arising from his lien. He can only insure to the amount of his mortgage debt.^° But an insurance of a mortgagee's 'Norwich F. Ins. Co. v. Boomer, v. Bohn, 48 Nebr. 743, 67 N. W. 52 111. -442, 4 Am. Rep. 618. 774, 58 Am. St. 719; Hadley v. New 'Hay v. Star F. Ins. Co., 13 Hun Hampshire Ins. Co., 55 N. H. 110; (N. Y.) 496. Excelsior Fire Ins. Co. v. Royal Ins. "Southern Build. &c. Assn. v. Mil- Co., 55 N. Y. 343, 14 Am. Rep. 271; ler, 110 Fed. 35.. McDonald v. Black, 20 Ohio 185, 55 "Carpenter v. Providence Wash- Am. Dec. 448; Smith v. Columbia ington Ins. Co., 16 Pet. (U. S.) 495, Ins. Co., 17 Pa. St. 253, 55 Am. Dec. 10 L. ed. 1044; Hanover F. Ins. Co. 546. § 419 INSUEANCB 593 interest is not an insurance of the mortgage debt, as has been said in some cases, nor is it an indemnity against the loss of that debt by a loss or damage to the property mortgaged, so that, if the mort- gaged property after the loss is still enough in value to pay the debt, there has been in effect no loss.^^ This subject was fully explained by Mr. Justice Polger, in a case before the Court of Appeals in New York,^^ and he clearly shows that the insurance of a mortgage inter- " Carpenter t. Providence Wash- ington Ins. Co., 16 Pet. (U. S.) 495, 10 L. ed. 1044, per Story, J.; Ker- nochan v. New York Bowery Fire Ins. Co., 17 N. Y. 428, per Strong, J.; ^tna F. Ins. Co. v. Tyler, 16 Wend. (N. Y.) 385, 30 Am. Dec. 90, per Cliancellor Walworth; Smith v. Columbia Ins. Co., 17 Pa. St. 253, 55 Am. Dec. 546; Mathewson v. Western Assur. Co., 4 L. Can. Jur. 57. See also Sussex County Mut. Ins. Co. V. Woodruff, 26 N. J. L. 541. ^^ Excelsior Fire Ins. Co. v. Royal Ins. Co., 55 N. Y. 343, 14 Am. Rep. 271, per Folger, J. "Fire under- writers in these days, in this state, are the creatures of stat- ute, and have no rights, save such as the state gives to them. They may agree that they will pay such loss or damage as hap- pens by fire to property. They are limited to this. It was not readily that it was first held that they could agree with a mortgagor or lienor of property, to reimburse to him the loss caused to him by fire. He is not the owner of it; how, then, can he insure it, was the query. And the effort was not to enlarge the power of the insurer so that it might insure a debt, but to bring the lienor within the scope of that power, so that the property might be- insured for his benefit. And it was done by holding that, as his security did depend upon the safety of the property, he had an in- terest in its preservation, and so had such interest as that he might take out a policy upon it against loss by fire, without meeting the ob- jection that it was a wagering pol- icy. The policy did not, therefore, become one upon the debt, and for indemnification against its loss; but still remained one upon the prop- erty, and against loss or damage to it. It is doubtless true, as is said by Gibson, J., in 17 Pa. St. 253, that in effect it is the debt which is in- sured. It is only as an effect, how- ever; an effect resulting from the primary act of insurance of the property which is the security for the debt. It is the interest in the property which gives the right to obtain insurance, and the owner- ship of the debt, a lien upon the property, creates that interest. The agreement is usually, as it is in fact in this case, for insuring, from loss or damage by fire, the property. The interest of the mortgagor is in the whole property, just as it exists undamaged by fire, at the date of the policy. If that property is con- sumed in part, though what there be left of it is equal in value to the amount of the mortgage debt, the mortgage interest is affected. It is not so great, or so safe, or so val- uable, as it was before. It was for indemnity against this very detri- ment, this very decrease in value, that the mortgagee sought insur- ance and paid his premium. "To say that it is the debt which is insured against loss, is to give to most, if not all, fire insurance companies a power to do a kind of business which the law and their charters do not confer. They are privileged to insure property against loss or damage by fire. They are not privileged to guaran- tee the collection of debts. If they are they may insure against the insolvency of the debtor. No one will contend this; and it will be said, it is not by a guaranty of the debt, but an indemnity is given against the loss of the debt by an insurance against perils to the property by fire. This is but com- ing to our position: that it is the 593 IXSUEANCE BY MOETGAGEE § 420 est is not an insurance of the debt, but of the interest of the mort- gagee in the property upon the safety of which depends his security, and that upon the happening of a loss the insurer is bound to make good the loss without regard to the value of the property remaining. The mortgagee's rights to the proceeds of the insurance taken out by him is not affected by the fact that the property is still, even after the loss insured against, sufficient security for the amount of the mort- gage.'= § 420. Insurer subrogated to rights of mortgagee. — It being set- tled that an insurance made by a mortgagee of his own interest, at his own expense, and upon his own motion, is an insurance of his interest in the property, and not of the debt secured, and that the insurers are liable to pay him the whole amount of the damage to the property, it remains to be considered whether either the mortgagor can claim that the payment shall be applied in discharge of his debt, or the insurers can claim ,the mortgage security by assignment or subroga- tion. In the first place, it is the undisputed doctrine of all the cases that the mortgagor himself can claim no benefit from such insurance.^* He has no claim, in case of loss, to have the proceeds of the insurance applied on the mortgage debt.^^ The question in dispute is, whether, property which is insured against lessened in value, and the mort- the loss by fire, and the protection gagee, the insuree, is affected, and to the debt is the sequence thereof, may call upon the insurer to make As the property it is which is in- him as good again as he was when sured against loss, it is the loss he effected his insurance." which occurs to it which the in- ^^^tna Ins. Co. v. Baker, 71 Ind. surer contracts to pay, and for such 102; Poster v. Equitable Mut. F. loss he is to pay within the Ins. Co., 2 Gray (Mass.) 216; Ex- limit of his liability, irrespective celsior Fire Ins. Co. v; Royal Ins. of the value of the property unde- Co., 55 N. Y. 343, 14 Am. Rep. 271; stroyed; So as to the remark, that Smith v. Columbia Ins. Co., 17 Pa. it is the capacity of the property St. 253, 55 Am. Dec. 546; to pay the debt which is insured. "Russell v. Southard, 12 How. This is true in a certain sense; but (U. S.) 139, 13 L. ed. 927; Ely v. it is as a result and not as a pri- Ely, 80 111. 532; Stinchfield v. Milli- mary undertaking. The undertak- ken, 71 Maine 567; Clark v. Wilson, Ing is that the property shall not 103 Mass. 219, 4 Am. Rep. 532; Suf- suffer loss by fire; that is, in folk Ins. Co. v. Boydon, 9 Allen effect, that its capacity to pay the (Mass.) 123; White v. Brown, 2 mortgage debt shall not be dimin- Cush. (Mass.) 412; Fowler v. ished. When an appreciable loss Palmer, 5 Gray (Mass.) 549; Foster has occurred to the property from v. Van Reed, 70 N. Y. 19, 26 Am. fire, its capacity to pay the mort- Rep. 544; Dobson v. Land, 8 Hare gage debt has been affected; it is 216, 4 De G. & Sm. 575; Bellamy v. not so well able to pay the debt Brickenden, 2 Johns. & Hem. 137. which is upon it. The mortgage in- '' Russell v. Southard, 12 How. terest, the insurable interest, is (U. S.) 139, 13 L. ed. 927; Honore 38 — Jones Mtg.— Vol. I. § 420 INSURANCE 594 upon payment of the loss under such a policy, the insurer shall be subrogated to the security held by the mortgagee, or whether he may, after having collected the insurance money, proceed to collect the mortgage debt from the mortgagor, and the property mortgaged. The general rule and the weight of authority is, that the insurer is thereupon subrogated to the rights of the mortgagee under the mort- gage. This is put upon the analogy of the situation of the insurer to that of a surety.^" In -Massachusetts, however, the insurer is not entitled to be subrogated to the rights of the mortgagee, and the latter may recover both the proceeds of the insurance and the full amount of the mortgage.^^ The mortgagor and mortgagee have each an insurable interest. If the mortgagee obtains insurance on his own account, and the premium is not paid by or charged to the mortgagor, the latter can not claim the benefit of a payment of the policy ;^^ but the insurer is entitled to be subrogated to the claim of the mortgagee, and may recover upon the note.^" If, however, the insurer receives the premium knowing that the mortgagor has paid or agreed to pay it, he is not entitled to be subrogated to the rights of the mortgagee, as a mere matter of equity, in the absence of a stipulation therefor in the policy.^" v. Lamar F. Ins. Co., 51 111. 409; Stinchfield v. MiUiken, 71 Maine 567; Mclntire v. Plaisted, 68 Maine 363; White v. Brown, 2 Cush. (Mass.) 412; Excelsior F. Ins. Co. V. Royal Ins. Co., 55 N. Y. 343, 14 Am. Rep. 271. ^^ Norwich Fire Ins. Co. v. Boomer, 52 111. 442, 4 Am. Rep. 618; Honore V. Lamar F. Ins. Co., 51 111. 409; Dick V. Franklin F. Ins. Co., 10 Mo. App. 376, affd. 81 Mo. 103; Bound Brook Mut. F. Ins. Assn. v. Nelson, 41 N. J. Eq. 485; Sussex County Mut. Ins. Co. V. Woodruff, 26 N. J. L. 541. See also Honore v. Lamar F. Ins. Co., 51 111. 409; Ulster County Sav. Inst. V. Leake, 73 N. Y. 161, 29 Am. Rep. 115; Excelsior P. Ins. Co. V. Royal Ins. Col, 55 N. Y. 343, 14 Am. Rep. 271; Springfield F. &c. Ins. Co. V. Allen, 43 N. Y. 389, 3 Am. Rep. 711; Kernochan v. New York Bowery F. Ins. Co., 5 Duer. (N. Y.) 1; Baker v. Monumental Sav. &c. Assn., 58 W. Va. 408, 52 S. E. 403, 3 L. R. A. (N. S.) 79, 12 Am. St. 996. "King v. State Mut. F. Ins. Co., 7 Cush. (Mass.) 1, 54 Am. Dee. 683; Suffolk Fire Ins. Co. v. Boyden, 9 Allen (Mass.) 123. " Stinchfleld v. Milliken, 71 Maine 567; Insurance Co. v. Woodbury, 45 Maine 447; White v. Brown, 2 Cush. (Mass.) 412. ^' Concord Union Mut. F. Ins. Co. v. Woodbury, 45 Maine 447; Calla- han V. Linthicum, 43 Md. 97, 20 Am. Rep. 106; Sussex County Mut. Ins. Co. V. Woodruff, 26 N. J. L. 541; Foster v. Van Reed, 70 N. Y. 19, 26 Am. Rep. 544; Cone v. Niagara F. Ins. Co., 60 N. Y. 619; Excelsior Fire Ins. Co. v. Royal Ins. Co., 55 N. Y. 343, 14 Am. Rep. 271; Kerno- chan v. N. Y. Bowery F. Ins. Co., 17 N. Y. 428; De Wolf v. Capital City Ins. Co., 16 Hun (N. Y.) 116; ^tna Ins. Co. v. Tyler, 16 Wend. (N. Y.) 385. 30 Am. Dec. 90. ""Dick V. Franklin F. Ins. Co., 10 Mo. App. 376, per Thompson, J., affd. 81 Mo. 103; Cone v. Niagara F. Ins. Co., 60 N. Y. 619; Kernochan V. Insurance Co., 17 N. Y. 428, 441. See also PhcEnix Ins. Co. v. Chad- bourne, 31 Fed. 300; Baker v. Fire- man's Fund Ins. Co., 79 Cal. 34, 21 Pac. 357; .^tna Ins. Co. v. Baker, 595 INSUKAXCE BY jMOETGAGEE § 420 Upon this principle it has been held that, upon payment of the mortgage debt, the equitable liability of the mortgagee to the mort- gagor for the money received from the insurers is a sufficient consid- eration to support a promise by the mortgagee to allow the amount secured by him upon the mortgage debt, and that an action may be maintained on such promise.^^ If insurance be effected upon the in- terest of the assured as mortgagee, at his own expense, the insurers, upon payment of a loss and tender of the balance due on the mortgage, have in some courts been held not entitled to have the mortgage as- signed to them, or to be subrogated to the rights of the assured under the mortgage, either in law or in equity. The mortgagee's insurance is not an insurance of the debt, although the amount of that is the measure of his insurable interest in the property.^^ 71 Ind. 102; Home Ins. Co. v. Mar- shall, 48 Kans. 235, 29 Pac. 161; Pendlton v. Elliott, 67 Mich. 496, 35 N. W. 97; Havens v. Germania Ins. Co., 135 Mo. 649, 37 S. W. 497; Hare V. Headley, 54 N. J. Eq. 545, 35 Atl. 445; ^Callahan v. Linthicum, 43 Md. 97, 20 Am. Rep. 106, Alvey and Gra- son, JJ., dissenting. ^King V. State Mutual Fire Ins. Co., 7 Cush. (Mass.) 1, 54 Am. Dec. 683. In this case Chief Justice Shaw said: "The case supposed is this : A man makes a loan of money, and takes a bond and mortgage for security. Say the loan is for ten years. He gets insurance on his own interest as mortgagee. At the expiration of seven years the build- ings are Imrnt down; he claims and recovers a loss to the amount in- sured, being equal to the greater part of the debt. He afterward se- cures the amount of his debt from the mortgagor, and discharges his mortgage. Has he received a double satisfaction for one and the same debt? "He surely may recover of the mortgagor, because he is his debtor, and on good consideration has con- tracted to pay. The money received from the underwriters was not a payment of his debt; there was no privity between the mortgagor and the underwriters; he had not con- tracted with them to pay it for him, on any contingency; he had paid them nothing for so doing. They did not pay because the mortgagor owed it, but because they had bound themselves, in the event which has happened, to pay a certain sum to the mortgagee. "But the mortgagee, when he claims of the underwriters, does not claim the same debt. He claims a sum of money due to him upon a distinct and independent contract, upon a consideration, paid by him- self, that upon a certain event, to wit, the burning of a particular house, they will pay him a sum of money expressed. Taking the risk or remoteness of the contingency into consideration, in other words the computed chances of loss, the premium paid and the sum to be re- ceived are intended to be, and in theory of law are, precisely equiv- alent. * * * Suppose — for, in or- der to test a principle, we may put a strong case — suppose the debt has been running twenty years, and the premium is at five per cent., the creditor may pay a sum equal to the whole debt in premiums, and yet never receive a dollar of it from either of the other parties. Not from the underwriters, for the con- tingency has not happened, and there has been no loss by fire; nor from the debtor, because, not hav- ing authorized the insurance at his expense, he is not liable for the pre- mium paid. "What, then, is there inequitable, on the part of the mortgagee, to- ward either party, in holding both § 421 INSTJEANCE 596 § 421. King V. State Mutual Fire Insurance Co. — The insurer has no interest in the mortgage debt ; and there is no privity between him and the mortgagor. Neither can the mortgagor claim any part of the money so recovered as a payment of the mortgage debt, in whole or in part; but he must still pay the whole mortgage debt to the mortgagee.^^ If, however, the mortgage debt was paid, and the mortgage discharged before the loss occurred, the mortgagee's in- surable interest having terminated, he has no claim to recover.^* IV. A Mortgage is not an Alienation Section 422. General rule. 423. Effect o£ mortgage in form an absolute deed. 424. Entry to foreclose. 424a. Condition against commence- ment of foreclosure proceed- ings. Section 425. Where title becomes absolute by strict foreclosure. 426. Alteration of ownership. 426a. Change of title, interest or possession. 427. Effect of conveyance subsequent to assignment of policy to mortgagee. § 422. General rule. — ^With reference to the usual provision, in the policy of insurance, that it shall become void upon an alienation of the property insured, or upon any transfer or change of title, the general rule is that a mortgage, whether executed before or after the policy is issued, is not an alienation or change of title until foreclosure is complete, or the mortgagor's title is otherwise wholly divested in consequence of the mortgage.^ But a mortgage is a breach of a condition against "all alienations and alterations in the ownership, situation, or state of the property insured by this company, in any sums? They are both due upon valid contracts with him, made upon adequate considerations paid by himself. There is nothing in- equitable to the debtor, for he pays no more than he originally received in money loaned; nor to the under- writer, for he has only paid upon a risk voluntarily taken, for which he was paid by the mortgagee a full and satisfactory equivalent." See also Concord Union Mut. Fire Ins. Co. V. Woodbury, 45 Maine 447; Gushing v. Thompson, 34 Maine 496; Clark v. Wilson, 103 Mass. 219, 4 Am. Rep. 532; Suftolk Fire Ins. Co. V. Boyden, 9 Allen (Mass.) 123; Poster V. Equitable Mut. F. Ins. Co., 2 Gray (Mass.) 216. =" King V. State Mutual- Fire Ins. Co., 7 Cush. (Mass.) 1, 54 Am. Dec. 683; White v. Brown, 2 Cush. (Mass.) 412; Mclntire v. Plaisted, 68 Maine 363; Bean v. Atlantic &c. R. Co., 58 Maine 82; Concord Union Mut. F. Ins. Co. V. Woodbury, 45 Maine 447; Cushing v. Thompson, 34 Maine 496. '* Graves v. Hampden Ins. Co., 10 Allen (Mass.) 281; Sussex County Mut. Ins. Co. V. Woodruff, 26 N. J. L. 541. * Friezen v. AUemania F. Ins. Co., 30 Fed. 352; Aurora F. Ins. Co. v. Eddy, 55 111. 213; Hartford Ins. Co. V. Walsh, 54 111. 164; Commercial Ins. Co. V. Spankneble, 52 111. 53, 4 Am. Rep. 582; Hanover F. Ins. Co. 597 MORTGAGE NOT AN ALIENATION § 422 material particular."^ So also where the condition was against aliena- tion "by sale, mortgage, assignment, or otherwise."^ In North Caro- lina the giving of a mortgage effects such a change of title and in- terest of the assured as avoids the policy, when not assented to by the insurer in the manner prescribed by the policy.'' So long as the period of redemption has not expired, a foreclosure sale is not an alienation." Even a sale under a power contained in the mortgage does not amount to an alienation, when the mortgagee himself becomes the purchaser through a third party, and the sale is repudiated by the mortgagor, and is subsequently set aside by a decree of court.* But V. Connor, 20 111. App. 297; Indiana Mut. Fire Ins. Co. v. Coquillard, 2 ind. 645. But see M'CuUoch v. In- diana Mut. Fire Ins. Co., 8 Blackf. (Ind.) 50; Lancashire Ins. Co. v. Monroe, 101 Ky. 12, 39 S. W. 434; Smith v. Monmouth Mut. Fire Ins. Co., 50 Maine 96; Pollard v. Somer- set Mut. Fire Ins. Co., 42 Maine 221; Bryan v. Traders' Ins. Co., 145 Mass. 389, 14 N. E. 454; Powers v. Guard- ian Ins. Co., 136 Mass. 108, 49 Am. Rep. 20; Judge v. Conn. Ins. Co., 132 Mass. 521; Rice v. Tower, 1 Gray (Mass.) 426; Jackson v. Mass. Mut. Fire Ins. Co., 23 Pick. (Mass.) 418, 34 Am. Dec. 69; Guest v. New Hamp- shire F. Ins. Co., 66 Mich. 98, 33 N. W. 31; Loy v. Home Ins. Co., 24 Minn. 315, 31 Am. Rep. 346; Jecko V. Insurance Co., 7 Mo. App. 308; Shepherd v. Union Mut. Fire Ins. Co., 38 N. H. 232; Button v. North Eastern Mut. Fire Ins. Co., 29 N. H. 153; Rollins v. Columhian Mut. Fire Ins. Co., 25 N. H. 200; Folsom V. Belknap County Mut. Fire Ins. Co., 10 N. H. 231; Barry v. Ham- burg-Bremen F. Ins. Co., 110 N. Y. 1, 17 N. E. 405; Conover v. Mutual Ins. Co., 3 Denio (N. Y.) 254, 1 Comst. 290; Van Duesen v. Charter Oak Ins. Co., 1 Rob. (N. Y.) 55; Byers v. Insurance Co., 35 Ohio St. 606; Kronk v. Birmingham Ins. Co., 91 Pa. St. 300; Howard F. Ins. Co. V. Bruner, 23 Pa. St. 50. See also Bushnell v. Farmers' Mut. Ins. Co., 110 Mo. App. 223, 85 S. W. 103; Koshland v. Hartford Fire Ins. Co., 31 Ore. 402, 49 Pac. 866; Peck v. Girard Fire &c. Ins. Co., 16 Utah 121, 51 Pac. 255, 67 Am. St. 600; Wolf V. Theresa Village Mut. Fire Ins. Co., 115 Wis. 402, 91 N. W. 1014. '^ Edmands v. Mutual Safety Fire Ins. Co., 1 Allen (Mass.) 311, 79 Am. Dec. 746. ' Edes y. Hamilton Mut. Ins. Co., 3 Allen (Mass.) 362. •■ Modlin V. Atlantic Fire Ins. Co., 151 N. Car. 35, 65 S. E. 605. ° United States Insurance Co. v. Stinson, 103 U. S. 25, 26 L. ed. 473; Columbian Ins. Co. v. Lawrence, 2 Peters (U. S.) 25, 7 L. ed. 335; Es- sex Sav. Bank v. Meriden F. Ins. Co., 57 Conn. 335, 17 Atl. 930; Hop- kins Mfg. Co. V. Aurora F. &c. Ins. Co., 48 Mich. 148, 11 N. W. 846. See also Stephens v. Illinois Mut. Fire Ins. Co., 43 111. 327; Campbell v. Hamilton Mut. Ins. Co., 51 Maine 69; Stuart v. Reliance Ins. Co., 179 Mass. 434, 60 N. E. 929; Strong v. Manufacturers' Ins. Co., 10 Pick. (Mass.) 40, 20 Am. Dec. 507; Loy V. Home Ins. Co., 24 Minn. 315, 31 Am. Rep. 346; Bragg v. New Eng- land Mut. Fire Ins. Co., 25 N. H. 289; Marts v. Cumberland Mut. Fire Ins. Co., 44 N. J. L. 478; Haight v. Continental Ins. Co., 92 N. Y. 51; Mt. Vernon Mfg. (3o. v. Summit County Mut. Fire Ins. Co., 10 Ohio St. 347; Farmers' Mut. Ins. Co. v. Graybill, 74 Pa. St. 17; Hammel v. Queen's Ins. Co., 54 Wis. 72, 11 N. W. 349, 41 Am. Rep. 1. ^ Scammon v. Commercial Union Ins. Co., 20 111. App. 500; Insurance Co. V. Sampson, 38 Ohio St. 672. § 423 INSURANCE 598 it lias been held that a mortgagee's purchase at a foreclosure of prop- erty insured, under a power of sale in the mortgage, is a breach of a condition against a sale without insurer's consent, contained in a policy payable to the mortgagee as his interest might appear.' The policy may, however, provide that it shall be void in case of an incumbrance on the property at the time the policy is issued, or an incumbrance thereupon be afterward created, and then of course a mortgage or other incumbrance will render the policy void.' This provision is waived if the insurer knew when the policy was issued that it was subject to a mortgage and made no objection." In general a mortgage is not an alienation until foreclosure is com- plete ; and a foreclosure is not complete until a transfer of title under a foreclosure sale. Thus where, previous to the loss, a decree of sale on foreclosure had been entered, and the property had been put up for sale and bid ofE by the mortgagee, but no deed had been delivered, and because of the iire the mortgagee refused to accept a deed, it was held that the policy had not become void by sale or alienation, and that the original owner had an insurable interest at the time of the iire." § 423. Effect of mortgage in form an absolute deed. — If, how- ever, the mortgage is by a deed absolute in form, this operates as a transfer oi change of title, and puts an end to an insurance condi- tioned to be void in that event," although there be a defeasance exe- ' Boston Co-Operative Bank v. policy avoids it. Bowlus v. Phenix American Central Ins. Co., 201 Mass. Ins. Co., 133 Ind. 106, 32 N. E. 319; 350, 87 N. E. 594, 23 L. R. A. (N. Kansas Farmers' Fire Ins. Co. v. S.) 1147. Saindon, 53 Kans. 623, 36 Pac. 983. "Hicks V. Farmers' Ins. Co., 71 'Georgia Home Ins. Co. v. Stein, Iowa 119, 32 N. W. 201, 60 Am. Rep. 72 Miss. 943, 18 So. 414. 781; Ellis v. State Ins. Co., 68 Iowa "Marts v. Cumberland Ins. Co., 578, 27 N. W. 762, 61 Iowa 577, 16 44 N. J. L. 478. N. W. 744; 56 Am. Rep. 863; Mai- "Western Mass. Ins. Co. v. Riker, lory V. Farmers Ins. Co., 65 Iowa 10 Mich. 279. "There may be a 450, 21 N. W. 756; Schumitsch v. transfer or change of title without American Ins. Co., 48 Wis. 26, 3 N. a sale. Should A convey a piece of W. 595. Not by mortgage on ad- property to B to hold in secret trust joining parcel. Eddy v. Hawkeye for him, there would be a transfer Ins. Co., 70 Iowa 472, 30 N. W. 808, or change of title from A to B, but 59 Am. Rep. 444. As to effect of a there would be no sale of the prop- change of incumbrances, see Rus- erty or an actual parting with it sell v. Cedar Rapids Ins. Co., 71 to B for a valuable consideration, Iowa 69, 32 N. W. 95; Hankins v. although the conveyance on its face Rockford. Ins. Co., 70 Wis. 1, 35 N. would import a sale from A to B. W. 34; Kansas Farmers' F. Ins. Co. And if the trust, instead of being T. Saindon, 53 Kans. 623, 36 Pac. secret, appeared on the face of the 983. Increasing an existing incum- conveyance, there would still be a brance contrary to the terms of the change of title. The title would no 399 MOETGAGE NOT AX ALIENATION § 424 cuted at the same time, if this be not recorded in accordance with a statute providing that an absolute conveyance shall not be defeated or affected by an unrecorded defeasance, as against any person other than the maker of the defeasance or his heirs or devisees, or persons having actual notice thereof.'^^ Some courts, however, hold that a conveyance which equity will treat as a mortgage does not terminate the interest of the assured, or make void the policy under the alienation clause.^^ If there be a writ- ten defeasance which is seasonably recorded, the two instruments con- stitute a mortgage as effectually as if the defeasance was contained in the deed, and there can be no pretense that there is an absolute con- veyance.^'' Even if the defeasance be not recorded, the deed is not an alienation which will avoid the policy.^^ But it has been held that where the defeasance was not under seal and the transaction appeared to be a transfer in payment of a pre-existing debt with an option of repurchase, there is a breach of the condition against alienation/" A conveyance of real estate by a debtor to a creditor under the provisions of the Georgia code is not an alienation of the property within the prohibition against a change of title. ^' §424. Entry to foreclose. — Where a policy provided that "the entry of a foreclosure of a mortgage" should be deemed an alienation of the property, and the company should not be holden for any loss occurring afterward, it was held that this did not mean an actual and complete foreclosure, but had reference to an entry by the mortgagee longer be in A but in B, his grantee. Ins. Co., 37 Fed. 524, 1 L. R. A. 704 ; We think such a conveyance would Commercial Ins. Co. v. Spankneble, clearly, come within the condition of 52 111. 53, 4 Am. Rep. 582; ^tna the policy and put an end to the Ins. Co. v. Jacobson, 105 111. App. insurance." 283; Trumbull v. Portage County See also Phcenix Ins. Co. v. As- Mut. Ins. Co., 12 Ohio 305; Burk- berry, 95 Ga. 792, 22 S. B. 717; hart v. Farmers' Union Assn. &c. Bennett v. Mutual F. Ins. Co., 100 Co., 11 Pa. Sup. Ct. 280; Tittemore Md. 337, 60 Atl. 99; Farmers' &c. v. Vermont Mut. Fire Ins. Co., 20 Ins. Co. V. Hahn, 1 Nebr. (unoff.) Vt. 546. 510, 96 N. W. 255. " Smith v. Monmouth Mut. F. Ins. "Tomlinson v. Monmouth Mut. F. Co., 50 Maine 96. Ins. Co., 47 Maine 232; Foote v. *= Bryan v. Traders' Ins. Co., 145 Hartford Ins. Co., 119 Mass. 259. See Mass. 389, 14 N. E. 454. See also also Bryan v. Traders' Ins. Co., 145 Aurora F. Ins. Co. v. Eddy, 55 111. Mass. 389, 14 N. E. 454; Dailey v. 213. Westchester F. Ins. Co., 131 Mass. "Adams v. Rockingham Mut. F. 173. Ins. Co., 29 Maine 292. Compare "Holbrook v. American Ins. Co., Foote v. Hartford F. Ins. Co., 119 1 Curtis (U. S.) 193; Hodges v. Ten- Mass. 259. nessee Marine &c. Ins. Co., 8 N. Y. "Phoenix Ins. Co. v. Asberry, 95 416. See also Nussbaum v. Northern Ga. 792, 22 S. E. 717. § 424a iiTSDEANCE 600 upon a breaeli of condition for the purpose of foreclosure. Under the system of foreclosure in use in Massachusetts, such entry duly re- corded, and followed by possession for three years, accomplishes a foreclosure.^^ Where the condition was against the "passing or entry of a decree of foreclosure, it has been held to refer only to a decree of strict foreclosure, not to a decree for sale.^^ § 424a. Condition against commencement of foreclosure proceed- ings. — ^Where an insurance policy contains a condition against the commencement of foreclosure proceedings, the institution of such pro- ceedings will avoid the policy.^" Such a condition is not inconsistent with a clause making the policy payable to the mortgagee in case of loss.^^ Such a condition is valid; and it is held that the service of a petition of foreclosure on the insured is a commencement of the pro- ceedings.^^ In regard to such a policy it was contended in behalf of the mortgagee that the insurers having issued such a policy, with no- tice of the interest of the mortgagee in the property, and with an agreement to pay him the loss, if any, they could not afterward call in question the natural result and incident of such a mortgage title, namely, the foreclosure thereof, but must be held to have agreed to it in advance. But it was held otherwise.^^ The clause, "commencement ^ Mclntire v. Norwich Fire Ins. "" Minnock v. Eurelca P. &o. Ins. Co., 102 Mass. 230, 3 Am. Rep. 458. Co., 90 Micli. 236, 51 N. W. 367; Tlie court says: "The first step to- Pearman v. Gould, 42 N. J. Eq. 4, ward foreclosure is the manifesta- 5 Atl. 811. tion of the intent to foreclose, which * Quinlan v. Providence Washing- is to he indicated in such manner ton Ins. Co., 133 N. Y. 356, 31 N. as the law points out, accompanied E. 31, 28 Am. St 645; Hayes v. with a formal registration in the United States Fire Ins. Co., 132 N. public records. It is very manifest. Car. 702, 44 S. E. 404; Norris v. as we think, that the words 'the Hartford F. Ins. Co., 55 S. Car. 450, entry of a foreclosure,' as used in 74 Am. St. 765. Contra Butz v. the policy, are not to be interpreted Ohio Farmers' Ins. Co., 76 Mich. 263, as meaning exactly the same thing 42 N. W. 1119, 15 Am. St. 316. as a consummated and finished fore- " Meadows v. Hawkeye Ins. Co., closure. The policy provides not 62 Iowa 387, 17 N. W. 600. merely for the transfer but the '"Findlay v. Union Mut. F. Ins. change of title, and the insurer may Co., 74 Vt. 211, 52 Atl. 429, 93 Am. very naturally have considered an St. 885. Compare Sharp v. Scottish entry for foreclosure as a material Union &c. Ins. Co., 136 Cal. 542, change in the title of the assured, 69 Pac. 253. and in his relation to the property. ^ Moore v. Hanover P. Ins. Co., The parties in their contract have 141 N. Y. 219, 36 N. B. 191; Titus taken pains to avoid saying simply v. Glens Falls Ins. Co., 81 N. Y. that 'the foreclosure of a mortgage' 410. The court, in reply to this shall be deemed an alienation, argument, says: "This reasoning There would be no occasion for does not carry conviction to our them to say that, inasmuch as the minds. A provision that a policy law would plainly have said it for shall be void in the case of fore- them." closure proceedings is common in 601 MORTGAGE NOT AX ALIENATION 424a of foreclosure proceedings," has been held to mean the institution of judicial proceedings for the enforcement of the mortgage ; and waivers of legal delays, and other waivers of a nature to facilitate and expe- dite the judicial proceedings, if ever begun, do not constitute of them- selves the commencement of foreclosure proceedings.^* A condition that, if the mortgage be foreclosed without the consent of the insurers, the policy shall be void, is broken by a foreclosure without such consent. But if the insurers are notified of the pendency of the foreclosure suit, and their consent to the same is asked, and no reply is made to the request, the insurers are liable for a loss occurring eight days after such notice and six days after the entry of the decree of foreclosure. There was either a waiver of the condition, or a neglect to refuse the consent as promptly as the occasion required, whereby the mortgagee was deprived of all power to protect himself by new insurance in case of a refusal.^' insurance policies, and we must as- sume that experience has shown to underwriters that such proceedings increase the risk to the insurer. The insurance company might have been willing, for the premium charged, to insure this barn with the mortgage upon it, and yet not willing to insure it in case of pro- ceedings to foreclose the mortgage. It did assent to mortgage, and agree that the loss, if any, be paid to the mortgagee, but it did not assent to continue the insurance in case the risk was increased by proceedings to foreclose the mortgage. Before commencing the foreclosure the plaintiff should have obtained the assent of the insurance company. It might have examined the circum- stances and granted such assent without any conditions, or it might have required an additional pre- mium for the increased risk. It might have refused altogether, and in that case the plaintiff could have delayed his foreclosure until the end of the year, or surrendered the policy and procured insurance else- where. Even if the provision were found to be very inconvenient and embarrassing, there is no help for it. There it is, and we can not take it out of the policy by construction. There are two provisions: one, that liens, without the assent of the com- pany, shall avoid the policy; and another, that foreclosure proceed- ings shall avoid it; and effect must be given to both. According to the construction contended for on the part of the plaintiff, the latter pro- vision would be wholly useless or nullified in every case, because all liens avoid the policy unless as- sented to; and according to that construction, when assented to, fore- closure proceedings may be insti- tuted without avoiding the policy. If such proceedings may be insti- tuted as incident to the mortgage, then they may be carried to their conclusion by a sale and conveyance, and thus, by assenting to a mort- gage, a company may be held to have assented to a change of title of the insured property. Such a construction is unreasonable and unwarranted." But in this case it was held that the insurance com- pany had by its acts waived the for- feiture. ^ Stenzel v. Pennsylvania F. Ins. Co., 110 La. 1019, 35 So. 271, 98 Am. St. 481. ^Armstrong v. Agricultural Ins. Co., 56 Hun (N. Y.) 399, 31 N. Y. St. 201, 9 N. Y. S. 873. § 425 INSUEANCE 602 § 425. Where title becomes absolute by strict foreclosure. — But when the title becomes absolute in the mortgagee by a strict fore- closure, or by a foreclosure effected by entry and possession, or when the title passes to another by a sale under a power contained in the mortgage, or by a sale under a decree of court in a foreclosure suit, the transfer is then complete, and the change of title is an alienation within the terms of the policy of insurance.^* In order to avoid the insurance, the foreclosure must not only be complete, but valid also.^' When, however, there is a right of redemption after sale, and there is no change of possession until the period for redemption has expired, the foreclosure does not operate as "a sale, transfer, or change in title," within the meaning of a policy, so as to defeat a recovery for a loss accruing after the sale, and before the expiration of the time of redemption. ^^ But a verbal promise by the mortgagee to sell the land to the mortgagor, made after the expiration of the period for redemp- tion, without consideration of any kind, will not so continue the mort- gagor's interest as to keep the policy in foree.^' In case, however, the foreclosure is effected by the mortgagor for the benefit of the mort- gagee, who signs the premium note and pays the assessments, fore- closure is not an alienation, if the mortgagee thereby obtains absolute title to the property, as he is already the person liable under the con- tract of insurance.^" § 426. Alteration of ownership. — But a mortgage is a violation of a condition against an "alteration of ownership,"^^ or change of "in- terest" of the assured,^^ as also of a condition against a sale or alien- ation "in whole or in part."'* A breach of such or other like condi- tion avoids the policy ; and the breach is sufficiently established, in the " Essex Sav. Bank v. Merlden F. 144 111. 490, 28 N. E. 919, 19 L. R. A. Ins. Co., 57 Conn. 335, 17 Atl. 930; 114; Richland County Mut. Ins. Co. McKlssick V. Mill Owners' Mut. P. v. Sampson, 38 Ohio St. 672. Ins. Co., 50 Iowa 116; Brunswick "^Loy v. Home Ins. Co., 24 Minn. Sav. Inst. V. Commercial Union Ins. 315, 31 Am. Rep. 346. Co., 68 Maine 313, 26 Am. Rep. 56; =» Essex Sav. Bank v. Merlden P. Campbell v. Hamilton Mut. Ins. Co., Ins. Co., 57 Conn. 335, 17 Atl. 930. 51 Maine 69; Abbott v. Hampden "Esch v. Home Ins. Co., 78 Iowa Mut. P. Ins. Co., 30 Maine 414; Ma- 334, 43 N. W. 229; Bragg v. North comber v. Cambridge Mut. P. Ins. Eastern Mut. Pire Ins. Co., 25 N. H. Co., 8 Cush. (Mass.) 133; McLaren 289. V. Hartford Fire Ins. Co., 5 N. Y. "Edmands v. Mutual Safety Pire 151; Mt. Vernon Mfg. Co. v. Summit Ins. Co., 1 Allen (Mass.) 311, 79 Am. County Mut. Pire Ins. Co., 10 Ohio Dec. 746. St. 347; Georgia Home Ins. Co. v. '^East Texas P. Ins. Co. v. Clarke, Kinnler, 28 Grat. (Va.) 88. 79 Tex. 23, 15 S. W. 166. =' Niagara P. Ins. Co. v. Scammon, '= Abbott v. Hampden Mut. Fire 603 MOETGAGB NOT AN ALIENATION § 426a absence of any evidence to the contrar}', by putting in evidence a cer- tified copy of the record of the mortgage.^* A conveyance and mortgage back to secure the purchase-money is such an alienation as will avoid a policy upon the property, although it is provided that the mortgagee shall retain possession until the purchase-money is paid.**^ But a conveyance by the insured, with a simultaneous reconveyance in trust for the first grantor, is held not to be such an alienation or transfer.^" And so if the sale and reconvey- ance constitute merely a conditional sale, they are regarded as parts of one entire contract, and are held not to be such an alienation as will avoid the policy .^^ A foreclosure of a mortgage is such a transfer of the property as will terminate an insurance conditioned to be void "if any change shall take place in the title or possession of the property," or "if the property is disposed of, so that all interest on the part of the assured has ceased."^* § 426a. Change of title, interest or possession. — The weight of authority supports the view that the execution of a mortgage on the insured premises is not a breach of the condition against a change of title, interest or possession.^^ Nor is this provision violated by the existence of a mortgage on the property at the time the policy was issued, as the condition refers only to subsequent changes.*" Policies sometimes contain conditions requiring the disclosure of existing in- cumbrances, and render the policy void if this is not done; but no such provision appears in the standard forms that are now required by Ins. Co., 30 Maine 414; Bates v. Co., 83 Iowa 402, 49 N. "W. 994; Com. Ins. Co., 13 Ohio Dec. 851. Smith v. Monmouth &c. Ins. Co., 50 "Gould V. Holland Purchase Ins. Maine 96; Judge v. Connecticut F. Co., 16 Hun (N. Y.) 538. Ins. Co., 132 Mass. 521; Rice v. ^'^ German-American Bank v. Agri- Tower, 67 Mass. 426; Loy v. Home cultural Ins. Co., 8 Mo. App. 401; Ins. Co., 24 Minn. 315, 31 Am. Rep. Moulthrop V. Farmers' Mut. F. Ins. 346; Barry v. Hamburg &c. Ins. Co., Co., 52 Vt. 123; Tittemore v. Ver- 110 N. Y. 1, 17 N. B. 405; Conover mont Mut. Fire Ins. Co., 20 Vt. 546. v. Mutual Ins. Co., 1 N. Y. 290, 4 '"' Morrison v. Tennessee Mar. &c. How. Pr. 3'65; Sun Fire Office v. Ins. Co., 18 Mo. 262, 59 Am. Dec. 299. Clark, 53 Ohio St. 414, 42 N. B. 248, =' Tittemore v. Vermont Mut. Fire 38 L. R. A. 562; Byers v. Farmers' Ins. Co., 20 Vt. 546. Ins. Co., 35 Ohio St. 606, 35 Am. ^Bishop V. Clay F. &c. Ins. Co., Rep. 623; Peck v. Girard &c. Ins. 45 Conn. 430. Co., 16 Utah 121, 51 Pac. 255, 67 Am. ™ Commercial Ins. Co. v. Spank- St. 600; Hartford &c. Ins. Co. v. neble, 52 111. 53, 4 Am. Rep. 582; Lasher Stocking Co., 66 Vt. 439, 29 Forehand v. Niagara Ins. Co., 58 111. Atl. 629, 44 Am. St. 859. App. 161; Germania F. Ins. Co. v. "Morotock Ins. Co. v. Rodefer, 92 Stewart, 13 Ind. App. 627, 42 N. E. Va. 747, 24 S. E. 393, 53 Am. St. 846. 286; Taylor v. Merchants' &c. Ins. § 427 INSUEANCE S04 statute in many states. Of course the execution of a mortgage for tlie purpose of paying off a mortgage which was in existence at the time the policy was executed is not a breach of this provision against the creation of a future incumbrance.^^ A mortgage on the insured prop- erty by a person who holds the legal title will not avoid a policy under a prohibition against changes in the title without the consent of the company indorsed upon the policy, if such mortgage is merely the obligation of the mortgagor and not of the insured.^^ Where the policy contains a condition that it shall be void if there is any change in the title, or the creation of an incumbrance, and to which is at- tached a mortgage slip protecting the rights of a mortgagee against a breach of condition by the mortgagor, the rights of such mortgagee are not affected by a transfer of the title or the creation of an incum- brance by the mortgagor.*^ §427. Effect of conveyance subsequent to assignment of policy to mortgagee. — If the mortgagor has already assigned the policy to the mortgagee with the consent of the insurers, liis subsequent trans- fer of the equity of redemption is no breach of the stipulation in the policy against alienation, so far as the assignee is concerned.** This view has been criticized in some courts as contrary to the prin- ciple of public policy, that no man shall be allowed to bargain for an advantage to arise from the destruction of property.*^ Where a mortgagor sells the mortgaged property and indorses an assignment of the policy of insurance to the purchaser, who agrees to pay the debt, and assigns to him the policy properly indorsed thereon, and both grantor and grantee request the mortgagee, who is in posses- sion and control of the policy, to secure the consent of the insurance company to such assignment, and the mortgagee neglects so to do, by reason whereof the insurance company is relieved from all liability to such grantee, and the mortgaged property is afterward wholly or partially destroyed by fire, the grantee may set up a counterclaim for damages in an action brought by the mortgagee to foreclose the mort- " Aurora P. Ins. Co. v. Eddy, 55 Ins. Co., 25 "Wash. 447, 65 Pac. 785, 111. 213; McKibban v. Des Moines 55 L. R. A. 165. &c. Ins. Co., 114 Iowa 41, 86 N. W. •" Fogg v. Middlesex Mut. Fire Ins. 38; Kosbland v. Home Mut. Ins. Co., Co., 10 Cush. (Mass.) 337; Foster v. 31 Ore. 321, 49 Pac. 864, 50 Pac. 567. Equitable Mut. Fire Ins. Co., 2 Gray "Hoose v. Prescott Ins. Co., 84 (Mass.) 216; Bragg v. North East- Mich. 309, 47 N. W. 587, 11 L. R. A. ern Mut. Fire Ins. Co., 25 N. H. 289; 340. Boynton v. Clinton &c. Mut. Ins. Co., *= Phoenix Ins. Co. v. Omaha Loan 16 Barb. (N. Y.) 254. &c. Co., 41 Nebr. 834, 60 N. W. 133, « Kernochan v. New York Bowery 25 L. R. A. 679; Boyd v. Thuringia F. Ins. Co., 17 N. Y. 428. 605 MORTGAGE NOT AN ALIENATION § 437 gage. This rule is equally applicable to an action to foreclose a mort- gage by one holding it, by assignment, in trust for certain outstanding obligations of the mortgagee, where the policy has been left in the hands of the mortgagee to be cared for and renewed, if necessary.*" Where a policy of insurance payable to the mortgagee provided that an unauthorized change in the title should vitiate the policy, in an action on the policy by the mortgagee it was held that evidence of a conveyance of the property to an officer of the mortgage company made to avoid a foreclosure was not objectionable as varying convey- ance by parol.*'' It is held that the mortgage clause attached to the policy is a sep- arate contract between the insurer and the mortgagee, and an alien- ation by the mortgagor or a failure of the mortgagee to give notice of the change of ownership, as required by a condition in the policy, will not avoid the insurance.*^ And where the policy contains such clause, an alienation by the mortgagor does not affect the rights of the mort- gagee's assignee.*' « First National Bank v. Renn, 63 N. "W. 828, 51 Am. St. 500; Kabrich Kans. 334, 65 Pac. 698. v. Sta,te Ins. Co., 48 Mo. App. 393; ^' Northern Assur. Co. v. Chicago Phoenix Ins. Co. v. Omaha L. &c. Mut. Bldg. Assn., 198 111. 474, 64 N. Co., 41 Nebr. 834, 60 N. W. 133, 25 E. 979. L. R. A. 679; Southern Bldg &c. ■" City Five Cents Sav. Bank v. Assn. v. Pennsylvania F. Ins. Co., 23 Pennsylvania F. Ins. Co., 122 Mass. Pa. Super. Ct. 88. 165; Pioneer Sav. &c. Co. v. St. Paul *" Whiting v. Burkhardt, 178 Mass. F. &c. Ins. Co., 68 Minn. 170, 70 N. 535, 60 N. E. 1, 52 L. R. A. 788, 86 W. 979; Washburn Mill Co. v. Fire Am. St. 503. Assn. Philadelphia, 60 Minn. 68, 61 CHAPTEE XI FIXTUKES I. Rules for Determining What Fixtures a Mortgage Covers^ §§ 428-443 II. Machinery in Mills, §§ 444-451 III. Rolling Stock of Railways, §§ 452-453a IV. Remedies for Removal of Fixtures, §§ 453-455 I. Rules for Determining What Fixtures a Mortgage Covers Section 428. In general. 429. Intention — ^Adaptation to use. 429a. Criterion for determining character of fixture. 430. Effect of enumerating fixtures in mortgage. 431. Effect of mortgage of chattels or agreement for removal. 431a. Character of personalty relm- pressed upon chattels after annexation. 432. Hired fixtures. 433. Buildings erected on mortgaged premises. 433a. Fixtures in and about a house. 434. Nursery stock. 435. Fixtures annexed before execu- tion of mortgage. 436. Chattels annexed after execu- tion of mortgage. 436a. Agreement that chattels may retain character as person- alty. Section 436b. Rights of vendor or mortgagee of chattels as against exist- ing mortgage of realty. 436c. Rights of mortgagee of realty as to chattels annexed prior to mortgage. 436d. Effect of after acquired prop- erty clause. 436e. Where new fixtures replace old. 437. Rights of equitable mortgagee to hold fixtures. 438. Waiver of claim to fixtures by mortgagee of realty. 439. Rights of mortgagee of realty to fixtures annexed by lessee after mortgage. 440. Right of mortgagee of tenant's fixtures to remove same after surrender of lease. 441. Removal of trade or manufac- turing fixtures by tenant. 442. Vermont rule. 443. Statutory provisions. § 428. In general.^ — A mortgage of real property, as a general rule, carries as part of the security all fixtures belonging to the realty, without any special mention of them being made in the conveyance. In determining what chattels when annexed to the land become fix- tures, and therefore bound by a mortgage, very much the same rules ^ See further on this subject, Jones Jones on Corporate Bonds and Mort- on Chattel Mortgages, §§ 123-137; gages, §§ 70-79, 136-144, and Jones Jones on Liens, §§ 1384-1388; and on Real Property, §§ 1665-1769. 606 607 WHAT COVERED BY MORTGAGE § 428 apply as between a grantor and his grantee in case of an absolute con- veyance,^ but although in the case of a deed the construction is gen- erally favorable to holding that things attached to the land are part and parcel of the realty rather than personalty, yet in the construction of a mortgage even greater favor in the same way seems to be shown the mortgagee. The reason seems not to be far away. When the ques- tion arises under a mortgage, the mortgagor always has the right to redeem, and in this way to gain the benefit of any addition made to the realty; and any one claiming under him has only his rights, and acquires these with full knowledge of the incumbrance and of the con- dition of the property. All buildings and other fixtures annexed to the freehold become part of it, and inure to the benefit of those who are entitled to it ; both to the mortgagee as an increased security for his debt, and to the mortgagor to the same extent as enhancing the value of his equity of redemption.^ The latter can obtain the full benefit of all improve- ments he has made by paying his debt and regaining his estate by re- demption. This rule, and the exceptions to it as well, are applicable to deeds of trust equally with mortgages.* A building erected upon the mortgaged land without the consent of the mortgagee may be sold by him as a part of the mortgaged prop- erty, and his right is not affected by the fact that the building was erected under an agreement with the mortgagor that it should be and remain the personal property of the party erecting , it.^ The mortgagor, for most purposes, is regarded as the owner of the ' McFadden v. Allen, 134 N. Y. v. Jackson, 98 111. 78; Wood v. ,Whe- 489, 32 N. E. 21; Snedeker v. War- len, 93 111. 153; Peoria Stone &c. ring, 12 N. Y. 170; Laflin v. Griffiths, Works v. Sinclair, 146 Iowa 56, 124 35 Barb. (N. Y.) 58; Gardner v. N. W. 772; Coltharp v. West, 127 Finley, 19 Barb. (N. Y.) 317; Main La. 430, 53 So. 675; Butler v. Page, v. Schwarzwaelder, 4 E. D. Smith 7 Mete. (Mass.) 40; Hunt v. Hunt, (N. Y.) 273; Robinson v. Preswick, 14 Pick. (Mass.) 374, 25 Am. Dec. 3 Edw. Ch. (N. Y.) 246; Poote v. 400; Graeme v. Cullen, 23 Grat. Gooch, 96 N. Car. 265, 60 Am. Rep. (Va.) 266. 411; Longstaff V. Meagoe, 2 Adol. & * Moore v. Valentine, 77- N. Car. El. 167. See also Williams v. Chi- 188; Graeme v. Cullen, 23 Grat. cage Exhibition Co., 188 111. 19, 58 (Va.) 266. See also Hill v. Farmers' N. E. 611; Pfluger v. Carmichael, 54 &c. Nat. Bank, 97 U. S. 450, 24 L. ed. App. Dlv. 153, 66 N. Y. S. 417; Kin- 1051. near v Scenic R. Co., 223 Pa. 390, ^ Meagher v. Hayes, 152 Mass. 228, 72 Atl. 808; McCrillis v. Cole, 25 R. 25 N. E. 105, 23 Am. St. 819; Guern- I. 156, 55 Atl. 196, 105 Am. St. 875; sey v. Wilson, 134 Mass. 482; Cole Gunderson v. Swarthout, 104 Wis. v. Stewart, 11 Cush. (Mass.) 181; 186, 80 N. W. 465, 76 Am. St. 860. Butler v. Page, 7 Mete. (Mass.) 40. 'Williams v Chicago Exhibition See also Ekstrom v. Hall, 90 Maine Co., 188 111. 19, 58 N. E. 611; Baird 186, 38 Atl. 106. § 429 FIXTUEBS 608 estate; indeed, he is so regarded, for all purposes, except so far as it is necessary to recognize the mortgagee as legal owner for the purposes of his security. The improvements, therefore, which the mortgagor, remaining in possession and enjoyment of the mortgaged premises, makes upon them, in contemplation of law he makes for himself, and to enhance the general value of the estate, and not for its temporary enjoyment.'' Where a mortgagee is entitled to fixtures attached to the mortgaged premises, a purchaser at a foreclosure sale under such mortgage will also be entitled to the fixtures, though he knew that the vendor of the property attached attempted to reserve title to same.'' § 429. Intention — Adaptation to use. — The intention with which an article of personal property is attached to the realty, whether for temporary use or for permanent improvement, has within certain lim- its quite as much to do with the determination of the question whether it has thereby become a permanent fixture, as has the way and manner in which it is attached.* In the more recent cases the intention with which a chattel is attached to the realty has become more and more "Winslow V. Merchants' Ins. Co., 426; Manwaring v. Jenison, 61 Mich. 4 Mete. (Mass.) 306, 38 Am. Dec. 117, 27 N. "W. 899; Robertson v. Cor- 368; Gaffield v. Hapgood, 17 Pick, sett, 39 Mich. 777; Wolford v. Bax- (Mass.) 192, 28 Am. Dec. 290; Hunt ter, 33 Minn. 12, 53 Am. Rep. 1; V. Hunt, 14 Pick. (Mass.) 374, 25 Perkins v. Swank, 43 Miss. 349; Am. Dec. 400. Rogers v. Brokaw, 25 N. J. Bq. 496; ' Crocker-Wheeler Co. v. Genessee Quinby v. Manhattan Cloth &c. Co., Recreation Co., 134 N. Y. S. 61. 24 N. J. Eq. 260; McRea v. Central « Holly Mfg. Co. V. New Chester Nat. Bank, 66 N. Y. 489; Voorhees Water Co., 48 Fed. 879; Rogers v. v. McGinnis, 48 N. Y. 278; Potter v. Prattville Mfg. Co., 81 Ala. 483, 1 Cromwell, 40 N. Y. 287, 100 Am. So. 643, 60 Am. Rep. 171; Tillman Dec. 485; Bishop v. Bishop, 11 N. V. Lacy, 80 Ala. 103; Lavenson v. Y. 123, 62 Am. Dec. 68 (hop poles); Standard Soap Co., 80 Cal. 245, 22 Hart v. Sheldon, 34 Hun (N. Y.) 38; Pac. 184; Pratt v. Whittier, 58 Cal. Sullivan v. Toole, 26 Hun (N. Y.) 126; Seedhouse v. Broward, 34 Fla. 203; Foote v. Gooch, 96 N. Car. 265, 509, 16 So. 425; Williams v. Chicago 1 S. B. 525, 60 Am. Rep. 411; Har- Exhibitlon Co., 188 111. 19, 58 N. B. mony Bldg. Assn. v. Berger, 99 Pa. 611; Arnold v. Crowder, 81 111. 56, St. 320; Morris' Appeal, 88 Pa. St. 25 Am. Rep. 260; Kelly v. Austin, 46 368; Kisterbock v. Lanning, 19 111. 156, 92 Am. Dec. 242; Jones v. Wkly. N. Cas. (Pa.) 54, 7 Atl. 596; Ramsey, 3 Bradw. (111.) 303; John- Padgett v. Cleveland, 33 S. Car. 339, son V. Mosher, 82 Iowa 29, 47 N. W. 11 S. B. 1069; Sweetzer v. Jones, 35 996; Ottumwa Woolen Mill Co. v. Vt. 317, 82 Am. Dec. 639; Hill v. Hawley, 44 Iowa 57, 24 Am. Rep. Wentworth, 28 Vt. 428, per Bennett, 719; Smith Paper Co. v. Servin, 130 J.; Taylor v. Collins, 51 Wis. 123, Mass. 511; Studley v. Ann Arbor 8 N. W. 22. Sav. Bank, 112 Mich. 181, 70 N. W. 609 WHAT COVERED BY MORTGAGE § 429 the decisive test whether or not the chattel has become a part of the realty." Such intention may be inferred from circumstances.^" If the article is something necessary for the proper enjoyment of the estate, it may be presumed that it was annexed for its permanent improvement, and therefore that it goes to the benefit of the mort- gagee. The fixtures may be so adapted to the building in which they are placed, and to the purposes for which the building is to be used, as to show clearly that they were designed to be permanent.^"- Such, for instance, are the fixtures in a manufactory necessary for furnish- ing the motive power, or for the proper carrying on of the business." A mortgage of a machine-shop includes a lathe and other fixtures necessary for the prosecution of the business of the shop.^^ A mort- gage of a building erected for a steam saw-mill, and which would be of little use for any other purpose, embraces also the boilers, engines, saws, gearing and machinery necessary for the working of the mill, and without which it would be incomplete.'^* Boilers, engines, shaft- 'Hill V. Farmers' &c. Nat. Bank, 97 U. S. 450, 24 L. ed. 1051; New York Life Ins. Co. v. Allison, 107 Fed. 179, 46 C. C. A. 229; Cboate v. Kimball, 56 Ark. 55, 19 S. W. 108; Mill Co. V. Hawley, 44 Iowa 57; Readfield Telephone &c. Co. v. Cyr, 95 Maine 287, 49 Atl. 1047; Smith V. Bay State Sav. Bank, 202 Mass. 482, 88 N. E. 1086; Maguire v. Park, 140 Mass. 21, 1 N. B. 750; Hubbell V. East Cambridge &c. Sav. Bank, 132 Mass. 447, 42 Am. Rep. 446; Smith Paper Co. v. Servin, 130 Mass. 511; Allen v. Mooney, 130 Mass. 155; Southbridge Sav. Bank v. Exeter Mach. Works, 127 Mass. 542; Turner V. Wentworth, 119 Mass. 459; Cos- grove V. Troescher, 62 App. Div. 123, 70 N. y. S. 764; McRea v. Central Nat. Bank, 66 N. Y. 489; Cooper v. Harvey, 16 N. Y. S. 660 ; Alberson v. Elk Creek Gold-Min. Co., 39 Ore. 552, 65 Pac. 978; Shelton v. Finer (Tex. Civ. App.), 126 S. W. 65; Hopewell Mills v. Taunton Sav. Bank, 150 Mass. 519, 23 N. E. 327. Knowlton, J., referring to some of these cases, says: "These cases seem to recognize the true principle on which the decisions should rest, only it should be noted that the in- tention to be sought is not the un- disclosed purpose of the actor, but the intention implied and manifested 39 — Jones Mtg. — Vol. I. by his act. It is an intention which settles, not merely his own rights, but the rights of others who have or who may acquire interests in the property. They can not know his secret purpose; and their rights de- pend, not upon that, but upon the inferences to be drawn from what is external and visible. In cases of this kind, every fact and circum- stance should be considered which tends to show what intention, in reference to the relation of the ma- chine to the real estate, is properly imputable to him who put it in posi- tion." "Equitable Guarantee &c. Co. v. Knowles, 8 Del. Ch. 106, 67 Atl. 961; Young V. Chandler, 102 Maine 251, 66 Atl. 539. "Equitable Trust Co. v. Christ, 2 Flip. (U. S.) 699. " William Firth Co. v. South Caro- lina Loan &c. Co., 122 Fed. 569; Till- man V. DeLacy, 80 Ala. 103; Milli- kin V. Armstrong, 17 Ind. 456; Feeder v. Van Winkle, 53 N. J. Eq. 370, 33 Atl. 399; Keve v. Paxton, 26 N. J. Eq. 107; Crane v. Brigham, 11 N. J. Eq. 29. " Hoskin v. Woodward, 45 Pa. St. 42. See also Triumph Blec. Co. v. Patterson, 211 Fed. 244. "Quinby v. Manhattan Cloth &c. Co., 24 N. J. Eq. 260; Brennan v. § 439 FIXTURES 610 ing and steam-pipes for heating a large bnilding are covered by a mortgage of the realty.^^ The principles by which to determine whether a personal article after being attached to the realty still remains a chattel are two : first, the mode and degree of the annexation; and, second, the purpose of it.^" The first can not of course be defined with any exactness. The modes of annexation may be almost as numerous as the instances that occur. The degrees of physical force with which, the chattels are an- nexed may be as many as the modes of annexation. The degree may be very slight, and yet be sufficient to make the article a fixture and part of the realty. As the result of the numerous cases, it is safe to say that this is the less important part of the criterion. If the intent is manifest that the chattel is attached to the estate for its permanent improvement, the mode and degree in which it is attached are of lit- tle importance. In a case before the English Court of Queen's Bench,^^ in regard to a hydraulic press placed in a factory, but not essential to its work, Mr. Justice Mellor said: "If we could see, as in the gas- works case,'^^ an intention that the chattel should remain fixed to the factory so long as the factory remained a factory, then we might think the press to be sufficiently fixed to become a part of the freehold; but we see no such intention." While it is true, as a general proposition, that the intention of the parties is to be determined by a construction of the language used in the conveyance, it is also undoubtedly true that collateral agreements extrinsic to tjie conveyance may control the question as to what arti- cles pass as a part of the realty conveyed.^* It has been held that this question may also be controlled by evidence of other transactions Whitaker, 15 Ohio St. 446. See also gagor and mortgagee they are not Humes v. Higman, 145 Ala. 215, 40 removable, though the mortgagor So. 128. remain in possession. I therefore "" Ex parte Montgomery, 4 Irish think that the possibility of re- Ch. 520. In this case the Lord Chan- moval is not so much the test as cellor said: "I find that all the the nature of the article." See also cases come around to the same ques- Young v. Hatch, 99 Maine 465, 59 tlon, namely, what are fixtures? Atl. 950. Now, it appears to me that this does " Hellawell v. Eastwood, 6 Exch. not at all depend upon the power of 295; Clarke v. Crownshaw, 3 B. & removal; the owner in fee has the Ad. 804. right to remove all fixtures; the " Parsons v. Hind, 14 W. R. 860. tenant has a right to remove fix- " Regina v. Lee, L. R. 1 Q. B. 241, tures erected for trade purposes; 14 W. R. 311. but until they are severed they are "Foster v. Prentiss, 75 Maine 279; still fixtures, and as between mort- Elliott v. Wright, 30 Mo. App. 217. 611 WHAT COVEEED BY MORTGAGE § 42J)a which show that the intention of the parties to the conveyance was that particular fixtures should be treated as personalty.^" § 429a. Criterion for determining character of fixture. — The cri- terion adopted by several courts for determining whether property ordinarily regarded as personal becomes a part of the realty is the united application of the following requisites: first, actual annexa- tion to the realty, or something appurtenant thereto; second, appro- priateness to the use or purpose of that part of the realty with which it is connected; third, the intention of the party making the annexation to make the article a permanent accession to the freehold, — this in- tention being inferred from the nature of the article affixed, the rela- tion and situation of the party making the annexation, the structure and mode of annexation, and the purpose or use for which the annex- ation has been made.^^ It is in the application of the criterion that the courts chiefly differ. While some look to physical attachment to the realty as the chief requisite of a fixture, others regard chiefly the intention of the party making the annexation, and hence arises an irreconcilable conflict of authorities. The mode and degree of annexation may determine the intention. Especially is this the case when an article is attached so as to be an inseparable and permanent part of the realty. When the an- nexation is less complete, it may still afford convincing evidence of the intention; as, for instance, where the building is constructed ex- pressly to receive the machine or other article, and this could not be removed without material injury to the building, or where the article would be of no value for use in that particular building, or could not ^Zeller v. Adam, 30 N. J. Eq. 421; v. Owen (N. J.), 19 Atl. 540; Spei- Fortman v. Goepper, 14 Ohio St. den v. Parker, 46 N. J. Eq. 292, 19 558. Atl. 21; McMillan v. New York Wa- '^ So stated in TeafE v. Hewitt, 1 ter Proof Paper Co., 29 N. J. Eq. 610; Ohio St. 511, 59 Am. Dec. 634, and Williamson v. New Jersey Southern expressly adopted in Potter v. Crom- R. Co., 29 N. J. Eq. 311; Blancke v. well, 40 N. Y. 287, 100 Am. Dec. 485; Rogers, 26 N. J. Eq. 563; Quinby v. Rogers v. Prattville Mfg. Co., 81 Manhattan Cloth &c. Co., 24 N. J. Ala. 483, 1 So. 643, 60 Am. Rep. 171; Eq. 260; McRea v. Central Nat. Tillman v. De Lacy, 80 Ala. 103; Bank, 66 N. Y. 489; Cooper v. Har- Choate v. Kimball, 56 Ark. 55, 19 S. vey, 16 N. Y. S. 660; Brennan v. W. 108; Capen v. Peckham, 35 Conn. Whitaker, 15 Ohio St. 446. See also 88; Sword v. Low, 122 111. 487, 13 William Firth Co. v. South Carolina N. E. 826; Blnkley v. Forkner, 117 Loan &c. Co., 122 Fed. 569, 59 C. C. Ind. 176, 19 N. E, 753; Dudley v. A. 73; In re Goldville Mfg. Co., 118 Hurst, 67 Md. 44, 8 Atl. 901; Thomas Fed. 892; State Security Bank v. V. Davis, 76 Mo. 72, 43 Am. Rep. 756; Hoskins, 130 Iowa 339, 106 N. W. State Savings Bank v. Kercheval, 65 764, 8 L. R. A. (N. S.) 376; Atlantic Mo. 682, 27 Am. Dec. 310; Doughty Safe Deposit &c. Co. v. Atlantic City § 429a FIXTUEES 612 be removed without being destroyed or greatly damaged.^^ The ques- tion thus becomes usually a question of mixed law and fact.^^ If the description of the property expressly includes buildings and engines, boilers, and fixed machinery appurtenant to the same, eflEeet must be given to such description of the fixtures, for it is obvious that by their use property was intended and included which was no part of the realty, and which would not pass by a mortgage upon it alone.^* A custom which is general in the place where the land lies, to treat certain articles as removable chattels, when they are attached to land merely for temporary use, may serve to determine the intention of the parties in any particular case, for the reason that it must be pre- sumed that they contracted with reference to such custom. Thus, where, after the execution of a mortgage, the mortgagor placed on the premises a boiler, saw-rig, shingle-mill, and planer, which could be removed without injury to the freehold, though he did not disclose to the mortgagee his intention that they should not become a permanent accession to the freehold, yet it was held, as it was shown to be cus- tomary to put such articles on land and remove them at will, that they were not fixtures, but chattels which the mortgagor or those claiming under him might remove.^^ It has been held that a custom to put certain articles upon premises for temporary use and to remove them when desirable, prevented their becoming fixtures when placed on the premises by a mortgagor after the making of the mortgage, since there was an absence of the inten- tion requisite to make them part of the realty.^^ So a gas stove and window shades running on rollers, placed by a mortgagor in an ordi- nary dwelling-house for a single family, not shown to have been in- tended to be occupied or used differently from common dwelling- Laundry Co., 64 N. J. Bq. 140, 53 Bank, 150 Mass. 519, 23 N. E. 327, Atl. 212; Pilley v. Christoplier, 39 15 Am. St. 235; Southbridge Sav- "Wash. 22, 80 Pac. 834, 109 Am. St. ings Bank v. Mason, 147 Mass. 500, 853. 18 N. E. 406; Carpenter v. Walker, =^ Equitable Trust Co. v. Christ, 2 140 Mass. 416, 5 N. E. 160; Maguire Flip. (U. S.) 599; Western Union v. Park, 140 Mass. 21, 1 N. B. 750; Tel. Co. V. Burlington &c. R. Co., 11 Allen v. Mooney, 130 Mass. 155; Tur- Fed. 1; Tillman v. De Lacy, 80 Ala. ner v. Wentworth, 119 Mass. 459. 103; Sword v. Low, 122 111. 487, 13 ^Beaupre v. Dwyer, 43 Minn. 485, N. E. 826; Campbell v. Roddy, 44 N. 45 N. W. 1094. J. Eq. 244, 14 Atl. 279, 6 Am. St. ="'Clioate v. Kimball, 56 Ark. 55, 889; McRea v. Central Nat. Bank, 19 S. W. 108. 66 N. Y. 489; Ford v. Cobb, 20 N. Y. ^Bemis v. First Nat. Bank, 63 344; Henkel v. Dillon, 15 Ore. 610, Ark. 625, 40 S. W. 127; Choate v. 17 Pac. 148. Kimball, 56 Ark. 55, 19 S. W. 108. ^Hopewell Mills v. Taunton Sav. 613 WHAT COVEEED BY MORTGAGE § 431 houses, are personal property, there being nothing to show that he intended to annex them as a permanent addition to the real estate.^' § 430. Effect of enumerating fixtures in mortgage. — The fact that a mortgage enumerates some fixtures, hut does not enumerate others, which afterward become the subject of dispute, affords reason to sup- pose that these were intentionally omitted in the mortgage deed, and did not pass by it f^ upon the principle, "Expressio unius est exclusio alterius." This principle is illustrated in a case where it became necessary to construe a deed which conveyed two dwelling-houses and a foundry, and it was held that if the granting part of the deed had mentioned only the dwelling-houses and the foundry, the fixtures in each would have passed ; but as the deed went on to say "together with all grates, boilers, bells and other fixtures in and ab,out the said two dwelling- houses,'"' while no mention was made of fixtures in the foundry, those of the latter did not pass.^' § 431. Effect of mortgage of chattels or agreement for removal. — The fact that a chattel has been mortgaged before, or at the time, it was attached to the realty, has weight as an implied agreement be- tween the parties in leading to the determination that such mortgage carries the fixture as against a mortgage of the realty already existing but is not by any means conclusive;^" and an agreement made by the mortgagor with a third person to whom the chattels belonged, that they should remain his after they are affixed to the realty until paid for, or that they should be subject until paid for to his right to remove them, has been held to have the same effect. In a case before the Court "Hook V. Bolton, 199 Mass. 244, 345; Carpenter v. Allen, 150 Mass. 85 N. E. 175, 17 L. R. A. (N. S.) 281, 22 N. E. 900; Carpenter v. 699, 127 Am. St. 487; Hall v. Law Walker, 140 Mass. 416, 5 N. E. 160; Guarantee &c. See, 22 Wash. 305, BurrlU v. Wilcox Lumber Co., 65 60 Pac. 643, 79 Am. St. 935. Mich. 571, 32 N. W. 824; Edwards =» Trappes v. Harter, 2 C. & M. 153. &c. Lumber Co. v. Rank, 57 Nebr. =»Hare v. Horton, 5 B. & Ad. 715, 323, 77 N. W. 765, 73 Am. St. 514; 27 B C L 160. But see Leonard v. Arlington Mill &c. Co. v. Yates, 57 Stlckney, 131 Mass. 541. Nebr. 286, 77 N. W. 677; Sheldon =" United States v. New Orleans v. Edwards, 35 N. Y. 279; Ford v. Railroad, 12 Wall. (U. S.) 362, 20 Cobb, 20 N. Y 344; Henry v. Von L ed 434- Tibbetts v. Moore, 23 Brandenstem, 12 Daly (N. Y.) 480; Cal 208- Sword v. Low, 122 111. 487, Hart v. Sheldon, 34 Hun (N. Y.) 13 N E 826- Binkley v. Forkner, 38; Case Mfg. Co. v. Carver, 45 117 Ind 176 19 N. B. 753; Miller Ohio St. 289, 13 N. E. 493. See also V Wilson, 71 Iowa 610, 33 N. W. Bass Foundry v. Gallentine, 99 Ind. 128- First Nat. Bank v. Elmore, 52 525, where it was held a mortgage Iowa 541 3 N W. 547; Eaves v. of the realty attaches to machinery Estes lo' Kans. 314, 15 Am. Rep. attached to it under an agreement § 431 FIXTURES 61J: of Appeals of New York/^ it was held that such an agreement pre- served the character of the chattels as personal property when they would otherwise have become fixtures so as to pass by a mortgage of the realty. But it was said that, while there was no doubt that the owner of the land intended that the articles, which were an engiiie and boilers, should ultimately become a part of the realty, and be perma- nently affixed to it, yet this intention was subordinate to the prior in- tention expressed by the agreement, that the act of annexing them should not change their character as chattels until the price should be fully paid. If a person who takes a mortgage upon real property has actual notice of a mortgage upon chattels which are afterward annexed to the mortgaged realty, he can not hold such annexed chattels under his mortgage as against the holder of the chattel mortgage.^^ The execution of a chattel mortgage by the owner of the land, upon machinery which he afterward places in a building thereon, is re- garded as an unequivocal declaration of his intention that the act of annexation shall not change or take away the character of the machin- ery as personalty until the debt secured by the mortgage has been fully paid.^' The mortgagee of the chattels has priority, so far as that can that the title to the machinery only to inquire at the county clerk's should not pass until it was paid office for liens on real estate, and for; Folsom v. Moore, 19 Maine was not required to extend her in- 252; Zeller v. Adam, 30 N. J. Eq. quiry to the town clerk's office in 421; Fortman v. Goepper, 14 Ohio search of chattel mortgages. * * * St. 558; Alherson v. Elk Creek Gold Upon the facts in this case the fll- Min. Co., 30 Ore. 552, 65 Pac. 978; ing of the defendant's chattel mort- Jones on Chattel Mortgages, §§ 124- gage was notice to the plaintiff that 137. See post § 445. the lien existed." "Tifft v. Horton, 53 N. Y. 377, ^ Holly Mfg. Co. v. New Chester 13 Am. Rep. 537. This case is not Water Co., 48 Fed. 879; Wood v. entirely in accord with the case of Holly Mfg. Co., 100 Ala. 326, 46 Am. Voorhees v. McGinnis, 48 N. Y. 278, St. 56, 13 So. 948; Ware v. Hamil- which related to an engine and ton Brown Shoe Co., 92 Ala. 151, 9 boilers which were covered by a So. 136; Vann v. Lumsford, 91 Ala. chattel mortgage. It seems, how- 576, 8 So. 719; Tillman v. De Lacy, ever, that part of the articles had 80 Ala. 103; Harris v. Powers, 57 been attached to the realty before Ala. 139; Sword v. Low, 122 III. the execution of the chattel mort- 487, 13 N. B. 826; Binkley v. Fork- gage, ner, 117 Ind. 176, 19 N. E. 753, 3 »^ Rowland V. West, 17 N. Y. S. 330. L. R. A. 33; Campbell v. Roddy, "On the question of notice, it is 44 N. J. Eq. 244, 14 Atl. 279, 6 Am. undoubtedly true that, so far as the St. 889; Tifft v. Horton, 53 N. Y. plaintiff was dealing with real es- 377, 13 Am. Rep. 537; Monarch tate in taking her mortgage, she Laundry v. Westbrook, 109 Va. 382, was not affected with notice by the 63 S. E. 1070; Tunis Lumber Co. v. filing of the chattel mortgage. As R. G. Dennis Lumber Co., 97 Va. the court said at the circuit, as the 682, 34 S. E. 613. purchaser of real estate she need 615 WHAT COVERED BY MORTGAGE § 431 be given him ■without impairing the security previnusly given to the mortgagee of the land.^* If the real estate is subject to a mortgage when chattels are an- nexed to it, which are not at the time subject to any personal mort- gage, or to any equitable agreement for their subsequent removal, the chattels, if of the nature to become fixtures, become so immediately upon being attached to the land ; and any chattel mortgage, or agree- ment that the articles should be considered personal property, will have no efiect.^^ The chattels once, having been annexed to the realty and become bound by a mortgage of the realty can not be dissevered, except with the consent of the mortgagee. In a ease where machinery for a saw-mill was sold to the owner under a condition that it should remain the property of the vendor until paid for, and after a part of it had been set up in the mill a mortgage was made of the mill premises, the mortgagee having no notice of this agreement, it was held that the part of the machinery which had been put up in the mill passed by the mortgage; but that as to such of the machinery as was then lying in the mill yard the mortgagee gained no title as against the unpaid vendor.^* The giving of a bill of sale or chattel mortgage on articles attached to the realty at the same time as the giving of a deed or real estate mortgage may have been done for the purpose of guarding against a mistake as to the character of the property.'^ It has been held that a purchase-money mortgage given on the sale of a large manufacturing plant, and which expressly includes fixtures, covered all articles necessary or convenient for the transaction of the business, although the mortgagee had conveyed part of the machinery to the purchaser by a bill of sale.'* It has been said that whether a chattel mortgage given to secure the purchase-price of property annexed to' real estate shall be postponed to a prior mortgage on the realty "must depend upon the inquiry whether ^Posdick V. Schall, 99 U. S. 235, Bank, 112 Mich. 181, 70 N. W. 426; 25 L. ed. 339; Meagher v. Hayes, 152 Miles v. McNaughton, 111 Mich. 350, Mass. 228, 25 N. E. 105, 23 Am. St. 69 N. W. 481; McRea v. Central 819; McFadden v. Allen, 134 N. Y. Nat. Bank, 66 N. Y. 489; Trow- 489, 32 N. E. 21, 19 L. R. A. 446. bridge v. Hayes, 21 Misc. 234, 45 =' United States v. New Orleans N. Y. S. 635; Homestead Land Co. R., 12 "Wall. (U. S.) 362, 20 L. ed. v. Becker, 96 Wis. 206, 71 N. W. 434; Vanderpoel v. Van Allen, 10 117; Stevens v. Barfoot, 13 Ont. Barb. (N. Y.) 157. App. 366. ""Miller v. Wilson, 71 Iowa 610, ""Cooper v. Harvey, 62 Hun 618, 33 N. W. 128; Davenport v. Shants, 41 N. Y. St. 594, 16 N. Y. S. 660; 43 Vt. 546. Morris' Appeal, 88 Pa. St. 368. "' Studley v. Ann Arbor Sav. § 431a " siXTDEES 616 or not the preservation of the rights of the holder of the chattel mort- gage ■will impair or diminish the security of the real estate mortgagee as it was when he took it. If it will not, then it would be inequitable that the latter should defeat or destroy the security of the former. If it will, then it was the folly or misfortune of the holder of the chattel mortgage that he permitted the property to be annexed to a freehold from which it can not be removed without diminishing or impairing an existing mortgage thereon."^'' §431a. Character of personalty reimpressed upon chattels after annexation. — By agreement of the persons interested, the character of personalty may be reimpressed upon chattels after this has been lost by annexation to the land so that the chattels have become fixtures, but have not been so incorporated with the realty as to lose their iden- tity, provided the reconversion of the fixtures into personalty does not interfere with the rights of creditors or of third persons. Thus the owner of land upon which were the plant and machinery of a marine railway had contracted to sell the property, and a third person ad- vanced the money to the purchaser to enable him to make the cash payment required, under an oral agreement between the lender, the vendor, and the vendee that the lender should advance the money and take title to the plant and machinery as security, and that he could remove the same at any time. The owner conveyed the land, and took back a mortgage to secure the remainder of the purchase-money. In an action to foreclose the mortgage it was held that the agreement was valid, and thereby the fixtures became personalty and were not covered by the mortgages, though the mortgages except for the agree- ment would cover the fixtures. The oral agreement is not within the rule that forbids parol evidenct to contradict a written instrument, because the lender upon the security of the chattels was not a party to the written instrument, namely, the mortgage.*" The parties to a mortgage may by agreement at the time of the execution of a mortgage determine that certain articles upon the mort- gaged land shall not be covered by the mortgage as fijstures, and the agreement will control, even if, as a matter of law, such articles would generally pass with the land as fixtures.*^ In such case the fixture =»Binkley v. Porkner, 117 Ind. 176, 476; Strong v. Doyle, 110 Mass. 92; 19 N. B. 753, 3 L. R. A. 33. Moody v. Aiken, 50 Tex. 65. Contra, <° Tyson v. Post, 108 N. Y. 217, Meyers v. Schemp, 67 111. 469. 15 N. E. 316. See also Foster v. "Richards V. Giltert, 116 Ga. 382; Mabe, 3 Ala. 402, 37 Am. Dec. 749; Foster v. Prentiss, 75 Maine 279; Bostwick V. Leach, 3 Day (Conn.) Elliott v. Wright, 30 Mo. App. 217. 617 WHAT COVERED BY MOETGAGE § 433 will be removable, notwithstanding the annexation was permanent in character, provided, always, that the removal can be made without any permanent material damage to the estate.*^ When the parties immediately concerned, by an agreement between themselves, manifest their purpose that the property, although it is annexed to the soil, shall retain its character as personalty, then, ex- cept as against persons who occupy the relation of innocent purchasers without notice, the intention of the parties will prevail, unless the property be of such nature that it necessarily becomes incorporated into and a part of the realty by the act and manner of annexation.^^ The intention of the parties as to fixtures may also be shown by evidence of other transactions between the parties.** As such an agree- ment does not relate to an interest in the land it may be by parol.*' But .after the fixture has once been attached to the realty its personal character can not be established by parol evidence as against a mort- gagee of the land.*" ■§ 432. Hired fixtures. — It has been held that boilers put into a steam-mill, after the execution of a mortgage upon the mill, under an agreement with the mortgagor that he should have the use of them at a certain rental, and that they should remain the property of the person who put them in, and who should have the privilege of remov- ing them at his pleasure, were not subject to the mortgage.*^ In like manner machinery put into a mill subject to a mortgage, merely to exhibit it to the public by one not a party to the mortgage, is not covered by the mortgage.*^ Although such machinery be after- ward bought by one of the mortgagors, if this be not done with the intent to use it in connection with the business carried on upon the «De Lacy v. Tillman, 83 Ala. 176, 19 N. E. 753, 3 L. R. A. 33; 155, 3 So. 294; Foster v. Prentiss, Taylor v. Watkins, 62 Ind. 511. 75 Maine 279; Carpenter v. Allen, «Zeller v. Adam, 30 N. J. Eq. 150 Mass. 281, 22 N. E. 900; Man- 421; Portman v. Goepper, 14 Ohio waring v. Jenison, 61 Mich. 117, St. 558. 27 N. W. 899 ; John Van Range Co. « Broaddus v. Smith, 121 Ala. 335, V Allen (Miss.) 7 So. 499; Elliott 26 So. 34, 77 Am. St. 61; Tyson v. v Wright 30 Mo. App. 217; Voor- Post, 108 N. Y. 217, 15 N. E. 316, 2 hees v. McGinnis, 48 N. Y. 278; Am. St. 409; Dubois v. Kelly, 10 Hart V. Sheldon, 34 Hun (N. Y.) Barb. (N. Y.) 496; Weston &c. R. 38; Vail v. Weaver, 132 Pa. St. 363, Co. v. Deel, 90 N. Car. 110. 19 Atl. 138, 19 Am. St. 598; Bene- «Gibbs v. Estey, 15 Gray (Mass.) diet V. Marsh, 127 Pa. St. 309, 18 587; Noble v. Boswith, 19 Pick. Atl. 26; Harkey v. Cain, 69 Tex. (Mass.) 314. 146 6 S. W. 637; Buzzell v. Cum- "Hill v. Sewald, 53 Pa. St. 271, mings, 61 Vt. 213, 18 Atl. 93. 91 Am. Dec. 209. " Binkley v. Forkner, 117 Ind. ■" Stell v. Paschal, 41 Tex. 640. § 433 FIXTURES 618 premises, it does not then come within the operation of the mort- gage.^® § 433. Buildings erected on mortgaged premises. — Buildings erected on the mortgaged premises by the mortgagor are annexed to the freehold and can not be removed by him, or by any one under his authority, or without his authority, while the debt remains unpaid.^" Thus, where, without the consent of the mortgagee, a building is erected upon mortgaged land under an agreement with the mort- gagor that it shall remain personal property, it becomes part of the realty and passes by a foreclosure sale of the premises.'^ But buildings erected on mortgaged lands by a third person under an agreement with the mortgagor who was in possession, by which agreement the right of removal was reserved, with knowledge of and without objection from the mortgagee, may be removed by the person erecting them where such removal in no way impairs the mortgagee's original security.^^ And when a building is erected merely for tem- porary use, and it is apparent that there was an intention that it should not become attached to the land even so slightly as by the sink- ing into the soil of the blocks upon which it rested, the mortgagee of the land will acquire no interest in it, although placed there by the mortgagor. If erected by a firm of which the mortgagor is a member for purposes of trade, it is all the more clear that it was not intended as a permanent improvement, or to become a part of the realty.°^ But a building erected by the side of a mill for use as an office in connection with the mill was held to be a part of the realty, although intended to be temporary only, and to be ultimately removed, and not attached to the mill nor fixed to the ground, but resting upon wooden blocks upon the surface of the earth. The use for which the building was erected was regarded as determining its character as part of the realty.^* The mortgagor can not convert a permanent structure erected thereon into personalty merely by executing a chattel mort- ■"Stell T. Paschal, 41 Tex. 640. 368; Burnside v. Twitchell, 43 N. "Baird v. Jackson, 98 111. 78; H. 390; Sweetzer v. Jones, 35 Vt. Wood V. Whelen, 93 111. 153; Dorr 317, 82 Am. Bee. 639, per Kellogg, V. Dudderar, 88 111. 107; Matzon v. J.; Frankland v. Moulton, 5 Wis. Griffin, 78 111. 477; New Orleans 1. See also Ekstrom v. Hall, 90 Nat. Bank v. Raymond, 29 La. Ann. Maine 186, 38 Atl. 106. 355, 29 Am. Rep. 335; Tarbell v. ■^^ Meagher v. Hayes, 152 Mass. Page, 155 Mass. 256, 29 N. E. 585; 228, 25 N. E. 105, 23 Am. St. 819. Guernsey v. Wilson, 134 Mass. 482; '''Paine v. McDowell, 71 Vt. 28, Cole V. Stewart, 11 Gush. (Mass.) 41 Atl. 1042. 181; Butler V. Page, 7 Mete. (Mass.) « Kelly v. Austin, 46 111. 156, 92 40; Winslow v. Merchants' Ins. Co., Am. Dec. 243. 4 Mete. (Mass.) 306, 38 Am. Dec. "Wight v. Gray, 73 Maine 297; G19 WHAT COVEEED BY MORTGAGE § 433a gage, and thus defeat the real estate mortgage in so far as it applies to such structure.^" Tlie fact that a house erected on mortgaged land rests on posts, in- stead of masonry, does not give the builder a right, as against the mortgagee, to remove such house, on the failure of the owner of the premises to pay for the labor and material used, unless, at the time of its erection, there was an agreement to that efEect between the parties.^" The owner of a lot of land, having by parol license allowed a third person to erect a building upon it, afterward made a mortgage of it to one who had no notice of such license. It was held that the mort- gagee was entitled to the building, and having entered into possession might maintain trespass against one removing it; and it was held, too, that the mere fact that the person who erected the building occu- pied it was no notice of his claim to it.'^^ § 433a. Fixtures in and about a house. — A mortgage of a house passes the presses, cupboards, glazed doors, movable partitions, grates, ranges, and other like fixtures contained in it.^' But it has been held that doors, mantels, casings, etc., ordered for the purpose of being used in a house but never attached to the building, are not fixtures, and so did not pass to the mortgagee.^" The mortgage also passes the windows and blinds, though tempo- rarily separated from the house; the door-keys;^" a sun dial erected on a permanent foundation;"^ a furnace so placed in a house that it can not be removed without disturbing the brick-work of the house, and causing a portion of the ceiling to fall."^ Without regard to the State Savings Bank v. Kercheval, "Liford's case, 11 Coke 50. 65 Mo. 682, 27 Am. Rep. 310. "Snedeker v. Warring, 12 N. Y. == Peoria Stone &c. Works v. Sin- 170. Clair, 146 Iowa 56, 124 N. W. 772. "' Stockwell v. Campbell, 39 Conn. ""Rowland v. Sworts, 17 N. Y. 362, 12 Am. Rep. 393; Young v. S. 399. Hatch, 99 Maine 465, 59 Atl. 950; "Prince v. Case, 10 Conn. 375; Maguire v. Park, 140 Mass. 21, 1 Powers V. Dennison, 30 Vt. 752. N. B. 750; Towne v. Fiske, 127 =« Andrews v. Powers, 66 App. Mass. 125, 34 Am. Rep. 353; Turner Div. 216, 72 N. Y. S. 597; Longstaff v. Wentworth, 119 Mass. 459; Tyler V. Meagoe, 2 Ad. & El. 167; Cole- v. White, 68 Mo. App. 607; Rah way grave v. Dias Santos, 2 Barn. & Sav. Inst. v. Irving St. Baptist Cress. 76; Monti v. Barnes, 70 Law Church, 36 N. J. Eq. 61; DufEus v. J. K. B. 225, 1 K. B. 205, 83 Law T. Howard Furnace Co., 8 App. Div. 619, 49 Wkly. Rep. 147. But see 567, 40 N. Y. S. 925; Pratt v. Baker, Central Union Gas Co. v. Browning, 92 Hun 331, 36 N. Y. S. 928; Maine 210 N. Y. 10, 103 N. E. 822. v. Schwarzwaelder, 4 E. D. Smith ""Blue V. Gunn, 114 Tenn. 414, 87 (N. Y.) 273; Filley v. Christopher, S. W. 408, 69 L. R. A. 892, 108 Am. 39 Wash. 22, 80 Pac. 834. Whether St. 912. a portable furnace set In brick is a § 433a FixxuEES 620 matter of injury by the removal of the furnace, some courts regard a furnace as necessarily a fixture, because it is adapted to the use of the realty, and was annexed as a permanent improvement."^ But a portable iron furnace for heating a house, standing on the cellar floor, and held in position merely by its own weight, and capable of being removed without injury to the building, is not a fixture covered by a mortgage of the realty."* Articles of furniture are not fixtures, though attached to the building. On this principle gas fixtures adjusted to the gas pipes do not pass with the realty."^ Mantel mirrors hung upon hooks driven into the walls, and pier mirrors, though made to order for the house, and having cornices of the same design as those of the room and connected with them, but so attached that they can be re- moved and put into another house, are not covered by a mortgage of the realty."" But mirrors set into the walls, so as to be a part of them at the time of the erection of a house, are a part of the realty."^ A show-case with drawers and sash, though fastened in place by nails, does not become part of the realty."* But it is held that a "bar" fastened by nails and screws to the walls and floor of a building used by the mortgagor as a saloon, was a part of the realty and passed by a mortgage."* Shelving and counters in a store, though nailed to the building, and necessary for its use as a store, and so used for many years, are not a part of the realty.'" Eadiators in a house or other part in realty, is a question of fact, win, 108 App. Div. 360, 95 N. Y. S. or of mixed law and fact. Allen v. 1122; Vaughen v. Haldeman, 33 Pa. Mooney, 130 Mass. 155. St. 522, 75 Am. Dec. 622; Montague ■« Fuller-Warren Co. V. Barter, 110 v. Dent, 10 Rich. (S. Car.) 135, 67 Wis. 80, 85 N. W. 698, 84 Am. St. Am. Dec. 572; Hall v. Law Guaran- 867. tee &c. Soc, 22 Wash. 305, 60 Pac. "Rahway Sav. Inst. v. Irving St. 643, 79 Am. St. 935. See also Cape- Baptist Church, 36 N. J. Eq. 61. hart v. Foster, 61 Minn. 132, 63 N. "It can not be held that the mere W. 257, 52 Am. St. 582; Hall v. Law fact that a chattel is placed in a Guarantee &c. Soc, 22 Wash. 305, part of a house which has been 60 Pac. 643, 79 Am. St. 935. adapted to receive it, will make it ""McKeage v. Hanover F. Ins. a fixture; for example, a bedstead Co., 81 N. Y. 38, 37 Am. Rep. 471, In a house obviously would not be affg. 16 Hun. 239. made a fixture by the mere fact ""Ward v. Kilpatrick, 85 N. Y. that it was placed in an alcove 413, 39 Am. Rep. 674. made to receive a bedstead." Per ^ Cross v. Marston, 17 Vt. 533, 44 Runyon, Ch. Am. Dec. 353. '''Towne V. Fiske, 127 Mass. 125, "^Woodham v. First Nat. Bank, 34 Am. Rep. 353; Guthrie v. Jones, 48 Minn. 67, 50 N. W. 1015, 31 Am. 108 Mass. 191; Wall v. Hinds, 4 St. 622. Gray (Mass.) 256, 64 Am. Dec. 64; "Johnson v. Mosher, 82 Iowa 29, McKeage v. Hanover F. Ins. Co., 81 47 N. W. 996. But see Woodham v. N. Y. 38, 37 Am. Rep. 471, affd., 16 First Nat. Bank, 48 Minn. 67, 50 Hun 239; Shaw v. Lenke, 1 Daly N. W. 1015, where the counter was (N. Y.) 487; Lawrence v. Kemp, 1 a bar in a saloon fastened to the Duer (N. Y.) 363; Condit v. Good- floor by nails and screws. 621 WHAT COVEEED BY MOETGAGE § 434 building are regarded as a part of the heating plant and as intended to be permanently annexed to the realty.'^ Where premises mortgaged contain a hot water heating apparatus consisting of a heater set on the cellar bottom connected by pipes run- ning through the walls with radiators, the radiators not being fastened to the floors, such fixtures form part of the realty and are covered by the mortgage.'^ Even electric light fixtures have been regarded as part of the realty as between mortgagors and mortgagees.'^ A mortgage of a plantation will not cover the wagons and tools used upon it, or the stock and cattle, unless such property be expressly included in the mortgage.''* A mortgage of a tract of land does not include as a fixture a portable steam saw-mill, boiler, and engine which are not attached to the soil, but may be moved from place to place. ■'^ Manure made in the ordinary course of husbandry upon a farm in possession of the mortgagor is so attached to the realty that, in the absence of any express stipulation to the contrary, it is considered a part of the realty, either as appurtenant to the freehold or as being in the nature of a fixture. The title to it is vested in the mortgagee, and the mortgagor has no right to remove it, and can give no title to it by sale.'''* § 434. Nursery stock. — Trees and shrubs planted in a nursery gar- den, for the temporary purpose of cultivation and growth until they are fit for market, and then to be taken up and sold, pass by a mort- "Capehart v. Foster, 61 Minn. Vahey, 183 Mass. 47. But see Hall 132, 63 N. W. 257, 52 Am. St. 582. v. Law Guarantee &c. Soc, 22 Wash. But see National Bank v. North, 305, 60 Pac. 643, 79 Am. St. 935. 160 Pa. St. 303, 28 Atl. 694. "Vason v. Ball, 56 Ga. 268. "'Young V. Hatch, 99 Maine 465, '= Taylor v. Watkins, 62 Ind. 511. 59 Atl. 950. " Chase v. Wingate, 68 Maine 204, '' Canning v. Owen, 22 R. I. 624, 28 Am. Rep. 36. See also Norton v. 48 Atl. 1033. The court says: "We Craig, 68 Maine 275; Fay v. Muzzey, can see no reason whatever why 13 Gray (Mass.) 53, 74 Am. Dec. such fixtures are not as much a part 619 ; Kittredge v. Woods, 3 N. H. of the realty as radiators, water- 503, 14 Am. Dec. 393. This rule faucets, set-tubs, bath-tubs, and does not apply as to manure made bowls, portable furnaces connected in livery stables. Daniels v. Pond, with hot-air pipes for heating the 21 Pick. (Mass.) 367, 32 Am. Dec. building, storm-doors and storm- 269; Parsons v. Camp, 11 Conn. 525; windows, window-blinds, whether nor to manure hauled from the inside or outside, fire-grates, pumps, barnyard and piled on a small lot mantels, and such other things as which is sold. Collier v. Jenks, 19 are annexed to the freehold with a R. I. 137, 32 Atl. 208, 61 Am. St. view to the improvement thereof." 741. As to kitchen ranges see Jennings v. § 434: FIXTUEBS 622 gage of the land, so that neither the mortgagor nor his assignee or creditors can remove them as personal property/^ One claiming that trees and shrubs, whether growing naturally or planted and cultivated for any purpose, are not part of the realty, must show special circumstances which talie the particular case out of the general rule ; he must show that the parties intended that they should be regarded as personal chattels. The mere fact that the trees and shrubs were the stock in trade of the mortgagor in his business as a nursery gardener is insufficient for this purpose. They are prima facie parcel of the land itself, and would pass to a vendee upon a sale of the land unless specially excepted, and in the same way, unless excepted, pass to a mortgagee.'^ Although planted by the .mortgagor after the execu- tion of the mortgage, they become a part of the realty and part of the mortgage security.''^ A mortgagee who acquired title to the mortgaged premises by sher- iff's deed under foreclosure after giving assurance to the mortgagor that he claimed no interest in nursery stock of great value placed by the mortgagor on the mortgaged land, and that he would not claim the trees when he got his deed, is estopped thereafter to deny the mort- gagor's title and right of possession of the nursery stock, and the mortgagor may maintain an action to recover the possession thereof.^" Where one having a stock of nursery trees growing on land in which he has no interest joins the owner of the land in a mortgage thereon, and at the time calls attention to the nursery stock as enhancing the value of the land as security, such stock will be regarded as part of the realty; and the mortgagee removing or injuring such stock while his interest is merely that of a mortgagee is liable, as for injury to the land." As between landlord and tenant, the general rule is that the latter may remove nursery trees. As between mortgagor and mortgagee, or vendor and vendee, however, the rule is different, and nursery trees planted by the owner of real estate become a part of the realty, and pass, as such, under a mortgage, although so long as the mortgagor has the right to redeem he would have the right, in the ordinary course of trade, to sell such of the stock as was suitable for transplanting.'" "Maples V. Millon, 31 Conn. 598; '"Price v. Brayton, 19 Iowa 309. Adams v. Beadle, 47 Iowa 439, 29 =" Wallace v. Dodd, 136 Cal. 210, Am. Rep. 487. See also DuBois v. 68 Pac. 693. Bowles, 30 Colo. 44, 69 Pac. 1067; "DuBois v. Bowles, 30 Colo. 44, King v. "Wilcomb, 7 Barb. (N. Y.) 69 Pac. 1067. 263; Bank of Lansingburgh v. »' DuBois v. Bowles, 30 Colo. 44, Crary, 1 Barb. (N. Y.) 542. 69 Pac. 1067; Maples v. Millon, 31 ™Per Hinman, C. J., in Maples V. Conn. 598; Adams v. Beadle, 47 Millon, 31 Conn. 598. 623 WHAT COVEEED BY MORTGAGE § 435 § 435. Fixtures annexed before execution of mortgage. — A fixture annexed to land before the execution of the mortgage will pass by the mortgage without any special mention of the fixture, and even with- out any general description of it, or evidence of intention to include it, such as might be afforded as to machinery or other articles em- ployed for manufacturing purposes by a special mention of a mill aside from the description of the land.^^ This was the decision in an early case in Massachusetts,^* in which it was held that a kettle in a fulling-mill set in brick-work, and used for dyeing cloth, passed by a mortgage of the land upon which the mill stood. The grounds of the decision were, that this fixture could not be removed without actual injury to the mill; that it was essential to the use of the mill; and that, being attached to it at the time of making the mortgage, it passed by it as part of the security. As a general rule, a mortgage of land passes the fixtures already upon it without any special mention being made of them. They" pass with the estate and as a part of it. In a mortgage deed the premises were described as certain land "with the paper-mill, etc., thereon, and water privilege, appurtenances, etc., together with all its privileges and appurtenances." The machinery in controversy was fastened to the floor of the mill by means of iron bolts with nuts upon the ends of them. The machinery, however, could be removed without injury to the building, and might be used in other paper-mills. The machinery was subsequently attached by a creditor of the mortgagor, but it was held that it passed by the mortgage of the land and mill as a part of the realty.^^ Iowa 439, 29 Am. Rep. 487; Price held not to be covered by the mort- V. Brayton, 19 Iowa 309. gage, on the ground that it was not "^Clore V. Lambert, 78 Ky. 224. permanently annexed. See also William Firth Co. v. South *= Burnside v. Twitchell, 43 N. H. Carolina L. &c. Co., 122 Fed. 569; 390; Lathrop v. Blake, 23 N. H. 46. Solomon v. Staiger, 65 N. J. L. 617, In Gale v. Ward, 14 Mass. 352, 7 48 Atl. 996; McCrillis v. Cole, 25 Am. Dec. 223, the fact that certain R. I. 156, 55 Atl. 196, 105 Am. St. carding machines could be removed 875; Canning v. Owen, 22 R. I. 624, from the mill without injury to it, 84 Atl. 1033, 84 Am. St. 858. and might be used in any other ^ Union Bank v. Emerson, 15 building erected for a similar pur- Mass. 159. See also Hamilton v. pose, was a reason for considering Huntley, 78 Ind. 521, 41 Am. Rep. them personal property, and not 593; Southbridge Sav. Bank v. covered by a mortgage of the realty. Stevens Tool Co., 130 Mass. 547. In A like view was taken in Fullam Hunt V. Mullanphy, 1 Mo. 508, 14 v. Stearns, 30 Vt. 443, in respect to Am. Dec. 300, a kettle annexed in a planing machine, a circular saw like manner to the freehold was § 435 FIXTURES 634 The mortgagee is entitled to have his lien respected as to all that was realty when he accepted the security.*'^- The mortgage of a fac- tory by a general name, or terms of description commonly understood to embrace all its essential parts, covers the machinery belonging thereto.^" The intention of the parties to a purchase-money mortgage, as re- gards iixtures, may be gathered from their intention in the other part of the transaction, namely, the sale of the property by the mortgagee to the mortgagor. Thus the owner of a twine factory, the land upon which it was situated, and the machinery in the mill, contracted to sell the whole for a gross sum, and executed a conveyance describing the land only, and took back a mortgage with the same description. This was held to cover the machinery of the mill, on the ground that the parties manifestly intended the mortgage to cover the same property that passed by the deed.^^ But where, upon the sale of a brewery, a deed was given of the real estate and a separate bill of sale of the fixtures, and the vendor took a mortgage for a part of the purchase-money, containing a description of the land alone, and the purchaser afterward gave a mortgage of the fixtures mentioned in the bill of sale, it was held that the fixtures were not included in the mortgage of the land.** But if it appears that a manufacturing establishment was sold as a whole for a gross sum, the mere fact that a bill of sale was made of part of the iixtures does not change their character ; but a mortgage of the land and improvements for the purchase-money wUl cover whatever was a fixture to the realty.*' And so if it appears that mill property containing machinery is conveyed and a purchase-money mortgage given, the vendor at the same time giving a bill of sale of the machinery and taking back a chattel mortgage thereon, the machinery will pass as realty by the conveyance.'" A mortgage of a mill passes the stones, tackling and implements and frame and a boring machine, v. 'Woodward, 45 Pa. St. 42. But see and in Kendall v. Hathaway, 67 Vt. McCosh v. Barton, 2 Ont. L. Rep. 77. 122, 30 Atl. 859, in respect to a *' McRea v. Central Nat. Bank, 66 cider mill and a shingle mill. See, N. Y. 489. on meaning of "appurtenances" in ^Zeller v. Adam, 30 N. J. Bq. 421; a chattel mortgage of a building, Fortman v. Goepper, 14 Ohio St. Frey v. Drahos, 6 Nebr. 1, 39 Am. 558. Rep. 353. ™ Morris' Appeal, 88 Pa. St. 368. '"aMcFadden v. Allen, 134 N. Y. "Cooper v. Harvey, 62 Hun (N, 489, 32 N. E. 21, 19 L. R. A. 446. Y.) 618, 41 N. Y. St. 594, 16 N. Y. '"Delaware &c. R. Co. v. Oxford S. 660. Iron Co., 36 N. J. Eq. 452; Hoskin 635 WHAT COVERED BY MORTGAGE § 433 necessary for ■working it.°^ A mortgage of a sugar-house carries with it an engine and machinery attached to it.°^ Machinery set in bricks and run by steam power, for the purpose of manufacturing cottonseed oil, constitutes a part of the realty, and part of the security under a mortgage of the realty.^^ A cotton-gin and press are fixtures and a part of the freehold, and are carried by a mortgage of it, whether erected before or after the mortgage.^* Hop- poles upon a farm are covered by a mortgage of the land.^"^ Platform scales fastened to sills laid upon a brick wall set in the ground, in- tended for permanent use, are fixtures.^" Of course, whenever it ap- pears from the instrument itself that the parties did not intend that the machinery in the mill should be covered by the mortgage, it will not constitute a part of the mortgagee's security.'^ A mortgage of a mill which in terms includes ' "all the machinery now or hereafter to be placed" in the mill, covers machinery subse- quently acquired by the mortgagor by purchase, and not by bailment, and placed on the premises, as against a lease subsequently executed by the mortgagor to the seller for the purpose of revesting title in the latter until payment of the price. °^ § 436. Chattels annexed after execution of mortgage. — Chattels attached to the realty after the execution of a mortgage of it become a part of the mortgage security, if they are attached for the permanent improvement of the estate and not for a temporary purpose and are adapted to the use to which the realty is devoted,^" or if they are such =^ Place V. Fagg, 4 Man. & R. 277. mortgage upon the poles immedi- "^ Citizens' Banli v. Knapp, 22 La. ately after their removal from the Ann 117. See also Hutchins v. farm, to secure an antecedent debt. Masterson, 46 Tex. 551, 26 Am. Rep. Sullivan v. Toole, 26 Hun (N. Y.) 286. 203. ■"Theurer v. Nautre, 23 La. Ann. "o Arnold v. Crowder, 81 111. 56, 749 See also William Firth Co. v. 25 Am. Rep. 260; Bliss v. Whitney, South Carolina L. &c. Co., 122 Fed. 9 Allen (Mass.) 114, 85 Am. Dec. 569; Tate v. Blackburne, 48 Miss. 1; 745. Bond V Coke 71 N. Car. 97; Jones "'Waterfall v. Penistone, 6 El. & V Bull 85 Tex. 136, 19 S. W. 1031. Bl. 876. See also Begbie v. Fen- "Bond V. Coke, 71 N. Car. 97; wick, L. R. 8 Ch. App. 1075, 19 W. Latham v. Blakely, 70 N. Car. 368; R. 402; Brown on Fixtures (3d ed), Fairis v. Walker, 1 Bailey (S. Car.) pp. 148, 149. 540. See also Degraffenreid v. "'Knowles Loom Works v. Ryle, Scruggs, 4 Humph. (Tenn.) 451, 40 97 Fed. 730. Am. Dec. 658. Contra Hancock v. "^ Hill v. Farmers' &c. Nat. Bank, Jordan, 7 Ala. 448, 42 Am. Dec. 97 U. S. 450, 24 L. ed. 1051; Tib- 600; Cole v. Roach, 37 Tex. 413. betts v. Moore, 23 Cal. 208; Seed- '=The lien of the mortgagee upon house v. Broward, 34 Fla. 509, 16 them is superior to the title ac- So. 425; Cunningham v. Cureton, quired by one who, with knowledge 96 Ga. 489, 23 S. E. 420; Williams of such mortgage, takes a chattel v. Chicago Exhibition Co., 188 IlL 40 — Jones Mtg. — Vol. L § 436 FIXTURES 636 as are regarded as permanent in their nature,^ or if they are so fas- tened or attached to the realty that the removal of them would be an injury to it.^ A mortgagor left in possession, who improves the prem- ises by the erection of new works, or by the introduction of new ma- chinery intended to be permanent, is not at liberty to impair the in- creased security by removing them.^ Nor can a mortgagor in posses- sion, without the consent of the mortgagee, authorize another to erect buildings on the mortgaged land and remove them.* The same rule applies to articles annexed to the premises by a sub- 19, 58 N. E. 611; "Wood v. Whelen, 93 111. 153; Ward v. Yarnelle, 173 Ind. 535, 91 N. E. 7; Bowen v. Wood, 35 Ind. 268; Ottumwa Wool- en Mill Co. V. Hawley, 44 Iowa 57, 24 Am. Rep. 719; Mutual Ben. Life Ins. Co. V. Huntington, 57 Kans. 744, 48 Pac. 19. In some cases con- siderable stress has been placed upon the fact that the personal chat- tels had already been mortgaged as personalty before they were attached to the realty. Eaves v. Estes, 10 Kans. 314, 15 Am. Rep. 345; Bank of Louisville v. Baumiester, 87 Ky. 6, 7 S. W. 170; Weil v. Lapeyre, 38 La. Ann. 303; Ekstrom v. Hall, 90 Maine 186, 38 Atl. 106; Wight v. Gray, 73 Maine 297; Parsons v. Copeland, 38 Maine 537; Corliss v. McLagln, 29 Maine 115; McKim v. Mason, 3 Md. Ch. 186; Hopewell Mills V. Taunton Sav. Bank, 150 Mass. 519, 23 N. E. 327, 6 L. R. A. 249, 15 Am. St. 235; Southbridge Sav. Bank v. Mason, 147 Mass. 500, 18 N. E. 406, 1 L. R. A. 350; Thomp- son V. Vinton, 121 Mass. 139; Pierce V. George, 108 Mass. 78, 11 Am. Rep. 310; Cole v. Stewart, 11 Cush. (Mass.) 181; Butler v. Page. 7 Mete. (Mass.) 40, 39 Am. Dec. 757; Winslow v. Merchants' Ins. Co., 4 Mete. (Mass.) 306, 38 Am. Dec. 368; Curry v. Schmidt, 54 Mo. 5x5; Dutro V. Kennedy, 9 Mont. 101, 22 Pac. 763; Langdon v.. Buchanan, 62 N. H. 657; Burnslde v. Twitchell, 43 N. H. 390; Pettengill v. Evans, 5 N. H. 54; Roddy v. Brick, 42 N. J, Eq. 218, 6 Atl. 806 Delaware &c. R. Co. V. Oxford Iron Co., 36 N. J. Eq. 452; Doughty v. Owen (N. J. Eq.), 19 Atl. 540; McPadd«n v. Al- len, 134 N. Y. 489, 32 N. E. 21, affg. 3 N. Y. S. 356; Davidson v. West- chester Gas Light Co., 99 N. Y. 558, 2 N. B. 892; McRea v. Central Nat. Bank, 66 N. Y. 489; Snedeker v. Warring, 12 N. Y. 170; McMillan v. Leaman, 101 App. Div. 436, 91 N. Y. S. 1055; Rice v. Dewey, 54 Barb. (N. Y.) 455; Gardner v. Pinley, 19 Barb. (N. Y.) 317; Sullivan v. Toole, 26 Hun (N. Y.) 203; Ber- liner V. Piqua Club Assn., 32 Misc. 470, 66 N. Y. S. 791; Phoenix Mills V. Miller, 4 N. Y. St. 787; Cooper V. Harvey, 16 N. Y. S. 660; Foote V. Gooch, 96 N. Car. 265, 1 S. E. 525, 60 Am. Rep. 411; Bond v. Coke, 71 N. Car. 97; Roberts v. Dauphin Deposit Bank, 19 Pa. St. 71; Harlan V. Harlan, 15 Pa. St. 507, 53 Am. Dec. 612; Davenport v. Shants, 43 Vt. 546. Ex parte Belcher, 4 Dea. & Chit. 703; Hubbard v. Bagshaw, 4 Sim. 326; Ex parte Reynal, 2 Mont. D. & De G. 443; Walmsley V. Milne, 7 C. B. (N. S.) 115, 97 B. C. L. 115, 29 L. J. C. P. 97, 6 Jur. (N. S.) 125, 1 L. T. (N. S.) 62, 8 W. R. 138; Meux v. Jacobs, L. R. 7, H. L. 493; Longbottom v. Berry, L. R. 5 Q. B. Div. 123; Rogers v. Ontario Bank, 21 Ont. Rep. 416; London &c. Loan Co. v. Pulford, 8 Ont. Rep. 150; Paterson v. Pyper, 20 U. C. C. P. 278. See post § 436b. •Coleman v. Stearns Mfg. Co., 38 Mich. 30. See also Mutual Benefit Life Ins. Co. v. Huntington, 57 Kans. 744, 48 Pac. 19. ''Clore V. Lambert, 78 Ky. 224. 'Foote V. Gooch, 96 N. Car. 265, 1 S. E. 525, 60 Am. Rep. 411. * Ekstrom v. Hall, 90 Maine 186, 38 Atl. 106. 637 "WHAT COVERED BY MORTGAGE § 436 sequent grantee or vendee in possession under an executory contract to purchase. ° The question whether fixtures annexed to the realty after a mort- gage of it has already been executed become a part of it, and thus become also subject to the mortgage, is a different one in some respects from that which arises when the same fixtures are already attached to the realty when the mortgage is made. As to those articles which in their nature are such as to render it doubtful whether they should be properly classed as fixtures or not, the tendency of the decisions seems to be to require stronger evidence of intention that things an- nexed to the realty after the making of the mortgage are actually fix- tures, and therefore form with the land one security, than is required when they are afBxed before the making of the mortgage." The reason of this apparently is, that, when the personal articles are already attached to the realty when the mortgage is taken, it is more likely that they entered into the consideration of the parties, in estimating the value of the security, than it is when they are not at- tached to the realty and may never be.'' It is true that there may be, in the taking of a mortgage before the fixtures are annexed, an expectation of an increased value to arise from their being subsequently attached to the realty, as when a build- ing has been erected for a certain purpose, and it is contemplated that the machinery or other articles adapted to be used in it will be placed in it; but it is evident that less reliance_ would be placed upon this expectation than upon the actual fact of the existence of the things upon the mortgaged estate. It does not follow, however, from the fact that the fixtures constituted no part of the mortgage security when it was taken, that they may therefore be removed without any wrong to the mortgagee. He is entitled to the benefit of any improvement of the ^Ogden V. Stock, 34 111. 522; Poor Quimby, 131 Mich. 140, 92 N. W. V. Oakman, 104 Mass. 309; Lynde 943; Andrews v. Powers, 66 App. V. Rows, 12 Allen (Mass.) 100; Div. 216, 72 N. Y. S. 597; Chandler Cooper v. Adams, 6 Cush. (Mass.) v. Hamell, 57 App. Div. 305, 67 N. 87; Eastman v. Foster, 8 Mete. Y. S. 1068; Moore v. Vallentine, 77 (Mass.) 19; Glidden v. Bennett, 43 N. Car. 188. N. H. 306; McFadden v. Allen, 134 « Tillman v. De Lacy, 80 Ala. 103; N. Y. 489, 32 N. E. 21, affg. 3 N. Y. Gardner v. Finley, 19 Barb. (N. Y.) S. 356. See also Sleberling v. Miller, 317; Kendall v. Hathaway, 67 Vt. 207 111. 443 69 N. E. 800; Gunder- 122, 30 Atl. 859; Buzzell v. Cum- son V. Kennedy, 104 111. App. 117; mings, 61 Vt. 213, 18 Atl. 93. But Lapham v. Norton, 71 Maine 83; see Muehling v. Muehling, 181 Pa. Hinkley &c. Iron Co. v. Black, 70 St. 483, 37 Atl. 527, 59 Am. St. 674. Maine 473, 35 Am. Rep. 346; Cutter 'Clore v. Lambert, 78 Ky. 224 V. Wait, 131 Mich. 508, 91 N. W. (approving text). 753, 100 Am. St. 619; Morley v. § 436 FIXTURES 628 property from whatever cause it may arise, just as he may suffer from a depreciation of it arising from accident or neglect, or from fluctua- tions in value due to general causes.^ The track of a railroad laid upon mortgaged lands under an ar- rangement with the mortgagor, without condemnation under the right of eminent domain, is subject to the mortgage lien, and may be sold with the land under foreclosure proceedings. ° Eails necessarily be- come an actual part of the permanent structure of a railroad, and are inseparable from it without destruction to the road. In that respect they are like the stones and brick of a house. The same rule applies to other permanent structures of a railroad, such as bridges.^" A mortgage by a gas company of its real estate with all the appur- tenances thereto, its gas mains, sewer pipes, and meters, covers an enlargement of its works, and an extension of its mains and pipes.^^ A mortgage by such company of its office furniture and fixtures cov- ers additions made thereto from time to time as the necessities of the works required."' Detachable and removable machinery is susceptible of ownership distinct from the land and buildings, and may be the subject of par- ticular and separate liens.^^ Such machinery, when affixed to the realty, does not become subject to an existing mortgage of the realty unless it is affixed by the owner of the chattel or with his assent. Thus, if machinery belonging to a third person be put into a mill upon a written agreement that it is to remain subject to the order of such third person until it be paid for in full, the act of the millowner in affixing the machinery to the mill is not sufficient to subject it to the operation of an existing mortgage.^* The owner of the machinery is not put upon inquiry as to the state of the title to the mill so as to be charged with constructive notice of the mortgage, and he does not assent to the affixing of the machinery to the realty absolutely, but only in a qualified way.^° 'Roberts v. Dauphin Deposit Weaver, 132 Pa. St. 363, 19 Atl. Bank, 19 Pa. St. 71. 138; Benedict v. Marsh, 127 Pa. St. "Meriam v. Brown, 128 Mass. 391; 309, 18 Atl. 26; Harlan v. Harlan, Hunt v. Bay State Iron Co., 97 20 Pa. St. 303. Mass. 279; Price v. Weehawken " Northwestern Mut. L. Ins. Co. v. Ferry Co., 31 N. J. Eq. 31. George, 77 Minn. 319, 79 N. W. 1028, "Porter v. Pittsburg &c. Steel 1064. Co., 122 U. S. 267, 30 L. ed. 1210, >" Cochran v. Flint, 57 N. H. 514; 7 Sup. Ct. 1206. Page v. Edwards, 64 Vt. 124, 23 Atl. "Wood V. Whelen, 93 111. 153. 917; Buzzell v. Cummings, 61 Vt. "Wood v. Whelen, 93 111. 153. 213, 18 Atl. 93; Davenport v. Shants, " Holly Mfg. Co. V. New Chester 43 Vt. 546. In Vail v. Weaver, 132 Water Co., 48 Fed. 879; Vail v. Pa. St. 363, 19 Atl. 138, it was held 639 WHAT COVEEED BY MORTGAGE § 436a In England, -while it is held that fixtures can not be removed with- out the assent of the mortgagee, it is held that such assent may be found in the mere fact that the mortgagor has been allowed to remain in possession and deal with the property.^* A mortgagee in possession, who has erected buildings and other fixtures, may lawfully take them down and remove them, if they are not so connected with the soil that they can not be removed without prejudice to it. So long as he is in possession he may exercise the right of removal, and need not resort to a proceeding in equity for the pur- pose of declaring and enforcing such right. ^' § 436a. Agreement that chattels may retain character as per- sonalty. — By agreement chattels may retain their character as per- sonalty after their annexation to the land, though in the absence of such agreement they would become fixtures to the land and subject to an existing mortgage. ^^ Such an agreement binds the holder of an existing mortgage of the realty if he is a party to it. If he is not a party to it, ordinary chattels annexed to the realty for the perma- nent repair or improvement of it become a part of the realty and sub- ject to the existing mortgage. But the chattels may be of such a char- acter, and their annexation to the realty such, that they will not lose their character as personalty if they are annexed with the intention of the owner of the equity and of the person interested in the chattels that they should retain their original character. Thus, telegraph or telephone wires strung upon poles may by such agreement remain personalty.^^ If the landowner, after placing a mortgage upon chattels for the purchase-price or otherwise, or incumbers the chattels in any other that the engine, machinery, and ap- fore has no reason to complain." pliances of an electric light plant Paine v. McDowell, 71 Vt. 28, 41 erected upon and firmly attached to Atl. 1042. real estate do not pass to a pur- '"Gough v. Wood (1894), 1 Q. B. chaser of the real estate at a sale 713, 724; Cumberland Union Bank- upon a mortgage of the realty, made ing Co. v. Maryport Hematite Iron and recorded before the plant was &c. Co. (1892), 1 Ch.. 415; Sanders placed by the mortgagor on the v. Davis, 15 Q. B. Dlv. 218. mortgaged premises, unless it was " Cooke v. Cooper, 18 Ore. 142, 22 the intention to make the plant a Pac. 945. part of the realty when it was ^^Oil City Boiler Works v. New erected. To like effect see Holly Jersey Water &c. Co., 81 N. J. L. Mfg. Co. V. New Chester Water Co., 491, 79 Atl. 451; Tyson v. Post, 108 48 Fed. 879. This rule in Vermont N. Y. 217, 15 N. E. 316; Sisson v. "is put upon the ground that the Hibbard, 75 N. Y. 542; Ford v. Cobb, mortgagee has parted with nothing 20 N. Y. 344. on the faith of the annexations be- "Union Safe Deposit &c. Co. v. ing a part of the realty, and there- Telegraph Co., 36 Fed'. 288. § 436b nxTUEES 630 way, as by purchasing them with a reservation of title in the vendor, should annex such chattels to his land, there must be implied from the existence of the chattel mortgage or other incumbrance an inten- tion on his part that the chattels are not to be annexed permanently, to the detriment of the mortgagee or lienor.^" Machinery, buildings and in fact almost anything may be made to retain its character of personalty by agreement, if it is not so in- corporated in the realty as to become so much a part of it that it can not be removed without materially injuring or destroying the realty. Thus an agreement that a building of a temporary nature should re- main personalty has been held binding as against parties to an exist- ing mortgage.^^ But it has been held that an agreement that ranges placed in a tenement house should remain personalty does not brad the mortgagee of the real estate.^^ § 436b. Rights of vendor or mortgagee of chattels as against ex- isting mortgage of realty. — There are two well defined and contrary views as to the effect of a chattel mortgage upon personal articles which are attached to mortgaged realty. Although a chattel mortgage of things about to be annexed to the realty is a contract, express or implied, between the owner of the chattels and the owner of the realty that these things shall retain their chattel character after their an- nexation to the realty and may be removed if necessary to enforce the chattel mortgage, yet according to one line of authorities, such things even if they can be removed, without injury to the realty, are a part of the security of the mortgagee of the realty, and can not be removed without his consent. This is sometimes called the Massachusetts doc- trine because it was first established in that state. In one case in that state Mr. Justice Hoar said -.^^ "We think it is not in the power of the mortgagor, by any agreement made with a third person after the ex- ecution of the mortgage, to give to such person the right to hold any- ^Binkley v. Forkner, 117 Ind. 176, App.), 126 S. W. 65. See also Cen- 19 N. E. 753, 3 L. R. A. 33; Carpen- tral Union Gas Co. v. Browning, 146 ter V. Allen, 150 Mass. 281, 22 N. E. App. Div. 783, 131 N. Y. S. 464; Bul- 900; Hunt v. Bay State Iron Co., lock Electric Mfg. Co. v. Lehigh Val. 97 Mass. 279; Jenks v. Colwell, 66 Trac. Co., 231 Pa. St. 129, 80 Atl. Mich. 420, 33 N. W. 528, 11 Am. St. 568. 502; Titbetts v. Home, 65 N. H. 242, =^ Mechanics' &c. Bank v. Bergen 23 Atl. 145, 15 L. R. A. 56, 23 Am. Heights Realty Corp., 137 App. St. 31; Campbell v. Roddy, 44 N. J. Div. 45, 122 N. Y. S. 33. Eq. 244, 14 Atl. 279, 6 Am. St. 889; ^ Clary v. Owen, 15 Gray (Mass.) Davenport v. Shants, 43 Vt. 546. 522, citing Winslow v. Merchants' "Shelton v. Finer (Tex. Civ. Ins. Co., 4 Mete. (Mass.) 306. 631 WHAT COVERED BY MORTGAGE § 436b thing to be attached to the freehold, which as between mortgagor and mortgagee would become a part of the realty." In the same court it was held that a building removed upon mort- gaged land without the mortgagee's consent, became a part of the realty, subject to the mortgage, although the mortgagor agreed with the owner of the building that it should remain personal property with the right of such owner to remove it; and that the purchaser of the land at a foreclosure sale under the mortgage became the owner of the building though he was notified at the sale of such agreement.^* Even under this rule if the chattels are generally deemed movables, such as curtain poles, gas fixtures in a house or machines which are only attached to a building sufiiciently to keep them steady or in place, they do not inure to the benefit of the mortgagee of the land.^° Under this view of the law a chattel mortgage of fixtures to be an- nexed to mortgaged land, or an agreement that such fixtures shall retain their chattel character, is not binding upon such prior mort- gagee of the land without notice to him and his consent.^® A chattel mortgage of fixtures given concurrently with a real estate mortgage covering the same property does not conclusively fix their »* Meagher v. Hayes, 152 Mass. 228, 25 N. E. 105, 23 Am. St. 819; Hunt v. Bay State Iron Co., 97 Mass. 279. For other Massachusetts au- thorities, see Pierce v. George, 108 Mass. 78, 11 Am. Rep. 310; Meagher V. Hayes, 152 Mass. 228, 25 N. B. 105; Southbridge Sav. Bank. v. Ma- son, 147 Mass. 500, 18 N. B. 406; Smith Paper Co. v. Servin, 130 Mass. 511; McConnell v. Blood, 123 Mass. 47. Followed also in Frankland V. Moulton, 5 Wis. 1; Fuller- Warren Co. v. Harter, 110 Wis. 80, 85 N. W. 698, 84 Am. St. 867, and a learned and full note in the latter report; Gunderson v. Swarthout, 104 Wis. 186, 80 N. W. 465, 76 Am. St. 860; Homestead Land Co. v. Becker, 96 Wis. 206, 71 N. W. 117; Kendall Mfg. Co. v. Run- die, 78 Wis. 150, 47 N. W. 364; Tay- lor v. Collins, 51 Wis. 123, 8 N. W. 22; Smith v. Waggoner, 50 Wis. 155, 6 N. W. 568; Porter v. Pittsburg Bessemer Steel Co., 120 U. S. 649, 30 L. ed. 830, 7 Sup. Ct. 741, 122 U. S. 267, 30 L. ed. 1210, 7 Sup. Ct. 1206; Evans v. Kister, 92 Fed. 828; Phoenix Iron Works Co. v. New York Security &c. Co., 83 Fed. 757; Watertown S. B. Co. v. Davis, 5 Houst. (Del.) 192; Beeler V. C. C. Mercantile Co., 81 Idaho 644, 70 Pac. 943, 60 L. R. A. 283; Pifield V. Farmers' Nat. Bank, 148 111. 163, 35 N. E. 802, 39 Am. St. 16C; Brass Foundry Works v. Gallentine, 99 Ind. 525; Hamilton v. Hunkle, 78 Ind. 521, 41 Am. Rep. 593; Miller v. Walson, 71 Iowa 610, 33 N. W. 128; Stillman v. Flenniken, 58 Iowa 450, 10 N. W. 842; Bkstrom, v. Hall, 90 Maine 186, 38 Atl. 106; Hawkins v. Hersey, 86 Maine 394, 30 Atl. 14; Wight V. Gray, 73 Maine 297: Mc- Fadden v. Allen, 134 N. Y. 489, 32 N. B. 21, limiting or overruling some earlier cases. == Jennings v. Vahey, 183 Mass. 47; Carpenter v. Walker, 140 Mass. 416, 5 N. E. 160; Maguire v. Park, 140 Mass. 21, 1 N. B. 750; Manning v. Ogden, 70 Hun (N. Y.) 399, 24 N. Y. S. 70. =" Hawkins v. Hersey, 86 Maine 394, 30 Atl. 14; Bartholomew v. Hamilton, 105 Mass. 239. See also Hershberger v. Johnson, 37 Ore. 109, 60 Pac. 838. § 436b FIXTURES 633 character as personal property as against the real estate mortgagee.^^ Where the chattels have been so annexed as to become an integral part of the realty, the retention of title thereto or the reservation of a lien thereon has been held to be ineffectual to preserve the rights of the seller, as against a prior mortgage of the realty.^' Moreover under this rule the fact that the chattel may be removed from the mortgaged realty without injury thereto is immaterial.^® The contrary doctrine that chattels permanently annexed to mort- gaged realty can by agreement with the mortgagor or by the implied agreement arising from a chattel mortgage be made to preserve their character as personalty, as against the mortgagee of the realty, is firmly maintained in several states.^" To preserve the personal character of fixtures as against an exist- ing mortgage of the realty a chattel or agreement that the fixtures ^ Studley v. Ann Arbor Sav. Bank, 112 Mich. 181, 70 N. W. 426. ^ Porter v. Pittsburg Bessemer Steel Co., 122 U. S. 267, 30 L. ed. 1210, 7 Sup. Ct. 1206; United States V. New Orleans R., 12 Wall. (U. S.) 362, 20 L. ed. 434; Guar- anty Trust Co. V. Galveston City R. Co., 107 Fed. 311, 46 C. C. A. 305; Evans v. Kister, 92 Fed. 828, 35 C. C. A. 28; Phoenix Iron Works Co. V. New York Security &c. Co., 83 Fed. 757, 28 C. C. A. 76; Westing- house Electric Mfg. Co. v. Citizens' Street R. Co., 24 Ky. L. 334, 68 S. W. 463; New Jersey v. Cruse (N. J. Eq.), 90 Atl. 673; Great Western Mfg. Co. V. Bathgate, 15 Okla. 87, 79 Pac. 903; Bullock Electric Mfg. Co. V. Lehigh Valley Traction Co., 231 Pa. 129, 80 Atl. 568. ^'Fuller-Warren Co. v. Harter, 110 Wis. 80, 85 N. W. 698. '» Broaddus v. Smith, 121 Ala. 335, 26 So. 34, 77 Am. St. 61; Warren v. Liddell, 110 Ala. 232, 20 So. 89 (con- ditional sale) ; Miller v. Griffin, 102 Ala. 610, 15 So. 238; Wood v. Holly Mfg. Co., 100 Ala. 326, 13 So. 948, 46 Am. St. 56; Anderson v. Cream- ery Package Mfg. Co., 8 Idaho 200, 67 Pac. 493, 56 L. R. A. 554, 101 Am. St. 188; Schumacker v. Edward P. Allis Co., 70 111. App. 556; Binkley V. Forkner, 117 Ind. 176, 19 N. E. 753; Eaves v. Bstes, 10 Kans. 314, 15 Am. Rep. 345; Baldwin v. Young, 47 La. Ann. 1466, 17 So. 883; Jenks V. Colwell, 66 Mich. 420, 33 N. W. 528, 11 Am. St. 502 (conditional sale); Burrill v. Wilcox Lumber Co., 65 Mich. 571, 32 N. W. 824; Crippen v. Morrison, 13 Mich. 23; Northwestern Mut. Life Ins. Co. v. George, 77 Minn. 319, 79 N. W. 1028, 1064; Merchants' Nat. Bank v. Stanton, 55 Minn. 211, 56 N. W. 821, 43 Am. St. 491; Warner v. Kenning, 25 Minn. 173; American Laundry Machinery Co. v. Citizens' Nat. Life Ins. Co. (Miss.), 65 So. 113; Ed- wards &c. Lumber Co. v. Rank, 57 Nebr. 323, 77 N. W. 765, 73 Am. St. 514; Arlington Mill &c. Co. v. Yates, 57 Nebr. 286, 77 N. W. 677; Tib- betts V. Horne, 65 N. H. 242, 23 Atl. 145, 23 Am. St. 31; General Electric Co. V. Transit Equip. Co., 57 N. J. Eq. 460, 42 Atl. 101; Campbell v. Roddy, 44 N. J. Eq. 244, 14 Atl. 279, 6 Am. St. 889; Rogers v. Brokaw, 25 N. J. Eq. 496; Cox v. New Bern Lighting &c. Co., 151 N. Car. 62, 65 S. E. 648, 134 Am. St. 966; Bel- vin V. Raleigh Paper Co., 123 N. Car. 138, 31 S. E. 655; Blanchard V. Eureka Planing Mill Co., 58 Ore. 37, 113 Pac. 55, 37 L. R. A. (N. S.) 133; Henkle v. Dillon, 15 Ore. 610, 17 Pac. 148; Paine v. McDowell, 71 Vt. 28, 41 Atl. 1042; Buzzell v. Cummings, 61 Vt. 213, 18 Atl. 93; Barnes v. Barnes, 6 Vt. 388; Ger- man Sav. &c. Soc. V. Weber, 16 Wash. 95, 47 Pac. 224; Hurxthal v. Hurxthal, 45 W. Va. 584, 32 S. E. 237. But see Brass Foundry Works V. Gallentine, 99 Ind. 525; Hamilton 633 WHAT COVERED BY JIOETGAGE 436c may be removed should be made prior to their annexation to the realty. ^^ Where this view of the law prevails, if machinery under mortgage is placed in a mill already mortgaged, it becomes subject to the realty mortgage, to the extent that is necessary to keep the security thereof unimpaired. So far as the personalty mortgage is concerned, if such machinery is mortgaged to its full value and it will not damage the mill property by its removal, the mortgagee or purchaser may remove the same, otherwise he must make good the damage caused by such removal. "When such mortgaged personal property is attached to the mortgaged realty, the mortgagor has only an equity of redemption therein, to which the mortgage on the realty at once attaches.^^ § 436c. Rights of mortgagee of realty as to chattels annexed prior to mortgage. — When a mortgage of real estate is made after chattels are annexed thereto under a chattel mortgage, or under an agreement that they shall retain their personal character, such mortgagee of the realty having no notice of such chattel mortgage or agreement is not bound thereby.^ ^ V. Huntley, 78 Ind. 521, 41 Am. Rep. 593. =' Miller v. Walson, 71 Iowa 610, 33 N. W. 128; First Nat. Bank v. Elmore, 52 Iowa 541, 3 N. W. 547; Sowden v. Craig, 26 Iowa 156, 96 Am. Dec. 125; Davenport v. Shants, 43 Vt. 546. =» Hurxthal v. Hurxthal, 45 W. Va. 584, 32 S. E. 237. Citing Sword v. Low, 122 111. 487, 13 N. E. 826; Eaves v. Estes, 10 Kans. 314; Camp- bell V. Roddy, 44 N. J. Eq. 244, 14 Atl. 279; Sisson v. Hibbard, 75 N. Y. 542; Tifft v. Horton, 53 N. Y. 377; Ford v. Cobb, 20 N. Y. 344. =■' Seedhouse v. Broward, 34 Fla. 509, 16 So. 425; Cunningliam v. Cureton, 96 Ga. 489, 23 S. E. 420; Baird v. Jackson, 98 111. 78; Wood V. Whelen, 93 111. 153; Matzon v. Griffin, 78 111. 477; New Orleans Nat. Bank v. Raymond, 29 La. Ann. 355, 29 Am. Rep. 335; Wigbt v. Gray, 73 Maine 297; Hawkins v. Horsey, 46 Maine 394, 30 Atl. 14; Hopewell Mills V. Taunton Sav. Bank, 150 Mass. 519, 23 N. E. 327; Carpenter V. Allen, 150 Mass. 281, 22 N. E. 900; Carpenter v. Walker, 140 Mass. 416, 5 N. E. 160; Southbridge Sav. Bank v. Stevens Tool Co., 130 Mass. 547; Southbridge Sav. Bank v. Ex- eter Works, 127 Mass. 542; Thomp- son V. Vinton, 121 Mass. 139; Hunt V. Bay State Iron Co., 97 Mass. 279; Watson V. Alberts, 120 Micb. 508, 79 N. W. 1048; Wickes v. Hill, 115 Mich. 333, 73 N. W. 375; Dutro v. Kennedy, 9 Mont. 101, 22 Pac. 763; Tibbetts v. Home, 65 N. H. 242, 23 Atl. 145, 23 Am. St. 31; Burnside V. Twitchell, 43 N. H. 390; Foote V. Gooch, 96 N. Car. 265, 1 S. E. 525, 60 Am. Rep. 411; Bond v. Coke, 71 N. Car. 97; Brennan v. Whitaker, 15 Ohio St. 446; Davenport v. Shants, 43 Vt. 546; Sweetzer v. Jones, 35 Vt. 317; Wade v. Donau Brewing Co., 10 Wash. 284, 38 Pac. 1009. There are some decisions, however, which hold in such case that the chattel character of fixtures may be retained even against a sub- sequent mortgagee of the realty without notice. Case v. L'Oebel, 84 Fed. 582; Adams Machine Co. v. In- terstate Bldg. Assn., 119 Ala. 97, 24 So. 857; Warren v. Liddell, 110 Ala. 232, 20 So. 89; Richardson v. Cope- land, 6 Gray (Mass.) 536, 66 Am. Dec. 424; Deane v. Hutchinson, 40 § 436d FIXTURES 634 A mortgagee of land is not bound to examine the records for chat- tel mortgages covering fixtures which have been so attached as to be- come an integral part of the real estate.^* But where buildings and machinery have been openly impressed with the character of person- alty prior to the giving of a real estate mortgage, they will retain that character as against the mortgagee with notice, in the absence of other controlling circumstances.^^ The chattel mortgage is not of itself no- tice to such subsequent mortgagee of the realty. A subsequent purchaser or mortgagee of the realty knowing at the time of his purchase or mortgage of the existence of a chattel mort- gage upon the fixtures, or of an agreement by the owner that the fix- tures might be removed, may be regarded as having taken his deed or mortgage subject to such chattel mortgage or agreement.^® In those jurisdictions where a bona fide purchaser of land is held to take it subject to rights of third persons in fixtures, the same rule would doubtless be applied to subsequent mortgagees without notice. 436d. Effect of after-acquired property clause. — A clause in a prior mortgage of real estate to the effect that the mortgage shall cover after-acquired property does not give the mortgagee a superior claim to chattels annexed thereto, as against the vendor by a condi- tional sale contract, since such clause in a mortgage attaches only to such interest as the mortgagor has when the mortgage is executed.^' N. J. Eq. 83, 2 Atl. 292; Hirsch v. (N. Y.) 116; Waller v. Bowling, 108 Graves Blev. Co., 53 N. Y. S. 664; N. Car. 289, 12 S. B. 990; Rowland Case Mfg. Co. v. Garven, 45 Ohio St. v. West, 62 Hun (N. Y.) 583; Si- 289; Brennan v. Whitaker, 15 Ohio mons v. Pierce, 16 Ohio St. 215; San St. 446. Contra, see First Nat. Bank Antonio Brewing Assn., v. Arctic V. Adam, 138 111. 483, 28 N. E. 955; Ice Mach. Mfg. Co., 81 Tex. 99, 16 Sword V. Low, 122 111. 487, 13 N. S. W. 797. E. 826; Peoria Stone &c. Works v. »'Wood v. Holly Mfg. Co., 100 Ala. Sinclair, 146 Iowa 56, 124 N. W. 772; 326, 13 So. 948, 46 Am. St. 56; J. Sowden v. Craig, 26 Iowa 156, 96 l. Mott Iron Works v. Middle States Am. Dec. 125; Reyman v. Hender- Loan &c. Co., 17 App. D. C. 584; son Nat. Bank, 98 Ky. 748, 34 S. W. Cox v. New Bern Lighting &c. Co., 697; Patton v. Phoenix Brick Co., 151 n. Car. 62, 65 S. E. 648, 134 167 Mo. App. 8, 150 S. W. 1116; At- Am. St. 966, 18 Am. & Eng. Ann. lantic Safe Deposit & Trust Co. v. Cas. 936; Detroit Steel Cooperage Atlantic City Laundry Co., 64 N. Co. v. Sistersville Brew. Co., 195 Fed. J. Eq. 140, 53 Atl. 212; Lindsay v. 447; in re Sunflower State Refining KInback, 4 Lack. Leg. N. (Pa.) 256. Co., 195 Fed. 180; In re WlUiams- ** Elliott V. Hudson, 18 Cal. App. burg Knitting Mill, 190 Fed. 871; 642, 124 Pac. 108. Tippett v. Barham, 180 Fed. 76, 103 "'Horn V. Indianapolis Nat. Bank, C. C. A. 430, 37 L. R. A. (N. S.) 125 Ind. 381, 25 N. B. 558, 9 L. R. 119; Holt v. Henley, 232 U. S. 637, A. 676, 21 Am. St. 231. 34 Sup. Ct. 459. But see Union Trust '"Greither v. Alexander, 15 Iowa Co. v. Southern Sawmills &c. Co., 470; Warner v. Kenning, 25 Minn. 166 Fed. 193, 92 C. C. A. 101; 173; Fryatt v. Sullivan Co., 5 Hill 635 WHAT COVEEED BY MORTGAGE § 436e Whether the vendor's right to the chattels is inferior to that of a prior mortgagee under an after-acquired property clause •would seem to depend upon whether the chattels have been so attached as to have become a part of the realty.^* Where title to a machine was retained as security for the payment of the purchase-price, it was held that the lien of a deed of trust which, by its terms, covered any machinery, tools, and fixtures which might thereafter be acquired by the grantor therein, did not attach to the machine, because the title to it never vested in the purchaser.'" Under an after-acquired property clause contained in a mortgage, any property acquired by the mortgagor subsequent to the date of the execution and delivery of the mortgage, and which is within the gen- eral description contained therein, will become as fully subject to the lien of the mortgage in equity as if such property had been owned by the mortgagor at the date of the execution and delivery of the mort- § 436e. Where new fixtures replace old. — There seems to be a difference of opinion with reference to the effect upon the rights of the parties of the circumstance that the fixtures to which the vendor reserves title take the place of old and worn-out fixtures removed from the premises. In one case the court said : "The old machinery was subject to the mortgage; the mortgagor could not substitute new for old, and compel the mortgagee purchasing at the foreclosure sale to take the mill in a dismantled condition, because of a contract made by the mortgagor with some third person, to which the mortgagee was not a party, to which he never consented, and of which he had no notice."*^ On the other hand it has been held that machinery sold under a contract of conditional sale will retain the character of personalty against the holder of an existing mortgage on the realty, notwith- standing that machinery in place when the realty mortgage was given has been removed to make room for the new machinery.*^ Boilers ='In re Sunflower State Refining How. (U. S.) 117, 16 L. ed. 436; Co., 195 Fed. 180. Tippett v. Barham, 180 Fed. 76, 103 ™ Defiance Mach. Works V. Trisler, C. C. A. 430, 37 L. R. A. (N. S.) 21 Mo. App. 69. 119. ■"' Thompson v. White Water Val- " Bass Foundry &c. Works, v. Gal- ley R. Co., 132 V. S. 68, 33 L. ed. lentine, 99 Ind. 525. See also Na- 256, 10 Sup. Ct. 29; Branch v. Jesup, tional Bank v. Levanseler, 115 Mich. 106 U. S. 468, 27 L. ed. 279, 1 Sup. 372, 73 N. W. 399; Smith v. Blake, Ct. 495; Galveston, H. &c. R. Co. 96 Mich. 542, 55 N. W. 978. V. Cowdrey, 11 Wall. (tT. S.) 459, « Page v. Ed'wards, 64 Vt. 124, 23 20 I,, ed. 199; Pennock v. Coe, 23 Atl. 917; Buzzell v. Cummings, 61 § 437 FixTUEES 636 hired for use in a mill, which could be removed without other injury than taking down the boiler wall, has been held not subject to an ex- isting mortgage on the realty, though they replaced others which had become worn out.*^ § 437. Eights of equitable mortgagee to hold fixtures. — An equi- table mortgagee has the same right to hold fixtures as part of his se- curity that a legal mortgagee has.** A woolen manufacturer mort- gaged, by deposit of the title-deeds, a piece of land, with a building upon it, and then built a mill upon the land and fitted it with a steam- engine and machinery necessary for his trade. Subsequently he as- signed to another all the machinery and fixtures in the mill, and after this executed to the equitable mortgagee a legal mortgage of the es- tate. The Court of Queen's Bench held that all the machines which were fixed in a quasi permanent manner to the floor, roof, or side- walls passed to the equitable mortgagee, but that those which were merely removable articles passed to the assignee under the bill of sale.*'' Where an equitable mortgage was created by the deposit of a lease, unaccompanied by any agreement, it was held that the tenant's fix- tures were included in the mortgage.*" § 438. Waiver of claim to fixtures by mortgagee of realty. — If the mortgagee assent to an arrangement between the mortgagor and a mechanic, whereby the latter builds and sets up a machine upon the mortgaged premises, under a contract that the machine shall remain his property until paid for, or if the mortgagee, being in possession, treats it as personal property and consents to its removal, a subsequent assignee of the mortgage can not insist that under it he became the owner of the machine, as property annexed to the realty by the mort- gagor. Such an agreement supersedes the general law as to fixtures between the mortgagor and mortgagee.*'^ Vt. 213, 18 Atl. 93; Davenport v. D. 631; Ex parte Lloyd, 3 D. & C. Shants, 43 Vt. 546. 765; Mather v. Fraser, 2 K. & J. ■"Hill v. Sewald, 53 Pa. St. 271, 536; Waterfall v. Penistone, 6 El. 91 Am. Dec. 209. & Bl. 876, 88 E. C. L. 876. " Meux V. Jacobs, L. R. 7 H. L. ^= Longbottom v. Berry, L. R. 5 Q. 481; Williams v. Evans, 23 Beav. B. Div. 123, 39 L. J. (N. S.) Q. B. 239; Ex parte Astbury, L. R. 4 Cb. Div. 87. See also Tebb v. Hodge, App. 630. See also Ex parte Bar- 39 L. J. (N. S.) C. P. 56. clay, 5 De G. M. & G. 413; Ex parte ""Williams v. Evans, 23 Beav. 239. Price, 2 Mont. D. & D. 518; Ex parte "Frederick v. Devol, 15 Ind. 357; Moore &c. Banking Co., 14 Ch. Div. Bartholomew v. Hamilton, 105 Mass. 379; Ex parte Tagart, 1 De Gex 531; 239. See also Wight v. Gray, 73 Ex parte Broadwood, 1 Mont. D. & Maine 297. 637 "WHAT COVEEED BY MOKTGAGE § 439 Where the consent of .the mortgagee of the realty to the arrange- ment is obtained, the rights of the chattel mortgagee or seller retain- ing title to the fixture, until payment of the purchase-price, may be enforced.*^ And such is the case, also, where a person sets up a steam-engine and boiler upon land owned by another, under an agree- ment that he may remove them at any time, and afterward takes a mortgage of the land from the owner of it. The engine and boiler never become the property of the mortgagor, or fixtures to the land, and therefore are not included in the mortgage.*' It is also held that where it was expressly agreed that a steam- engine and its appurtenances should continue to be the property of the seller until he should receive a chattel mortgage thereon and a mortgage upon the land, an assignee of a prior mortgage on the land, with notice of the chattel mortgage on the engine, took subject thereto.^" A mortgagee waives his claim that certain machinery and tools in a mill are covered by his mortgage by requesting the mortgagor, after he had removed such machinery and tools, to repay to him the amount he had paid upon them as taxes, and by accepting and re- taining the money so demanded, with full knowledge of the facts and situation of the property.''^ § 439. Rights of mortgagee of realty to fixtures annexed by lessee after mortgage. — If fixtures be added to the property by a tenant at will of the mortgagor after the mortgage, the right to remove them is determined by the rule which prevails as between mortgagor and mort- gagee, and not that which prevails as between landlord and tenant; and they can not be removed without the consent of the mortgagee.^'' *« Hawkins v. Hersey, 86 Maine to any one. The equities of tlie pur- 394, 30 Atl. 14; Bartholomew v. chaser in such case must he re- Hamilton, 105 Mass. 239; Pierce v. garded as latent equities of third Emery, 32 N. H. 484; Fuller-War- persons. Schultz v. Sroelowltz, 191 ran Co. v. Harter, 110 Wis. 80, 85 N. 111. 249, 61 N. B. 92. W. 698, 53 L. R. A. 603, 84 Am. St =» Crippen v. Morrison, 13 Mich. 23. 867. ^Foster v. Prentiss, 75 Maine 279. ""Taft v. Stetson, 117 Mass. 471. "^Tarhell v. Page, 155 Mass. 256, An assignee of a mortgage is pro- 29 N. E. 585; Meagher v. Hayes, tected against payments made to 152 Mass. 228, 25 N. B. 105, 23 Am. the mortgagee by a purchaser of the St. 819; Hunt v. Bay State Iron Co., property who has assumed the pay- 97 Mass. 279; Lynde v. Rowe, 12 ment of the incumbrance, the pur- Allen (Mass.) 100; Clary v. Owen, chaser believing that the mortgagee 15 Gray (Mass.) 522; Merchants' still owned the mortgage and the Nat. Bank v. Stanton, 55 Minn. 211, debt secured, notwithstanding the 56 N. W. 821, 43 Am. St. 491; Per- assignee has not recorded the as- kins v. Swank, 43 Miss. 349; An- signment or given notice thereof drews v. Day Button Co., 132 N. Y. § 439 FIXTURES 638 This seems to be a logical consequence of the rule that a mortgagor can not by agreement confer rights of removal not possessed by him- self.=^ It does not avail the tenant that he annexed the fixtures imder a special contract with the mortgagor,'* or that the holder of the mort- gage, who seeks to enforce his claim to the fixtures, took the assign- ment of the mortgage with notice of the tenant's claim.'' But it has been held that an agreement between landlord and ten- ant giving the latter the right to remove articles annexed by him, may be enforced against one claiming under a prior mortgage of the realty provided the security of the mortgage is not affected by a removal of the articles,'^ and this is true even though the agreement was not made until after foreclosure, if made during the period of redemption.'' If a lease containing a stipulation giving the lessee the right to re- move fixtures is made before the mortgage, the mortgagee takes the mortgage subject to the stipulations for removal, and also subject to the recognized right of the lessee to annex and remove at pleasure certain classes of articles.'^ Where the lease was made after the mortgage, and the mortgage, in the particular jurisdiction, is re- 348, 30 N. E. 831; Day v. Perkins, 2 Sandf. Chi. (N. Y.) 359; Belvin V. Raleigh Paper Co., 123 N. Car. 138, 31 S. E. 655; Hey v. Bruner, 61 Pa. St. 87. ■" Seedhouse v. Broward, 34 Fla. 509, 16 So. 425; Cunningliam v. Cureton, 96 Ga. 489, 23 S. E. 420; Bowen v. Wood, 35 Ind. 268; Ot- tumwa ■Woolen Mill Co. v. Hawley, 44 Iowa 57, 24 Am. Rep. 719; Mutual Ben. Life Ins. Co. v. Huntington, 57 Kans. 744, 48 Pac. 19; Dutro v. Kennedy, 9 Mont. 101, 22 Pac. 763. "Clary v. Owen, 15 Gray (Mass.) 552. The mortgage will even attach to machinery put Into a mill by the maker for trial, and to be purchased upon its proving satisfactory. Ham- ilton V. Huntley, 68 Ind. 521, 41 Am. Rep. 593. In this case the person who ordered the machinery was not the owner, but a tenant of the mill. The machinery was attached to the mill only in a temporary manner, so that it could be removed without injury to the mill. It was to be- come the property of the tenant of the mill upon his giving his notes for the price of the machinery after sixty days' trial of it. The tenant refused to accept the machinery and give his notes as agreed, and he subsequently quit possession of the mill, leaving the machinery in it, and another tenant took posses- sion of it. It was held that, as be- tween the makers of the machinery and the . mortgagee, the machinery was part of the realty. See also Bass Foundry v. Gallentlne, 99 Ind. 525. There is a tendency in some cases to hold that where the fixtures are erected by a tenant of the mort- gagor, under an agreement that they shall remain the property of the tenant, the mortgagee can not interpose, before taking possession of the premises, to prevent the car- rying out of such agreement. Tifft V. Horton, 53 N. Y. 377, 380, 13 Am. Rep. 537. °= Clary v. Owen, 15 Gray (Mass.) 552. *= Broaddus v. Smith, 121 Ala. 335, 26 So. 34, 77 Am. St. 61; Paine v. McDowell, 71 Vt. 28, 41 Atl. 1042. "' Pioneer Sav. &c. Co. v. Fuller, 57 Minn. 60, 58 N. W. 831. ■* Union Terminal Co. v. Wilmar &c. R. Co., 116 Iowa 392, 90 N. W. 92. 639 "WHAT COVERED BY MORTGAGE § 439 garded merely as a lien, the mortgagor, retaining the legal title, has the right to make a lease, which is valid as against the mortgagee, .in so far as it does not affect his security, and the lessee would have the same right to annex and remove fixtures as if no mortgage had been given, provided their removal does not render the premises less valuable as a security than they were at the date of the mortgage.^' Where, during the pendency of a suit to foreclose a mortgage, a stranger, by permission of the mortgagor, erected a barn on the mort- gaged premises, it was held that as against the mortgagee he had no right to remove it.°° A lessee who has erected a building upon mortgaged land, under an arrangement with the mortgagor, by leasing the building to the mortgagee after the latter has purchased the mortgaged premises upon foreclosure sale, is estopped from setting up title thereto in himself."^ When permanent structures are erected by a lessee upon the mort- gaged estate under an agreement with the mortgagor, the mortgagee's consent is necessary for their removal f^ but if they are erected for a temporary purpose, and with the intention of removing them, the lessee may remove them at any time during his term. A tenant's fixtures are not brought within a subsequent mortgage of the premises by his neglect to remove them on a renewal of his lease by a new landlord."^ Where one who has leased land to a firm buys out the right of one of the partners and afterward gives a mort- gage on the premises, the possession of the new firm is notice to the mortgagee that erections put up by the former firm are not covered by the mortgage, because the other partner's rights can not be taken away."* If a lessee subsequently purchases the reversion of the premises, "» Pioneer Sav. &c. Co. v. Fuller, 111. App. 153; Cooper v. Johnson, 57 Minn. 60, 58 N. W. 831; Bern- 143 Mass. 108, 9 N. B. 33; Holbrook heimer v. Adams, 70 App. Div. 114, v. Chamberlin, 116 Mass. 155, 17 75 N. Y. S. 93; Sprague Nat. Bank Am. Rep. 146; Lake Superior Ship V. Brie R. Co., 22 App. Div. 526, 48 Canal Co. v. McCann, 86 Mich. 106, N. Y. S. 65. But see McFadden v. 48 N. W. 692; Early v. Burtis, 40 Allen, 134 N. Y. 489, 32 N. E. 21, N. J. Eq. 501; Hughes v. Shingle 19 L. R. A. 446. Co., 51 S. Car. 1, 28 S. E. 2; Tunis •» Preston v. Briggs, 16 Vt. 124. Lumber Co. v. R. G. Dennis Lumber "i Betts V. Wurth, 32 N. J. Eq. 82. Co., 97 Va. 682, 34 S. E. 613. «^ Wiggins Ferry Co. v. Ohio &c. "^ Kerr v. Kingsbury, 39 Mich. 150, R. Co., 142 U. S. 396, 35 L. ed. 1055, 33 Am. Rep. 362. 12 Sup Ct. 188; Kelly v. Austin, 46 "Kerr v. Kingsbury, 39 Mich. 150, III. 156, 92 Am. Dec. 243; Hewitt 33 Am. Rep. 362. V. Watertown Steam Engine Co., 65 § 440 FISTDEES 640 machinery and other fixtures set up by him become subject to an existing mortgage of the realty.*' If a lessee mortgages his leasehold estate, the same rules in rela- tion to fixtures upon the estate apply as between him and his mort- gagee that would apply if he owned the estate in fee.** Trade fi:xtures set up by a partnership upon land owned by the individual partners, which the partnership has no interest in beyond the use, do not become part of the realty, and may be removed by the partnership when its occupation of the premises ceases.*'' §440. Eight of mortgagee of tenant's fixtures to remove same after surrender of lease. — If a lessee mortgages tenant's fixtures, and afterward surrenders his lease, the mortgagee has a right to enter and sever them. The surrender of the term does not operate to ex- tinguish the right or interest already granted, but is subject to that in- terest, for the support of which the original term still continues. The mortgagee's right to sever the fixtures from the freehold is an interest of a peculiar nature, in many respects rather partaking of the char- acter of a chattel than of an interest in real estate. "But we think," said Mr. Justice Williams, in a case before the English Court of Common Pleas,** "that it is so far connected with the land that it may be considered a right or interest in it, which, if the tenant grants away, he shall not be allowed to defeat his grant by a subsequent vol- untary act of surrender."*' § 441. Removal of trade or manufacturing fixtures by tenant. — It is a settled rule of law that fixtures annexed to the freehold by a tenant for the purposes of trade or manufacture may be removed by him at the expiration of his term, whenever the removal of them is not contrary to any prevailing practice, and the articles can be re- moved without causing material injury to the freehold.'" The pur- »» Jones V. Detroit Chair Co., 38 371; Free v. Stuart, S9 Nebr. 220; 57 Mich. 92, 31 Am. Rep. 314. N. "W. 991. '^''Shuart v. Taylor, 7 How. Pr. " McConnell v. Blood, 123 Mass. (N. Y.) 251; Ex parte Bentley, 2 47, 25 Am. Rep. 12; Holbrook v. M. D. & De G. 591; Ex parte Wil- Chamberlin, 116 Mass. 155, 17 Am. son, 4 Dea. & Chittenden 143, 2 Mont. Rep. 146; Guthrie v. Jones, 108 & Ayr. 61. Mass. 191; PoIIe v. Rouse, 73 Miss. '"Robertson v. Corsett, 39 Mich. 713, 19 So. 481; Coombs v. Beau- 777. mont, 5 B. & Ad. 72; Trappes v. "'London &c. Loan &c. Co. v. Harter, 3 Tyrw. 603; Tyler on Fix- Drake, 6 C. B. (N. S.) 798. tures, p. 267. See also Royce v. Lat- " Saint V. Pilley, L. R. 10 Exch. shaw, 15 Colo. App. 420, 62 Pac. 137; Adams v. Goddard, 48 Maine 627; Updegraff v. Lesem, 15 Colo. 212; Dobscheutz v. Holliday, 82 111. App. 297, 62 Pac. 342; Dreiske v. 641 WHAT COVERED BY JtOHTGAGE § 441 pose of this rule is to encourage the putting up of works beneficial to the public by persons whose tenure of the property is so short or so uncertain that they would not make the improvements or put in the machinery necessary for the profitable pursuit of their business, unless they had the right of removing these things at the termination of their tenancy. The reason of this rule does not ap- ply when the fixtures are annexed by one who has, instead of the limited interest of a tenant, an unlimited ownership in fee; or an ownership which is qualified only by the condition of a mortgage up- on the land which it is presumed he intends to fulfil, and which at any rate he would be estopped to say he did not intend to meet, and thus to keep the ownership of the land. Even after a forfeiture of the condition, he is allowed a considerable time within which to re- deem, "or else obtain the full value of the land and of all the personal articles he has affixed to it by a sale of the whole interest upon fore- closure. In a case before the Court of Exchequer,''^ the question of the application of this rule to the removal of a steam-engine and boiler, used in a saw-mill upon the mortgaged premises before the execution of the mortgage, was fully discussed. It was found by the jury that these things were put up by the mortgagor, not to improve the inheritance, but for the better use of the property, and that they could be removed without any appreciable damage to the freehold; but the court held that these findings were immaterial, be- cause the right of the mortgagee attached by reason of the annexation to the land, and therefore that the intention of the mortgagor in re- spect of them could not prevail against the legal eSect of the deed. People's Lumber Co., 107 111. App. entitled to remove such trade fix- 285; Baker v. McClurg, 96 111. App. tures. There have been several 165; Ward v. Earl. 86 111. App. 635; cases where the courts have de- Gordon V. Miller, 28 Ind. App. 612, cided that, upon the true construc- 63 N. B. 774; Union Terminal Co. tion of the mortgage deeds, trade V. Wilmer &c. R. Co., 116 Iowa 392, fixtures were removable by the 90 N. W. 92; L. A. Thompson Scenic mortgagor, but not one to show R. Co. V. Young, 90 Md. 278, 44 Atl. that such right exists without a 1024; Winner v. Williams, 82 Miss, special provision. A mortgage is a 669, 35 So. 308; Cohen v. Witte- security or pledge for a debt, and mann, 100 App. Div. 338, 91 N. Y. it is not unreasonable, if a fixture S. 493; Couch v. Welsh, 24 Utah 36, be annexed to land at the time of 66 Pac. 600; Tunis Lumber Co. v. the mortgage, or if the mortgagor R. G. Dennis Lumber Co., 97 Va. in possession afterward annexes a 682, 34 S. E. 613. fixture to it, that the fixtures shall '' Climie v. Wood, L. R. 3 Exch. be deemed an additional security 257. Kelly, C. B., delivering the for the debt, whether it be a trade judgment of the court, said: "It Is fixture or a fixture of any other a case between mortgagor and mort- kind. It has already been observed gagee, and no authority has been that no authority has been cited to cited to show that a mortgagor is show that trade fixtures may be re- 41 — ^JoNES Mtg. — Vol. I. 441 FIXTUEBS 642 This ease was carried by appeal to the Exchequer Chamber/^ where the judgment of the court below and the law there declared were affirmed. Mr. Justice Willes, speaking of the reason why the engine and boiler, though they might have been removed by a tenant at the expiration of his term, yet could not be removed by a mort- gagor, said: "And we are of opinion that the decisions which es- tablish a tenant's right to remove trade fixtures do not apply as be- tween mortgagor and mortgagee any more than between heir at law and executor. The irrelevancy of these decisions to cases where the conflicting parties are mortgagor and mortgagee was pointed out in Walmsley v. Milne,'^ and we concur with the observations made in that case by the Court of Common Pleas." As illustrating this dis- tinction and the reason of it, the learned judge quotes the language of Lord Cottenham, in a case before the House of Lords, where it was sought to extend the rule in regard to trade fixtures to a case arising between an heir at law and executor.''* If the premises are mortgaged by the lessor during the existence of a tenancy, the mortgagee, or any one deriving title to the prem- ises under the mortgage, occupies the position of the lessor toward to encourage him to erect those new works which are supposed i;o he ben- eficial to the public, that any rule of that kind should be established, because he was master of his own land. It was quite unnecessary, therefore, to seek to establish any such rule In favor of trade as ap- plicable here, the whole being en- tirely under the control of the per- son who erected this machinery." To like effect Chief Justice Shaw, in a case before the Supreme Court of Massachusetts, Winslow v. Mer- chants' Insurance Co., 4 Mete. (Mass.) 306, 38 Am. Dec. 368, said: "The mortgagor, to most purposes, is regarded as the owner of the es- tate; indeed, he is so regarded to all purposes, except so far as it is necessary to recognize the mort- gagee as legal owaer for the pur- poses of his security. The improve- ments, therefore, which the mort- gagor, remaining in the possession and enjoyment of the mortgaged premises, makes upon them, in con- templation of law he makes for him- self, and to enhance the general value of the estate, and not for its temporary enjoyment." moved by the mortgagor, but there are several to the contrary; and un- less we are prepared to overrule them, our judgment must be ad- verse to the plaintiff." To like ef- fect see Cullwick v. Swindell, L. R. 3 Bq. Cas. 249, per Lord Romilly; Ex parte Cotton, 2 Mont. D. & De G. 725; Hawtry v. Butlin, L. E. 8 Q. B. Div. 290, 21 W. R. 633; Maples V, Millon, 31 Conn. 598; Day v. Per- kins, 2 Sandf. Ch. (N. Y.) 859. "Climie v. Wood, L. R. 4 Exch. "7 C. B. (N. S.) 115. » Fisher v. Dixon, 12 CI. & F. 312. "The principle upon which a de- parture has been made from the old rule of law in favor of trade appears to me to have no application to the present case. The individual who erected the machinery was the own- er of the land, and of the personal property which he erected and em- ployed in carrying on the works: he might have done what he liked with it; he might have disposed of the land; he might have disposed of the machinery; he might have separated them again. It was there- fore not at all necessary, in order 643 WHAT COVERED BY MORTGAGE '§ 443 the lessee; and the latter may remove in that case fixtures erected by him whenever he could do so as against his lessor.'^ It has been said that it is immaterial whether the mortgagee of the land had notice that the articles were trade fixtures, since he could not acquire any interest other than what the mortgagor had, and be- sides the very character of the structure, and of the business carried on therein, were sufScient to put him on inquiry.'"' A receiver who rebuilt a trade fixture with the proceeds of insurance, after loss by fire, was held to have the right to remove same as against one claiming under a mortgage subsequent to the lease." § 442. Vermont rule. — In Vermont the rule as to fixtures seems to be exceptionally strict in requiring that they shall in all cases be substantially attached to the freehold, and in holding that it is not sufScient to make personal chattels a part of the freehold that they are attached to the building in which they are used in a manner adapted to keep them steady, or that they are essential to the occupation of the building for the business carried on in it. "The rule requiring actual annexation," says Mr. Justice Bennett,'* "is not affected by those cases where a constructive annexation has been held suf&cient. These cases may be regarded as exceptions to the general rule, or else as cases where the things were mere incidents to the freehold, and be- came a part of it, and passed with it, upon a principle different from that of its being a fixture." It was, moreover, said that reference must be had not only to the annexation, but also to the object and pur- pose of it ; and that to change the nature and legal qualities of a chattel into a fixture requires not only a positive act on the part of the person making the annexation, but also that his intention to make this change should particularly appear; and that, if this intention be left in doubt, the article should still be regarded as personal property. It was accordingly held in this case that, in a mortgage of a mill for manufacturing paper, the iron shafting used to communicate the motive power to the machinery, and fastened to the building by means of bolts, should be r^arded as a constituent part of the mill, and therefore as included in a mortgage of that; but that a large iron boiler supported by brick-work, laid on a stone foundation placed on the ground near the center of the building, and also the machines " Globe Marble Mills Co. v. Quinn, " Union Terminal Co. v. "Wllmar 76 N. Y. 23, 32 Am. Rep. 259. &c. A. R. Co., 116 Iowa 392, 90 N. "Royce v. Latshaw, 15 Colo. App. W. 92. 420, 62 Pac. 627. "Hill v. Wentworth, 28 Vt. 429. §■ 443 FIXTURES 644 for grinding rags into pulp, the paper-presses, and other machinery, were no part of the real estate, as between the mortgagor and mort- gagee. This decision was followed by another to like effect in the same court, holding that, while the steam-engine and boilers used in a marble mill were fixtures as between mortgagor and mortgagee, yet the saw-frames, though fastened to the building by bolts, were not such fixtures. The manner in which they were attached to the build- ing was not considered to be such as to operate to change their char- acter as chattels.''^ § 443. Statutory provisions. — In Vermont it is provided by stat- ute that machinery attached to or used in any shop, mill, printing- oflBce, or factory may be mortgaged by deed, executed, acknowledged, and recorded as deeds of real estate. Such mortgages may be as- signed, discharged, or foreclosed like mortgages of real estate.^" The statute does not apply to a case where machinery was set up subsequent to and not mentioned in a mortgage of the realty whereto it is at- tached, but the rights of the parties are to be determined by the law established by the decisions of the court prior to the statute.*^ In Connecticut it is provided that the fixtures of a manufacturing or mechanical establishment, or of a printing or publishing house, the furniture of a dwelling-house, and the hay in a barn, and other things enumerated, may be mortgaged with the realty when the mort- gage contains a particular description of the machinery, furniture, or other property, to the same effect as if the same were a part of the real estate. The same may be mortgaged separate from the realty, if particularly described, and the deed be executed, acknowledged, and recorded in all respects as a mortgage of land.*^ In Ehode Island it is provided that the water-wheels, steam-engines, boilers, main belts which first give motion to the shafting, all shafting, whether upright or horizontal, and hangers for the same, except such as are used to drive a special machine, all drums, pulleys, wheels, gear- ing, steam-pipes, gas-pipes and gas fixtures, water-pipes and fixtures, kettles and vats set and used in any mechanical or manufacturing "Sweetzer v. Jones, 35 Vt. 317, Stearns, 30 Vt. 443; Sturgis v. War- 82 Am. Dec. 639. See also Kendall ren, 11 Vt. 433; Tobias v. Francis, V. Hathaway, 67 Vt. 122, 30 Atl. 3 Vt. 425, 23 Am. Rep. 217. 859; Hackett v. Amsden, 57 Vt. 432; ^'Rev. Stat. 1894, § 2269. Newhall v. Kinney, 56 Vt. 591; Bav- *"■ Kendall v. Hathaway, 67 Vt. 122, enport v. Shants, 43 Vt. 546; Har- 80 Atl. 859. ris V. Haynes, 34 Vt. 220; Bartlett =^Gen. Stat. 1902, § 4132. V. Wood, 32 Vt. 372; Fullam v. 645 MACHINERY IN MILLS § 444 establishment, shall be regarded as real estate, whenever the same be- long to the owner of the real estate to which they are attached. All other machinery, tools, and apparatus of every description, used and employed in any manufacturing establishment, are declared to be per- sonal estate.*'^ II. Machinery in Mills Section 444. Intention witli reference to ma- chinery in mills. 445. Effect of subsequent chattel mortgage of machinery. 446. Machinery furnishing motive power. Section 447. Various articles of machinery. 448. Looms in mill. 449. Cotton looms. 450. Machinery of a silk-mill. 451. Machinery in iron rolling-mill. I§ 444. Intention with reference to machinery in mills.— A dis- tinction is properly made between such fixtures in a mill as are in- dispensable to its use as a mill, and the movable machines used in it, which may be dispensed with upon a change in business to which the mill may be readily adapted.^ Of the former class are such as are used for furnishing the motive power; and if the mill is adapted to one business only, the machinery necessary for that business may be included in the same class.^ To this class also belongs machinery »1 Stim. Am. St. Law. §§ 2100- 2102. 1 Tillman v. De Lacy, 80 Ala. 103; Smith Paper Co. v. Servin, 130 Mass. 511; McConnell v. Blood, 123 Mass. 47, 25 Am. Rep. 12; Farrar v. Chauf- fetete, 5 Denio (N. Y.) 527; Morris' Appeal, 88 Pa. St. 368; Price v. Jenks, 14 Phila. (Pa.) 228. See also Shepard v. Blossom, 66 Minn. 421, 69 N. "W. 221, 61 Am. St. 431. = Harkness v. Sears, 26 Ala. 493, 62 Am. Dec. 742; Sands v. Pfeiffer, 10 Cal. 258; Kloess v. Katt, 40 111. App. 99; Otis v. May, 30 111. App. 581; Jenney v. Jackson, 6 111. App. 32; Soarks v. State Bank, 7 Blackf. (Ind.) 469; Ottumwa "Woolen Mill Co. V. Hawley, 44 Iowa 57, 24 Am. Rep. 719; New Orleans Canal &c. Co. V. Leeds, 49 La. Ann. 123, 21 So. 168; McKim v. Mason, 3 Md. Ch. 186; Southbridge Sav. Bank v. Ex- eter Mach. Works, 127 Mass. 542; McConnell v. Blood, 123 Mass. 47, 25 Am. Rep. 12; Winslow v. Merchants' Ins. Co., 4 Mete. (Mass.) 306, 38 Am. Dec. 368; Coleman v. Stearns Mfg. Co., 38 Mich. 30; Dutro v. Ken- nedy, 9 Mont. 101, 22 Pac. 763; Despatch Line of Packets v. Bel- lamy Mfg. Co., 12 N. H. 205, 37 Am. Dec. 203; Lee v. Hubschmidt Bldg. &c. Co., 55 N. J. Eq. 623, 37 Atl. 769; Speiden v. Parker, 46 N. J. Eq. 292, 19 Atl. 21; Scheifele v. Schmitz, 42 N. J. Eq. 700, 1 Atl. 698; Dela- ware, L. &c. R. Co. V. Oxford Iron Co., 36 N. J. Eq. 452; Keeler v. Keeler, 31 N. J. Eq. 181; McMillan V. Fish, 29 N. J. Eq. 610; Potts v. New Jersey Arms Co., 17 N. J. Eq. 395; Crane v. Brigham, 11 N. J. Eq. 29; Doughty v. Owen (N. J. Eq.), 19 Atl. 540; Berliner v. Piqua Club Assn., 32 Misc. 470, 66 N. Y. S. 791; Bigler v. Nat. Bank, 26 Hun (N. Y.) 520; Phoenix Mills v. Miller, 4 N. Y. St. 787, 17 N. Y. S. 158; Cooper v. Harvey, 16 N. Y. S. 660; Home v. Smith, 105 N. Car. 322, 11 S. E. 373, 18 Am. St. 903; Case Manufacturing Co. V. Carver, 45 Ohio St. 289, 13 N. E. 493; Brennan v. Whitaker, 15 Ohio St. 446; Teaff v. Hewitt, 1 Ohio St. 511, 59 Am. Dec. 634; Barker V. Cincinnati Pressed Brick Co., 4 Ohio Dec. 270; Helm v. Gilroy, 20 § 444 FIXTURES 646 specially adapted to carry out the purpose for ■which the mill was erected, and presumably to increase its value, although it may be removed without injury to the building.* Of the other class are movable machines used in a mill adapted to various kinds of business, which may be wholly set aside, and still the value and usefulness of the mill property would not be materially Ore. 517, 26 Pac. 851; Vail v. Weav- er, 132 Pa. St. 363, 19 Atl. 138, 19 Am. St. 598; Roberts v. Dauphin Deposit Bank, 19 Pa. St. 71; Jones V. Bull, 85 Tex. 136, 19 S. W. 1031; Phelan v. Boyd (Tex.), 14 S. W. 290; Sweetzer v. Jones, 35 Vt. 317, 82 Am. Dec. 639; Harris v. Haynes, 34 Vt. 220; Hill v. Wentworth, 28 Vt. 428; Frankland v. Moulton, 5 "Wis. 1; Walmsley v. Milne, 7 C. B. (N. S.) 115, 97 E. C. L. 115; Long- bottom V. Berry, L. R. 5 Q. B. Div. 123; Climle v. Wood, L. R. 3 Exch. 257, L. R. 4 Exch. 329; Hobson v. Gorringe, 1 Ch. 182; Cross v. Barnes, 46 L. J. Q. B. Div. 479, 36 L. T. (N. S.) 693; Schrieber v. Malcolm, 8 Grant's Ch. (U. C.) 433; Minhin- nlck V. Jolly, 29 Ont. Rep. 238; Don V. Warner, 28 Nova Scotia 202; Dates v. Cameron, 7 U. G. Q. B. Div. 228; Dickson v. Hunter, 29 Grant's Ch. (U. C.) 73. " Southbridge Sav. Bank v. Mason, 147 Mass. 500, 18 N. E. 406; Pierce V. George, 108 Mass. 78; Hopewell Mills V. Taunton Sav. Bank, 150 Mass. 519, 23 N. E. 327, 15 Am. St. 235. In the latter case Knowlton, J., said: "We are of opinion that this rule is applicable to the case at bar. The building mortgaged was a cotton-mill; and the machin- ery in controversy was all procured for use In the manufacture of cotton cloth. Most of it was heavy; and there is much to indicate that, while there were changes in the kinds of goods manufactured, the machines were not of a kind intended to be moved from place to place, but to be put in position and there used with the building until they should be worn out, or until, for some un- foreseen cause, the real estate should be changed, and put to a dif- ferent use. Of most of them, it is said in the agreed statement that they were fastened to the floor for the purpose of steadying them when in use; but it is also said that this is not a statement of the only pur- pose for which they were fastened. They seem to have been attached to the building, and connected with the motive power, with a view to permanence." See also Hill v. Farmers' &c. Nat. Bank, 97 U. S. 450, 24 L. ed. 1051; William Firth Co. V. South Carolina L. &c. Co., 122 Fed. 569, 59 C. C. A. 73; Fisk V. People's Nat. Bank, 14 Colo. App. 21, 59 Pac. 63; Cunningham v. Cure- ton, 96 Ga. 489, 23 S. E. 420; Calu- met Iron &c. Co. v. Lathrop, 36 111. App. 249; Stillman v. Flenniken, 58 Iowa 450, 10 N. W. 842, 43 Am. Rep. 120; Ottumwa Woollen Mill Co. v. Hawley, 44 Iowa 57, 24 Am. Rep. 719; Swoop V. St. Martin, 110 La. 237, 34 So. 426; Parsons v. Cope- land, 38 Maine 537; Lord v. Detroit Sav. Bank, 132 Mich. 510, 93 N. W. 1063; Lyle v. Palmer, 42 Mich. 314, 3 N. W. 921; Farmers' Loan &c. Co. V. Minneapolis Engine Works, 35 Minn. 543, 29 N. W. 349; Langdon V. Buchanan, 62 N. H. 657; Knicker- bocker Trust Co. V. Penn Cordage Co., 66 N. J. Eq. 305, 58 Atl. 409, 105 Am. St. 640; Atlantic Safe De- posit &c. Co. V. Atlantic City Laun- dry Co., 64 N. J. Eq. 140, 53 Atl. 212; Roddy v. Brick, 42 N. J. Eq. 218, 6 Atl. 806; Delaware &c. R. Co. V. Oxford Iron Co., 36 N. J. Eq. 452; McRea v. Bank, 66 N. Y. 489; Cooper V. Harvey, 16 N. Y. S. 660; Morris' Appeal, 88 Pa. St. 368; Har- lan V. Harlan, 15 Pa. St. 507; Mc- Fadden v. Crawford, 36 W. Va. 671, 15 S. E. 408, 32 Am. St. 894; Pat- ton V. Moore, 16 W. Va. 428, 37 Am. Rep. 789; Taylor v. Collins, 51 Wis. 123, 8 N. W. 22; Longbottom V. Berry, L. R. 5 Q. B. Div. 123; Holland v. Hodgson, L. R. 7 C. P. 328. 6J:7 MACHINEET IN MILLS § 444: impaired. Such machinery, not being indispensable to the enjoy- ment of the realty, is generally considered not to be a part of it, and not to pass by a mortgage of it.* The courts of different states are not agreed as to the legal status of articles of machinery; for, while the policy of some seems to be to treat them as chattels wherever the intention of the parties will per- mit, other courts are disposed to regard them as fixtures to the realty. A mortgage was made of certain land, and the mills thereon.^ In the mills were various articles of machinery for carding, spin- ning, and preparing cotton yarn and cotton twine. These were sub- sequently seized upon an execution against the mortgagor, and were claimed as well by the mortgagee. It appeared that the machines might be easily removed without injury to them or to the building, and might be used for the same purpose in any other building." The court held that they were not properly fixtures, and therefore not subject to the mortgage. Under quite similar circumstances a mortgage of a woolen factory was held not to pass the looms used in it for the manufacture of broadcloth, and merely fastened to the floor by screws to keep them in their places.^ In these cases the intention was held to govern the character of the articles under con- sideration. It is to be observed, however, that other courts have de- cided cases quite similar, if not altogether like these cited from the * Carpenter v. Walker, 140 Mass. other building erected for similar 416, 5 N. E. 160; Maguire v. Park, purposes." 140 Mass. 21, 1 N. B. 750; Hubbell =Vanderpoel v. Van Allen, 10 V. Savings Bank, 132 Mass. 447, 42 Barb. (N. Y.) 157. See also Potter Am. Rep. 446; Soutb Bridge Sav. v. Cromwell, 40 N. Y. 287, 100 Am. Bank v. Exeter Macbine Works, 127 Dec. 485; Cresson v. Stout, 17 Johns. Mass. 542, 25 Am. Rep. 47; McCon- (N. Y.) 116, 8 Am. Dec. 373. nell V. Blood, 123 Mass. 47, 25 Am. ° The highest authorities agree in Dee. 12; Winslow v. Merchants' Ins. holding that these facts alone Co., 4 Mete. (Mass.) 306, 38 Am. should have little weight in decid- Dec. 368; Robertson v. Corsett, 39 ing the question. See cases cited in Mich. 777; Wolford v. Baxter, 33 this section, and Walmsley v. Milne, Minn. 12, 21 N. W. 744, 53 Am. Rep. 7 C. B. (N. S.) 115. 1; Scheifele v. Schmitz, 42 N. J. 'Murdock v. Gifford, 18 N. Y. 28. Eq. 700, 11 Atl. 257; Pennsylvania In the Supreme Court it was held Mut. Ins. Co. V. Semple, 38 N. J. that the mortgage carried the Eq. 575; Rogers v. Brokaw, 25 N. J. looms, on the ground that they Eq. 496; Gale v. Ward, 14 Mass. 352, were intended to be a permanent 7 Am. Dec. 233. In the latter case, and essential part of the woolen Mr. Chief Justice Parker said the factory. Murdock v. Harris, 20 articles in controversy "must be Barb. (N. Y.) 407. See McRea v. considered as personal property, be- Central Nat. Bank, 66 N. Y. 489, for cause, although in some sense at- a review of the cases in New York, tached to the freehold, yet they See also Blancke v. Rogers, 26 N. J. could be easily disconnected, and Eq. 563; Rogers v. Brokaw, 25 N. J. were capable of being used in any Eq. 496. § 444 pixTUKEs 648 New York reports, directly contrary to the decisions in these;' and it is to be further observed that the policy of the decisions in. New- York, Vermont, and Ohio seems to be to favor treating machinery and like articles fixed to the realty as chattels.' Other courts, for good reasons, hold such machinery to be fixtures, and to be covered by a mortgage of the realty without particular mention. Thus, in a case decided in lowa,^" the mortgage, after describing the land, upon which was situated a woolen manufactory filled with ma- chinery for making cloth from wool, granted "all and singular the tenements, hereditaments, and appurtenances thereto belonging or in any wise appertaining." Other mortgages were subsequently made which in terms covered the machinery, and upon a foreclosure of the former mortgage a contention arose in regard to the machinery of the mill. The court, after critically reviewing the cases, say: "It being conceded by all the cases that the engine, boiler, and attach- ments, being the motive power, are fixtures, and that the stones or burrs of a grist-mill, with the attachments, are likewise fixtures, it is not easy to understand why any dividing line should be made at the point where the belting attaches to the other machinery. Is there anything in the whole record of this case tending to show that the machinery in question was intended to be any less permanent than the engine, shafting, or belt? The fair presumption is, that the whole machinery, including that now in question, was placed in the build- ing with the intention that it should remain there as part of the machinery until worn out or displaced by other. This assumption is as strong and controlling as to the carding-machines, spinning- jacks, etc., as it is as to the engine, shafting, and belts." There- fore the court conclude that all of the machinery which was propelled by the engine was part of the real estate, and passed by the fore- closure sale.^^ There is no certain criterion by which to determine in all cases what belongs to the one class and what to the other. Different courts decide differently in regard to the same articles; and even the de- cisions of the same court do not always seem to be perfectly consist- ent. The varying circumstances of the cases seem sometimes to have " Ottumwa Woolen Mill Co. v. Hawley, 44 Iowa 57, 24 Am. Rep. Hawley, 44 Iowa 57, 24 Am. Rep. 719. 719. "To like eifeot see Parsons v. »TeafE v. Hewitt, 1 Ohio St. 511, Copeland, 38 Maine 537; Teaffi v. 59 Am. Dec. 634. See ante § 442. Hewitt, 1 Ohio St. 511, 59 Am. Dec. "Ottumwa Woolen Mill Co. v. 634; Harlan v. Harlan, 15 Pa. St. 507, 53 Am. Dec. 612. 649 MACHINEEY IN MILLS § 444 an immediate influence upon the determination of the courts, greater than the statement of them in the reports would seem to warrant. But in doubtful cases, where the mode and extent of the annexation of the chattels to the realty do not determine their character as fix- tures, the intention with which they were put upon the estate, whether for permanent use or for a temporary purpose, comes in with a con- trolling influence to settle the doubt.^^ This intention is to be gathered, not merely or chiefly from the manner in which the chat- tels are annexed to the realty, but from the character of the improve- ment, whether it is essential to the proper use of the realty.^^ It is held that the mere placing of machinery in position in a building with intent to make it a permanent part of a manufacturing plant, does not make it part of the real estate unless it is actually or constructively attached to the building or to the land. It may be sufiicient if the machines be secured or bolted to the floor, or the ponderous machines weighing from three to four tons resting upon the floor, by their own weight, may under certain circumstances be treated as part of the realty.^** Some courts are inclined to regard all things used in a factory, which are a part of the machinery necessary in the process of manu- facture, as fixtures and covered by a mortgage of the factory ;^^ while other courts are inclined to regard all movable machinery, not in- dispensable to carrying on the work of the factory, as personalty." A mortgage of a manufacturing plant which covers machinery, >=Tolles v. Winton, 63 Conn. 440, E. 750; Shelton v. Ficklln, 32 Grat. 28 Atl. 542; Stockwell v. Campbell, (Va.) 727; Green v. Phillips, 26 39 Conn. 362, 12 Am. Rep. 393; Ca- Grat. (Va.) 752, 21 Am. Rep. 323. pen v. Peckham, 35 Conn. 88; Kelly "Shepard v. Blossom, 66 Minn. V. Austin, 46 111. 156, 92 Am. Dec. 421, 69 N. W. 221, 61 Am. St. 431; 243, per Walker, J.; Ottumwa Washington Nat. Bank v. Smith, 15 Woolen Mill Co. v. Hawley, 44 Wash. 160, 45 Pac. 736. Iowa 57, 24 Am. Rep. 719; Smith ^= Johnson v. Wiseman, 4 Mete. Paper Co. v. Servin, 130 Mass. 511; (Ky.) 357, 83 Am. Dec. 475; Huston Ferris v. Quimby, 41 Mich. 202, 2 v. Clark, 162 Pa. St. 435, 29 Atl. N. W. 9; Keeler v. Keeler, 31 N. J. 866. Eq. 181; McRea v. Central Nat. "Magulre v. Park, 140 Mass. 21, Bank, 66 N. Y. 489; Morris' Appeal, 1 N. E. 750; Farmers' Loan &c. Co. 88 Pa. St. 368; Shelton v. Ficklin, v. Minneapolis Eng. &c. Works, 35 32 Grat. (Va.) 727. Minn. 543, 29 N. W. 349; Wolford " Rogers v. Prattville Mfg. Co., 81 v. Baxter, 33 Minn. 12, 21 N. W. Ala. 483, 1 So. 643, 60 Am. Rep. 171; 744, 53 Am. Rep. 1; Keeler v. Tillman v. De Lacy, 80 Ala. 103; Keeler, 31 N. J. Eq. 181; Rogers v. Lavenson v. Standard Soap Co., 80 Brokaw, 25 K. J. Eq. 496; Chase v. Cal. 245, 22 Pac. 184; Carpenter v. Tacoma Box Co., 11 Wash. 377, 39 Walker 140 Mass. 416, 5 N. E. 160; Pac. 639; Cherry v. Arthur, 5 Wash. Maguire v. Park, 140 Mass. 21, 1 N. 787, 32 Pac. 744. § 445 FIXTURES 650 covers machinery subsequently put in to replace machinery that is old, worn out, or not well adapted to the purposes of the business.^^ § 445. Effect of subsequent chattel mortgage of machinery. — An existing mortgage of the realty may have priority of a chattel mort- gage of machinery subsequently annexed, although the chattel mort- gage be made at the time the articles were attached.^' ■If the mortgagee of the chattels has actual knowledge of the mort- gage of the realty, or constructive knowledge of it by record, his mort- gage of chattels annexed or about to be annexed to the realty is sub- ject to the legal consequences of the annexing of such chattels to the mortgaged realty. In a Massachusetts case, the right to certain ma- chinery in a building used as a machine-shop was contested between a mortgagee of the real estate and a mortgagee of the machinery de- scribed as personal property.^" Before either of the mortgages was made, the mortgagor owned the machine-shop, and also the machin- ery, and used both for manufacturing purposes. It was held that such machines and their appurtenances as were specially adapted to be used in the shop and were annexed to it passed by the mortgage of the real estate. In this class were included punches, polishing frames, vibra- tors, a polisher and fan-blower, the pulleys, shafting, and hangers. These were bolted or screwed to the floors or timbers of the building, although it appeared that they could be removed without substantial injury to it. The wheels belonging to the polishing machines were placed in the same class, although they could be detached and removed without injury. But other articles not appearing to be essential parts of the shop, and not attached to it, were held not to pass by the mort- gage of the real property, but by the mortgage of the personalty. Of these articles not considered fixtures in any sense of the word were " Sturgis Nat. Bank T. Levanseler, Car. 339, 11 S. E. 1069; Jones on 115 Micli. 372, 73 N. "W. 399. Chattel Mortgages, §§ 123-135. See '» Roddy V. Brick, 42 N. J. Eq. 218. ante §§ 436b, 436c. See also Fisk v. People's Nat. Bank, '" Pierce v. George, 108 Mass. 78, 14 Colo. App. 21, 59 Pac. 63; Bass 11 Am. Rep. 310. See also Millikin Foundry v. Gallentine, 99 Ind. 525; v. Armstrong, 17 Ind. 456; First Pierce v. George, 108 Mass. 78, 11 Nat. Bank v. Elmore, 52 Iowa 541, Am. Rep. 310; Tibbetts v. Home, 65 3 N. "W. 547; Parsons v. Copeland, N. H. 242, 23 Atl. 145; Voorbees v. 38 Maine 537; Allen v. "Woodard, McGinnis, 48 N. Y. 278; Henry v. 125 Mass. 400, 28 Am. Rep. 250; Mc- Von Brandenstein, 12 Daly (N. Y.) Connell v. Blood, 123 Mass. 47, 25 480; Cooper v. Harvey, 16 N. Y. S. Am. Rep. 12; Winslow v. Mer- 660; Buzzell v. Cummings, 61 Vt. chants' Ins. Co., 4 Mete. (Mass.) 213, 18 Atl. 93; Smith v. Waggoner, 306, 38 Am. Dec. 368; Richardson 50 Wis, 155, 6 N. W. 568. See v. Copeland, 6 Gray (Mass.) 536, 66 contra Padgett v. Cleveland, 33 S. Am. Dec. 424. 651 MACHINERY IN MILLS § 445 the lathes fastened to a bench by screws, and operated by a foot move- ment; grindstones resting upon frames standing upon the floor; a rattler and frame, tack machines, the slitter, the anvils, the vises, the lathes, and a portable forge. In a case in Ohio a similar question arose between the holder of a chattel mortgage of the fixtiires and a mortgagee of the realty in re- spect to the boilers, engines, saws, and gearing of a steam saw-mill. ^^ The chattel mortgage was made before the articles were annexed to the property, but it recited that they were designed to be used in the mortgagor's saw-mill, and power was given the mortgagees to take possession of them upon default, whether they should be attached to the freehold and in law become a part of the realty or not. The mort- gage of the real estate was afterward taken without notice of this agreement. The record of the chattel mortgage was constructive notice only of an incumbrance upon chattels; but when the mortgage of the real estate was made, these things were not chattels, but real estate, and the record of the mortgage as a chattel mortgage was no notice to the mortgagee of the realty. The court declared that it devolved upon the mortgagee of the chattels, who sought to change the legal character of the property after it was annexed to the realty and to create incumbrances upon it, either to pursue the mode prescribed by law for incumbering the kind of estate to which it appeared to the world to belong, and for giving notice of such incumbrance ; or, other- wise, take the risk of its loss in case it should be sold and conveyed "■ Brennan v. Wliitaker, 15 Ohio boiler and machinery were at the St. 446. For a similar case with shop for repair, the owner of the lilie decision, see Pranltland v. mill gave a chattel mortgage upon Moulton, 5 Wis. 1. See also Fort- them; and after the repairs were man v. Goepper, 14 Ohio St. 558. In completed, and the mill was in run- Voorhees v. McGinnis, 48 N. Y. 278, ning order, he gave another mort- the owner of a saw and grist mill gage upon them and other ma- erected a substantial building, and chinery. After the repairs and before placed therein a steam-engine, the last chattel mortgage, he gave boiler, shafting, and gearing, which a second real estate mortgage on the were constructed with special refer- premises, and the plaintiff ac- ence to the place in which they quired title under the foreclosure were to be used, but without any and sale oU the two real estate intent on the part of the person mortgages. The holders of the making the improvement either of chattel mortgages removed the ma- making them a part of the freehold, chinery covered by these mortgages, or of removing them in the future, It was held that, although the mort- and gave a real estate mortgage gagor had no special intent upon upon the property. Subsequently the subject, the facts disclosed that the boiler and machinery were re- the boiler, engine, shafting, and moved for the purpose of having gearing were permanent accessions them replaced by a new boiler and to the freehold. new machinery, and, while the new § 445 FIXTURES 652 as part of the real estate of a purchaser without notice.^^ As against a mortgagee of the realty, to sustain a claim to the fixtures, there must be either an actual severance of them previously made, or actual notice of the agreement by the mortgagor that they should be severed. If machinery, already subject to a chattel mortgage, be afiked to the realty, with the assent of the mortgagee, it becomes a question ■whether the chattel mortgage lien is lost as against an existing mort- gagee of the realty, or as against subsequent purchasers and mort- gagees of the realty, or creditors who subsequently obtain liens upon it. The intention and agreement of the parties has much to do with the determination of the question whether the chattels annexed to the realty retain their character as personal property.^^ An engine and boiler mortgaged to the maker were set up on a foundation, and an engine-house was built over them. The land was already subject to a mortgage. It was held that the mortgagee of the land acquired no title to the engine and boiler as against the mort- gagee of these chattels, although it appeared that they could not be removed without some injury to the walls built up about them; for the chattels could be removed without taking away or destroying that which was essential to the support of the main building, or other part of the real estate to which they were attached, and without destroying or of necessity injuring the chattels themselves.^* A water-wheel and necessary shafting and gearing put into a saw- mill, under an agreement which amounted to a conditional sale, re- tain their identity and character as chattels as against a mortgagee whose mortgage covered the mill when these things were attached.^'' But machinery permanently attached to land and belonging to the ''"Per White, J., in Brennan v. 583, 43 N. Y. St. 698, 17 N. Y. S. Whitaker, 15 Ohio St. 446. He dis- 330. sents from the ruling in Ford v. '^ Tifft v. Horton, 53 N. Y. 377, 13 Cobb, 20 N. Y. 344, where it was Am. Rep. 537. See also Miller v. held that an agreement evidenced Griffin, 102 Ala. 610, 15 So. 238; by a chattel mortgage was effectual Tibbetts v. Moore, 23 Cal. 208; An- against a subsequent purchaser of derson v. Creamery Package Mfg. the land without notice; and cites Co., 8 Idaho 200, 67 Pac. 493, 56 L. to the contrary Richardson v. Cope- R. A. 554, 101 Am. St. 188; Long land, 6 Gray (Mass.) 536, and other v. Cockern, 128 111. 29, 21 N. E. 201, cases. affg. 29 111. App. 304; First Nat. '"Manwaring v. Jenison, 61 Mich. Bank v. Elmore, 52 Iowa 541, 3 N. 117, 27 N. W. 899; Campbell v. W. 547; Eaves v. Estes, 10 Kans. Roddy, 44 N. J. Eq. 244, 14 Atl. 279, 314, 15 Am. Rep. 345. But see Voor- 6 Am. St. 889; Tifft v. Horton, 53 hees v. McGinnis, 48 N. Y. 278; N. Y. 377, 13 Am. Rep. 537; Potter Frankland v. Moulton, 5 Wis. 1. v. Cromwell, 40 N. Y. 287, 100 Am. == Page v. Edwards, 64 Vt. 124, 23 Dec. 485; Sheldon v. Edwards, 35 Atl. 917; Buzzell v. Cummings, 61 N Y. 279; Rowland v. West, 62 Hun Vt. 213, 18 Atl. 93; Davenport v. 653 MACHINERY IN MILLS § 446 owner thereof, which was used in a manufactory, will be treated as a fixture and pass by a real estate mortgage given by him, although a chattel mortgage was given at the same time upon the machinery for the purpose of insuring against a possible mistake as to its character.^® §446. Machinery furnishing motive power. — A steam-engine and boiler, with the appurtenances belonging to them, permanently affixed, and used for furnishing the motive power of a mill, together with the shafts and pulleys connected with the engine, are fixtures, and pass to a mortgagee of the realty.^' The machinery of the motive power, whether a steam-engine or a water-wheel, and all the shafting and other means of communicating this power, are as a general rule fix- tures.^* A steam-engine and boilers fixed in a mill by the mortgagor after the execution of the mortgage become subject to it.^* It is not Shants, 43 Vt. 546. See in connec- tion Tibbetts v. Home, 65 N. H. 242, 23 Atl. 145, 15 L. R. A. 56, 23 Am. St. 31; Cochran v. Flint, 57 N. H. 514. ™ Studley v. Ann Arbor Sav. Bank, 112 Mich. 181, 70 N. W. 426; Home- stead Land Co. v. Becker, 96 Wis. 206, 71 N. "W. 117. "Tillman v. De Lacy, 80 Ala. 103; Lavenson v. Standard Soap Co., 80 Cal. 245, 22 Pac. 184, 13 Am. St. 147; Ottumwa Woolen Mill Co. v. Haw- ley, 44 Iowa 57, 24 Am. Rep. 719; Southbridge Sav. Bank v. Exeter Machine Works, 127 Mass. 542; Cole- man V. Stearns Mfg. Co., 38 Mich. 30; Scheifele v. Schmitz, 42 N. J. Eq. 700, 11 Atl. 257; Roddy v. Brick, 42 N. J. Eq. 218, 6 Atl. 806; Keeler V. Keeler, 31 N. J. Bq. 181; Wat- son V. Watson Mfg. Co., 30 N. J. Eq. 483; Quinby v. Manhattan Cloth &c. Co., 24 N. J. Eq. 260; Doughty v. Owen (N. J. Eq.), 19 Atl. 540; Sweetzer v. Jones, 35 Vt. 317, 82 Am. Dec. 639; Harris v. Haynes, 34 Vt. 220; Taylor v. Collins, 51 Wis. 123, 8 N. W. 22; Hubbard v. Bagshaw, 4 Sim. 326; In re McKibben, 4 Ir. Ch. (N. S.) 520. See also Larue v. American Diesel Engine Co., 176 Ind. 609, 96 N. E. 772; Prudential Ins. Co. v. Guild (N. J. Eq.), 64 Atl. 694; Berliner v. Piqua Club Assn., 32 Misc. 470, 66 N. Y. S. 791; Albert v. Uhrich, 180 Pa. St. 283, 36 Atl. 745; McCrillis v. Cole, 25 R. I. 156, 55 Atl. 196, 105 Am. St. 875; Zim- mermann v. Bosse, 60 Wash. 556, 111 Pac. 796; Gunderson v. Swarthout, 104 Wis. 186, 80 N. W. 465, 76 Am. St. 860. But see Padgett v. Cleve- land, 33 S. Car. 339, 11 S. B. 1069. =* Powell V. Monson &c. Mfg. Co., 3 Mason (U. S.) 459, Fed. Cas. No. 11357; McConnell v. Blood, 123 Mass. 47, 25 Am. Rep. 121; Keeler V. Keeler, 31 N. J. Bq. 181; Keve v. Paxton, 26 N. J. Eq. 107; Hill v. Wentworth, 28 Vt. 428. In Rhode Island, by statute, the water-wheels, steam-engines, boilers, main belts, which iirst give motion to the shaft- ing, all shafting, whether upright or horizontal, and hangers for the same, except such as are used to drive a special machine, all drums, pulleys, wheels, gearing, steam pipes, gas-pipes and gas-fixtures, water-pipes and fixtures, kettles and vats set and used in any mechanical or manufacturing establishment, are declared, to be real estate, whenever the same belong to the owner of the real estate to which they are at- tached. All other machinery, tools, and apparatus of every description, used and employed in any manufac- turing establishment, are declared to be personal estate, and as such shall be considered, in assignments of dower, in attachments, and in all cases whatsoever, except in the as- sessment and payment of taxes. P. S. 1882, ch. 171, §§ 1, 2. "°Cope V. Romeyne, 4 McLean (U. S.) 384, Fed. Cas. No. 3207; Rice I 447 FIXTURES 654 material that they are the property of another, as, for instance, that they were leased to the mortgagor, if he annexes them to the freehold with the. consent of the owner.^" But if the land and the engine are held by different titles, the latter does not necessarily become part of the realty when set up and used by one who does not own the land.^^ Even if they were subject at the time to a chattel mortgage, this would not hold against the mort- gage of the realty after they are attached to it.^^ Nor does it make any difference that, although erected in a permanent manner, they can be removed without injury to the building in which they are placed or with which they are connected.^^ A mortgage of a factory by a lessee passes to the mortgagee a steam engine used in it, although the lessor could not claim it.^* Machinery furnishing motive power has occasionally been held to be personalty in view of the intention with which it was annexed,^^ or the mode of annexation.^^ § 447. Various articles of machinery. — A shingle-machine put into a mill by a mortgagor becomes a part of the mortgage security.^" Mill-saws attached to a saw-mill and used in it become a part of the realty, and subject to a mortgage of the -mill previously made.^^ Heavy V. Adams, 4 Harr. (Del.) 332; Dud- 416, 5 N. E. 160; Early v. Burtis, 40 ley V. Hurst, 67 Md. 44, 8 Atl. 901; N. J. Eq. 501, 4 Atl. 765. See also McKim V. Mason, 3 Md. Ch. Dec. Long v. Cockern, 128 111. 29, 21 N. 186; Wlnslow v. Merchants' Ins. Co., E. 201; McLaughlin v. Nash, 14 Al- 4 Mete. (Mass.) 306, 38 Am. Dec. len (Mass.) 136, 92 Am. Dec. 741. 368; Randolph v. Gwynne, 7 N. J. ''Corliss v. McLagin, 29 Maine Eq. 88, 51 Am. Dec. 265. 115. In Trull v. Fuller, 28 Maine ""Fryatt v. Sullivan Co., 5 Hill (N. 545, the owner of a saw-mill made Y.) 116. See also Roberts v. a mortgage of a clapboard-machine Dauphin Deposit Bank, 19 Pa. St. 71. and shingle-machine set up in the ^'Robertson v. Corsett, 39 Mich, saw-mill and used there, which was 777. recorded as a personal mortgage. '^ Voorhees v. McGinnis, 48 N. Y. Subsequently a creditor of the mort- 278; Frankland v. i^oulton, 5 Wis. gagor levied an execution upon the 1. But see Padgett v. Cleveland, 33 land and mill, and it was held that S. Car. 339, 11 S. E. 1069. these machines passed to a pur- " Sparks v. State Bank, 7 Blackf. chaser of real estate under the exe- (Ind.) 469; Voorhees v. McGinnis, cution as parcel of the realty. But 48 N. Y. 278. in "Wells v. Maples, 15 Hun (N. Y.) " Day V. Perkins, 2 Sandf. 'Ch. (N. 90, a shingle-machine not fastened Y.) 359. to the building, except so far as nec- ^ Tillman v. De Lacy, 80 Ala. 103 ; essary to keep It in place, was held Crane v. Brigham, 11 N. J. Eq. 29; not to be covered by a mortgage of Randolph v. Gwynne, 7 N. J. Eq. 88, the realty. A similar decision was 51 Am. Dec. 265; Vail v. Weaver, made in Choate v. Kimball, 56 Ark. 132 Pa. St. 363, 19 Atl. 138, 19 Am. 55, 19 S. W. 108. St. 598; Padgett v. Cleveland, 33 S. "Robertson v. Corsett, 39 Mich. Car. 339, 11 S. E. 1069. 777; Coleman v. Stearns Mfg. Co., ™ Carpenter v. Walker, 140 Mass. 38 Mich. 30; Johnston v. Morrow, 60 655 MACHINERY IN MILLS § 447 machinery for making paper, fastened to a building or to its founda- tions, is regarded as a fixture.^" So machinery in a fruit-canning fac- tory.*" So machinery for manufacturing soap.*^ So a vacuum pan in a milk condensing plant. *^ So machinery in a brewery.*^ So machin- ery in a nail factory.** So machinery in a cotton mill.*° So machinery in a laundry plant.*'^ So machinery in a cordage factory.*^ So pieces of machinery in a sugar mill, which if removed would be only scrap iron.*^ So heavy machinery in brick works.*" So a cupola and crane bricked into a factory.'^" So -an elevator and its appurtenances.**^ So a machine for turning kegs, a machine for joining staves, and a ma- chine for cutting staves, were held to pass by a mortgage of a keg factory in which they were used, . and to which they were attached.^^ But, on the other hand, a planing and matching machine, and a machine for making moldings, used in a sash and blind factory, were held not to pass by a mortgage of the realty.^'' And so machinery in a saw-mill, attached by screws and bolts, but removable without in- Mo. 339; Burnside v. Twitchell, 43 N. H. 390. See also Humes v. Hig- man, 145 Ala. 215, 40 So. 128; Helm V. Gllroy, 20 Ore. 517, 26 Pac. 851. ''Hill V. Farmers' &c. Nat. Bank, 97 U. S. 450, 24 L. ed. 1051; Fish v. New York Water Proof Paper Co., 29 N. J. Eq. 16; Quinby v. Manhat- tan Cloth &c. Co., 24 N. J. Eq. 260. See also First Nat. Bank v. Adam, 138 111. 483, 28 N. E. 955; Bowen v. Wood, 35 Ind. 268; Lathrop v. Blake, 23 N. H. 46; Walrath v. Henderson, 6 Wkly. Dig. (N. Y.) 293. ""Dudley v. Hurst, 67 Md. 44, 8 Atl. 901. "Lavenson v. Standard Soap Co., 80 Cal. 245, 22 Pac. 184. « State Bank v. Fish, 120 N. Y. S. 365. «Scheifele v. Schmitz, 42 N. J. Eq. 700, 1 Atl. 698; Neilson v. Will- iams, 42 N. J. Eq. 291, 11 Atl. 257. See also Equitable Trust Co. v. Christ, 47 Fed. 756; Farmers' &c. Bank v. Cover, 1 Hayw. & H. (D. C.) 177, Fed. Cas. No. 4653. But see Dehring v. Beck, 146 Mich. 706, 110 N. W. 56; Wolford v. Baxter, 33 Minn. 12, 53 Am. Rep. 1; Fitzgerald v. Atlanta Home Ins. Co., 61 App. Div. 350, 70 N. Y. S. 552, holding casks, bottles, and packing cases to be personalty; Meyer v. Orynski (Tex. Civ. App.), 25 S. W. 655. "Delaware, L. &c. R. Co. v. Ox- ford Iron Co., 36 N. J. Eq. 452. « William Firth Co. v. South Caro- lina L. &c. Co., 122 Fed. 569, 59 C. C. A. 73. ""Atlantic Safe Deposit &c. Co. v. Atlantic City Laundry Co., 64 N. J. Eq. 140, 53 Atl. 212. " Knickerbocker Trust Co. v. Penn Cordage Co., 66 N. J. Eq. 305, 58 Atl. 409, 105 Am. St. 640; McRea v. Cen- tral Nat. Bank, 66 N. Y. 489. "Folse V. Triche, 113 La. 915, 37 So. 875; Swoop v. St. Martin, 110 La. 237, 34 So. 426. "»Pisk v. People's Nat. Bank, 14 Colo. App. 21, 59 Pac. 63; Simpson Brick-Press Co. v. Wormley, 61 111. App. 460. But see C. W. Raymond Co. V. Ball, 210 Fed. 217. ™Lord V. Detroit Sav. Bank, 132 Mich. 510, 93 N. W. 1063. " Condit V. Goodwin, 44 Misc. 312, 89 N Y S 827 ="Laflin v. Griffiths, 35 Barb. (N. Y.) 58. See also Snedeker v. War- ring, 12 N. Y. 170; Walker v. Sher- man, 20 Wend. (N. Y.) 636. ■"Rogers V. Brokaw, 25 N. J. Eq. 496. See also Wells v. Maples, 15 Hun (N. Y.) 90. § 448 rixTUKEs 656 jury to the building, do not constitute a part of the realty." And so machines used in a shoe-shop, although attached to the building by nails and bolts, are not covered by a mortgage of the realty." ■ To constitute such machines fixtures, they must be actually an- nexed to the freehold in such a way as to evince an intention of mak- ing them a permanent accession to the freehold.^^ Where, in the case of machinery, the principal part is a fixture by actual annexation to the soil, parts not physically annexed, but which, if removed, would leave the principal thing unfit for use, and would not of themselves, and standing alone, be well adapted for general use elsewhere, are considered constructively annexed.^^ The wires of an electric light company, engaged in lighting a city, are an integral part of the company's lot of land, and machinery situ- ated upon the lot for producing the light, and they pass as fixtures under a mortgage of the lot with all machinery and appurtenances.^* § 448. looms in a mill. — In the English courts there have been several eases involving the determination of the question whether looms in a mill pass by mortgage of it in which they are not partic- ularly named.'"' A mortgage was made of a mill "vrith the ware-house, counting-house, engine-house, boiler-house, weaving-shed, wash-house, gas-works, and reservoirs belonging, adjoining, or near thereto, and also the steam-engine, shafting, going-gear, machinery, and all other fixtures whatever," affixed to the land and premises. The assignees "Neufelder v. Third St. &c. R. land, and which, if removed, would Co., 23 Wash. 470, 63 Pac. 197, 53 L. leave the principal thing incomplete R. A. 600, 83 Am. St. 831. and unfit for use." Per Stone, J. == McConnell v. Blood, 123 Mass. In this case the entire machinery 47, 25 Am. Rep. 12; Padgett v. Cleve- of a fruit-canning factory was held land, 33 S. Car. 339, 11 S. E. 1069. to pass under a mortgage, though But see Fifield v. Farmers' Nat. some articles, such as crates, cap- Bank, 148 111. 163, 35 N. B. 802, 39 ping-machines, and work-tables. Am. St. 166; Helm v. Gilroy, 20 Ore. were not actually annexed to the 517, 26 Pac. 851. soil; hut being essentially necessary °° In re Eagle Horseshoe Co., 163 to the working of the principal ma- Fed. 699; Roddy v. Brick, 42 N. J. chinery, they were regarded as con- Eq. 218; Blancke v. Rogers, 26 N. J. structively annexed. Eq. 563; Kendall v. Hathaway, 67 ™Fechet v. Drake, 2 Ariz. 239, 12 Vt. 122, 30 Atl. 859. Pac. 694; Regina v. North Stafford- =' Dudley v. Hurst, 67 Md. 44, 8 shire R. Co., 3 El. & El. 392. See Atl. 901. "Thus the key of a lock, also New York Security &c. Co. v. the sail of a windmill, the leather Saratoga Gas &c. Co., 157 N. Y. 689, belting of a saw-mill, although ac- 51 N. B. 1092; Vail v. Weaver, 132 tually severed from the principal Pa. St. 363, 19 Atl. 138, 19 Am. St. thing and stored elsewhere, pass by 598. constructive annexation. They must ™ Holland v. Hodgson, L. R. 7 C. be such as to go to complete the P. 328, 41 L. J. C. P. (N. S.) 146, 20 machinery which is affixed to the W. R. 990. 657 MACHINBET IX MILLS 448 in bankruptcy of the mortgagor took possession of and sold, among other things, a large number of looms that were in the mill. Each loom rested upon four feet, and was attached to the floor by means of a wooden plug driven through each foot. The mortgagee claimed the looms as part of his security, and the Court of Common Pleas gave judgment in his favor, and this was affirmed by the Court of Ex- chequer Chamber.*" The American cases are to like effect; and it is not essential that the machinery is attached to the building otherwise than by its own " In the latter court Mr. Justice Blackburn said: "Since the decision of this court in Climie v. Wood, L. R. 3 Exch. 257, and on appeal, L. R. 4 Exch. 328, it must be consid- ered as settled law (except perhaps in the House of Lords), that what are commonly known as trade or tenant's fixtures form part of the land, and pass by a conveyance of it; and that though, if the person who erected those fixtures was a tenant with a limited interest in the land, he has a right as against the freeholder to sever the fixtures from the land, yet, if he be a mort- gagor in fee he has no right as against his mortgage. * * * it was admitted, and we think prop- erly admitted, that where there is a conveyance of the land the fixtures are transferred, not as fixtures, but as a part of the land, and the deed of transfer does not require regis- tration as a bill of sale." The learned Judge further says that it has been contended, and justly, that Hellawell v. Eastwood, 6 Exch. 295, is very like the pres- ent case, with this exception: that there the tenant had a limited in- terest only, whereas here he has the fee; and if that case should apply to this case, it would follow (but for that exception, perhaps) that the looms which were in question remained chattels. But that case was decided in 1851. In 1853, the Court of Queen's Bench had, in Wilt- shear V. Cottrell, 1 E. & B. 674, to consider what articles passed by the conveyance in fee of a farm; and there the court decided that a cer- tain threshing-machine inside a barn, fixed by screws and bolts to four posts which were let into the 42 — Jones Mtg. — Vol. I. earth, passed by the conveyance. It seems difficult to point out how the threshing-machine in that case was more for the improvement of the inheritance of the farm than the looms in the present case were for the improvement of the manufac- tory. Then there was the case of Mather v. Fraser, 2 Kay & J. 536, in 1856, and that of Walmsley v. Milne, 7 C. B. (N. S.) 115, in 1859, in which similar decisions to that in Wiltshear v. Cottrell were given. These cases "seem authorities for this principle, — that when an article is affixed by the owner of the fee, though only affixed by bolts and screws, it is to be considered as part of the land, at all events where the object of setting up the article is to enhance the value of the prem- ises to which it is annexed, for the purposes to which those premises are applied. The threshing-machine in Wiltshear v. Cottrell was affixed by the owner of the fee to the barn as an adjunct to the barn, and to improve its usefulness as a barn, in much the same way as the hay- cutter in Walmsley v. Milne was affixed to the stable as an adjunct to it, and to improve its usefulness as a stable. And it seems difficult to say that the machinery in Mather V. Fraser was not as much affixed to the mill as an adjunct to it, and to improve the usefulness of the mill as such, as either the thresh- ing-machine or the hay-cutter." In conclusion, he says, it is of great importance that the law as to what is the security of a mortgage should be settled, and that these decisions should not be reversed unless clearly wrong. § 449 FIXTURES 658 •weight.'^ But a mortgage of a woolen factory has been held not to pass the looms used in it for the manufacture of broadcloth, the looms being merely fastened to the floor by screws to keep them in their places.*^ § 449. Cotton looms. — ^Under a mortgage of a mill for the man- ufacture of cotton cloth, with the appurtenances, "together with the steam-engines, boilers, shafting, piping, mill-gearing, gasometers, gas- pipes, drums, wheels, and all and singular other the machines, fix- tures, and effects fixed up in or attached or belonging to the said mill or factory, buildings, or premises," the question arose, upon a subse- quent sale of the estate under a power of sale contained in the mort- gage, whether a large number of looms for weaying cotton yarn into cloth, and which were set into the floors without any fastening, passed by mortgage, and by the subsequent sale. Lord Eomilly, giving the de- cision of the Court of Chancery,''^ said: "My opinion is that those words mean that the mill and everything that properly belongs to the mill is the thing that is mortgaged. I do not think that the furniture of the mill does properly belong to the mill ; it is liable to be changed from time to time. * * * I do not doubt that looms are machinery in one sense, but the qu'estion is, are they properly speaking machin- ery belonging to the mill ? In one sense, no doubt, they belong to the mill, because they are put into the mill, but I read those words as ^belonging essentially to the mill,' and forming necessarily a part of it, whatever may be the purpose to which the mill may be applied. To whatever purpose the mill may be applied, the steam-power, the gas- lighting, and the like, do form a part of it; the others are merely accidental, and no more form a part of the mill than a carpet forms part of a house. If a house and all the things belonging to the house were assigned, that would not necessarily include the furniture unless it was so specified. * * * I am clear the looms are not fixtures in any proper sense of the term.""* In like manner, in a comparatively recent case in ISTew Jersey, it •was held that spinning-frames, twisting-frames, and like machinery, «i Equitable Guarantee &c. Co. v. ■« Hutchinson V. Kay, 23 Beav. 413. Knowles, 8 Del. Ch. 106, 67 Atl. 961; See also McKim v. Mason, 3 Md. Lyle V. Palmer, 42 Mich. 314, 3 N. Ch. Dec. 186, relating to machinery W. 921; Cavls v. Beckford, 62 N. for the manufacture of cotton goods. H. 229, 13 Am. St. 554. See ante See ante § 444. § t*^- "Not in accord with ante §§ 444, "' Murdock v. Qifeord, 18 N. Y. 28. 448 and post § 450. See also McRea v. Central Nat. Bank, 66 N. Y. 498. 659 MACHINERY IN MILLS § 450 though fastened to the floors by nails or screws, or held in position by cleats, are personal property, and pass under a chattel mortgage as against a mortgage of the realty subsequently given; but that the steam-engine, boilers, shafting, belting, couplings and pulleys used to- communicate the power, the water-wheels and water-wheel governors, the gas-generator and gas-pump connected with it, the gas-pipes and burners, and the steam-heating pipes, whether laid on hooks along the walls or resting on the floor, are parts of the mill and pass by the mortgage of the realty as against a prior chattel mortgage. "' Hardly in accord with these cases is a decision in Massachusetts. The mortgage of a cotton mill covered also "all machinery, tools, and fixtures therewith appertaining." The mill was built for, and had al- ways been used for, the manufacture of cotton cloth. The question arose whether the mortgage covered certain looms subsequently put into the mill. These looms were not specially built for use in this par- ticular mill, and could equally well be used for the same purpose in any other cotton-mill, with the ordinary room to hold them, and power to operate them. Said loooms were each about seven feet long, three feet wide, two and one-half feet high, and of six hundred pounds weight, screwed down to the flooring of the weaving-room in order to steady them when in use, and connected by pulleys, belts, and shaft- ing with the power operating the factory. They did not replace ma- chines like them, and were used for the manufacture of a kind of cloth different from that made in the mill when it was mortgaged. It was held that the machinery became a part of the realty and was sub- ject to the mortgage.*" § 450. Machinery of a silk-mill. — A silk manufacturer mortgaged certain land, "also all that silk-mill there erected or in the course of erection, and all other buildings then or thereafter to be erected there- on; and also all those the steam-engine or steam-engines, boilers, steam-pipes, main shafting, mill gearing, mill-wright's work, and all other machinery and fixtures whatsoever there erected or set up, or to be thereafter, etc., upon the said plat of land, mill, and premises, with the appurtenances.""^ A second mortgage was made more compre- hensive in terms; and the first mortgagee having sold the property under an order of court, the question arose upon a claim by the second '"Keeler v. Keeler, 31 N. J. Eq. by Mr. Justice Knowlton deserves 181. careful study. ™ Hopewell Mills v. Taunton Sav. "' Haley v. Hammersley, 3 De Gex, Bank, 150 Mass. 519, 23 N. E. 327, F. & J. 587, 9 W. R. 562. 15 Am. St. Rep. 235. The opinion § 451 FIXTURES 660 mortgagee whether the spinning-mills and other machinery passed un- der the first mortgage. The plaster of the Eolls held that only such machinery passed by the mortgage under the words "other machinery" as was of the same nature with the articles specified in the enumera- tion previously made, and that therefore only the machinery used for the purpose of giving power to the mill was included in the mortgage. On appeal, however, it was decided that all the machinery placed in the mill, whether for creating power or for being moved, was in- cluded in the mortgage. "It seems rather improbable," said Lord Chancellor Campbell, "that the parties should have contemplated such a damaging disruption of the machinery as must take place if the mortgagees, in seeking to make good their security, must tear in pieces the machinery in the mill, removing and selling one-half of it, which would be comparatively of little value without the other half." He concurs with the Vice-Chancellor Page Wood, in his general view of the law upon this subject in Mather v. Eraser,*' and is of opinion that, according to the true construction of the mortgage deed, all the disputed articles are included in the mortgage to the defend- ants. § 451. Machinery in iron rolling-mill. — A mortgage of an iron rolling-mill was held to pass the entire set of rolls used in the mill, whether in place and fixed for use or temporarily detached.*' The rolls, being adapted to the manufacture of bars of different shapes and sizes, can not all be used at once ; but they are equally a part of the mill when unfixed to give place to others. "Duplicates necessary and proper for an emergency," said Chief Justice Gibson, "consequently follow the realty, on the principle by which duplicate keys of a bank- ing-house or the toll-dishes of a mill follow it." A similar decision was made in a comparatively recent case in England.'^" ^2 K. & J. 536. it is quite manifest that without Voorhis T. Freeman, 2 Watts & rolls the machine could not do any S. (Pa.) 116, 37 Am. Dec. 490. See part of the work for which it is also McFadden v. Crawford, 36 W. made. One set of rolls clearly Va. 671, 15 S. E. 408, 32 Am. St. passes. But we have here duplicate ^^f- rolls, and with reference to them— I Ex parte Astbury, L. R. 4 Ch. am not now speaking of rolls which App. 630. Mr. Justice Giffard, giv- can be considered as in any sense ing the opmion, said: "There ap- unfinished, but of duplicate rolls pear to be connected with rolling which have been actually fitted to machmes parts which, beyond all the machine— I can not see why, If doubt, are not fixed, in the strict one set of rolls passes, the duplicate sense of the term; but it is in evi- rolls should not pass also. It comes, dence that if a machine is ordered in fact, to this, that the machine It IS sent with one set of rolls, and with one set of rolls is a perfect 661 EOLLING STOCK § 453 In the same case it was held that the straightening plates embedded in the floor were also fixtures, but that the weighing machines were not. III. Rolling Stock of Railways Section 452. Rolling stock and fixtures gen- erally. Section 452a. "What fixtures included under railroad mortgage. § 452. Rolling stock and fixtures generally. — Whether the rolling stock and fixtures of a railroad are personal property, or are in some sense fixtures, and therefore pass by a mortgage of the realty, is a question that has been much discussed, and the decisions are con- flicting. On the one hand it is said that railway cars are a neces- sary part of the entire establishment; that their wheels are fitted to the rails; that they are peculiarly adapted to the use of the railway, and can not be used for any other purpose; and that they are neces- sary incidents of the real estate in a mortgage of it. In an early case before the Supreme Court of New York, it was decided that rolling stock was to be deemed fixtures.^ But the Court of Appeals several machine, but the machine with a duplicate set is a more perfect machine. * * * The fact is that, whether there is one set of rolls or a duplicate set, they are each part and parcel of the machine, and come within the term 'belonging to the machine as a part of it.' Dictum, of Lord Cottenham in Fisher v. Dixon, 12 CI. & F. 312. Then comes the case as to the different sizes of rolls. But if the duplicates of the same size pass, it follows that the rolls of different sizes pass, if they render the machine still more per- fect than if the rolls were all of the same size. * * * But I can not hold that the rolls which have never been fitted to the machine, and have never been used in the machine, and which require something more to be done to them before they are fitted to the machine, belong to the machine, or that they are essential parts of it." * Farmers' Loan &c. Co. v. Hen- drickson, 25 Barb. (N. Y.) 484. Mr. Justice Strong, delivering the opin- ion of the court, said: "The prop- erty of a railway company consists mainly of the road-bed, the rails upon it, the depot erections, and the rolling stock, and the franchises to hold and use them. The road-bed, the rails fastened to it, and the buildings at the depots, are clearly real property. That the locomotives and passenger, baggage, and freight cars are a part, and a necessary part, of the entire establishment, there can be no doubt. Are they so permanently and inseparably con- nected with the more substantial realty as to become constructively fixtures? * * * It may he that if an appeal should be made to the common sense of the community, it would be determined that the term 'fixtures' could not well be applied to such movable carriages as rail- way cars. But such cars move no more rapidly than do pigeons from a dovecote or fish in a pond, both of which are annexed to the realty." This decision was followed in Stevens v. Buffalo &c. R. Co., 31 Barb. (N. Y.) 590, and Beardsley v. Ontario Bank, 31 Barb. (N. Y.) 619, holding that rolling stock is person- alty, and a mortgage of it subject to the Chattel Mortgage Act. A few years later the same court held that a mortgage of a railroad need not be recorded as a chattel mortgage in §453 riXTUEES 662 years afterward established the doctrine in this state to be that rolling stock is personal in its character, and that a mortgage of it must be recorded as a chattel mortgage.^ The federal courts have held that all property essential to the oper- ation of a railroad, including the right of way, road-bed, ties, -rails, side-tracks, switches, depots, station-houses, water tanks, and other fixtures, together with the rolling stock and other necessary movable appliances, are real estate.^ The same ruling is made by the courts of many states,* in some of which, however, the character of rolling stock as property is fixed by statute.'' In those states in which the subject is uncontrolled by statute, the preponderance of authority is to the efEeet that only the land owned by the railroad company, together with the ties, rails and other structures permanently affixed thereto, is realty; and that en- gines, cars, and other movable appliances are to be regarded for most purposes as personalty.^ As a summary of the adjudications upon this subject, it may be said that, while there are many and strong arguments for holding that rolling stock is part of the realty of a railroad,^ and this view seems order to bind the rolling stock. Bement v. Plattsburgh &c. R. Co., 47 Barb. (N. Y.) 104, 51 Barb. 45. ='Hoyle V. Plattsburgh &e. R. Co., 54 N. Y. 314, 13 Am. Rep. 595; Ran- dall V. Elwell, 52 N. Y. 521, 11 Am. Rep. 747. ' ' Gloucester Ferry Co. v. Penn- sylvania, 114 U. S. 196, 29 L. ed. 158, 5 Sup. Ct. 826; Minnesota Co. V. St. Paul Co., 2 Wall. (U. S.) 609, 17 Li. ed. 886; Pennock v. Coe, 23 How. (U. S.) 117, 16 L. ed. 436; Farmers' Loan &c. Co. v. St.. Joseph &c. R. Co., 3 Dill (U. S.) 412, Fed. Cas. No. 4669; Union Loan &c. Co. v. Southern Cal. Motor Rd. Co., 51 Fed. 840. * Palmer v. Forbes, 23 111. 301; Louisville &c. R. Co. v. State, 25 Ind. 177, 87 Am. Dec. 358; Farmers' Loan &c. Co. v. Hendrickson, 25 Barb. (N. Y.) 484; Youngman v. Elmira &c. R. Co., 65 Pa. St. 278; Webster Lumber Co. v. Keystone L. &c. Co., 51 W. Va. 545, 42 S. B. 632, 66 L. R. A. 33. = 1 Stimson's Am. St. Law. § 468. See also Phillips v. Winslow, 18 B. Men. (Ky.) 431, 68 Am. Dec. 729; Miller v. Rutland &c. R. Co., 36 Vt. 452. 'Neilson v. Iowa Eastern R. Co., 51 Iowa 184, 1 N. W. 434, 33 Am. Rep. 124; Boston &c. R. Co. v. Gil- more, 37 N. H. 410, 72 Am. Dec. 336; Williamson v. New Jersey S. R. Co., 29 N. J. Eq. 311; Hoyle v. Plattsburgh &c. R. Co., 54 N. Y. 314. 13 Am. Rep. 595; Randall v. Elwell, 52 N. Y. 321, 11 Am. Rep. 747; Coe V. Columbus &c. R. Co., 10 Ohio St. 372, 75 Am. Dec. 518; Chicago &c. R. Co. V. Ft. Howard, 21 Wis. 44, 91 Am. Dec. 458. 'Meyer v. Johnston, 53 Ala. 237, 332; Titus v. Mabee, 25 111. 257; Hunt V. Bullock, 23 111. 320; Palmer v. Forbes, 23 111. 301; Phillips v. Winslow, 18 B. Men. (Ky.) 431, 68 Am. Dec. 729; Douglass v. Cline, 12 Bush (Ky.) 608; Morrill v. Noyes, 56 Maine 458, 96 Am. Dec. 486; State V. Northern Cent. R. Co., 18 Md. 193; Pierce v. Emery, 32 N. H. 484; Youngman v. Elmira &c. R. Co., 65 Pa. St. 278; Covey v. Pitts- burgh, Fort Wayne &c. R. Co., 3 Phila. (Pa.) 173. 663 ROLLING STOCK § 452a to have the support of the United States courts/^ — ^the weight of authority in the state courts seems to be against that position."' The question of what is permanently afBxed to a railroad right of ■way is one partly of law and partly of fact, mainly dependent on the purpose of the builders, whether, for example, it be to cojistruct a main line or side branches for temporary use.^ § 452a. What fixtures included under railroad mortgage. — The extent of property covered by a railroad mortgage is a matter of in- terpretation under the rules applicable to the interpretation of mort- gages by individuals, reference, however, being had to the authorizing statute." Fixtures, whether acquired before or after the execution of such mortgage, are subject to its lien.^" On the principle that fixtures, though subsequently severed, are subject to the lien of a mortgage of the freehold, worn-out rails re- placed by new ones have been held to be included in a railroad mort- gage; and so of new rails not yet laid.^^ A track laid merely for a temporary use has been held not to come under the lien as part of the realty ;^2 sq have repair tools,'^ fueU* and furniture.^^ A mortgage of a railroad, if its terms cover such future acquisitions, 'a Pennock V. Coe, 23 How. (U.S.) "Palmer v. Forbes, 23 111. 301; 117; Galveston R. Co. v. Cowdrey, Brainerd v. Peck, 34 Vt. 49C; First 11 Wall. (U. S.) 459; Dunham v. Nat. Bank v. Anderson, 75 Va. 250; Cincinnati &c. R. Co., 1 "Wall. (U. Farmers' Loan &c. Co. v. Commer- S.) 254; Minnesota Co. v. St. Paul cial Bank, 11 Wis. 207, 15 Wis. 424, Co., 2 Wall. (U. S.) 609; Farmers' 82 Am. Dec. 689. Loan &c. Co. v. St. Joseph &c. R. Co., " Van Keuren v. Central R. Co., 3 Dill. 412; Clinton v. Springfield R. 38 N. J. L. 165. Co., 6 Biss. 529; Pullam v. Cincin- ^Lehigh &c. Co. v. Central R. Co., nati &c. R. Co., 4 Biss. 35. 35 N. J. Eq. 379; Williamson v. New 'b Williamson v. New Jersey Jersey &c. R. Co., 29 N. J. Eq. 311, Southern R. Co., 29 N. J. Bq. 311; revg. 28 N. J. Eq. 277; Brainerd Coe V. Columbus &c. R. Co., 10 Ohio y. Peck, 34 Vt. 496. But see Dela- St. 372, 75 Am. Dec. 518; Boston ware, L. &c. R. Co. v. Oxford Iron &c. R. Co. v. Gilmore, 37 N. H. 410, Co., 36 N. J. Eq. 452. 22 Am. Dec. 336. See also Jones on u Hunt v. Bullock, 23 111. 320. But Corporate Bonds and Mortgages, §§ gee Coe v. McBrown, 22 Ind. 252; 136-144. Phillips v. Winslow, ' 18 B. Mon. ^ 'Van Keuren v. Central R. Co., (Ky.) 431, 68 Am. Dec. 729. 38 N. J. L. 165. "Raymond v. Clark, 46 Conn. 129; ° Wilson v. Gaines, 103 U. S. 417, xitus v. *Mabee, 25 111. 257; Hunt 26 L. ed. 401; Coe v. New Jersey ^_ Bullock, 23 111. 320; Lehigh &c. Midland &c. R. Co., 31 N. J. Eq. q^. v. Central R. Co., 35 N. J. Eq. 105. 379; Southbridge Savings Bank v. "Porter v. Pittsburg &c. Steel Co., jjason, 147 Mass. 500, 18 N. E. 406, 122 U. S. 267, 30 L. ed. 1210, 7 Sup. 1 l. r. a. 350. But see Wood v. Ct. 1206; Wood v. Whelen, 93 111. whelen, 93 111. 153. 153. § 453 FIXTURES 664 will, however, be held in equity to apply to after-acquired rolling stock," even if not specially mentioned; although it has been held that loose rolling stock, such as engines and ears, is, in such a case, subject to the lien on it^' when it comes into the mortgagor's hands.^* IV. Remedies for Removal of Fixtures Section Section 453. Remedies of mortgagee in gen- mortgagor for removal of fix- eral — Replevin. tures. 454. Mortgagee's remedy against 455. Remedy of mortgagee out of possession. § 453. Remedies of mortgagee in general — Replevin. — The mort- gagee may follow and take fixtures covered by a mortgage of the realty, and improperly removed, wherever he can find them,^ The mortgagor himself can of course gain no right to hold them as against the mortgagee. A purchaser from the mortgagor has no such right, because he is affected with knowledge of the existing lien, and as against the mortgagee his purchase is therefore fraudulent and void. "Even without knowledge of the mortgage," says Cliief Justice Low- rie, of Pennsylvania,^ "it is hard to see how a purchaser could be re- lieved from this responsibility; for all purchasers, hirers, and renters are bound to ascertain, or take the risk of assuming, the title of their vendors and lessors. But may not a mortgagor sell in the usual way the lumber, firewood, coal, ore, or grain found growing on the land, without violating the rights of the mortgagee ? Yes, he may, until the mortgagee stops him by ejectment or estrepement, for those things are usually intended for consumption and sale, and the sale of them is the usual way of raising the money to pay the mortgage. But in the case of a factory or other building it is from the use of it as it is, and not by its consumption or its sale by piecemeal, that all its profits are to be derived." ""Galveston, H. &c. R. Co. v. Cow- 64 Ala. 603; Maryland v. Northern drey, 11 Wall (U. S.) 459, 20 L. Central R. Co., 18 Md. 193. But see ed. 199; Pennock v. Coe, 23 How. Miller v. Rutland &c. R. Co., 36 Vt. (U. S.) 117, 16 L. ed. 436; Scott v. 452. Clinton &c. R. Co., 6 Biss* (U. S.) "United States v. New Orleans R. 529, Fed. Cas. No. 12527; Meyer v. Co., 12 Wall (U. S.) 362, 20 L. ed. Johnston, 53 Ala. 237, 64 Ala. 603; 434; Contracting &c. Co. v. Conti- Phillips V. Winslow, 18 B. Mon. nental Trust Co., 108 Fed. 1; Bos- (Ky.) 431, 68 Am. Dec. 729; Ham- ton Safe Deposit &c. Co. v. Bankers' lin V. Jerrard, 72 Maine 62; Morrill &c. Tel. Co., 36 Fed. 288. V. Noyes, 56 Maine 458, 96 Am. Dec. " See post §§ 687, 688. 486; Nichols v. Mase, 94 N. Y.160. "Hoskin v. Woodward, 45 Pa. St "Meyer v. Johnston, 53 Ala. 237, 42. 665 REMEDIES FOR REMOVAL § 453 The mortgagee's right of action is based xipon his general legal ownership under his mortgage, or upon his actual or constructive pos- session at the time of severance.'' The mortgagee, having the legal title to the property, may maintain replevin for fixtures removed from the realty.* Articles retaining their character as personalty by virtue of an ex- press or implied agreement, and which have been wrongfully severed from the realty, may be recovered by the mortgagee in an action in replevin.^ If after the foreclosure of a mortgage the mortgagor wrong- fully removes a house from the land, the purchaser having the legal title may maintain replevin for it." It is held, however, under a different view of the nature of a mort- gage, that when a fixture, as, for instance, a house, annexed to the real estate by the mortgagor, is afterward, before the foreclosure of the mortgage, by him removed from the premises and sold, although it was part of the mortgaged premises, the mortgagee can not recover it from the purchaser ; that by the removal he has lost his right to the property, though he might still have a cause of action for the waste.'' But justice would seem to demand, and authority supports this posi- tion, that one purchasing what he either actually or constructively knows to be mortgaged to another shall not be allowed to shelter him- self behind his wrongful act, and say that thereby the nature of the property was changed. The remedy of the mortgagee, in states where a mortgage is regarded as merely a lien for security, is not at law but in equity; not replevin to recover the property severed, but gen- erally injunction to restrain the commission of waste.^ Even in New Jersey, where the mortgagee is regarded as having the legal title for the purpose of asserting and maintaining his pos- ' Gooding v. Shea, 103 Mass. 360 ; " Matzon v. Griffin, 78 111. 477. See Verner v. Betz, 46 N. J. Eq. 256, 19 post § 688. Atl. 206. See ante § 144 and post 'Clark v. Reyburn, 1 Kans. 281; § 688. Harris v. Bannon, 78 Ky. 568. To * Dutro V. Kennedy, 9 Mont. 101, like effect see Citizens' Bank v. 22 Pac. 763. See this case, also, on Knapp, 22 La. Ann. 117; Buckout the question of damages in such v. Swift, 27 Cal. 433, 87 Am. Dec. suit for the removal of the fixtures. 90; Woehler v. Endter, 46 Wis. 301, = Ott V. Specht, 8 HOust. (Del.) 50 N. W. 1099. 61, 12 Atl. 721; Adams v. Tully, « Williams v. Chicago Exhibition 164 Ind. 292, 73 N. B. 595; Hartwell Co., 188 111. 19, 58 N. E. 611; Van- V. Kelly, 117 Mass. 235; Gill v. De derslice v. Knapp, 20 Kans. 647; Armant, 90 Mich. 425, 51 N. W. 527; Dudley v. Hurst, 67 Md. 44, 8 Atl. Weathersby v. Sleeper, 42 Miss. 732; 901; State Sav. Bank v. Kercheval, Hines v. Ament, 43 Mo. 298; Page 65 Mo. 682; Verner v. Betz, 46 N. v. Urick, 31 Wash. 601, 72 Pac. 454, J. Eq. 256, 19 Atl. 206; Taylor v. 96 Am. St. 924. Collins, 51 Wis. 123, 8 N. W. 22. 454 FIXTURES 666 session, he is not allowed to maintain replevin for fixtures wrongfully removed;" but he may maintain an action on the case for the injury to the security." Where a mortgagor in possession removed a building to another lot of land, to make room for part of a larger building and improvements, and sold the lot, and building aflBxed to it, to a bona fide purchaser, it was held, on a bill for foreclosure of the mortgage, that the building could not be returned to the mortgaged land, and the remedy of the mortgagee was at law for the removal of the build- ing. ^^ If the owner of the equity of redemption moves a house from the mortgaged premises to another tract of land not covered by the mort- gage, the lien on the house is not thereby impaired. The court may decree a sale of the house in its new situs, under the mortgage, with leave to the purchaser to remove or roll the building ofE again.^^ Where a house was wrongfully removed from mortgaged premises and permanently attached to other real estate, it was held that replevin was nqt the proper remedy, but the mortgagee might recover damages for its removal.^' The mortgage lien may be enforced as against one who has pur- chased the house without knowledge that it had been removed from the mortgaged land.^* § 454. Mortgagee's remedy against mortgagor for removal of fix- tures. — The mortgagee, by virtue of his interest in the property, may maintain an action against the mortgagor for removing fixtures, and thereby causing substantial and permanent injury and deprecia- tion to the mortgaged estate. The owner of the equity has no more right than a stranger to impair the security of the mortgage. The damages are measured by the extent of the injury, and not by the in- sufficiency of the remaining security. The mortgagee is not obliged to apply in the first place the property that remains at any valuation whatever. "He is entitled to the full benefit of the entire mortgaged estate for the full payment of his entire debt."*^ "Kircher v. Schalk, 39 N. J. L. "Partridge v. Hemenway, 89 a35. See post § 688. Midi. 454, 50 N. "W. 1084. " Verner v. Betz, 46 N. J. Eq. 256, ^ Byrom v. Chapin, 113 Mass. 308. 19 Atl. 206; Jackson v. Turrell, 39 Otlierwise, where a mortgage is re- N. J. L..329. garded as a mere lien and not a " Verner v. Betz, 46 N. J. Eq. 256, title to the land. There the insuffi- 19 Atl. 206. • ciency of the security must be "Turner v. Mebane, 110 N. Car. shown. Gardner v. Heartt, 3 Denlo 413, 14 S. E. 974. (N. Y.) 232; Lane v. Hitchcock, "Dorr v. Dudderar, 88 111. 107. 14 Johns. (N. Y.) 213. See also Ricketts v. Dorrell, 55 Ind. 470. 667 EEMEDIES FOE EEMOVAL 454 But a different rule of damages prevails in states where a mortgage is regarded as merely an equitable conveyance to secure the debt. In those states it necessarily follows that an action by a mortgagee for any injury to the premises must be based, not upon the injury to the premises, in which he has only an equitable interest, but upon the loss occasioned to him by impairing his security. The measure of his damages is therefore limited to the loss he may sustain upon his se- curity.^ ° Under this rule the action must rest upon proof that, before the alleged injury, the mortgaged premises were of sufficient value to pay the plaintiff's mortgage, or a part of it, and that, by reason of such injury, they became inadequate for that purpose.^^ This is the rule in New York and New Jersey.^* "Schalk v. Klngsley, 42 N. J. L. 32; Van Pelt v. McGraw, 4 N. Y. 110. In the New York case the court said: "This action Is not based upon the assumption that the plain- tiff's land has been injured, but that his mortgage as a security has been impaired. His damages, therefore, would be limited to the amount of injury to the mortgage, however great the injury to the land might be." "Schalk V. Kingsley, 42 N. J. L. 32, per Van Syckel, J. "In Schalk v. Kingsley, 42 N. J. L. 32, the Supreme Court, discuss- ing these different rules of damages, their adaptation to the nature of the mortgagee's estate, and the prac- tical results produced by each, says: "There is much force in the Massa- chusetts view, that the mortgagee is entitled to be protected in the en- joyment of the security for which he contracted, however ample it may be, and the wrongdoer himself ought not to complain if he is compelled to restore what he unlawfully re- moved. Especially would this be so in the case of a mortgage maturing at a remote future period, when the real value of the premises would depend upon contingencies which might not be foreseen. But while injustice may in some cases be done by rejecting this rule, it is not in harmony with_ the nature of the mortgagee's estate, and its adoption in practice would lead to many dif- ficulties. In Massachusetts, by force and effect of the mortgage, and as between the parties to the mortgage, the right of possession also passes immediately to the mortgagee, and carries with it the incidents of a right to sue in trespass for any in- jury to the freehold. There it may be a necessary logical sequence that in an action at law, the damages, which represent the injury to the premises, must go to the owner of the legal estate. "The objections to the Massachu- setts rule are obvious, and are not met, in my judgment, by the court in Gooding v. Shea, before cited. Such litigation would frequently re- sult to the benefit of the mortgagor, by whose consent the wrong was committed, by operating as a satis- faction of the mortgage when the premises were still ample to satisfy the mortgage debt. A more serious objection would exist in the fact that the action would be maintain- able for every slight injury to the freehold. The person who purchased and removed a stick of timber or a cord of wood, or the mechanic who tore down an old building prepara- tory to the erection of a new one, or who made any alteration In the structures upon the premises which might be deemed in any degree det- rimental to their value, would be amenable to suit. But admitting that the third mortgagee may sue and recover for the entire injury to the premises, how shall the damages be appropriated, and how would the wrongdoer be shielded from further recovery by the first and second § 454 FIXTURES 668 When such injury has been done, there can be but one recovery for it, and a reasonable satisfaction made in good faith to a prior mort- gagee bars an action by a subsequent mortgagee. If after the removal of the fixtures, and before the mortgagee brings an action of trespass to recover their value, he sells the mortgaged premises under a power of sale, and receives therefrom more than enough to pay his claim and all prior incumbrances, this fact may be shown in mitigation of his claim for damages.^* But upon the question whether the injury had been settled and satisfied by payment to the first mortgagee, evidence is admissible to show that the articles removed were of greater value than the sum so paid, and that the damage done to the premises by their removal was greater than the value of the articles so removed.^" In Wisconsin it is held the mortgagee after a decree of foreclosure may maintain an action for an injury done the mortgaged premises, either by the mortgagor or by a stranger, provided the security be thereby impaired and the mortgagor be insolvent.^^ A mortgagee may recover the value of fixtures wrongfully removed mortgagees? The prior mortgagees could not be made parties to sucli suit, and they would not be bound by the verdict as to the amount of damages found in favor of the third mortgagee; and, in our practice, there is no method in which the in- jury to each mortgagee could be as- certained, and the distribution prop- erly made. In fact, the rule repels the idea of distribution, for it is based upon the notion that the mort- gagee plaintiff is entitled to the en- tire damage done to the lands. A rule which would subject a defend- ant to pay to each of several mort- gagees the full amount of damage which he had committed upon the premises would unhesitatingly be condemned. "It is therefore suggested, in the Massachusetts cases, that but one recovery would be allowed, and that would afterward be appropriated un- der the direction of the court. Aside from the entire absence of any recognized procedure in our courts of law by which the several parties in interest could be bound by the verdict, and by which an appropriation could be made, such a course would manifestly be mere circumlocution, leading to the prac- tical adoption of the other rule; for, in the end, the distribution would necessarily be made upon the basis of the actual loss to each mort- gagee. "All these diflSculties would be ob- viated by adopting the injury to the security as the basis of damages. Under that rule, no suit can be maintained unless the plaintiff sus- tains a substantial injury; and each mortgagee in turn may, without ref- erence to the other, recover such damage as he can show he has sus- tained on his part. "The action must rest upon proof that, before the alleged injury, the mortgaged premises were of suffi- cient value to pay the plaintiff's mortgage, or a part of it, and that, by reason of such injury, they be- came inadequate for that purpose. In that view the extent of the loss can be approximately computed. This, in my opinion, is the better rule, and one which, in its practical application, will not be attended with any serious difficulty." "King v. Bangs, 120 Mass. 514. ""Byrom v. Chapin,.113 Mass. 308. "Jones V. Costigan, 12 Wis. 677, 78 Am. Dec. 771. 669 REMEDIES FOE REMOVAL § 455 from the mortgaged premises, although since such removal of them the property has been sold under a power in his mortgage, and he has himself purchased it at a price sufBcient to satisfy his claim. His title is suflBcient to sustain a cause of action.^^ § 455. Remedy of mortgagee out of possession. — A mortgagee not having possession, or the right of possession, can not maintain an action of tort in the nature of trespass quare clausum fregit against a stranger for breaking and entering the mortgaged premises and re- moving fixtures. But the right to recover damages for the value of the fixtures is separable from that to recover for "breach to the close."^^ The right of present possession only affects the form of action. The right to recover depends upon the title, and not upon possession or the right of possession. In an action of tort for forcibly entering the house and removing fixtures, the mortgagee, even before condition broken, may recover the full amount of damage done to the estate by the removal, without regard to the sufficiency of his security. Until the whole debt be paid, he can not be deprived of any substantial part of his entire security without full redress therefor. "As the injury affects the estate, it may be sued for directly by any one in whom the legal interest is vested. A second or third mortgagee, though not in possession, has a sufficient interest in the estate to maintain an action for such an injury. Although it is true that a stranger may thus be liable to either of the several mortgagees, as well as to the mortgagor, it doe's not follow that he is liable to all successively. The superior right is in the party having superiority of title. But the defendant can resist neither by merely showing that another may also sue or has sued. If he would defeat the claim of either, he must show that an- other having a superior right has appropriated the avails of the claim to himself. The demand is not personal to either mortgagee, but arises out of and pertains to the estate; and, when recovered, applies in payment, pro tanto, of the mortgage debt, and thus ultimately for the benefit of the mortgagor, if he redeems."^* The mortgagee, even before entering into possession, can maintain an action against the mortgagor or any other person who severs and ''^Laflin v. Griffiths, 35 Barb. (N. «Per Wells, J., in Gooding v. Y.) 58. Shea, 103 Mass. 360, 4 Am. Rep. 563. '"Gooding v. Shea, 103 Mass. 360, In New Jersey the action is upon 4 Am. Rep. 563; Woodman v. Fran- the case. Jackson, v. Turrell, 39 N. cis, 14 Allen (Mass.) 198; Page v. J. L. 329. Robinson, 10 Gush. (Mass.) 99. § 455 nxTDEEs 670 removes from the mortgaged estate any articles which have been an- nexed to and made part of it. It makes no difference as against the mortgagee that the fixtures are severed by accident. Therefore, if a building be partly destroyed by fire, the mortgagor has no right to sell such parts of it as are saved; and he can not maintain an action for the price of such articles if the value of the land is less than the amount of the mortgage debt, and the mortgagee has entered for breach of the condition and forbidden the payment to the mortgagor. ^^ When the mortgagee has no right to enter and the mortgagor can be deprived of possession only by a foreclosure and sale, he may re- tain possession after the sale until the delivery of the deed to the pur- chaser; but if he removes fixtures in the meantime, the purchaser may recover them by an action of replevin. The purchaser's deed takes effect by relation at the date of the mortgage, and passes fixtures subsequently annexed by the mortgagor.^' A mortgagee not in actual possession and who has not entered to foreclose can not maintain trespass against the owner of the equity of redemption for cutting grass on the land, as the owner has a right to take every annual crop.^^ But if the property detached from the realty be iixtures subject as part of the realty to a mortgage, the mort- gagee, whether in possession of the premises or not, may sue for the recovery of the things themselves in an action of replevin;^* or may sue in trespass for damage done the freehold ; or he may, in an action of trover, recover their value.^° A tort-feasor has no right to complain of the form of the remedy. »Wilmarth v. Bancroft, 10 Allen "Woodward v. Pickett, 8 Gray (Mass.) 348. (Mass.) 617. ""Sands v. Pfelffer, 10 Cal.' 258. =»Laflm v. Griffiths, 35 Barb. (N. But see Alexander v. Shonyo, 20 Y.) 58. Kans. 705; Vanderslice v. Knapp, 20 ^Hitchman v. Walton, 4 M. & W. Kans. 647. See ante § 453 and post 409; Holland v. Hodgson, L. R. 7 § 684. C. P. 328. CHAPTEE XII EECOKDING AS AFFECTING PRIORITY^ I. Nature and Application of Registry Acts, §§ 456-48'J'a II. Requisites as to Execution and Acknowledgment, §§ 488-503 III. Requisites as to the Time and Manner of Recording, §§ 504-514a IV. Errors in the Record, §§ 515-532 V. The Effect of a Record Duly Made, §§ 533-537 VI. Torrens System of Registration, §§ 537a-537g I. Nature and Application of Registry Acts Section 456. Statutory provisions in gen- eral. 457. Books of record. 458. Time allowed for record — Ef- fect of record in general. 459. Mortgagees as bona fide pur- chasers — Consideration. 460. Pre-existing debt as considera- tion. 461. Extension of debt as considera- tion. 462. Judgment creditors as purchas- ers — Priority of mortgages over judgments and attach- ments. 463. Unrecorded mortgage preferred to judgment. 464. Priority of unrecorded mort- gage over subsequent judg- ment. 465. Priority of judgment liens and attachments under registry laws. 466. Knowledge of unrecorded con- veyance by judgment or at- tachment creditor. 467. Purchaser at execution sale — Notice and possession as af- fecting priority. 468. Purchase-money mortgages — Priority — Joinder of wife. 469. Contemporaneous execution of purchase-money mortgage — Vendor as mortgagee. Section 470. Dower, homestead, and judg- ment liens ineffective against purchase-money mortgages. 471. Mortgage recorded before ac- quisition of title postponed to purchase-money mortgage. 472. Priority of purchase-money mortgage made to third per- son. 473. Deed and purchasq-money mort- gage as one transaction — Pri- ority over homestead, dower, and mechanics' liens. 473a. Priority of purchase-money mortgage over mechanics' liens. 474. Necessity of record and ac- knowledgment between par- ties and their privies. 475. Assignees and administrators of bankrupt and insolvent mortgagors' estates. 476. Equitable mortgages included under recording acts. 477. Equitable mortgage for prece- dent debt or present consid- eration. 478. Leasehold estates included un- der recording acts. 479. Record of assignments of mortgages. 480. Record of assignment as notice to mortgagor. ^ See in general on this subject Jones on Real Property, ch. xxxi, §§ 1386-1498. 671 456 EECORDING AS AFFECTING PEIOKITT 672 481. Effect of recording assignment —Subsequent purchasers — Actual and constructive no- tice. 481a. Recording assignment — Pay- ment of paper before ma- turity -without its produc- tion. 482. Assignee as bona fide purchaser — Notice — Rights, and priori- ties. 483. Priority under different assign- ments of same mortgage. 484. Manner of recording an assign- ment — Identification of mort- gage — Marginal record. 485. Record of collateral agreement affecting mortgage, or partial release. 486. Crops and trees included as part of realty. 487. Mechanics' lien laws affecting priority of mortgages. 487a. Expenses of administration upon estate of deceased mortgagor. § 456. Statutory provisions in general. — In most of the states mortgages are required by statute to be recorded in the same manner as other conveyances of real property, in order to charge third persons acquiring interests in the property, such as subsequent purchasers, mortgagees, and judgment creditors.^ In general, the statutes pro- ^ Alabama: Code 1907, §§ 3383, 3384. Alaska: Civ. Code 1900, § 98; Nestor v. Holt, 1 Alaska 567. Arizona: Civ. Code 1901, par. 749, Rev. Stat. 1913, § 2080. Arkansas: Dig. of Stat. 1904, § 763; Dodd v. Parker, 40 Ark. 536; Pry v. Martin, 33 Ark. 203. California: Civ. Code 1906, §§ 1169-1171, 1214, 2950, 2952. Colorado: Ann. Stats. 1891, § 446; Mills Ann. Stat. 1912, § 836, p. 390. Connecticut: Gen. Stat. 1902, § 4036. Delaware: Rev. Code 1874, p. 503, §§ 14-17. District of Columbia: Rev. Stat. 1874, §§ 446, 447, as amended Apr. 29, 1878, 20 Stats, at Large, ch. 69; Code of Law 1911, §§ 521, 523. Florida: Gen. Stat. 1906, § 2480. Georgia: Code 1910, §§ 3259, 3260, 4198. Idaho: Rev. Code 1908, §§ 3405. 3408. Illinois: Hurds Rev. Stat. 1913, ch. 30, p. 534, §§ 28, 31, ch. 95, p. 1663, § 4. Indiana Burns' Ann. Stat. 1914, §§ 3957, 3962. Iowa: Code 1897, § 2925. Kansas: Gen. Stat. 1889, §§ 1128- 1130, 3885; Gen. Stat. 1909, §§ 1670, 1671. Kentucky: Stat. 1909, §§ 494- 498a; Russell's Stat. § 2062. See Tennis Coal Co. v. Asher, 143 Ky. 223, 136 S. W. 197. Louisiana: Rev. Code 1889, §§ 2264-2266; Civ. Code 1912, §§ 3329, 3342-3348, 3370. In this state the registry preserves the evidence oi mortgages during ten years reckon- ing from the day of its date; i.s effect ceases, even against the con- tracting parties, if the inscriptions have not been renewed, before the expiration of this time, in the man- ner in which they were first made. As to necessity of reinscription, see Batey v. Woolfolk, 20 La. Ann. 385; Kohn V. McHatton, 20 La. Ann. 223; Levy V. Mentz, 23 La. Ann. 261; Adams v. Daunis, 29 La. Ann. 315; Watson V. Bondurant, 30 La. Ann. 1; Succession of Gayle, 30 La. Ann. 351; Patterson v. De la Ronde, 8 Wall. (U. S.) 292, 19 L. ed. 415; Bondurant v. Watson, 103 U. S. 281, 26 L. ed. 447. Neither inscription nor reinscription necessary as against the parties or their heirs. Cucullu V. Hernandez, 103 V. S. 105, 26 L. ed. 322. Omission to rein- scribe does not destroy the lien. Its rank only is affected. Norres v. Hays, 44 La. Ann. 907, 11 So. 462; Shepherd v. Orleans Cotton Press Co., 2 La. Ann. 100. A new act of mortgage does away with the necessity of a rein- scription. Hart V. Caffrey, 39 La. Ann. 894, 2 So. 788. Notice is not 673 EEGISTKY ACTS § 456 vide that such conveyances shall not be valid as against persons other than the grantor, his heirs and devisees, and persons having notice thereof, unless they are recorded in the registry of deeds for the county in which the land is situated. equivalent to registry. Boyer v. Joffrion, 40 La. Ann. 657, 4 So. 872. The pendency of a suit to foreclose the mortgage does not supply the omission to reinscrlbe. Pickett v. Foster, 149 U. S. 505, 37 L. ed. 829, 13 Sup Ct. 998. The object of the relnscrlptlon is to obviate the ne- cessity of searching for mortgages more than ten years back. To effect It, a new description of the property is necessary; and a mere reference to the previous mortgage Is not suf- ficient. Shepherd v. Orleans Cotton Press Co., 2 La. Ann. 100; Hyde v. Bennett, 2 La. Ann. 799; Poutz v. Reggio, 25 La. Ann. 637. Maine: Rev. Stat. 1883, ch. 73, §§ 8, 9. Maryland: Rev. Code 1888, art. 24, §§ 13-16; Ann. Code 1911, art. 21, §§ 31, 32, p. 502; also art. 21, § 19, p. 497. Massachusetts: Pub. Stat. 1882, ch. 120, § 14; Rev. Laws 1902, ch. 127, p. 1222, §§ 4, 7, 14. Michigan: Ann. Stats. 1882, §§ 5683-5689; Ann. Stat. 1913, §§ 10843, 10850. The statute applies to mort- gages as well as deeds. Jackson City Bank v. Campbell, 172 Mich. 541, 138 N. W. 254. Minnesota: Gen. Stat. 1913, § 6844. Mississippi: Code 1906, §§ 2784, 2787, 2788; Mississippi Valley Co. V. Chicago, St. L. &c. R. Co., 58 Miss. 846, 38 Am. Rep. 348. Missouri: Rev. Stat. 1909, §§ 2809 2811 Montana: Rev. Code 1907, §§ 4648, 5751-5754. A mortgage Is a conveyance within the code rela- tive to the recording of convey- ances. Cornish v. Woolverton, 32 Mont. 456, 81 Pac. 4. Nebraska: Comp. Stat. 1885, ch. 73, §§ 1618; Ann. Stat. 1911, §§ 10816-10818. Nevada: Rev. Laws 1912, §§ 1038-1040; Grellet v. Heilshorn, 4 Nev. 526. New Hampshire: P. Stat. 1891, 43 — ^JoNES Mtg.— Vol. I. ch. 136, § 4; P. Stat. 1901, ch. 137, § 4. New Jersey: Rev. 1877, pp. 155, 705, 706; Supp. 1886, pp. 133, 135; Comp. Laws 1911, p. 1541, § 21, p. 1552, § 53. See also Den v. Wade, 20 N. J. L. 291. The Mortgage Registry Act does not apply to mortgages of leasehold estates. Hutchinson v. Bramhall, 42 N. J. Eq. 372, 7 Atl. 873, reversing Deane v. Hutchin- son, 40 N. J. Eq. 83, 2 Atl. 292. Subsequently a statute was enacted requiring mortgages or leasehold estates to be recorded, and making the recording acts applicable there- to. Laws 1887, ch. 161. The regis- try act applies as against the state. Clement v. Bartlett, 33 N. J. Eq. 43. New Mexico: Comp. Laws 1884, §§ 429, 2761-2762; Comp. Laws 1897, §§ 3953-3955. New York: Birdseye's Consol. Laws 1909, p. 5090, § 291. A mort- gage is a conveyance, under the statute. Sullivan v. Corn Bxch. Bank, 154 App. Div. 292, 139 N. Y. S. 97. North Carolina: Pell's Revisal 1908, ch. 18, § 982. Witherell v. Murphy, 154 N. Car. 82, 69 S. E. 748. North Dakota: Rev. Code 1905, §§ 5038, 5039, 5042; Comp. Laws 1913, ch. 49, §§ 5550, 5594-5598. An unrecorded executory contract for a deed to a purchaser in possession, is a mortgage and a "conveyance," entitled to record under the stat- ute. Simonson v. Wenzel, 27 N. Dak. 638, 147 N. W. 804. Ohio: 1 Rev. Stat. 1892, §§ 1143, 4132-4135; Gen. Code 1910, § 8542. Oklahoma: Comp. Laws 1909, §§ 1195-1199. Oregon: Lord's Oregon Laws 1910, § 7129. Pennsylvania: Purdon's Dig. 1905, §§ 154-166. Rhode Island: Pub. Stat. 1882, ch. 173, §§ 3, 4; Gen. Laws 1909, ch. 253, p. 875, § 6. But this statute does not make an unacknowledged § 456 EECOEDING AS AFFECTIXG PEIOEITY 67i In somewhat difierent terms, but with like effect, the statutes of some states provide that conveyances shall be void as to subsequent purchasers and creditors in good faith and for a valuable considera- tion without notice, until and except they are recorded or left for record in the proper registry of deeds. Everywhere a record properly made is constructive and absolute notice of the conveyance as re- corded.^ The order of priority between persons claiming liens on the same property, by mortgage or otherwise, is fixed by the order in which they are filed for record. In other words, priority of record gives deed void as to others having actual notice of Its existence. Westerly Sav. Bank v. Stillman Mfg. Co., 16 R. I. 497, 17 Atl. 918. South Carolina: Code 1912, § 3542. South Dakota: Rev. Code 1903, C. C. p. 734, § 986, p. 829, § 2065. Tennessee: Code 1884, §§ 2811, 2S37, 2843 2887-2890; Code 1896, §§ 3697, 3705, 3712. Texas: 2 Rev. Civ. Stats. 1889, arts. 4332-4334; Sayles' Civ. Stat. 1914, art. 1104. Utah: Comp. Laws 1888, §§ 2610- 2613; Comp. Laws 1907, § 1975; Neslin v. Wells, 104 U. S. 428, 26 L. ed. 802. Vermont: Constitution, ch. 2, § 35; Rev. Laws 1880, ch. 97, §§ 1927- 1935; Pub. Stat. 1906, §§ 2579-g581. Virginia: Code 1904, ch. 109, ^ 2465-2467; McCormack v. James, 36 Fed. 14; Hunton v. Wood, 101 Va. 54, 43 S. E. 186. Washington: Code and Stat. 1910, §§ 8781-8787. West Virginia: Code 1887, ch. 74, §§ 4-8; Code 1913, §§ 3805, 3834- 3836. Wisconsin: Stat 1913, §§ 2241- 2244. Wyoming: Rev. Stat. 1887, §§ 15-25; Comp. Stat. 1910, §§ 3646, 3653-3656. See the following decisions in the United States courts upon the necessity of recording: Pickett v. Foster, 149 U. S. 505, 37 L. ed. 829, 13 Sup. Ct. 998; Lovell v. Cragin, 136 y. S. 130, 34 L. ed. 372, 10 Sup. Ct. 1024; Bacon v. Northwestern KTut. L. Ins. Co., 131 U. S. 258, 33 L. ed. 128, 9 Sup. Ct. 787; Ridings V. Johnson, 128 U. S. 212, 32 L. ed. 401, 9 Sup. Ct. 72; Stevenson v. Texas &c. R. Co., 105 U. S. 703, 26 L. ed. 1215; Patterson v. De la Ronde, 8 Wall (U. S.) 292, 19 L. ed. 415; Beals v. Hale, 4 How. (U. S.) 37, 11 L. ed. 865; Anthony V. Butler, 13 Pet. (U. S.) 423, 10 L. ed. 229; Bank of Alexandria v. Herbert, 8 Cranch (U. S.) 36, 3 L. ed. 479; Brudenell v. Vaux, 2 Dall. (U. S.) 302, Fed. Cas. No. 2049; Sturgess v. Cleveland Bank, 3 Mc- Lean (U. S.) 140, Fed. Cas. No. 13571; Hunt v. Innis, 2 Woods (U. S.) 103, Fed. Cas. No. 6892; Tru- man V. Weed, 67 Fed. 645, 14 C. C. A. 595; Wright v. Buckman, 39 Fed. 243; Metropolitan Trust Co. v. Pennsylvania &c. R. Co., 25 Fed. 760. See also to the effect that a mortgage of land is a "conveyance" within the meaning of the record- ing acts; Stewart v. Powers, 98 Cal. 514, 33 Pac. 486; Tolman v. Smith, 74 Cal. 345, 16 Pac. 189; Hassey v. Wilke, 55 Cal. 525; Odd Fellows' Sav. Bank v. Banton, 46 Cal. 603; Hull V. Diehl, 21 Mont. 71, 52 Pac. 782; Sullivan v. Corn Exch. Bank, 154 App. Div. 292, 139 N. Y. S. 97; Lamed v. Donovan, §4 Hun 533, 65 N. Y. St. 852, 32 N. Y. S. 731; Ward V. Isbill, 73 Hun 550, 56 N. Y. St. 185, 26 N. Y. S. 141; Fries v. Null, 154 Pa. St. 373, 26 Atl. 554; Rowell V. Williams. 54 Wis. 636, 12 N. W. 86. For effect of record generally, and failure to record, see post §§ 523, 527. ' See the statutes cited above for such provision in the following states: Alabama, Arizona, Colo- rado, Georgia, Idaho, Kentucky, Missouri, Nebraska, New Mexico, North Dakota, Oregon, South Caro- 675 EEGISTEY ACTS § 45? priority of title, as a general rule ;* and this priority dates from the time the instrument is delivered to the recorder for record. A mort- gage is a conveyance with a condition; and the mortgagee is a pur- chaser ; and in most of the states there are no special provisions in re- lation to recording mortgages, but the general provisions as to record apply as well to mortgages. § 457. Books of record. — In most of the states, all instraments relating to the title to real estate are recorded in the same books of record, but in several states it is provided by statute that all mort- gages shall be recorded in separate books kept for this purpose only.'^ A record not made in the proper book does not operate as constructive notice." A deed absolute in form intended as a mortgage should be Una, South Dakota, Wisconsin, Wy- oming. ■'Bennett Lumber Co. v. Martin, 132 Ga. 491, 64 S. E. 484; Huebsch V. Sctieel, 81 111. 281 ; Jones v. Jones, 16 111. 117; GivanovitclL v. Baton Rouge Hebrew Cong., 36 La. Ann. 272; Ogle v. King, 22 La. Ann. 391; Dunwell v. Bidwell, 8 Minn. 34; Rumery v. Loy, 61 Nebr. 755, 86 N. W. 478; Burrows v. Hovland, 40 Nebr. 464, 58 N. W. 947; Allen v. Bolen, 114 N. Car. 560, 18 S. E. 964; Quinnerly v. Quinnerly, 114 N. Car. 145, 19 S. E. 99; Bloom v. Noggle, 4 Ohio St. 45; Day v. Clark, 25 Vt. 397; Morris v. Bentley, 2 N. W. Ter. (Can.) 253. See also Cope v. Crichton, 30 Ont. 603; Burns' Rev. Stat. Indiana 1914, § 3962; Rev. Code Louisiana 1913, § 3329; Pur- don's Pennsylvania Digest 1905, p. 1181, § 158. » California: Civ. Code 1906, § 117L Florida: Rev. Stat. 1892, § 1391; Gen. Stat. 1906, §§ 2480, 2481. See Ivey V. Dawley, 50 Fla. 537, 39 So. 498. Idaho: Rev. Stat. 1887. Code 1911, § 3158. Louisiana: Rev. Code 2252. Michigan: Ann. Stat. 567; Ann. Stat. 1913, § 10842. See as to what instrument should be recorded as a mortgage, Balen v. Mercier, 75 Mich. 42, 42 N. W. 666. Nebraska: Ann. Stat. 1911, § 9604. § 2999; 1913, § 1882, § 10841, New Mexico: Comp. Laws 1897, § 3957. New Tork: Birdseye's Consol. Laws 1909, Real Property Law § 315. North Dakota: Comp. Laws 1913, § 5560. Ohio: Gen. Code 1910, § 2757. Oregon: Laws 1910, § 7126. South Dakota: Civ. Code 1903, § 967, p. 73L Texas: Sayles' Civ. Stat. 1914, art. 6796; Cavanaugh v. Peterson, 47 Tex. 197. This provision is held to be directory. Lignoski v. Crook- er, 86 Tex. 324, 24 S. W. 278; Ken- nard v. Mabry, 78 Tex. 151, 14 S. W. 272. But a mechanic's lien need not be recorded. Quinn v. Logan, 67 Tex. 600, 4 S. W. 247. Mortgages of personal property are generally recorded separately from mortgages and other instru- ments relating to real property. In some states separate books are re- quired for releases of mortgages and other liens, for mechanics' liens, for marriage contracts, and In a few states separate books are required for each class of instru- ments relating to real property. See post § 51L "Kent v. Williams, 146 Cal. 3, 79 Pac. 527; Cady v. Purser, 131 Cal. 552, 63 Pac. 844, 82 Am. St. 391; Baker v. Lee, 49 La. Ann. 874, 21 So. 588; Cordeviolle v. Dawson, 26 La. Ann. 534; Colomer v. Morgan, 13 La. Ann. 202; Deane v. Hutchin- son, 40 N. J. Eq. 83, 2 Atl. 292; Par- sons V. Lent, 34 N. J. Eq. 67; Wil- 458 EECOEDING AS AFFECTING PRIORITY 676 Tecorded in the book of mortgages, and has been held void as to sub- sequent bona fide purchasers and mortgagees, when recorded only in the book of deeds. But the weight of authority seems to be that the recording of such instruments in the book of deeds is sufficient.' Usage may determine the validity of a record. Thus, where mort- gages of real and personal property are, required to be recorded in separate books, and a mortgage embracing both real and personal property is recorded only in the book of real estate mortgages, it is held to be sufficiently recorded to make it constructive notice of the lien upon the personal property, it appearing that it is the custom to record such mortgages in this manner without making a double record.' § 458. Time allowed for record — ^Effect of record in general. — The recording acts of several states provide that mortgages shall be re- corded within a specified time after execution.' The effect of this pro- liamson v. New Jersey So. R. Co., 29 N. J. Eq. 311; Purdy v. Hunting- ton, 42 N. Y. 334, 1 Am. Rep. 532; Gillig V. Maass, 28 N. Y. 191; Stod- dard V. Rotten, 5 BoBw. (N. Y.) 378; James v. Morey, 2 Cow. (N. Y.) 246, 6 Jolins. Ch. 417, 14 Am. Dec. 475; Bank for Savings v. Franlj;, 56 How. Pr. (N. Y.) 403, 45 Super. Ct. 404; Clute v. Robinson, 3 Jolins. (N. Y.) 595; Day v. Dunham, 2 Jolins. Ch. (N. Y.) 182, 15 Jolins. 555; Grimstone v. Carter, 3 Paige (N. Y.) 421, 24 Am. Dec. 230; White v. Moore, 1 Paige (N. Y.) 551; War- ner V. Winslow, 1 Sandf. Ch. (N. Y.) 430; Brown v. Dean, 3 Wend. (N. Y.) 208; Howells v. Hettrick, 13 App. Div. 366, 43 N. Y. S. 183; Van Thorniley v. Peters, 26 Ohio St. 471; Calder v. Chapman, 52 Pa. St. 359, 91 Am. Dec. 163; Luch's Appeal, 44 Pa. St. 519; Knowlton v. Walker, 13 Wis. 264; Reed v. Wil- son, 23 Ont. 552. See also Ivey v. Dawley, 50 Pla. 637, 39 So. 498 (record in Miscellaneous Book suffi- cient prior to statute of 1892); Grand Rapids Nat. Bank v. Ford, 143 Mich. 402, 107 S. W. 76, 114 Am. St. 668 (absolute deed intended as a mortgage) ; Gordon v. Constantino Hydraulic Co., 117 Mich. 620, 76 N. W. 142 (lease containing mortgage clause). See post § 511. 'See post § 511. 'Anthony v. Butler, 13 Pet. (U. S.) 423, 10 L. ed. 229; Boyle Ice Machine Co. v. Gould, 73 Cal. 153, 14 Pac. 609; Harriman v. Woburn Elec. Light Co., 163 Mass. 85, 39 N. E. 1004. See post § 511. "Alabama: Under the Code of 1896, §§ 1005. 1006, the time for rec- ord was limited to thirty days. Mil- ler V. Griffin, 102 Ala. 610, 15 So. 238; Cook v. Parham, 63 Ala. 456; De Vendal v. Malone, 25 Ala. 272; Coster V. Bank of Georgia, 24 Ala. 37. But this section has been re- written, and under the Code of 1907, § 3383, mortgages to secure debts, created at the date thereof, are made void as to purchasers, mort- gagees, and judgment creditors, without notice, unless recorded be- fore the accrual of the right of such purchasers, mortgagees or judgment creditors. Delaware: A mortgage for pur- chase-money recorded within thirty days after its execution has prece- dence of any judgment or other lien of prior date. Other deeds and mortgages must be recorded within three months after delivery in order to avail against a subse- quent fair creditor, mortgagee, or purchaser for a valuable considera- tion without notice. Rev. Code 1874, pp. 504, 505, § 21; Laws 1881, ch. 520; Laws 1883, p. 509. Georgia: Deeds must be recorded within one year and mortgages 67r REGISTRY ACTS § 458 vision is not to invalidate the mortgage as between the parties^ if not recorded within the time specified. It is admissible in evidence, and within thirty days from date, or they will be postponed to other liens or purchases made prior to the record without notice of the un- recorded conveyance. The record of mortgage not made within the time prescribed is notice from the time of record. Code 1882, §§ 1959, 1960, 2705; Civ. Code 1910, § 3260; North V. Goebel, 138 Ga. 739, 76 S. B. 46; Maddox v. Wilson, 91 Ga. 39, 16 S. E. 213; Myers v. Picquet, 61 Ga. 260; Adair v. Davis, 71 Ga. 769. Under the code mortgages not re- corded within the time required re- main valid as against the mort- gagor. North V. Goebel, 138 Ga. 739, 76 S. E. 46. Indiana: Under the Act of 1875, in force till January 1, 1914, deeds and mortgages not recorded within forty-five days from their execution are fraudulent and void as against subsequent purchasers, or mort- gagees in good faith and for a val- uable consideration. Rev. Stat. 1888, §§ 2931, 2932. Schmidt v. Zahronlt, 148 Ind. 447, 47 N. E. 335. But valid as to existing creditors. American T. &c. Bank v. McGetti- gan, 152 Ind. 582, 52 N. E. 793. As to proof of recording, see Moore v. Glover, 115 Ind. a67, 16 N. E. 163; Carson v. Eickhoff, 148 Ind. 596, 47 N. B. 1067 (second mortgage duly recorded preferred to first mort- gage not recorded in forty-five days). Under Burns' Ann. Stat. 1914, § 3962, deeds and mortgages take priority according to the time of filing for record, and are fraudu- lent and void as to a subsequent purchaser or mortgagee in good faith for a valuable consideration, having his deed or mortgage first recorded. Kentucky: Deeds other than deeds of trust and mortgages, by residents of the state, sixty days from date; by persons residing out of the state in the United States, four months; by persons out of the United States, twelve months. Gen. Stat. 1888, p. 315, § 14. But see Statutes 1909, §§ 496, 497. Maryland: Deeds and mortgages, within six months from date. Ann. Code 1911, art. 21, §§ 13-15. When so recorded they take effect as be- tween the parties from their date; otherwise they are not valid for the purpose of passing the title. A mortgage not recorded within six months has priority over general creditors at its date, but not over subsequent creditors. Sixth Ward Bldg. Assn. V. Willson, 41 Md. 506; Pfeaffl V. Jones, 50 Md. 263; Dyson V. Simmons, 48 Md. 207; Hearn v. Purnell, 110 Md. 458, 72 Atl. 906; Hoffman v. Gosnell, 75 Md. 577, 24 Atl. 28. Oregon: Deeds and mortgages must be recorded within five days after execution. Laws 1910, § 7129. Pennsylvania: Deeds and mort- gages must be recorded within six months after execution. Purdon's Dig. 1905, p. 1181, § 155. This pro- vision was first enacted in 1715, for the protection of subsequent mort- gagees and others from loss by se- cret pledges of property. The six months allowed are calendar months. Brudenell v. Vaux, 2 Dall. (Pa.) 302. By recent statute, ap- plicable to Philadelphia alone, deeds and other conveyances are valid as against subsequent pur- chasers only from the date of rec- ord. Purdon's Ann. Dig., p. 2110, § 5. The statute of 1893, p. 109, re- quires all deeds affecting lands in this state to be recorded within ninety days from the date of execu- tion; and unless so recorded they shall be adjudged fraudulent and void against any subsequent mort- gagee for a valid consideration or any creditor. See also Davey v. Ruffell, 162 Pa. St. 143, 29 Atl. 894. A mortgage recorded before a deed of the same land is recorded has priority over the deed, though the deed was recorded within six months from its execution and the mortgage was not. Fries v. Null, 154 Pa. St. 573, 26 Atl. 554. A mortgage for purchase-money, if recorded within sixty days from its execution, has priority. Bright- ly's Purdon's Dig., p. 588; Bratton's § 458 EECOEDING AS AFFECTING PEIOKITY 678 IS an equitable lien, although not so recorded.^" The failure to comply with this requirement only goes to the effect of the mortgage as to subsequent purchasers. As to purchasers whose conveyances are reg- istered before a mortgage recorded after the expiration of the limited time, the mortgage is ineffectual." If not recorded within the limited time, a subsequent recordation is ineffectual,^^ at least against third persons whose rights have intervened." Thus, a mortgage recorded Appeal, 8 Pa. St. 164; Parke v. Neeley, 90 Pa. St. 52. Of two mort- gages for purchase-money recorded within the sixty days, that which is first recorded has priority. Dun- gan V. American L. Ins. &c. Co., 52 Pa. St. 253. With the exception of mortgages for purchase-money, no mortgage is a lien until left for rec- ord; but when recorded, the prior- ity of lien is according to the prior- ity of record. Brooke's Appeal, 64 Pa. St. 127; Poster's Appeal, 3 Pa. St. 79; Brightly's Dig. 1872, p. 478. If two or more deeds are left on the same day, they have priority ac- cording to the time they were left at the olfice for record. Brooke's Appeal, 64 Pa. St. 127. If the mort- gage remains unrecorded at the time of the death of the mortgagor, though good against him while he lived, it is not good against his creditors after his decease, but must then come in with his general debts. Brightly's Purdon's Dig., p. 588; Nice's Appeal, 54 Pa. St. 200; Adams' Appeal, 1 Pa. St. 447. South Carolina: Deeds, deeds of trust and mortgages, and statutory liens are valid, so as to affect sub- sequent creditors or purchasers for valuable consideration without no- tice, only when recorded within forty days from the time of execu- tion. Summers v. Brice, 36 S. Car. 204, 15 S. E. 374. Pub. Stat. 1882, § 1776. The Civil Code 1893, § 1968, as amended in 1898 and em- bodied in Civil Code 1902, § 2456, provides that all mortgages and instruments in the nature of mort- gages shall be valid, against subse- quent creditors only when recorded within forty days after execution. See Miller v. Wroton, 82 S. Car. 97, 63 S. E. 62, affd. 63 S. Y. 449. But after the record of a mortgage, al- though not made within the forty days, no superior lien can be ac- quired by judgment or otherwise. Brown v. Sartor, 87 S. Car. 116, 69 S. E. 88. See also Code of 1912, § 3542, limiting the time for record to ten days. Virginia: Any conveyance record- ed within ten days from the day of its acknowledgment shall, un- less it be a mortgage, or a deed of trust not in consideration of mar- riage, be as valid as to creditors and subsequent purchasers as if re- corded on the day of acknowledg- ment. Code 1904, § 2467. In several states, provisions al- lowing time for recording instru- ments have been repealed, as in California, District of Columbia, Indiana, Mississippi, New Jersey, North Carolina and Ohio, and it is not probable that like provisions now remaining upon the statute books will remain many years Icnger. "Charter v. Graham, 56 111. 19; Sixth Ward Bldg. Assn. v. Willson, 41 Md. 506; Plume v. Bone, 13 N. J. L. 63; Den v. Watkins, 6 N. J. L. 445; Penman v. Hart, 2 Bay (S. Car.) 251; Ashe v. Livingston, 2 Bay (S. Car.) 80; Ash v. Ash, 1 Bay (S. Car.) 304; Rootes v. Holliday, 6 Munf. (Va.) 251. " Cowan V. Green, 2 Hawks (N. Car.) 384. "Alexandria Bank v. Herbert, 8 Cranch. (U. S.) 36, 3 L. ed. 479; Steiner v. Clisby, 95 Ala. 91, 10 So. 240, 11 So. 294; Harding v. Allen, 70 Md. 395, 17 Atl. 377; Sixth Ward Bldg. Assn. V. Willson, 41 Md. 506; Ridley v. McGehee, 13 N. Car. 40; Woodrow V. Blythe, 2 Del. Co. (Pa.) 18; Mowry v. Crocker, 33 S. Car. 436, 12 S. B. 3; Bloom v. Simms, 27 S. Car. 90, 3 S. E. 45; Williams v. Beard, 1 S. Car. 309. See also Jumonville v. Sharp, 27 La. Ann. 46L "Wyman v. Russell, 4 Biss. (U. 679 EEGISTRT ACTS § 458 several months after the period for recording had elapsed and after rights to liens in favor of mechanics and materialmen had arisen, is inferior to the statutory liens, though notice of them was not filed till after the recording of the mortgage.^'' Of two mortgages of equal equity, recorded within the time limited after execution, that which is first recorded has priority.^^ Mere delay and failure to record a mortgage within the prescribed time, does not render the mortgage fraudulent as to existing or siibsequent creditors, especially if induced by the mortgagor's promise to pay within such time.^° The effect of these provisions is that the record, when made within the prescribed time, relates back to the date of delivery of the instru- ment, and gives it priority over an instrument of subsequent date or delivery, although this has already been recorded.^'' A record made after the prescribed time operates as notice only from the time of de- livery of the instrument for record.^' As between conveyances neither of which is recorded within the prescribed time, the ordinary rule of priority of record prevails, and preference is given to the instrument first recorded. ^° The terms of the statute may determine the question of priority between instruments not recorded within the prescribed time. S.) 307, Fed. Cas. No. 18115; Miller V. Griffin, 102 Ala. 610, 15 So. 238; Tolle V. Alley, 15 Ky. L. 529, 24 S. W. 113; Porche v. Le Blanc, 12 La. Ann. 778; Stanhope v. Dodge, 52 Md. 483; PfeafE v. Jones, 50 Md. 263; Plume v. Bone, 13 N. J. L. 63; Fries v. Null, 158 Pa. St. 15, 27 Atl. 867; South Carolina L. &c. Co. T. McPherson, 26 S. Car. 431, 2 S. E. 267. "Jenckes v. Jenckes, 145 Ind. 624, 44 N. E. 632; Rev. Stat. 1894, § 3350. ^=Wood V. Lordler, 115 Ind. 519, 18 N. E. 34; Gibson v. Keyes, 112 Ind. 568, 14 N. E. 591, modifying or reversing Cain v. Hanna, 63 Ind. 408; Den v. Roberts, 4 N. J. L. 315; Dungan v. American Life Ins. &c. Co., 52 Pa. St. 253. "National State Bank v. Sanford Fork &c. Co., 157 Ind. 10, 60 N. E. 699. "Clarke v. White, 12 Pet. (U. S.) 178, 9 L. ed. 1046; Betz v. Mulin, 62 Ala. 365; Nichols v. Hampton, 46 Ga. 253; Anderson v. Dugas, 29 Ga. 440; Breckenrldge v. Todd, 3 T. B. Mon. (Ky.) 52, 16 Am. Dec. 83; Claiborne v. Holmes, 51 Miss. 146; Northrup v. Brehmer, 8 Ohio 392. '* Delane v. Moore, 14 How. (U. S.) 253, 14 L. ed. 409; Wyman v. Russell, 4 Biss. (U. S.) 307; Mal- lory V. Stodder, 6 Ala. 801; Hocken- huU V. Oliver, 80 Ga. 89, 4 S. E. 328; Adair v. Davis, 71 Ga. 769; McGuire v. Barker, 61 Ga. 339; An- derson V. Dugas, 29 Ga. 440; Gil- christ V. Gough, 63 Ind. 576, 30 Am. Rep. 250; Meni v. Rathbone, 21 Ind. 454; Harding v. Allen, 70 Md. 395, 17 Atl. 377; Claiborne v. Holmes, 51 Miss. 146; Sanborn v. Adair, 29 N. J. Bq. 338; South Carolina Loan Co. V. McPherson, 26 S. Car. 431, 2 S. E. 267; King v. Fraser, 23 S. Car. 543; McNamee v. Huckabee, 20 S. Car. 190; Steele v. Mansell, 6 Rich. L. (S. Car.) 614. In South Carolina, prior to January 1, 1877, a valid record could not be made after the time limited. Bloom v. Simms, 27 S. Car. 90, 3 S. E. 45. "Adair v. Davis, 71 Ga. 769; Reasoner v. Edmundson, 5 Ind. 393; Northrup v. Brehmer, 8 Ohio 392; § 459 RECORDING AS AFFECTING PEIOEITT 680 If the second deed is executed after the first deed has been recorded, though not within the time limited, the first deed has priority.^" If the second deed be made before the first deed is recorded, and the second deed be recorded within the time limited, but the first deed be not so recorded, though recorded before the second deed, the second deed has priority by virtue of relation back to the time of its execu- tion.2i Such a provision is a pernicious one, and is the source of much more inconvenience and fraud than it can possibly prevent. It practi- cally amounts to a withdrawal of the protection of the registry law for the period allowed for registration. A purchaser is never sure of his own priority until he has waited for the prescribed time to elapse after the recording of the deed to himself. § 459. Mortgagees as bona fide purchasers — Consideration. — A mortgagee of real estate for a valuable consideration is a purchaser within the meaning of the recording laws. This is declared by statute in some states, and in others it is a rule of Judicial construction.^^ A valid consideration, in some form, either a contemporaneous loan, or agreement for future advances, or some surrender of value, is neces- sary to entitle a mortgagee to the protection given a bona fide pur- chaser.^^ If the mortgage is given and accepted in good faith, with- Flescliner v. Sumpter, 12 Ore. 161, ter, 12 Ore. 161; Haynsworth v. 6 Pac. 506; McNamee V. Huckabee, Bischoff, 6 S. Car. 159; Moore v. 20 S. Car. 190. Walker, 3 Lea (Tenn.) 656; Bass ''"Adair v. Davis, 71 Ga. 769; v. Wheless, 2 Tenn. Ch. 531; Weln- Steele v. Mansell, 6 Klch. L. (S. berg v. Rempe, 15 W. Va. 829; Car.) 437. Rowell v. "Williams, 54 Wis. 636; 12 "Leger v. Doyle, 11 Rich. L. (S. N. W. 86. See post § 710. Car.) 109, 70 Am. Dec. 240, per =»• Craft v. Russell, 67 Ala. 9 ; Whe- Wardlaw, J.; McNamee v. Hucka- Ian v. McCreary, 64 Ala. 319 bee, 20 S. Car. 190, per McGowan, Watts v. Burnett, 56 Ala. 340 J.; Carson v. Eickhoff, 148 Ind. 596, Coleman v. Smith, 55 Ala. 368 47 N. E. 1067. Short v. Battle, 52 Ala. 456; Doe =^ Carpenter v. Longan, 16 Wall. v. Reeves, 10 Ala. 137; General Ins. (U. S.) 271, 21 L. ed. 313; Whelan Co. v. United States Ins. Co., 10 V. McCreary, 64 Ala. 319; Fargason Md. 517, 69 Am. Dec. 174; Brooks V. Edrington, 49 Ark. 207, 4 S. W. v. Owen, 112 Mo. 251, 19 S. W. 723, 763; Warner v. Watson, 35 Fla. 402, 20 S. W. 492; Wheeler v. Kirtland, 17 So. 654; Broward v. Hoeg, 15 24 N. J. Eq. 552; Simons v. First Fla. 370; Walden v. A. P. Brantley Nat. Bank, 93 N. Y. 269 (agreement Co., 116 Ga. 298, 42 S. E. 503; Par- for future advances); First Nat. ker V. Barnesville Sav. Bank, 107 Bank v. Robinson, 105 App. Div. Ga. 650, 34 S. E. 365; Herff v. 193, 94 N. Y. S. 767; Outterson v. Griggs, 121 Ind. 471, 23 N. E. 279; Dilts, 66 Hun 629, 49 N. Y. St. 277, Patton v. Eberhart, 52 Iowa 67, 2 21 N. Y. S. 163 (surrender of title N. W. 954; Jordan v. McNeil, 25 to personalty as a consideration) ; Kans. 459; Chapman v. Miller, 130 Halbert v. Paddleford (Tex. Civ. Mass. 289; McDowell v. Lockhart, App.), 33 S. W. 592. 93 N. Car. 191; Flechner v. Sump- 681 EEGISTET ACTS 459 out fraud, and is supported by an actual present consideration, the mortgagee is a bona fide purchaser for value, and is protected against adverse claims of which he has no notice,^* including prior convey- ances,^^ and other existing liens and claims.^" "When I speak of a purchaser for a valuable consideration," says Lord Hardwicke, "I in- clude a mortgagee, for he is a purchaser pro tanto."^^ A mortgagee is a purchaser for value under a mortgage given to indemnify a surety against a contemporaneous liability, and he is protected against latent equities of which he had no notice.^* ^ Klsner v. Trigg, 98 U. S. 50, 25 L. ed. 83; Woodruff v. Adair, 131 Ala. 530, 32 So. 515; Rogers v. Adams, 66 Ala. 600; Wells v. Mor- row, 38 Ala. 125; Turman v. Bell, 54 Ark. 273, 15 S. W. 886, 26 Am. St. 35; Bush v. Golden, 17 Conn. 594; Scott v. Atlas Sav. &c. Assn., 114 Ga. 134, 39 S. E. 942; Lane v. Partee, 41 Ga. 202; Brwin v. Hall, 18 111. App. 315; Lehman v. Hawks, 121 Ind. 541, 23 N. E. 670; Herff v. Griggs, 121 Ind. 471, 23 N. E. 279; Koon V. Tramel, 71 Iowa 132, 32 N. W. 243; Hewitt v. Rankin, 41 Iowa 35; Straeffer v. Rodman, 146 Ky. 1, 141 S. W. 742, Ann. Gas. 1913C, 549; Thompson v. Whitbeck, 47 La. Ann. 49, 16 So. 570; Pierce v. Faunce, 47 Maine 507; Dana v. New- hill, 13 Mass. 498; Shepard v. Shep- ard, 36 Mich. 173; Masterson v. West End &c. R. Co., 72 Mo. 342; Fair v. Howard, 6 Nev. 304; Stern- berg V. Sternberg (N. J. Bq.), 69 Atl. 492; Werner v. Franklin Nat. Bank, 166 N. Y. 619, 59 N. E. 1132; Drake v. Paige, 127 N. Y. 562, 28 N. B. 407; La Farge Fire Ins. Co. v. Bell, 22 Barb. (N. Y.) 54; Maas V. Dunmyer, 21 Okla. 434, 96 Pac. 591; Kieffer v. Victor Land Co., 53 Ore. 174, 90 Pac. 582, 98 Pac. 877; Landigan v. Mayer, 32 Ore. 245, 51 Pac. 649, 67 Am. St. 521; Lancaster v. Dolan, 1 Rawle (Pa.) 231, 18 Am. Dec. 625; Haynsworth v. Bisch- off, 6 S. Car. 159; Brigham v. Thompson, 12 Tex. Civ. App. 562, 34 S. W. 358; Wallwyn v. Lee, 9 Ves. Jr. 24, 7 Rev. 142, 32 Eng. Re- print 509. See also Williams v. Lewis, 158 N. Car. 571, 74 S. B. 17 (second mortgagee not a bona fide purchaser); Scott v. Farnam, 55 Wash. 336, 104 Pac. 639; Shoufe v. Griffiths, 4 Wash. 161, 30 Pac. 93, 31 Am. St. 910 (doctrine of bona fide purchasers not applied to mort- gage of equitable estate). ^Kindred v. New England Mtg. Sec. Co., 116 Ala. 192, 23 So. 56; Harding v. Tate, 23 Ky. L. 1918, 68 S. W. 17; Keith &c. Coal Co. v. Bingham, 97 Mo. 196, 10 S. W. 32; Farmer v. Fisher, 197 Pa. St. 114, 46 Atl. 892; Summers v. Price, 36 S. Car. 204, 15 S. E. 374; Parrish V. Mahany, 10 S. Dak. 276, 73 N. W. 97, 66 Am. St. 715; McKeen v. Sultenfuss, 61 Tex. 325; Hays v. Tilson (Tex.), 35 S. W. 515. See also Ross V. Sweeney, 12 Ky. L. 861, 15 S. W. 357; Valentine v. Lunt, 115 N. Y. 496, 22 N. E. 209 (bona fide purchaser of subsequent mort- gagee protected though conveyance is void for duress); Charlestown v. Page, 1 Speer's Eq. (S. Car.), 159 (rights of purchaser from mort- gagee, without notice). ''"Gerson v. Pool, 31 Ark. 85; Austin V. Pulschen, 112 Cal. 528, 44 Pac. 788; Salter v. Baker, 54 Cal. 140; Edwards v. Thorn, 25 Fla. 222, 5 So. 707; Robbins v. Moore, 129 111. 30, 21 N. E. 934; Clark v. Hunt, 3 J. J. Marsh. (Ky.) 553; Mairs v. Bank of Oxford, 58 Miss. 919; Cor- net V. Bertelsmann, 61 Mo. 118; Drake v. Paige, 52 Hun 292, 24 N. Y. St. 131, 5 N. Y. S. 466; Patterson V. Johnson, 7 Ohio 225; Moran v. Wheeler, 87 Tex. 179, 27 S. W. 54; Shurtz V. Johnson, 28 Grat. (Va.) 657. ="Willoughby v. Willoughby, 1 T. R. 763. See also Salter v. Baker, 54 Cal. 140; Seevers v. Delashmutt, 11 Iowa 174; Porter v. Green, 4 Iowa 571; Singer Mfg. Co. v. Chal- mers, 2 Utah 542. ^Bartlett v. Varner, 56 Ala. 580. § 460 EECOKDING AS AFFECTING PEIOEITT 682 A trustee in a deed of trust is also a purchaser for value. He oc- cupies the same ground with respect to notice, either actual or con- structive, of any outstanding equities, that a mortgagee does.''' A deed of trust, given as security for bonds to be issued later, is inopera- tive as a security, unless the bonds are actually issued to bona fi.de creditors, before liens of other creditors attach to the property con- veyed.^" A voluntary mortgage may not be regarded as a purchase for value. Thus, a deed made by a father to his daughter of a very valuable farm by way of settlement upon himself for life and for his wife and daugh- ter after his death does not make the daughter a purchaser for value so as to entitle her to prevail over a prior unrecorded conveyance by the father.^ "■ The rule would be similar in case of a mortgage made for a like consideration. Although a mortgagee does not record his mortgage, he does not lose his lien as against a subsequent grantee without notice, who pays no consideration.'^ But a party holding un- der an unrecorded mortgage or trust deed can not prevail over a sub- sequent grantee without notice who has paid any valuable considera- tion.^' Although a part of the consideration for a mortgage may fail, as based upon a pre-existing debt, or otherwise insufficient to render the mortgagee a bona fide purchaser, the mortgage may be a valid and preferred security as to the remainder.^* § 460. Pre-existing debt as consideration. — A mortgage given to secure a pre-existing debt is by some courts distinguished from one upon which the consideration is paid at the time of its execution ; and the same rule is applied in case of a purchase in consideration of the grantee's canceling an existing debt of the grantor. The mortgage or deed made to secure a pre-existing debt does not constitute the grantee a purchaser for value in good faith. The former, although given upon a valid consideration as between the parties, is not regarded as a pur- chase for a valuable consideration which will entitle the mortgagee to protection against prior equities, although he had no notice of them ^Kesner v. Trigg, 98 TJ. S. 50, 25 '^Roberts v. "W. H. Hughes Co., L. ed. 83; New Orleans Canal &c. 86 Vt. 76, 83 Atl. 807. Co. V. Montgomery, 95 U. S. 16, 24 ^ Openshaw v. Dean (Tex. Civ. L. ed. 346; Gilbert v. Lawrence, 56 App.), 125 S. W. 989. W. Va. 281, 49 S. E. 155. "Wells v. Morrow, 38 Ala. 125; =° Allen V. Montgomery R. Co., 11 Klaes v. Klaes, 103 Iowa 689, 72 N. Ala. 437. W. 777; Gibson v. Wheless, 2 Tenn. =^Ten Eyck v. Witbeck, 135 N. Ch. 631. Y. 40, 31 N. B. 994, 31 Am. St. 809. 683 EEGISTEX ACTS 460 when he took the mortgage.^' He must have parted with some value or some right upon the faith of the mortgage and at the time of it, to entitle him to protection as a purchaser. He must have received some new consideration, or must have relinquished some security for '= People's Sav. Bank v. Bates, 120 U. S. 556, 30 L. ed. 754, 7 Sup. Ct. 679; Bybee v. Hawkett, 8 Sawy. (U. S.) 176, 12 Fed. 649; Morse v. God- frey, 3 Story (U. S.) 364; Hill v. Hite, 79 Fed. 826; Gewin v. Shields, 167 Ala. 593, 52 So. 887; Anniston Carriage "Works v. Ward, 101 Ala. 670, 14 So. 417; Anthe v. Heide, 85 Ala. 236, 4 So. 380; Banks v. Long, 79 Ala. 319; Jones v. Robinson, 77 Ala. 499; Craft v. Russell, 67 Ala. 9; Cook V. Parham, 63 Ala. 456; Thurman v. Stoddard, 63 Ala. 336; Alexander v. Caldwell, 55 Ala. 517; Coleman v. Smith, 55 Ala. 368; Short v. Battle, 52 Ala. 456; Gaf- ford v. Stearns, 51 Ala. 434; Wells V. Morrow, 38 Ala. 125; Miller v. Mattison, 105 Ark. 201, 150 S. W. 710; Haldiman v. Taft, 102 Ark. 45, 143 S. W. 112; Fargason v. Ed- rington, 49 Ark. 207; Withers v. Little, 56 Cal. 37Q; Salisbury Sav. Soc. V. Cutting, 50 Conn. 113; Har- ris V. Evans, 134 Ga. 161, 67 S. E. 880; Collins v. Moore, 115 Ga. 327, 41 S. E. 609; Chance v. McWhorter, 26 Ga. 315; Warford v. Hankins, 150 Ind. 489, 50 N. E. 468; Adams V. Vanderbeck, 148 Ind. 92, 45 N. E. 645, 47 N. E. 24, 62 Am. St. 497; Citizens Nat. Bank v. Judy, 146 Ind. 322, 43 N. E. 259; First Nat. Bank V. Connecticut Mut. Life Ins. Co., 129 Ind. 241, 28 N. E. 695; Durham V. Craig, 79 Ind. 117; Gilchrist v. Gough, 63 Ind. 576, 30 Am. Rep. 250; Sennefe v. Brackey (Iowa), 146 N. W. 24; Rea v. Wilson, 112 Iowa 517, 84 N. W. 539; Smith v. Moore, 112 Iowa 60, 83 N. W. 813; Koon V. Tramel, 71 Iowa 132, 32 N. W. 243; Phelps v. Fockler, 61 Iowa 340, 14 N. W. 729, 16 N. W. 210; Port v. Embree, 54 Iowa 14, 6 N. W. 83; Holmes v. Stix, 104 Ky. 351, 20 Ky. L. 593, 47 S. W. 243; Bufflngton. v. Gerrish, 15 Mass. 156, 8 Am. Dec. 97; Clark v. Flint, 22 Pick. (Mass.) 231, 33 Am. Deo. 733; Maynard v. Davis, 127 Mich. 571, 86 N. W. 1051; Edwards v. McKer- nan, 55 Mich. 520, 22 N. W. 20; Boxheimer v. Gunn, 24 Mich. 372; Whittacre v. Fuller, 5 Minn. 508; Schumpert v. Dillard, 55 Miss. 348; Hinds V. Pugh, 48 Miss. 268; Per- kins V. Swank, 43 Miss. 349; Mc- Leod V. First Nat. Bank, 42 Miss. 99; Reeves v. Evans (N. J. Eq.), 34 Atl. 477; Martin v. Bowen, 51 N. J. Eq. 452, 26 Atl. 823; Lamb V. Lamb (N. J. Eq.), 23 Atl. 1009; Pancoast v. Duval, 26 N. J. Eq. 445; Wheeler v. Kirtland, 24 N. J. Eq. 552; Mingus v. Condit, 23 N. J. Eq. 313; Breed v. National Bank, 171 N. Y. 648, 63 N. E. 1115; Constant V. Rochester University, 111 N. Y. 604, 19 N. B. 631, 2 L. R. A. 734, 7 Am. St. 769; Young v. Guy, 87 N. Y. 467; Union Dime Savings Inst. V. Duryea, 67 N. Y. 84; De Lancey V. Stearns, 66 N. Y. 157; Weaver v. Barden, 49 N. Y. 286; Hiscock v. Phelps, 49 N. Y. 97; Van Heusen V. Radcliff, 17 N. Y. 580, 72 Am. Dec. 480; O'Brien v. Fleckensteln, 86 App. Div. 140, 83 N. Y. S. 499; Stalker v. McDonald, 6 Hill (N. Y.) 93, 40 Am. Dec. 389; Coddington v. Bay, 20 Johns. (N. Y.) 637, 11 Am. Dec. 342; Constant v. Am. Bap. Soc, 21 J. & S. (N. Y.) 170; Bank of Sav- ings V. Prank, 13 J. & S. (N. Y.) 404; Gary v. White, 7 Lans. (N. Y.) 1, 52 N. Y. 138; Padgett v. Law- rence, 10 Paige (N. Y.) 170, 40 Am. Dec. 232; Manhattan Co. v. Evert- son, 6 Paige (N. Y.) 457; Dicker- son V. Tillinghast, 4 Paige (N. Y.) 215, 25 Am. Dec. 528; Westervelt v. Haff, 2 Sandf. Ch. (N. Y.) 98; Small V. Small, 74 N. Car. 16; Don- aldson V. State Bank, 16 N. Car. 103, 18 Am. Dec. 577; Lewis v. An- derson, 20 Ohio St. 281; Ashton's Appeal, 73 Pa. St. 153; Marsh v. Ramsey, 57 S. Car. 121, 35 S. E. 433; Summers v. Brice, 36 S. Car. 204, 15 S. E. 374; Zorn v. Savan- nah &c. R. Co., 5 S. Car. 90; Brown V. Vanlier, 7 Humph. (Tenn.) 239; Moody V. Martin (Tex. Civ. App.), 117 S. W. 1015; Stacey v.- Henke, 32 Tex. Civ. App. 462, 74 S. W. 925; Spurlock v. Sullivan, 36 Tex. § 460 EECOEDIITG AS AFFECTING PEIOEITT 684 a pre-existing debt due him.^" But if the mortgagee at the time of taking the mortgage released other security and extended the time of payment the mortgage will he sustained.^' If the mortgagee upon taking the mortgage has surrendered any valuable right, such as a prior mortgage upon the property, the new mortgage is based upon a valuable consideration as much as if he had paid money for it.^* Thus the surrender of a vendor's lien, a me- chanic's lien, or a note indorsed by a surety, or any other security already held for a pre-existing debt, if given contemporaneously and if so intended, will be a sufficient new consideration to constitute the mortgagee a purchaser for value. ^^ If an antecedent debt is accom- 511; McDonald v. Johns, 62 Wash. 521, 114 Pac. 175, 33 L. R. A. (N. S.) 57; Funk v. Paul, 64 Wis. 35, 24 N. W. 419. See also Stefflan v. Milmo Nat. Bank, 69 Tex. 513, 6 S. W. 823; McKamey v. Thorp, 61 Tex. 648; Ayres v. Duprey, 27 Tex. 593, 86 Am. Dec. 657. The same rule was laid down in Illinois in the case of Metropolitan Bank v. Godfrey, 23 111. 579. In later cases, however, it has been held, so far as negotiable paper is concerned, that an indorsee taking it before maturity as payment or security for a pre-existing debt is a holder for value, and takes it free from latent defenses on the part of the maker. Doolittle V. Cook, 75 111. 354; Man- ning V. McClure, 36 111. 490. In the latter case Mr. Justice Law- rence, referring to Metropolitan Bank v. Godfrey, 23 111. 579, said: "We do not desire to be understood as overruling that position; but if that question comes again before us, it will be open to argument whether a different principle should be applied to conveyances of real estate from that which all the mem- bers of the court agree should be applied to the indorsement of a promissory note." One who takes a trust deed to secure a note given as additional security for a pre-existing debt, and credits the discounted amount of the note on the debt, is not a bona fide purchaser. Moody v. Martin (Tex. Civ. App.), 117 S. W. 1015. A creditor who takes from his debtor a deed to land to secure a pre-existing debt, without any change of condition, or present payment, or other new considera- tion, will not be considered a bona fide purchaser, protected against an easement of which he has no notice. Harris v. Evans, 134 Ga. 161, 67 S. E. 880. Under the law merchant, one taking negotiable paper before maturity in payment of or as se- curity for an antecedent debt be- comes a bona fide holder, but that rule does not extend to one taking a mortgage merely as security for an antecedent debt without advanc- ing a new consideration. Haldi- man v. Taft, 102 Ark. 45, 143 S. W. 112. A new mortgage given to re- place one lost or omitted in process of registration, is not an ordinary mortgage given to secure an antece- dent debt, and is entitled to greater consideration in equity than a mortgage given to secure an ante- cedent debt. Brace v. Superior Land Co., 65 Wash. 681, 118 Pac. 910. == Wilson v. Knight, 59 Ala. 172 Bartlett v. Varner, 56 Ala. 580 Withers v. Little, 56 Cal. 370 Schumpert v. Dillard, 55 Miss. 348 Hinds V. Pugh, 48 Miss. 268; Per kins V. Swank, 43 Miss. 349; Law rence v. Clark, 36 N. Y. 128; Web ster V. Van Steenbergh, 46 Barb. (N. Y.) 211; Pickett v. Barron, 29 Barb. (N. Y.) 505; Spurlock v. Sul- livan, 36 Tex. 511. "'Alston V. Marshall, 112 Ala. 638, 20 So. 850. See also Hunt v. Hunt, 67 Ore. 178, 134 Pac. 1180. ™ Constant v. University of Roch- ester, 111 N. Y. 604, 19 N. E. 631, 7 Am. St. 769, 2 L. R. A. 734. =» Wilson v. Knight, 59 Ala. 172; Constant v. Rochester University, 685 EEGISTEY ACTS § 460 panied by any new or contemporaneous consideration, even such as an extension of time, the creditor is protected as a bona fide purchaser." A definite extension of the time for payment of a pre-existing debt is considered a new consideration, which will make the mortgagee a purchaser for value.*^ If, however, a mortgage is given to secure the mortgagee against a liability already incurred by him as surety for the mortgagor, it stands in the same position as a mortgage for a pre- existing debt.*^ A mortgage to secure future indebtedness constitutes the mortgagee a purchaser from the time that advances are made by the mortgagee under the mortgage without actual notice of a subsequent mortgage.*" But a mortgage to secure an antecedent debt is perfectly valid as between the parties, and as against all others who had at the time no equitable interest in the property; whatever may be its effect as to purchasers or incumbrances.** Moreover, such a mortgage, if taken without notice of one given to secure a future indebtedness, has pre- cedence of it, if it be first recorded.*"* The mortgagee for an antecedent debt acquires a lien upon the prop- erty to the extent only of the mortgagor's equitable interest at the time. Thus, if the mortgagor has then contracted to sell the land, and the vendee has paid a portion of the purchase-money, the mort- gage is a lien only to the extent of the unpaid purchase-money upon such contract. But after the vendee has received notice of the mort- 111 N. Y. 604, 19 N. E. 631, 2 L. R. v. Wilson, 112 Iowa 517, 84 N. W. A. 734, 7 Am. St. 769; Norwalk 539; Johnston v. Robuck, 104 Iowa Nat. Bank v. Lanier, 7 Hun (N. 523, 73 N. W. 1062; Cbadwlck v. Y.) 623; Lane v. Logue, 12 Lea Devore, 69 Iowa 637, 29 N. "W. 757; (Tenn.) 681 (surrender of vendor's Meyer v. Evans, 66 Iowa 179, 23 N. lien). W. 386; Duncan v. Miller, 64 Iowa "WWtfleld V. Riddle, 78 Ala. 99; 223, 20 N. W. 161; Laylin v. Knox, Cook V. Parham, 63 Ala. 456. See 41 Mich. 40, 1 N. W. 913; Lauben- also Douglas v. Miller, 102 App. heimer v. McDermott, 5 Mont. 512, Div. 94, 92 N. Y. S. 514; Branch v. 6 Pac. 344; Brooks v. Owen (Mo.), Griffin, 99 N. Car. 173, 5 S. E. 393. 20 S. W. 492; Longfellow v. Bar- See post § 461. nard, 58 Nebr. 612, 617, 79 N. "W. 255, "See post § 461. 76 Am. St. 117; Chaffee v. Atlas ■■= Southerland v. Fremont, 107 N. Lumber Co., 43 Nebr. 224, 61 N. W. Car. &65, 12 S. E. 237. See also 637; Henry v. Vliet, 36 Nebr. 138, rhler V. Semple, 20 N. J. Bq. 288. 54 N. W. 122; Turner v. Killian, 12 See post § 461. Nebr. 380, 12 N. "W. 101; Perkins v. " Simons v. First Nat. Bank, 93 Trinity Realty Co., 69 N. J. Eq. 723, N. Y. 269. 61 Atl. 167; Sargent v. Cooley, 12 N. Dak. 1, 94 N. W. 576; Smith v. Worman, 19 Ohio St. 145; Moore v. Fuller, 6 Ore. 272, 25 Am. Rep. 524; Usina v. Wilder, 58 Ga. 178; Kran- Paine v. Benton, 32 Wis. 491. ert v Simon 65 III. 344; McLeish ^"National Bank v. Whitney, 103 V. Hanson, 157 111. App. 605; Rea U. S. 99, 26 L. ed. 443. ■"Turner v. McFee, 61 Ala. 468 Steiner v. McCall, 61 Ala. 406 Machette v. Wanless, 1 Colo. 225 § 460 KECORDING AS AFFECTING rBIOEITT 686 gage, he can not make a valid payment of the remainder of the pur- chase-money.*" This rule requiring the pajrment of an actual consideration at the time of the transaction to constitute a bona fide purchaser, within the meaning of the recording acts, does not apply to any one but the orig- inal mortgagee. He being protected by the recording acts from a prior unrecorded conveyance, any one who takes an assignment from him is entitled to the same protection, although the assignee parts with no valuable consideration for the assignment, and even thoagh he has actual notice of the prior unrecorded conveyance.*^ If the sole consideration of a conveyance be the love and affection of the grantor, it will not hold against a prior unrecorded mortgage of the same property, or against a mortgage imperfectly recorded.** But numerous authorities hold that a mortgagee who has taken his mortgage in good faith to secure a pre-existing debt, or a pur- chaser who has received a conveyance in consideration of his cancel- ing a pre-existing debt, is entitled to be regarded as a purchaser, and to be protected as such.*° The weight of authority, however, seems to be against this position. '^ Young V. Guy, 87 N. Y. 457, affg. 23 Hun 1. ■"Wood V. Chapin, 13 N. Y. 509, 67 Am. Dec. 62; Webster v. Van Steenbergh, 46 Barb. (N. Y.) 211. "Toole V. Toole, 107 Ga. 472, 33 S. E. 686; Bishop v. Schneider, 46 Mo. 472, 2 Am. Rep. 533; Aubuchon v. Bender, 44 Mo. 560; Parrish v. Mahany, 12 S. Dak. 278, 81 N. W. 295, 76 Am. St. 604. See also Cot- ton V. Graham, 84 Ky. 672, 8 Ky. L. 658, 2 S. W. 647. But see Ray V. HoUenbeck, 42 Fed. 381. •"•Gassen v. Hendrick, 74 Gal. 444, 16 Pac. 242; Schluter v. Harvey, 65 Cal. 158, 3 Pac. 659; Frey v. Clif- ford, 44 Cal. 335; Robinson v. Smith, 14 Cal. 94. See also Partridge v. Smith, 2 Hiss. (U. S.) 183; Withers V. Little, 56 Cal. 370; Citizens' Nat. Bank v. Judy, 146 Ind. 322, 43 N. B. 259; Wert v. Naylor, 93 Ind. 431; Hewitt V. Powers, 84 Ind. 295; Evans v. Pence, 78 Ind. 439; Mc- Laughlin V. Ward, 77 Ind. 383; Gil- christ V. Gough, 63 Ind. 576, 30 Am. Rep. 250; Babcock v. Jordan, 24 Ind. 14. The doctrine is modified to the extent that such a mortgage does not cut off prior secret equi- ties. Busenbarke v. Ramey, 53 Ind. 499; Hayner v. Eberhardt, 37 Kans. 308, 15 Pac. 168; Jackson v. Reid, 30 Kans. 10, 1 Pac. 308; Soule v. Shotwell, 52 Miss. 236. In State Bank v. Frame, 112 Mo. 502, 20 S. W. 620. Mac- farlane, J., says: "Whether the satisfaction of a pre-existing debt IS a consideration sufficient to protect a purchaser of real estate against a prior unrecorded deed, of which be has no notice, has never Deen definitely and directly passed upon by this court, so far as we are advised." After reviewing the Missouri cases, the most important of which are Crawford v. Spencer, 92 Mo. 498, 4 S. W. 713; Fitzgerald v. Barker, 96 Mo. 661, 10 S. W. 45; Redpath v. Lawrence, 42 Mo. App. 101; Lawrence v. Owens, 39 Mo. App. 318; Feder v. Abrahams, 28 Mo. App. 454; Hess v. Clark, 11 Mo. App. 492, he continues: "We think the rule deducible from these authorities is, that a deed made In consideration of the absolute dis- charge of a pre-existing debt of the grantor, or an adequate portion of it, will constitute the grantee a purchaser for value, so as to pro- tect him against a previous unre- 687 EEGISTHY ACTS § 461 § 461. Extension of debt as consideration. — A definite extension of time for the payment of an existing debt, by a valid agreement, for any period however short, though it be for a day only, is a valuable consideration, and is sufficient to support a mortgage, or a convey- ance, as a purchase for a valuable consideration.'^'' But the mere tak- ing of collateral security on time is not by itself, and in the absence of any agreement beyond it, an extension of the time of payment of the original debt ; and therefore a mortgage taken as security in such ■way is not a purchase for value. ^^ The extension of time must be given at the time and in consider- corded deed of the same grantor. By the satisfaction of the debt the creditor divests himself of the right of an action, or of securing the original liability and places himself in a worse condition than he would have done by a definite for- bearance of the debt." Herbage v. Moodie, 51 Nebr. 837, 71 N. W. 778; Dorr V. Meyer, 51 Nebr. 94, 70 N. W. 543; Fair v. Howard, 6 Nev. 304; Branch v. Griffin, 99 N. Car. 173, 5 S. B. 393; Bank v. Bridgers, 98 N. Car. 67, 3 S. E. 826, 2 Am. St. 378; Brem v. Lockhart, 93 N. Car. 191; Potts V. Blackwell, 4 Jones- Eq. (N. Car.) 58; Cammack v. Soran, 30 Grat. (Va.) 292; Gilbert v. Law- rence, 56 W. Va. 281, 49 S. E. 155. But a conveyance in consideration of the extinguishment of a prece- dent debt makes the grantee a bona fide purchaser for value. Adams v. Vanderbeck, 148 Ind. 92, 45 N. B. 645, 47 N. E. 24; Wert v. Naylor, 93 Ind. 431. "" Randolph v. Webb, 116 Ala. 135, 22 So. 550; Alston v. Marshall, 112 Ala. 638, 20 So. 850; Whitfield v. Riddle, 78 Ala. 99; Jones v. Robin- son, 77 Ala. 499; Downing v. Blair, 75 Ala. 216; Craft v. Russell, 67 Ala. 9; Thames v. Rembert, 63 Ala. 561; Cook v. Parham, 63 Ala. 456; Fargason v. Edrington, 49 Ark. 207, 4 S. W. 763; Gilchrist v. Gough, 63 Ind. 576, 30 Am. Rep. 250; Davis V. Lutkiewiez, 72 Iowa 254, 33 N. W. 670; Koon v. Tramel, 71 Iowa 132, 32 N. W. 243; Phelps v. Fock- ler, 61 Iowa 340, 14 N. W. 729, 16 N. W. 210; Sullivan Sav. Inst. v. Young, 55 Iowa 132, 7 N. W. 480; Port V. Bmbree, 54 Iowa 14, 6 N. W. 83; De Mey v. Defer, 103 Mich. 239, 61 N. W. 524; Schumpert v. Dillard, 55 Miss. 348; Morrill v. Skinner, 57 Nebr. 164, 77 N. W. 375; O'Brien v. Fleckenstein, 86 App. Div. 140, 83 N. Y. S. 499, affd. 180 N. Y. 350, 73 N. E. 30, 105 Am. St. 768; Gary v. White, 52 N. Y. 138; Hale V. Omaha Nat. Bank, 1 J. & S. (N. Y.) 40; First Nat. Bank v. Lament, 5 N. Dak. 393, 67 N. W. 145; Farmers' &c. Nat. Bank v.- Wal- lace, 45 Ohio St. 152, 12 N. E. 439; Farmers' &c. Bank v. Citizens' Bank, 25 S. Dak. 91, 125 N. W. 642; Farmers' Nat. Bank v. James, 13 Tex. Civ. App. 550, 36 S. W. 288; Watts V. Corner, 8 Tex. Civ. App. 588, 27 S. W. 1087. See also Mis- souri Broom Mfg. Co. v. Guymon, 115 Fed. 112, 53 C. C. A. 16. An employer who accepted a mortgage for money embezzled, extending the time for repayment of the amount, was held a bona fide purchaser for value as against the employe's wife, who was induced to sign the mort- gage by her husband's false repre- sentation. Hunt V. Hunt, 67 Ore. 178, 134 Pac. 1180. Under the Civil Code of South Dakota §§ 986, 987, making a "conveyance" void as against subsequent bona fide pur- chasers and incumbrancers of rec- ord, a mortgage though given to secure a pre-existing debt is sup- ported by a suflScient consideration, where a definite extension of the time of payment is granted. Farm- ers' &c. Bank v. Citizens' Nat. Bank, 25 S. Dak. 91, 125 N. W. 642. See post §§ 532, 610. "Gary v. White, 52 N. Y. 138, revg. 7 Lans. 1; Wood v. Robinson, § 462 RECORDING AS AFFECTING PEIORITX 688 ation of the mortgage. A mortgagee is not considered a purchaser for value, merely because the result of the mortgage may be to extend the time of payment."*^ Where a mortgage is made in terms to secure an existing note, and the mortgage declares that "the same shall be paid in the manner following," giving future days of payment beyond the time of payment mentioned in the note, the mortgage extends the time of payment of the note. The mortgage in such case, by reason of the extension of the time of payment, is founded upon a valuable con- sideration. The date of payment in the note and the date of payment in the mortgage being inconsistent, the latter should prevail.^' A mortgage made to secure a loan made at the time, as well as a pre-existing debt, is based upon a valid consideration."* §462. Judgment creditors as purchasers — Priority of mortgages over judgments and attachments. — A Judgment creditor is not a pur- chaser within the recording acts, unless he is made so by statute."'* He was not regarded as a purchaser at common law. In a case in Peere Williams, "it was granted," said the reporter, "that if Lord Winehelsea, the covenantor, had made a mortgage of the premises for a valuable consideration and without notice, such mortgagee, in regard that he might have pleaded his mortgage, and would have been as a purchaser without notice, should have held place against the in- tended purchaser, for then the money would have been lent on the title and credit of the land, and would have attached on the land; which would not be so in the ease of a judgment creditor, who, for aught that appears, might have taken out execution against the per- son or goods of the party that gave the judgment ; and a judgment is a general security, not a specific lien on the land.""" And in another case given by the same reporter it was said, that "one can not call a 22 N. Y. 564. The dictum In the » Branch v. Griffin, 99 N. Car. 173, case of Pratt v. Coman, 37 N. Y. 5 S. E. 398; Bank v. Bridgers, 98 440, to the contrary, is denied in N. Car. 67, 3 S. E. 826. Gary v. "White, 52 N. Y. 138. The »= Hacker v. White, 22 Wash. 415, courts have been disposed to limit 60 Pac. 1114, 79 Am. St. 945; Daw- the authority of Gary v. White to son v. McCarty, 21 Wash. 314, 57 the facts of that case. Hubbard v. Pac. 816, 75 Am. St. 841; Kargar v. Gurney, 64 N. Y. 467; Durkee v. Nat. Steele-Wedeles Co., 103 Wis. 286, 79 Bank, 36 Hun (N. Y.) 565; Grocers' N. W. 216. See also Foster v. Hob- Bank V. Penfield, 7 Hun (N. Y.) son, 131 Iowa 58, 107 N. W. 1101; 279. Swarts v. Stees, 2 Kans. 236, 85 Am. •^^ Ingenhuett v. Hunt, 15 Tex. Civ. Dec. 588; Gaston v. Merriam, 33 App. 248, 39 S. W. 310. Minn. 271, 22 N. W. 614. "= Durkee v. National Bank, 36 "= Finch v. Winehelsea, 1 P. Wms. Hun (N. Y.) 565. 277. 689 REGISTRY ACTS § 462 judgment creditor a purchaser, nor has such creditor any right to the land; he has neither jus in re nor ad rem."'*'' The recording acts do not change the common law in this respect, unless they in terms interpose to protect a judgment lien ; and where they do not it stands, as at common law, subject to the prior convey- ance, though this be not recorded.'^* If there be an existing mortgage at the time the judgment is rendered, the judgment will bind only the equity of redemption, whether the mortgage be recorded or not, or whether the judgment creditor had or had not actual notice of the mortgage when he obtained the judgment.^" In such case a purchaser at the execution sale under the judgment will take subject to the mortgage."" But a sale under a senior execution will defeat the lien of a junior mortgage, although the mortgagee may have the liens mar- shaled in equity to secure satisfaction out of the personalty.^^ A recorded mortgage is superior to a subsequent attachment."^ An attachment of land upon the debt of one holding the record title does not avail at all against the equitable owner of the estate, or against one claiming under a mortgage or deed not recorded."'* There is no •appreciable distinction between an attachment and a levy of an execu- tion or a judgment lien, except that which results from the amount of expense incurred in the latter proceedings, and such expense can not be regarded as placing the creditor in the situation of a bona fide purchaser."* Whether the lien be by attachment or by judgment, it is =' Brace v. Marlborough, 2 P. Wms. v. Caldwell, 141 Mass. 489, 6 N. B.' 491. 737; Longstreet v. Shipman, 5 N. J. ■* Knell V. Green St. Bldg. Assn., Eg. 43. See also Claflin v. South 34 Md. 67. See post § 465. Carolina R. Co., 8 Fed. 118, 4 ™ Hackett v. Callender, 32 Vt. 97. Hughes 12 (mortgage defectively re- Con tra see Persons v. Van Tassel, corded); Newton First Nat. Bank 15 S. Dak. 362, 89 N. W. 861. v. Jasper County Bank, 71 Iowa 486, "Johnston V. Crawley, 22 Ga. 348; 32 N. W. 400; Northwestern Por- Mclntire v. Garmany, 8 Ga. App. warding Co. v. Mahaffey, 36 Kans. 802, 70 S. E. 198; Knapp v. Jones, 152, 12 Pac. 705; Campion v. Kille, 143 111. 375, 32 N. E. 382; Meacham 14 N. J. Eq. 229; Temple v. Hooker, V. Steele, 93 111. 135; Morton v. 6 Vt. 240. A defect in the mortgage. White, 2 Ind. 663; De Blanc v. Du- or conduct of the mortgagee creat- martrait, 3 La. Ann. 542; Nulsen v. ing an estoppel may defeat his pri- Wishon, 68 Mo. 383; Minor Lumber ority. Scrivener v. Dietz, 68 Cal. 1, Co. V. Thompson, 91 Nebr. 93, 135 8 Pac. 609. N. W. 429; Lovejoy v. Lovejoy, 31 "'Le Clert v. Oullahan, 52 Cal. N. J. Eq. 55. 252; Hart v. Farmers' &c. Bank, 33 "'Gadberry v. McClure, 4 Strob. Vt. 252. Eq. (S. Car.) 175. « Cover v. Black, I Pa. St. 493, "^Beamer v. Freeman, 84 Cal. 554, per Chief Justice Gibson; Shryock 24 Pac. 169; First Nat. Bank v. v. Waggoner, 28 Pa. St. 430; Heister Hayzlett, 40 Iowa 659; Iowa Loan v. Fortner, 2 Binn. (Pa.) 40, 4 Am. &c. Co. v. Mowery, 67 Iowa 113, 24 Dec. 417; Eodgers v. Gibson, 4 N. W. 747; Western Union Tel. Co. Yeates (Pa.) 111. 44 — ^JoNES Mtg.— Vol. I. § 463 EECOEDING AS APFECTING PRIORITY 690 a lien only upon the real estate, or the interest in it owned by the debtor, not upon that owned by another, as is the case when the debtor has conveyed it or mortgaged it, although the deed be unre- corded. The creditor is entitled to the same rights as the debtor had, and to no more.°° § 463. 'Unrecorded mortgage preferred to judgment. — The priority of mortgage and judgment liens is determined at common law by the date of their acquisition, the first in time being the first in right.'* "Tarver v. Ellison, 57 Ga. 54; Scott V. McMurran, 7 Blackf. (Ind.) 284; Goodenough v. McCoid, 44 Iowa 659; Dunwell v. Bidwell, 8 Minn. 34; Lambertville Nat. Bank v. Boss (N. J.) 13 Atl. 18; Jackson v. Dubois, 4 Johns. (N. Y.) 216; "Wertz's Ap- peal, 65 Pa. St. 306. " Bronson v. La Crosse &c. R. Co., 2 "Wall. (U. S.) 283, 17 L. ed. 725; First Nat. Bank v. Caldwell, 4 Dill. (U. S.) 314, Fed. Cas. No. 4798; McArthur v. Caldwell, 31 Fed. 521; Trapnall v. Richardson, 13 Ark. 543, 58 Am. Dec. 338; Cambridge Tile Co. V. W. B. Scaife &c. Co., 137 Ga. 281, 73 S. E. 492; Marshall v. Hodg- kins, 99 Ga. 592, 27 S. E. 748; Home V. Seisel, 92 Ga. 683, 19 S. E. 709; Osborne v. Hill, 91 Ga. 137, 16 S. E. 965; McAlpin v. Bailey, 76 Ga. 687; Hughes v. Mt. Vernon Bank, 4 Ga. App. 23, 60 S. B. 809; Tyrrell V. Ward, 102 111. 29; Spalding v. Heideman, 96 111. App. 405; Paxton V. Sterne, 127 Ind. 289, 26 N. E. 557; Morton v. White, 2 Ind. 663; Curie V. Wright, 140 Iowa 651, 119 N. W. 74; Weare v. Williams, 85 Iowa 253, 52 N. W. 328; Markson v. Buchan, 33 Kans. 739, 7 Pac. 578; Portwood V. Outton, 3 B. Mon. (Ky.) 247; Reigle v. Leiter, 8 Md. 405; Chand- ler V. Parsons, 100 Mich. 313, 58 N. W. 1011; Talbot v. Barager, 37 Minn. 208, 34 N. W. 23; Marlow v. John- son, 31 Miss. 128; Sayre v. Coyne (N. J. Eq.), 33 Atl. 300; Tichenor V. Tichenor, 45 N. J. Eq. 664, 18 Atl. 301; Lambertville Nat. Bank v. Boss (N. J. Eq.), 13 Atl. 18; Westervelt V. Voorhis, 42 N. J. Eq. 179, 6 Atl. 665; People v. Bacon, 99 N. Y. 275, 2 N. E. 4; Stevens v. Watson, 45 How. Pr. (N. Y.) 104; McKenzie v. Bismarck Water Co., 6 N. Dak. 361, 71 N. W. 608; Porter v. Barclay, 18 Ohio St. 546; Kramer v. Farmers' &c. Bank, 15 Ohio 253; Fleek v. Zillhaver, 117 Pa. St. 213, 12 Atl. 420; Kelso v. Kelly, 14 Pa. St. 204; Lynch v. Dearth, 2 Pen. & W. (Pa.) 101; Moore's Appeal, 7 Watts & S. (Pa.) 298; Febeiger v. Craig- head, 2 Yeates (Pa.) 42, 1 L. ed. 778; Drewery v. Columbia Amuse- ment Co., 87 S. Car. 445, 69 S. E. 879, 1094; Coleman v. Hamburg Bank, 2 Strob. Eq. (S. Car.) 285, 49 Am. Dec. 671; Blose v. Bear, 87 Va. 177, 12 S. E. 294, 11 L. R. A. 705; Nutt V. Summers, 78 Va. 164; American Sav. &c. Bank v. Helgesen, 64 Wash. 54, 116 Pac. 837, Ann. Cas. 1913 A, 390; Badeley v. Consolidated Bank, 38 Ch. Div. 238, 57 L. J. Ch. 468, 59 L. T. (N. S.) 419. See also Penn Mutual Life Ins. Co. v. Heiss, 141 111. 35, 31 N. E. 138, 33 Am. St. 273 (judgments against railroad by abutting owners preferred to mort- gage bonds); Bell v. Cassem, 158 111. 45, 41 N. E. 1089, 29 L. R. A. 571 (prior mortgage preferred to subsequent judgment under Illinois Dram-Shop Act.); Seeberger v. Campbell, 88 Iowa 63, 55 N. W. 20 (judgments against legal owner, who is a mere trustee, postponed to mortgages given by the equitable owner). This rule of priority ap- plies to an equitable mortgage, Cayce v. Stovall, 50 Miss. 396; and to an absolute deed intended as a mortgage, Edler v. Clark, 51 Fed. 117; and to a mortgage covering after-acquired property, Rice v. Kelso, 57 Iowa 115, 7 N. W. 3, 10 N. W. 335; People's Trust Co. v. Brooklyn &c. R. Co., 121 App. Div. 604, 106 N. Y. S. 782; and to a junior mortgage securing a debt to the 691 REGISTRY ACTS § 463 A mortgage recorded prior to an entry of judgment which is a lien upon the property takes precedence of the judgment lien/^ and a fore- closure of the mortgage, or a sale of the property under a power in the mortgage, defeats the judgment lien;"* and a mortgage recorded prior to an attachment is superior to the attachment lien, although the order for attachment be in the sheriff's hands at the time, but the attachment has not been actually made.*" If the judgment becomes a lien only from the date of its record, then as against a deed priority depends upon the priority of record. An attachment which takes effect from the time of delivering the or- der to the officer takes precedence of the lien of a mortgage executed before the order of attachment comes to the hands of the ofBcer, but not recorded till afterward.'" And so a judgment which is a lien from the time it is docketed takes precedence of a mortgage executed and re- corded after the docketing of the judgment. ■"• If the judgment be- comes a lien upon the real estate of the debtor from the date of entry or docketing, the order of priority between a judgment lien and a mortgage lien depends upon the order in which they are respectively entered and recorded;'^ at least where there are no intervening equi- ties, arising from actual notice.''^ A creditor having actual notice of a prior unrecorded mortgage at the time of obtaining his judgment lien,''' or before the debt was con- United States, Hoppock v. Shober, 112 N. Car. 196, 17 S. E. 566, 34 Am. 69 N. Car. 153. St. 483; Laurent v. Lanning, 32 Ore. "'Home V. Seisel, 92 Ga. 683, 19 11, 51 Pac. 80; Britton y. Bean, 4 S. E. 709; Kennard v. Mabry, 78 Phila. (Pa.) 289; Miller v. Wroton, Tex. 151, 14 S. W. 272. 82 S. Car. 97, 63 S. E. 62, 449; Car- ""Gray v. Patton, 13 Busli (Ky.) raway v. Carraway, 27 S. Car. 576, 625; McKenzie v. Bismarck Water 5 S. E. 157; Hill v. Rixey, 26 Grat. Co., 6 N. Dak. 361, 71 N. W. 608. (Va.) 72. '"Coles V. Berryhill, 37 Minn. 56, "Hutchinson v. Bramhall, 42 N. 33 N. W. 213; Belbaze v. Ratto, 69 J. Eq. 372, 7 Atl. 873. Tex. 636, 7 S. W. 501. See also "Williams v. Tatnall, 29 111. 553; Rice-Stix Dry Goods Co. v. Saun- Thomas v. Vanlieu, 28 Cal. 616; ders, 128 La. 82, 54 So. 479. Mead v. New York, H. &c. R. Co., 45 "Cross V. Fombey, 54 Ark. 179, Conn. 199. See also Cheesebrough 15 S. W. 461. V. Millard, 1 Johns. Ch. (N. Y.) 409, "GuUey v. Thurston, 112 N. Car. 7 Am. Dec. 494. It is immaterial 192, 17 S. E. 13. how the knowledge was acquired. A "Ludlow V. Clinton Line R. Co., judgment creditor who was joined 1 Flip. (U. S.) 25, Fed. Cas. No. in foreclosure of a mortgage on the 8600; Martinez v. Lindsey, 91 Ala. property, can not deny actual no- 334, 8^0. 787; Snell v. Cummins, 67 tice of the mortgage. Newhall v. Ark. ^261, 54 S. W. 342; Cabot v. Hatch, 134 Cal. 269, 66 Pac. 266, 55 Armstrong, 100 Ga. 438, 28 S. E. L. R. A. 673. Notice of a prior in- 123; Belli V. Cassem, 158 111. 45, 41 cumbrance which is void in law N. E. 1089, 29 L. R. A. 571; Warner does not affect the right of a cred- V. Helm, 9 111. 220; Wood v. Young, iter. Hubbard v. Savage, 8 Conn. 38 Iowa lt)2; Vanstory v. Thornton, 215. § 463 RECORDING AS AFFECTING PRIORITY 692 traeted,'^ will hold his lien subject to such mortgage. A deed or mortgage executed and recorded after a judgment has been entered against the mortgagor is of course subject to the judgment lien/'' un- less the mortgagor holds the land in trust, such as a resulting trust in favor of his wife.''' As between a mortgage and a judgment ren- dered in a county different from that in which the land is, priority is determined by priority of registration in the county where the land is situate.''* The rules for determining priority between a judgment docketed on the same day on which a mortgage is recorded, vary in the different states. In Delaware, a judgment is a lien during the entire day of its entry, and has priority over a mortgage recorded at any hour the same day.'''' In Pennsylvania there is no priority as between a mort- gage and a judgment entered of record on the same day, and the record not showing which was first recorded, they are payable pro rata as equal liens.*" This rule seems to prevail in South Carolina and Tennessee, the judgment and mortgage being of equal rank, in the absence of proof of actual priority.*"^ In Ohio the lien of a judgment relates back to the day and hour fixed by statute for the opening of the term of court, at which the judgment was rendered.*^ Under a statute which provides that a mortgage recorded within a certain time after its date shall take effect as between the parties from its date, a judgment recovered subsequently to the date of a mortgage, and before the recording of it, binds only the equity of re- demption, and is subject to the mortgage without regard to the ques- tion of actual notice, if the mortgage is subsequently recorded within the time prescribed by law.*^ A deed or mortgage recorded after the time prescribed takes priority over the claims of all creditors who have not previously established a lien.** '^Lahr's Appeal, 90 Pa. St. 507; 2 Phila. (Pa.) 354. But see Magaw Britton's Appeal, 45 Pa. St. 172. v. Garrett, 25 Pa. St. 319. ™Tarver v. Ellison, 57 Ga. 54; "Ex parte Stagg, 1 Nott & McC. Lambertville Nat. Bank v. Boss (N. (S. Car.) 405; Murfree v. Carmack, J.), 13 Atl. 18; Vanstory v. Thorn- 4 Yerg. (Tenn.) 270, 26 Am. Dec. ton, 112 N. Car. 196, 17 S. E. 566. 232. "Seeberger v. Campbell, 88 Iowa '^Hemmlnway v. Davis, 24 Ohio 63, 55 N. W. 20. St. 150; Davis v. Messenger, 17 Ohio ™ Firebaugh v. Ward, 51 Tex. 409. St. 231. See also FoUett v. Hall, 16 ™ Hollingsworth v. Thompson, 5 Ohio 111, 47 Am. Dec. 365. Har. (Del.) 432. « Knell v. Green St. Building "» Hendrickson's Appeal, 24 Pa. St. Assn., 34 Md. 67. See ante § 458 363; Claason's Appeal, 22 Pa. St. and post § 544. 359; Clawson v. Eichbaum, 2 Grant «* South Carolina Loan &c. Co. v. Cas. (Pa.) 130; Maze v. Burke, 12 McPherson, 26 S. Car. 431, 2 S. B. Phila. (Pa.) 335; Doolittle v. Barry, 267. 693 EEGISTET ACTS 464 § 464. Priority of unrecorded mortgage over subsequent judgment. — In most of the states, a judgment obtained by a creditor and duly- entered and docketed, without notice of an unrecorded mortgage pre- viously given by his debtor on the same land, will have priority over the mortgage, and the mortgage will not be enforcible against the land, until the creditor is satisfied.*^ But in several states an unre- corded deed or mortgage is preferred to a subsequent judgment. A judgment or attaching creditor is not considered a purchaser within the recording acts of these states, for a judgment lien or attachment is not protected by them ; and a deed or mortgage being valid without being recorded, for all purposes except that of preserving its lien against bona fide purchasers and mortgagees, is valid against a sub- sequent judgment lien.*® In such case it makes no difference that the *»Lash V. Hardick, 5 Dill. (XT. S.) 505, Fed. Cas. No. 8097; Chadwick V. Carson, 78 Ala. 116; Barker v. Bell, 37 Ala. 354; De Vendell v. Hamilton, 27 Ala. 156; Cleveland v. Shannon (Ark.), 12 S. "W. 497; Hawkins v. Piles, 51 Ark. 417, 11 S. W. 681; New England Mtg. &c. Co. V. Ober, 84 Ga. 294, 10 S. E. 625; Hoist v. Burrus, 79 Ga. Ill, 4 S. E. 108; Richards v. Myers, 63 Ga. 762; Shepherd v. Burkhalter, 13 Ga. 443, 58 Am. Dec. 523; Tarboro r. Micks, 118 N. Car. 162, 24 S. E. 729; Bostic V. Young, 116 N. Car. 766, 21 S. E. 552; Building &c. Assn. v. Clark, 43 Ohio St. 427, 2 N. E. 846; Tousley V. Tousley, 5 Ohio St. 78; "White v. Denman, 1 Ohio St. 110; Jackson v. Luce, 14 Ohio 514; Mayham v. Coombs, 14 Ohio 428; Acklin v. Waltermier, 19 Ohio Cir. Ct. 372, 10 Ohio Cir. Dec. 629; Lahr's Appeal, 90 Pa. St. 507; Jaques v. Weeks, 7 AVatts (Pa.) 261; Barnett v. Squyres, 93 Tex. 193, 54 S. W. 241, 77 Am. St. 854; Hunton v. Wood, 101 Va. 54, 43 S. E. 186; Heermans v. Montague (Va.), 20 S. E. 899; McCance v. Taylor, 10 Grat. (Va.) 580; McCullough v. Sommerville, 8 Leigh (Va.) 415. See also Button V. McReynolds, 31 Minn. 66, 16 N. W. 468; Golcher v. Brisbin, 20 Minn. 453; Sipley v. Wass, 49 N. J. Bq. 463, 24 Atl. 233; Voorhis v. Wester- velt, 43 N. J. Eq. 642, 12 Atl. 533, 3 Am. St. 315; Thomas v. Kelsey, 30 Barb. (N. Y.) 268; Schmidt v. Hoyt, 1 Edw. (N. Y.) 652; Jackson v. Du- bois, 4 Johns. (N. Y.) 216; Meier v. Kelly, 22 Ore. 136, 29 Pac. 265. "■Withnell v. Courtland Wagon Co., 25 Fed. 372; Ukiah Bank v. Petaluma Sav. Bank, 100 Cal. 590, 35 Pac. 170; Hoag v. Howard, 55 Cal. 564; Plant v. Smythe, 45 Cal. 161; Pixley v. Huggins, 15 Cal. 127; Shirk V. Thomas, 121 Ind. 147, 22 N. E. 976, 16 Am. St. 381; Heberd v. Wines, 105 Ind. 237; Wright v. Jones, 105 Ind. 17; Poltz v. Wert, 103 Ind. 404; Hays v. Reger, 102 Ind. 524; Boyd v. Anderson, 102 Ind. 217; Orth v. Jennings, 8 Blackf. (Ind.) 420; Albia State Bank v. Smith, 141 Iowa 255, 119 N. W. 608; Curie v. Wright, 140 Iowa 651, 119 N. W. 74; Rea v. Wilson, 112 Iowa 517, 84 N. W. 539; Sigworth v. Meriam, 66 Iowa 474, 24 N. W. 4; Duncan v. Miller, 64 Iowa 223, 20 N. W. 161; Phelps v. Fodder, 61 Iowa 340, 14 N. W. 729, 16 N. W. 210; First Nat. Bank v. Hayzlett, 40 Iowa 659; Hoy v. Allen, 27 Iowa 208; Churchill v. Morse, 23 Iowa 229, 92 Am. Dec. 422; Evans v. Mc- Glasson, 18 Iowa 150; Hays v. Thode, 18 Iowa 51; Welton v. Tiz- zard, 15 Iowa 495; Patterson v. Lin- der, 14 Iowa 414; Seevers v. Dela- shmutt, 11 Iowa 174, 77 Am. Dec. 139; Bell v. Evans, 10 Iowa 353; Norton v. Williams, 9 Iowa 528; Wallace v. Mahaffey, 36 Kans. 152, 12 Pac. 705; Plumb v. Bay, 18 Kans. 415; Holden v. Garrett, 23 Kans. 98, where the subject is quite fully con- sidered; Swarts V. Stees, 2 Kans. 236, § 464 KECOKDING AS AFFECTING PEIOKITY 694 mortgage was given to secure future advances, which had not been made when the judgment was rendered.*^ It has even been held that lands omitted from a deed or mortgage by mistake may be regarded as con- veyed by an unrecorded deed or mortgage so far as a subsequent judg- ment is concerned; and the lien of the judgment will be subject to the equity of such deed or mortgage. This decision is based upon a statute which is held to accord priority only to a lien evidenced by some instrument "required to be recorded."'* A judgment lien is subject to every possible description of equity in favor of a third person against the debtor at the time the judgment lien attached, "and it is immaterial whether the rights of such third party consist of an equitable estate or interest in the judgment debt- or's land, an equitable lien on his land, or a mere equity against a debtor which attaches to or affects his land."*' 85 Am. Dec. 588; Clift v. Williams, 105 Ky. 559, 49 S. W. 328, 51 S. W. 821; Commonwealth v. Robinson, 96 Ky. 553; Forepaugh v. Appold, 17 B. Mon. (Ky.) 625; Rlghter v. For- rester, 11 Bush (Ky.) 278; Morton v. Robards, 4 Dana (Ky.) 258; Knell' V. Green St. Bldg. Assn., 34 Md. 67. Since Gen. Stat. 1878, eh. 40, § 21, a judgment takes precedence of an un- recorded deed. Dutton v. M'Reyn- olds, 31 Minn. 66; Welles v. Bald- win, 28 Minn. 408; Greenleaf v. Edes, 2 Minn. 264; Kelly v. Mills, 41 Miss. 267; Martin v. Nixon, 92 Mo. 26, 4 S. W. 503; Fox v. Hall, 74 Mo. 315; Black v. Long, 60 Mo. 181; Sappington v. Oeschli, 49 Mo. 244; Reed v. Ownby, 44 Mo. 204; Potter v. McDowell, 43 Mo. 93; Stilwell v. McDonald, 39 Mo. 282; Draper v. Bryson, 26 Mo. 108, 69 Am. Dec. 483; Davis v. Ownsby, 14 Mo. 170, 55 Am. Dec. 105; Vaughn v. Sehmalsle, 10 Mont. 186, 25 Pac. 102, 10 L. R. A. 411; A. J. Minor Lumber Co. v. Thompson, 91 Nebr. 93, 135 N. W. 429; Hubbart v. Walker, 19 Nebr. 94, 26 N. W. 713; Mansfield v. Greg- ory, 11 Nebr. 297, 9 N. W. 87; Har- ral V. Gray, 10 Nebr. 186, 4 N. W. 1040; Galway v. Malchow, 7 Nebr. 285; Sullivan v. Corn Exchange Bank, 154 App. Div. 292, 139 N. Y. S. 97 (decided under New York Real Property Law, § 291); Lament v. Cheshire, 65 N. Y. 30; Thomas v. Kelsey, 30 Barb. (N. Y.) 268; Bu- chan V. Sumner, 2 Barb. Ch. (N. Y.) 165, 47 Am. Dec. 305; Stevens v. Watson, 4 Abbott Dec. (N. Y.) 302; Schmidt v. Hoyt, 1 Edw. (N. Y.) 652; Wilder v. Butterfield, 50 How. Pr. (N. Y.) 385; Jackson v. Dubois, 4 Johns. (N. Y.) 216; Shryock v. Waggoner, 28 Pa. St. 430; Cover v. Black, 1 Pa. St. 493; Carraway v. Carraway, 27 S. Car. 576, 5 S. E. 157; Coleman v. Hamburg Bank, 2 Strob. Eq. (S. Car.) 285, 49 Am. Dec. 671; Kohn v. Lapman, 13 S. Dak. 78, 82 N. W. 408; Roblin v. Palmer, 9 S. Dak. 36, 67 N. W. 949; Bateman v. Backus, 4 Dak. 433, 34 N. W. 66; Cowardin v. Anderson, 78 Va. 88; Floyd v. Harding, 28 Grat. (Va.) 401; Dawson v. McCarty, 21 Wash. 314; Karger v. Steele-Wedeles Co., 103 Wis. 286, 79 N. W. 216; Burgh V. Francis, 1 Eq. Cas. Abr. 320, pi. 1; Burn v. Burn, 3 Ves. 582; Finch V. Winchelsea, 1 P. Wms. 277. Otherwise in Ohio, where a mort- gage takes effect only from the time it is recorded. See post § 467. "Thomas v. Kelsey, 30 Barb. (N. Y.) 268. ^ Galway v. Malchow, 7 Nebr. 285. ''Baker v. Morton, 12 Wall. (U. S.) 150, 20 L. ed. 262; Peck v. Will- iams, 113 Ind. 256, 15 N. B. 270; Churchill v. Morse, 23 Iowa 229; Bush V. Bush, 33 Kans. 556, 6 Pac. 794; Sweet v. Jacocks, 6 Paige (N. Y.) 355; Meier v. Kelly, 22 Ore. 136, 695 EEGISTET ACTS § 464 The lien of a mortgage unrecorded at the date of a judgment, but recorded before the sale upon an execution thereon, is prior to the lien of the judgment, and the purchaser buys with constructive notice of the mortgage.'" And likewise a prior unrecorded mortgage takes pre- cedence over a sale under attachment or execution, if recorded before the sheriff's deed based upon such sale.^^ But where a statute provides that a mortgage shall not be a lien upon the property until it shall have been recorded, then the doctrine of notice, it has been held, does not apply to the creditor, but to pur- chasers only.'^ And a statute providing that a mortgage shall not be valid against creditors until recorded, has been held to apply only to subsequent creditors without notice, who by their own activity have acquired a lien upon the property before the mortgage is recorded.'* A statute postponing an unrecorded mortgage to all other liens ob- tained prior to its record, refers only to liens obtained during the lifetime of the grantor."* An unrecorded mortgage given by an ancestor retains its priority over a judgment recorded against an heir at law during the lifetime of the ancestors, although the judgment creditor had no notice of the mortgage when he recovered his judgment.'^ A statute conferring authority to mortgage leasehold estates, being in derogation of common law, must be strictly construed, and a pro- vision therein for recording must be strictly complied with. Hence the recording of a leasehold mortgage and any extension thereof is ab- solutely necessary to give validity to the lien as against creditors of the mortgagor.'* 29 Pac. 265; Snyder v. Martin, 17 »"Holden v. Garrett, 23 Kans. 98; W. Va. 276. See also Long v. Fields, Davis v. Ownsby, 14 Mo. 170, 55 Am. 31 Tex. Civ. App. 241, 71 S. "W. 774. Dec. 105; Hulings v. Guthrie, 4 Pa. ""Holden v. Garrett, 23 Kans. 98, St. 123; Jaques v. Weeks, 7 Watts which see for a full discussion of (Pa.) 261. These cases seem to be the subject; followed in Wallace v. overruled in Solms v. McCulloch, 5 Mahaffey, 36 Kans. 152, 12 Pac. Pa. St. 473; but the authority of the 705. A confession of judgment and latter case is questioned in Uhler a mortgage, acknowledged and de- v. Hutchinson, 23 Pa. St. 110. livered on the same day, without in- «= In re Watson, 201 Fed. 962 (con- tention as to preference will be con- struing Kentucky Statute 1903, sidered equal liens, although the § 496). confession of judgment was dock- °*Civ. Code Georgia 1895, § 2727; eted before the mortgage was re- Hawes v. Glover, 126 Ga. 305, 55 S. corded. Adirondack Hdw. Co. v. E. 62. Walsh, 74 Misc. 594, 134 N. Y. S. "'Voorhis v. Westervelt, 43 N. J, 562. Eq. 642, 12 Atl. 533. See also Vree- " A. J. Minor Lumber Co. v. land v. Claflin, 24 N. J. Eq. 313. Thompson. 91 Nebr. 93. 135 N. W. « Stock v. German Catholic Press 429 Co., 230 Pa. 127, 79 Atl. 414; Febei- § 465 RECORDING AS AFFECTING PRIORITY 696 § 465. Priority of judgment liens and attachments under registry laws. — But, on the other hand, under the registry laws of many states it is held that the lien of a judgment or attachment is superior to an unrecorded mortgage, or to a recorded mortgage which is defect- ively executed, in the absence of actual notice of the mortgage on the part of the judgment or attaching creditor, or of the execution pur- chaser.'^ ger V. Craighead, 4 Dall. (Pa.) 151, 1 L. ed. 778; Bennett v. Calhoun Loan &c. Assn., 9 Rich. Eq. (S. Car.) 163; Willis V. Heath (Tex.), 18 S. W. 801; Jewett v. Brock, 32 Vt. 65; Benton v. McParland, 26 Vt. 610. See also Lane v. Lloyd, 33 Ky. 570, 110 S. W. 401. See also, concerning pri- ority of mortgage given between the issuance of the first execution and an alias. Gamble v. Fowler, 58 Ala. 576; Bates v. Bailey, 57 Ala. 73. ""Taylor v. Miller, 13 How. (U. S.) 287, 14 L. ed. 149; Hitz v. Na- tional Metropolitan Bank, 111 U. S. 722, 28 L. ed. 577, 4 Sup. Ct. 613; Stevenson v. Texas H. Co., 105 U. S. 703, 26 L. ed. 1215; Benton v. Wool- sey, 12 Pet. (U. S.) 27, 9 L. ed. 987; Lash v. Hardick, 5 Dill. (U. S.) 505, Fed. Cas. No. 8097; Ludlow v. Clinton Line R. Co., 1 Flipp. (U. S.) 25, Fed. Cas. No. 8600; United States V. Griswold, 7 Saw. (U. S.) 311, 332; United States v. Devereux, 90 Fed. 182, 32 C. C. A. 564; Comp- ton V. Sharpe, 174 Ala. 149, 56 So. 967; King v. Paulk, 85 Ala. 186, 4 So. 825; Barker v. Bell, 37 Ala. 354; De Vendell v. Hamilton, 27 Ala. 156; Cleveland v. Shannon (Ark.), 12 S. W. 497; Hawkins v. Files, 51 Ark. 417, 11 S. W. 681; Main v. Alexan- der, 9 Ark. 112, 47 Am. Dec. 732; Moor V. Watson, 1 Root (Conn.) 388; Andrews v. Mathews, 59 Ga. 466 (provided the judgment debt was antecedent to the date of the mort- gage); Richards v. Myers, 63 Ga. 762; Georgia Civil Code 1895, § 2727; Georgia Civil Code 1910, § 3260 (postponing an unrecorded mortgage to other liens obtained prior to its record); Cambridge Tile Co. v. W. B. Scaife &c. Co., 137 Ga. 281, 73 S. E. 492; Illinois Rev. Stat. 1891, ch. 30, § 30; Reichert v. McClure, 23 111. 516; Massey v. Westcott, 40 111. 160; McFadden v. Worthing- ton, 45 111. 362; Guiteau v. Wisely, 47 111. 433; Columbus Buggy Co. V. Graves, 108 111. 459; Roane v. Baker, .120 111. 308, 11 N. E. 246; Munfordv.McIntyre, 16 Ill.App. 316; Wicks V. McConnell, 102 Ky. 434, 20 Ky. L. 84, 43 S. W. 205; Gallagher V. Galletley, 128 Mass. 367; Coffin v. Ray, 1 Mete. (Mass.) 212; Berryhill V. Smith, 59 Minn. 285, 61 N. W. 144; Dutton V. McReynolds, 31 Minn. 66, 16 N. W. 468; Lamberton v. Mer- chants' Bank, 24 Minn. 281; Mis- sissippi Valley Co. v. Chicago, St. L. & New Orleans R. Co., 58 Miss. 846; Humphreys v. Merrill, 52 Miss. 92. Walton V. Hargroves, 42 Miss. 18, 97 Am. Dec. 429; Westervelt v. Voor- his, 42 N. J. Eq. 179, 6 Atl. 665; Hoag V. Sayre, 33 N. J. Eq. 552; Sharp V. Shea, 32 N. J. Eq. 65; Roll V. Rea, 57 N. J. L. 647, 32 Atl. 214; Howell V. Brewer (N. J.), 5 Atl. 137; Moore v. Davey, 1 N. Mex. 303; Tarboro v. Micks, 118 N. Car. 162, 24 S. E. 729; King v. Portis, 77 N. Car. 25; Van Thorniley v. Peters, 26 Ohio St. 471; Tousley v. Tousley, 5 Ohio St. 78; Fosdick v. Barr, 3 Ohio St. 471; White v. Denman, 1 Ohio St. 110, 16 Ohio 59; Holliday v. Franklin Bank, 16 Ohio 533; Paine V. Mooreland, 15 Ohio 435, 45 Am. Dec. 585; Mayham v. Coombs, 14 Ohio 428; Dickey v. Henarie, 15 Ore. 351, 15 Pac. 464; Baker v. Wood- ward, 12 Ore. 3, 6 Pac. 173; Carp- man V. Baccastow, 84 Pa. St. 363 Uhler V. Hutchinson, 23 Pa. St. 110 Hullngs V. Guthrie, 4 Pa. St. 123 Hibberd v. Bovier, 1 Grant Cas. (Pa.) 266; Butler v. Maury, 10 Humph. (Tenn.) 420; McKeen v. Sultenfuss, 61 Tex. 325; Arledge v. Hail, 54 Tex. 398; Mainwaring v. Templeman, 51 Tex. 205; Grimes v. Hobson, 46 Tex. 416; Ayres v. Du- 697 EEGISTET ACTS 465 The statutes of these states in terms provide that UBrecorded con- veyances shall be void as to creditors, or subsequent incumbrancers. In several states the statutes refer to "creditors" generally, without re- striction to judgment creditors."* But the statutes of Alabama, Ar- kansas, Colorado, Minnesota and New Jersey refer to "Judgment creditors," and simple contract creditors are not protected."' An un- recorded mortgage or conveyance is not valid against "subsequent creditors," under the statutes of Delaware, Maryland, Oklahoma, and under the wording of the earlier statutes of South Carolina and Texas.^ In Indiana, Kansas, New Hampshire and Ehode Island, the prey, 27 Tex. 593; Ranney v. Ho- gan, 1 Tex. Unrep. Cas. 253; Camp- bell V. Nonpareil Fire-Brick &c. Co., 75 Va. 291; Hill v. Rixey, 26 Grat. (Va.) 72; McCance v. Taylor, 10 Grat. (Va.) 580; McCullough v. Sommerville, 8 Leigh (Va.) 415; Parkersburg Nat. Bank v. Neal, 28 W. Va. 744; Anderson v. Nagle, 12 W. Va. 98. See also Shepherd v. Burkhalter, 13 Ga. 443, 58 Am. Dec. 523; Orth v. Jennings, 8 Blackf. (Ind.) 420; Albia State Bank v. Smith, 141 Iowa 255, 119 N. W. 608 (judgment creditor purchasing at execution sale protected); Baker v. Atkins, 107 La. 490, 32 So. 69; Gol- cher V. Brisbin, 20 Minn. 453. Where, however, the outstanding equity of a third person is one that arises by operation of law, and is incapable of being made a matter of record, the registry laws have no application, and the judgment creditor remains, as at common law, a mere volunteer. Kelly v. Mills, 41 Miss. 267. "^Void as against "creditors": Ari- zona: Rev. Stat. 1913, § 2080; Reid V. Kleyenstauber, 7 Ariz. 58, 60 Pac. 879. See also National Cash Reg- ister Co. V. Bradbury, 12 Ariz. 99, 95 Pac. 180. District of Columbia: Code 1911, § 521. Florida: Gen. Stat. 1906, § 2480. Idaho: Rev. Code 1908, § 3408. See Lewiston Nat. Bank v. Mar- tin, 2 Idaho 734, 23 Pac. 920. Illinois: Rev. Stat. 1913, ch. 30, § 31, p. 534. Kentucky: Stat. 1909, § 494. Louisiajia: Merrick's Rev. Code 1912, § 3329. See Pickersgill v. Brown, 7 La. Ann. 297. Mississippi: Code 1906, § 2784. Nebraska: Ann. Stat. 1911, § 1081G. North Carolina: Pell's Revisal 1908, ch. 18, § 982. Tennessee: Ann. Code 1896, § S749. Texas: Sayles' Civ. Stat. 1914, § 1104. Virginia: Code 1904, § 2465. West Virginia: Code 1913, §§ 3834, 3835. "Void as against "judgment cred- itors": Alabama: Code 1907, § 3383; McGhee v. Importer's Bank, 93 Ala. 192, 9 So. 734. Arkansas: Stat. 1904, § 763. Colorado: Mill's Ann. Stat. 1912, § 836; Emery v. Yount, 7 Colo. 107, 1 Pac. 686. Minnesota: Gen. Stat. 1913, § 6844. New Jersey: Comp. Stat. 1910, p. 1552, § 53. ' Not valid as against "subsequent creditors": Delaware: Rev. Code 1874, p. 504. Maryland: Ann. Code 1911, art. 21, § 32, p. 502. Oklahoma: Comp. Laws 1909, § 1195. South Carolina: Gen. Stat. 1882, § 1776. Under this statute a judg- ment obtained after the execution of a mortgage, upon a debt con- tracted before its execution, can not be considered a subsequent debt. Carraway v. Carraway, 27 S. Car. 576, 5 S. E. 157. See Code 1912, § 3542. Texas: Rev. Civ. Stats. 1889, 465 BECOEDING AS AFFECTING PRIOKITT 698 statutes make unrecorded conveyances void except as between the par- ties.^ Connecticut, Maine, Massachusetts, Vermont, Louisiana, Mis- souri, Nevada and New Mexico, have similar statutes declaring that an unrecorded mortgage is void against other persons than the grant- ors, their heirs and devisees, and persons having actual notice.^ In New York, Ohio, Pennsylvania, Michigan, and many of the western states, creditors are not mentioned in the statutes requiring record.* A purchaser under execution sale following such judgment or at- tachment is, of course, in like manner protected against a prior un- recorded deed of which he had no notice.** But a judgment creditor who purchases at his own execution sale is presumed to know of the § 4332. See also Sayles Civ. Stat. 1914, § 1104. ' Indiana: Burns' Rev. Stat. 1914, § 3957. See State Bank v. Backus, 160 Ind. 682, 69 N. E. 512; Hutch- inson V. First Nat. Bank, 133 Ind. 271, 30 N. E. 952, 36 Am. St. 537. Kansas: Gen. Stat. 1909, §§ 1671, 1672. New Hampshire: Gen. Stat. 1891, ch. 136, § 4. Oregon: Laws 1910, § 7129 (void as to third persons If not duly re- corded). Rhode Island: Pub. Stat. 1882, ch. 173, § 4; Gen. Laws 1909, eh. 253, §§ 7, 11. ''Connecticut: Gen. Stat. 1902, § 4036. Louisiana: Rev. Code 1889, §2266. See Merrick's Rev. Code 1912, §§ 3329, 2251, 2262, 2264. Maine: Rev. Stat. 1883, ch. 73, § 8. Under Laws 1895, p. 37, any one interested in real estate of which another holds an unrecorded deed may compel the latter to re- cord his deed. Massachusetts: Rev. Laws 1902, ch. 127, § 4, p. 1222. Missouri: 1 Rev. Stat. 1889, §2420. See Rev. Stat. 1909, §§ 2810, 2811. Nevada: Rev. Laws 1912, § 1038. New Mexico: Comp. Laws 1897, § 3960. Vermont: Pub. Stat. 1906, § 2581. * Creditors not mentioned in these states: California: Civ. Code 1906, § 1214. Georgia: Code 1911, § 3260 (un- recorded mortgage postponed to all other liens or purchases prior to the record). See Rea v. "Wilson, 112 Iowa 517, 84 N. W. 539. Iowa: Code 1897, § 2925; but it is held that an unrecorded mort- gage is not void as against cred- itors who have not acquired a lien. In re Lement v. McKibben, 91 Iowa 345, 59 N. W. 207. Michigan: Ann. Stat. 1882, § 5683; Howell's Stat. 1913, § 10850. See Cutler V. Steele, 93 Mich. 204, 53 N. W. 521. Montana: Rev. Code 1907, § 4683. Nevada: Gen. Stat. 1885, § 2594. New Mexico: Laws 1887, ch. 10. See Comp. Laws 1897, § 3960. New York: Birdseye's Consol. Laws 1909, Real Property Law, § 291. North Dakota: Comp. Laws 1913, § 5594. Ohio: Gen. Code 1910, § 8543. Oregon: Laws 1910, § 7129. Pennsylvania: Purd. Dig. 1905, p. 1181, § 158. South Dakota: Rev. Code 1903, § 2069. See Murphy v. Planklnton Bank, 13 S. Dak. 501, 83 N. W. 575; Kohn V. Lapham, 13 S. Dak. 78, 82 N. W. 408. Utah: Comp. Laws 1907, § 1975. "Washington: Code 1910, § 8781. "Wisconsin: Stat. 1913, § 2241. "Wyoming: Comp. Stat. 1910, §§ 3653-3656. *a Andrews v. Mathews, 59 Ga. 466; McPadden v. "Worthington, 45 111. 362; Garwood v. Garwood, 9 N. J. L. 193; Jackson v. Chamberlin, 8 Wend. (N. Y.) 620; Paine v. Moore- land, 15 Ohio 435, 45 Am. Dec. 585; Morrison v. Punk, 23 Pa. St. 421; Ehle V. Brown, 31 Wis. 405. 699 EEGISTET ACTS § 466 existence of prior mortgages. = It does not matter that the judgment was for a pre-existing debt/ or that the subsequently recorded mort- gage was given to secure purchase-money.'' In Ohio, inasmuch as the statute declares that mortgages shall take effect only from the time they are left for record, a judgment recovered after the date of a mortgage, and before it is recorded, takes precedence of it.* Yet, in' this state, a judgment creditor is not a purchaser, nor is he in any way entitled to the privileges of that position.^ A receiver appointed for and in the interest of general creditors is entitled to the debtor's real estate in preference to a mortgagee whose mortgage, though executed before the receiver's appointment, was not delivered till afterward.^" A mortgage which is not recorded in the county where the land conveyed lies, is not effective against creditors or purchasers. If a mortgage of land lying in two counties be recorded in but one, a fore- closure sale passes the land in both, as against a purchaser under a judgment docketed in the county where the mortgage was not re- corded subsequently to the foreclosure proceedings. The want of reg- istration does not disable the debtor from disposing of the property by a valid conveyance before the judgment lien attaches; nor does it prevent the court, in a proceeding to which the debtor is a party, from transferring it by a judicial sale.^^ i§ 466. Knowledge of unrecorded conveyance by judgment or at- tachment creditor. — Generally, knowledge on the part of a judgment or attaching creditor of an unrecorded conveyance of the debtor's prop- erty affects him as it would a purchaser; that is, the notice is equiva- lent to a record of the deed.^^ But although the creditor has notice Otherwise in Mississippi: Kelly ^Cheney v. Maumee Cycle Co., 64 V. Mills, 41 Miss. 267. Ohio St. 205, 60 N. B. 207. » Throckmorton v. O'Reilly (N. J. "King v. Portis, 77 N. Car. 25, Eq.), 55 Atl. 56. 81 N. Car. 382. "Uhler V. Semple, 20 N. J. Eq. "Wyatt v. Stewart, 34 Ala. 716; 288. De Vendell v. Doe, 27 Ala. 156 ; Mead 'Roane v. Baker, 120 111. 308, 11 v. New York &c. R. Co., 45 Conn. N. E. 246. 199; Goodard v. Prentice, 17 Conn. * National Bank v. Tennessee &c. 546; Doyle v. Wade, 23 Fla. 90, 1 Co., 62 Ohio St. 564, 57 N. E. 450. So. 516; Columbus Buggy Co. v. Mayham v. Coombs, 14 Ohio 428. Graves, 108 111. 459; Sinking Fund Under a statute of the state of Comrs. v. Wilson, 1 Ind. 356; Swan Kansas, quite similar in effect, the v. Moore, 14 La. Ann. 833; Priest Supreme Court of the latter state v. Rice, 1 Pick. (Mass.) 164, 11 Am. took a different view. Holden v. Dec. 156; Lamberton v. Merchants' Garrett, 23 Kans. 98. Nat. Bank, 24 Minn. 281; Lough- "Tousley v. Tousley, 5 Ohio St. ridge v. Bowland, 52 Miss. 546; 78. Humphreys v. Merrill, 52 Miss. 92; § 466 EECOEDING AS AFFECTING PRIORITY 700 of an unrecorded conveyance, a purchaser at the sale upon execution is not affected by it, and, being without notice himself, he acquires a title superior to the unrecorded mortgage.^ ^ And, on the other hand, a judgment creditor having gained priority over an unrecorded mort- gage, a purchaser at the execution sale obtains the same priority, not- withstanding he has notice of the mortgage.^* But knowledge ac- quired by an attaching or judgment creditor after his lien has attached does not displace or affect it.^^ If a creditor's attorney have actual notice of a conveyance of his debtor's land, he is as much debarred from claiming relief, as a bona fide creditor without notice thereof, as if he had had such actual no- tice himself, although the creditor denies notice in his answer under oath.^« An illegal or unsuccessful attempt to record a mortgage is not no- tice to a subsequent judgment creditor; and a mortgage improperly recorded for want of probate is postponed to a judgment founded on an antecedent debt, so that a purchaser under execution will acquire a good title against the mortgagee.^'' Bass v. Estill, 50 Miss. 300; Hender- son V. Downing, 24 Miss. 106; Mer- chants' Bldg. &c. Assn. v. Barber (N. J. Eq.), 30 Atl. 865; Hutchinson v. Bramhall, 42 N. J. Eq. 372, 7 Atl. 873; Britton's Appeal, 45 Pa. St. 172; Uhler v. Hutchinson, 23 Pa. St. 110; Stroud v. Lockart, 4 Dall. (Pa.) 153; Barnett v. Squyres, 93 Tex. 193, 54 S. W. 241, 77 Am. St. 854; Hart V. Farmers' &c. Bank, 33 Vt. 252; Young V. Devries, 31 Grat. (Va.) 304; Floyd v. Harding, 28 Grat. (Va.) 401. See post § 538. In Tennessee it is held that notice, while effectual as against subse- quent purchasers, does not avail as against creditors. Coward v. Cul- ver, 12 Heisk. (Tenn.) 540; Lookout Bank v. Noe, 86 Tenn. 21, 5 S. W. 433. A judgment creditor who has joined in foreclosure proceedings can not deny actual notice of the mort- gage. Newhall v. Hatch, 134 Cal. 269, 66 Pac. 266, 55 L. R. A. 673. A mere statement of a debtor to his creditor who is inquiring after the debtor's property and assets, that his property is mortgaged for all it is worth, is not notice of any par- ticular mortgage, so as to give an unrecorded mortgage preference over a subsequent judgment. Con- dit V. Wilson, 36 N. J. Bq. 370. A judgment creditor who relases his judgment debtor to borrow money on a mortgage, is chargeable with notice of such mortgage, and he can not set up a judgment recovered after delivery of the mortgage, though it is not recorded before entry of the judgment. Hutchinson V. Bramhall, 42 N. J. Eq. 372, 7 Atl. 873 ^" Miles V. King, 5 S. Car. 146. "Smith V. Jordan, 25 Ga. 687; Wait V. Savage (N. J. Eq.), 15 Atl. 225. ^° Loughridge v. Bowland, 52 Miss. 546; Humphreys v. Merrill, 52 Miss. 92; Hulings v. Guthrie, 4 Pa. St. 123. ^"Dickerson v. Bowers, 42 N. J. Eq. 295, 11 Atl. 142. " Andrews v. Mathews, 59 Ga. 466. See also Carper v. McDowell, 5 Grat. (Va.) 212; Manufacturers' &c. Bank V. Pennsylvania Bank, 7 Watts & S. (Pa.) 335, 42 Am. Dec. 240. 701 EEGISTET ACTS § 467 § 467. Purchaser at execution sale — Notice and possession as af- fecting priority. — In most states, a purchaser of mortgaged property at execution sale under judgment against the mortgagor, takes sub- ject to the paramount lien of the mortgage, and such purchaser can not recover possession until the mortgage debt is paid.^^ An execution under a judgment junior to a mortgage, binds only the debtor's equity of redemption, and the purchaser at the execution sale takes subject to the mortgage.^' But in states requiring mortgages to be recorded, if a mortgage is not recorded within the time prescribed by statute. ^'Rust V. Electric Lighting Co., 124 Ala. 202, 27 So. 263; Lovelace v. Webb, 62 Ala. 271; McDonald v. Fos- ter, 5 Ala. 664; Whitmore v. Tatum, 54 Ark. 457, 16 S. W. 198, 26 Am. St. 56; Allen v. Phelps, 4 Cal. 256; Chester v. "Wheelwright, 15 Conn.- 562; Hitch v. Bailey, 115 Ga. 891, 42 S. E. 252; Tarver v. Ellison, 57 Ga. 54; Johnston v. Crawley, 25 Ga. 316, 71 Am. Dec. 173; Funk v. Mc- Reynold, 33 111. 481; Merritt v. Niles, 25 111. 282; Rahm v. Butterfield, 82 Ind. 163; Sinking Fund Comrs. v. "Wilson, Smith (Ind.) 221; Hendryx V. Evans, 120 Iowa 310, 94 N. "W. 853; Bush V. Herring, 113 Iowa 158, 84 N. "W. 1036; Thomas v. McKay, 5 Bush (Ky.) 475; Dougherty v. Lin- thicum, 8 Dana (Ky.) 194; Forrest V. Phillips, 2 Mete. (Ky.) 194; "Wor- sham V. Lancaster, 20 Ky. L. 701, 47 S. "W. 448; Hubbard v. Ratcliffe, 13 Ky. L. 640; Terrio v. Guidry, 5 La. Ann. 589; Montgomery v. Mc- Gimpsey, 7 Sm. & M. (Miss.) 557; Meade v. Thompson, "Walk. (Miss.) 450; Hubble v. Vaughan, 42 Mo. 138; State V. Cryts, 87 Mo. App. 440; Orr v. Broad, 52 Nebr. 490, 72 N. W. 850; Porter v. Parmley, 52 N. Y. 185, 14 Abb. Pr. (N. S.) (N. Y.) 16; Lansingburgh Bank v. Crary, 1 Barb. (N. Y.) 542; "Weaver v. Too- good, 1 Barb. (N. Y.) 238; Jackson v. Hull, 10 Johns. (N. Y.) 216; Sny- der V. Stafford, 11 Paige (N. Y.) 71; Cole V. "White, 26 "Wend. (N. Y.) 511; Halyburton v. Greenlee, 72 N. Car. 316; Anderson v. Holloman, 46 N. Car. 169; Ormond v. Faircloth, 5 N. Car. 35; State v. Laval, 4 McCord (S. Car.) 336; Erwin v. Blanks, 60 Tex. 583; "Wilkins v. Bryarly (Tex.), 46 S. "W. 266; Murrell v. Kelly &c. Shoe Co., 18 Tex. Civ. App. 114, 44 S. "W. 27; Jones v. Her- rick, 35 "Wash. 434, 77 Pac. 798; Hamilton v. Carter, 12 "Wash. 510, 41 Pac. 911. In Pennsylvania the mortgage must be a prior lien to all others, except other mortgages, ground-rents and purchase-money due the state, in order to continue a subsisting lien on the property after sale under a junior execution. Meigs V. Bunting, 141 Pa. St. 233, 21 Atl. 588, 23 Am. St. 273; Hoh- man's Appeal, 127 Pa. St. 209, 17 Atl. 902; Saunders v. Gould, 124 Pa. St. 237, 16 Atl. 807; Commonwealth V. Susquehanna &c. R. Co., 122 Pa. St. 306, 15 Atl. 448, 1 L. R. A. 225; Rheim Bldg. Assn. v. Lea, 100 Pa. St. 210; Zeigler's Appeal, 26 Pa. St. 465; Shryock v. Jones, 22 Pa. St. 303; Carpenter v. Koons, 20 Pa. St. 222; Glover v. Patterson, 104 Ga. 17, 30 S. E. 414. See also Ragan v. Coley, 4 Ga. App. 421, 61 S. E. 862; Gouwens v. Gouwens, 237 111. 506, 86 N. E. 1067, 127 Am. St. 338. "■Newberry v. Bulkey, 5 Day (Conn.) 384; Mclntire v. Garmany, 8 Ga. App. 802, 70 S. E. 198; John- ston V. Crawley, 22 Ga. 348; Knapp V. Jones, 143 111. 375, 32 N. E. 382; Meacham v. Steele, 93 111. 135; Mor- ton V. White, 2 Ind. 663; De Blanc V. Dumartrait, 3 La. Ann. 542; Nul- sen V. Wishon, 68 Mo. 383; A. J. Minor Lumber Co. v. Thompson, 91 Nebr. 93, 135 N. W. 429; Lovejoy v., Lovejoy, 31 N. J. Eq. 55; Febeiger' V. Craighead, 4 Dall. (Pa.) 151, 1 L. ed. 778; Bennett v. Calhoun Loan &c. Assn., 9 Rich. Eq. (S. Car.) 163; Willis V. Heath (Tex.), 18 S. W. .801; Jewett v. Brock, 32 Vt. 65; Benton v. McFarland, 26 Vt. 610. § 467 EECOEDING AS AFFECTING PEIOEITT 703 a judgment against the mortgagor obtained before foreclosure, by a creditor without notice of the mortgage, takes priority over the mort- gage, and an execution sale under the judgment extinguishes the lien of the mortgage.^" A purchaser at an execution sale without notice, either actual or constructive, of any interest or equity of a third person, is a purchaser for a valuable consideration, and is entitled to the protection of the registry acts, though the judgment did not make the judgment cred- itor a bona fide purchaser entitled to such protection.^ ^ But if the pur- chaser at the execution sale had at the time actual or constructive no- tice of the rights or equities of third persons in the land, he acquires a title subject to such rights and equities.^^ Possession operates as notice to the judgment creditor, and to the purchaser at the execution sale, of the purchaser's rights, just as it does to a subsequent pur- chaser.^^ If the judgment creditor himself becomes the purchaser at the ex- ecution sale, he is not, according to the weight of authority, entitled to the position of a bona fide purchaser for value as against unrecorded conveyances.^* Yet there are numerous authorities which hold that the judgment creditor so purchasing is a purchaser for value within the » Taylor v. Miller, 14 How. (U. 205; Curtis v. Root, 28 111. 367; Hoy S.) 287, 14 L. ed. 149; Jordan v. v. Allen, 27 Iowa 208; Righter v. Mead, 12 Ala. 247; "Smith v. Jor- Forrester, 1 Bush (Ky.) 278; Perry dan, 25 Ga. 687; Shepherd v. Burk- v. Trimble, 25 Ky. L. 725, 76 S. W. halter, 13 Ga. 443, 58 Am. Dec. 523; 343; Priest v. Rice, 1 Pick. (Mass.) Hendryx v. Evans, 120 Iowa 310, 164, 11 Am. Dec. 156; Ismon v. Lo- 94 N. W. 853; Godchaux v. Di- der, 135 Mich. 345, 97 N. W. 769; charry, 34 La. Ann. 579 ; Hargreaves Fox v. Hall, 74 Mo. 345, 41 Am. Rep. V. Merken, 45 Nebr. 668, 63 N. W. 316; Black v. Long, 60 Mo. 181; Sap- 951; Bennet v. Fooks, 1 Nebr. 465; pington v. Oeschli, 49 Mo. 244; Pot- McKnight v. Gordon, 13 Rich. Eq. ter v. McDowell, 43 Mo. 93; Davis (S. Car.) 222, 94 Am. Dec. 164. See v. Ownshy, 14 Mo. 170, 55 Am. Dec. also Mansfield v. Johnson, 51 Fla. 105; Schroeder v. Gurney, 73 N. Y. 239, 40 So. 196, 120 Am. St. 159. 430; Hackett v. Callender, 32 Vt. "McNitt V. Turner, 16 Wall. (U. 97. S.) 352, 21 L. ed. S41; Thomas v. ==Weld v. Madden, 2 Cliff. (U. S.) Vanlieu, 28 Cal. 616; Lee v. Berming- 584; King v. Paulk, 85 Ala. 186, 4 ham, 3D Kans. 312; Den v. Richman, So. 825; Glendenning v. Bell, 70 Tex. 13 N. J. L. 43; Jackson v. Chamber- 632, 8 S. W. 324; Woodson v. Collins, lain, 8 Wend. (N. Y.) 620; Holmes 56 Tex. 168. V. Buckner, 67 Tex. 107; Ayres v. " O'Rourke v. O'Connor, 39 Cal. Duprey, 27 Tex. 593, 86 Am. Dec. 442; Kelly v. Mills, 41 Miss. 267; 657; Ehle v. Brown, 31 Wis. 405. McAdow v. Black, 6 Mont. 601, 13 But see Parker V. Prescott, 87 Maine Pac. 377; Wright v. Douglass, 10 444, 32 Atl. 1001; Nugent v. Prie- Barb. (N. Y.) 97; Rutherford v. batsch, 61 Miss. 402. Green, 2 Ired. Eq. (N. Car.) 121; ^Apperson v. Burgett, 33 Ark. Orme v. Roberts, 33 Tex. 768. 328; Patterson v. Bsterling, 27 Ga. 703 EEGISTBY ACTS § 468 recording acts, although the entire purchase-price is applied in pay- ment of the debt.''^ § 468. Purchase-money mortgages — Priority — Joinder of wife. — A mortgage given at the time of the purchase of real estate, to secure the payment of purchase-money, or the balance thereof, has preference over all Judgments, mortgages, liens and other debts of the mortgagor, to the extent of the land purchased. It is so provided by statute in several states.^^ In other states the same precedence is given to pur- chase-money mortgages vs^ithout the aid of any statute.^^ It has been New York: 4 Rev. Stat. (8th ed.) 1889, p. 2454. North Carolina: 1 Code 1883, § 1272. West Virginia: Roush v. Miller, 39 "W. Va. 638, 20 S. E. 662. Under the recording acts of Washington, the question of priority between one holding a purchase-money mortgage and another can not be raised un- less the mortgages concur in time or the priorities are controlled by some contract or equities arising between the several mortgagees. Wakefield v. Fish, 62 Wash. 564, 114 Pac. 180. ="Threefoot v. Hillman, 130 Ala. 244, 30 So. 513, 89 Am. St. 39; Coch- ran V. Adler, 121 Ala. 442, 25 So. 761; Campbell v. Anderson, 107 Ala. 656, 18 So. 218; McRae v. Newman, 58 Ala. 529; Tolman v. Smith, 85 Cal. 280, 24 Pac. 743; Guy v. Car- riere, 5 Cal. 511. See also Wiser v. Clinton, 82 Conn. 148, 72 Atl. 928; Courson v. Walker, 94 Ga. 175, 21 S. B. 287; Rasin v. Swann, 79 Ga. 703, 4 S. B. 882; Scott v. Warren, 21 Ga. 408; Kneen v. Halin, 6 Idaho 621, 59 Pac. 14; Wehrheim v. Smith, 226 111. 346, 80 N. B. 908; Roane v. Baker, 120 111. 308, 11 N. B. 246; Elder v. Derby, 99 111. 228; Wright v. Troutman, 81 111. 374; Christie v. Hale, 46 111. 117; Fitts v. Davis, 42 111. 391; Austin v. Underwood, 37 111. 438, 87 Am. Dec. 254; Curtis v. Root, 20 111. 54; Spitzer v. Williams, 98 111. App. 146; Fletcher v. Holmes, 32 Ind. 497; Laidley v. Aikin, 80 Iowa 112, 45 N. W. 384; Koon v. Tramel, 71 Iowa 132, 32 N. W. 243; Phelps v. Fockler, 61 Iowa 340, 14 N. W. 729, 16 N. W. 210; Parsons V. Hoyt, 24 Iowa 154; Grant v. ="Fash V. Ravesies, 32 Ala. 451; Hunter v. Watson, 12 Cal. 363, 73 Am. Dec. 543; Courson v. Walker, 94 Ga. 175, 21 S. E. 287; Rasin v. Swann, 79 Ga. 703, 4 S. E. 882; Smith V. Jordan, 25 Ga. 687; Frazier v. Crafts, 40 Iowa 110; Gower v. Do- heney, 33 Iowa 36; Condit v. Wilson, 36 N. J. Eq. 370; Sharp v. Shea, 32 N. J. Bq. 65; Wood v. Chapin, 13 N. Y. 509, 27 Am. Dec. 62. But see Stevenson v. Texas R. Co., 105 U. S. 703, 26 L. ed. 1215; Wright v. Doug- las, 10 Barb. (N. Y.) 97; Wallace v. Campbell, 54 Tex. 87; Grace v. Wade, 45 Tex. 522. ^Delaware: Rev. Code 1874, p. 504, Amended Code 1893, p. 630, § 21. Georgia: Act of 1875. Prior to that act dower had preference to such a mortgage. See Georgia Code 1911, § 5248, also § 4048. Wilson v. Peebles, 61 Ga. 218; Carter v. Hal- lahan, 61 Ga. 314. Indiana: 1 Rev. Stat. 1888, § 1089, 2 Rev. Stat. 1876, p. 334, Burns' Ann. Stat. 1914, § 1136. Kansas: 1 Gen. Stat. 1889, § 3888, Gen. Stat. 1909, § 5198. Maryland: 2 Pub. Gen. Laws 1888, art. 66, § 4, 2 Ann. Code 1911, art. 66, § 4, p. 1519; Glenn v. Clark, 53 Md. 608; Heuisler v. Nickum, 38 Md. 275; Ahem v. White, 39 Md. 409. Mississippi: Code 1906, § 2780. New Jersey: Rev. Stat. 1S77, p. 167, § 77; Comp. Stat. 1910, p. 1535, § 4, p. 3301, § 10; Daly v. New York &c. R. Co., 55 N. J. Eq. 595, 38 Atl. 202; Protection Bldg. &c. Assn. v. Knowles, 54 N. J. Eq. 519, 34 Atl. 1083; Hopler v. Cutler (N. J. Eq.), 34 Atl. 746; Bradley v. Bryan, 43 N. J. Eq. 396 13 Atl. 806. § 468 EECOEDIXG AS AFFECTING PKIOEITT 704 said that the lien of a purchase-money mortgage is entitled to the highest consideration in a court of equity.^* Thus a purchase-money mortgage takes precedence of a prior mortgage covering after-acquired property, given by the same mortgagor before he took title.-" If a mortgage is in fact given for purchase-money, the fact need not be recited or appear on its face, to give it priority.'" But the contrary fact may be proved against it, as well as fraud, which would postpone it to other liens. '^ The purchase-money mortgage executed and recorded contempo- raneously with a title deed, has preference over a prior mortgage given by the purchaser to a creditor and recorded before the title deed, since the purchaser had no title when he executed the first mortgage. The Dodge, 43 Maine 489; Hooper v. Cen- tral Trust Co., 81 Md. 559, 32 Atl. 505, 29 L. R. A. 262; Ahern v. White, 39 Md. 409; Clark v. Monroe, 14 Mass. 351; Marin v. Knox, 117 Minn; 428, 136 N. W. 15, 40 L. R. A. (N. S.) 272; Peaslee v. Hart, 71 Minn. 319, 73 N. W. 976; Moody v. Tschabold, 52 Minn. 51, 53 N. W. 1023; Schoch v. Birdsall, 48 Minn. 441, 51 N. W. 382 (quoting text); Jacoby v. Crowe, 36 Minn. 93, 30 N. W. 441; Stewart v. Smitb, 36 Minn. 82, 30 N. W. 430; Bolles v. Carli, 12 Minn. 113; Banning v. Edes, 6 Minn.. 402; Balnbridge v. Woodburn, 52 Miss. 95; Rogers v. Tucker, 94 Mo. 346, 7 S. W. 414; Morris v. Pate, 31 Mo. 315; Henry McShane Mfg. Co. V. Kolb, 59 N. J. Eq. 146, 45 Atl. 553; Bradley v. Bryan, 43 N. J. Eq. 396, 13 Atl. 806; Clark v. Butler, 32 N. J. Eq. 664; Boies v. Benham, 127 N. Y. 620, 28 N. E. 657, 14 L. R. A. 55; Pope v. Mead, 99 N. Y. 201, 1 N. E. 671; "Wilson v. Smith, 52 Hun 171, 22 N. Y. St. 367, 4 N. Y. S. 915; Bunting v. Jones, 78 N. Car 242; Martin v. Vandeveer, 41 Ohio St. 437; Jarvis v. Hannan, 40 Ohio St. 334; Ward v. Carey, 39 Ohio St. 361; Stephenson v. Haines, 16 Ohio St. 478; Commonwealth Title Ins. &c. Co. V. Ellis, 192 Pa. St. 321, 43 Atl. 1034, 73 Am. St. 816; Coleman v. Reynolds, 181 Pa. St. 317, 37 Atl. 543; City Nat. Bank's Appeal, 91 Pa. St. 163; Glaze v. Watson, 55 Tex. 563; Straus v. Bodeker, 86 Va. 543, 10 S. B. 570; Cowardin v. Anderson, 78 Va. 88; Brace v. Superior Land Co., 65 Wash. 681, 118 Pac. 910; Bisbee v. Carey, 17 Wash. 224, 49 Pac. 220. A purchase-money mort- gage containing a provision that cer- tain judgments against the mort- gagor shall have priority over the lien of the mortgage, is by such re- citals rendered subject to the lien of the judgments. Stover v. Hellyer (N. J.), 62 Atl. 698. The fact that mortgages were not executed until the delivery of the deed, six years after the contract of sale of land, was held not to affect their charac- ter as purchase-money mortgages, or their priority over a judgment against the vendee rendered before their execution. Marin v. Knox, 117 Minn. 428, 136 N. W. 15, 40 L. R. A. (N. S.) 272. See post § 470. ^ Brace v. Superior Land Co., 65 Wash. 681, 118 Pac. 910. '^Farmers' Loan &c. Co. v. Den- ver &c. R. Co., 126 Fed. 46, 60 C. C. A. 588; Tolman v. Smith, 85 Cal. 280, 24 Pac. 743; Wendler v. Lam- beth, 163 Mo. 428, 63 S. W. 684; Hinton v. Hicks, 156 N. Car. 24, 71 S. B. 1086. But see Houston v. Houston, 67 Ind. 276. =° Commonwealth Title Ins. &c. Co. V. Ellis, 192 Pa. St. 321, 43 Atl. 1034, 73 Am. St. 816. See also Boies V. Benham, 127 N. Y. 620, 28 N. B. 857, 14 L. R. A. 55 (recital effective between two mortgages re- corded same day). " Preston v. WoUshater, 30 Plttsb. L. J. (N. S.) (Pa.) 103; Thomas v. Davis, 3 Phila. Randall Co. v. Glendenning, 19 v. Lampe, 58 Wis. 267, 16 N. W. 614. Okla. 475, 92 Pae. 158. Otherwise in Oregon; and Cali- " Commercial Bank v. King, 107 fornia. Watson v. Dundee M. &c. Ala. 484, 18 So. 243; Beuhler v. Co., 12 Ore. 474, 8 Pae. 548; Wood- MoCormick, 169 111. 269, 48 N. E. ward v. Brown, 119 Cal. 283, 51 Pae. 287; McAuliffe v. Renter, 166 111. 2, 63 Am. St. 108. 491, 46 N. E. 1087; Smith v. Keo- In New York the record of an hane, 6 Bradw. (111.) 585; Turpin assignment of a recorded mortgage V. Ogle, 4 Bradw. (111.) 611; Con- is not necessary as against the sub- necticut Mut. L. Ins. Co. v. Talbot, sequent purchaser of the mort- 113 Ind. 373, 14 N. E. 586, 3 Am. gaged land, but only against a sub- St. 655; Jenks v. Shaw, 99 Iowa sequent purchaser of the mortgage. 604, 68 N. W. 900; Bowling v. Cook, Curtis v. Moore, 152 N. Y. 159, 46 39 Iowa 200; Lewis v. Kirk, 28 N. E. 168. Kans. 497, 42 Am. Rep. 173; Swasey An unrecorded assignment of a T. Emerson, 168 Mass. 118, 46 N. E. mortgage is good against one who 426, 60 Am. St. 368; Commonwealth is not a subsequent purchaser or V. Globe Ins. Co., 168 Mass. 80, 46 incumbrancer in good faith. State N. B. 410; Ferguson v. Glassford, v. Coughran, 19 S. Dak. 27i, 103 N. 68 Mich. 36, 35 N. W. 820; Sheldon W. 31. V. Holmes, 58 Mich. 138, 24 N. W. 'i'39 REGISTRY ACTS § 479 gage, whereby the mortgagee was bound to release a portion of the premises upon receiving a certain sum in payment.*^ An assignee of the mortgage whose assignment is not recorded is barred by a decree foreclosing a prior lien in a suit against his assignor, who appeared of record as owner of the incumbrance, unless his assignment is re- corded prior to the deed of sale under such decree.*' A provision in a mortgage that it shall be nonnegotiable and uncollectible in the hands of any other person than the original mortgagee is not operative against an assignment by process of law or through an order of court.^" The doctrine, that the assignee of a mortgage takes it subject to all equities existing between the mortgagor or his grantees and the mort- gagee, can not be applied to those instruments which are properly designated in the recording acts as conveyances, which both a release of a mortgage and an agreement for such release would be, without nullifying the acts to that extent, and withholding the protection they were designed to confer upon purchasers.^ ^ ' But the record of an assignment of a mortgage is not constructive notice of it to the mortgagor so as to make invalid a payment made by him to the mortgagee.''^ It is desirable, for this reason, that per- sonal notice should be given him of the assignment, though the as- signee's title is complete without notice to the owner of the equity of redemption.^^ A purchaser of the equity of redemption is charged with notice of an assignment of the mortgage which has been recorded prior to the purchase.^* The record of the assignment is a part of the record title of which he must take notice at the time of his purchase. It has been held that a power of attorney to assign a mortgage,''^ or one to collect * Warner v. Winslow, 1 Sandf. mortgages securing negotiable notes. Ch. (N. Y.) 430; St. Jolin v. Spald- Stark v. Olsen, 44 Nebr. 646, 63 ing, 1 Thomp. & C. (N. Y.) 483. N. W. 37; Eggert v. Beyer, 43 ""Jones V. Fisher, 88 Nebr. 627, Nebr. 711, 62 N. W. 57; New York 130 N. W. 269. Life Ins. &c. Co. v. Smith, 2 Barb. '"Scaife v. Scammon Inv. &c. Ch. (N. Y.) 82; Ely v. Scofield, 35 Assn., 71 Kans. 402, 80 Pac. 957. Barb. (N. Y.) 330. See post § 480 °^St. John V. Spalding, 1 Thomp. and note. & C. (N. Y.) 483. ^ Jones v. Gibbons, 9 Ves. 407; °- Hubbard v. Turner, 2 McLean Ex parte Barnett, 1 De G. 194. See (U. S.) 519; Lockrow v. Cline, 4 also Barnes v. Long Island Real Kans. App. 716; Williams v. Keyes, Est. &c. Co., 88 App. Div. 83, 84 N. 90 Mich. 290, 51 N. W. 520, 30 Am. Y. S. 951. St. 438; Gen. Stat. Minn. 1913, § "Brewster v. Games, 103 N. Y. 6843; Robbins v. Larson, 69 Minn. 556, 9 N. E. 323. 436, 72 N. W. 456, 65 Am. St. 572; »= Williams v. Birbeok, Hoffm. (N. Olson V. Northwestern Guar. Loan Y.) 359; Morrison v. Mendenhall, Co., 65 Minn. 475, 68 N. W. 100. The 18 Minn. 232. See also Atkinson v. statute does not apply to a pur- Patterson, 46 Vt. 750. chaser from the mortgagor nor to § 480 EECOKDING AS AFFECTING PEIOEITT 730 a mortgage and discharge it/° is not within the recording acts, and therefore a record of them is not notice. Although the assignment of a debt is not recorded, it carries with it the mortgage securing the same,'*'' leaving the original mortgagee ■without any interest.^* §480. Record of assignment as notice to mortgagor. — It is pro- vided by statute in several states that the recording of an assignment of a mortgage shall not in itself be deemed notice of such assignment to the mortgagor, his heirs, or personal representatives, so as to in- validate any payment made by them to the person holding the bond or note.^® But such statutes are not enlarged by construction and apply only to the persons and in the cases specified.''" Such statutes do not apply to a purchaser of the equity of redemption, or to a sub- sequent mortgagee, or an assignee of his mortgage, unless it is in terms made applicable to him."^ Apart from the statutes, it has been frequently held that the re- cording of an assignment of a mortgage, will not give constructive notice thereof to the mortgagor, so as to invalidate subsequent pay- ments on the mortgage debt made by him to the mortgagee, and ^"Jackson v. Kichards, 6 Cow. (N. Y.) 617. ='Fish T. First Nat. Bank, 150 Fed, 524, 80 C. C. A. 266; Smith v. Godwin, 145 N. Car. 242, 58 S. E. 1089; Morton v. Blades Lumber Co., 144 N. Car. 31, 56 S. E. 551 (as- signee asserting rights against heirs of mortgagor) ; Emmons v. Hawk, 62 W. Va. 526, 59. S. B. 519; Mil- waukee Trust Co. V. Van Valken- hurgh, 132 Wis. 638, 112 N. W. 1083 (indorsement of note expressly including mortgage security). ™ Turpin v. Derickson, 105 Md. 620, 66 Atl. 276. «» California: Civ. Code 1906, § 2935; Acts 1874, p. 261; Codes & Statutes 1876, § 7935. See Rogers v. Peckham, 120 Cal. 238, 52 Pac. 483. Kansas: See Statutes 1901, §§ 4234-4239. Michigan: Howell's Stats. 1913, § 10854; Goodale v. Patterson, 51 Mich. 532, 16 N. W. 890. See also Brooke v. Struthers, 110 Mich. 562, 68 N. W. 272, 35 L. R. A. 536; Wil- liams V. Keyes, 90 Mich. 290, 51 N. W. 520, 30 Am. St. 438; Ingalls v. Bond, 66 Mich. 338, 33 N. W. 404. Minnesota: Gen. Stat. 1913, § 6843; Robblns v. Larson, 69 Minn. 436, 72 N. W. 456, 65 Am. St. 572; Hostetter v. Alexander, 22 Minn. 559; Johnson v. Carpenter, 7 Minn. 176. Nebraska: Ann. Stat. 1911, § 10840. New York: 1 Rev. Stat. (7th ed.), p. 763, § 41; Lamed v. Dono- van, 155 N. Y. 341, 49 N.. E. 942. Or'^gon: Lord's Ore. Laws 1910, § 7136. Utah: Comp. Laws 1907, § 2002. Wisconsin: Statutes 1913, § 2244. Wyoming: Comp. Stat. 1910, § 3656. See ante § 479. ™ Blumenthal v. Jassoy, 29 Minn. 177, 12 N. W. 517; Bull v. Mitchell, 47 Nebr. 647, 66 N. W. 632; Eggert v. Beyer, 43 Nebr. 711, 62 N. W. 57 (not applied to negotiable paper secured by a mortgage) ; Brewster V. Carnes, 103 N. Y. 556, 9 N. E. 323; Larned v. Donovan, 84 Hun (N. Y.) 633, 65 N. Y. St. 852. 32 N. Y. S. 731. •"Robblns v. Larson, 69 Minn. 436, 72 N. W. 456; Viele v. Judson, 82 N. Y. 32. See also Assets Reali- zation Co. V. Clark, 205 N. Y. 105, 731 REGISTRY ACTS § 480 actual notice of the assignment is necessary to charge the mortgagor,^" except where the mortgage is security for a negotiable note."^ A pur- chaser of land already subject to a mortgage is chargeable with notice of an assignment of the mortgage which has been recorded prior to his purchase.''* On the other hand, in two or three states the record of an assign- ment is notice to the owner of the equity of redemption, as well as to subsequent purchasers.*^ The object of the statutory provision that the record of an assign- ment shall not be deemed in itself notice to the mortgagor, his heirs, or personal representatives, of such assignment, so as to invalidate any payment made by him or them to the mortgagee, is to save the necessity of examining the record every time a payment is made. It is argued, therefore, that for all other purposes the record of the as- signment is notice even to the mortgagor. Accordingly under such a provision it has been held that the record of an assignment of a mortgage is constructive notice as against a grantee of the mortgagor that the mortgagee can no longer deal with the mortgage title, and that a subsequent discharge or release of the mortgage executed by the mortgagee is invalid.*" If the release is obtained by the mortgagor 98 N. E. 457, 41 L. R. A. (N. S.) 1914, § 1145 et seq. Connecticut 462. The rule requiring the as- Mut. L. Ins. Co. v. Talbot, 113 Ind. signee to give notice to the mort- 373, 14 N. E. 586, 3 Am. St. 655. gagor does not extend to third per- Prior to this statute the record ot sons unknown to the assignee, an assignment was not notice. Schumacher v. "Wolf, 125 111. App. Reeves v. Hayes, 95 Ind. 521. 81. New Jersey: Comp. Stat. 1910, p. "2 Murphy v. Barnard, 162 Mass. 72, 3418, §§ 32, 34. If an assignment 38 N. B. 29, 44 Am. St. 340; New York be not recorded, payment to the Life Ins. &c. Co. v. Smith, 2 Barb, mortgagee without knowledge of Ch. (N. Y.). 82; Wolcott t. Sulli- the assignment and a release by van, 1 Edw. Ch. (N. Y.) 399; Pettus him are binding upon the assignee. V. McGowan, 37 Hun (N. Y.) 409; Shotwell v. Matthews (N. J. Eq.), James v. Johnson, 6 Johns. Ch. (N. 21 Atl. .1067; "Weinberger v. Brum- Y.) 417; Reed v. Marble, 10 Paige berg, 69 N. J. Eq. 669, 61 Atl. 732; (N. Y.) 409; Foster v. Carson, 147 Mott v. Newark German Hospital, Pa. St. 157, 23 Atl. 342, 159 Pa. St. 55 N. J. Eq. 722, 37 Atl. 757; Fritz 477, 28 Atl. 356, 39 Am. St. 696; v. Simpson, 34 N. J. Eq. 436. See Lawton v. Howe, N. Bruns. Eq. Cas. also Devlin v. Collier, 53 N. J. L. 191. 422, 22 Atl. 201. ''Merriam v. Bacon, 5 Mete. North Dakota and South Dakota: (Mass.) 95; Jones v. Smith, 22 Civ. Code, § 1629. See Comp Laws Mich. 360; Blumenthal v. Jassoy, N. Dak. 1913, §§ 6742, 6743; Rev. 29 Minn. 177, 12 N. "W. 517. See also Code S. Dak. 1903, §§ 2056, 2057. Stark T. Olsen, 44 Nebr. 646, 63 N. Pickford v. Peebles, 7 S. Dak. 166, W. 37. See post § 481. 63 N. "W. 779. •"Brewster v. Carnes, 103 N. Y. ""Viele v. Judson, 82 N. Y. 32; 556, 9 N. E. 323. Belden v. Meeker, 47 N. Y. 307, 2 «= Indiana: Burns. Ann. Stat. Lans. 470, § 481 EECOEDING AS AFFECTING PEIOEITT 733 himself without the payment of any sum of money upon the mortgage debt, the statute does not protect him against the effect of an assign- ment already recorded."^ § 481. Effect of recording assignment — Subsequent purchasers — Actual and constructive notice. — The effect of recording an assign- ment is not only to protect the assignee against a subsequent sale of the mortgage by the apparent holder of it, but also to prevent a wrong- ful discharge of it by the mortgagee.®* It is true that as against sub- sequent purchasers of the premises, or the holders of subsequent mort- gages upon them, and attaching and judgment creditors, the record of a prior mortgage is sufBcient notice of its existence without the record of an assignment of the mortgage to one who has purchased it. The failure to record the assignment does not blot out the record of the mortgage itself."' And accordingly, several cases hold that a subsequent purchaser or mortgagee can not avoid a prior recorded mortgage on the ground that an assignment of such mortgage was not recorded.'" But the assignment of a mortgage is more generally treated as a conveyance, and if not recorded is considered void as against subse- quent purchasers of the mortgaged premises affected by the assign- ment, whereas if the assignment is recorded, it imparts constructive notice of the assignee's rights to such subsequent purchasers.''^ Of "' Belden v. Meeker, 47 N. Y. 307, Vt. 401. It Is a too narrow view of 2 Lans. 470. the authorities to say that the rec- '* Parmenter v. Oaltley, 69 Iowa ord of the assignment protects 388, 28 N. W. 653; Larned v. Dono- merely against a subsequent as- van, 155 N. Y. 341, affg. 84 Hun signment by the mortgagee. 533; Brewster v. Carnes, 103 N. Y. ™Quimby v. Williams, 67 N. H. 556, 9 N. E. 323; Viele v. Judson, 489, 41 Atl. 862, 68 Am. St. 685; 82 N. Y. 32; Crane v. Turner, 67 N. Wilson v. Kimball, 27 N. H. 300; Y. 437; Van Keuren v. Corkins, 66 Bamberger v. Geiser, 24 Ore. 203, N. Y. 77; Pennsylvania Salt Co. v. 33 Pac. 609; Watson v. Dundee Mtg. Neel, 54 Pa. St. 9; Henderson v. &c. Co., 12 Ore. 474, 8 Pac. 548; Pilgrim, 22 Tex. 464; Passumpsic Smith v. Smith, 23 Tex. Civ. App. Sav. Bank v. Buck, 71 Vt. 190, 44 304, 55 S. W. 541. Atl. 93; Ladd v. Campbell, 56 Vt. "Foss v. Dullam, 111 IVtinn. 220, 529; Torrey v. Deavitt, 53 Vt. 331. 126 N. W. 820; Gillian v. McDowall, See post §§ 566, 872, 956. 66 Nebr. 814, 92 N. W. 991; Ames v. "'Bnos V. Cook, 65 Cal. 175, 3 Pac. Miller, 65 Nebr. 204, 91 N. W. 250; 632; Burt v. Moore, 62 Kans. 536, Bacon v. Van Schoonhoven, 87 N. 64 Pac. 57; Fisher v. Cowles, 41 Y. 446; Purdy v. Huntington, 42 N. Kans. 418, 21 Pac. 228; Bridges v. Y. 334, 1 Am. Rep. 532; Smyth v. Bidwell, 20 Nebr. 185, 29 N. W. 302; Knickerbocker Life Ins. Co., 21 Quimby v. Williams, 67 N. H. 489, Hun (N. Y.) 241, affd. 84 N. Y. 589; 41 Atl. 862; Viele v. Judson, 82 N. Heilbrun v. Hammond, 13 Hun (N. Y. 32; Campbell v. Vedder, 3 Keyes Y.) 474; Mills v. Comstock, 5 (N. Y.) 174, 1 Abb. App. Dec. (N. Johns. Ch. (N. Y.) 214; Vander- Y.) 295; Sprague v. Rockwell, 51 kemp v. Shelton, 11 Paige (N. Y.) 733 EEGISTET ACTS § 481 course the failure to record an assignment is immaterial where the subsequent purchaser had actual knowledge of iU' If the premises are conveyed to the mortgagee after he has assigned the mortgage, there is no merger of the mortgage title. '^ It makes no difference that the assignment is not recorded. If the mortgagee, in this condition of the title, then conveys the estate to one who pur- chases without knowledge of the assignment of the mortgage, the question arises whether the assignee, having omitted to record his as- signment, thus leaving, so far as the record shows, a complete title in the mortgagee, can be protected in his title as against the purchaser from the mortgagee.'* Of course such purchaser is charged with constructive notice of the existence of a mortgage, and of the continuance of its lien, by its record. Having this information he is chargeable in law with the further notice that the mortgage is a lien in the hands of any person to whom it may have been legally transferred, and that the record of such transfer is not necessary to its validity, nor as a protection against a purchaser of the property mortgaged, or any other person than a subsequent purchaser in good faith of the mortgage itself, or the bond or debt secured by it; but rather that one purchasing the premises from the mortgagee would take them subject to the lien of the mortgage irrespective of the ownership of it, unless the mortgagee was the owner. That knowledge and notice make it his duty, in the exercise of proper diligence, to inquire whether his vendor, the mort- gagee, is still the owner of the mortgage, and his omission to make that inquiry deprives him of the protection of a bona fide purchaser.''^ 28; Clark v. XJlrich, 14 N. Y. St. 4; Artz v. Yeager, 30 Ind. App. 677, 66 Brownback v. Ozias, 117 Pa. St. 87, N. E. 917. 11 Atl. 301; Neide v. Pennypacker, "Purdy v. Huntington, 42 N. Y. 9 Phila. (Pa.) 86; Pickford v. 334, 1 Am. Rep. 532; Campbell v. Peebles, 7 S. Dak. 166, 63 N. W. Vedder, 3 Keyes (N. Y.) 174; 1 Abb. 779; Merrill v. Luce, 6 S. Dak. 354, App. Dec. 295. 61 N. W. 43, 55 Am. St. 844; Fal- "This, then, is the case: "A lass v. Pierce, 30 Wis. 443; Frank sells and conveys land to B. B V. Snow, 6 Wyo. 42, 42 Pac. 484, gives back a bond and mortgage for 43 Pac. 78. See also James v. New- the purchase-money. A sells and man, 147 Iowa 574, 126 N. W. 781; assigns the bond and mortgage to Bridges v. Bidwell, 20 Nebr. 185, C, and afterward receives a con- 29 N. W. 302. But see Curtis v. veyance of the equity of redemption Moore, 162 N. Y. 159, 46 N. E. 168, from B, and then by a full cove- 57 Am. St. 506; Campbell v. Ved- nant deed conveys the land, and all der, 1 Abb. Dec. (N. Y.) 295, 3 his estate and interest in the land Keyes 174; Miller v. Lindsley, 19 to D." Hun. (N. Y.) 207; McCurdy v. Les- "Oregon Trust Co. v. Shaw, 5 lie, 2 Wkly N. Cas. (Pa.) 273. Sawy. (U. S.) 336 (quoting and "Miller v. Larned, 103 111. 562; approving the text); Burhans v. § 481a RECORDING AS AFFECTING PRIORITY 734 A mortgage covered separate tracts, and after its assignment and before it was recorded the original mortgagees executed a release of part of the property, acknowledging therein a payment of part of the secured debt] which release was recorded; and thereafter and before the assignment was recorded, a third person took a second mortgage upon the property remaining subject to the first mortgage. It was held, that the second mortgagee had the right to rely upon the record, and as against her the payment recited in the release must be con- sidered as having been properly made and the amount secured by the first mortgage reduced to that extent.'^ Where a mortgagee assigned the mortgage as collateral security, and afterward received payment of the debt, but failed to turn it over to the assignee, the landowner who made the payment with constructive notice of the assignment can not defeat foreclosure on the ground that the assignee is estopped to deny mortgagee's agency for the purpose of collecting the debt, without proving the agency or facts constituting an estoppel.'^ § 481a. Eecording assignment — ^Payment of paper before maturity without its production. — By the weight of authority, a mortgage se- curing negotiable paper is a mere incident thereto and partakes in its negotiability. Hence the law of negotiable instruments governs the rights of the parties as well as third persons, concerning payment ; and payment before maturity to any one other than the holder of the ne- gotiable instrument is at the risk of the payer, and is binding upon the holder of the paper only where express or implied authority to re- ceive such payment existed. Consequently payment of a negotiable note secured by a mortgage, by the mortgagor or his grantee, when made to the mortgagee not in possession of the note and mortgage, is not binding upon an assignee thereof before maturity, who had posses- sion of the papers at the time of payment, unless he had expressly or impliedly authorized such payment.'* In a recent New York Hutcheson, 25 Kans. 625, 37 Am. ™New Orleans Canal &c. Co. v. Rep. 274; Purdy v. Huntington, 42 Montgomery, 95 U. S. 16, 24 L. ed. N. Y. 334, overruling 46 Barb. (N. 346; Sawyer v. Prickett, 19 Wall. Y.) 389, 1 Am. Rep. 532. See also (U. S.) 146, 22 L. ed. 105; Kenni- Van Keuren v. Corkins, 6 Thomp. cott v. Wayne County, 16 Wall. (U. & C. (N. Y.) 355, 4 Hun 129, 66 N. S.) 452, 21 L. ed. 319; Carpenter v. Y. 77; Gillig V. Maass, 28 N. Y. 191; Longan, 16 Wall. (U. S.) 271, 21 Warner v. Winslow, 1 Sandf. Ch. L. ed. 313; Windle v. Bonebrake, (N. Y.) 430. See post § 804. 23 Fed. 165; Baumgartner v. Peter- ™ Frank v. Snow, 6 Wyo. 42, 42 son, 93 Iowa 572, 62 N. W. 27; Bray- Pac. 484, 43 Pac. 78. ley v. Ellis, 71 Iowa 155, 32 N. W. "Bettle V. Tiedgen, 85 Nebr. 276, 254; Burhans v. Hutcheson, 25 122 N. W. 890, 77 Nebr. 799, 116 Kans. 625, 37 Am. Rep. 274; Hoff- N. W. 959. acker v. Manufacturers' Nat. Bank 735 EEGISTET ACTS § 481a case, reviewing the decisions upon this subject, it was held that it is the duty of a person paying a note or bond secured by a mortgage to require the production and cancelation of the instrument; and that a payment of the balance due on a mortgage by a purchaser of the equity of redemption, made to the mortgagee to discharge the mort- gage, without taking any satisfaction, or requiring production of the securities for cancelation, was of no avail as against the holder of an unrecorded assignment.''' A recent Wisconsin decision holds that the indorsee of a note se- cured by a mortgage having possession of the instruments need not record his assignment, to be protected against payments by the debtor to the original mortgagee.^" In another Wisconsin decision, the court said that a mortgagor in a mortgage securing a negotiable note, or his subsequent, grantee, is not warranted in paying the mortgage in- debtedness to the record owner thereof or his agent, relying solely upon the record, where the securities are not in possession of such owner or the person acting as his agent.^^ The rule that a mortgagor is entitled to deal with the mortgagee as the holder of the mortgage, until he has actual notice of an assign- (Md.), 23 Atl. 579; Murphy v. Bar- nard, 162 Mass. 72, 38 N. E. 29, 44 Am. St. 340; Biggerstaff v. Marston, 161 Mass. 101, 36 N. E. 785; Brooke V. Strutters, 110 Mich. 563, 68 N. W. 272, 35 L. R. A. 536; Markey v. Corey, 108 Mich. 184, 66 N. W. 493, 36 L. R. A. 117, 62 Am. St. 698; Williams v. Keyes, 90 Mich. 290, 51 N. W. 520, 30 Am. St. 438; Mor- rison V. Roehl, 215 Mo. 545, 114 S. W. 981; Borgess Invest. Co. v. Vette, 142 Mo. 560, 44 S. W. 754, 64 Am. St. 567; Dodge v. Birkenfeld, 20 Mont. 115, 49 Pac. 590; Snell v. Margritz, 64 Nebr. 6, 91 N. W. 274; Herbage v. Moodie, 51 Nebr. 837, 71 N. W. 778; Porter v. Ourada, 51 Nebr. 510, 71 N. W. 52; Stark v. Olsen, 44 Nebr. 646, 63 N. W. 37; Eggert V. Beyer, 43 Nebr. 711, 62 N. W. 57; Webb v. Hoselton, 4 Nebr. 308, 19 Am. Rep. 638; Bautz V. Adams, 131 Wis. 152, 111 N. W. 69, 120 Am. St. 1030. The reason advanced in support of this doc- trine is that a mortgagor executing a mortgage as security for a nego- tiable note payable to order, is charged with knowledge that the note is negotiable, and therefore he makes payments to the original mortgagee without production of the note at his peril, as such pay- ments have no effect as against an indorsee thereof who has posses- sion at the time the payments are made. Baumgartner v. Peterson, 93 Iowa 572, 62 N. W. 27. "Assets Realization Co. v. Clark, 205 N. Y. 105, 98 N. E. 457, 41 L. R. A. (N. S.) 462. See also Notes in 21 L. R. A. (N. S.) 52 and 29 L. R. A. (N. S.) 576; Keen v. Miller, 105 Ark. 152, 150 S. W. 411; Ex- change Nat. Bank v. Ross, 17 Gal. App. 235, 119 Pac. 398; Scott v. Taylor, 63 Fla. 612, 58 So. 30; Gar- rett V. Fernauld, 63 Fla. 434, 57 So. 671; Aycock Bros. Lbr. Co. v. First Nat. Bank, 54 Fla. 604, 45 So. 501. »° Marling v. Jones, 138 Wis. 82, 119 N. W. 931, 131 Am. St. 996. "Beautz v. Adams, 131 Wis. 152, 111 N. W. 69, 120 Am. St. 1030. See also Bartel v. Brown, 104 Wis. 493, 80 N. W. 801 (emphasizing the im- portance of ■ protecting holders of commercial paper, and proof of their authority to receive payment l^v production of the written secrri- ties). § 483 EECOKDING AS AFFECTING PEIOEITY 736 ment, has no application when the mortgage is given to secure a ne- gotiable note, and this is transferred before it is due.*^ A different rule prevails in Massachusetts.'^ There the estate of a mortgagee of land is a legal estate, which passes by the same instruments of con- veyance as other legal estates. It is declared to be as important to be able to ascertain from the registry the existence or continuance of a mortgage as of any other legal title. "Not unfrequently the whole or part of an estate held in mortgage is released or conveyed when the debt is not paid; and in the absence of fraud, a conveyance by the party who appears on the record to be the owner of the mortgage should be sufl&cient to protect a purchaser who has no actual or con- structive notice of title in any other."** Therefore, as held in a later ease, "one who takes a conveyance of a mortgage, either by a formal assignment or a quitclaim deed, from a person who appears of record to be the owner of it, will acquire a good title as mortgagee, unless he has actual notice or information of a defect in the title."'" § 482. Assignee as bona fide purchaser — Notice — Rights and pri- orities. — An assignee of a mortgage is a purchaser, and is entitled to the protection of the recording acts as much as a purchaser of the equity of redemption.'" If he purchases in good faith, and for a val- uable consideration, he is not chargeable with any notice his assignor had of prior incumbrances upon the property, provided he records his assignment before such prior mortgage or other deed is recorded." He is then chargeable only with constructive notice, such as is afforded by record, or by open and adverse possession of the premises by an- other." The assignee gains priority in such case, not by the prior re- =' Jones V. Smith, 22 Mich. 360. == Stark v. Boynton, 167 Mass. 443, »= Blunt V. Norris, 123 Mass. 55, citing Gallagher v. Galletley, 128 25 Am. Rep. 14; Welch v. Priest, 8 Mass. 367; Morse r. Curtis, 140 Allen (Mass.) 165; "Wolcott v. Win- Mass. 112. Chester, 15 Gray (Mass.) 461, *" Smyth v. Knickerhocker L. Ins. stated in post § 804. Co., 84 N. Y. 589; Decker v. Boice, So by statute in Maryland: Act 83 N. Y. 215; Westbrook v. Gleason, 1868, ch. 373; Code 1911, art. 21, 79 N. Y. 23; Butler v. Mazeppa § 34, p. 504. The act does not af- Bank, 94 Wis. 351, 68 N. W. 998. feet equitable assignments. Byles *' Decker v. Boice, 83 N. Y. 215. V. Tome, 39 Md. 461 ; Western Mary- ^ Jackson v. Reid, 30 Kans. 10, 1 land &c. Co. v. Goodwin, 77 Md. 271, Pac. 308; Bush v. Lathrop, 22 N. 26 Atl. 319; Hewell v. Coulbourn, Y. 535; Union College v. Wheeler, 54 Md. 59. 59 Barb. (N. Y.) 585; Jackson v. So in Vermont: Ladd v. Camp- Van Valkenburgh, 8 Cow. (N. Y.) bell, 56 Vt. 529. 260; Jackson v. Given, 8 Johns. (N. "Welch V. Priest, 8 Allen Y.) 137, 5 Am. Dec. 328; Varick v. (Mass.) 165. Briggs, 6 Paige (N. Y.) 323. '^37 EEGISTET ACTS § 482 cording of the assigned mortgage, but by the prior recording of his own assignment.*" A bona fide assignee of a note and mortgage which is duly recorded, has priority over an elder but unrecorded mortgage of which he had no notice, even though his assignor had notice thereof."" Such as- signee, however, must first record his title, in states where the record- ing of assignments is required or permitted, and an assignment re- corded after an elder mortgage, will be postponed to it."^ If the as- signee omits to record his assignment, and an elder mortgage of which he had no notice, but of which his assignor had notice, is first re- corded, he will hold subject to such elder mortgage; and he would also hold subject to it if such elder mortgage had been recorded before he took the assignment, but after the recording of the mortgage as- signed."^ A formal and valid assignment of a mortgage and the debt secured invests the assignee with all the rights, powers and equi- ties of the mortgagee."^ The assignee of a mortgage takes all the rights of his assignor, and if, in the hands of the assignor, it was entitled to priority over an- other mortgage under the statute because of its priority of record, and of the fact that it was taken by the assignor for a full consideration, and without notice that the other mortgage had in fact been previously executed, it has the same priority in the hands of the assignee, al- though he may have taken it with knowledge of the facts."* An as- signment of a mortgage, though not recorded until after the death of the assignor, is superior to the rights of the heirs of the assignor, who are not treated as bona fide purchasers within the recording act."^ »' Decker v. Boice, 83 N. Y. 215. »» English v. Waples, 13 Iowa 57; The contrary rule declared in Jack- Rumery v. Loy, 61 Nebr. 755, 86 N. son V. Van Valkenburgh, 8 Cow. W. 478; Westbrook v. Gleason, 79 (N. Y.) 260, is no longer in force. N. Y. 23. Bank for Savings v. Frank, 13 J. & ''^Brower v. Witmeyer, 121 Ind. S. (N. Y.) 404. 83, 22 N. E. 975; De Lancey v. ™Coonrod v. Kelly, 119 Fed. 841, Stearns, 66 N. Y. 157; Fort v. 56 C. C. A. 353; Harrison v. Yerby Burch, 5 Denio (N. Y.) 187. (Ala.), 14 So. 321; Dulin v. Hunter, "'Bulkley v. Chapman, 9 Conn. 5; 98 Ala. 539, 13 So. 301; Clasey v. Beatty v. Clement, 12 La. Ann. 82; Sigg, 51 Iowa 371, 1 N. W. 590; Holmes v. Holmes, 129 Mich. 412, Paul V. Paul, 23 N. Y. St. 370, 5 N. 89 N. W. 47, 95 Am. St. 444; Smith Y. S. 743; Morris v. Beecher, 1 N. v. Godwin, 145 N. Car. 242, 58 S. E. Dak. 130, 45 N. W. 696; Building 1089. Assn. v. Clark, 43 Ohio St. 427, 2 "'Coonrod v. Kelly, 119 Fed. 841. N. B. 846. See also Decker v. "= Wellendorf v. Wellendorf, 120 Boice, 83 N. Y. 215; David Steven- Minn. 435, 139 N. W. 812, 43 L. R. son Brew. Co. v. Iba, 12 Misc. 329, A. (N. S.) 1144. 65 N. Y. St. 784, 33 N. Y. S. 642, 1 Ann. Cas. 356. 47 — Jones Mtg. — Vol. I. § 483 RECORDING AS AFFECTING PRIORITY 738 If a mortgage be assigned, but the assignment is not recorded until after the mortgagor makes a conveyance of the mortgaged premises to the mortgagee, and the latter executes another mortgage of the same, which deed and subsequent mortgage are first recorded, the last mortgage will take precedence of the first ; but another mortgage after the recording of the assignment of the first mortgage will be subject thereto.^" A second mortgagee assigned his mortgage and part of the debt, but the assignment was not recorded. Subsequently the mortgagor conveyed the land to the second mortgagee. The first mortgagee then released his mortgage, and took a third mortgage on the land for the unpaid principal and interest, without actual knowledge of the assign- ment, and on the faith ef the record and of the second mortgagee's representation that his mortgage had been extinguished by merger. It was held that he was entitled to priority over the assignee claiming under the unrecorded assignment of the second mortgage, though such mortgage was never actually discharged of record."^ And so, where there were two successive mortgages of the same land, and the mortgagor in the first mortgage was the mortgagee in the second, and the second mortgage was first recorded and was then assigned to a bona fide purchaser for value before the first mortgage was recorded, but the assignment was not recorded until after the re- cording of the first mortgage, the mortgagee in the second mortgage could not claim priority, because when he recorded his mortgage he had notice of the prior mortgage which he had himself executed. It was held, in a controversy between assignees of the respective mort- gages, that the assignee of the second mortgage could derive no benefit from the prior record of his mortgage, as he stood as to that in the shoes of his assignor; and that he was not entitled to priority by the record of his assignment, because the first mortgage was recorded be- fore the recording of his assignment. But it was conceded that if he had recorded his assignment before the first mortgage -was recorded he would have gained a preference.®* An assignee of a note and mortgage, who does not receive the instru- ments, and knows that they are in the possession of a third person, ■« McCormick v. Bauer, 122 111. »' Pritehard v. Kalamazoo College, 573, 13 N. E. 852; Jenks v. Shaw, 82 Mich. 587, 47 N. "W. 31. 99 Iowa 604, 68 N. W. 900, 61 Am. ""Westbrook v. Gleason, 79 N. Y. St. 256; Brewster v. Carnes, 103 N. 23, reversing same case 14 Hun (N. Y. 556, 9 N. E. 323; Butler v. Bank Y.) 245. This case is stated and of Mazeppa, 94 Wis. 351, 68 N. W. approved by Andrews, J., in Decker 998. V. Boice, 83 N. Y. 215. 'J'Sa REGISTRY ACTS § 483 the note being indorsed in blank, can not be considered a bona fide pur- chaser -without notice. °® If a mortgagee assigns one of the notes se- cured by a mortgage, and afterward assigns another note secured by it, together with the mortgage, to another person, the latter assignee is not protected against the assignee of the note as an innocent pur- chaser, because the mortgage itself is notice to him of the existence of such note.^ § 483. Priority under different assignments of same mortgage. — If priority between the different assignments of the same mortgage is not fixed by record, it will generally be determined by the relative equities of the parties, and an assignee who is a purchaser in good faith will be preferred to one who is not.^ The fact that a later as- signee knew of an earlier assignment will postpone him.^ And so the failure of one assignee to require the production and delivery of the instruments in the hands of a third person, will likewise postpone him.* It is not often that the question of priority of rights under different assignments of the same mortgage can arise, because an assignment is generally accompanied by a delivery of the note or bond secured by the mortgage and of the mortgage itself; and except under peculiar circumstances a person acting in good faith would not take a mere written transfer of the mortgage title without a delivery of these. "^ The fact that the assignor did not have these papers to deliver would be enough ordinarily to put the purchaser on his guard, even if it did not amount to notice to him of a prior assignment. At any rate, the absence of these papers would be enough to put in doubt his good " Bunker v. International Har- postpone him. Warden v. Adams, vester Co., 148 Iowa 708, 127 N. W. 15 Mass. 233. See also Bunker v. 1016. International Harvester Co., 148 'Wilson v. Eigenbrodt, 30 Minn. Iowa 708, 127 N. W. 1016. 4, 13 N. W. 907. ^Porter v. King, 1 Fed. 755; ^Batchellor v. Richardson, 17 Harding v. Durand, 36 111. App. Ore. 334, 21 Pac. 392; Potter v. 238; Murphy v. Barnard, 162 Mass. Stransky, 48 Wis. 235, 4 N. W. 95. 72, 38 JST. E. 29, 44 Am. St. 340; See also Chew v. Brumagin, 21 N. Blunt t. Norris, 123 Mass. 55, 25 J. Eq. 520 (absolute assignment Am. Rep. 14; Kitchin's Appeal, 196 and assignment as collateral) ; Pa. St. 321, 46 Atl. 418. See also Hoyt T. Thompson, 19 N. Y. 207. Buehler v. McCormick, 169 111. 269, = Van Vleet v. Blackwood, 33 48 N. B. 287. But see Richards Mich. 334; Ubansky v. Shirmer, 111 Trust Co. v. Rhomberg, 19 S. Dak. App. Div. 50, 97 N. Y. S. 577. An 595, 104 N. W. 268. assignee's knowledge that the as- "Porter v. King, 1 Fed. 755 (quot- signor Intended to assign the mort- ing text with approval), gage to another is not sufficient to § 484 KECOEDING AS AFFECTING PRIORITY 740 faith in taking the assignment ; and would make him chargeable with notice of any defect there may be in the assignor's title." But if two assignments of the same mortgage by any means are made and taken by different persons in good faith, of course the assignee who first records his assignment would gain the better title to the mortgage, if he has paid full value for it at the time of taking it. If he paid only part of the consideration, then he would have priority only to the extent of the payment made by him ; for he is then a pur- chaser, and entitled to protection only to that extent.^ In the absence of special equities in either assignee, the general rule prevails that he who is first in time, is first in right.* § 484. Manner of recording an assignment — Identification of mort- gage — Marginal record. — A separate assignment of a mortgage is gen- erally recorded in the same manner as the mortgage itself or any other instrument affecting lands.^ When an assignment of a mortgage is indorsed upon the mortgage deed, which is referred to as "the within described mortgage," it is sufficient to record the assignment without recording the mortgage with it anew, and identification by cross- references to the respective pages on which instruments are recorded is sufficient.^" Such reference is usually made by the register from the record of one instrument to the other ; but unless required by law, this is not essential. A recital of the names of the parties to the mortgage, and its date, is a sufficient identification of it; although it is usual in addition to this description, when the assignment is not indorsed upon the mortgage, to refer, in the description of it, to the book and page of the record. But neither a reference to the record of the mortgage nor a description of the mortgaged lands is necessary. An assignment is sufficient which so identifies the mortgage that by examining the rec- ords the one referred to can be ascertained.^^ It is usual for the register to note an assignment upon the mar- gin of the record of a mortgage; and in many states it is made by statute his duty to do so. But in the absence of such a statute the = Kellogg v. Smith, 26 N. Y. 18; 48 "Wis. 235, 4 N. W. 95. See post Brown v. Blydenburgh, 7 N. Y. 141, § 566. 57 Am. Dec. 506. 'Conover v. Grover, 31 N. J. Eq. 'Oregon Trust Co. v. Shaw, 5 539. Sawyer (U. S.) 336; Wiley v. Wil- "Merrill v. Luce, 6 S. Dak. 354, llamson, 68 Maine 71; Bush v. 61 N. W. 43, 55 Am. St. 844; Hen- Lathrop, 22 N. Y. 535; Purdy t. derson v. Pilgrim, 22 Tex. 464. Huntington, 46 Barb. (N. Y.) 389, " Soule v. Corbley, 65 Mich. 109, 42 N. Y. 334, 1 Am. Rep. 532; Pick- 31 N. W. 785; Carli v. Taylor, 15 ett V. Barron, 29 Barb. (N. Y.) Minn. 171; Viele v. Judson, 82 N. 505; Campbell v. Vedder, 3 Keyes Y. 32. (N. Y.) 174; Potter v. Stransky. " Viele v. Judson, 82 N. Y. 32. 741 REGISTRY ACTS § 485 omission of the register to do so does not affect the right of the as- signee.^^ A statute requiring assignments of mortgages to be recorded or en- tered on the margin of the mortgage record, does not extend to the mere assignment of a note which carries the mortgage securing it, as an incident. '^^ Under a statute requiring mortgages to be recorded in separate books, an assignment of a mortgage should be recorded in a book for mortgages, and the record of it in the book for deeds is held to be of no avail. ^* The certificate of the registry of a mortgage, required by statute to be indorsed thereon, is prima facie evidence of its record.^^ § 485. Kecord of collateral agreement affecting mortgage, or par- tial release. — The same principles apply equally to the record of any agreement aSeeting a mortgage. If not executed with the formalities entitling it to be recorded, the record affords no constructive notice of its contents. If, for instance, land subject to a mortgage is sold, and mortgaged back for the purchase-price, the vendor agreeing to pay off the elder mortgage, or in default of so doing to allow the purchaser to pay it, and have the amount of it deducted from the mortgage given for the price of the land, and this agreement, without being entitled to be recorded, is nevertheless put upon record, and the purchaser sub- sequently pays the elder mortgage as contemplated by the agreement, an assignee of the mortgage for the purchase-money having no actual notice of this agreement, is not concluded by it, but may hold his mortgage for the original amount of it.^" A release of a mortgage is a conveyance, required to be recorded, to affect subsequent purchasers and incumbrancers without notice.^^ A release of a part of the mortgaged premises is a conveyance by which the title to real estate may be affected, and, unless it be recorded, it is void against a subsequent assignee of the mortgage for value and "Viele V. Judson, 82 N. Y. 32, "Dutton v. Ives, 5 Mich. 515. overruling Moore v. Sloan, 50 Barb. "Palmer v. Bates, 22 Minn. 532; (N Y ) 442 Baker v. Thomas, 61 Hun 17, 39 N. "Perry v. Fisher, 30 Ind. App. Y. St. 816, 15 N. Y. S. 359; Mutual 261, 65 N. E. 935; construing Burns' Life Ins. Co. v. Wilcox, 55 How. Pr. Ann. Stat. Indiana 1914, §§ 1145- (N. Y.) 43. See also Gibson v. 1149 (Burns' Stat. 1901, § 1107a). Thomas, 85 App. Biv. 243, 83 N. Y. "Purdy V. Huntington, 42 N. Y. S. 552 (insufficient deposit of re- 334, 1 Am. Rep. 532. See also Gil- lease). But see Blume v. Lundry, lig V. Haass, 28 N. Y. 191. 130 N. Y. S. (836. '=Jakway v. Jenison, 46 Mich. 521, 9 N. W. 836. § 486 EECOBDING AS AFFECTING PRIORITY 742 without notice.^' An unrecorded agreement to release is in like man- ner void against an assignee of the mortgage in good faith.^° Any collateral or subsequent written agreement by the parties to a mortgage, which materially affects or alters the terms or conditions of the original mortgage, should be recorded. Thus an agreement made at the time of executing a deed of trust, whereby the beneficiaries promise the grantor not to sell, until they have sustained loss as sure- ties on the grantor's bond, is a part of the deed, and is an instrument affecting real estate.^" And likewise, the written appointment of a substitute trustee, is an instrument in writing affecting lands, within the recording act.^^ § 486. Crops and trees Included as part of realty. — The registry laws apply to sales and mortgages of growing crops and trees, or to an agreement constituting a lien upon them, so long as they are a part of the realty. A verbal agreement, or an agreement in writing not re- corded, whereby the crop is pledged by a tenant of land to the owner as security for advances, is of no validity as against a mortgage of it afterward made and duly recorded.^^ Growing trees are generally considered part of the realty and are embraced in a mortgage of the land,^'' unless expressly excepted.^* And since a mortgage of standing timber is considered a conveyance of an interest in land, it must be recorded as such ; and if filed as a chattel "Mutual Life Ins. Co. v. Wilcox, the satisfaction of his claim for 55 How. Pr. (N. Y.) 43. A regis- wages as against a creditor of the trar is bound to register a partial owner, and that the registration release. In re Ridout, 2 U. C. C. P. act did not apply. As to mortgages 477. The mortgagor's possession is of crops, see Jones on Chattel Mort- not notice to a purchaser under gages, §§ 142-146. foreclosure, of the the rights of the *" Hutchins v. King, 1 Wall. (U. mortgagor under an unrecorded S.) 53, 17 L. ed. 544; In re Bruce, partial release of the premises. 9 Ben. (U. S.) 236, Fed. Cas. No. Palmer v. Bates, 22 Minn. 532. 2045; Adams v. Beadle, 47 Iowa "St. John V. Spauldlng, 1 T. & 439, 29 Am. Rep. 487. See also C. (N. Y.) 483. Maples v. Millon, 31 Conn. 598 ™ Munson v. Ensor, 94 Mo. 504, (trees and shrubs In nursery in- 7 S. W. 108. eluded); Mann v. English, 38 U. "Gooch V. Addison, 13 Tex. Civ. C. Q. B. 240. App. 76, 35 S. W. 83. " Mercantile Trust Co. v. South- ''^ Jones v. Chamberlin, 5 Heisk. ern &c. Land Co., 86 Fed. 711, 30 (Tenn.) 210. This case is dlstin- C. C. A. 349; Moisant v. McPhee, 92 guished from Tedford v. Wilson, 3 Cal. 76, 28 Pac. 46. See also In re Head (Tenn.) 311, where it was Holmes Lumber Co., 189 Fed. 178 agreed that the proceeds of a farm (recital of mortgagee's right of ac- should be liable for the wages of a cess to cut timber) ; American Nat. person who entered into possession Bank v. First Nat. Bank, 52 Tex. of it and carried it on for the own- Civ. App. 519, 114 S. W. 176 (im- er. Being in possession, he was held plied reservation of right to cut to be entitled to apply the crops to timber). 743 EEGISTEY ACTS § 487 mortgage it will not constitute notice to a subsequent purchaser.^' But the record of a timber deed in a special book kept for such excep- tional instruments was held proper.^" A parol contract for the sale of growing trees to be cut and removed from the land is ordinarily a contract for the sale of a chattel interest, though the trees are a part of the realty so long as they remain stand- ing. Therefore, to insure protection against a sale or mortgage of the land before the trees are severed, it is desirable that the sale be re- corded. If the owner of land which is mortgaged sells growing trees, and the purchaser cuts and removes the trees without knowledge of the mortgage, which is not recorded, the mortgagee has no title to the timber as against such purchaser, and can not maintain replevin for it." § 487. Mechanics' lien laws affecting priority of mortgages. — The statutes providing for mechanics' liens qualify and affect and some- times destroy the priority of conveyances as established by the regis- try laws; and it is therefore important that these statutes should be considered in connection with the registry laws. Such liens may be given priority of mortgages executed and recorded subsequently to the date of the contract under which the lien is claimed, as is the case in Massachusetts and Maine,^^ but more frequently mechanics' liens are given precedence of mortgages upon the property recorded after the commencement of the work or improvement for which the lien is claimed.^' The argument in favor of such a provision is, that one who =* "Williams v. Hyde, 98 Mich. 152, 13N.E.182. Under the Massachusetts 57 N. W. 98. statute, the claim of a third person '"Mee V. Benedict, 98 Mich. 260, for labor performed upon a build- 57 N. W. 175, 22 L. R. A. 641, 39 ing has been held superior to a pur- Am. St. 543. chase-money mortgage to the owner, " Banton v. Shorey, 77 Maine 48. who had impliedly authorized a con- ^ Saucier v. Maine Supply &c. Co., tractor to employ the necessary 109 Maine 342, 84 Atl. 461; Parnham workmen to erect the building. Mc- V. Richardson, 91 Maine 559, 40 Atl. Cormack v. Butland, 191 Mass. 421, 553; Morse T. Dole, 73 Maine 351; 77 N. E. 761. See post § 609 and Shaughnessy v. Isenberg, 213 Mass. ante §§468, 473a, concerning prior- 159, 99 N. E. 975; McDowell v. Rock- ity of purchase-money mortgages and wood, 182 Mass. 150, 65 N. E. 65; mechanic's liens. Taylor v. Springfield Lbr. Co., 180 For lien laws affecting the prior- Mass. 3, 61 N. E. 217; Sprague v. ity of railroad mortgages, see Jones McDougall, 172 Mass. 553, 52 N. E. on Liens, §§ 1618-1675. 1077; Carew v. Stubbs, 155 Mass. For a statement of the law as to 549, 30 N. E. 219; Batchelder v. priority between mechanic's liens Rand, 117 Mass. 176; Dunklee v. and mortgages, see Jones on Liens, Crane, 103 Mass. 470. See also Men- §§ 1457-1486. ticello Bank v. Sweet, 64 Ark. 502, As to priority of statutory liens 43 S. W. 500; Interstate Bldg. &c. for water rates, see Jones on Liens, Assn. V. Ayers, 177 111. 9, 52 N. B. § 102. 342; Paddock v. Stout, 121 111. 571, ^ See post § 609. § 487 RECORDING AS AFFECTING PRIORITY 744 takes a mortgage upon a building in process of erection, or upon land upon which improvements for which a lien is given are being made, is bound to know that there may be a lien upon the property for the work already done, and to assume that the work is to go forward, and that there may be a further lien for completing the work. It is not desir- able, either, that the execution of a mortgage upon the land should be permitted to arrest the work and prevent its completion as would most likely happen if the making of the mortgage had the effect of post- poning any lien afterward filed. It is regarded also as just that the mechanic should have the benefit of the labor and materials that go into the property and give it value, rather than the mortgagee, who has taken his mortgage during the progress of the work.^" Under such statutes, a mortgage made in good faith to secure future advances on a building, if recorded before the commencement of the building, is entitled to priority over liens for labor or materials, al- though the advances are not made till after the commencement of the building.*^ A mortgage made to secure future advances will thus have priority over subsequently attaching mechanics' liens, to the extent of the amount advanced, including advances made after accrual of the mechanics' liens,^^ provided such advances were definitely con- tracted for and were obligatory upon the mortgagee,^^ but voluntary '"Davis v. Bilsland, 18 Wall. (U. v. Mutual Ben. L. Ins. Co., 27 N. J. S.) 659, 21 L. ed. 969; Equitable Eq. 604; Piatt v. Griffith, 27 N. J. Life Ins. Co. v. Slye, 45 Iowa 615; Eq. 207; Barnett v. Griffith, 27 N. J. Neilson v. Iowa Eastern R. Co., 44 Eq. 201; Taylor v. La Bar, 25 N. J. Iowa 71. See also Riverside Lum- Eq. 222; Central Trust Co. v. Bart- ber Co. v. Schafer, 251 Mo. 539, 158 lett, 57 N. J. L. 206, 30 Atl. 583 S. W. 340. (mortgage to secure bonds to be is- =' Keystone Iron Works Co. v. sued subsequently); Lipman v. Douglass Sugar Co., 55 Kans. 195, 40 Jackson Architectural Iron Works, Pac. 273; Flint &c. Mfg. Co. v. Doug- 128 N. Y. 58, 27 N. E. 975; Moro- lass Sugar Co., 54 Kans. 455, 38 Pac. nay's Appeal, 24 Pa. St. 372; Lyle 566; Heal v. Evans Creek Coal &c. v. Ducomb, 5 Blnn. (Pa.) 585; Co., 71 Wash. 225, 128 Pac. 211; Wis- Blackmar v. Sharp, 23 R. L 412, 50 consin Planing Mill Co. v. Schuda, Atl. 852; Wroten v. Armat, 31 Grat. 72 Wis. 277, 39 N. W. 558. See post (Va.) 228; Home Sav. &c. Assn. v. § 609. See also McAdams v. Pied- Burton, 20 Wash. 688, 56 Pac. 940; mont Trust Co. (N. Car.), 83 S. E. Wisconsin Planing-Mill Co. v. Schu- 623. da, 72 Wis. 277, 39 N. W. 558. See '^ Anglo-American Sav. &c. Assn. also Martsolf v. Barnwell, 15 Kans. V. Campbell, 13 App. D. C. 581, 43 L. 612; Reed v. Rochford, 62 N. J. Eq. R. A 622; Richards v. Waldron, 20 186, 50 Atl. 70; Page v. Carr, 232 Pa. D. C. 585; Kiene v. Hodge, 90 Iowa 371, 81 Atl. 430. But see Allen Co. 212, 57 N. W. 717; Brooks v. Lester, v. Emerton, 108 Maine 221, 79 Atl. 36 Md. 65 (advances of materials); 905; Culmer Paint &c. Co. v. Glea- Hill V. Aldrich, 48 Minn. 73, 50 N. son (Utah), 130 Pac. 66. W. 1020; Central Trust Co. v. Conti- ^ Anglo-American Sav. &c. Assn. nental Iron Works, 51 N. J. Eq. 605, v. Campbell, 13 App D. C. 581, 43 L. 28 Atl. 595, 40 Am. St. 539; Jacobus R. A. 622; Whelan v. Exchange 745 EEGISTET ACTS § 487 and optional advances by the mortgagee with notice of intervening, liens are postponed thereto.^* The lien of a holder of corporate bonds and a mortgage, given to secure prior advances to the corporation, after the attachment of a mechanic's lien, and accepted with knowledge thereof, is inferior to the mechanic's lien. Future advances upon such a mortgage can have priority only to the extent of the money actually advanced by the mortgagee and applied to the erection of a new build- ing on the premises, and money expended for furniture in the build- ing is not embraced in such a prior claim.^' Under still other statutes, a bona fide mortgagee is regarded as a purchaser who is not affected by a mechanic's lien unless he has re- ceived actual or constructive notice of it in a manner prescribed; and the fact that the mechanic is at work upon the building at the time of the mortgage is not actual notice of his lien.^° There are statutes, however, which give a mechanic's lien precedence over a mortgage which was a lien on the land before the building was commenced.^'' This lien is waived by taking a mortgage^' or other se- curity for the amount for which a lien might be claimed. The commencement of a building, within the meaning of these statutes, is the first labor done on the ground which is made the foun- dation of the building, and forms part of the work suitable and neces- sary for its construction.^' It is some work or labor on the ground. Trust Co., 214 Mass. 121, 100 N. E. Laws, § 3671; Lord's Ore. Laws, 1095; Barnett v. Griffith, 27 N. J. 1910, § 7418; Cooper Mfg. Co. v. Eg. 201; Taylor v. Le Bar, 25 N. J. Delahunt, 36 Ore. 402, 51 Pac. 649, Eq. 222; Lipman v. Jackson Archi- 60 Pac. 1. Although a lien for min- tectural Iron Works, 128 N. Y. 58, ing supplies was not filed until after 27 N. B. 975; Moroney's Appeal, 24 suit to foreclose a mortgage on the Pa. St. 372; Blackmar v. Sharp, 23 R. mining property, the lien was held I. 412, 50 Atl. 852. See also Bankers' prior to the mortgage, the supplies Trust Co. V. Gillespie, 181 Fed. 448, having been furnished in part he- 104 C. C. A. 196; Valley Lbr. Co. v. fore the execution of the mortgage. Wright (Cal. App.), 84 Pac. 58; Grants Pass Banking &c. Co. v. En- Weisman v. Volino, 84 Conn. 326, 80 terprise Min. Co., 58 Ore. 174, 113 Atl. 81; Piatt v. Griffith, 27 N. J. Bq. Pac. 859, 34 L. R. A. (N. S.) 395. 207. ^ TruUinger v. Kofoed, 7 Ore. 228, "Whelan v. Exchange Trust Co., 33 Am. Rep. 708. 214 Mass. 121, 100 N. B. 1095; Gray '"Conrad v. Starr, 50 Iowa 470; V. McClellan, 214 Mass. 92, 100 N. Kansas Mtg. Co. v. Weyerhaeuser, E. 1093; Finlayson v. Crooks, 47 48 Kans. 335, 29 Pac. 153; National Minn. 74, 49 N. W. 398, 645. See Mtg. &c. Co. v. Hutchinson Mfg. Co., also Blackmar v. Sharp, 23 R. L 412, 6 Kans. App. 673, 50 Pac. 100; Kelly 50 Atl. 852. V. Rosenstock, 45 Md. 389; Brooks '= Porch V. Agnew Co., 70 N. J. v. Lester, 36 Md. 65; Pennock v. Eq. 328, 61 Atl. 721. Hoover, 5 Rawle (Pa.) 291. See ''Foushee v. Grigsby, 12 Bush also Riverside Lumber Co. v. Scha- (Ky.) 75; Gere v. Gushing, 5 Bush fer, 251 Mo. 539, 158 S. W. 340. But (Ky.) 304. merely clearing, leveling, or fencing ='As in Oregon: Hill's Ann. the property is not a commence- § 487 EECOKDING AS AFFECTING PEIOKITT 746 such as beginning to dig the foundation, which every one can see and recognize as the commencement of a building; and the work moreover must be done with the intention thus formed of continuing it to com- pletion.*" When a building is changed or enlarged, the lien attaches from the coramencement of the alteration on the ground, and is subject to liens that had previously attached.*^ As against a mortgage the lien of which attached after such commencement of a buUding or of altera- tions and additions to it,*^ a lien can be supported for machinery and fixtures afterward furnished, although not upon the ground at the time, and the work was not done there, but at a distance in shops. When additions to an old building are in their extent and value sig- nificant enough to give notice to purchasers and creditors of the change in the character of the property, the additions so made, the work and materials furnished therefor, and the machinery placed therein, are subjects of mechanics' liens as new buildings.*^ A mechanic's lien for repairing or enlarging a building is not par- amount to an existing mortgage upon it, even where such lien relates back to the commencement of the work upon a building, so that, when a mortgage covers a building partially erected, a lien for work done or materials furnished in completing the building would relate back to the time of the commencement of the building, and would take pre- cedence of the mortgage.** This rule prevails although the building be changed so that very little of the original structure remains; as, for instance, where there was a mortgage upon a paper-mill which was out of repair and was almost wholly removed, and a new one was erected in its place, and this was supplied with new machinery. *'' A trust deed, duly recorded, has priority over a mechanic's lien, under ment of the building. Central Trust *■ Parrish and Hazard's Appeal, 83 Co. V. Cameron Iron &c. Co., 47 Fed. Pa. St. 111. 136; George M. Newhall Eng. Co. v. "Parrish and Hazard's Appeal, 83 Egolf, 185 Fed. 481, 107 C. C. A. 581; Pa. St. 111. A hot water system Middletown Sav. Bank v. Fellowes, installed as an integral part of a 42 Conn. 36 (fencing); Kiene v. building to replace a hot air fur- Hodge, 90 Iowa 212, 57 N. W. 717 nace, does not constitute a separate (filling); Kelly v. Rosenstock, 45 structure or addition, nor take pri- Md. 389; Kansas Mtg. Co. v. Weyer- orlty over a deed of trust, although haeuser, 48 Kans. 335, 29 Pac. 153; the system was removable without Nixon v. Cydon Lodge, 56 Kans. 298, material injury to the building. El- 43 Pac. 236 (excavation for cellar), liott &c Engineering Co. v. Baker, "Jean v. Wilson, 38 Md. 288; 134 Mo. App. 95, 114 S. W. 71. Brooks v. Lester, 36 Md. 65; Mu- •'*Neilson v. Iowa Eastern R. Co., tual Benefit Life Ins. Co. v. Rowand, 44 Iowa 71; Getchell v. Allen, 34 26 N. J. Eq. 389. See also Pusey v. Iowa 559. Pennsylvania &c. Mills, 173 Fed. 629. "= Equitable Life Ins. Co. v. Slye, ■" Norris' Appeal, 30 Pa. St. 122. 45 Iowa 615. 747 EEGISTKY ACTS § 487 a STibsequent contract for materials used in an addition to the building of the owner; and one who acquires title through such trust deed, ac- quires rights superior to the mechanic's lien, without reference to no- tice or want of notice of the lien/' Mechanics and laborers asserting a lien upon real property for their work, and claiming priority over mortgagees and others who have ac- quired interest in the property, must make strict proof of all that is essential to the creation of the lien ; such, for instance, as proof of the commencement of the work, of its character, and of its completion. The commencement of the work must be shown, for from that date the lien attaches, if at all. The character of the work must be shown, for it is not for all kinds of work that a lien is allowed. The completion of the work must be shown, for notice of claiming a lien must be filed.*'' Whether the work relied on as having been done prior to the mortgage is to be regarded as a commencement of the building is a question of fact, to be determined by the evidence.*^ In order to have priority the mortgage must be recorded before the building is commenced or the mechanic's lien accrues.*^ Under several statutes, as, for instance, that existing prior to 1876 in Iowa, the only manner of establishing the priority of a mechanic's lien upon a building, over a pre-existing incumbrance upon the land, was by a sale and removal of the building; and when the nature of the improvement was such that it could not be removed, the lien was "Klrcher v. M. Keating &c. Co., Foley, 8 Colo. App. 435, 47 Pac. 64; 145 111. App. 1; W. T. Joyce Co. v. Thielman v. Carr, 75 111. 385; Carroll, Light, Heat &c. Co., 153 Dersch v. Miller, 137 Ky. 89, 122 S. Iowa 372, 133 N. W. 785. W. 177, 124 S. W. 362; Brooks v. " Davis V. Alvord, 94 U. S. 545, 24 Lester, 36 Md. 65; Ortonville v. L. ed. 283; Sunset Lumber Co. v. Geer, 93 Minn. 501, 101 N. W. 963, Bachelder (Cal.), 140 Pac. 35; Trust 106 Am. St. 445; Stuyvesant v. Co. V. Casey, 131 Ky. 771, 115 S. W. Browning, 33 N. Y. Sup. Ct. 203; 780. See also Chicago Lbr. Co. v. Bell v. Groves, 20 Wash. 602, 5.6 Pac. Des Moines Driving Park, 97 Iowa 401. But the rule is otherwise in 25, 65 N. W. 1017 (lien postponed by some states. Root v. Bryant, 57 Cal. defective statement though subse- 48; Rose v. Munie, 4 Cal. 173; quent mortgagee knew of claim); Fletcher v. Kelly, 88 Iowa 475, 55 Security Bldg. &c. Union v. Colvin, N. W. 474, 21 L. R. A. 347; Math- 27 Pa. Super. Ct. 594 (lien post- wig v. Mann, 96 "Wis. 213, 71 N. W. poned to mortgage because of defec- 105, 65 Am. St. 47. A lien for ma- tive description). Strict compli- terial delivered before the record of ance with the statute in making and a mortgage takes priority over such filing such statement can not be mortgage. J. S. Gabel Lumber Co. waived. Adams v. Central City v. West, 95 Nebr. 394, 145 N. W. Granite Brick & Block Co., 154 Mich. 849; H. F. Cady Lumber Co. v. Miles 448, 117 N. W. 932. (Nebr.), 147 N. W. 210. A trust «'Kelly V. Rosenstock, 45 Md. 389. deed given a year after the com- *" Meyer v. Construction Co., 100 mencement of the building improve- U. S. 457, 25 L. ed. 593; Small v. ments is inferior to a mechanic's § 487a RECORDING AS AFFECTING PRIORITY 748 necessarily postponed to the prior incumbrance upon the land.'" The lien of the mechanic can not exceed the right of the owner who con- tracted for the improvements upon the land; and therefore where the owner's interest was an estate in fee of one undivided third part of the property, and a life estate in the remaining two-thirds, the lien of the mechanic was limited to the same interests. The owner of such a part interest in the land would not have the power to remove a building erected by him upon it, and a purchaser under a mechanic's lien would acquire no greater right to remove it.^^ If the owner's in- terest in the building were such that he might remove it, the right of removal would pass by sale under the mechanic's lien; subject however, to the qualification that the right of removal depends upon the fact whether the building upon which the materials were fur- nished and the work done is so far an independent structure as to be capable of being removed without material injury to that which would remain.^^ If the building can not be removed without materially in- juring or altogether destroying its value, — if it be, for instance, a building of brick, three stories high, with a stone foundation; or if the interest of the owner be such that he had no right of removal as against others, — ^the lien of a mechanic can not be enforced through a removal of the building."^ § 487a. Expenses of administration upon estate of deceased mort- gagor. — The expenses of administration of the estate of a deceased mortgagor are not a lien prior to an existing mortgage on his land, though the other property of the deceased is insufficient to pay such expenses. The lien of the mortgagor being prior in time it must pre- vail as against such expenses.^* The mortgagee is entitled to the amount of his mortgage out of the proceeds of the mortgaged property against general creditors of the estate, even where such estate is in- solvent.^' And where the administrator is ordered to sell the mort- gaged premises free of liens, the mortgagee is entitled to have the lien for work and materials. Farn- jure the building permanently, such ham V. California Safe Deposit fed right could not be exercised as Co., 8 Cal. App. 266, 96 Pac. 788. against a mortgage lien which had '" Conrad v. Starr, 50 Iowa 470. attached during construction of the ^'Conrad v. Starr, 50 Iowa 470; building. Ward v. Yarnelle, 173 Ind. Jessup V. Stone, 13 Wis. 466. 535, 91 N. B. 7. "" O'Brien V. Pettis, 42 Iowa 293. "Murray's Estate, 18 Cal. 686; "» Conrad v. Starr, 50 Iowa 470. Ryker v. Vawter, 117 Ind. 425, 20 N. Where materials furnished for a E. 294; Shepard v. Saltzman, 34 theater building, under a contract Ore. 40, 54 Pac. 882. retaining title with the right of re- "^ Kirkpatrick v. Caldwell, 32 Ind. moval, had so far become a part of 279; Perry v. Borton, 25 Ind. 274. the building that removal would in- 749 EXECDTIOlSr AND ACKKTOWLEDGMENT § 488 entire proceeds of the sale applied to the payment of his mortgage debt, even to the exclusion of claims for costs of administration, funeral expenses and expenses of last sickness.'^ II. Requisites as to Execution and Acknowledgment Section 488. Generally. 489. Description of the property — Notice of defective descrip- tion. 490. Apparent error in description. 491. Signature. 491a. Omission of mortgagee's name. 492. Requirement of seal. 493. Manner of recording seal. 494. Requirement of witnesses. 495. Acknowledgment or proof. 496. Competency of officer taking ac- knowledgment. 497. Disqualification of officer by in- terest or relationship. Section 498. Certificate of official character of officer taking acknowledg- ment. certification of per- acquaintance with making acknowledg- 499. Officer's sonal party ment. 500. Presumption of regularity from certificate of acknowledgment — Impeachment for fraud. 501. Delivery prerequisite to effect- ive record — Delivery through agents. 502. Delivery after recording. 503. When a subsequent delivery be- comes operative. § 488. Generally. — The first requisite to the valid record of any deed is that it shall be executed according to law. Constructive notice and priority by registration can only arise from the record of a valid instrument.^ If defectively executed, it is not generally entitled to be recorded; but even if it is recorded it is not constructive notice, so as to vest in the grantee or mortgagee any interest in the premises as against subsequent purchasers in good faith without notice.^ =« Mayer v. Myers, 129 Ind. 366, 27 N. E. 740; Ryker v. Vawter, 117 Ind. 425, 20 N. E. 294. ^Loomis V. Brush, 36 Mich. 40; New England Nat. Bank v. North- western Nat. Bank, 171 Mo. 307, 71 S. W. 191, 60 L. R. A. 256; Southern BIdg. &c. Assn. v. Rodgers, 104 Tenn. 437, 58 S. W. 234; Texas Moline Plow Co. v. Klapproth (Tex. Civ. App.), 164 S. W. 399; Stiles v. Ja- phet, 84 Tex. 91, 19 S. W. 450; Wright v. Lancaster, 48 Tex. 250; Terry v. Cutler, 14 Tex. Civ. App. 520, 39 S. W. 152; Hunt v. Allen, 73 Vt. 322, 50 Atl. 1103; Isham v. Ben- nington Iron Co., 19 Vt. 230; Wood V. Meyer 36 Wis. 308. See also Col- vin V. Warford, 20 Md. 357. "Lynch v. Murphy, 161 U. S. 247, 40 L. ed. 688, 16 Sup. Ct. 523; Strong V. Smith, 3 McLean (U. S.) 362; Lewis V. Baird, 3 McLean (U. S.) 56; Schults v. Moore, 1 McLean (U. S.) 520; Cumberland Bldg. &c. Assn. V. Sparks, 106 Fed. 101; Central Trust Co. V. Georgia Pac. R. Co., 83 Fed. 386 (record of a copy of a rail- road mortgage insufficient) ; Sheri- dan V. Schimpf, 120 Ala. 475, 24 So. 940; Main v. Alexander, 9 Ark. 112, 47 Am. Dec. 732; McMinn v. O'Con- nor, 27 Cal. 238; Mesick v. Sunder- land, 6 Cal. 297; Kenney v. Jeffer- son County Bank, 12 Colo. App. 24, 54 Pac. 404; Sumner v. Rhodes, 14 Conn. 135; Carter v. Champion, 8 Conn. 547, 21 Am. Dec. 695; Stal- lings V. Newton, 110 Ga. 875, 36 S. E. 227; Herndon v. Kimball, 7 Ga. 432, 50 Am. Dec. 406; Mack v. Mcintosh, 181 111. 633, 54 N. E. 1019; Choteau v. Jones, 11 111. 300, 50 Am. Dec. 460; Reeves v. Hayes, 95 Ind. 521; Woodbury v. Fisher, 20 Ind. 387, 83 Am. Dec. 325; Reed v. Coale, 4 Ind. § 488 EECOEDING AS AFFECTING PEIOEITT 750 As said by Pomeroy in his work on Equity Jurisprudence: "The .eeord does not operate as constructive notice, unless the instrument is duly executed, and properly acknowledged or proved, so as to entitle it to be recorded. The statutes generally require, as a condition to registration, that the instrument should be legally executed, and that it should be formally acknowledged or proved, and a certificate thereof annexed. If a writing should be placed upon the records with any of these preliminaries entirely omitted or defectively performed, such a record would be a mere voluntary act, and would have no effect upon the rights of subsequent purchasers or incumbrancers."^ Story states 283; Brown v. Budd, 2 Ind. 442; Bar- ney V. Little, 15 Iowa 527; Reynolds V. Kingsbury, 15 Iowa 238; Brown v. Lunt, 37 Maine 423; Dewitt v. Moul- ton, 17 Maine 418; Pfeaff v. Jones, 50 Md. 263; Cockey v. Milne, 16 Md. 200; Johns v. Reardon, 3 Md. Ch. 57; Blood v. Blood, 23 Pick. (Mass.) 80; Sigourney v. Lamed, 10 Pick. (Mass.) 72; Woods v. Love, 27 Mich, 308; Buell v. Irwin, 24 Mich. 145; Hall V. Redson, 10 Mich. 21; Galpin V. Abbott, 6 Mich. 17; Button v. Ives, 5 Mich. 515; Lowry v. Harris, 12 Minn. 255; Parret v. Shaubhut, 5 Minn. 323, 80 Am. Dec. 424; Marx V. Jordan, 84 Miss. 334, 105 Am. St. 457; Bass v. Estill, 50 Miss. 300; Work V. Harper, 24 Miss. 517; Bishop V. Schneider, 46 Mo. 472, 2 Am. Rep. 533; Stevens v. Hampton, 46 Mo. 404; Salvage v. Haydock, 68 N. H. 484, 44 Atl. 696; Fryer v. Rocke- feller, 63' N. Y. 268; James v. Morey, 2 Cow. (N. Y.) 246, 14 Am. Dec. 475; Frost V. Beekman, 1 Johns Ch. (N. Y.) 288; McAllister v. Purcell, 124 N. Car. 262, 32 S. E. 715; Todd v. Outlaw, 79 N. Car. 235; Blake v. Graham, 6 Ohio St. 580, 67 Am. Dec. 360; White v. Denman, 1 Ohio St. 110; McKean v. Mitchell, 35 Pa. St. 269, 78 Am. Dec. 335; Green v. Drinker, 7 Watts & S. (Pa.) 440; Arthur v. Screven, 39 S. Car. 77, 17 S. E. 640; Williams & Co. v. Pay- singer, 15 S. Car. 171; Lynch v. Hancock, 14 S. Car. 66; Southern Building &c. Assn. v. Rodgers, 104 Tenn. 437, 58 S. W. 234; Johnson v. Walton, 1 Sneed (Tenn.) 258; Stiles V. Japhet, 84 Tex. 91, 19 S. W. 450; HoUiday v. Cromwell, 26 Tex. 188; Hunt V. Allen, 73 Vt. 322, 50 Atl. 1103; Pope v. Henry, 24 Vt. 560; Isham V. Bennington Iron Co., 19 Vt. 230; Stevens v. Brown, 3 Vt. 420, 23 Am. Dec. 215 (copy of deed not entitled to record, and not notice if recorded); Hunton v. Wood, 101 Va. 54, 43 S. E. 186; Pringle v. Dunn, 37 Wis. 449, 19 Am. Rep. 772; Ely v. Wilcox, 20 Wis. 523, 91 Am. Dec. 436. The decisions of a state court that a mortgage shall be a lien from the time it is filed in the recorder's of- fice, which shall be notice to all persons of the mortgage, and that a mortgage not properly acknowl- edged constitutes no lien against third persons, though recorded to their knowledge, establish a rule of property. Main v. Alexander, 9 Ark. 112; Ford v. Burks, 37 Ark. 94; Cross V. Fombey, 54 Ark. 179, 15 S. W. 461; Milling Co. v. Mikles, 61 Ark. 123, 32 S. W. 493, and will be followed by the Federal courts. Thus, in Louisiana, to create a conventional mortgage, two things are essential, namely, there must be an intention by the parties to cre- ate a mortgage; and to give effect to that intention it must be ex- pressed with sufficient clearness to serve as notice to third persons when the instrument is recorded. Benjamin's Succession, 39 La. Ann. 612, 2 So. 187. See also Howe v. Powell, 40 La. Ann. 307, 4 So. 450; Pomeroy's Equity Jurisprudence, § 652; Story's Equity Jurisprudence (13th ed.), § 404. = Pomeroy Bq. Jur., § 652; Lynch V. Murphy, 161 U. S. 247, 40 h. ed. 688, 16 Sup. Ct. 528. 751 EXECUTION- AND ACKNOWLEDGMENT § 488 the doctrine thus : "The doctrine as to the registration of deeds being constructive notice as to all subsequent purchasers, is not to be understood of all deeds and conveyances w^hich may be de facto regis- tered, but of such only as are authorized and required by law to be registered, and are duly registered in compliance with law. If they are not authorized or required to be registered, or the registry itself is not in compliance with the law, the act of registration is treated as a mere nullity; and then the subsequent purchaser is afEected only by such actual notice as would amount to a fraud."* The record of a deed, which appears on its face to have been prop- erly executed and acknowledged, is evidence that the deed was in fact so executed, though the deed, by reason of extrinsic facts, may be void or voidable." As already noticed, equity will give the instrument effect between the parties, according to their intention." Where a recorded mortgage contains a provision not entitled to record, the constructive notice arising from such record will be confined to such portions as are embraced within the recording acts.'' If a conveyance defectively executed be afterward reformed, it will not affect the interest of one who has in the meantime purchased in good faith, and, according to some authorities, will not affect a lien obtained in the meantime by an attachment, or judgment, or a levy of execution. If for any reason a deed be not executed, acknowledged, or recorded according to the statutory requirements, yet, if it be shown that a subsequent pur- chaser or creditor had actual notice of the deed, or must be presumed to have had such notice of it, from the defective record, he is charge- able with notice, as in other cases. ^ Inasmuch as the registration of a deed or mortgage is solely for the benefit and protection of the grantee, and rests wholly in his election, he can not, in the absence of an agreement express or implied to the contrary, hold the grantor liable for the registration f ees.^ * Story Eq. Jur. (13th ed.), § 404; Kerns v. Swope, 2 Watts (Pa.) 75, Lynch v. Murphy, 161 U. S. 247, 40 dictum of C. J. Gibson. But it L. ed. 688, 16 Sup. Ct. 523. would seem that actual knowledge ' Choteau v. Jones, 11 111. 300, 50 of the deed must he proved, and not Am. Rep. 460; Clague v. Washburn, merely presumed. 42 Minn. 371, 44 N. W. 130. See also The recording of a mortgage de- Stevens V. Hampton, 46 Mo. 404; fectively executed, and not entitled Stevens v. Morse, 47 N. H. 532. to record does not give It priority 'See ante § 474. over a subsequent judgment; and 'Monroe v. Hamilton, 60 Ala. 226 reformation will not give it effect (provision in a mortgage restrain- as against a judgment rendered be- ing the power of the mortgagor as fore the decree of reformation. Van a partner). Thorniley v. Peters, 26 Ohio St. 471. •Hastings v. Cutler, 24 N. H. 481; "Simon v. Sewell, 64 Ala. 241. § 489 EECOEDING AS AFFECTING PEIOEITT 752 § 489. Description of the property — Notice of defective descrip- tion. — The description of the property conveyed or incumbered by mortgage must be such as reasonably to enable subsequent purchasers to identify the land; otherwise the record of the conveyance is not constructive notice.^" A conveyance of lands without description of boundary or location, but merely as "all other lands owned by the vendor" in a state named, is inoperative as notice to the public of any particular tract conveyed, if not void for want of description.^^ On the other hand, a mortgage describing the lands as all the lands of the mortgagor in a named county has been held sufficient to pass title to all land owned by him in such county .^^ And in like manner a mort- gage of all the lots the mortgagor then owned in a certain town was deemed sufficiently definite, as between the parties.^^ The record of a trust deed intended to incumber the east one-half of the northeast quarter of a certain section, but written and tran- scribed as ''the one-half of the northeast quarter," does not operate as constructive notice to a purchaser, or put him on inquiry.^* And like- wise the record of a trust deed describing a tract as containing one hundred acres, but designating a smaller tract by boundaries and dis- " Ripley v. Harris, 3 Biss. (U. S.) 199; Briglit v. Buckman, 39 Fed. 243 ; Edwards v. Bender, 121 Ala. 77, 25 So. 1010; Adams v. Edgerton, 48 Ark. 419, 3 S. W. 628; Davis v. Ward, 109 Cal. 186, 41 Pac. 1010, 50 Am. St. 29; Chamberlain v. Bell, 7 Cal. 292, 68 Am. Dec. 260; Slocum V. O'Day, 174 111. 215, 51 N. B. 243; Ricti V. Trustees of Schools, 158 111. 242, 41 N. B. 924; Citizens' Nat. Bank v. Dayton, 116 111. 257, 4 N. B. 492; Rodgers v. Kavanaugh, 24 111. 533; Rinehardt v. Reiters, 158 Xnd. 675, 64 N. B. 459; Murphy v. Hen- dricks, 57 Ind. 593; Porter v. Bryne, 10 Ind. 146, 71 Am. Dec. 305; Peters v. Ham, 62 Iowa 656, 18 N. W. 296; Port V. Embree, 54 Iowa 14, 6 N. W. 83; Nelson v. Wade, 21 Iowa 49; Halloway v. Platner, 20 Iowa 121, 89 Am. Dec. 517; Stewart v. Huff, 19 Iowa 557; Green v. Witherspoon, 37 La. Ann. 751; Brydon v. Camp- bell, 40 Md. 331; Stead v. Grosfield, 67 Mich. 289, 34 N. W. 871; Barrows V. Baughman, 9 Mich. 213; Bailey V. Galpin, 40 Minn. 319, 41 N. W. 1054; Thorp v. Merrill, 21 Minn. 336; Simmons v. Fuller, 17 Minn. 485; Goodbar v. Dunn, 61 Miss. 618; Eggleston v. Watson, 53 Miss. 339; Ozark Land &c. Co. v. Franks, 156 Mo. 673, 57 S. W. 540; Cass County V. Oldham, 75 Mo. 50; Baker v. Bait- lett, 18 Mont. 446, 45 Pac. 1084; Rut- gers V. Kingsland, 7 N. J. Bq. 178; Banks v. Ammon, 27 Pa. St. 172; Lally V. Holland, 1 Swan (Tenn.) 396; Carter v. Hawkins, 62 Tex. 393; Waters v. Spofford, 58 Tex. 115; Florence v. Morien (Va.), 34 S. E. 890; Mundy v. Vawter, 3 Grat. (Va.) 518; Warren v. Syme, 7 W. Va. 474. See ante §§ 65, 66. "Herman v. Deming, 44 Conn. 124; Green v. Witherspoon, 37 La. Ann. 751; Mundy v. Vawter, 3 Grat. (Va.) 518. '^Vanmeter v. Vanmeter, 3 Grat. (Va.) 148. See ante § 65. '' Starling v. Blair, 4 Bibb. (Ky.) 288. See also Easter v. Severln, 64 Ind. 375; City Nat. Bank v. Barrow, 21 La. Ann. 396; Strouse v. Cohen, lis N. Car. 349, 18 S. B. 323. See ante §65. " Simmons v. Hutchinson, 81 Miss. 351, 33 So. 21. 753 EXECUTION AND ACKNOWLEDGMENT § 489 tances, operates as notice only in respect to the latter tract, and not to other land necessary to complete the one hundred acres. If all of the boundaries are specified except one, and that may be ascertained from the requirements of the deed, the description is sufficiently defi- nite to render the recorded deed notice of the rights of the parties in the land intended to be covered thereby>= Although the opening clause in the description of land in a recorded mortgage is indefinite as to the starting point, where the clause following designates a definite point of commencement the description is sufficient to put creditors of the mortgagor on inquiry.^* If a subsequent mortgagee or purchaser has notice of a mistake in the description of a prior conveyance, as, for instance, that the lot was described as number "eighteen" instead of "eight," the correct num- ber, such mortgagee or purchaser will take subject to the prior convey- ance, in the same way that he would had the description been correctly given ;^^ and the subsequent mortgagee has constructive notice of the mortgage as it was intended to be given, when the premises are well defined and well-known to the parties, and a notice on the margin of a prior defective mortgage referred to a prior deed in which the land was correctly described.^* The mortgagee can not enforce his mortgage upon the land actually described when he knows that by mistake this particular land was described in place of another lot intended to be described.^" But when the grantee has no notice of any mistake, and there is no uncertainty on the face of the deed, though in fact the land described is, through mistake, not the land intended to be con- '=Reid V. Rhodes, 106 Va. 701, 56 "Northrup v. Hottenstejn, 38 S. E. 722. The record of a trust Kans. 263, 16 Pac. 445. deed describing the property as 160 The clause creating the lien pre- acres known as the J. B. H. home- vails as to the interest conveyed, stead survey is sufficient, at least as Thus a mortgage of an undivided against one who is not a bona fide fourth part of certain lands is not purchaser. Rushing v. Citizens' enlarged by a recital in the descrip- Nat. Bank of Plain view (Tex. Civ. tion as being one undivided half App.), 162 S. W. 460. part. "Albia State Bank v. Smith, 141 On the other hand, the interest Iowa 255, 119 N. W. 608. conveyed by a mortgage is not di- ^'Hoopeston Building Assn. v. minished by an incidental recital Green, 16 111. App. 204; Duncan v. as to the source of title. Thus a Miller, 64 Iowa 223, 20 N. W. 161; mortgage of "a certain tract of Peters v. Ham, 62 Iowa 656, 18 N. land, being the same premises con- W. 296; Warburton v. Lauman, 2 veyed to me by a deed referred to," Greene (Iowa) 420; Cox v. Esteb, 81 the mortgagor then owning the en- Mo. 393. tire tract, though only an undi- '' Bent V. Coleman, 89 111. 364. See vided half of it was conveyed by also Wallace v. Furber, 62 Ind. 103; the deed referred to, is a mortgage Newman v. Tymeson, 13 Wis. 172, of the whole land, and not merely 80 Am. Dec. 735. of an undivided half of it, in the 48— Jones Mtg. — Vol. I. § 490 RECOEDIKG AS AFFECTING PRIOEITT 754 vejed, the record is notice of a conveyance of the land actually de- scribed., not of that intended to be described.^" A mortgage described certain lots by a town plat which was not re- corded, but a plat was subsequently recorded upon which the same lots were described by different numbers. It was held that the record was not enough to put a subsequent purchaser upon inquiry, and that he was not affected with constructive notice of the mortgage.^'^ So a mort- gage which erroneously described certain lots in University Park, sec- ond addition, to west La Fayette, as in ^'University Park addition to West La Fayette," was held not to be entitled to priority by virtue of recording, against one who took without actual notice.^^ But the record of a mortgage was held sufBcient notice to a subse- quent judgment creditor of the mortgagor, where the mortgage correct- ly described the property, except as situate in a township of which it was once a part, but then included in a new township.^^ A mortgage ex- ecuted to the state of Indiana for a loan of school funds and describ- ing the premises mortgaged by township and range, without naming the county and state in which they were located, is void for uncer- tainty in the description.^* And so, a mortgage describing land as parts of certain sections, without stating the township or range is void for uncertainty.''^ § 490. Apparent error in description. — ^When a description in a deed or mortgage is erroneous, and it is apparent what the error is, the record is constructive notice of the deed or mortgage of the lot in- tended to be described.^' And so the record of a deed, describing the premises by an impossible sectional number, is sufficient to put a pur- chaser from the same grantor upon inquiry, and may charge him with notice of the grant actually made or intended to be made.^'' Parol evidence is admissible to identify the land intended when there is an ambiguity or uncertainty in the description.^* absence of evidence of any inten- 42 Ind. 267. See ante §§ 65-66a. tion to limit the conveyance In this ^Boyd v. Ellis, 11 Iowa 97; Wll- way. Morse v. Morse, 58 N. H. 391. son v. Calder, 8 Kans. App. 856, 55 ^"Wait V. Smith, 92 111. 385; San- Pac. 552; Martin v. Kitchen, 195 ger V. Craigue, 10 Vt. 555. Mo. 477, 93 S. W. 780. See ante ^Stewart v. Huff, 19 Iowa 557. § 66. ="Rinehardt v. Reifers, 158 Ind. "Anderson v. Baughman, 7 Mich. 675, 64 N. B. 459. 69, 74 Am. Dec. 699; "Wolfe v. Dyer, ^ Mohr V. Scherer, 30 Pa. Super. 95 Mo. 545, 8 S. W. 551; People v. Ct. 509. Storms, 97 N. Y. 364; Tousley v. '"Murphy v. Hendricks, 57 Ind. Tousley, 5 Ohio St. 78. 593. See also Barron v. Barron, 122 "^ Merrick v. Wallace, 19 111. 486; Ala. 194, 25 So. 55; Cochran v. Utt, Carter v. Hawkins, 62 Tex. 393. "»Tranum v. Wilkinson, 81 Ala. 755 EXECUTION AND ACKNOWLEDGMENT § 491 A purchaser who is able from his knowledge of the property to interpret an erroneous description, and give it the meaning intended, is charged with notice from the record of it.^* But although a mistake in description be such that the conveyance would be invalidated as against a subsequent purchaser, yet it has been held that a subsequent judgment lien will not for this reason be- come a paramount lien upon the land intended to be described.'" Even where a parcel of land which the parties intended to include in the conveyance was wholly omitted in the description, the deed may be reformed in chancery, and the omitted tract included in the convey- ance free from any judgment lien which has in the meantime at- tached to the debtor's real estate.'^ If the description is such as reasonably to put one upon inquiry as to the property intended to be conveyed, and to lead him to ascertain what that property is, the record will afford constructive notice of a conveyance of that property.'^ § 491. Signature. — The record of a deed without the signature of the grantor is not constructive notice ; and this is so though the instru- ment was in fact signed, but the signature was omitted by mistake from the record.^' A signature is binding if made at the proper time and duly acknowledged, whether signed by the person owning the name, or by some one else with his consent.'* If the name of the mortgagee be by mistake written in the blank for the mortgagor, and the name of the mortgagor in that left for the mortgagee, but is signed by the right party and purports to secure a 408, 1 So. 201; Salisbury v. Andrews, 89 111. 364, 7 Am. Rep. 366; Erick- 19 Pick. (Mass.) 250. son v. RafEerty, 79 111. 209; Merrick "'Bright v. Buckman, 39 Fed. 243; v. "Wallace, 19 111. 486; Myers v. Erickson v. Rafferty, 79 III. 209; Perry, 72 111. App. 450; Dargin v. Carter v. Hawkins, 62 Tex. 393. Beeker, 10 Iowa 571; Roberts v. '"Yarnell V. Brown, 170 111. 362, 48 Bauer, 35 La. Ann. 453; Anderson N. E. 909; White v. Wilson, 6 Blackf. v. Baughman, 7 Mich. 69, 74 Am. (Ind.) 448, 39 Am. Dec. 437; Welton Dec. 699; Cable v. Minneapolis Stock V. Tizzard, 15 Iowa 495; Swarts v. Yards &c. Co., 47 Minn. 417, 50 N. Stees, 2 Kans. 236, 85 Am. Dec. 588; W. 528; Coney v. Laird, 153 Mo. Gillespie v. Moon, 2 Johns. Ch. (N. 408, 55 S. W. 96; Gouverneur v. Ti- Y.) 584, 7 Am. Dec. 559. tus, 6 Paige (N. Y.) 347; Tousley " White V. Wilson, 6 Blackf . (Ind.) v. Tousley, 5 Ohio St. 78; Rankin 448. See ante § 99. v. McCarthy (Tex.), 37 S. W. 979; '"^ Partridge v. Smith, 2 Biss. (IT. Nye v. Moody, 70 Tex. 434; Carter S.) 183; Vercruysse v. Williams, 112 v. Hawkins, 62 Tex. 393; Sengfelder Fed. 206, 50 C. C. A. 486; Tranum v. Hill, 21 Wash. 371, 58 Pac. 250. v. Wilkinson, 81 Ala. 408, 1 So. 201; ^ Shepherd v. Burkhalter, 13 Ga. Lewis v. Hinman, 56 Conn. 55, 13 443, 58 Am. Dec. 523. See ante § 81a. Atl. 143; Citizens' Nat. Bank v. Day- " Johnson v. Van Velsor, 43 Mich, ton, 116 111. 257; Bent v. Coleman, 208, 5 N. W. 265. § 491a EECOEDING AS AFFECTING PRIORITY 756 debt from the party signing to the other, and is acknowledged by the party signing, the mistake in the transposition of the names of tlie parties being palpable, its record will be notice to subsequent pur- chasers from the mortgagor of the mistake.^^ A deed signed by one not described therein as grantor is wholly in- operative either as a conveyance or as notice if recorded.^' Thus if the name of one person is inserted in a deed as the grantor, but it is signed, acknowledged aitid delivered by another person not mentioned in the body of the deed, the record thereof can not operate as con- structive notice to a subsequent purchaser.^' A deed signed in a wrong name, or a name by which the grantor is not customarily known, im- parts no notice. Such is the ease, if a married woman executes a deed under the name she bore prior to her marriage, without mention of her married name.'* § 491a. Omission, of mortgagee's name. — A mortgage executed and recorded with the name of the mortgagee omitted does not im- part constructive notice of the existence of such mortgage to a subsequent purchaser. With reference to this defect, it has been said : "The mortgage, when executed, was and now is blank as to the name of the mortgagee. The question in this ease is not as to whether there might be an implied authority between the mortgagor and the mortgagee to fill up the blank and make the instrument complete. The question is as to the effect of the record of the instrument, in its im- perfect condition, as constructive notice to a subsequent purchaser of the property. It has been frequently held that slight omissions in the acknowledgment of a deed destroy the effect of the record as construct- ive notice. A fortiori, it seems to us, should so important and vital omission as that of the name of the grantee have that effect. The case of Chauncey v. Arnold, 24 If. Y. 330, is in point. In that ease it was held that an instrument in the form of a mortgage, but containing the name of no mortgagee, did not become effectual by delivery to one who advanced money upon it, the blank not having been filled at the 2= Beaver v. Blanker, 94 111. 175. tary Is erroneous); Payne v. Par- ^ Marx V. Jordan, 84 Miss. 334, 36 ker, 10 Maine 178, 25 Am. Dec. 226. So. 386, 105 Am. St. 457; Stone v. =' Marx v. Jordan, 84 Miss. 334, 36 Sledge, 87 Tex. 49, 26 S. W. 1068, 47 So. 386, 105 Am. St. 457 (signature Am. St. 65. See also Agurs v. Bel- of David Bowie to deed reciting Cher, 111 La. 378, 35 So. 607, 100 Prank Bowie and Prances Bowie as Am. St. 485 (signature by mark suf- grantors). ficient though name signed by no- '^ Draude v. Rohrer Mfg. Co., 9 Mo. App. 249. 757 EXECUTION" AND ACKNOWLEDGMENT § 493 time of suit. * * * The defect in the description of the deed is also, we think, fatal to the effect of the record as constructive notice."^" § 492. Requirement of seal. — ^Where seals are still in use, convey- ances must be executed under seal to entitle them to be recorded.*" In most states the use of a seal has been wholly dispensed with by statute. In others a scroll is given the same effect as a seal.*^ But where the use of a seal or its equivalent is required, an instrument purporting to be a mortgage, but not executed under seal, is not entitled to be recorded ; and if it be copied into the records, it does not impart notice to subsequent purchasers or incumbrancers.*^ A mortgage without a seal, however, though void as a conveyance of the legal title, will operate as an equitable mortgage, and if re- corded, will prevail against a subsequent agreement to give a mort- gage,*^ or against a subsequent purchaser with notice of the existence of the unsealed mortgage.** Thus an instrument intended as a deed of trust conveying land to secure a debt without a seal, though not effectual as a deed of trust at law, is an equitable mortgage, entitled to record, and when recorded constitutes a valid lien against subse- quent purchasers and creditors.*^ If by accident the seal was omitted a court of equity may grant re- lief by requiring a seal to be affixed; and the court may grant such relief even after an attempt to foreclose the mortgage.*^ =*Disque v. WrigM, 49 Iowa 538. Car.), 17 S. E. 640. The recording See ante § 90. The omission of the statute of Missouri embraces all in- mortgagee's name is not a defect struments affecting the legal or equi- which can be availed of by a judg- table title to land, and the record of ment creditor of the mortgagor be- a mortgage imparts notice although fore levy and sale, as against one no seal or scrawl is attached. Mc- who agreed to furnish the payment Clurg v. Phillips, 57 Mo. 214. of the mortgage debt in considera- "^Portwood v. Outton, 3 B. Mon. tion of subrogation to the rights of (Ky.) 247; Harrington v. Fortner, the mortgagee. Watson v. Bowman, 58 Mo. 468 ; McClurg v. Phillips, 57 142 Iowa 528, 119 N. W. 623. Mo. 214. See also Brydon v. Camp- - "In re St. Helen Mill Co. 3 bell, 40 Md. 331; Todd v. Eighmie, Saw. (U. S.) 88; Hebron v. Centre 4 App. Div. (N. Y.) 9. Harbor, 11 N. H. 571; Bowers v. "Harrington v. Fortner, 58 Mo. Oyster, 3 Pa. St. 239. See also 468; McClurg v. Phillips, 57 Mo. Moore v. Madden, 7 Ark. 530, 46 Am. 214; Westerly Sav. Bank v. Still- Dec. 298; Hughes v. Tong, 1 Mo. man Mfg. Co., 16 R. I. 497, 17 Atl. 389; Woods v. Wallace, 22 Pa. St. 918. 171. See ante § 81. *° Atkinson v. Miller, 34 W. Va. " See ante § 81, and see Jones' Le- 115, 11 S. E. 1007, 9 L. R. A. 544, dis- gal Forms, pp. 1-84. approving Pratt v. Clemens, 4 W. ^^Racouillat v. Rene, 32 Cal. 450; Va. 443, and Shattuok v. Knight, 25 Racouillat v. Sansevain, 32 Cal. 376; W. Va. 590. Jones V Berkshire, 15 Iowa 248, 83 -^Gaylord v. Pelland, 169 Mass. Am Dec. 412; Arthur v. Screven (S. 856, 47 N. E. 1019. § 493 KECORDING AS AFFECTING PRIORITY 758 If the instrument was sealed at the time of its execution, the sub- sequent detachment of the seal does not invalidate it, unless it be proved that the seal was detached before the instrument reached the clerk's ofSee for record; and the burden of such proof is upon the party who attacks the validity of the instrument.*^ § 493. Manner of recording seal. — A seal need not be copied into the record. All that is necessary is, that the record should afford some indication that the instrument was under seal.** The fact that the deed purports to be signed and sealed affords a presumption that it was sealed when recorded.*" Thus a seal may be presumed from the attestation clause.^" But if the record does not show a copy of the seal, or anything to indicate that there was a seal upon the original deed, the presumption is that there was no seal to the deed when it was exeeuted.°^ The same rule applies to copying the official seal to the certificate of acknowledgment. All that is necessary is, that the record should show in some manner that such a seal was attached to the certificate.^'' A statement in the body of the certificate that the •" Van Riswick v. Goodhue, 50 Md. 57. ^ Jones V. Martin, 16 Cal. 166; Smith V. Dall, 13 Cal. 510; Gale v. Shillock (Dak.), 29 N. W. 661; Sum- mer V. Mitchell, 29 Fla. 179, 10 So. 562, 14 L. R. A. 815, 30 Am. St. 106; Cox V. Stern, 170 111. 442, 48 N. B. 906, 62 Am. St. 385; Bucklen v. Has- terlik, 155 111. 423, 40 N. E. 561; Switzer v. Knapps, 10 Iowa 72, 74 Am. Dec. 375; Hedden v. Overton, 4 Bibb. (Ky.) 406; Growning v. Behn, 10 B. Men. (Ky.) 383; Sneed V. Ward, 5 Dana (Ky.) 187; Beards- ley V. Day, 52 Minn. 451, 55 N. W. 46; Griffin v. Sheffield, 38 Miss. 359; Hammond v. Gordon, 93 Mo. 223, 6 8. W. 93; Geary v. Kansas City, 61 Mo. 378; Dale v. Wright, 57 Mo. 110; Heath v. Big Falls Cotton Mills, 115 N. Car. 202, 20 S. B. 369; Aycock v. Raleigh &c. R. Co., 89 N. Car. 321; Carpenter v. Prazer, 102 Tenn. 462, 52 S. W. 858; Witt v. Harlan, 66 Tex. 690, 2 S. W. 41; Coffey v. Hen- dricks, 66 Tex. 676, 2 e. W. 47; Put- ney V. Cutler, 54 Wis. 66, 11 N. W. 437; Huey v. Van Wie, 23 Wis. 613. See also Racouillat v. Sansevain, 32 Cal. 376; Racouillat v. Rene, 32 Cal. 450; Hadden v. Larned, 87 Ga. 634, 13 S. E. 806; Van Riswick v. Good- hue, 50 Md. 57. ■"■Smith V. Dall, 13 Cal. 510; Crowning v. Behn, 10 B. Mon. (Ky.) 383; Heath v. Big Palls Cotton Mills, 115 N. Car. 202, 20 S. B. 369. "Reusens v. Staples, 52 Ped. 91; Carrington v. Potter, 37 Ped. 767; Ellison V. Branstrator, 153 Ind. 146, 54 N. E. 433; Macey v. Stark, 116 Mo. 481, 21 S. W. 1088; McCoy v. Cassidy, 96 Mo. 429, 9 S. W. 926; Todd v. Union Dime Sav. Bank, 118 N. Y. 337, 23 N. E. 299. ^'- Switzer v. Knapps, 10 Iowa 72, 74 Am. Dec. 375; Hiles v. Atlee, 90 Wis. 72, 62 N. W. 940. "'Jones V. Martin, 16 Cal. 165; Smith V. Dall, 13 Cal. 510; Gale v. Shillock, 4 Dak. 182, 29 N. W. 661; Sumner v. Mitchell, 29 Pla. 179, 10 So. 562, 14 L. R. A. 815, 30 Am. St. 106; Hadden v. Larned, 87 Ga. 634, 13 S. E. 806; Sneed v. Ward, 5 Dana (Ky.) 187; Griffin v. Sheffield, 38 Miss. 359, 77 Am. Dec. 646; Ham- mond V. Gordon, 93 Mo. 223, 6 S. W. 93; Addis v. Graham, 88 Mo. 197; Geary v. Kansas City, 61 Mo. 378; Thorn v. Mayer, 12 Misc. 487, 67 N. Y. St. 389, 33 N. Y. S. 664; Coffey v. Hendricks, 66 Tex. 676, 2 S. W. 47; 759 EXECUTION AND ACKNOWLEDGilENT § 494 officer had affixed his seal of office raises a presumption that such was the fact." § 494. Requirement of witnesses. — The record of a deed not exe- cuted in compliance with a statute requiring that it shall be attested by two witnesses is not constructive notice/* though the defect be not apparent on the face of the instrument, one of the witnesses being the grantor's wife.^= Thus, where a deed appeared duly attested, but the witnesses thereto neither saw the grantor's sign, nor heard him ac- knowledge the instrument, the deed was improperly recorded, and the record gave no notice. ^^ But a mortgage attested by one witness under such a statute is good in equity between the parties,^ '^ and as against all others, whether purchasers or creditors, who had actual notice of the existence of the mortgage.^* When a statute provides that a deed, to be recordable, shall be at- "Witt V. Harlan, 66 Tex. 660, 2 S. W. 41; Ballard v. Perry, 28 Tex. 347. See also Emmal v. Webb, 36 Cal. 197; Hadden v. Larned, 87 Ga. 634, 13 S. E. 806; Perry v. Bragg, 111 N. Car. 159, 16 S. E. 10. ■^Griffin v. Sheffield, 38 Miss. 359, 77 Am. Dec. 646; Addis v. Graham, 88 Mo. 197; Norfleet v. Russell, 64 Mo 176; Geary v. Kansas City, 61 Mo. 378. "Hodgson V. Butts, 3 Cranch (U. S.) 140, 2 L. ed. 391; Garter v. Champion, 8 Conn. 549, 21 Am. Dec. 695; Donalson v. Thomason, 137 Ga. 848, 74 S. E. 762; Baxley v. Baxley, 117 Ga. 60, 43 S. E. 436; White v. Magarahan, 87 Ga. 217, 13 S. E. 509; Gardner v. Moore, 51 Ga. 268; Frost- burg Mut. Building Assn. v. Brace, 51 Md. 508; Van Rlswick v. Good- hue, 50 Md. 57; Galpin v. Abbott, 6 Mich. 17; Ross v. Worthington, 11 Minn. 438, 88 Am. Dec. 95; Thomp- son V. Morgan, 6 Minn. 292; Parret V. Shaubhut, 5 Minn. 323, 80 Am. Dec. 424; Hastings v. Cutler, 24 N. H. 481; Schultz v. Tonty Lumber Co., 36 Tex. Civ. App. 448, 82 S. W. 363; New York Life Ins. &c. Co. v. Staats, 21 Barb. (N. Y.) 570; Van Thorniley v. Peters, 26 Ohio St. 471; White V. Denman, 16 Ohio 59, 1 Ohio St. 110; Harper v. Barsh, 10 Rich. Eq. (S. Car.) 149; Batte v. Stone, 4 Yerg. (Tenn.) 168; Riviere v. Wil- kens, SI- Tex. Civ. App. 454, 72 S. W. 608; Morrill v. Morrill, 53 Vt. 74, 38 Am. Rep. 659; Potter v. Stransky, 48 Wis. 235, 4 N. W. 95; Pringle v. Dunn, 37 Wis. 449, 19 Am. Rep. 772. See also Johnson v. Sandhoff, 30 Minn. 197, 14 N. W. 889; Clark v. Strong, 105 App. Div. 179, 93 N. Y. S. 514; Simpson v. Simpson, 107 N. Car. 552, 12 S. E. 447; State v. Cow- hick, 9 Wyo. 93, 60 Pac. 265. A mortgage attested by one witness who is not an officer authorized by law to attest a mortgage, is not en- titled to record, and consequently its record is not notice. Donalson v. Thomason, 137 Ga. 848, 74 S. E. 762. It has been held that, under a stat- ute which does not actually declare a deed without attestation invalid, a deed not properly attested, when actually acknowledged and recorded, affords constructive notice of the actual contents of the record; but not of the deed as actually written, when there was a mistake in record- ing it. Bryden v. Campbell, 40 Md. 33L See ante § 82. ^= Carter v. Champion, 8 Conn. 549, 21 Am. Dec. 695. "■ Baxley v. Baxley, 117 Ga. 60, 43 S. E. 436. " Hastings v. Cutler, 24 N. H. 481; Moore v. Thomas, 1 Ore. 201. ■* Sanborn v. Robinson, 54 N. H. 239; Hastings v. Cutler, 24 N. H. 481; Morrill v. Morrill, 54 Vt. 74. § 495 EECOEDING AS AFFECTING PKIOEITT 760 tested by two "witnesses, and a mortgage so witnessed was by mistake recorded without any copy of the attestation, it was held that the reg- istry was not constructive notice. The recording of the instrument not being in compliance with the law, the registration is a mere nullity ; and a subsequent purchaser is affected only by such actual no- tice as would amount to a fraud.^^ § 495. Acknowledgment or proof. — The recording acts generally prescribe certain formalities in the execution of a deed which must be complied with to entitle it to be recorded. An acknowledgment or proof of the deed before some oflBcer is in most of the states an es- sential prerequisite. Without an acknowledgment, or with one that is defective, the record of the deed is unauthorized and is not con- structive notice.'" The statutes of several states expressly require ^ Pringle v. Dunn, 37 Wis. 449, 19 Am. Dec. 772. ™Dufphey v. Frenaye, 5 Stew. & P. (Ala.) 215; Larkin v. Hagan (Ariz.), 126 Pac. 268; Reid v. Kley- ensteuber, 7 Ariz. 58, 60 Pac. 879; Challis V. German Nat. Bank, 56 Ark. 88, 19 S. W. 115; Conner v. Abbott, 35 Ark. 365; Martin v. O' Bannon, 35 Ark. 62; Haskill v. Se- vier, 25 Ark. 152; Jacoway v. Gault, 20 Ark. 190, 73 Am. Dec. 494; Main V. Alexander, 9 Ark. 112, 47 Am. Dec. 732; Wolf v. Fogarty, 6 Cal. 224, 65 Am. Dec. 509; McKeown, v. Collins, 38 Fla. 276, 21 So. 103; Ed- wards V. Thorn, 25 Fla. 222, 5 So. 707; New England Mtg. Sec. Co. v. Ober, 84 Ga. 294, 10 S. B. 625; Mac- Kenzie v. Jackson, 82 Ga. 80, 8 S. E. 77; Shepherd v. Burkhalter, 13 Ga. 443, 58 Am. Dec. 523; Willard v. Cramer, 36 Iowa 22; Demlng v. State, 23 Ind. 416; Reed v. Coale, 4 Ind. 283; Carleton v. Byington, 18 Iowa 482; Jones v. Berkshire, 15 Iowa 248, 83 Am. Dec. 412; Fisher V. Cowles, 41 Kans. 418, 21 Pac. 228; Meskimen v. Day, 35 Kans. 46, 10 Pac. 14. Though under a former Kansas statute, acknowledgment was not a prerequisite to reg- istration. Brown v. Simpson, 4 Kans. 76; Simpson v. Mundee, 3 Kans. 172; Herd v. Cist (Ky.), 12 S. W. 466; Blight v. Banks, 6 T. B. Mon. (Ky.) 192, 17 Am. Dec. 136; Sitler v. McComas, 66 Md. 135, 6 Atl. 527; Dyson v. Simmons, 48 Md. 207; Johns v. Scott, 5 Md. 81; Price V. McDonald, 1 Md. 403, 54 Am. Dec. 657; Johns v. Reardon, 3 Md. Ch. 57; Blood v. Blood, 23 Pick. (Mass.) 80; Dohm v. Haskin, 88 Mich. 144, 50 N. W. 108; Cogan v. Cook, 22 Minn. 137; Baze v. Asper, 6 Minn. 220; Parret v. Shaubhut, 5 Minn. 323, 80 Am. Dec. 424; Bass v. Estill, 50 Miss. 300; Work v. Harper, 24 Miss. 517; German-American Bank v. Carondelet Real Estate Co., 150 Mo. 570, 51 S. W. 691; Brim v. Fleming, 135 Mo. 597, 37 S. W. 501; Bishop V. Schneider, 46 Mo. 472, 2 Am. Rep. 533; Stevens v. Hampton, 46 Mo. 404; Irwin v. Welch, 10 Nebr. 479; Brinton v. Scnll, 55 N. J. Eq. 747, 35 Atl. 843; Frost v. Beek- man, 1 Johns Ch. (N. Y.) 288; Stod- dard V. Rotton, 18 N. Y. Super. Ct. 378; Armstrong v. Combs, 1 App. Div. 246, 44 N. Y. S. 171; Withrell V. Murphy, 154 N. Car. 82, 69 S. E. 748; Quinnerly v. Quinnerly, 114 N. Car. 145, 19 S. E. 99; White v. Con- nelly, 105 N. Car. 65, 11 S. E. 177; Todd v. Outlaw, 79 N. Car. 235; Amick V. Woodworth, 58 Ohio St. 86, 50 N. E. 437; White v. Denman, 1 Ohio St. 110; Fleschner v. Sumpter, 12 Ore. 161, 6 Pac. 506; Heister v. Fortner, 2 Binn. (Pa.) 40, 44, 4 Am. Dec. 417; Kerns v. Swope, 2 Watts (Pa.) 75; Barney v. Button, 2 Watts (Pa.) 31; Armstrong v. Austin. 45 S. Car. 69, 22 S. E. 763, 29 L. R. A. 772; Woolfolk v. Graniteville Mfg. Co., 22 S. Car. 332; McGuire V. Gal- 761 EXECUTION AND ACKNOWLEDGMENT 495 proper acknowledgment as prerequisite to a valid record, operative as notice to third persons and subsequent purchasers,"'^ vifhereas acknowl- edgment is not a prerequisite to record under the statutes of other states.«2 It has been held, however, that where an acknowledgment is in due form, the only defect in it being a latent one, as, for instance, be- ing taken by the ofBcer out of his Jurisdiction, the record of the mort- gage is notice to subsequent purchasers in favor of one holding an assignment of the mortgage duly recorded."* The purpose of this requirement is to insure the authenticity of the instrument before admitting it of record. The certificate must be made and attested substantially in the form given by statute; or, where no special form is prescribed, then in accordance substantially with the provisions of the statute respecting it ; but it need not be in lagher, 95 Tenn. 349, 32 S. W. 209; Wood V. Cochrane, 39 Vt. 544; Pope V. Henry, 24 Vt. 560; Hunton v. Wood, 101 Va. 54, 43 S. E. 186; Nich- olson V. Gloucester Charity School, 93 Va. 101, 24 S. E. 899; Raines v. Walker, 77 Va. 92; Carper v. Mc- Dowell, 5 Grat. (Va.) 212; Abney v. Ohio Lumber &c. Co., 45 W. Va. 446, 32 S. E. 256; Cox v. Wayt, 26 W. Va. 807; Girardin v. Lampe, 58 Wis. 267, 16 N. W. 614; Prlndle v. Dunn, 37 Wis. 449, 19 Am. Rep. 772; Renwick V. Berryman, 3 Manitoba 387. In Arkansas a defectively acknowl- edged mortgage has been held void as to all persons except the original parties, even though such persons had actual notice of its existence. Wright V. Graham, 42 Ark. 140; Ford V. Burks, 37 Ark. 91; Conner V. Abbott, 35 Ark. 365. "Arkansas: Stat. 1904, § 763. Florida: Gen. Stat. 1906, § 2481. Massachusetts: Rev. Laws 1902, ch. 127, p. 1222, §§ 7, 14. Mississippi: Code 1906, §.2793. Nebraska: Code 1911, § 10817. New Jersey: Comp. Laws 1911, p. 1152, § 52. Pennsylvania: See Purdon's Pa. Dig. 1905, p. 1181, § 155. Tennessee: Code 1896, § 3712. West Virginia: Code 1913, § 3805. Wyoming: Comp. Stat. 1910, § 3651; State v. Cowhick, 9 Wyo. 95, 60 Pac. 265. "' In the following states acknowl- edgment is not a prerequisite to registration : Alabama: Code 1907, § 3373. Colorado: Mills' Ann. Stat. 1912, § 838. Connecticut: Gen. Stat. 1912, § 4039. Illinois: A record of a convey- ance, though not proven or acknowl- edged, operates as constructive no- tice to subsequent purchasers and creditors. Hurds' Rev. Stat. 1913, p. 534, § 31; Morrison v. Brown, 83 111. 562; Reed v. Kemp, 16 111. 445; Choteau v. Jones, 11 111. 300, 50 Am. Dec. 460; Stebbins v. Duncan, 108 U. S. 32, 27 L. ed. 641, 2 Sup. Ct. 313. Michigan: 2 Ann. Stats. 1882, § 5727. See Howell's Stat. 1913, §§ 10824, 10840. Washington: Remington's Code 1910, §§ 8781, 8784. See also Nevada Comp. Laws 1900, § 2718. See ante § 83. "^Heilbrun v. Hammond, 13 Hun (N. Y.) 474; Angier v. Schieffelin, 72 Pa. St. 106, 13 Am. Rep. 659. See also Ogden Building &c. Assn. v. Mensch, 196 111. 554, 63 N. E. 1049, 89 Am. St. 330; Stevens v. Hamp- ton, 46 Mo. 404; Morrow v. Cole, 58 N. J. Eq. 203, 42 Atl. 673; Corey v. Moore, 86 Va. 721, 11 S. E. 114. But see Sitler v. McComas, 66 Md. 135, 6 Atl. 527. § 496 EECOEDING AS AFFECTIXG PEIOEITT 762 the exact words of the form or of the statute."* In aid of the certifi- cate reference may be had°° to the instrument itself, or to the certifi- cate of the recorder, as, for instance, to fix the date of acknowledg- ment, in compliance with a statute providing that the certificate of acknowledgment shall contain the time when it is taken.** The record of a mortgage acknowledged before one justice of the peace, when a statute required it to be made before two justices, does • not operate as notice.*' When a statute requires the acknowledgment of a married woman to be taken separate and apart from her husband, the record is no notice of a lien on her estate unless the acknowledgment is so taken. *^. Where a married woman joined in the granting clause of a mortgage, releasing all her estate in the lands mortgaged, and the certificate recited her execution of the deed and relinquishment of dower and homestead, the execution and acknowledgment was held sufficient to convey her separate estate.*' If the acknowledgment be by an agent, the certificate should show with reasonable clearness that the acknowledgment was made on be- half of the constituent, or as being his deed.'" A mortgage recorded without having been acknowledged creates no valid lien as against creditors and subsequent purchasers, whether they have actual notice of the mortgage or not; but it is good as between the parties, and on breach of the condition of payment may be enforced against the mortgagor, and on his death against his administrator, in preference to his general creditors.'^ § 496. Competency of officer taking acknowledgment. — The officer must be duly appointed and qualified. The registration of a mortgage, acknowledged or proved before an officer who has not been duly ap- pointed or qualified, has no effect in rendering it operative against sub- sequent purchasers.'^ " Alvis V. Morrison, 63 111. 181, 14 strong v. Ross, 20 N. J. Eq. 109; Am. Rep. 117; Allen v. Lenoir, 53 Grove v. Zumbro, 14 Grat. (Va.) 501. Miss. 321; Merriam v. Harsen, 2 "^ Cazort &c. Co. v. Dunbar, 91 Ark. Barb. Ch. (N. Y.) 232; Duval v. 400, 121 S. W. 270. Covenhoven, 4 Wend. (N. Y.) 561. ™McAdow v. Black, 6 Mont. 601. °° Carpenter V. Dexter, 8 Wall. (U. 13 Pac. 377; McDaniels v. Flower S.) 513, 19 L. ed. 426. Brook Mfg. Co., 22 Vt. 274. ™ Kelly V Rosenstock, 45 Md. 389. "Haskill v. Sevier, 25 Ark. 152; "Dufphey v. Frenaye, 5 Stew. & Main v. Alexander, 9 Ark. 112, 47 P. (Ala.) 215. See also Munn v. Am. Dec. 732; Straeffer v. Rodman, Lewis, 2 Port. (Ala.) 24. 146 Ky. 1, 141 S. W. 742. "'Muir V. Gallaway, 61 Cal. 498; "Worsham v. Freeman, 34 Ark. Coleman v. Billings, 89 III. 183; Al- 55; Suddereth v. Smyth, 13 Ired. L. len V. Lenoir, 53 Miss. 321; Arm- (N. Car.) 452. '^63 EXECUTIOX AND ACKNOWLEDGMENT § 496 An acknowledgment of a mortgage taken by a de facto officer is validJ* But an officer de facto must act under color of authority and where a mortgage was acknowledged before one who acted as a notary public but whose commission had expired nearly two years before, it was held that such person could not be considered a notary de facto, though he assumed to act as such after his commission expired, until the proof of the mortgage.'* It is equally necessary that the officer should act within the limits of his jurisdiction." Some statutes confine the officer's power to take acknowledgments to instruments affecting land within his county or district, in which case an acknowledgment of a mortgage of land lying in another county or district has no effect.'* But generally a mortgage or other conveyance of land lying in any part of the state may be acknowledged before an officer of any county." A judge, or commissioner, or other officer empowered to take an acknowledgment, can not act out of the state for which he was appointed.'^ When, however, acknowledgments made before an officer not au- thorized to act are by statute declared to be good and efEectual, in the same way that they would have been had they been taken and certified by an officer properly qualified, one purchasing after such statute has gone into effect is bound to take notice of the conveyance, though until that time the record would be notice to no one.'* " Crutchfield v. Hewett, 2 App. D. Stansberry v. Pope, 4 Bibb (Ky.) C. 373; Sharp v. Thompson, 100 111. 492; Love v. Taylor, 26 Miss. 567; 447; 39 Am. Rep. 61; Wilson v. Kim- Dennistoun v. Potts, 26 Miss. 13; mel, 109 Mo. 260, 19 S. W. 24; Pres- Duly v. Brooks, 30 Mo. 515; Van cott V. Hayes, 42 N. H. 56, 43 N. H. Cortlandt v. Tozer, 17 Wend. (N. 593. See also Davidson v. State, 135 Y.) 338; McFerran v. Powers, 1 Ind. 254, 34 N. E. 972. Serg. & R. (Pa.) 102; Davey y. Ruf- " Hughes V. Long, 119 N. Car. 52, fel, 14 Pa. Co. Ct. 272; Campbell v. 25 S. E. 743. Moon, 16 S. Car. 107. "Jackson v. Golden, 4 Cow. (N. "Jackson v. Humphrey, 1 Johns. Y.) 266. (N. Y.) 498; Harris v. Burton, 4 " Middlecoff v. Hemstreet, 135 Cal. Har. (Del.) 66 (notary); Cowan v. 173, 67 Pac. 768; Bishop v. Schnei- Beall, 1 McAr. D. C. 270 (justice of der, 46 Mo. 472, 2 Am. Rep. 533. See the peace). A certificate of acknowl- also Musick v. Barney, 49 Mo. 458 edgment in which the officer de- (deed); Hughes v. Wilkinson, 37 scribes himself as "a justice of the Miss. 482; People v. Mutual Life peace within and for said codnty," Ins. Co., 65 How. Pr. (N. Y.) 239. no county being named, except that " Johns V. Reardon, 3 Md. Ch. 57 in the body of the deed, where both (mortgage) ; Johnson v. McGehee, 1 the grantor and grantee resided, is Ala. 186; Colton v. Seavey, 22 Cal. not necessarily invalid. Beckel v. 496; Doe v. Vandewater, 7 Blackf. Petticrew, 6 Ohio St. 247; Fuhrman (Ind.) 6; Schoolcraft v. Campbell, 6 v Loudon, 13 Serg. & R. (Pa.) 386, Blackf. (Ind.) 481; Ford v. Gregory, 15 Am. Dec. 608. 10 B. Mon. (Ky.) 175; Gray v. Pat- ™ Journeay v. Gibson, 56 Pa. St. ton, 2 B. Mon. (Ky.) 12; Moore v. 57. Farrow, 3 A. K. Marsh. (Ky.) 41; § 49r KECOKDING AS AFFECTING PRIORITY 764 § 497. Disqualification of officer by interest or relationship. — The taking of an acknowledgment is a ministerial act; therefore it may be done by one who is so related to the parties as to be disqualified as a judge or juror.^" On grounds of public policy the grantee in an in- strument is disqualified from acting as a notary or other official in taking and certifying the acknowledgment of the grantor, and this principle applies to a mortgagee.*^ And likewise a trustee in a deed of trust can not take a valid acknowledgment of it.*^ An acknowledgment of a mortgage to one of two coexecutors taken before a master who was the coexeeutor was held valid, where the face of the mortgage did not disclose his interest therein, the taking of the acknowledgment being considered a ministerial act.^^ The owner of a note representing an indebtedness secured by a mort- gage, being the real party in interest, is disqualified from taking the acknowledgment of such mortgage, and could not qualify himself for this purpose by resorting to the subterfuge of inserting his wife's name in the note as payee.^* Where a mortgage is made to the payee '" Lynch v. Livingston, 6 N. Y. 422; Williamson v. Carskadden, 36 Ohio St. 664; Truman v. Lore, 14 Ohio St. 144. In other cases it is de- clared that the oflScer act judicially. Homcepathic Mut. L. Ins. Co. v. Mar- shall, 32 N. J. Bq. 103; Heeter v. Glasgow, 79 Pa. St. 79, 21 Am. Rep. 46; Williams v. Baker, 71 Pa. St. 476; Jones on Real Prop., § 1127. "Green v. Abraham, 43 Ark. 420; Lee V. Murphy, 119 Cal. 364, 51 Pac. 549; Hammers v. Dole, 61 111. 307; Hubble V. Wright, 23 Ind. 322 (ac- knowledgment taken by one of the mortgagees void) ; Farmers' &c. Bank v. Stockdale, 121 Iowa 748, 96 N. W. 732 (chattel mortgage); City Bank v. Radtke, 87 Iowa 363, 54 N. W. 435; LaPrad v. Sherwood, 79 .Mich. 520, 44 N. W. 943; Turner v. Connelly, 105 N. Car. 72, 11 S. E. 179; White v. Connelly, 105 N. Car. 65, 11 S. E. 177; Amick v. Wood- worth, 58 Ohio St. 86, 50 N. E. 437. A party to a mortgage can not act as an officer taking the acknowledg- ment thereto. Meckel Bros. Co. v. DeWitt, 23 Ohio Cir. Ct. 174. '^Muense v. Harper, 70 Ark. 309, 67 S. W. 869; Darst v. Gale, 83 111. 136; Russell v. Bosworth, 106 111. App. 314; Holden v. Brimage, 72 Miss. 228, 18 So. 383; Wasson v. Connor, 54 Miss. 351; Bennett v. Shipley, 82 Mo. 448; Black v. Gregg, 58 Mo. 565; Dail v. Moore, 51 Mo. 589; Stevens v. Hampton, 46 Mo. 404; Lance v. Tainter, 137 N. Car. 249, 49 S. E. 211; Rothschild v. Daugher, 85 Tex. 332, 20 S. W. 142, 16 L. R. A. 719, 34 Am. St. 811; Brown v. Moore, 38 Tex. 645; Nich- olson V. Gloucester Charity School, 93 Va. 101, 24 S. E. 899; Clinch River Veneer Co. v. Kurth, 90 Va. 737, 19 S. E. 878; Jones on Real Prop., § 1125; Tavenner v. Barrett, 21 W. Va. 656 (acknowledgment before one of the trustees as a notary). The fact that the acknowledgment of a trust deed by a married woman was taken by the trustee therein was not alone considered sufficient ground .for annulling it at her instance. Weidman v. Templeton (Tenn.), 61 S. W. 102. ''Morrow v. Cole, 58 N. J. Eq. 203, 42 Atl. 673. " Hedbloom v. Pierson, 2 Nebr. (Unoff.) 799, 90 N. W. 218. The court, in discussing the question as to what interest will disqualify an officer from taking an acknowledg- ment says: "Whether such dis- qualification exists in any case must be determined from the par- ticular facts and circumstances of 765 EXECUTION AND ACKNOWLEDGMENT § 497 of a note to protect a surety thereon, the surety has such an interest in the mortgage as to render its acknowledgment before him void, and the record of the mortgage without effect.*^ An acknowledgment taken before the cashier of a bank of which the mortgagee was president is sufficient, and a mortgage so acknowledged and duly recorded consti- tutes notice.*" The acknowledgment of a mortgage to a corporation, by a notary who is a stockholder and oflScer of the corporation, is not invalid.*^ And the fact that a mortgage was acknowledged before an ofBcer of a corporation which was agent for a firm of which the mortgagee was a member, does not render the acknowledgment invalid.** But a gen- eral counsel and stockholder of a mortgagee corporation has been held incompetent to act as a notary to take an acknowledgment of a mort- gage, though he may have been a proper witness.*" The record of a deed of trust given to secure the debt of a charitable corporation is not invalid because the officer who took the acknowledgment was one of the incorporators, and as such entitled to a small fee for attending meetings of the board."" An absolute deed acknowledged before the husband of the grantee therein and given in satisfaction of a debt secured by a trust deed in which the husband was the beneficiary has been held void."^ It has been held that a married woman may acknowledge a mortgage of her separate estate before her husband, he being a justice of the peace."^ And a husband's acknowledgment to a mortgage and a privy exami- nation of his wife were not considered invalid because taken by an officer who was related to them."^ that case. No statute exists in this »= Leonhard v. Flood, 68 Ark. 162, state- which prescribes what rela- 56 S. W. 781. tionship or interest of an officer ^^Kee v. Ewing, 17 Okla. 410, 87 shall disqualify him from taking an Pac. 297. acknowledgment in any given case; »'Horton v. Columbian Bldg. &c. but it would seem that, on the Soc, 8 Ohio Dec. 169, 6 Wkly. L. ground of public policy, an officer Bui. (Ohio) 141. See also Florida should be disqualified from taking Savings Bank &c. Exchange v. an acknowledgment whose direct Rivers, 36 Fla. 575, 18 So. 850; Hor- and beneficial interest would be bach v. Tyrrell, 48 Nebr. 514, 67 subserved in having the convey- N. "W. 485, 37 L. R. A. 434. ance made which he acknowledged; »« Gilbert v. Garber, 69 Nebr. 419, and perhaps it may be said, as a 95 N. "W. 1030. ,,,,., ,,„ very general proposition, that an «»Maddox v. Wood, 151 Ala. 157, officer who is a party to a convey- 43 So. 968. ance or interested therein, is dis- " Nicholson v. Gloucester Charity qualified from taking the acknowl- School, 93 Va. 101, 24 SE. 899. edgment of the grantor." The court "Jones v. Porter, 59 Miss^^ 628^ approves the case of Horbach v. "^ Kimball v. Johnson, 14 Wis. 674 Tvrrell 48 Nebr. 514, 67 N. W. 485, =' McAllister v. Pursell, 124 N. 37 LR A 434 Car. 262, 32 S. E. 715. § 498 HECOEDING AS AFFECTING PRIORITY 'i'66 § 498. Certificate of official character of officer taking acknowl- edgment. — The statement or recital of the oflBcer's official character, in the certificate of acknowledgment, is generally considered prima facie evidence of the fact."* When a statute requires that a certificate of the official character of the officer before whom the acknowledgment was made shall accompany the certificate of acknowledgment, the filing of the mortgage for record without the latter certificate does not con- stitute a record of it. If, however, this certificate is subsequently ob- tained and, recorded in the registry where the deed is recorded, the mortgage will be treated as recorded from the date of the filing of this certificate."^ Although the certificate of official character must show on its face all the material matters required by statute,"" only a substantial compliance with the statute is required, and technical or unsubstantial objections will not defeat it, or the record of the mort- gage which it authenticates."' § 499. Officer's certification of personal acquaintance with party making acknowledgment. — Upon the same principle, also, when a statute requires that the officer shall certify that he is personally ac- quainted with the party making the acknowledgment, the omission so to do renders null the acknowledgment and the record."* The require- »« Williams v. Kerr, 113 N. Car. v. Coulee, 28 111. 219; Shephard v. 306, 18 S. B. 501. See also Deery Carriel, 19 111. 313 (recital "I am V. Cray, 5 "Wall. (IT. S.) 795, 18 L. satisfied" of grantor's identity not ed. 653; Mott v. Smith, 16 Cal. 533; sufficient) ; Livingston v. Kettelle, Thompson v. Morgan, 6 Minn. 292. 6 111. 116, 41 Am. Dec. 166; Brinton °=Ileasoner v. Edmundson, 5 Ind. v. Seevers, 12 Iowa 389; Gould v. 393; Ely v. Wilcox, 20 Wis. 523, 91 Woodward, 4 G. Greene (Iowa), 82; ■ Am. Dec. 436. Pinckney v. Burrage, 31 N. J. L. 21 »» People V. Register of New York, (certificate that officer is "satis- 6 Ahb. Prac. (N. Y.) 180. fled" of identity sufficient under "Wells V. Atkinson, 24 Minn. 161. New Jersey statute); Thurman v. See also Harding v. Curtis, 45 111. Cameron, 24 Wend. (N. Y.) 87; 252; Winston v. Gwathmey, 8 B. Paolillo v. Faber, 56 App. Div. 241, Men. (Ky.) 19; Morse v. Hewett, 69 N. Y. S. 638, 9 Ann. Cas. (N. Y.) 28 Mich. 481; Harrington v. Fish, 32; Cannon v. Deming, 3 S. Dak. 10 Mich. 415. 421, 53 N. W. 863; Bone v. Green- »» Davidson v. Alabama Iron &c. lee, 1 Cold. (Tenn.) 29; Johnson v. Co., 109 Ala. 383, 19 So. 390; Pogarty Walton, 1 Sneed (Tenn.) 258; Frost V. Finlay, 10 Cal. 239, 70 Am. Dec. v. Erath Cattle Co., 81 Tex. 505, 17 714; Kelsey v. Dunlap, 7 Cal. 160; S. W. 52, 26 Am. St. 831; Salmon Wolf V. Fogarty, 6 Cal. 224, 65 Am. v. Huff, 80 Tex. 133, 15 S. W. 1047; Dec. 509; Fryer v. Rockefeller, 63 McKie v. Anderson, 78 Tex. 207, 14 N. Y. 268. See also Rogers v. S. W. 576; Smith v. Garden, 28 Wis. Adams, 66 Ala. 600; Conner v. Ab- 685; Peyton v. Peacock, 1 Humph, bott, 35 Ark. 365; Kimball v. Sem- (Tenn.) 135. In this case, although pie, 25 Cal. 400; Gage v. Wheeler, the improper registration was not 129 111. 197, 21 N. E. 1075; Becker Insisted upon by the answer, the V. Quigg, 54 111. 390; Tully v. Davis, court upon the exhibition of the 30 111. 103, 83 Am. Dec. 179; Short deed took notice of the defect. 767 EXECUTION AND ACKNOWLEDGMENT § 499 ment must be substantially complied with.*' But a literal compliance with the statute is not essential and the certificate is sufficient if it states that the party is "known" to the officer omitting the word "per- sonally.'"- The fact of acknowledgment and the identity of the party executing and acknowledging are the essential facts to be stated in the ceftificate, and the objection that "personally" was omitted in a certificate that the parties acknowledging a mortgage "were known" to the magistrate, is frivolous.^ In Connecticut and the earlier New York cases, the officer was presumed to have performed his duty, and to have had personal knowledge or satisfactory proof of the party's identity; so that proof by his certificate was not required.^ If the officer taking the acknowledgment certifies that he knows the parties by whom the instrument purports to be executed, when in fact he did not, his certificate, though prima facie valid, upon proof of this fact, is a nullity, both as entitling the paper to be recorded and as affording any proof of its execution, though in fact the instrument was acknowledged by the persons who executed it.* But it seems that the length of acquaintance between the officer and the party making the acknowledgment is immaterial, and a mere introduction at the time of the acknowledgment is enough if it satisfies the officer's con- science.* As between the parties themselves the mortgage would, of course, be valid upon proof of its execution and delivery. »°Ritter v. Wortli, 58 N. Y. 627; words "personally acquainted." West Point Iron Co. v. Reymert, 45 Kelly v. Callioun, 95 U. S. 710, 24 N. Y. 703; Troup v. Haight, Hopk. L. ed. 544. (N. Y.) 239. And see cases cited "^ Henderson v. Grewell, 8 Cal. 581. supra. See also Bryan v. Ramirez, 8 Cal. 1 Henderson v. Grewell, 8 Cal. 581; 461, 48 Am. Dec. 340. Hopkins v. Delaney, 8 Cal. 85; » Sandford v. Bulkley, 30 Conn. Welch v. Sullivan, 8 Cal. 511; TuUy 344; Northrop v. Wright, 7 Hill (N. v. Davis, 30 111. 103, 83 Am. Dec. Y.) 476; Crowder v. Hopkins, 10 189; Delaunay v. Burnett, 4 Gilm. Paige (N. Y.) 183. (111.) 454 ("well acquainted" equiv- "Watson v. Campbell, 28 Barb, alent to personally known); Ro- (N. Y.) 421. "This case," says Mr. senthal v. Griffin, 28 Iowa 263; Justice Ingraham, "shows the im- Todd V. Jones, 22 Iowa 146 (per- propriety of a commissioner of sonal knowledge implied in such deeds, in such an acknowledgment, certificate); Bell v. Evans, 10 Iowa certifying that he knows the par- 353 ("well known" equivalent to ties, without any other knowledge personally known) ; Warner v. than a mere introduction, or seeing Hardy, 6 Md. 525; Brown v. McCor- the signature written. He thereby mick, 28 Mich. 215; Robson v. endangers the security, and ex- Thomas, 55 Mo. 581; Alexander v. poses himself to liability for dam- Merry, 9 Mo. 514; Sheldon v. ages arising therefrom." Stryker, 42 Barb. (N. Y.) 284, 27 "Nippel v. Hammond, 4 Colo. 211; How. Pr. 387; Davis v. Bogle, 11 Wood v. Bach, 54 Barb. (N. Y.) 134. Heisk. (Tenn.) 315. The expres- But see Jones v. Bach, 48 Barb. (N. sion "personally known" is suffl- Y.) 568. cient where the statute uses the § 499 EECOEDING AS AFFECTING PEIOEITT 768 A certificate of acknowledgment which simply describes the persons acknowledging as "grantors of the within indenture," without stating that they were known to the officer to be the same persons who are described in and who executed it, as prescribed by the statute, is in- sufficient to entitle the deed to be recorded." Omission of the words "described in and who executed" is immaterial where the certificate recites that the party is known to be the identical person whose name is subscribed to the deed, or who "executed" if Under a statute re- quiring the officer to certify that a party was "personally known or proved" to him to be the same person, a certificate identifying the grantor as the party "who by good authority to me given is the iden- tical person," who appeared and acknowledged the deed, was held in- sufficient;' and likewise a certificate which states that the deed was acknowledged by the "above-named persons who executed the fore- going instrument," was held fatally defective.® A certificate of ac- knowledgment to a mortgage, stating that the "above-named mort- gagor" personally appeared before a justice, and that he was person- ally known to him as the identical person who executed the mortgage, was held equivalent to the statement that the individual acknowledg- ing was personally known to the justice to be the person whose name was subscribed to the mortgage. In this case the court said: "The evident object of the legislature, in these directions in relation to the acknowledgment of deeds, is to prevent one individual from per- sonating another. That object we think has been fully accomplished in the present case. The term, 'the above-named mortgagor,' must be understood to mean the real party who was to execute the mort- A notary omitting to state in his certificate that the party acknowl- edging the mortgage was known to him or identified, is guilty of gross and culpable negligence, and is liable on his official bond for damages resulting therefrom, by postponement of such defective and improp- •= Fryer v. Rockefeller, 63 N. Y. Fryer v. Rockefeller, 63 N. Y. 268 268. (parties described as the "grantors ' Henderson V. Grewell, 8 Cal. 581; of the within indenture"). S^e also Thurman v. Cameron, 24 Wend. (N. Miller v. Link, 2 Thomp. & C. (N. Y.) 87. See also Tiffany v. Glover, Y.) 86 ("personally appeared before 3 G. Greene (Iowa) 387 ("who me , signer and sealer of signed and sealed" equivalent to the foregoing instrument" insuffi- "whose name is subscribed as a cient). party"); Hunt v. Johnson, 19 N. Y. "'Livingston v. Kettelle, 1 Gilm. 279. (111.) 116, 41 Am. Dec. 166, approv- « Becker v. Qulgg, 54 111. 390 (deed ing McConnel v. Reed, 2 Scam. (111.) of married woman). 371. "Brinton v. Seevers, 12 Iowa 389; 769 EXECUTION' AND ACKNOWLEDGMENT § 500 eriy lecorded mortgage to a later mortgage which exhausted the en- tire property. By accepting office a notary holds himself out to the world as a person competent to perform the duties of his office. He contracts with those who employ him to perform his duties with in- tegrity, diligence and skill. His neglect is not excused by the fact that the certificate had been partly filled by the attorney for the grantee. A mortgagee is not charged with knowledge of a defect in the certificate by receiving and retaining possession of the in- strument. The measure of damages against the notary for such omis- sion is the amount of the debt and interest intended to be secured by the mortgage.^^ § 500. Presumption of regularity from certificate of acknowledg- ment — Impeachment for fraud. — The certificate of acknowledgment is not conclusive ; but when it is correct in form, and is apparently exe- cuted by one authorized to act in the matter, and within his jurisdic- tion, it is sufficient to admit the deed to record, and is prima facie good.^^ It may be shown that the officer who made the certificate was not in fact authorized to act, or had become incompetent, or that he acted outside his jurisdiction.^^ It may be shown that the deed was never in fact executed or delivered;^* or that the deed was void when acknowledged by reason of its containing material blanks.^^ Where a certificate of acknowledgment appears regular upon its .face, a strong presumption exists in favor of its truth -p-^ and this pre- sumption of regularity must be first overcome by competent evi- dence;" the burden of proof resting upon the party impeaching it.^^ "Fogarty v. Finlay, 10 Cal. 239. son, 227 Mo. 333, 126 S. W. 1027; 70 Am. Dec. 714. Patnode v. Deschenes, 15 N. Dak. "Holbrook v. Worcester Bank, 2 100, 106 N. W. 573; Ward v. Baker Curtis (U. S.) 244, Fed. Cas. No. (Tex. Civ. App.), 135 S. W. 620; 6597; People v. Snyder, 41 N. Y. Adams v. Smith, 11 Wyo. 200, 70 397; Morris v. Keyes, 1 Hill (N. Pac. 1043. The rule is the same y.) 540; Jackson v. Schoonmaker, 4 with deeds. Barnett v. Proskauer, Johns. (N. Y.) 161; Blewett v. Bash, 62 Ala. 486; Baldwin v. Bornheimer, 22 Wash. 536, 61 Pac. 770. 48 Cal. 433; Hourtienne v. Schnoor, " German- American Bank v. Car- 33 Mich. 274; Addis v. Graham, 88 ondelet Real Estate Co., 150 Mo. 570, Mo. 197; Hultz v. Ackley, 63 Pa. St. 51 S. W. 691; Lynch v. Livingston, 142. 6 N Y 422. See ante § 496. " Cameron v. Culkins, 44 Mich. "Howell V. McCrie, 36 Kans. 636, 531, 7 N. W. 157; Johnson v. Van 14 Pac. 257, 59 Am. Rep. 584; Jack- Velsor, 43 Mich. 208, 5 N. W. 265; son V. Perkins, 2 Wend. (N. Y.) Hourtienne v. Schnoor, 33 Mich. 274. 308 " Linton v. National Life Insur- "Drury v. Foster, 1 Dill. (IT. S.) ance Co., 104 Fed. 584, 44 C. C. A. 4gQ 54; Barnett v. Proskauer, 62 Ala, "Goulet V Dubreuille, 84 Minn. 486; Bell v. Castleberry, 96 Ark. 564, 72, 86 N. W. 779; Albright v. Steven- 132 S. W. 649; Meyer v. .Gossett, 38 49_joNES Mtg. — Vol. I. § 500 RECORDING AS AFFECTING PRIORITY 770 The officer is prima facie such as he is described to be, de facto and de jure. He is like an officer authorized to talce testimony under a special commission. His return must stand until it is impeached by- collateral proof. Until this is done his return is proof in itself of his official character, of his signature, and of his acting within his juris- diction.^® The fact that he does not recollect the transaction does riot affect his certificate.^" A mistake in the certificate of acknowledgment, whereby the grantee instead of the grantor appeared to be the person who made the ac- knowledgment, can not be corrected in a court of equity, so as to give the record of the deed legal effect from the beginning, because it can not be determined from the face of the instrument whether the error consisted in inserting the wrong name, or in taking the acknowledg- ment of the wrong man.^^ A mistake in the date of an acknowledgment may be shown and the true date established by parol.^^ The certificate of acknowledgment will not be invalidated by a mistake in the date,^^ nor it would seem even by the absence of a date.^* A mistake arising from a technical omission in the certificate may be corrected.^'' As to the statements of fact contained in a certificate of acknowl- edgment which is regular in form, such, for instance, as the fact that the grantor appeared and acknowledged the execution of the instru- ment, they can only be impeached for fraud. The certificate is con- Ark. 377; Langenbeck v. Louis, 140 acknowledged the mortgage. Dlke- Cal. 406, 73 Pac. 1086; O'Donnell v. man v. Arnold, 78 Mich. 455, 44 N. Kelliher, 62 111. App. 641; Morris W. 407. V. Sargent, 18 Iowa 90; Gabhey v. "Canandarqua Academy v. Mc- Forgeus, 38 Kans. 62, 15 Pac. 866; Kech'nie, 19 Hun (N. Y.) 62; Thur- Oriol V. Creditors, 22 La. Ann. 32; man v. Cameron, 24 Wend. (N. Y.) Hourtienne v. Schnoor, 33 Mich. 87, and cases cited. 274; Ray v. Crouch, 10 Mo. App. "Tooker v. Sloan, 30 N. J. Bq. 321; Bohan v. Casey, 5 Mo. App. 394. 101; Boyd v. Boyd, 21 App. Dlv. ^Wood v. Cochrane, 39 Vt. 544. 361, 47 N. Y. S. 522; Davis v. Davis, ^Hoit v. Russell, 56 N. H. 559; 146 N. Car. 163, 59 S. B. 659; Ford Gest v. Flock, 2 N. J. Eq. 108. But V. Osborne, 45 Ohio St. 1, 12 N. B. see Greene v. Godfrey, 44 Maine 25. 526; Swiger v. Swiger, 58 W. Va. The fact that an acknowledgment in 119, 52 S. E. 23; Adams v. Smith, a deed is dated before its execution 11 "Wyo. 200, 70 Pac. 1043. The fact does not invalidate the deed. Pish- that a notary who signed a certifl- er v. Butcher, 19 Ohio 406, 53 Am. cate of acknowledgment to a mort- Dec. 436. gage, was also attorney for the ^ Mosier v. Momsen, 13 Okla. 41, party relying upon the mortgage, 74 Pac. 905; Yorty v. Paine, 62 "Wis. does not alter the presumption in 154, 22 N. W. 137. favor of the certificate, and the bur- " Irving v. Brownell, 11 111. 402; den of proof is still on the one im- Webb v. Huff, 61 Tex. 677. peaching it where the notary and "= Edmunds v. Leavell (Ky.), 3 S. other witnesses testify that latter W. 134. 771 EXECUTION AND ACKNOWLEDGMENT § 500 elusive of all the facts required by la-w to be certified therein, and evi- dence which is merely in contradiction of the facts certified to will not be received.^" In a few states, including Minnesota and Missouri, a certificate of acknowledgment regular on its face is regarded as prima facie evidence only of the facts recited therein, and may be rebutted by proof that such recitals are not true in fact, without showing fraud or imposition.^'' As between the parties to a deed or mortgage, evidence is admissi- ble to impeach the certificate for fraud, duress, or imposition in which the grantee participated or of which he had notice before parting with the consideration.^^ As against innocent parties who, in reliance upon the certificate of acknowledgment, have in good faith parted with an adequate consideration, without knowledge or constructive notice that =»Paxton V. Marshall, 18 Fed. 361; Hayes v. Southern Home Bldg. Assn., 124 Ala. 663, 26 So. 527, 82 Am. St. 216; American Freehold Land Mtg. Co. v. Thornton, 108 Ala. 258, 19 So. 529, 54 Am. St. 148; Read v. Rowan, 107 Ala. 366, 18 So. 211; American Freehold Land Mtg. Co. V. James, 105 Ala. 347, 16 So. 887; Grider v. American Free- hold Land Mtg. Co., 99 Ala. 281, 12 So. 775, 42 Am. St. 58; Shelton v. Aultman &c. Co., 82 Ala. 315, 8 So. 232; Downing v. Blair, 75 Ala. 216; Petty V. Grisard, 45 Ark. 117; Hol- land V. "Webster, 43 Fla. 85, 29 So. 625; Strauch v. Hathaway, 101 111. 11, 40 Am. Rep. 193; Russell v. The- ological Union, 73 111. 337; Graham V. Anderson, 42 111. 514, 92 Am. Dec. 89; Johnston v. Wallace, 53 Miss. 331, 24 Am. Rep. 699; Morris v. Linton, 31 Nebr. 537, 85 N. W. 565; Council Bluffs Sav. Bank v. Smith, 59 Nebr. 90, 80 N. W. 270 (quoting text) ; Barker v. Avery, 36 Nebr. 599, 54 N. W. 989; Phillips v. Bish- op, 35 Nebr. 487, 53 N. W. 375; Pereau v. Frederick, 17 Nebr. 117, 22 N. W. 235; Williamson v. Cars- kadden, 36 Ohio St. 664; Baldwin v. Snowden, 11 Ohio St. 203, 78 Am. Dec. 303; Wester v. Hurt, 123 Tenn. 508, 130 S. W. 842, 30 L. R. A. (N. S.) 358, Ann. Cas. 1912 C, 329; Ken- nedy V. Security Bldg. &c. Assn. (Tenn.), 57 S. W. 388; Henke v. Stacy, 25 Tex. Civ. App. 272, 61 S. W. 509. " Dodge V. HoUinshead, 6 Minn. 25, 80 Am. Dec. 433; Comings v. Leedy, 114 Mo. 454, 21 S. W. 804; Barrett v. Davis, 104 Mo. 549, 16 S. W. 377; Mays v. Pryce, 95 Mo. 603, 8 S. W. 731; Steffln v. Bauer, 70 Mo. 399; Wannell v. Kem, 57 Mo. 478. See also Moore v. Hopkins, 83 Cal. 270, 23 Pac. 318, 17 Am. St. 248; Pierce v. Georger, 103 Mo. 540, 15 S. W. 848; Young v. Engdahl, 18 N. Dak. 166, 119 N. W. 169. But see Springfield Engine &c. Co. v. Donovan, 147 Mo. 622, 49 S. W. 500. But the proof, to have this effect, must be clear, cogent, and convinc- ing. Bohan v. Casey, 5 Mo. App. 101 ; Young V. Duvall, 109 U. S. 573, 27 L. ed. 1036, 3 Sup. Ct. 414; Insur- ance Co. V. Nelson, 103 U. S. 544, 26 L. ed. 436; Mather y. Jarel, 33 Fed. 366. ^Grider v. American Freehold Land Mtg. Co., 99 Ala. 281, 12 So. 775, 42 Am. St. 58; Smith v. Mc- Guire, 67 Ala. 34; Holt v. Moore, 37 Ark. 145; Chivington v. Colorado Springs Co., 9 Colo. 597, 14 Pac. 212; Fitzgerald v. Fitzgerald, 100 111. 385; Kerr v. Russell, 69 111. 666, 18 Am. Rep. 634; Eyster v. Hathe- way, 50 111. 521, 99 Am. Dec. 537; Long V. Branham, 30 Ky. L. 552, 99 S. W. 271; Davis v. Hamblin, 51 Md. 525; Central Bank v. Copeland, 18 Md. 305, 81 Am. Dec. 597; O'Neil V. Webster, 150 Mass. 572, 23 N. E. 235; Worcester v. Eaton, 13 Mass. 371, 7 Am. Dec. 155; Allen v. Le- noir, 53 Miss. 321; Williamson v. Carskadden, 36 Ohio St 664; Cover .500 EBOOEDING AS AFFECTING PEIOEITT 773 such certificate is false, parol evidence is not admissible even to sho-w fraud or imposition in procurement of the acknowledgment.^' Under the statutes of some states for the special protection of the homestead right, it is required that the wife should acknowledge be- fore : the officer that she had released the homestead right.^" If, for instance, the certificate shows that a married woman was examined separate and apart from her husband, and voluntarily relinquished her rights of dower and homestead in the lands, it can not be impeached by evidence that there was no private examination; that she did not acknowledge the deed as her act and deed; that the contents of the deed were not made known to her; or that she did not release her homestead right. There must first be some allegation and proof of fraud or imposition practiced upon her; or some fraudulent combina- tion between the parties interested and the officer taking the acknowl- V. Manaway, 115 Pa. St. 338, 8 Atl. '393, 2 Am. St. 552; Darlington's Ap- peal, 86 Pa. St. 512, 27 Am. Rep. 726; Heeter v. Glasgow, 79 Pa. St. 79, 21 Am. Rep. 46; Hall v. Patter- son, 51 Pa. St. 289; Louden v. Blythe, 16 Pa. St. 532, 55 Am. Dec. 527, 27 Pa. St. 22, 67 Am. Dec. 442; Kennedy v. Security Bldg. &c. Assn. (Tenn.), 57 S. W. 388; Pierce v. Fort, 60 Tex. 464; Westbrooks v. Jeffiers, 33 Tex. 86; "Wiley v. Prince, 21 Tex. 637; Rollins v. Menager, 22 W. Va. 461. See also Breitling v. Chester, 88 Tex. 586, 32 S. W. 527. If the mortgagee has knowledge of circumstances which would put an honest man on inquiry concerning the procurement of the acknowledg- ment, and wilfully neglects to In- vestigate the fraud, he will be charged with notice of such fraud as if a party thereto. Louden v. Blythe, 27 Pa. St. 22, 67 Am. Dec. 442, 16 Pa. St. 532, 55 Am. Dec. 527. ^ Linton v. National L. Ins. Co., 104 Fed. 584, 44 C. C. A. 54; Gid- dens V. Boiling, 99 Ala. 319, 13 So. 511; Moses v. Dade, 58 Ala. 211; Holt V. Moore, 37 Ark. 145; De Ar- naz V. Escandon, 59 Cal. 486; Ladew V. Paine, 82 111. 221; Marston V. Brittenham, 76 111. 611; Kerr v. Rus- sell, 69 111. 666, 18 Am. Rep. 634; McHenry v. Day, 13 Iowa 445, 81 Am. Dec. 438; Godsey v. Virginia Iron &c. Co., 26 Ky. L. 657, 82 S. W. 386; Fribble v. Hall, 13 Bush (Ky.) 61; Kenneday v. Price, 57 Miss. 771; Johnston v. Wallace, 53 Miss. 331, 24 Am. Rep. 699; Spring- field Engine &c. Co. v. Donovan, 147 Mo. 622, 49 S. "W. 500; Baldwin v. Snowden, 11 Ohio St. 203, 78 Am. Dec. 303; Moore v. Fuller, 6 Ore. 272, 25 Am. Rep. 524; Singer Mfg. Co. v. Rook, 84 Pa. St. 442, 24 Am. Rep. 204; Heeter v. Glasgow, 79 Pa. St. 79, 21 Am. Rep. 46; Williams v. Baker, 71 Pa. St. 476; Hall v. Pat- terson, 51 Pa. St. 289; Louden v. Blythe, 27 Pa. St. 22, 67 Am. Dec. 442; Shell v. Holston Nat. Bldg. &c. Assn. (Tenn.), 52 S. W. 909; Shields v. Netherland, 5 Lea (Tenn.) 193; Finnegan v. Finnegan, 3 Tenn. Ch. 510; Webb v. Burney, 70 Tex. 322, 7 S. W. 841; Miller v. Yturria, 69 Tex. 549, 7 S. W. 206; Henderson V. Terry, 62 Tex. 281; Pierce v. Fort, 60 Tex. 464; Davis v. Kennedy, 58 Tex. 516; Waltee v. Weaver, 57 Tex. 569; Kocourek v. Marak, 54 Tex. 201, 33 Am. Rep. 623; Pool v. Chase, 46 Tex. 207; Forbes v. Thomas (Tex.), 51 S. W. 1097; Summers v. Sheern (Tex.), 37 S. W. 246; Mc- Dannell v. Horrell, 1 Tex. Unrep. Cas. 521. "•As in Illinois, both under Act of 1857 and that of 1869. See Kurd's Rev. Stat. 1912, ch. 52, p. 1166, § 4; Warner v. Crosby, 89 111. 320. In Indiana, under Acts 1879, p. 129. See also Burns' Ann. Stat. 1914, §§ 3971, 3972. 773 EXECUTION' AND ACKNOWLEDGMENT § 500 edgment.^^ There would be no certainty in titles if the officer's cer- tificate could be contradicted by any other evidence. The law directs him to make his certificate in writing, and wheb he has made it the. world is to look to that and to nothing else.^^ Parol evidence can only be admitted to show fraud or duress connected with the acknowledg- ment, not to contradict the officer's certificate.^' But it is held that the certificate of a magistrate to the deed of 4 married woman that she was of full age is not conclusive, and th?it; she can not ratify it after coming of age except by acknowledgment: separa1;e and apart from her husband.'* • ' - The exception, that the magistrate's certificate is not' conclusive of/' the facts stated in it when fraud is shown, does not, however,- extend ; to the case of one who has in good faith purchased without notice of the fraud ; he is protected by the record, notwithstanding the f raud.'^ '^ Insurance Co. v. Nelson, 103 U. S. 544, 26 L. ed. 436; Hayes v. South- ern Home Bldg. &c. Assn., 124 Ala. 663, 26 So. 527, 82 Am. St. 216; American Freehold Land Mtg. Co. V. Thornton, 108 Ala. 258, 19 So. 529, 54 Am. St. 148; Coleman v. Smith, 55 Ala. 368; Miller v. Marx, 55 Ala. 322; Holland v. Webster, 43 Fla. 85, 29 So. 625; Blackman v. Hawks, 89 111. 512; McPherson v. Sanborn, 88 111. 150; Crane v. Crane, 81 III. 165; Lowell v. Wren, 80 111. 238; Russell v. Baptist Theological Union, 73 111. 337; Kerr v. Russell, 69 111. 666, 18 Am. Dec. 634; Mon- roe v. Poorman, 62 111. 523; Graham V. Anderson, 42 111. 514, 92 Am. Dec. 89; M'Neely v. Rucker, 6 Blackf. (Ind.) 391; Ridgely v. Howard, 3 Har. & McH. (Md.) 321; Bissett v. Bissett, 1 Har. & McH. (Md.) 211; Johnson v. Van Velsor, 43 Mich. 208, 5 N. W. 265; Johnston v. Wallace, 53 Miss. 331, 24 Am. Rep. 699; Bald- win V. Snowden, 11 Ohio St. 203, 78 Am. Dec. 303; Moore v. Fuller, 6 Ore. 272, 25 Am. Rep. 524; Lewars V. Weaver, 121 Pa. St. 268, 15 Atl. 514; Oppenheimer v. Wright, 106 Pa. St. 569; Singer Mfg. Co. v. Rook, 84 Pa. St. 442, 24 Am. Rep. 204; Heeter v. Glasgow, 79 Pa. St. 79, 21 Am. Rep. 46; Jamison v. Jamison, 3 Whart. (Pa.) 457, 31 Am. Dec. 536; Wester v. Hurt, 103 Tenn. 508, 130 S. W. 842; Williams v. Pouns, 48 Tex. 141; Hartley v. Frosh, 6 Tex. 208, 55 Am. Dec. 772; Lefebvre V. Dutruit, 51 Wis. 426, 8 N. W. 149, 37 Am. Rep. 833. See also Hitz v. Jenks, 123 U. S. 297, 31 L. ed. 156,. 8 Sup. Ct. 143 (deed); Godsey v. Virginia Iron &c. Co., 26 Ky. L. 657, 82 S. W. 386. If the certificate is not in statutory form, she is not estopped to deny its sufficiency un-; less guilty of some positive fraud. > Kopke V. Votaw (Tex.), 95 S. W.r 15. =^Per Tilghman, C. J., in Jourdau' V. Jourdan, 9 Serg. & R. (Pa.) 268, 11 Am. Dec. 724. See also Graham V. Anderson, 42 111. 514, 92 Am. Dec. 89 ' "'Moore v. Fuller, 6 Ore. 272, 25. Am. Rep. 524; Heeter V. Glasgow, 79 Pa. St. 79, 21 Am. Rep. 46; Jam- ison V. Jamison, 3 Whart. (Pa.) 457, 31 Am. Dec. 536; Homeopathic Mut. L. Ins. Co. V. Marshall, 32 N. J. Eq. 103. In a note to this case by the reporter the decisions of the vari- ous states upon the question, whether the officer's certificate is conclusively or only prima facie correct, are fully cited. See also Dowell V. Mitchell, 82 Ky. 47, 5 Ky. L. 746; Dolph v. Barney, "5 Ore. 191. =* Williams v. Baker, 71 Pa. St. 476; Ledger Building Assn. v. Cook, 7 Reporter 409, 19 Alb. L. J. 281. '" Heeter v. Glasgow, 79 Pa. St. 79, 21 Am. Rep. 46; Hall v. Patterson, 51 Pa. St. 289. § 501 EECOEDING AS AFFECTING PEIOKITT 774 If he has actual knowledge of fraud or duress in obtaining a wife's acknowledgment to a deed, or knowledge of such circumstances as would naturally lead him to inquiry, he is deprived of the protection accorded to an innocent and bona fide holder. Even less than actual duress will avoid a wife's acknowledgment of a mortgage in the hands of an assignee who ought to have inquired for defenses and did not. It is enough if it be shown that she did it under moral constraint, as, for instance, by threats, persecution, and harshness on the part of her husband. These facts being known to the mortgagee, his assignee is affected by them in case he is not entitled to the protection accorded to one who takes negotiable paper for value before maturity. He should inquire of the mortgagors whether the mortgage is open to any defense.*® A substantial compliance with the requirements of such a statute is sufficient.*^ § 501. Delivery prerequisite to effective record — Delivery through agents. — Delivery is another incident necessary to giving effect to the conveyance even as between the parties to it.*' Although the deed be »°Twitchell v. McMurtrie, 77 Pa. St. 383; McCandless v. Bngle, 51 Pa. St. 309; Michener v. Cavender, 38 Pa. St. 334, 80 Am. Dec. 486. "Hornbeck v. Mutual Building Assn., 88 Pa. St. 64. See also Hayes V. Southern Home Bldg. &c. Assn., 124 Ala. 663, 26 So. 527, 82 Am. St. 216. ''Brumby v. Jones, 141 Fed. 318, 72 C. C. A. 466; Freeman v. Peay, 23 Ark. 439; Humiston v. Preston, 66 Conn. 579, 34 Atl. 544; Edwards V. Tbom, 25 Fla. 222, 5 So. 707; Fitch V. Miller, 200 111. 170, 65 N. E. 650; Lanphier v. Desmond, 187 111. 370, 58 N. B. 343; Hawes v. Hawes, 177 111. 409, 53 N. E. 78; Baker v. Updike, 155 111. 54, 39 N. B. 587; Johnson v. Prosperity Loan &c. Assn., 94 111. App. 260; Houfes V. Schultze, 2 Bradw. (111.) 196; Fitzgerald v. Goff, 99 Ind. 28; Henry V. Carson, 96 Ind. 412; Goodwin v. Owen, 55 Ind. 243; Hoadley v. Had- ley, 48 Ind. 452; Woodbury v. Fish- er, 20 Ind. 387, 83 Am. Deo. 325; Foley V. Howard, 8 Iowa 56; May- nard v. Maynard, 10 Mass. 456, 6 Am. Dec. 146; Parker v. Hill, 8 Mete. (Mass.) 447; Samson v. Thornton, 3 Mete. (Mass.) 275, 37 Am. Dec. 135; Cressinger v. Dessen- burg, 42 Mich. 580, 4 N. "W. 269; Nazro v. Ware, 38 Minn. 443, 38 N. W. 359; Gadsden v. Thrush, 56 Nebr. 565, 76 N. W. 1060, 45 L. R. A. 654; Hoagland v. Green, 54 Nebr. 164, 74 N. W. 424 (delivery insuffi- cient though mortgagee had man- ual possession) ; Yeomans v. Petty, 40 N. J. Bq. 495, 4 Atl. 631; Rapps v. Gottlieb, 142 N. Y. 164, 36 N. B. 1052, affg. 67 Hun 115; Durfee v. Knowles, 50 Hun 601, 18 N. Y. St. 583, 2 N. Y. S. 466; Munoz v. Wil- son, 6 N. Y. St. 66; Shirley v. Burch, 16 Ore. 83, 18 Pac. 351, 8 Am. St. 273; Gorham v. Meacham, 63 Vt. 231, 22 Atl. 572, 13 L. R. A. 676; Ault V. Blackman, 8 Wash. 624, 36 Pac. 694; Garmer v. Martin (W. Va.), 80 S. E. 495; Harmon v. Myer, 55 Wis. 85, 12 N. W. 435; Croft v. Bunster, 9 Wis. 503. The execution of a mortgage includes delivery as an essential element. Van Valken- burgh v. Oldham, 12 Gal. App. 572, 108 Pac. 42; John Shillito Co. v. McConnell, 130 Ind. 41, 26 N. E. 95 Nebr. 894, 145 N. W. 849. See ante § 84. 775 EXECUTION" AND ACKNOWLEDGMENT § 501 recorded, if it has not been delivered, or the delivery was unauthorized, a subsequent conveyance by the grantor, or a subsequent judgment against him, will take precedence.^' Delivery becomes effectual when the mortgagor surrenders dominion of a completed mortgage with in- tent thereby to make it operative.*" A mortgage must not only be de- livered to, but must be accepted by the mortgagee ; otherwise the title does not pass. To be delivered, it would seem that the deed must pass under the power of the grantee or some person for his use, with the consent of the grantor.*^ The fact of the acknowledgment of the deed at a certain date is not by itself evidence that it was delivered at that time, or was ever de- livered,*^ though this has been said to be presumptive evidence.*^ • The record of the deed is said to be evidence of delivery in a greater degree, but it is not conclusive, of a delivery. It has sometimes been spoken of as a prima facie evidence of delivery.** It may be evidence for the jury to consider.*" But the registration itself does not operate as a delivery ; nor does it supersede the necessity of proof of a delivery.*'' Under the doctrine generally prevailing, the act of the mortgagor in iiling the mortgage for record or causing it to be recorded, constitutes only prima facie evidence of a delivery to the mortgagee.*'^ Under certain circum- =»Lanphier v. Desmond, 187 111. Schantz, 70 Wis. 497, 36 N. W. 249. 370, 378, 58 N. E. 343 (quoting "Moody v. Dryden, 72 Iowa 461, text); Woodbury v. Fisher, 20 Ind. 34 N. W. 210; Sessions v. Sherwood, 387, 83 Am. Dec. 325; Goodsell v. 78 Mich. 234, 44 N. W. 263; Knolls Stinson, 7 Blackf. (Ind.) 437; Wool- v. Barnhart, 71 N. Y. 474; Jackson son V. Kelley, 73 Minn. 513, 76 N. v. Perkins, 2 Wend. (N. Y.) 308; W. 258. Preston v. Albee, 120 App. Div. 89, "Merritt v. Temple, 155 Ind. 497, 105 N. Y. S. 33 (record presumptive 58 N. E. 699; Osborne v. Eslinger, evidence of delivery); Kille v. Ege, 155 Ind. 351, 58 N. E. 439; Ander- 79 Pa. St. 15; Peterson v. Kilgore, son v. Anderson, 126 Ind. 62, 24 N. 58 Tex. 88. E. 1036; Stokes v. Anderson, 118 <= Jordan v. Farnsworth, 15 Gray Ind. 533, 21 N. E. 331, 4 L. R. A. (Mass.) 517. 313. Delivery may be inferred from ^ Weber v. Christen, 121 111. 91, circumstances which indicate that 11 N. E. 893; Houfes v. Schultze, the grantor intended to part with 2 Bradw. (111.) 196, 96 111. 335; Skin- dominion of the instrument. In re ner v. Baker, 79 111. 496; Stiles v. Goldville Mfg. Co., 118 Fed. 892. Probst, 69 111. 382; Kingsbury v. "Woodbury V. Fisher, 20 Ind. 387, Burnslde, 58 111. 310, 11 Am. Rep. 83 Am. Dec. 325; Dearmond v. Dear- 67; National Bank v. Morse, 73 Iowa mond, 10 Ind. 191. See ante § 84. 174, 34 N. W. 803, 5 Am. St. 670; '"Freeman v. Schroeder, 43 Barb. Foley v. Howard, 8 Iowa 56; (N. Y.) 618, 29 How. Pr. (N. Y.) Hawkes v. Pike, 105 Mass. 560, 7 263; Jackson v. Richards, 6 Cow. Am. Rep. 554; Parker v. Hill, 8 (N. Y.) 617. Mete. (Mass.) 447. «Pereau v. Frederick, 17 Nebr. "Walton v. Burton, 107 111. 54; 117, 22 N. W. 235; WyckofE v. Rem- Connard v. Colgan, 55 Iowa 538, 8 sen, 11 Paige (N. Y.) 564; Portz v. N. W. 351; Cobb v. Chase, 54 Iowa § 501 EECOEDING AS AFFECTING PEIOEITT 776 stances, howeTer, the recording of a mortgage at the instance of the mortgagor has been held to amount to a delivery of the instrument to the mortgagee.** Thus a delivery to the register for record may be an effectual delivery to the grantee, where such delivery is made at the request of the grantee,*' or where the register had authority from him to receive it and keep it, or it is so delivered pursuant to a pre- vious agreement between the parties.^" And so where a mortgagor de- livered the mortgage to the recorder for registration, intending it as a complete delivery, and the mortgagee being notified of the trans- action, approved it, thereafter receiving interest on the loan, the de- livery was deemed suificient.^^ A mortgage by a corporation to secure a bond, duly signed, sealed and attested, was taken by the attorney of the corporation and deliv- ered to the trustee therein, who executed its acceptance in the pres- ence of two witnesses, after which it was redelivered to the attorney to be recorded, but was subsequently lost or mislaid, and was not re- turned to the trustee. It was held that there was a sufiScient delivery to render the mortgage valid. The court said : "Delivery is indispen- sable to the completion of a deed, but this may be done either formally, or delivery may be inferred from circumstances which indicate that the grantor intended to part with the dominion of the instrument and put it into the possession of the trustee."^^ 253, 6 N. "W. 300; Foley v. Howard, C. C. A. 73. In Withers v. Jenkins, 8 Iowa 56; Foster v. Beardsley 6 S. Car. 122, the court says: "It Scythe Co., 47 Barb. (N. Y.) 505; Is not necessary to the valid ex- Ford v. McCarthy, 77 Hun 612, 61 ecution of a deed that there should N. Y. St. 363, 29 N. Y. S. 786; be actual delivery either to the Geissmann v. Wolf, 46 Hun (N. Y.) grantee in person, or to some one 289, 11 N. Y. St. 306; Clymer v. expressly authorized to accept it on Groff, 220 Pa. 580, 69 Atl. 1119. his behalf. Much less is such a ■" Elsberry v. Boykin, 65 Ala. 336; requisition essential where the in- Carnall v. Duval, 22 Ark. 136; Doer- strument gives a trust conferring ner v. Nieberding, 3 Ohio Dec. 519. on the trustee a mere naked title, " Thayer V. Stark, 6 Cush. (Mass.) coupled with no interest, that he 11; Dusenbury v. Hulbert, 2 Thomp. holds for the mere purpose of pro- & C. (N. Y.) 177. tecting and preserving the trust for ■"Ward V. Ward, 144 Fed. 308; the beneficiaries who may be en- Capital City Bank v. Hodgin, 24 titled to these enjoyments. If the Fed. 1; Lawrence v. Lawrence, 181 grantor, in the absence of the 111. 248, 54 N. E. 918; Brunson v. grantee, and without his knowledge, Henry, 140 Ind. 455, 39 N. E. 256; has actually consummated the deliv- Reid V. Abernethy, 77 Iowa 438, 42 ery In accordance with the purpose N. W. 364; Hoffman v. Mackall, 5 declared on the face of the instru- Ohio St. 124, 64 Am. Dec. 637. ment, the object to be effected by •"Renken v. Bellmer, 55 Cal. 466. it is as fully accomplished as if ^' In re Goldville Mfg. Co., 118 Fed. there had been an actual transfer 892; William Firth Co. v. South Car- of the paper from the hands of the olina Loan &c. Co., 122 Fed. 569, 59 grantor to those of the grantee." 777 EXECUTION" AND ACKNOWLEDGMENT § 503 Delivery to a grantee who is called by a wrong name in the deed identifies the grantee, and vests the title in him.'^' A deed may be delivered by the grantor's agent. Thus a notary, with whom a note and mortgage are left by the mortgagor, after ac- knowledging the mortgage before him, will be presumed to have au- thority to deliver them, in the absence of instructions to. the contrary ; and a delivery by him to the mortgagee is a sufficient delivery.''* Of course a delivery to an agent of the grantee is a delivery to the grantee himself; as, for instance, a delivery to the secretary of a rail- road company is sufficient. °^ A delivery of a trust deed to a vice-pres- ident of a bank was held a delivery to the bank, notwithstanding his agreement to retain the instrument in his custody and to use it only to satisfy directors who had demanded security.^^ An officer employed by the mortgagee to obtain the execution and acknowledgment of a mortgage is the mortgagee's agent to accept delivery of the instru- ment.°^ A delivery of a mortgage made by a partner upon the disso- lution of the firm to secure a note of the firm, which he has assumed, to the other partner, who is indemnified by the mortgage, is suffi- cient.°* A deed of trust delivered to a third person with directions to deliver it to the mortgagee was held to be constructively delivered to the mort- gagee, giving it priority over a Judgment lien where the mortgagee told such person to retain it for safekeeping, though the mortgagor, with consent of the mortgagee, took the papers away temporarily to cancel some of the interest notes.^° § 502. Delivery after recording. — ^Where the delivery of a deed or mortgage is essential to its validity, it is a prerequisite to valid regis- tration.*^ And, since there can be no complete delivery without ac- ceptance, the record of an instrument made without the knowledge or assent of the grantee is of no effect until it has been accepted."^ But "= Fisher v. Milmine, 94 111. 328; =' Greene v. Conant, 151 Mass. 223, Beaver v. Blanker, 94 111. 175. 24 N. E. 44. " Adams v. Adams, 70 Iowa 253, ^ Conwell v. McCowan, 81 111. 285. 30 N. W. 795. The unconditional ™ Stahlhuth v. Nagle, 229 Mo. 570, delivery of a mortgage by a hus- 129 S. W. 687. band, as agent for his wife, though " Edwards v. Thom, 25 Fla. 222, unauthorized, is binding upon her. 5 So. 707; Fitzgerald v. Goff, 99 Ind. Alexander v. Welcker, 141 Cal. 302, 28; Hogadone v. Grange Mut. Fire 74 Pac. 845. Ins. Co., 133 Mich. 339, 94 N. "W. ■* Truman v McCollum, 20 Wis. 1045; Van Auken v. Mizner, 2 Nebr. 360; Patterson v. Ball, 19 Wis. 243. (Unoff.) 899, 90 N. W. 637; Houston See ante § 84. Land &c. Co. v. Hubbard, 37 Tex. « Rushing v. Citizens' Nat. Bank Civ. App. 546, 85 S. W. 474. (Tex. Civ. App.), 162 S. W. 460. "'Parmelee v. Simpson. 5 Wall. § 502 RECORDING AS AFFECTING PRIORITY 778 a subsequent acceptance by the grantee or mortgagee of a conveyance delivered to the recording oflBcer will render the record effective against third persons from the time of such acceptance.*^ A mortgagee taking a mortgage which has been recorded without a delivery takes it subject to a conveyance by the mortgagor made to another person after such record but before the mortgage was de- livered.'* Although a deed is generally considered of no effect until there has been a delivery of it to the grantee, yet a subsequent accept- ance by the grantee of a deed filed for record without delivery, has been held to ratify the making and recording of it, and to give it legal effect from the time of filing, as against intermediate incumbrances.^* When, for instance, one in debt to a bank executed a mortgage to it, and without delivering it sent it to the record ofiBce to be recorded, and then sent word to the officers of the bank of the execution of the mortgage, and that they could get it of the recorder, and they replied that "they were glad it was done," this was held a sufficient delivery of the deed to the bank to pass the title as against one to whom the mortgagor made and delivered another mortgage of the same prop- erty two days afterward, but after such notification to the bank and reply."' There are cases which hold that a delivery may be made to a stranger in behalf of the mortgagee, and without his authority, and upon his subsequent acceptance of the mortgage the title is regarded as having vested in him from the time of such delivery. Such was held to be the case where one in failing circumstances made a mort- gage to a creditor who resided out of the state, without the knowledge of his creditor, and delivered it to his own attorney for the benefit of the creditor, with the request that the attorney should cause it to be (U. S.) 81, 18 L. ed. 542; Weber L. ed. 232; Parmelee v. Simpson, V. Christen, 121 111. 91, 11 N. E. 5 Wall.. (U. S.) 81, 18 L,. ed. 542; 893, 2 Am. St. 68; Union Mut. Life Clark v. National Bank, 66 Fed. 404, Ins. Co. V. Campbell, 95 111. 267, 35 13 C. C. A. 545; Parker v. Hill, 8 Am. Rep. 166; Herbert v. Herbert, 1 Mete. (Mass.) 447; Mutual &c. Ins. 111. 354, 12 Am. St. 192; Woodbury Co. v. Rowand, 26 N. J. Eq. 389; V. Fisher, 20 Ind. 387, 83 Am. Dec. Wilcox v. Drought, 71 App. Div. (N. 325; Parker V. Hill, 8 Mete. (Mass.) Y.) 402, 75 "N. Y. S. 960; Farmers' 447; Samson v. Thornton, 3 Mete. &c. Bank v. Drury, 38 Vt. 426. See (Mass.) 275, 37 Am. Dec. 135; Pos- ante § 85. ter V. Beardsley Scythe Co., 47 Barb. " Lanphier v. Desmond, 187 111. (N. Y.) 505; Jackson v. Phipps, 12 370, 58 N. E. 343, affg. 86 111. App. Johns. (N. Y.) 418; Cook v. Cook 101. (R. I.), 43 Atl. 537; McCutchin v. "^Carnall v. Duval, 22 Ark. 136. Piatt, 22 Wis. 561; Miller v. Bline- See ante § 85. bury, 21 Wis. 676. See ante § 84. " Farmers' &c. Bank v. Drury, 38 <» Gould V. Day, 94 U. S. 405, 24 Vt. 426. 779 EXECUTION" AND ACKNOWLEDGMENT § 503 recorded and handed to the creditor. The mortgage -was accordingly- recorded, and afterward received and accepted by the mortgagee ; but after the delivery of it to the attorney and the recording of it, and before the attorney had delivered it to the mortgagee, the property was attached by another creditor of the mortgagor's. It was held that the mortgaged estate immediately vested in the mortgagee, whose title was therefore superior to that of the attaching creditor.*' It has been held, moreover, that it may be presumed that a mort- gagee, in whose favor a mortgage has been executed and placed on record, will assent to it on being notified of its existence; and there- fore, although it be made and recorded without his knoivledge, and the land is afterward attached by creditors of the mortgagor before the mortgagee has notice of the mortgage, which he afterward assents t9 and ratifies, he may hold the mortgage lien against such attach- ments.'' Thus, an absent mortgagee in whose favor a mortgage has been executed and recorded by the mortgagor is presumed to have accepted the mortgage;"" and especially where such mortgage is per- mitted to remain of record, and is recognized by all the parties in interest, the recording is presumed a delivery, and want of manual delivery is immaterial.'"' There may be some slight presumption of delivery arising from the record of a deed; but when this is overcome, the burden is upon the party claiming title under it to show on actual delivery before a levy upon the land by attachment or execution.''^ § 503. When a subsequent delivery becomes operative. — Although a deed be inoperative at the time it is recorded, as when it is recorded before delivery, or is recorded as a deed when intended as a mortgage, and the statutes of the state where it is executed require that it shall be recorded in such case in separate mortgage books, upon a subse- quent delivery in the one case, and in the other upon a purchase of the equity of redemption by the mortgagee, the record then becomes «' Merrills v. Swift, 18 Conn. 257, Jones on Chattel Mortgages, §§ 104- 46 Am. Dec. 315, and cases cited. 113. This is doubtful law. See also John- ^ Ensworth v. King, 50 Mo. 477. son V. Farley, 45 N. H. 505. The This case should not be relied upon execution and recording of a deed in any other state, is valid as against an attaching " In re Immanuel Presbyterian creditor, whose attachment is lev- Church, 112 La. 348, 36 So. 408. ied before actual delivery to the "Sessions v. Sherwood, 78 Mich, grantee. Hedge v. Drew, 12 Pick. 234, 44 N. W. 263. (Mass.) 141, 22 Am. Dec. 416. But "Harmon v. Myer, 55 Wis. 85, see Bell v. Farmers' Bank, 11 Bush 12 N. W. 435. (Ky.) 34, 21 Am. Rep. 205; see § 503 RECORDING AS AFFECTING PKIOEITY 780 fully operativeJ^ The delivery of the deed, or the purchase of the equity of redemption, is equivalent to a delivery of the deed for record at that time, in the same way as when a deed is recorded in anticipa- tion of the completion of a sale. The mortgage is effectual only from the time of such delivery, and any one who has in the meantime be- fore the delivery obtained a lien upon the property has a preference over such mortgagee. His assent to the mortgage makes the mortgage valid, and the record of it notice only from that time.'^ Where, for instance, a mortgage was recorded on the thirteenth day of a certain month, and was held by the mortgagor ready for delivery when he should obtain a loan, and was not delivered until the seventh day of the following month, the latter date was held to be the date of its registry, as against one who in the meantime had acquired a me- chanic's lien upon the property. But if the mortgage be executed and acknowledged, and put upon record by the mortgagor, in pursuance of a prior contract for a loan upon it, which is afterward made in pursuance of the contract, and the mortgage is then delivered upon the payment of the money, it has priority in equity over liens of mechanics and materialmen for work and materials furnished, after the mortgage is recorded, for a build- ing which the mortgagor commenced to erect upon the premises after the recording of the mortgage and before its delivery, the mortgagee having no knowledge of this fact. In such case the mortgage upon delivery has relation to the agreement for the loan, and the registry takes effect and becomes operative as constructive notice before the delivery, and from the time the mortgage was left for record.'* The recording of a mortgage is evidence of delivery and acceptance only so far as relates to the validity of the conveyance; and the rule does not apply to a provision in a mortgage which imposes an obliga- tion on the mortgagee to assume the payment of a pre-existing incum- brance on the property.'^ "Warner v. Winslow, 1 Sandf. Ins. Co., 27 N. J. Eq. 604. The doc- Ch. (N. Y.) 430. See ante §§ 85-87. trine of relation is fully considered "Houfes V. Schultze, 2 Bradw. in this case. See also contra, (111.) 196; Mutual Ben. Life Ins. Co. Houfes v. Schultze, 2 Bradw. (111.) V. Rowand, 26 N. J. Eq. 389; Foster 196; Pratt v. Potter, 21 Barb. (N. V. Beardsley Scythe Co., 47 Barb. Y.) 589; Judd v. Seekins, 62 N. Y. (N. Y.) 505; Jackson v. Richards, 266, 3 Thomp. & C. 266. 6 Cow. (N. Y.) 617; Hood v. Brown, "Swisher v. Palmer, 106 111. App. 2 Ohio 266. 432, "Jacobus V. Mutual Benefit Life 781 TIME AND MANNER OF EECOEDING § 504 III. Requisites as to the Time and Manner of Recording Section Section 504. When record becomes operative 509. Time of recording— After death as notice. of mortgagor. 506. Sufficiency of deposit for regis- 510. Place of record. tration. 511. Special books for record of 506. Payment of recording fees as mortgages. prerequisite to valid record. 512. Powers of attorney. 507. Record of schedule, memoran- 513. Record of separate defeasance. dum, or map annexed to deed. 514. Apparent record title. 508. Time of recording — Indorse- 514a. Reinscription, in Louisiana ment — Priority between mort- and Mississippi, gages recorded same day. § 504. When record becomes operative as notice. — In the usual course of recording, each instrument deposited with the recording officer is immediately indorsed with an official time stamp or other memorandum of the fact and time of filing, and placed among the ac- cessible files of newly deposited and untranscribed instruments until it can be copied in the records at length. In due order and course of time, sometimes specified by statute, the recorder enrols it in the record books. This official transcript then becomes the true and only record, since the owner of the instrument usually removes the original from the recorder's office after the enrolment has been made.^ Since the original instrument is subject to public inspection in the recorder's office between the date of filing and that of transcribing, the completed record is with good reason declared to relate back to the exact time of filing the instrument, and to give constructive notice from that time. Accordingly the record is considered notice from the time of filing and entry of the deed for record. It is sometimes provided by statute that a deed shall be deemed to be recorded when it is filed for record, or noted in an entry book by the recorder as received. But aside f rorn any statutory provision, the judicial interpretation of the effect of the filing is the same.^ ^Donald v. Beals, 57 Cal. 399; 29, § 446; Shepard v. Murphy, 26 Hatch V. Haskins, 17 Maine 391; Colo. 350, 58 Pac. 588. Potter V. Dooley, 55 Vt. 512. Connecticut: G. S. 1902, § 4036; "Alabama: Leslie v. Hinson, 83 Lewis v. H;inmaji, 56 Conn. 55; Ala. 266, 3 So. 443; Mallory v. Stod- Franklin v. Cannon, 1 Root (Conn.) der, 6 Ala. 801. 500. Arizona: Rev. Stat. 1913, § 2067. District of Columbia: Code 1911, Arkansas: Dig. of Stats. 1904, § 499; Sis v. Boarman, 11 App. D. § 762; Gates v. Walls, 28 Ark. 244. C. 116. California: Civ. Code 1906, Florida: Gen. Stat. 1906, § 2488. § 1170; Cady v. Purser, 131 Cal. 552, Illinois: Kurd's Rev. Stat. 1913, 63 Pac. 844; Edwards v. Grand, 121 ch. 30, § 30, p. 534; Haworth v. Tay- Cal. 254, 53 Pac. 796. lor, 108 111. 275; Kiser v. Heuston, Colorado: Ann. Stats. 1891, ch. 38 111. 252; Madlener v. Ruesch, 91 § 504 EECOEDING AS AFFECTING PEIOEITT 782 The record as notice dates from the moment the deed was left for record, and was indorsed by the recorder and entered upon the index 111. App. 391; Jummel v. Mann, 80 111. App. 288. Indiana: Nichol v. Henry, 89 Ind. 54; Gilchrist v. Gough, 63 Ind. 576, 30 Am. Rep. 250; Kessler v. State, 24 Ind. 313. Kansas: Gen. Stat. 1909, § 2182; Lee V. Birmingham, 30 Kans. 312, 1 Pac. 73; Poplin v. Mundell, 27 Kans. 138. Kentucky: Webb v. Austin, 22 Ky. L. 764, 58 S. W. 808; Bank v. Haggin, 1 A. K. Marsh. (Ky.) 306. Louisiana: Merrick's Code 1913, §§ 2262, 2264. The law governing the recording of mortgages is dif- ferent from that governing the registry of conveyances, in that a mortgage is not recorded until ac- tually inscribed in the book of mort- gages. Schneidau v. New Orleans Land Co., 132 La. 264, 61 So. 225. Massachusetts: Gillespie v. Rog- ers, 146 Mass. 610, 16 N. E. 711; Jacobs V. Denison, 141 Mass. 117, 5 N. E. 526. Michigan: Sinclair v. Slawson, 44 Mich. 123, 38 Am. Rep. 235; People V. Bristol, 35 Mich. 28. Minnesota: A mortgage is pre- sumed to have been recorded the day it was filed. Stat. 1913, § 6844 et seq. Mississippi: Code 1906, § 2788. Mangold v. Barlow, 61 Miss. 593, 48 Am. Rep. 84. Missouri: Bishop v. Schneider, 46 Mo. 472, 2 Am. Rep. 533; Har- rold V. Simonds, 9 Mo. 323. Montana: Civ. Code 1895, § 1591; Donald v. Beals, 57 Cal. 399. Nebraska: Comp. Stats. 1885, ch. 73, § 15; Ann. Stat. 1911, § 10815; Deming v. Miles, 35 Nebr. 739, 53 N. W. 665, 37 Am. St. 464; Perkins v. Strong, 22 Nebr. 725, 36 N. W. 292. Nevada: Comp Laws 1900, § 2664. New Mexico: Comp. Laws 1897, § 3954. New York: Birdseye's Consol. Laws 1910, Real Property Law, § 317; Mutual L. Ins. Co. v. Dake, 87 N. Y. 257; Bedford v. Tupper, 30 Hun (N. Y.) 174; Simonson v. Falihee, 25 Hun (N. Y.) 570. North Carolina: Bostic v. Young, 116 N. Car. 766, 21 S. E. 552; Davis v. Whitaker, 114 N. Car. 279, 19 S. E. 699, 41 Am. St. 793; Parker v. Scott, 64 N. Car. 118; Metts v. Bright, 4 Dev. & B. (N. Car.) 173, 32 Am. Dec. 683. Ohio: Bercaw v. Cockerill, 20 Ohio St. 163; Hoffman v. Mackall 5 Ohio St. 124, 64 Am. Dec. 637 Tousley v. Tousley, 5 Ohio St. 78 Bloom v. Noggle, 4 Ohio St. 45 Fosdick V. Barr, 3 Ohio St. 471 Brown v. Kirkman, 1 Ohio St. 116 Mayhem v. Coombs, 14 Ohio 428 Magee v. Beatty, 8 Ohio 396. Oregon: Laws 1910, § 7127. Pennsylvania: Farabee v. Mc- Kerrihan, 172 Pa. St. 234, 33 Atl. 583, 51 Am. St. 734; Clader v. Thom- as, 89 Pa. St. 343; Glading v. Prick, 88 Pa. St. 460; Brooke's Appeal, 64 Pa. St. 127. Rhode Island: Nichols v. Rey- nolds, 1 R. I. 30, 36 Am. Dec. 238. South Dakota: Parrish v. Ma- hany, 10 S. Dak. 276, 73 N. W. 97, 66 Am. St. 715. Tennessee: Code 1896, § 3749; Woodward v. Boro, 16 Lea (Tenn.) 678. Texas: Rev. Stat. 1879, § 4334; Sayles' Stat. 1914, § 6828; Harrison V. McMurry, 71 Tex. 122, 8 S. W. 612; Belbaze v. Ratto, 69 Tex. 636, 7 S. W. 501; Copelin v. Shuler (Tex.), 6 S. W. 668; Hudson v. Randolph, 66 Fed. 216, 13 C. C. A. 402. Vermont: Bigelow v. Topliff, 25 Vt. 273, 60 Am. Dec. 264. Virginia: Horsley v. Garth, 2 Grat. (Va.) 471, 44 Am. Dec. 393. Washington: Remington's Code 1910, § 8781. Wisconsin: St. Croix Land &c. Co. V. Ritchie, 73 Wis. 409, 41 N. W. 345; Prlngle v. Dunn, 37 Wis. 449, 19 Am. Rep. 772; Shove v. Lar- sen, 22 Wis. 142. But in this state the mere filing of the deed, without entering it in the Index or reception book, is not a record; International Life Ins. Co. v. Scales, 27 Wis. 640; though the deed be transcribed at length upon the record, Lombard 783 TIME AND MANNER OF EECOEDING § 505 or entry book, although it was not actually spread upon the record for months, or for any length of time afterward,^ or was lost and not recorded at all.* The entry in the entry book is constructive notice until the deed is spread in full upon the record." It may be kept in the office and referred to until it is transcribed, and the original deed so filed is notice to all the world." When it is spread upon the record, however, it is notice of only what appears upon the record.'^ A pre- sumption in favor of the record will prevail against the testimony of a subsequent purchaser or mortgagee that, at the time of filing his deed for record, no incumbrance upon the property appeared of rec- ord.' The record is not defective for the reason that a portion of it was printed instead of being written with pen and ink." § 505. Sufficiency of deposit for registration. — To constitute a valid filing for record a mortgage or other instrument must be deliv- ered at the recording office, and delivery elsewhere will not render the deeds remained in the recorder's hands, hut in the last named cases may have heen taken away by the grantees. In Wisconsin the record of a deed or mortgage becomes effective only when the Index entries pre- scribed by statute have been made. When properly indexed the record relates back to the time of filing. Pringle v. Dunn, 37 Wis. 449, 19 Am. Rep. 772; International Life Ins. Co. V. Scales. 27 Wis. 640; Webb on Record of Title, § 16. ■* Lee V. Bermingham, 30 Kans. 312, 1 Pac. 73; Perkins v. Strong, 22 Nebr. 725, 36 N. W. 292; Marlet V. Hinman, 77 Wis. 136, 45 N. W. 953, 20 Am. St. 102. " Sinclair v. Slawson, 44 Mich. 123, 6 N. W. 207, 38 Am. Rep. 235. "Nichols V. Reynolds, 1 R. 1. 30, 36 Am. Dec. 238; Bigelow v. Top- liff, 25 Vt. 273, 60 Am. Dec. 264. 'Donald v. Reals, 57 Cal. 399; Hatch V. Haskins, 17 Maine 391; Potter V. Dooley, 65 Vt. 512. See post §§ 549, 550. 'Vandercook v. Baker, 48 Iowa 199. "Maxwell v. Hartmann, 50 Wis. 660, 8 N. W. 103. See also Caldwell V. Center, 30 Cal. 539, 89 Am. Dec. 131 (record in pencil insufficient). V. Culberston, 59 Wis. 433, 18 N. W. 399. Contrary to the general rule see Iowa: Nickson v. Blair, 59 Iowa 531, 13 N. W. 641; Yerger v. Barz, 56 Iowa 77, 8 N. W. 769. Wyoming: Comp. Stat. 1910, § 3653. See post §§ 550, 551. "Franklin v. Cannon, 1 Root (Conn.) 500; Benson v. Callaway, 80 Ga. 230, 4 S. E. 851; Kiser v. Heuston, 38 111. 252; Bank v. Hag- gin, 1 A. K. Marsh. (Ky.) 306; Sin- clair V. Slawson, 44 Mich. 123, 38 Am. Rep. 235; Wood's Appeal, 82 Pa. St. 116; Brooke's Appeal, 64 Pa. St. 127; Musser v. Hyde, 2 Watts & S. (Pa.) 314; Crews v. Taylor, 56 Tex. 461; Throckmorton v. Price, 28 Tex. 605, 91 Am. Dec. 334; Lane V. Duchac, 73 Wis. 646, 41 N. W. 962. In Georgia, under the Code, §§ 267, 1957, a mortgage is not re- corded until it is actually spread upon the record. In Texas the cases of Taylor v. Harrison, 47 Tex. 454, 26 Am. Rep. 304, and Woodson v. Allen, 54 Tex. 551, are not consistent with the de- cisions' in the same state cited above. It has been suggested that the apparent conflict in these de- cisions, may have arisen from the fact that, in the cases first cited, the § 505 EECOKDING AS AFFECTING PEIOEITT 784 record operative, although the officer indorse it as filed.^" But a de- livery at the proper office to a person in charge, is good although made after the usual office hours. ^^ A deed is sufficiently recorded by depos- iting it with the person in charge of the registration office, though such person be neither the official recorder nor a deputy of his, for the recorder is responsible for the acts of the person whom he has placed in charge of the office, and the acts of such person in custody of the records are the acts of the recorder.^^ The registration of a conveyance being purely a ministerial act, the recorder is not disqualified from acting by reason of his being a party to the deed.^^ The recorder is usually required by statute to attest the record by his signature, but in the absence of such requirement a copy of the record is admissible in evidence though this has not been signed by the officer.^* A mortgage or other instrument must be filed with the intention that it should be recorded ; and if filed with instructions to the officer not to record it until further notice, it will not be considered recorded until such direction is given,^^ even though the recorder may have in- " Edwards v. Grand, 121 Cal. 254, 53 Pac. 796. See also Withrow v. Citizens' Bank, 55 Kans. 378, 40 Pac. 639; Kalb v. "Wise, 5 Oliio 533, 5 Oliio N. P. 5; Matter of Jones, 2 Ohio Dec. 409, 7 Ohio N. P. 225; Horsley v. Garth, 2 Grat. (Va.) 471, 44 Am. Dec. 393. " Edwards v. Grand, 121 Cal. 254, 53 Pac. 796. "Cook V. Hall, 6 111. 575; Orne v. Barstow, 175 Mass. 193, 55 N. E. 896; Deming v. Miles, 35 Nebr. 739, 53 N. W. 665, 37 Am. St. 464; Deane V. Hutchinson, 40 N. J. Eq. 83, 2 Atl. 292; Stewart v. Beale, 68 N. Y. 629, afl'g. 7 Hun 405; Dodge v. Potter, 18 Barb. (N. Y.) 193; Bishop v. Cook, 13 Barb. (N. Y.) 326; Maley V. Tipton, 2 Head (Tenn.) 403; Fairbanks v. Davis, 50 Vt. 251; Houghton V. Burnham, 22 Wis. 301. But see in regard to entry made by an unauthorized person, Pearson v. Powell, 100 N. Car. 86, 6 S. E. 188.' The instrument should be delivered to the official recorder or his dep- uty. Wilson V. Eifler, 11 Heisk. (Tenn.) 179; Conant's Estate, 43 Ore. 530, 73 Pac. 1018. In Vermont an assistant clerk can act only when the clerk Is absent or disabled, and can not receive an instrument for record when the clerk, is present. Blair v. Ritchie, 72 Vt. 311, 47 Atl. 1074. Where no one is in charge of the oflBce, it is not sufficient to leave the in- strument there with the recording fee; and if it is not recorded until several days later, the record will take effect only from the actual re- cording. Crouse v. Johnson, 65 Hun 337, 47 N. Y. St. 559, 20 N. Y. S. 177. ^Tessier v. Hall, 7 Mart. (0. S.) (La.) 411; Brockenborough v. Mel- ton, 55 Tex. 493. For the same rea- son the recorder may appoint a deputy to act in his stead. Dodge V. Potter, 18 Barb. (N. Y.) 193. "Wilt V. Cutler, 38 Mich. 189. '"Bo wen v. Fassett, 37 Ark. 507; Haworth v. Taylor, 108 111. 275; Town V. Griffith, 17 N. H. 165; Gib- son V. Thomas, 85 App. Div. 243, 83 N. Y. S. 552, affd. 180 N. Y. 483, 73 N. E. 484, 70 L. R. A. 768; Co- nant's Estate, 43 Ore. 530, 73 Pac. 1018; Turberville v. Fowler, 101 Tenn. 88, 46 S. W. 577; Hunt v. Allen, 73 Vt. 322, 50 Atl. 1103; Blair V. Ritchie, 72 Vt. 311, 47 Atl. 1074. See also Dedman v. Earle, 52 Ark. 164, 12 S. W. 330 (chattel mort- gage). 785 TIME AND MANNER OF RECORDING § 506 dorsed the time of receiving it.^' If the officer records it -without fur- ther directions the record will not constitute notice ;^^ but it inay be- come effective by a subsequent ratification.^' If a grantee withdraws an instrument from the recorder's office, after it has been filed for record, but before it has been copied into the record books, the operation of the record is suspended until its re- turn,^° and the purpose or reason for such withdrawal is immaterial.^" But the record again becomes effective when the instrument is re- turned to the office.^^ § 506. Payment of recording fees as prerequisite to valid record. — The payment of the recording fees is not a prerequisite to a valid record of a deed, if the recorder receives it for record. If he waives his right to a prepayment of such fees, he is bound to make a proper record of the deed,^^ and the record will be valid.^^ Under a statutory provision that no deed shall be admitted to record until the fee for recording is paid, the recording officer is not bound to receive a deed for record until the fee has been paid.^* Even such a provision is re- garded merely as directory, and the record is valid. The recorder in such case assumes the fee or tax,^^ and may obtain reimbursement from the person depositing the instrument for record.^" "Town v. Griffith, 17 N. H. 165. Am. St. 102 (record of instrument "Haworth v. Taylor, 108 III. 275; lost through officer's fault not preju- Brigham v. Brown, 44 Mich. 59, 6 diced). N. W. 97; Blair v. Ritchie, 72 Vt. ""Worcester Nat. Bank v. 311, 47 Atl. 1074. But see Mercan- Cheeney, 87 111. 602. But see Wil- tile Co-Operative Bank v. Brown, son v. Leslie, 20 Ohio 161. 96 Va 614, 32 S. B. 64. *» Woodruff v. Phillips, 10 Mich. ^» Blair v. Ritchie, 72 Vt. 311, 47 500. S. E. 1074. ^Bussing v. Grain, 8 B. Mon. "Lawton v. Gordon, 37 Cal. 202; (Ky.) 593; People v. Bristol, 35 Kiser v. Heuston, 38 111. 252; Yer- Mich. 28; Ridley v. McGehee, 2 Dev. ger V. Barz, 56 Iowa 77, 8 N. W. (N. Car.) 40; Parrish v. Mahany, 769; Webb v. Austin, 22 Ky. L. 764, 10 S. Dak. 276, 73 N. W. 97, 66 Am. 58 S. W. 808; Jones v. Parker, 73 St. 715. Maine 248; Glamorgan v. Lane, 9 "« Hoffman v. Mackall, 5 Ohio St. Mo. 446; Ward v. Watson, 24 Nebr. 124, 64 Am. Dec. 637; Parrish v. 692, 39 N. W. 615; Hickman v. Per- Mahany, 10 S. Dak. 276, 73 N. W. rin 6 Goldw. (Tenn.) 135; Johnson 97, 66 Am. St. 715; Lucas v. Claf- V Burden, 40 Vt. 567, 94 Am. Dec. flin, 76 Va. 269. But see Phillips v. 436 See also Murray v. Zeller (N. Clark, 4 Mete. (Ky.) 348, 83 Am. J.), 59 Atl. 261. An unauthorized Dec. 471 (subsequent purchasers removal of the instrument by, a not charged with notice), third person without the knowledge =" Cunninggim v. Peterson, 109 N. of the grantee will not prejudice the Gar. 33, 13 S. E. 714. record Parrish v. Mahany, 10 S. == Hoffman v. Mackall, 5 Ohio St. Dak 276, 73 N. W. 97, 66 Am. St. 124, 64 Am. Dec. 637; Lucas v. 715- Parker v. Panhandle Nat. Glafflin, 76 Va. 269. Bank, 11 Tex. Giv. App. 702, 34 S. ^Bussing v. Grain, 8 B. Mon. W 196 See also Marlet v. Hin- (Ky.) 593. man, 77 Wis. 136, 45 N. W. 953, 20 SO— Jones Mtg.— Vol. I. § 507 EECOEDING AS AFFECTING PEIOEITY 786 But where a deed is sent to a recorder by mail or otherwise to be recorded, without the fee for recording, and the recorder in conse- quence of not receiving the fee "pigeon-holed" it, the deed is not lodged for record so as to be notice to a subsequent bona fide creditor of the vendor.^^ If, however, the recorder receives the deed without the fees being paid, and enters it as a deed received, or indorses such entry upon the deed, and he allows the entry to stand, he can not be heard to contradict such entry upon finding that his fees are not in fact paid.^^ In the absence of a special agreement, the mortgagor is not liable for the payment of the recording fee, since the registration of the mortgage is solely for the benefit of the mortgagee.^' A statute requiring the prepayment of taxes on land and proof thereof by a certificate from the county treasurer as prerequisite to the registration of a deed, has been held unconstitutional, as depriv- ing a person of property without due process of law.^° § 507. Record of schedule, memorandum, or map annexed to deed. — A schedule, memorandum, or map referred to in a deed, and an- nexed to it, is a part of the deed, and must be recorded as a part of it.**^ If such schedule, memorandum, or map, be not annexed, in- dorsed, or otherwise made a part of the deed, it need not be recorded although referred to in the deed.^^ On the other hand, a schedule, memorandum, or map annexed to or indorsed upon a deed is not ordi- narily the deed or part of it unless it is referred to in the deed.^^ Where a deed refers to a certain recorded map for description of prem- ises conveyed, a map drawn in pencil and merely pasted between the leaves of the recorder's book, is not duly recorded, and is insufiicient ^ Dickerson v. Bowers, 42 N. J. the mortgagor shall pay such fees, Eq. 295, 11 Am. St. 142. creates a valid lien for them. Bout- ^ Ridley v. McGehee, 2 Dev. (N. well v. Steiner, 84 Ala. 307, 4 So. Car.) 40. 184, 5 Am. St. 375. "»The record being for the pro- ™ State v. Moore, 7 Wash. 173, 34 tection of the grantee, it is for him Pac. 461. to see that the record is made, and "' Sawyer v. Pennell, 19 Maine 167. the recording fees paid. Even in '^ Shirras v. Caig, 7 Cranch (U. case of a mortgage, though it may S.) 34, 3 L. ed. 260; Chapin v. Cram, be customary for a borrower to pay 40 Maine 561. See also Deppen v. all the expenses attending the loan, Bogar, 7 Pa. Super. Ct. 434; Opper- including the fees for registering mann v. McGown (Tex.), 50 S. W. the mortgage securing the loan, the 1078; Glenn v. Seeley, 25 Tex. Civ. mortgagee can not hold the mort- App. 523, 61 S. W. 959. gagor liable for such fees in the ab- '^ McKean &c. Land Imp. Co. v. sence of an agreement to pay them. Mitchell, 35 Pa. St. 269, 78 Am. Dec, Simon v. Sewell, 64 Ala. 241. A 335. stipulation in the mortgage, that 787 TIME AND MANNER OF RECORDING § 508 to identify the land. Since the object of the recording acts is a preser- vation of accurate and durable copies of instruments, a copy made in pencil is not sufficient.'* Where a statute provides that the parties offering a plat or map for record shall first acknowledge it, a plat of mortgaged land executed by three persons but properly acknovrledged by only two, and not as- sented to by the mortgagee, is of no effect, where subsequent to the filing of the plat, the title to the mortgaged land passes to the mort- gagee by foreclosure and he does nothing to affirm or recognize the plat.'^ If an additional provision or agreement be indorsed upon a deed or mortgage after its execution, or be embraced in a separate paper, this should be acknowledged as a separate deed; and it is not neces- sary to record the deed or mortgage again in order to connect it with such additional provision, if this duly refers to the original deed or mortgage which it affects or qualifies.^" § 508. Time of recording — Indorsement — Priority between mort- gages recorded same day. — It is not essential to the validity of a regis- tration, that the time of delivery to the register should be entered or indorsed on the deed or mortgage. ^^ If such indorsement is made, it constitutes at least prima facie evidence of the fact and time of filing,^' but, according to the apparent weight of authority, it is not conclusive and may be contradicted by parol evidence."" Numerous cases hold, however, that tlie certificate of the register is conclusive »* Caldwell v. Center, 30 Cal. 539, "'Webb v. Austin, 22 Ky. L. 764, 89 Am. Dec. 131. 58 S. W. 808. See also Merrick v. ^"^ Alton V. Fischback, 181 111. 396, Wallace, 19 111. 486; Day &c. Lum- 55 N. E. 150. ber Co. v. Mack, 24 Ky. 640, 69 S. =°Munson v. Ensor, 94 Mo. 504, W. 712; Head v. Goodwin, 37 Maine 7 S. W. 108; Choteau v. Thompson, 181; Thomas v. Hanson, 59 Minn. 2 Ohio St. 114. 274, 61 N. W. 135; Jackson v. Phil- =' Edwards v. Grand, 121 Cal. 254, lips, 9 Cow. (N. Y.) 94. 53 Pac. 796; Metts v. Bright, 4 Dev. "» Worcester Nat. Bank v. & B. L. (N. Car.) 173, 32 Am. Dec. Cheeney, 87 111. 602; Budd v. 683. See also Eufaula Nat. Bank v. Brooke, 3 Gill (Md.) 198, 43 Am. Pruett, 128 Ala. 470, 30 So. 731; Dec. 321 (time of filing a question Cook V. Hall, 1 Gil. (111.) 575; for the jury when controverted); Thorn v. Mayer, 12 Misc. 487, 67 Town v. Griffith, 17 N. H. 165; Cun- N. Y. St. 389, 33 N. Y. S. 664; Blsh- ninggim v. Peterson, 109 N. Car. op V. Cook, 13 Barb. (N. Y.) 326; 33, 13 S. B. 714; Kalb v. Wise, 5 Cunninggim v. Peterson, 109 N. Ohio Dec. 533, 5 Ohio N. P. 5; Blair Car. 33, 13 S. B. 714. The rule is v. Ritchie, 72 Vt. 311, 47 Atl. 1074; the same concerning chattel mort- Bartlett v. Boyd, 34 Vt. 256; gages: Gorham v. Summers, 25 Horsley v. Garth, 2 Grat. (Va.) Minn. 81; Day &c. Lumber Co. v. 471, 44 Am. Dec. 393. See also Ed- Mack, 24 Ky. L. 640, 69 S. W. 712; wards v. Grand, 121 Cal. 254, 53 Pac. Bailey v. Costello, 94 Wis. 87, 68 796. N. W. 663. § 508 EECOEDING AS Ari'ECTING PKIOEITT 788 as to the time when a mortgage deed was left for record, as between the mortgagee and a subsequent purchaser or creditor who has at- tached the mortgaged land subsequently to the time stated in the cer- tificate." If the recording officer has failed to note the time of receiving a deed for record, the time may be shown by parol evidence.*^ If the mortgage be left at the registry in the absence of the recorder, and it is received and filed by a clerk in charge of the office, the filing is sufficient, though the clerk has no authority to perform the duties of the register. It is the duty of the recording officer to enter and num- ber the mortgage, and the rights of the mortgagee can not be im- paired by his omission to do so.*^ The certificate is not, however, con- clusive of anything beyond the time of the receipt of the instrument for record, as, for instance, it is not conclusive that it is duly re- corded.*^ If a mortgage be left with a register with no directions to record it,** or with directions that it shall not be placed on record until fur- ther directions should be given, and it is recorded without such direc- tions ever having been given, there is no effectual recording of it.*'^ In such case, if directions should be subsequently received to record the mortgage, the record should be made as of the time when such in- structions are received, and not as of the time when the deed was left, nor of the time when it was recorded without authority.** When the time of receiving a mortgage for record as entered in the index book shows upon its face that it was not made at the time "Webb V. Austin, 22 Ky. L. 764, 17 N. Y. 469; Jackson v. Phillips, 9 58 S. W. 808; Hatch v. Haskins, 17 Cow. (N. Y.) 94; Cunninggim v. Maine 391; Adams v. Pratt, 109 Peterson, 109 N. Car. 33, 13 S. E. Mass. 59; Fuller v. Cunningham, 714; Blair v. Ritchie, 72 Vt. 311, 47 105 Mass. 442; Ames v. Phelps, 18 Atl. 1074; Wing v. Hall, 47 Vt. 182. Pick. (Mass.) 314; Tracy v. Jenks, See also Budd v. Brooke, 3 Gill 15 Pick. (Mass.) 465; Bullock v. (Md.) 198, 43 Am. Dec. 321; Bart- Wallingford, 55 N. H. 619; Edwards lett v. Boyd, 34 Vt. 256; Horsley v. V. Barwise, 69 Tex. 84. Garth, 2 Grat. (Va.) 471, 44 Am. ■"Metts V. Bright, 4 Dev. & B. Dec. 393. (N. Car.) 173, 32 Am. Dec. 683; « Horsley v. Garth, 2 Grat. (Va.) Boyce v. Stanton, 15 Lea (Tenn.) 471, 44 Am. Dec. 393. 346. ■">Bowen v. Passett, 37 Ark. .507; « Dodge V. Potter, 18 Barb. (N. Haworth v. Taylor, 108 111. 275; Y.) 193; Metts v. Bright, 4 Dev. & Gibson v. Thomas, 85 App. Div. 243, B. (N. Car.) 173, 32 Am. Dec. 683; 83 N. Y. S. 552, afCd. 180 N. Y. 483, Houghton v. Burnham, 22 Wis. 301. 73 N. E. 484, 70 L. R. A. 768; Hunt See ante §§ 504, 505. v. Allen, 73 Vt. 322, BO Atl. 1103. '•■Bubose V. Young, 10 Ala. 365; «Bowen v. Fassett, 37 Ark. 507; Worcester Nat. Bank v. Cheeney, 87 Yerger v. Barz, 56 Iowa 77, 8 N. W. 111. 602; Thorp v. Merrill, 21 Minn. 769; Brigham v. Brown, 44 Mich. 336; Town v. GrlflBth, 17 N. H. 165; 59, 6 N. W. 97; Town v. Griffith, 17 New York Life Ins. Co. v. White, N. H. 165. 789 TIME AND MANNER OF EECOEDING § 508- of such reception, the presumption of the correctness of the register's entry is lost,*' and parol evidence is admissible to show when the deed was actually received for record. The filing of a mortgage for record affords no notice if the deed be withdrawn before it is re- corded.** As between two mortgagees, whose mortgages are executed and re- corded on the same day, that which was first delivered for record has priority,*"* and parol evidence is admissible to show which was first deposited for record.^" To ascertain which is prior, the fractional parts of a day are considered, and the legal fiction that there are no fractions of a day does not preclude such determination of priority.^^ The indorsements on different trust deeds, by the recording oflBcer, of their numbers and time of filing for record, is to be regarded as indicating their priority, since each instrument takes effect from the time of filing it for record.^^ To avoid the effect of the recording act, which gives priority among mortgages executed by the same party' at the same time, according to their order of record, it must clearly appear that all the mortgages were in fact executed at the same time, and that it was agreed by the parties taking the mortgages that they should be equal liens. °^ In case no entry is made upon the record of the time of the recording of the mortgage, when the law of a state required no such entry, and it appears from the record to have been recorded at an early day, it will be presumed that the record was made within the time required by law after the execution of it.^* As between two mortgages acknowledged the same day and recorded the same day and hour, mortgaging the same premises to secure two notes made payable to the same nominal payee, for convenience in negotiating them, that one is entitled to priority which is first entered "Metts V. Bright, 4 Dev. & B. 539; Spaulding v. Scanland, 6 B. (N. Car.) 173, 32 Am. Dec. 683; Hay Mon. (Ky.) 353. V. Hill, 24 Wis.. 235. =» Boone v. Telles, 2 Bradw. (111.) "Worcester Nat. Bank v. 539; Spaulding v. Scanland, 6 B. Cheeney, 87 111. 602; Glamorgan v. Mon. (Ky.) 353. Lane, 9 Mo. 442; Hickman v. Per- "'New England Mtg. Sec. Co. v. rin, 6 Cold. (Tenn.) 135; Lawton Fry, 143 Ala. 637, 42 So. 57, 111 Am. V. Gordon, 37 Cal. 202. Under the St. 62; Lemon v. Staats, 1 Cow. (N. California statute. Civil Code, Y.) 592. See also Wood v. Lordier, §§ 1170, 1213, notice is not imparted 115 Ind. 519, 18 N. E. 34; Gibson until the instrument is spread upon v. Keyes, 112 Ind. 568, 14 N. E. 591. the record in the proper book, but "^ Madlener v. Ruesch, 91 111. App. when this is done it relates back 391. to the time of deposit for record. "^ White v. Leslie, 54 How. Pr. (N. Watkins v. Wilhoit (Cal.), 35 Pac. Y.) 394. 646. "Hallv. Tunnell, 1 Houst. (Del.) ^'Brookfield v. Goodrich, 32 111. 320. 363; Boone v. Telles, 2 111. App. § 509 RECORDING AS AFFECTING PRIORITY '^90 and numbered by the recorder for record and which secures the note bearing the earlier date, if such mortgage is the first one transferred for value.^^ § 509. Time of recording — ^After death of mortgagor. — Generally, a mortgage may be recorded at any time after its execution, and the record will be effective against all subsequent claims,^" unless there has been unreasonable delay or laches.^^ A mortgage may be recorded after the death of the mortgagor, if he has in his lifetime made de- livery of it. His general creditors can not for that reason claim that the mortgage was inoperative as against them.'^* The recording of a deed is no part of its execution. Neither does a lien attach to the real estate of a debtor in favor of his general creditors immediately upon his death, as against the specific lien of the mortgage which was good against the mortgagor. His heirs take the estate upon his decease sub- ject to the incumbrance; and the lien of the general creditors, which is merely a right to have the real estate in the hands of the heirs ap- plied for their benefit upon a deficiency of the personal assets, attaches to it in the same condition.''* In like maimer a mortgage executed and delivered before a general assignment of the mortgagor for the benefit of his creditors, or before his bankruptcy, if valid in other respects, is valid against the assign- ment or the bankruptcy, though not recorded until afterward."'" A mortgagor, having borrowed money upon his business property, continued in business deriving credit from the ownership of the prop- . erty which was apparently unincumbered. Upon his death several years after, the mortgagee discovered that the mortgage, which he had ^ Fischer v. Tuchy, 186 111. 143, 57 Moore v. Masterson, 19 Tex. Civ. IC. E. 801, affg. 87 111. App. 574. App. 308, 46 S. W. 855; Vickers v. ^'Finley v. Spratt, 14 Bush (Ky.) Carnohan, 4 Tex. Civ. App. 305, 23 225; Citizens' Bank v. Ferry, 32 La. S. W. 338. Ann. 310; Herman V. Clark (Tenn.), "Kappes v. Rutherford Park 39 S. W. 873. See also for applica- Assn., 60 N. J. Eq. 129, 46 Atl. 218. tion of the rule to chattel mort- See also Longworth v. Close, 1 Mc- gages: Hope v. Johnston, 28 Fla. Lean (U. S.) 282, Fed. Cas. No. 55, 9 So. 830; Reese v. Taylor, 25 8489; Reese v. Taylor, 25 Fla. 283, Fla. 283, 5 So. 821; Roe v. Meding, 5 So. 821. 53 N. J. Ed. 350, 33 Atl. 394. The ■« Haskell v. Bissell, 11 Conn. 174; rule applies even where the statute Gill v. Pinney, 12 Ohio St. 38; Her- requires recording "forthwith" or man v. Clark (Tenn.), 39 S. W. 873; "immediately." Gibson v. "Warden, McCandlish v. Keen, 13 Grat. (Va.) 14 Wall. (U. S.) 244, 20 L. ed. 797; 615. See also Terry v. Briggs, 12 McVay v. English, 30 Kans. 368, 1 Mete. (Mass.) 17. Pac. 795; Roe v. Meding, 53 N. J. ""Gill v. Pinney, 12 Ohio St. 38. Eq. 350, 33 Atl. 394; Wilson v. Les- ""Mellon's Appeal, 32 Pa. St. 121; lie, 20 Ohio 161; Maverick v. Bo- Wyckoft v. Remsen, 11 Paige (N. hemian Club (Tex.), 36 S. W. 147; Y.) 564. 791 TIME AND MANNER OF EECOEDING § 510 instructed the mortgagor to record, had not been recorded, and re- corded it prior to any contemplation of insolvency of the mortgagor's estate. It was held that the mortgage constituted a valid lien which was prior to that of the mortgagor's creditors.°^ § 510. Place of record. — The registration must be made in the registry district within which the land lies, which is generally a coun- ty, but in Connecticut and Vermont is a town. In some of the new states and territories in which there is territory which is not yet or- ganized into counties, special provision is made for the recording of deeds of lands lying within such unorganized territory, as by provid- ing that the record shall be made in the county to which such unor- ganized territory is attached for judicial purposes. And it has been accordingly decided by a federal court that land lying in an unor- ganized county is to be regarded for all purposes, including registry, as being within the territorial limits of a county- to which it is at- tached for judicial purposes.^^ After the organization of a new county, a deed or mortgage prop- erly recorded under the law as it existed at the time of the record need not be recorded anew;"^ but a deed that had been executed but not recorded, at the time of the organization of a new county, should be recorded in that county."* Where a county is divided into two districts, each district stands as a separate county for purposQs of registration ; and a mortgage recorded in one district on property situ- ated in the other is not effective against a subsequent mortgage prop- erly recorded in the district where the property is located."^ If the land embraced in a deed is situated in more than one county, the deed should be recorded in each county in which any part of the land is situated ; otherwise the grantee will not be protected as to that "'Herman v. Clark (Tenn.), 39 Colquhoun, 18 Tex. 148; 'Williamson S. W. 873. V. Work, 33 Tex. Civ. App. 369, 77 "' Thayer v. Herrick, Fed. Cas. No. S. W. 266. See also Stebbins v. 13868. Duncan, 108 U. S. 32, 27 L. ed. 641, "^ Chambers v. Haney, 45 La. Ann. 2 Sup. Ct. 313; Lumpkin v. Muncey, 447 12 So. 621; Parish Board v. Ed- 66 Tex. 311, 17 S. W. 732. rington, 40 La. Ann. 633, 4 So. 574; "Aster v. Wells, 4 Wheat. (U. Ellison V. Her, 22 La. Ann. 470; S.) 466, 4 L. ed. 616; Beaver v. Hayden v. Nutt, 4 La. Ann. 65; Frick County, 53 Ark. 18, 13 S. W. Thomas v. Hanson, 59 Minn. 274, 61 134; Green v. Green, 103 Cal. 108, N. W. 135; Koerper v. St. Paul &c. 37 Pac. 188; Garrison v. Haydon, R. Co., 40 Minn. 132, 41 N. B. 656; 1 J. J. Marsh. (Ky.) 222, 19 Am. Bivings v. Gosnell, 133 N. Car. 574, Dec. 70; Geer v. Missouri Lumber 45 S. E. 942; Hill v. Grant (Tex.), &c. Co., 134 Mo. 85, 34 S. W. 1099, 44 S. W. 1016; Trimble v. Edwards, 56 Am. St. 489. 84 Tex. 497, 19 S. W. 772; Jones v. == Beaver v. Frick County, 53 Ark. Powers, 65 Tex. 207; McKissick v. 18, 13 S. W. 134. § 510 EECOKDING AS AFFECTING PKIOKITT 792 part of the land lying in the county where the instrument is not re- corded.*'^ But where a statute only requires a deed to be recorded in the county where a body of land or part thereof lies, registration in either county is sufficient/'' It is intended that the registry laws shall enable a person interested in the title to land to ascertain from the records of the county, or other registry district within which the land is situate, what convey- ances there are affecting that land. The recording of a deed in a county other than that in which the land is situated does not operate as constructive notice.®* Thus, where a new county had been created, and a grantee, not being advised of the change, recorded his deed in the old county, instead of the new, the registration was declared worthless as notice.®' A subsequent change of the county boundaries by which the land becomes a part of another county does not impose upon the grantee the duty of recording his deed again in such other county.''" A sub- sequent discovery made in running a boundary line between two coun- ties or parishes, that mortgaged lands in fact lie beyond the true boundary of the county or parish in which they were supposed to be situated and where the mortgage was recorded, does not affect the «» Ludlow T. Clinton Line R. Co., Portis, 77 N. Car. 25; Oberholtzer's 1 Flip. (U. S.) 25, Fed. Cas. No. Appeal, 124 Pa. St. 583, 17 Atl. 143; 8600; Van Meter v. Knight, 32 Cole v. Ward, 79 S. Car. 573, 61 S. Minn. 205, 20 N. W. 142; Harper E. 108; Adams v. Hayden, 60 Tex. V. Tapley, 35 Miss. 506; Wells v. 223; Hawley v. Bullock, 29 Tex. Wells, 47 Barb. (N. Y.) 416; Ober- 216; Perrin v. Reed, 35 Vt. 2; Blaok- lioltzer's Appeal, 124 Pa. St. 583, 17 ford v. Hurst, 26 Grat. (Va.) 203; Atl. 143. Horsley v. Garth, 2 Grat. (Va.) 471, "Clayton t. Exchange Bank, 121 44 Am. Dec. 393; Pollard v. Lively, Fed. 630, 57 C. C. A. 656; Conn v. 2 Grat; (Va.) 216; Stewart v. Mc- Manifee, 2 A. K. Marsh. (Ky.) 396, Sweeney, 14 Wis. 468. See also 12 Am. Dec. 417; Day &c. Lumber Clayton v. Exchange Bank, 121 Fed. Co. V. Mack, 24 Ky. L. 640, 69 S. 630, 57 C. C. A. 656; Taylor v. Mc- W. 712; Shiveley v. Gilpin, 23 Ky. Donald, 2 Bibb (Ky.) 420; Coney L. 2090, 66 S. W. 763; Rice y. Sally, v. Laird, 153 Mo. 408, 55 S. W. 96 176 Mo. 107, 75 S. W. 398; Perry v. (erroneous transcription of name of Clift (Tenn.), 54 S. W. 121; Han- county in a trust deed recorded in cock V. Tram Lumber Co., 65 Tex. proper county, immaterial); Hunt 225; Mattfeld v. Huntington, 17 v. Swayze, 55 N. J. L. 33, 25 Atl. Tex. Civ. App. 716, 43 S. W. 53; 850; Brown v. Edson, 23 Vt. 435. Brown v. Lazarus, 5 Tex. Civ. App. ""Astor v. Wells, 4 Wheat. (U. 81, 25 S. W. 71. S.) 466, 4 L. ed. 616. ■"Lewis V. Baird, 3 McLean (U. '"Garrison v. Haydon, 1 J. J. S.) 56; Beaver v. Frick County, 53 Marsh. (Ky.) 222, 19 Am. Dec. 70; Ark. 18, 13 S. W. 134; St. John v. Koerper v. St. Paul &c. R. Co., 40 Conger, 40 111. 535; Harang v. Minn. 132, 41 N. W. 656; Jones v. Plattsmier, 21 La. Ann. 426; Har- Powers, 65 Tex. 207; Melton v. Tur- per V. Tapley, 35 Miss. 506; Moore ner, 38 Tex. 81. V. Davey, 1 N. Mex. 303; King v. 793 TIME AND MANNER OF RECORDING § 511 validity of such mortgage.''^ But if the county lines have never been established, the grantee must at his peril ascertain in what county the land is situated.'^ When a deed already recorded is recorded in another county, the certificate of the recorder of the prior record is not a part of the deed, and need not be copied in the second record.'^ § 511. Special books for record of mortgages. — When it is provided that mortgages shall be recorded in books kept for that purpose sep- arate from other instruments, a mortgage recorded as a deed is not effectual as against subsequent bona fide purchasers or mortgagees; even if the mortgage be in form an absolute deed, but intended as se- curity for a loan of money.''* If a mortgage is not recorded in the mortgage books, it can not be found by means of the index to those books, and therefore is not regarded as properly recorded.''^ Such a deed is of course valid as between the parties,'" and, though the rec- ord is a nullity, it becomes operative in case the mortgagee afterward acquires the equity of redemption.''^ "Stewart v. Walsh, 23 La. Ann. 560; Gumming v. Biossatt, 2 La. Ann. 794. " Jones V. Powers, 65 Tex. 207. ™ Stinnett v. House, 1 Tex. Un- rep. Gas. 484. '* Kent V. Williams, 146 Cal. 3, 79 Pac. 527; Gady v. Purser, 131 Gal. 552, 63 Pac. 844, 82 Am. St. 391; Baker v. Lee, 49 La. Ann. 874, 21 So. 588; Cordeviolle v. Dawson, 26 La. Ann. 534; Golomer v. Morgan, 13 La. Ann. 202; Grand Rapids Nat. Bank V. Ford. 143 Mich. 402, 107 S. W. 76, 114 Am. St. 668 (absolute deed intended as a mortgage); Gordon v. Gonstantine Hydraulic Co., 117 Mich. 620, 76 N. W. 142 (lease con- taining mortgage clause); Deane v. Hutchinson, 40 N. J. Eq. 83, 2 Atl. 292; Parsons v. Lent, 34 N. J. Eq. 67; Williamson v. New Jersey Southern R. Go., 29 N. J. Eq. 311; Purdy V. Huntington, 42 N. Y. 334, 1 Am. Rep. 532; Gillig v. Maass, 28 N. Y. 191; Stoddard v. Rotton, 5 Bosw. (N. Y.) 378; James v. Morey, 2 Gow. (N. Y.) 246, 6 Johns. Gh. (N. Y.) 417, 14 Am. Dec. 475; Bank for Savings v. Frank, 54 How. Pr. (N. Y.) 403, 45 Sup. Gt. 404; Clute v. Robison, 2 Johns. (N. Y.) 595; Dey v. Dunham, 2 Johns, Gh. (N. Y.) 182, 15 Johns. 555; Grimstone V. Garter, 3 Paige (N. Y.) 421, 24 Am. Dec. 230; White v. Moore, 1 Paige (N. Y.) 551; Warner v. Wins- low, 1 Sandf. Gh. (N. Y.) 430; Brown v. Dean, 3 Wend. (N. Y.) 208; Howells v. Hettrick, 13 App. Div. 366, 43 N. Y. S. 183; Van Thor- niley v. Peters, 26 Ohio St. 471; Galder v. Ghapman, 52 Pa. St. 359, 91 Am. Dec. 163; Luch's Appeal, 44 Pa. St. 519; Drake v. Reggel, 10 Utah 376, 37 Pac. 583; Knowlton v. Walker, 13 Wis. 264. See also Nes- lin V. Wells, 104 U. S. 428, 26 L. ed. 802; Ivey v. Dawley, 50 Fla. 537, 39 So. 498. The New York statute providing for the recording of mortgages in separate books ex- pressly includes, also, conveyances absolute in terms, but intended as mortgages. Birdseye's Gonsol. Laws 1910, Real Property Law, § 315, p. 5106. See ante § 457 for statutes. ■"'Luch's Appeal, 44 Pa. St. 519. ''"James v. Morey, 6 Johns. Gh. (N. Y.) 417, 2 Gow. 246, 14 Am. Dec. 475; Swepson v. Bank, 9 Lea (Tenn.) 713. "Warner v. Winslow, 1 Sandf. Gh. (N. Y.) 430; Grellet v. Heils- horn, 4 Nev. 526; Parsons v. Lunt, 34 N. J. Eq. 67. § 511 EECOKDING AS AFFECTING PRIORITY 794 A subsequent purchaser or mortgagee, who has actual notice of a mortgage which is improperly recorded as an absolute conveyance, of course takes a title subject to such mortgage, just as he would if the mortgage were not recorded at all. A statute which is merely di- rectory to the recorder in this respect would not invalidate a record of the mortgage not made in the record books specially used for mort- A deed which is in fact a mortgage is entitled to be recorded ac- cording to its real rather than its apparent character,^' and accord- ingly the courts of several states have held that an absolute deed in- tended as a mortgage must be recorded in the book of mortgages in order for the record to be effective.*" But the weight of authority seems to be that the recording of such instrument in the book of deeds is sufBcient, although the defeasance rests in parol or in a separate agreement not recorded.*^ Various reasons have been assigned in sup- ™ Smith v. Smith, 13 Ohio St. 532. See also Haseltine v. Espey, 13 Ore. 301, 10 Pac. 423; Clader v. Thomas, 89 Pa. St. 343; Glading v. Frick, 88 Pa. St. 460; Downing v. Glen Rock Oil Co., 207 Pa. St. 455, 56 Atl. 995. ™Shaw V. Wilshire, 65 Maine 485; Nicklin v. Betts Spring Co., 11 Ore. 40G, 5 Pac. 51, 50 Am. Rep. 477. ™Ives V. Stone, 51 Conn. 446; Stearns v. Porter, 46 Conn. 313; Hart v. Chalker, 14 Conn. 77; North v. Balden, 13 Conn. 376, 35 Am. Dec. 83; Cordeviolle v. Dawson, 26 La. Ann. 534; Purdy v. Huntington, 42 N. Y. 343, 1 Am. Rep. 532; Gillig v. Maass, 28 N. Y. 191; Jackson V. Van Valkenburgh, 8 Cow. (N. Y.) 260; James v. Morey, 2 Cow. (N. Y.) 246, 14 Am. Dec. 475; Dey v. Dun- ham, 2 Johns. Ch. (N. Y.) 182; Grimstone v. Carter, 3 Paige (N. Y.) 421, 24 Am. Dec. 230; White v. Moore, 1 Paige (N. Y.) 551; War- ner V. Winslow, 1 Sandf. Ch. (N. Y.) 430; Brown v. Dean, 3 Wend. (N. Y.) 208; Gregory v. Perkins, 15 N. Car. 50; Williams v. Purcell (Okla.), 145 Pac. 1151; Calder v. Chapman, 52 Pa. St. 359, 91 Am. Dec. 163; Edwards v. Trumbull, 50 Pa. St. 509; In re Luch's Appeal, 44 Pa. St. 519; Hendrickson's Appeal, 24 Pa. St. 363; Friedley v. Hamilton, 17 Serg. & R. (Pa.) 70, 17 Am. Dec. 638; Manufacturers' &c. Bank v. Bank of Pennsylvania, 7 Watts & S. (Pa.) 335, 42 Am. Dec. 240; McLan- ahan v. Reeside, 9 Watts (Pa.) 508, 36 Am. Dec. 136. See also Gulley v. Macy, 84 N. Car. 434; Halcombe v. Ray, 1 Ired. L. (N. Car.) 340; Dukes v. Jones, 6 Jones L. (N. Car.) 14; Thompson v. Mack, Harr. (Mich.) 150 (under early statutes). Under Compiled Laws of Michigan, § 8981, providing for different sets of books for the recording of deeds and mort- gages, and § 8988, rendering void all conveyances improperly record- ed, as against subsequent pur- chasers; a deed absolute in form but intended as a mortgage is void against a subsequent purchaser if recorded in the book for the record of deeds instead of the record for mortgages; especially since § 8980 requires all absolute deeds not in- tended as mortgages to be entered in the book of deeds. Grand Rapids Nat. Bank v. Ford, 143 Mich. 402, 107 S. W. 76, 114 Am. St. 668 (quot- ing text). ^ Kent V. Williams, 146 Cal. 3, 79 Pac. 527; Gibson v. Hough, 60 Ga. 588; DeWolf v. Strader, 26 III. 225, 79 Am. Dec. 371; Clemons v. Elder, 9 Iowa 272; Young v. Thompson, 2 Kans. 83; Ing v. Brown, 3 Md. Ch. 521; Harrison v. Phillips' Academy, 12 Mass. 456; Marston v. Williams, 45 Minn. 116, 47 N. W. 644, 22 Am. St. 719; Benton v. Nicoll, 24 Minn. 221; Bank of Mobile v. Tishomingo Sav. Inst., 62 Miss. 250; Grellet v. 795 TIME AND MANNER OF EECOKDING § 511 port of such a record, the statutes being construed as merely directory to the recording/^ or as designating the record books by the form rather than the substance of the instrument,^^ the argument also be- ing advanced that an absolute deed intended as a mortgage passes title, and is at law a deed, though in equity a mortgage.'* Except in states whose statutes require a different construction, the record of a conveyance in the form of an absolute deed, in a book kept for the recording of deeds, ought to be held to impart effectual notice of the rights or interests conveyed, although a statute requires mort- gages to be recorded in separate books. '^ Where separate books are designated for recording mortgages of land and chattels, a mortgage including both realty and personalty should be recorded in both books.^^ The recording of a mortgage upon Heilshorn, 4 Nev. 526; Merchants' State Bank v. Tufts, 14 N. Dak. 238, 103 N. W. 760, 116 Am. St. 682; Kemper v. Campbell, 44 Ohio St. 210, 6 N. E. 566; Haseltine v. Es- pey, 13 Ore. 301, 10 Pac. 423; Rug- gles V. Williams, 1 Head (Tenn.) 141; Kennard v. Mabry, 78 Tex. 151, 14 S. W. 272; Seymour v. Darrow, 31 Vt. 122; Gibson v. Seymour, 4 Vt. 518; Knowlton v. "Walker, 13 "Wis. 264. See also Kent v. "Williams, 146 Cal. 3, 79 Pac. 537. *° Robertson v. Brown, 5 La. Ann. 154; Gillespie v. Cammack, 3 La. Ann. 248; Smith v. Smith, 13 Ohio St. 532; Kennard v. Mabry, 78 Tex. 151, 14 S. "W. 272. ^Merchants State Bank v. Tufts, 14 N. Dak. 238, 103 N. W. 760, 116 Am. St. 682. »* Benton v. NicoU, 24 Minn. 221; Kemper v. Campbell, 44 Ohio St. 210, 6 N. E. 566; Haseltine v. Es- pey, 13 Ore. 301, 10 Pac. 423. «= Kennard v. Mabry, 78 Tex. 151, 14 S. "W. 272. Chief Justice Stayton said: "Every person is presumed to know that a deed absolute on its face may have been intended by the parties to it only as a mortgage, and that the courts will so hold it to be, if executed only for the pur- pose of securing a debt. So know- ing, every person ought to be held to be affected with notice of every right, less than absolute ownership, the person holding under a deed so recorded has. If the record shows an absolute conveyance, it gives no- tice of the fact that the vendor has parted with all interest he had in the land, and such notice ought to be binding on a subsequent pur- chaser or mortgagee, who must know that, as between the parties, on proof of the fact that it was exe- cuted to secure a debt, the courts will hold it to be only a mortgage. The decisions which take this view of the question we think the better. Clemons v. Elder, 9 Iowa 272; Young V. Thompson, 2 Kans. 83; Grellet v. Heilshorn, 4 Nev. 526; Haseltine v. Espey, 13 Ore. 301, 10 Pac. 423; Nicklin v. Betts Spring Co., 11 Ore. 406, 5 Pac. 51; Ruggles V. "Williams, 1 Head (Tenn.) 141. °° Deane v. Hutchinson, 40 N. J, Eq. 83, 2 Atl. 292; Stewart v. Beale 7 Hun (N. Y.) 405, affd. 68 N. Y 629; Hunt v. Allen, 73 Vt. 322, 50 Atl. 1103. See also "Ward v. "Ward 131 Fed. 946; Ramsdell v. Citizens Electric &c. Light Co., 103 Mich. 89 61 N. "W. 275; Merrill v. Ressler, 37 Minn. 82, 33 N. "W. 117, 5 Am. St, 822; Hardin v. Dolge, 46 App. Div. 416, 61 N. Y. S. 753. But the record of a mortgage of both land and chat- tels in the book of real estate mort gages has been held suflEicient. An- thony V. Butler, 13 Pet. (U. S.) 423 10 L. ed. 229; Boyle Ice Machine Co. V. Gould, 73 Cal. 153, 14 Pac. 609 Proper entry in a series of books kept for recording instruments af- fecting real estate imparts con- structive notice that both interests in realty and personalty are con- § 512 EECOEDING AS AFFECTING PRIOHITY 796 a building and machinery, forming part of the realty, as a chattel mortgage, does not give notice to a subsequent mortgagee of the realty.*' § 512. Powers of attorney. — It is sometimes provided by statute that a power of attorney, under which a mortgage is executed, shall be recorded with the deed, which owes its existence to the power, and when this is the case the record of the deed without the power has no legal effect.** But, aside from this requirement, it is not necessary that a power should be recorded with the mortgage, or that it should be recorded at all, in order that the mortgage deed when recorded should be notice to all the world.*° The record of a power of attorney, when the law does not require it to be recorded, does not amount to constructive notice.'" And so the record of a deed of trust which is defective because of an insuffi- cient acknowledgment and an unauthorized power of attorney, does veyed. Long v. Gorman, 100 Mo. App. 45, 79 S. W. 180. Record of a timber deed in a special book kept lor such exceptional instruments, was held proper. Mee v. Benedict, 98 Mich. 260, 57 N. W. 175, 22 L. R. A. 641, 39 Am. St. 543. But a mortgage of standing timber has been held to be a mortgage of an interest in land, and the filing thereof as a chattel mortgage was not constructive notice to a subse- quent purchaser from the mort- gagor. Williams v. Hyde, 98 Mich. 152, 57 N. W. 98.- The custom or usage of the recording officer to re- cord mortgages of both real and per- sonal property in the book of real estate mortgages only, was held to support the record of a mixed mort- gage so entered. Anthony v. But- ler, 13 Pet. (U. S.) 423, 10 L. ed. 229; Harriman v. Woburn Elec. Light Co., 163 Mass. 85, 39 N. E. 1004. See ante § 457. *' Peoria Stone &c. Works v. Sin- clair, 146 Iowa 56, 124 N. W. 772. ^'Carnall v. Duval, 22 Ark. 136; Stewart v. Hall, 3 B. Mon. (Ky.) 218. Powers of attorney to convey by deed generally are likewise re- quired to be recorded. Flannery v. O'Brien, 6 Ky. L. (Abst.) 667; Tay- lor V. McDonald, 2 Bibb (5 Ky.) 420; Moore v. Farrow, 3 A. K. Marsh. (Ky.) 41; Graves v. Ward, 2 Duv. (Ky.) 301; Citizens' Fire Ins. &c. Co. T. Doll, 35 Md. 89, 6 Am. Rep. 360; Oatman v. Fowler, 43 Vt. 462. See also Voorhies v. Gore, 3 B. Mon. (Ky.) 529. Under a stat- ute providing that a power of attor- ney to convey land shall be recorded with the deed, the power may he recorded before the deed. Rosen- thal V. Ruffin, 60 Md. 324. A copy of a power of attorney to convey land is not entitled to record and if recorded is ineffective; the power must accompany the deed upon the record. Montgomery v. Dorion, 6 N. H. 250; Oatman v. Fowler, 43 Vt. 462. *» Wilson V. Troup, 2 Cow. (N. Y.) 195, 14 Am. Dec. 458. The rule ap- plies to deeds generally, and powers of attorney to convey land need not be recorded, apart from statute. Ro- per V. McFadden, 48 Cal. 346; An- derson V. Dugas, 29 Ga. 440 (record permitted but not required); Moore V. Pendleton, 16 Ind. 481; Rownd V. Davidson, 113 La. 1047, 37 So. 965; Valentine v. Piper, 39 Mass. 85, 33 Am. Dec. 715; Morse v. Hewett, 28 Mich. 481 (record per- mitted though not expressly pro- vided for) ; Montgomery v. Dorion, 6 N. H. 250; Tyrrell v. O'Connor, 56 N. J. Bq. 448, 41 Atl. 674; Johnson V. Bush, 3 Barb. Ch. (N. Y.) 207; Diehl V. Stine, 1 Ohio Clr. Ct. 515. ^ Williams v. Birbeck, HotE. Ch. (N. Y.) 359. 797 TIME AKD MANNER OF EECOEDING § 513 not operate as constructive notice."^ The law does not intend, that to be known for the existence of which there is no legal necessity.^^ § 513. Becord of separate defeasance. — When an absolute deed is given in the way of security, with a written defeasance back, the rights of the mortgagee are in general fully protected without any record of the defeasance. The recorded deed is sufficient notice of his in- terest.*^ In fact it is notice of a greater interest than he actually has. In some states, however, the recording of the defeasance with the deed is expressly required as a condition upon which the mortgagee shall derive any benefit from the record of the deed."* When the defeasance »i Lynch v. Murphy, 161 U. S. 247, 40 L. ed. 688, 16 Sup. Ct. 523. ""James v. Morey, 2 Cow. (N. Y.) 246, 296, 6 Johns. Ch. 417, 14 Am. Dec. 475. "^Ives V. Stone, 51 Conn. 446; Newberry v. Bulkley, 5 Day (Conn.) 384; McClure v. Smith, 115 Ga. 709, 42 S. E. 53; Gibson v. Hough, 60 Ga. 588; Christie v. Hale, 46 111. 117; Clemons v. Elder, 9 Iowa 272; Young V. Thompson, 2 Kans. 83; Bailey v. Myrick, 50 Maine 171; Jackson v. Ford, 40 Maine 381; Har- rison V. Morton, 87 Md. 671, 40 Atl. 897; Ing v. Brown, 3 Md. Ch. 521; Bayley v. Bailey, 5 Gray (Mass.) 505; Marston v. Williams, 45 Minn. 116, 47 N. W. 644, 22 Am. St. 719; Butman v. James, 34 Minn. 547, 27 N. W. 66; Benton v. Nicoll, 24 Minn. 221; Bank of Mobile v. Tishomingo Sav. Inst, 62 Miss. 250; Livesey v. Brown, 35 Nebr. Ill, 52 N. "W. 838; Grellet v. Heilshorn, 4 Nev. 526; Kemper v. Campbell, 44 Ohio St. 210, 6 N. E. 566; Security Sav. &c. Co. V. Loewenberg, 38 Ore. 159, 62 Pac. 647; Haseltine v. Espey, 13 Ore. 301, 10 Pac. 423; Ruggles v. Will- iams, 1 Head (Tenn.) 141; Gibson V. Seymour, 4 Vt. 518; Knowlton v. Walker, 13 Wis. 264. See ante § 253. "There are such statutes in the following named states: Maryland: Ann. Civil Code Md. 1911, art. 66, § 1, p. 1518. The deed is not made void by neglect to record the defeasance, but the grantee de- rives no benefit from the record as against subsequent purchasers. Owens V. Miller, 29 Md. 144. See also Harrison v. Morton, 87 Md. 671, 40 Atl. 897; Hoffman v. Gosnell, 75 Md. 577, 24 Atl. 28; Waters v. Rig- gin, 19 Md. 536; Ing v. Brown, 3 Md. Ch. 521. Nebraska: Comp. Stats. 1885, ch. 73, § 25, Stat. 1911, § 10825; Live- sey v. Brown, 35 Nebr. Ill, 52 N. W. 838. New Hampshire: The defeasance must be embodied in the conveyance itself. Pub. Stat. 1901, ch. 139, § 2, p. 442. New Jersey: Rev. Stat. 1877, p. 706, § 21, Comp. Stat. 1910, p. 3414, § 21; Essex County Nat. Bank v. Harrison, 57 N. J. Bq. 91, 40 Atl. 209; Clark v. Condit, 18 N. J. Eq. 358. New York: Birdseye's Consol. Laws 1910, § 320; Mutual Life Ins. Co. V. Nicholas, 144 App. Div. 95, 128 N. Y. S. 902; Hoschke v. Hosch- ke, 42 Misc. 125, 85 N. Y. S. 1006; McAulay v. Porter, 71 N. Y. 173. See also Leavitt v. Waldemar Co., 151 N. Y, S. 832. North Dakota: Comp. Laws 1913, §§ 6754, 6755. The same rule is ju- dicially established in Pennsylvania. Calder v. Chapman, 52 Pa. St. 359; Corpman v. Baccastow, 84 Pa. St. 363; Edwards v. Trumbull, 50 Pa. St. 509; Luch's Appeal, 44 Pa. St. 519; Friedley v. Hamilton, 17 Serg. & R. (Pa.) 70; Jacques v. Weeks, 7 Watts (Pa.) 261; Rathfon v. Specht, 18 Pa. Co. Ct. 19. "A mort- gage," says Mr. Justice Black, in Hendrick's Appeal, 24 Pa. St. 363, "when in the shape of an absolute conveyance with a separate defeas- ance, the former being recorded, the latter not, gives the holder no rights against a subsequent incumbrancer. It is good for nothing as a convey- § 513 RECORDING AS AFFECTING PRIORITY 798 is not recorded, the obvious effect of the record of the deed alone is to make the grantee the apparent absolute owner of the estate, and the person who holds the defeasance may be barred of all right of re- demption by a sale by the mortgagee to one who buys in good faith and without notice of such defeasance. A judgment creditor of the grantor in such case can not claim that the conveyance is of the character of an unrecorded mortgage, so as to render the property subject to his judgment.'' Such absolute deed is in law regarded as merely a deed, and it is only in equity that effect is given to the intention of the parties that it shall operate as a security only. But judgments against such grantor or mortgagor are liens upon his equity of redemption in the premises, and an equitable action to have them so declared may be maintained against a subsequent purchaser having kaowledge of the facts, and ance, because it is in fact not a conveyance; and it is equally worth- less as a mortgage, because it does not appear by the record to be a mortgage." Under the Pennsyl- vania statute a deed will not be con- strued as a mortgage unless the de- feasance or other writing explain- ing its character is recorded. Pur- don's Dig. 1905, p. 1180, § 154. Safe Deposit &c. Co. v. Linton, 213 Pa. St. 105, 62 Atl. 566; Lohrer v. Rus- sell, 207 Pa. 105, 56 Atl. 333; Moran v. Munhall, 204 Pa. St. 242, 53 Atl. 1094; Crotzer v. Bittenbender, 199 Pa. St. 504, 49 Atl. 266; McKibbin V. Peters, 185 Pa. St. 518, 40 Atl. 288; Friedley v. Hamilton, 17 Serg. & R. (Pa.) 70, 17 Am. Dec. 638; In re Rockhill's Estate, 29 Pa. Super. Ct. 28. South Dakota: Comp. Laws 1887, § 4371; Rev. Code 1903, §§ 2070, 2071, p. 829; Murphy v. Plankinton Bank, 13 S. Dak. 501, 83 N. W. 575. See also Gerken v. Sonnabend, 130 N. Y. S. 605 (mortgage tax law strictly construed and inapplicable to a deed with a defeasance). Al- though the recording of a deed, without the defeasance gives the mortgage no beneiit of the recording act, the record is effective against subsequent judgment creditors of the mortgagor. Mutual Life Ins. Co. V. Nicholas, 144 App. Div. 95, 128 N. Y. S. 902. ■"Bank of Mobile v. Tishomingo Sav. Inst., 62 Miss. 250. In Con- necticut, also, unless the defeasance is recorded with the deed, the in- struments being intended to operate as a mortgage, a creditor of the grantor may attach the property as his, for the transaction is regarded as invalid as against the grantor's creditors. Ives v. Stone, 51 Conn. 446. Carpenter, J., delivering the opinion of the court, after reviewing the Connecticut decisions which re- quire the debt secured to be fully and accurately described, said: "This transaction, the defeasance being unrecorded, is contrary to the spirit of all decisions. The rec- ord, so far from disclosing the true state of the title, shows it to be an absolute deed instead of a mort- gage; it represents the grantee as the owner of the property, whereas the grantor owns it subject to the grantee's debt, and the equity of re- demption is concealed and placed apparently beyond the reach of creditors, while a secret trust ex- ists in favor of the grantor. So far from describing the debt with reasonable certainty, the record is entirely silent on the subject, and places it within the power of the parties by collusion, if they are disposed, to set up any claim, and for any amount, as a substitute for the one really intended to be se- cured. If this transaction can be sustained as a valid mortgage 799 TIME AND MANNER OF EECOEDING 513 holding the land under a deed direct from the grantee or mortgagee.'" As to third persons, the absolute conveyance is not defeated or affected unless the defeasance is also recorded; and an express dec- laration to this effect has been made by statute in several states."^ The object of such statutes is to protect innocent purchasers from the mortgagee, who has apparently an indefeasible title ; wliile the provi- sion whereby the record of the defeasance is enforced, in the states before named, is made for the protection of the mortgagor. These requirements of statute have no application when the convey- ance to which the defeasance relates does not purport upon its face to be absolute and unconditional.'^ While a purchaser in good faith, and without notice from a mortgagee, by an absolute conveyance ob- tains a title not subject to redemption, yet if the purchaser has notice of the original transaction, he takes only the mortgagee's title; and if there are successive mutations, but always coupled with such notice, against creditors, it will not only destroy all the benefits of the re- cording system as respects mort- gages, but will enable the parties, by a change in the form of the mortgage, to convert the system it- self into an instrument of fraud." See also Stearns v. Porter, 46 Conn. 313; Hart v. Chalker, 14 Conn. 77. The same rule is adopted in North Carolina. GuUey v. Macy, 84 N. Car. 434; Dukes v. Jones, 6 Jones L. (N. Car.) 14; Gregory v. Perkins, 4 Dev. (N. Car.) 50. " Marston v. Williams, 45 Minn. 116, 47 N. W. 644. "Alabama: Code 1907, § 3384. Alaska: Codes 1900, p. 373, § 100. California: Civ. Code 1906, § 2950; Payne v. Morey, 144 Cal. 130, 77 Pac. 831. Delaware: Within sixty days. Code 1893, ch. 520, § 18, p. 629. Dakota: Comp. Laws 1887, § 4371. Indiana: Within ninety days from date of deed. Burns' Ann. Stat. 1914, § 3964. Kansas: Gen. Stat. 1909, § 5195; Holmes v. Newman, 68 Kans. 418, 75 Pac. 501. Maine: Rev. Stat. 1903, p. 658, § 12; Smith v. Monmouth Mut. Fire Ins. Co., 50 Maine 96. Massachusetts: Pub. Stat. 1882, Ch. 120 § 23; Moors v. Albro, 129 Mass. 9; Harrison v. Phillips' Acad- emy, 12 Mass. 456; Kelleran v. Brown, 4 Mass. 443; Newhall v. Burt, 7 Pick. (Mass.) 157; Newhall v. Pierce, 5 Pick. (Mass.) 450. Michigan: Howell's Stat. 1913, § 10853; Columbia Bank v. Jacobs, 10 Mich. 349, 81 Am. Dec. 792; Rus- sell v. Waite, Walk. Ch. (Mich.) 31. Mlnnesuta: Gen. Stat. 1913, § 6851; Cogan v. Cook, 22 Minn. 137. Missouri: Rev. Code 1907, § 5750. Oklahoma: Comp. Laws 1909, § 1197. Oregon: Lord's Ore. Laws 1910, § 7i33. Pennsylvania: Within sixty days. Laws 1881, p. 84; Purdon's Pa. Dig. 1905, p. 1181, § 155; Safe Deposit &c. Co. V. Linton, 213 Pa. 105, 62 Atl. 566; Lohrer v. Russell, 207 Pa. 105, 56 Atl. 333; Moran v. Munhall, 204 Pa. 242, 53 Atl. 1094; Crotzer V. Bittenbender, 199 Pa. 504, 49 Atl. 266; Sankey v. Hawley, 118 Pa. St. 30, 13 Atl. 208; In re Rockhill's Es- tate, 29 Pa. Super. Ct. 28. Rhode Island: Gen. Laws 1909, p. 898, § 1. Wisconsin: Stat. 1913, § 2243. Wyoming: Comp. Stat. 1910, § 3655. See also Lobban v. Gar- nett, 9 Dana (Ky.) 389; Wolf v. Theresa Village Mut. Fire Ins. Co., 115 Wis. 402, 91 N. W. 1014. ""Noyes v. Sturdivant, 18 Maine 104; Russell v. Waite, Walk. (Mich.) 3L § 514: RECOEDING AS AFFECTING PHIORITT 800 the original conveyance continues as a mortgage.®* The fact that the grantor remains in possession of the property has been held sufBcient to charge the purchaser with such notice.^ Accordingly, a purchaser in good faith without notice from the grantee in a recorded deed ab- solute given as security, was held to be protected to the extent of his payment, with interest, against all persons, except those in. actual pos- session at the time of such purchase.^ It has been held that the recording of a bond for a deed does not impart notice to a purchaser of the land that the obligee in the bond is in fact a mortgagor, though that was the intent of the parties.^ And again it has been held that a bond for a deed is not an instrument of defeasance which is required to be recorded.* An instrument of de- feasance has full efEect between the parties without being recorded.^ § 5.14. Apparent record title. — ^A purchaser may rely upon the legal title as it appears of record. These provisions of statute are only the enactment of a principle that is necessarily deduced from the general provisions of the registry system, and which had already been established by judicial construction." "It is regarded," says Chief Justice Eedfield, "as more in conformity to just principles of equity and fair dealing, that the estate of the cestui que trust should be ex- tinguished by the deed of the trustee, than that the equal equity of the purchaser should be defeated, and thus the free and fair transmis- sion of estates be embarrassed and placed under a cloud of suspicion and doubt. The equities of the parties being equal, the legal estate is allowed to prevail, and a rule of policy is at the same time subserved by leaving the transmission of titles unembarrassed as far as practica- ■» Shaver y. Woodward, 28 111. Co., 146 Mass. 389, 14 N. E. 454; 277; Brown v. Gaffney, 28 111. 149; Moors v. Albro, 129 Mass. 9; Bayley Hall V. Savill, 3 Greene (Iowa) 37, v. Bailey, 5 Gray (Mass.) 505; Mars- 54 Am. Dec. 485; Williams v. Thorn, ton v. Williams, 45 Minn. 116, 47 11 Paige (N. Y.) 459. N. W. 644, 22 Am. St. 719; Butman 'Mann v. Falcon, 25 Tex. 271. v. James, 34 Minn. 547, 27 N. W. ^Kraus v. Potts, 38 Okla. 674, 135 66. See also Stetson v. Gulliver, 2 Pac. 362 (under Okla. Comp. Laws Gush. (Mass.) 494; Russell v. 1909, § 1198). Waite, Walk. (Mich.) 31. ' Holmes V. Newman, 68 Kans. ° Harrison v. Phillips Academy, 12 418, 75 Pac. 501. Mass. 456; Newhall v. Burt, 7 Pick. 'Holmes v. Newman, 68 Kans. (Mass.) 157; Newhall v. Pierce, 5 418, 75 Pac. 501. Pick. (Mass.) 450; Columbia Bank ' Bailey v. Myrick, 50 Maine 171; v. Jacobs, 10 Mich. 849, 81 Am. Dec. Jackson v. Ford, 40 Maine 381; Har- 792; Stoddard v. Rotton, 5 Bosw. rison v. Morton, 87 Md. 671, 40 Atl. (N. Y.) 378; Mills v. Comstock, 5 897; Owens v. Miller, 29 Md. 144; Johns. Ch. (N. Y.) 214; Whittick Short V. Caldwell, 155 Mass. 57, 28 v. Kane, 1 Paige (N. Y.) 202. See N. E. 1124; Bryan v. Traders' Ins. ante, § 339. 801 TIME AND MANNEE OF EECOEDING § 514a ble, thus inspiring confidence, rather than distrust, in the transmis- sion of titles to real estate."^ When the mortgage is by a deed absolute in form, and the defea- sance is not recorded, the grantee can of course convey a good title to a bona fide purchaser.^ Thus a bona fide purchaser from the grantee, without notice, actual or constructive, of the defeasible nature of the original conveyance, takes an indefeasible title, and as against him the grantor has no right of redemption.' The position of the parties is quite the same when the holder of a mortgage duly recorded has taken a conveyance of the equity of redemption, and has then assigned the mortgage to one who does not record the assignment, and has then conveyed the fee to another. Apparently the mortgagee, at the time of his conveyance in fee, had the complete title by merger of the mort- gage in the fee, just as the mortgagee by an absolute deed has it ; and the prior assignment of the mortgage by an assignment not recorded amounts to the defeasance not being recorded.^" As elsewhere noticed, in some states neither an attaching creditor nor a judgment creditor is regarded as a purchaser, and therefore he acquires by his attachment or judgment no lien upon the land in the hands of the mortgagee holding the title absolutely, as against the equitable cestui que trust, or grantor equitably entitled to the equity of redemption.^^ ■§ 514a. Reinscription, in Louisiana and Mississippi. — ISTo renewal of the record of real estate mortgages is required in most states. But under the Louisiana statute, a mortgage on land must be reinscribed within ten years from the original inscription; otherwise it loses pri- ority as a lien against intervening rights of third persons, even though they have actual notice; and a subsequent reinscription is effective 'Hart V Farmers' &c. Bank, 33 Murphy v. Plankinton Bank, 13 S. Vt. 252. Dak. 501, 83 N. W. 575. See also 'Turman v. Bell, 54 Ark. 273, 15 Miller v. Thomas, 14 111. 428; Jame- S. W. 886; Pico v. Gallardo, 52 Cal. son v. Emerson, 82 Maine 359, 19 206; Bailey v. Myrick, 50 Maine 171; Atl. 831. But see Carveth v. Wine- Tufts v. Tapley, 129 Mass. 380. See gar, 133 Mich. 34, 94 N. W. 381. ante § 253. "Mills v. Comstock, 5 Johns. Ch. "Nelson v. Wadsworth (Ala.), 61 (N. Y.) 214. See also Purdy v. So. 895; Jenkins v. Rosenberg, 105 Huntington, 42 N. Y. 334, 1 Am. 111. 157; Maxfield v. Patchen, 29 111. Rep. 532, revg. 46 Barb. 389. 39- Jolivet V. Chaves, 125 La. 923, "Hart v. Farmers' &c. Bank, 33 52 So. 99, 32 L. R. A. (N. S.) 1046; Vt. 252. See also Loring v. Me- Tufts V. Tapley, 129 Mass. 380; lendy, 11 Ohio 355; Baird v. Kirt- Kemp V. Small, 32 Nebr. 318, 49 N. land, 8 Ohio 21. But see Parrott v. W 169- Gruber v. Baker, 20 Nev. Baker, 82 Ga. 364, 9 S. E. 1068. 453, 23 Pac. 858, 9 L. R. A. 302; Sl_joNES Mtg.— Vol. I. § 514a EECOEDIKG AS AFFECTING PRIOEITT 802 only from the time thereof. ^^ Strict compliance with the require- ment of reinscription is neeessary.^^ Circumstances which would or- dinarily stop the running of a statute of limitations do not dispense with reinscription;^* and even the pendency of foreclosure proceed- ings is not equivalent notice.^^ But the Louisiana statute, like other recording acts, relates only to the effect of the inscription and reinscription, and not to the valid- ity of the mortgage; and although failure to reinscribe causes loss of priority and effect against third parties, the mortgage remains a valid obligation against the mortgagor and his heirs.^^ Thus failure to re- inscribe does not discharge the mortgage between the original parties or affect persons who have not acquired intervening adverse rights,^' nor can a purchaser from the mortgagor take advantage of such fail- ure, if he has assumed payment of the mortgage debt.^* "Louisiana: Rev. Code, art. 3369; Lovell V. Cragin, 136 U. S. 130, 34 L. ed. 372, 10 Sup. Ct. 1024; Lemelle v. Thompson, 34 La. Ann. 1041 (mort- gage by minor); Fillastre v. St. Amand, 32 La. Ann. 352; De St. Romes v. Blanc, 31 La. Ann. 48; Byrne v. Citizens' Bank, 23 La. Ann. 275; Levy v. Mentz, 23 La. Ann. 261; Johnson v. Lowry, 22 La. Ann. 205; Kohn v. McHatton, 20 La. Ann. 223; Robinson v. Haynes, 19 La. Ann. 132. See also Gagneux's Suc- cession, 40 La. Ann. 701, 4 So. 869 (death of mortgagor); Morrison v. Citizens' Bank, 27 La. Ann. 401; Liddell v. Rucker, 13 La. Ann. 569 (fraudulent procurement of second mortgage) ; Ynogoso's Succession, 13 La. Ann. 559; Roche v. Groysilliere, 13 La. 238 (statute retroactive). "Batey v. Woolfolk, 20 La. Ann. 385; Gremillon's Succession, 4 La. Ann. 411. See also Hart v. Caffery, 39 La. Ann. 894, 2 So. 788. "Johnson v. Lowry, 22 La. Ann. 205 (record office closed for over two years) ; Kohn v. McHatton, 20 La. Ann. 223 (suspension during Civil War). See also New Orleans Ins. Assn. v. Labranche, 31 La. Ann. 839. >= Pickett V. Foster, 149 U. S. 505, 37 L. ed. 829, 13 Sup. Ct. 998; Wat- son V. Bondurant, 30 La. Ann. 1; Barelli v. Delassus, 16 La. Ann. 280; Young V. New Orleans City Bank, 9 La. Ann. 193; Hyatt v. Gallier, 6 La. Ann. 321. " Pickett V. Poster, 149 U. S. 505. 37 L. ed. 829, 13 Sup. Ct. 998; Shields v. Shift, 124 U. S. 351, 31 L. ed. 445, 8 Sup. Ct. 510; Bondurant V. Watson, 103 U. S. 281, 26 L. ed. 447; Cucullu v. Hernandez, 103 U. S. 105, 26 L. ed. 322; Patterson v. De la Ronde, 8 Wall. (U. S.) 292, 19 L. ed. 415; Pickett v. Foster, 36 Fed. 514; Norres- v. Hays, 44 La. Ann. 907, 11 So. 462; In re Myrick's Succession, 43 La. Ann. 884, 9 So. 498; In re Gagneux's Succession, 40 La. Ann. 701, 4 So. 869; Factors' &c. Ins. Co. v. Warren, 37 La. Ann. 85; Adams v. Daunis, 29 La. Ann. 315; Villavaso v. Walker, 28 La. Ann. 775; Thompson v. Simmons, 22 La. Ann. 450; Liddell v. Rucker, 13 La. Ann. 569; Letaste v. Beraud, 2 La. Ann. 768; Bethany v. Creditors, 7 Rob. (La.) 61; Lejeune v. Hebert, 6 Rob. (La.) 419; Minor v. Alexander, 6 Rob. (La.) 166. See also Milten- berger v. Dubroca, 34 La. Ann. 313; Gegan v. Bowman, 22 La. Ann. 336; In re Flower's Succession, 12 La. Ann. 216. " Cucullu V. Hernandez, 103 U. S. 105, 26 L. ed. 322; Norres v. Hays, 44 La. Ann. 907, 11 So. 462; In re Myrick's Succession, 43 La. Ann. 884, 9 So. 498. See also Roche v. Groysilliere, 13 La. 238. "Cucullu v. Hernandez, 103 U. S. 105, 26 L. ed. 322; McDaniel v. Guillory, 23 La. Ann. 544; Batey v. Woolfolk, 20 La. Ann. 385; Dupuy V. Dashiell, 17 La. 60. 803 EEEOES IK THE EECOED 515 The Mississippi statute provides that a trust deed shall eease to be a lien upon property, as to subsequent purchasers, unless a renewal thereof is entered on the record within six months after the remedy to enforce it appears by the record to be barred by the statute of limi- tations.^' IV. Errors in the Record Section 515. Defective record as notice of contents — Clerical errors. 516. Error chargeable to grantee and not to third persons. 517. Error chargeable to third per- sons under statutes making mortgage operative upon fil- ing. 518. Index not essential to record. Section 519. Recorder's liability for errors. 520. Index essential under some statutes. 521. Correction of errors in record. 521a. Curative statutes. 522. Unrecorded or defectively re- corded mortgage as an equi- table lien. § 515. Defective record as notice of contents — Clerical errors. — If the record of a deed be defective for any cause, it is constructive no- tice of only what the record contains, in case the record is not an ac- curate transcript of the instrument. Persons interested in a title have a right to resort to the records to find out the contents of a deed, and can be considered as having notice of it only as it appears of record. The rule that the deed is notice from the time it is left for record is subject to the qualification that it is correctly transcribed. When the record itself is defective, it is notice of only what appears upon it.- " Klaus v. Moore, 77 Miss. 701, 27 So. 612 (construing the Code 1892, § 2462; Code 1906, § 2796). 'Davis V. Ward, 109 Cal. 186, 41 Pac. 1010; Page v. Rogers, 31 Cal. 293; Chamberlain v. Bell, 7 Cal. 292, 68 Am. Dec. 260; Shepherd v. Buck- halter, 13 Ga. 443, 58 Am. Dec. 523; Baugher v. Woollen, 147 Ind. 308, 45 N. E. 94; Smith v. Lowry, 113 Ind. 37, 15 N. E. 17; State v. Davis, 96 Ind. 539; Gilchrist v. Gough, 63 Ind. 576, 30 Am. Rep. 250; Disque V. Wright, 49 Iowa 538; Howe v. Thayer, 49 Iowa 154; Miller v. Ware, 31 Iowa 524; Miller v. Bradford, 12 Iowa 14; Taylor v. Hotchkiss, 2 'La. Ann. 917; Hill v. McNichol, 76 Maine 314; Stedman v. Perkins, 42 Maine 130; McLarren v. Thompson, 40 Maine 284; Brydon v. Campbell, 40 Md. 331; Johns v. Scott, 5 Md. 81; Barnard v. Campau, 29 Mich. 162; Thompson v. Morgan, 6 Minn. 292; Parrot v. Shaubhut, 5 Minn. 323; Bishop v. Schneider, 46 Mo. 472, 2 Am. Rep. 533; Terrell v. An- drew, 44 Mo. 309; Crosby v. Vleet, 3 N. J. L. 86; Mutual Life Ins. Co. v. Dake, 87 N. Y. 257; Gillig v. Maass, 28 N. Y. 191; New York Life Ins. Co. V. White, 17 N. Y. 469; Peck v. Mallams, 10 N. Y. 509; Bedford V. Tupper, 30 Hun (N. Y.) 174; Simonson v. Falihee, 25 Hun (N. Y.) 570; Frost v. Beekman, 1 Johns. Ch. (N. Y.) 288, 18 Johns. 544; Ford v. James, 4 Keyes (N. Y.) 300; White V. McGarry, 2 Flipp. (U. S.) 572; Jennings v. Wood, 20 Ohio 261; Schell v. Stein, 76 Pa. St. 398, 18 Am. Rep. 416; Heister v. Fortner, 2 Binn. (Pa.) 40, 4 Am. Dec. 417; Potter V. Dooley, 55 Vt. 512; Sanger V. Craigue, 10 Vt. 555; Sanger v. Adams, 8 Vt. 172, 30 Am. Dec. 459; Thomas v. Stuart, 91 Va. 694, 22 S. B. 511; Pringle v. Dunn, 37 Wis. 449, 19 Am. Rep. 772. See also Peo- ple V. Bristol, 35 Mich. 28; 2 Pom- § 515 EECOEDING AS AI'FECTING PEIORITT 804 This is the view sustained by the greater number of decisions and by the greater weight of reason, as distinguished from the view that the filing of the deed operates as a record of it, and that it is constructive notice from such time of the actual contents of the deed.^ These dif- ferent views depend somewhat upon the different terms used by the statutes in regard to the effect of filing or recording of deeds as con- structive notice; though it is true that there is a conflict of decisions under statutes substantially the same. Of course, a record is not invalidated by a mere clerical error in transcribing the instrument not affecting the sense or obscuring its meaning.^ Every requirement of statute in relation to the execution and ac- knowledgment or proof of a deed or mortgage must be complied with in order to gain priority by the record of it.* Moreover, the deed as it stands must be spread upon the record correctly, and appear there- on as a valid instrument, showing the prerequisites to a valid regis- tration.' If the record of a mortgage fails to state the amount secured there- by, it will not give constructive notice of such amount." An erroneous eroy's Eq. Jur., §§ 653, 654. But see Gorham v. Summers, 25 Minn. 81; Bradford v. Tupper, 30 Hun (N. Y.) 174; Simonson v. Falihee, 25 Hun (N. y.) 570; Bigelow v. Top- liff, 25 Vt. 273, 60 Am. Dec. 264; Curtis V. Lyman, 24 Vt. 338, 58 Am. Dec. 174; Ferris v. Smith, 24 Vt. 27; Pringle v. Dunn, 37 Wis. 449, 19 Am. Rep. 772. Where a mortgage is altered after acknowledgment, the defect in recording and construc- tive notice extends only to elimina- tion of the clause inserted. Johnson V. Northern Minnesota Land &c. Co. (Iowa), 150 N. W. 596. See post §§ 516, 517. ^See post § 517. 'Turman v. Bell, 54 Ark. 273, 15 S. W. 886, 26 Am. St. 35; Meherin V. Oaks, 67 Cal. 57, 7 Pac. 47; Og- den V. Ogden, 79 111. App. 488; Hoopeston Bldg. Assn. v. Green, 16 111. App. 204; Poutz v. Reggio, 25 La. Ann. 637; Muehlberger v. Schil- ling, 19 N. Y. St. 1, 3 N. Y. S. 705; Tousley v. Tousley, 5 Ohio St. 78; Citizens' Bank v. Shaw, 14 S. Dak. 197, 84 N. W. 779; Hart v. Patter- son, 17 Tex. Civ. App. 591, 43 S. W. 545; St. Croix Laud &c. Co. v. Ritchie, 73 Wis. 409, 41 N. W. 409. See also Robertson v. Downing Co., 120 Ga. 833, 48 S. E. 429, 102 Am. St. 128; Central Nat. Bank v. Brecheisen, 65 Kans. 807, 70 Pa& 895; Gillespie v. Brown, 16 Nehr. 457, 20 N. W. 632; Hughes v. Deb- nam, 53 N. Car. 127. *Weed V. Lyon, Harr. (Mich.) 363; Thompson v. Mack, Harr. (Mich.) 150. Only reasonable and practical compliance with the stat- ute is necessary, for example, in in- dexing, or cross-references by book and page. Downing v. Glen Rock Oil Co., 207 Pa. 455, 56 Atl. 995. " Dean v. Gibson, 34 Tex. Civ. App. 508, 79 S. W. 363; Lander v. Brom- ley, 79 Wis. 372, 48 N. W. 594; Wood V. Meyer, 36 Wis. 308. See also Du Rose V. Kell, 90 S. Car. 196, 71 S. E. 371. ° Bullock V. Battenhousen, 108 111. 28; Battenhousen v. Bullock, 11 111. App. 665; Bergman v. Bogda, 46 111. App. 351; Lacour v. Carrie, 2 La. Ann. 790; Whlttacre v. Fuller, 5 Minn. 508; Du Bose v. Kell, 90 S. Car. 196, 71 S. E. 371. See also Bou- ton V. Doty, 69 Conn. 531, 37 Atl. 1064; Pearce v. Hall, 12 Bush (Ky.) 805 EEEOBS IN THE EECOED 515 entry of an amount less than that recited in the mortgage, has been held not to be notice of the full amount, but only of the sum appear- ing on the record. If, for instance, a mortgage for three thousand dollars be, by mistake of the recorder, registered as for three hundred dollars, or a mortgage for four hundred dollars be registered as two hundred dollars, it is notice to subsequent bona fide purchasers of a lien of only that amount.'' And so if a mortgage for five thousand dol- lars be recorded as for five hundred dollars, although indexed as a mortgage for five thousand dollars, it is a lien as against a bona fide subsequent mortgagee only for the smaller amount; and the knowl- edge of such subsequent mortgagee that the mortgage was indexed as a mortgage for the larger amount is not sufficient to charge him with knowledge of the true amount.^ Although the record must correctly show the identity of the parties to the mortgage or other instrument," slight errors in this regard will not vitiate the record, especially where no one has been actually mis- led thereby.^" The record of a mortgage to partners, in the firm name 209. The record is suflacient if the purchaser is put upon inquiry as to the debt secured. Booth v. Barnum, 9 Conn. 286, 23 Am. Dec. 339; Equi- table Building &c. Assn. v. King, 48 Fla. 252, 37 So. 181. Although one of several notes secured by a mort- gage was omitted from the descrip- tion, the record was held to give suf- ficient notice to a subsequent pur- chaser where the aggregate amount of the notes was correctly given. Dargin v. Beeker, 10 Iowa 571. Al- though the record of a mortgage failed to state the amount of the note secured by it, but referred to the note by its date, the names of the maker and payee, the date of its maturity, the rate of interest pro- vided for, and the time of payment, It was held that the record was suf- ficient. Fetes V. O'Laughlin, 62 Iowa 532, 17 N. W. 764. 'Frost V. Beekman, 1 Johns. Ch. (N. Y.) 288 ($3,000 recorded $300); Beekman v. Frost, 18 Johns. (N. Y.) 544, 9 Am. Dec. 246; Peck v. Mal- lams, 10 N. Y. 509 (actual notice of amount) ; Terrell v. Andrew, 44 Mo. 309; Hill v. McNichol, 76 Maine 314; Stevens v. Bachelder, 28 Maine 218; Gilchrist v. Gough, 63 Ind. 576, 30 Am. Rep. 250 (mortgage for $5,000 recorded as $500). Where a mort- gage was assigned for $2,250, and the records then showed that the mortgage was recorded with the date blank, and that a mortgage for $2,500 had been executed on the same land to the same mortgagee, and that a conveyance had been made to the mortgagee, who as- sumed the latter mortgage as part of the price, it was constructive no- tice that the $2,500 mortgage was a substitution for the $2,250 mort- gage, and the assignee is not a pur- chaser writhout notice. Taylor v. American Nat. Bank, 64 Fla. 525, 60 So 783 » Gilchrist v. Gough, 63 Ind. 576, 30 Am. Rep. 250. 'Johnson v. Wilson, 137 Ala. 468, 34 So. 392, 97 Am. St. 52; Baugher v. Woollen, 147 Ind. 308, 45 N. E. 94; Disque v. Wright, 49 Iowa 538; Jen- nings v. Wood, 20 Ohio 261 (mistake in grantor's name) ; In re Sturte- vant's Appeal, 34 Pa. St. 149. " Fincher v. Hanegan, 59 Ark. 151, 26 S. W. 821, 24 L. R. A. 543 ("Hen- ry N. Ward" instead of Henry M. Ward); Muehlberger v. Schilling, 19 N. Y. St. 1, 3 N. Y. S. 705 ("Shel- leng" instead of "Schilling"); Roy- ster V. Lane, 118 N. Car. 156, 24 S. E. 796. See also Loser v. Plainfield Savings Bank, 149 Iowa 672, 128 N. § 515 EECOKDING AS AFFECTING PRIORITY 806 containing their surnames only, was held sufiBcient, notwithstanding a statute requiring the clerk to enter the Christian names and sur- names of parties to deeds.^"^ Where the name of the mortgagee was omitted by mistake in transcribing the instrument, but appeared in the entry book, the record was held sufficient to impart constructive notice.^" The record of a mortgage professing on its face to relate ex- clusively to a married woman's property, but including in the descrip- tion land of the husband who joined therein, does not operate against third persons as a mortgage of his land.^^ The description of the mortgaged property must identify it with reasonable certainty, or at least be sufficient to put a subsequent pur- chaser upon inquiry ; otherwise the record thereof will not be construc- tive notice.^* And if a material part of the description be omitted from the record, the record is constructive notice of only what appears upon it.^^ But a defect in the record of a mortgage as to the descrip- tion of the property has been held not to invalidate the lien, where the original instrument was correct.^" Thus a misdescription in the record of the "northwest quarter" of a certain section as the "southwest quar- ter" was held not to be prejudicial,*^ and a description of mortgaged land as "thirty acres in" a certain quarter section, which could be identified as the only thirty acres owned by the mortgagor therein and bounded by a certain creek, was held sufficient to charge judgment creditors of the mortgagor with notice.** It is not generally held, however, that it is part of the purchaser's duty to search the original papers to find out whether the recorder has correctly spread their contents upon the record. The obligation of giving notice rests upon the party holding the title. If the re- corder occasions a loss to the owner by incorrectly transcribing the deed, he may recover damages of the recorder for such loss.** W. 1101, 31 L. R. A. (N. S.) Va. 701, 56 S. B. 722. See also Tal- 1112. But see Johnson v. Wilson, madge v. Interstate Bldg. &c. Assn., 137 Ala. 468, 34 So. 392, 97 Am. St. 105 Ga. 550, 31 S. B. 618; Mettart 52 (record of mortgage as executed v. Allen, 139 Ind. 644, 39 N. B. 239. by A. W. Dixon, not notice to pur- See ante §§ 489, 65 et seq. chasers that J. W. Dixon executed "Ward v. Stark, 91 Ark. 268, 121 It). S. W. 382. "Bernstein v. Hobelman, 70 Md. "Covington v. Fisher, 22 Okla. 29, 16 Atl. 374. 207, 97 Pac. 615. " Sinclair v. Slawson, 44 Mich. " Van Valkenberg v. American &c. 123, 6 N. W. 207, 38 Am. Rep. 235. Mtg. Co., 87 Fed. 617, 31 C. C. A. " W. F. Taylor Co. v. Sample, 122 145. La. 1016, 48 So. 439. "Terrell v. Andrew, 44 Mo. 309. " See ante § 489. See also Taylor v. Hotchklss, 2 La. "Disque v. Wright, 49 Iowa 538; Ann. 917; Ritchie v. Griffiths, 1 Simmons v. Hutchinson, 81 Miss. Wash. 429, 25 Pac. 341, 12 L. R. A. 351, 33 So. 21; Reid v. Rhodes) 106 384, 22 Am. St. 155. 807 EEKOES IN THE RECORD § 516 § 516. Error chargeable to grantee and not to third person. — In accord with the theory that the record of a deed is notice only of what appears of record, there i& an important line of cases holding that the registration of a mortgage or other instrument is the duty of the grantee therein, that the recording officer is his agent, and that the grantee must suffer the loss resulting from the failure to record, rather than a third person or subsequent purchaser who has examined the records and acted in ignorance of the omission or mistake.^" Ac- cording to these cases third persons are not required to go beyond the registry to ascertain whether the title is good. If there is any error or omission in the registry of a deed or mortgage, the grantee must suffer for it rather than others who afterward consult the records. He may in some cases have recourse against the recorder for damages occasioned by his errors or omissions in recording; but otherwise the loss so occasioned must fall upon him.^^ In discussing the necessity of an actual, complete and correct rec- ord of a deed, including proper indexing and transcription, the Su- preme Court of "Washington says : "The very object in having it re- corded is to give constructive notice to innocent purchasers, and to protect the grantee's title against said purchasers. The law imposes upon him the duty of having his deed recorded. It is not the attempt to record a deed that the law requires ; but it is the recording of the deed. It would be an empty benefit, indeed, that would accrue to the buying public if the attempt to record were held to take the place of the record. The obligation rests upon the grantee to give the notice required by the law. He controls the deed. He can put it on record or not, as he pleases. He has the right and the opportunity to see that *> Cady V. Purser, 131 Cal. 552, 63 Mutual Life Ins. Co. v. Dake, 87 N. Pac. 844, 82 Am. St. 391; Watkins Y. 257; GlUig v. Maass, 28 N. Y. v. "Wilhoit, 104 Cal. 395, 38 Pac. 53; 191; Peck v. Mallams, 10 N. Y. 509, Donald v. Beals, 57 Cal. 399; Cham- Said. Notes (N. Y.) 199; Bedford v. berlain v. Bell, 7 Cal. 292, 68 Am. Tupper, 30 Hun (N. Y.) 174; Simon- Dec. 260; Benson v. Green, 80 Ga. son v. Falihee, 25 Hun (N. Y.) 570; 230, 4 S. E. 851; Shepherd v. Buck- Beekman v. Frost, 18 Johns. (N. Y.) halter, 13 Ga. 443, 58 Am. Dec. 523; 544, 9 Am. Dec. 246; Frost v. Beek- Gllehrist v. Gough, 63 Ind. 576, 30 man, 1 Johns. Ch. (N. Y.) 288; Jen- Am. Rep. 250; Barney v. McCarty, nings v. Wood, 20 Ohio 261; Potter 15 Iowa 510, 83 Am. Dec. 427; Noyes v. Dooley, 55 Vt. 512; Sawyer v. Ad- v. Horr, 13 Iowa 570; Miller v. Brad- ams, 8 Vt. 172, 30 Am. Dec. 459. See ford, 12 Iowa 14; Taylor v. Hotch- also Baugher v. Woollen, 147 Ind. kiss, 2 La. Ann. 917; Hill v. Mc- 308, 45 N. E. 94; Smith v. Lowry, Nichol, 76 Maine 314; Brydon v. 113 Ind. 37, 15 N. E. 17; State v. Campbell, 40 Md. 331; Thompson v. Davis, 96 Ind. 539. See ante § 515. Morgan, 6 Minn. 292; Parret v. ^Taylor v. Hotchkiss, 2 La. Ann. Shaubhut, 5 Minn. 323, 80 Am. Dec. 917. 424; Terrell v. Andrew, 44 Mo. 309; § 517 KECOEDING AS AFFECTING PRIORITY 808 the work is done as he directs it to be done, in legal manner. No one else has this opportunity, and if, from any cause, he fails to give the notice required by law, the consequences must fall upon him. It may be a hardship; but, where one of two innocent persons must suffer, the rule is that the misfortune must rest on the person in whose busi- ness, and under whose control, it happened, and who had it in his power to avert it."^^ § 517. Error chargeable to third persons under statutes making mortgage operative upon filing. — The other view prevails under stat- utes which make the deed operative as a record from the time it is filed for record, and the apparent weight of authority is that any er- ror in transcribing the deed, as, for instance, in the date of the deed or of the acknowledgment,^' or in the sum secured by a mortgage, does not prejudice the grantee or mortgagee.^* The mortgagee is regarded as having discharged his entire duty when he has delivered his mort- gage, properly executed and acknowledged, to the recording ofScer, and as being in the same attitude as if tlie deed were at that moment correctly spread upon the record book ; so that no error in transcription can deprive the deed of its operation as a recorded instrument, and subsequent purchasers are charged with constructive notice, notwith- standing the officer does not properly record the instrument.^^ '^RitcWe V. Griffiths, 1 Wash. 429, 486; Riggs v. Boylan, 4 Biss. (U. S.) 25 Pac. 341, 12 L. R. A. 384, 22 Am. 445; Polk v. Cosgrove, 4 Biss. (U. St. 155. See also Terrell v. Andrew, S.) 437. 44 Mo. 309. So also In Ohio, where the statute ^ Grove v. Great Northern Loan provides that a deed "shall take Co., 17 N. Dak. 352, 116 N. W. 345, effect and have preference from the 138 Am. St. 707 (date of mortgage time the same is delivered to the omitted in record) ; In re Wood's recorder." Tousley v. Tousley, 5 Appeal, 82 Pa. St. 116; In re Ohio. St. 78. Brooke's Appeal, 64 Pa. St. 127; So in Michigan: Sinclair v. Slaw- Musser v. Hyde,' 2 Watts & S. (Pa.) son, 44 Mich. 123, 6 N. W. 207, 38 314. See also Parke v. Neeley, 90 Pa. Am. Rep. 235. See ante § 515. St. 52; Thomas v. Stuart, 91 Va. 694, ^ Riggs v. Boylan, 4 Biss. (U. S.) 22 S. E. 511 (omission of certain 445; Polk v. Cosgrove, 4 Biss. (U. words from acknowledgment of S.) 437; Hudson v. Randolph, 66 deed). See ante § 89, concerning Fed. 216, 13 C. C. A. 402; Fouche v. error in date. Swan, 80 Ala. 151; Mims v. Mims, "Mims v. Mims, 35 Ala. 23; Du- 35 Ala. 23; Case v. Hargadine, 43 hose v. Young, 10 Ala. 365; Taylor Ark. 144; Oats v. Walls, 28 Ark. 244; V. American Nat. Bank, 64 Fla. 525, Lewis v. Hinman, 56 Conn. 55, 13 60 So. 783; Bedford v. Tupper, 30 Atl. 143; Hine v. Robbins, 8 Conn. Hun (N. Y.) 174; Simonson v. Fall- 342; Judd v. Woodruff, 2 Root hee, 25 Hun (N. Y.) 570. A similar (Conn.) 298; FrauKlin v. Cannon, view was taken under a statute of 1 Root (Conn.) 500; Hartmyer v. Illinois, providing that deeds "shall Gates, 1 Root (Conn.) 61; Green- take effect and be in force from and field v. Stout, 122 Ga. 303, 50 S. E. after the time of filing the same for 111; Chatham v. Bradford, 50 Ga. record." Merrick v. Wallace, 19 111. 327, 15 Am. Rep. 692; Kiser v. Heu- 809 ERRORS IN THE RECORD § 517 The omission of the name of the mortgagee from the record, after it had been properly entered in the entry book, does not defeat the mortgage as to subsequent purchasers.^^ A mistake of the officer in transcribing a mortgage, by which it is made to appear to be a security for a smaller amount than is actually provided for by it, does not impair the mortgage as a security for the amount for which it was actually given, although subsequent pur- chasers and creditors , relying upon the record have taken the incum- brance to be only the amount there disclosed. The lien of a deed or mortgage begins when it is left for record and entered in a proper entry book, required to be kept for the purpose of showing what deeds or mortgages are left for record. The grantee is under no obligation ston, 38 111. 252; Merrick v. Wal- lace, 19 111. 486 ; Lee v. Bermingham, 30 Kans. 312, 1 Pac. 73; Poplin v. Mundell, 27 Kans. 138; Zear v. De- posit &c. Co., 2 Kans. App. 505, 43 Pac. 977; State Banlc v. Haggin, 1 A. K. Marsh. (Ky.) 306; Buckner v. Davis, 19 Ky. L. 1349, 43 S. W. 445 (mortgage recorded several years after delivery to recorder) ; Swan v. Vogle, 31 La. Ann. 38; Payne v. Pavey, 29 La. Ann. 116; Taylor v. Hotchkiss, 2 La. Ann. 917; Falcon- er's Succession, 4 Rob. (La.) 5; Hay- den V. PeircB, 165 Mass. 359, 43 N. E. 119; Gillespie v. Rodgers, 146 Mass. 610; Getchell v. Moran, 124 Mass. 404; Sykes v. Keating, 118 Mass. 517; Wood v. Simons, 110 Mass. 116; Fuller v. Cunningham, 105 Mass. 442; Jordan v. Farns- worth, 15 Gray (Mass.) 517; Ames V. Phelps, 18 Pick. (Mass.) 314; Tracy v. Jenks, 15 Pick. (Mass.) 465; Sinclair v. Slawson, 44 Mich. 123. 6 N. W. 207, 38 Am. Rep. 235; Mangold v. Barlow, 61 Miss. 593, 48 Am. Rep. 84; Deming v. Miles, 35 Nebr. 739, 53 N. W. 665, 37 Am. St. 464; Perkins v. Strong, 22 Nebr. 725, 36 N. W. 292; Converse V. Porter, 45 N. H. 385; Mutual Ins. Co. V. Dake, 87 N. Y. 257; Bedford V. Tupper, 30 Hun (N. Y.) 174; Simonson v. Falihee, 25 Hun (N. Y. 570. (Otherwise, it seems, in the earlier cases In New York, Frost V. Beekman, 1 Johns. Ch. (N. Y.) 288, 18 Johns. 544; Peck v. Mallams, 10 N. Y. 509); Green v. Garrington, 16 Ohio St. 548; Tousley v. Tousley, 5 Ohio St. 78; Brown v. Kirkman, 1 Ohio St. 116; Covington v. Fisher, 22 Okla. 207, 97 Pac. 615; Board of Comrs. V. Babcock, 5 Ore. 472; Cla- der V. Thomas, 89 Pa. St. 343; Gla- ding V. Frick, 88 Pa. St. 460; In re Wood's Appeal, 82 Pa. St. 116; Schell V. Stein, 76 Pa. St. 398, 18 Am. Rep. 416; Brooke's Appeal, 64 Pa. St. 127; Prouty V. Marshall, 36 Pa. Sup. Ct. 527; Musser v. Hyde, 2 Watts & S. (Pa.) 314; Nichols v. McReynolds, 1 R. L 30, 36 Am. Dec. 238; Arm- strong V. Austin, 45 S. Car. 69, 22 S. E. 763, 29 L. R. A. 772; Woodward V. Boro, 16 Lea (Tenn.) 678; Swep- son V. Exchange &c. Bank, 9 Lea (Tenn.) 713; Flowers v. Wilkens, 1 Swan (Tenn.) 408; Willis v. Thomp- son, 85 Tex. 301, 20 S. W. 155; Frei- berg V. Magale, 70 Tex. 116, 7 S. W. 684; Woodson v. Allen, 54 Tex. 551; Throckmorton v. Price, 28 Tex. 606, 91 Am. Dec. 334; Mercantile &c. Bank v. Brown, 96 Va. 614, 32 S. E. 64; Thomas v. Stuart, 91 Va. 694, 22 S. B. 511; Beverly v. Ellis, 1 Rand. (Va.) 102; Shove v. Larsen, 22 Wis. 142. See also The W. B. Cole, 59 Fed. 182, 8 C. C. A. 78; McGregor V. Hall, 3 Stew. & P. (Ala.) 397; Durrence v. Northern Nat. Bank, 117 Ga. 385, 43 S. E. 726; Cook v. Hall, 6 111. 575; Jennings v. Wood, 20 Ohio 261. But see Shepard v. Burkhalter, 13 Ga. 443, 58 Am. Dec. 523; Lally v. Holland, 1 Swan (Tenn.) 396; McLouth v. Hurt, 51 Tex. 115. ^ Sinclair v. Slawson, 44 Mich. 123, 6 N. W. 207, 38 Am. Rep. 235. § 518 RECORDING AS AFFECTING PRIORITY 810 to supervise the work of the recorder, and see that he spreads the deed upon record, or that he puts it upon the index.''' If, however, the record is such that it suggests a probable mistake in recording, it puts purchasers upon inquiry and charges them with notice of what the deed contains.^* In discussing a case where a pur- chaser was put upon inquiry by examination of a defective record showing his source of title, which disclosed intervening equities, the United States Court of Appeals, per Judge Taft, said: "The proper construction of the recording acts charges every person taking title with all conveyances or mortgages made by any one in the chain of title while he holds title, whether the recording of such conveyances occur then or not. If, upon the record, a prior conveyance seems to be defeated by a subsequent one through delay in recording, then the person taking title must inquire as to the facts which might defeat the statutory effect of such prior record. * * * ^ purchaser is charged with notice of his chain of title, whether the grantees therein are bona fide purchasers or not."^^ Moreover, if the grantee is himself guilty of any negligence or ir- regularity with reference to the recording of his deed, whereby his deed does not appear of record, he can not claim priority as against a subsequent bona fide purchaser. Thus, where a grantee took his deed out of the recorder's ofiEice before it was recorded, without noticing that it did not contain the recorder's certificate of recording required by law, the loss was held to fall on him whose want of care and caution made it possible.^" § 518. Index not essential to record. — ^The index is no part of the record, and a mistake in it does not invalidate the notice afforded by ''In re 'Wood's Appeal, 82 Pa. St. have examined the records, may be 116; Payne v. Pavey, 29 La. Ann. induced to purchase, when they 116. See ante § 515. have exhausted all usual means of "Lewis V. Hinman, 56 Conn. 55, Inquiry and information. If they 13 Atl. 143. See ante § 490. do thus purchase, a loss must be =» The W. B. Cole, 59 Fed. 182, 8 C. borne. Where should it fall? Upon C. A. 78. him whose care and caution did ""Turman v. Bell, 54 Ark. 273, 15 not prevent it, or upon him whose S. W. 886. Hemingway, J., said: slight care and caution would have "If the grantee remove his deed be- prevented it? The question implies fore it is recorded, he places it in Its own answer." Oats v. Walls, 28 the power of the grantor to exhibit Ark. 244, holding that, when the a clear title, and thus to mislead deed is once placed in the hands of and deceive subsequent purchasers, the recorder, the grantee has no By the exercise of slight care and further responsibility, is referred to caution he could have averted such at length and disposed of as fol- a possibility, but, if he fails to do lows: "In so far as that case holds it, persons ignorant of the deed, who that a deed is notice of its provi- 811 ERRORS IN THE RECORD § 518 a record otherwise properly made.^^ Although a deed be omitted from the index, there is constructive notice of it which affects all subsequent purchasers from the time it was left for record.^^ The general policy of the recording acts is to make the filing of a deed, duly executed and acknowledged, with the proper recording officer, constructive notice from that time; and although it be provided that the register shall make an index for the purpose of affording a correct and easy refer- ence to the books of record in his office, the index is designed, not for the protection of the party recording his conveyance, but for the con- venience of those searching the records; and instead of being a part of the record, it only shows the way to the record. It is in no way necessary that a conveyance shall be indexed, as well as recorded, in sions from the time it is filed for duly deposited in the recorder's of- record, and that the effect of such fice, but actually recorded in the notice can not be impaired by the deed-book and indexed in the index misconduct of the officer, it is ap- of the deeds, is sufficiently recorded proved; but in so far as it holds to constitute notice from the time it that the notice continues as against was left for record. A statute re- those who in good faith and for quiring recorders to keep two in- value acquire adverse interests after dexes of mortgages separate from the deed, unrecorded, and, without the indexes of deeds, but containing a certificate of record, is with- no repeal of prior legislation upon drawn from the files, it is over- the recording of deeds and mort- ruled." gages, can create no new rule of ^Amos V. Givens (Ala.), 60 So. constructive notice. Farabee v. Mc- 829; Chatham v. Bradford, 50 Ga. Kerrihan, 172 Pa. St. 234, 33 Atl. 327, 15 Am. Rep. 692; Nichol v. Hen- 583, 51 Am. St. 734. ry, 89 Ind. 54; Gilchrist v. Gough, »" Hampton Lbr. Co. v. Ward, .95 63 Ind. 576, 30 Am. Rep. 250; Agurs Fed. 3; Amos v. Givens (Ala.), 60 V. Belcher, 111 La. 378, 35 So. 607, So. 829; Chatham v. Bradford, 50 100 Am. St. 485; Swan v. Vogel, 31 Ga. 327, 15 Am. Rep. 692; Herndon La. Ann. 38; Bishop v. Schneider, v. Ogg, 119 Ky. 814, 27 Ky. L. 268, 46 Mo. 472, 2 Am. Rep. 533; Lincoln 84 S. W. 754; Bishop v. Schneider, Bldg. &c. Assn. v. Hass, 10 Nebr. 46 Mo. 472, 2 Am. Rep. 533; Ryan 581, 7 N. W. 327; Semon v. Terhune, v. Carr, 46 Mo. 483; Perkins v. 40 N. J. Eq. 364, 2 Atl. 18; Mutual Strong, 22 Nebr. 725, 36 N. W. 292; L. Ins. Co. V. Dake, 87 N. Y. 257; Eureka Lumber Co. v. Satchwell, Bedford v. Tupper, 30 Hun (N. Y.) 148 N. Car. 316, 62 S. E. 310; Davis 174; Green v. Garrington, 16 Ohio v. Whitaker, 114 N. Car. 279, 19 S. St. 548, 91 Am. Dec. 103; Polk v. E. 699; Yarrington v. Green, 2 Ohio Babcock, 5 Ore. 472; Musgrove v. Dec. 721; Polk v. Babcock, 5 Ore. Bonser, 5 Ore. 313; Stockwell v. Mc- 472; Stockwell v. McHenry, 107 Pa. Henry, 107 Pa. St. 237, 52 Am. Rep. St. 237, 52 Am. Rep. 475; Schell v. 475; Greenwood Loan &c. Assn. v. Stein, 76 Pa. St. 398, 18 Am. Rep. Childs, 67 S. Car. 251, 45 S. E. 167; 416; Speer v. Evans, 47 Pa. St. 141; Armstrong v. Austin, 45 S. Car. 69, Throckmorton v. Price, 28 Tex. 605, 22 S. B. 763, 29 L. R. A. 772; Barrett 91 Am. Dec. 334; Curtis v. Lyman, v. Prentiss, 57 Vt. 297; Curtis v. 24 Vt. 338, 58 Am. Dec. 174; Sawyer Lyman, 24 Vt. 338; Oconto v. Jer- v. Adams, 8 Vt. 172, 30 Am. Dec. rard 46 Wis. 317, 50 N. W. 591; Fal- 459; Virginia Bldg. &c. Co. v. Glenn, lass v Pierce, 30 "Wis. 443; Ely v. 99 Va. 460, 39 S. B. 136. See also Wilcox, 20 Wis. 523, 91 Am. Dec. The W. B. Cole, 59 Fed. 182, 8 C. 436. See also Travelers' Ins. Co. v. C. A. 78. Patten, 98 Ind. 209. A mortgage § 518 EECOEDING AS AFFECTING PEIOEITT 813 order to make it a valid notice.^' "Ordinarily the recording of an ia- stmment means the copying of it into the public records kept for the purpose, by or under the direction or authority of the proper public ofiB.cer. In this sense the index forms no part of the record. The rec- ord is complete without it. An index to the record of an instrument is the means provided for pointing out or indicating vrhere the record may be found. It may in many cases be indispensable in order to se- cure the full benefit of the record to the public. But its office is to fa- cilitate the researches of those having occasion to examine the records ; and strictly it can not be said to form part of the record."^* When a grantee has delivered his deed to the recorder, notice of its contents is imparted from that time, if it is correctly spread upon the record. He has done all the law requires of him for his protection. The purpose of the index is only to point to the record, but constitutes no ''Davis V. "Whitaker, 114 N; Car. 279, 41 Am. St. 793 (quoting text); Mutual Life Ins. Co. v. Dake, 1 Abb. N. Cas. (N. y.) 381. Mr. Justice Smitb, delivering the opinion of the Supreme Court, said: "It is not a little surprising to find that a ques- tion so likely to come up frequently has not arisen in any reported case in this state. I suppose the usual practice in searching the records in the clerk's office is to consult the in- dex, and to rely upon it. That is ob- viously the most convenient way; and if the index is full and accurate, it saves the necessity of going through the records themselves. But if the index is imperfect and mis- leads the searcher, as appears to have been the case here, who is to suffer — the party who duly tran- scribed his mortgage in the record book, or the party who, relying on the index, omitted to look at the record? The question is to be an- swered by determining whether the index is an essential part of the rec- ord — that is to say, whether it is necessary to the completeness and efficiency of the record as a notice to after purchasers." After examin- ing the statutes, and reaching the conclusion that the index is no part of the record, he continues: "In reaching this conclusion, I have not overlooked the practical inconve- niences that may result from it in searching records. But the duty of the court is only to declare the law as the legislature has laid it down. Arguments ab inconveni- ent! may sometimes throw light upon the construction of ambigu- ous or doubtful words; but where, as here, the language of the law makes it plain, they are out of place. Inconveniences in practice will result whichever way the ques- tion shall be decided. The power to remedy them is in the legislature, and not in the courts. Even as the law now stands, the party injured by the omission of the clerk is not without remedy, for he has his ac- tion against the clerk." Affirmed by the Court of Appeals, 87 N. Y. 257, and the first part of this section quoted with approval. See this case commented upon and approved, 4 Cent. L. J. 340. See also Bishop v. Schneider, 46 Mo. 472, 2 Am. Rep. 533. The same rule was applied un- der analogous statutes in New York relating to the filing of chattel mort- gages. Dodge V. Potter, 18 Barb. (N. Y.) 193; Dikeman v. Puckhafer, 1 Abb. Pr. (N. S.) (N. Y.) 32. These cases hold that the mortgagee, by filing and depositing his mortgage with the clerk, did all that he could do, and all that he was required to do, in order to perfect his claim, and that the omission of the mort- gage from the index, being without his fault or knowledge, did not prej- udice him. " Green v. Garrington, 16 Ohio St. 458, 91 Am. Dec. 103. 813 EEEOES IN THE KECOED § 518 part of it.^= In the absence of proof to the contrary, it is presumed that the entry in the general index and the actual recording of a mort- gage were simultaneous; and the fact that entries in the record are not made in consecutive order, either according to number or date of receipt, does not affect the validity of the record.^" Statutory provi- sions requiring entry books to be kept have been construed similarly to those requiring indexes, and are declared not to make the entry book an essential part of the record. ^^ The neglect of a register of deeds, after a mortgage entitled to be recorded has been left with him for record, to make a note of refer- ence from the record of the certificate of entry by the mortgage for breach of condition to the record of the mortgage, and vice versa, as directed by statute, can not affect the rights of the parties to the mort- gage or those claiming under them.^* In Pennsylvania, however, under statutes not materially different from those in New York, Chief Justice "Woodward reasoned that the mortgage not duly indexed was not constructive notice to third per- sons; that, as a guide to inquirers, the index is an indispensable part of the recording ; and that without it the record affects no party with notice.^ ^ In this case the purchaser had actual notice of the existence of the mortgage, and therefore could not complain of the want of record; and in that view what was said by the court as to the suffi- ciency of the record was not material to the result. It has been held that an index or entry book may be resorted to, to supply omissions or correct errors in the record, and it will con- stitute notice of a recorded instrument if enough is disclosed to put a prudent examiner upon inquiry.*" But the correct indexing of a '= Bishop V. Schneider, 46 Mo. 472, "' Hayden v. Peirce,' 165 Mass. 359, 2 Am. Rep. 533. As to errors of in- 43 N. E. 119. dex as. to names, see Pinney v. Rus- ^ Speer v. Evans, 47 Pa. St. 141. sell, 52 Minn. 443, 54 N. "W. 484; See also Schell v. Stein, 76 Pa. St. Fincher v. Hanegan, 59 Arlt. 151, 26 398, 18 Am. Rep. 416. S. W. 821; Phillips v. McKaig, 36 ""Disque v. Wright, 49 Iowa 538; Nebr. 853, 55 N. W. 259; Dppen- Jones v. Berkshire, 15 Iowa 248, 83 heimer v. Robinson, 87 Tex. 174, 27 Am. Dec. 412; Loser v. Plainfield S. W. 95. Sav. Bank, 149 Iowa 672, 128 N. W. "°Lane v. Duchac, 73 Wis. 646, 41 1101; Swan v. Vogel, 31 La. Ann. 38; N. W. 962. Sinclair v. Slawson, 44 Mich. 123, 6 ='Nichol V. Henry, 89 Ind. 54. See N. W. 207, 38 Am. Rep. 235; Piper also Gilchrist v. Gough, 63 Ind. 576, v. Hilliard, 58 N. H. 198; Pringle 30 Am. Rep. 250. But see Sinclair v. Dunn, 37 Wis. 449, 19 Am. Rep. V. Slawson, 44 Mich. 123, 6 N. W. 772. See also American Emigrant 207, 38 Am. Rep. 235. Co. v. Call, 22 Fed. 765. § 519 EECOEDING AS AFFECTING PKIOEITY 814 mortgage will not validate a defective transcription, entirely omitting the witnesses,*^ or misstating the amount secured.*^ A mere clerical error in the index will not invalidate the construc- tive notice of the record, where it would not mislead a careful person in examination of the records.^^ § 519. Eecorder's liability for errors. — The recording oflBcer is liable in damages for errors and omissions made in recording or in- dexing a deed ; but whether his liability is to the grantee in the deed, or to any third person who is injured by the error or omission, is a question that has given rise to some discussion. In those states in which the rule is adopted that a deed is constructive notice from the time it is left for record, whether it is in fact recorded or not, and is notice of the contents of the deed itself, the grantee could not ordi- narily be injured by the omission or error, and consequently the lia- bility of the recorder would be to the subsequent purchaser, who has purchased relying upon the correctness of the record. But without reference to this rule, the recorder should be liable to any third per- son injured by his negligence.** The recorder is not liable for recording a forged deed unless he "■ Pringle v. Dunn, 37 Wis. 449, 19 v. Schneider, 46 Mo. 472, 2 Am. Rep. Am. Rep. 772. 533; State v. Green, 24 Mo. App. 80, "Gilchrist v. Gough, 63 Ind. 576, 100 S. W. 1115 (record of trust deed 30 Am. Rep. 250. falsely marked satisfied) ; Mutual ^» Paige V. Lindsey, 69 Iowa 593, Life Ins. Co. v. Dake, 87 N. Y. 257, 29 N. W. 615; Barney v. Little, 15 affg. 1 Ahb. N. Gas. (N. Y.) 381; Iowa 527; Jones v. Berkshire, 15 Clark v. Miller, 54 N. Y. 528; Van Iowa 248, 83 Am. Dec. 412; Agurs Schaick v. Sigel, 58 How. Pr. (N. V. Belcher, 111 La. 378, 35 So. 607, Y.) 211; State v. Grizzard, 117 N. 100 Am. St. 485. See also Bardon Car. 105, 23 S. E. 93; Green v. Gar- V. Land &c. Imp. Co., 157 U. S. 327, rington, 16 Ohio St. 548, 91 Am. Dec. 39 L. ed. 719, 15 Sup. Ct. 650; Hodg- 103; Polk v. Babcock, 5 Ore. 472; son V. Lovell, 25 Iowa 97, 95 Am. Peabody Bldg. &c. Assn. v. House- Dec. 775. man, 89 Pa. St. 261, 33 Am. Rep. 757, *■ Hampton Lumber Co. v. Ward, 7 Wkly. N. Cas. 193; Houseman v. 95 Fed. 3; Stephenson v. Mfg. Co., Girard Mut. Bldg. &c. Assn., 81 Pa. 84 Fed. 114; Norton v. Kumpe, 121 St. 256; Schell v. Stein, 76 Pa. St. Ala. 446, 25 So. 841; Reeder v. State, 398, 18 Am. Rep. 416; Armstrong v. 98 Ind. 114; State v. Davis, 96 Ind. Austin, 45 S. Car. 69, 22 S. E. 763, 539; Gilchrist v. Gough, 63 Ind. 576; 29 L. R. A. 772; Maxwell v. Stuart, First Nat. Bank v. Clements, 87 99 Tenn. 409, 42 S. W. 34; Crews v. Iowa 542, 54 N. W. 197 (delay in Taylor, 56 Tex. 461; Curtis v. indexing a mortgage); Lee v. Ber- Lyman, 24 Vt. 338, 58 Am. Dec. mmgham, 30 Kans. 312; Poplin v. 174; Hunter v. Windsor, 24 Vt. Mundell, 27 Kans. 138; Gordon v. 327; Mercantile Co-operative Bank Stanley, 108 La. 182, 32 So. 531; Fox v. Brown, 96 Va. 614, 32 S. B. V. Thibault, 33 La. Ann. 32; Commis- 64; Johnson v. Brice, 102 Wis. sioners v. Duckett, 20 Md. 468, 83 575, 78 N. W. 1086. See also Spen- Am. Dec. B57; Mangold v. Barlow, cer v. Registrar, A. C. 503, 75 L. J. 61 Miss. 593, 48 Am. Rep. 84; Bishop P. C. 100, 95 L. T. (N. S.) 316; Har- 815 EEROES IN THE EECOED § 520 knew it was forged.*' It is not required of the recorder that he shall determine the genuineness or validity of an instrument before re- cording it.*° One who in good faith has taken a subsequent deed or mortgage of the property, on the faith of finding no incumbrance upon the index, has a remedy for damages against the register, whose duty it was under the law to make the index.*'' Where payment was indorsed on the back of a mortgage of certain lands and the register erroneously entered payment upon the margin of the record of a different mort- gage between the same parties upon other lands, the register was held liable to a third person who made a loan to the mortgagee, and took a mortgage on the land erroneously released, and suffered loss in con- sequence.** In Missouri a statute provides that a recorder who neglects or re- fuses to keep an index to the books of record shall pay to the party aggrieved double the damages which may be occasioned thereby; but the court has suggested that before a purchaser can recover for the failure of the recorder to index a prior mortgage upon the property, he must show that the damage arose from the recorder's neglect, and not from other causes; as, for instance, his own reliance upon false outside representations as to the title without an examination of the index, or from his mistaken reliance upon the covenants of the grantor.** In California a similar statute provides for treble damages against a recorder for negligence in recording conveyances, but the court, in a case where the record was made in the wrong book, refused to extend such relief to third persons, holding that the parties ag- grieved within the meaning of the act referred only to the parties to the conveyance.^" § 520. Index essential under some statutes. — In a few states, in- cluding Iowa and Washington, the index is an essential part of the risen v. Brega, 20 IT. C. Q. B. 324. Y.) 381, per Smith, J. See also Gor- A recorder Is liable for loss arising don v. Stanley, 108 La. 182, 32 So. from his failure to record in the 531; Van Schaick v. Siegel, 58 How. book of mortgages and privileges an Pr. (N. Y.) 211. act of sale, giving rise to the ven- " Mechanics' Bldg. Assn. v. Whit- dor's privilege, and reserving a acre, 92 Ind. 547. See also State v. mortgage for the unpaid portion of Green, 112 Mo. App. 108, 90 S. W. the price. Baker v. Lee, 49 La. Ann. 403. 874, 21 So. 588. '"' Bishop v. Schneider, 46 Mo. 472, « Ramsey v. Riley, 13 Ohio St. 157. 2 Am. Rep. 533. " Sacerdotte V. Duralde, 1 La. 482. ™Watkins v. Wilhoit (Cal.), 35 " Mutual Life Ins. Co. v. Dake, 87 Pac. 646. N. Y. 257, afCg. 1 Abb. N. Cas. (N. § 520 EECOKDING AS AFFECTING PEIOKITT 816 record, and a deed filed but not indexed,^^ or even copied into the record but not indexed/- does not impart constructive notice. The laws require a descriptive index to be kept, and prescribe the requisites of the index, and the index is regarded as an integral part of a com- plete and valid registration.^^ In discussing the necessity of compliance with the Washington statute, requiring the correct entry of deeds in an index book, show- ing the time of filing, the names of the parties, the description of the property and the book and page of record, the court says: "The re- quirements specified above are for the direct and only purpose of giv- ing notice to the public. They are vital provisions, essential to con- stitute constructive notice. * * * The Iowa statute was substan- tially as ours, except that the recorder was required to keep a 'fair book,' in which he entered every deed, giving date, parties, and de- scription of land, in addition to the index with about the same re- quirements as ours. So that there was really more chance for an in- nocent purchaser to be put on his guard, under their registration laws, in the absence of the index, than under ours; and yet the Supreme Court of that state has uniformly held that the index was necessary to give constructive notice. * * * The law was, no doubt, suggested by the necessity of some such provisions as the records accumulated, and, at the present day, considering the accumulations of deeds, mort- gages, and liens of all kinds, affecting real estate, and the rapidity with which such titles are changing every day, if we give the effect of constructive notice to the record at all, the only practical way by which the public can obtain the benefit of that notice is through the medium of the index."^* In Wisconsin, the rule has been applied to the record of tax deeds,°° though not unqualifiedly to mortgages; and the omission of the de- scription in such index is regarded as cured by the recording of the deed at length in the proper record.^' "Whalley v. Small, 25 Iowa 184; ""Greenwood v. Jenswold, 69 Iowa Congregational Churcli Bldg. Soc. v. 53, 28 N. W. 433; Barney v. Mc- Scandinavian Free Church, 24 "Wash. Carty, 15 Iowa 510, 83 Am. Dec. 427. 433, 64 Pac. 750 (mortgagor's name "Ritchie v. Griffiths, 1 Wash. 429, improperly indexed); Malbon v. 25 Pac. 341, 12 L. R. A. 384, 22 Am. Grow, 15 Wash. 301, 46 Pac. 330 St. 155. (description In index ambiguous "'Hiles v. Atlee, 80 Wis. 219, 49 but sufficient); RitcWe v. Griffiths, N. W. 816, 27 Am. St. 32; Ramsay 1 Wash. 429, 25 Pac. 341, 12 L. R. A. v. Hommel, 68 Wis. 12, 31 N. W. 271; 384, 22 Am. St. 155 (fully discuss- Lombard v. Culbertsen, 59 Wis. 433, ing this view). 18 N. W. 399; Potts v. Cooley, 51 "= Barney v. McCarty, 15 Iowa 510, Wis. 353, 8 N. W. 153; International 83 Am. Dec. 427; Peters v. Ham, 62 Life Ins. Co. v. Scales, 27 Wis. 640. Iowa 656, 18 N. W. 296. " Lane v. Duchac, 73 Wis. 646, 41 817 ERRORS IN THE RECORD § 520 A recital in a mortgage for purchase-money, that the premises are the same conveyed to the mortgagor by the mortgagee by deed of even date, is generally sufficient notice of the mortgage when recorded, al- though by mistake the lot described is an entirely different lot. Yet in Iowa this recital is held to be an insufficient notice of the conveyance of the lot referred to in the recital, inasmuch as the lot described would appear in the index, and not the lot referred to in the recital.^^ If, however, a deed recites the existence of a prior mortgage of the same land, the grantee is charged with constructive notice of such prior mortgage, though it is not indexed on the records.^" It is not necessary, however, that the descriptive part of the index should con- tain more than a reference to the record; and where a description by plan or survey is impracticable, a reference to "certain lots of land,'"^* or "see record,""" has been held sufficient ; but where the mortgage cov- ered two lots of land, but the description of one of them only was entered in the descriptive column of the index, it was held that the record did not impart constructive notice of the lot not described, and that the consequences of the recorder's error should fall upon the mort- gagee, rather than upon subsequent purchasers.""^ The record, though complete in every other respect except that it is not properly indexed, does not operate as constructive notice."^ Yet, while an index is insufficient if it would mislead an inquirer by giving a totally wrong description, a mistake in the index reference to the page of the book where the instrument is recorded, the names of the grantor and the grantee being correctly given, does not prevent its operating as constructive notice of the acts which would be dis- closed by an examination of the record. The record book and the in- dex book are not considered detached and independent books, but are related and connected, and a party is affected with notice of the contents of the record when an ordinarily diligent search will bring him to a knowledge of such contents. To a competent examiner of the records, finding the name of one entered upon the index as having made a mortgage, it would occur that it was much more likely that N. W. 962; Pringle v. Dunn, 37 Wis. '^ Miaa, L. Ins. Co. v. Bishop, 69 449, 19 Am. Rep. 772 (mortgage). Iowa 645, 29 N. W. 761. See also St. Croix Land &c. Co. v. =» American Emigrant Co. v. Call, Ritchie, 73 Wis. 409, 41 N. W. 345 22 Fed. 765; Bostwick v. Powers, 12 (tax deed); Oconto v. Jerrard, 46 Iowa 456. Wis. 317, 50 N. W. 591 (tax deed). «» White v. Hampton, 13 Iowa 259. "Whalley v. Small, 25 Iowa 184: "'Noyes v. Horr, 13 Iowa 570. Breed v. Conley, 14 Iowa 269, 81 Am. "» Peters v. Ham, 62 Iowa 656, 18 Dec. 485; Scoles v. Wilsey, 11 Iowa N. W. 296; Howe v. Thayer, 49 Iowa 261; Calvin v. Bowman, 10 Iowa 154; Gwynn v. Turner, 18 Iowa 1. 529. S2— Jones Mtg. — Vol. I. § 521 EECOKDING AS AFFECTING PRIORITY 818 the recorder should make an error in entering the page of the record than that he should mistake the name of the mortgagor, or should enter his name at all if he had not recorded the deed.*' § 521. Correction of errors in record. — A register may correct an error in the record at any time subsequent to the registration. If he has omitted to indicate the seal or scroll opposite the grantor's signa- ture, he may afterward supply the omission, or may record the deed anew.°* And likewise he may supply the omission of an index entry, and the record will be good from the time of such correction without the necessity of re-recording."" Where the doctrine prevails that the record is notice of only what appears of record, though this be defect- tive, a correction of a mistake in the record made by the register can not affect the rights of a purchaser without notice of the mistake who has become such after the record was made, but before the making of the correction.'"' The record of a mortgage, duly transcribed, can not be altered by the recorder, even with the consent of the parties. The proper method to correct a material mistake in a recorded mortgage is to execute and record a new mortgage, reciting that it is given to correct the former mortgage."^ § 521a. Ciirative statutes. — In some states curative statutes have been enacted for the purpose of validating records of conveyances which are defective because of omissions or errors in the prescribed formalities, such as the certificate of acknowledgment,"* the requisite "» Barney v. Little, 15 Iowa 527. Martz, 38 Mich. 761; Sellers v. Sel- See comments upon this and other lers, 98 N. Car. 13, 3 S. E. 917. A Iowa cases, 4 Cent. L. J. 387. second mortgage covering the same "* Sellers v. Sellers, 98 N. Car. 13, realty and securing the same debt, 3 S. B. 917. between the same parties, reciting °°Bardon v. Land &c. Imp. Co., 157 that it is given to correct a former U. S. 327, 39 L. ed. 719, 15 Sup. Ct. mortgage, supersedes the first, and 650; Agurs v. Belcher, 111 La. 378, the two constitute one mortgage, 35 So. 607, 100 Am. St. 485; Hotson nothing having intervened to affect v. Wetherby, 88 Wis. 324, 60 N. W. the mortgagee's security. Rossbach 423. V. Micks, 89 Nebr. 821, 132 N. W. «> Chamberlain v. Bell, 7 Cal. 292, 526. 68 Am. Dec. 260; Harrison v. "Wade, " Defective acknowledgments of S Cold. (Tenn.) 505; Baldwin v. mortgages and deeds have f re- Marshall, 2 Humph. (Tenn.) 116. quently been cured by statute. Rav- See also Jay v. Carthage, 48 Maine erty v. Fridge, 3 McLean (U. S.) 353. 230, Fed. Cas. No. 11586; Elliott v. ='Youtz V. Julliard, 10 Ohio Dec. Pearce, 20 Ark. 508; Landers v. 298, 20 "Wkly. L. Bui. 26. The re- Bolton, 26 Cal. 393; Logan v. Will- corder has no authority to interpo- iams, 76 111. 175; Deininger v. Mc- late anything into the original rec- Connel, 41 111. 227; Cole v. Wright, ord of an instrument. Burton v. 70 Ind. 179; Steeple v. Downing, 60 819 EEKOES IN THE liECORD § 521a number of witnesses, or the notarial seal.'" Although retrospective in their operation,"" such statutes have generally been held constitutional and valid.'^ They can not, however, impair the rights of third per- sons which have vested in the meantime •^'^ and some curative acts have been applied only to deeds recorded after their passageJ^ Ind. 478; Jones v. Berkshire, 15 Iowa 248, 83 Am. Dec. 412; Du- lany v. Tilghman, 6 Gill & J. (Md.) 461; HoUingswortli v. Mc- Donald, 2 Har. & J. (Md.) 230, 3 Am. Dec. 545; Lariverre v. Rains, 112 Mich. 276, 70 N. W. 583; Brooks v. Fairchild, 36 Mich. 231; Brown v. McCormick, 28 Mich. 215; Brown v. Cady, 11 Mich. 535; Williams v. Butterfield, 182 Mo. 181, 81 S. W. 615; German-Ameri- can Bank v. Carondelet Real Estate Co., 150 Mo. 570, 51 S. W. 691; Bishop V. Schneider, 46 Mo. 472, 2 Am. Rep. 533; Stevens v. Hampton, 46 Mo. 404; Allen v. Moss, 27 Mo. 354; Tatom v. White, 95 N. Car. 453; Barton v. Morris, 15 Ohio 408; Cable V. Gable, 146 Pa. St. 451, 23 Atl. 223; Journeay v. Gibson, 56 Pa. St. 57; Rigler v. Cloud, 14 Pa. St. 361; Jaques v. Weeks, 7 Watts (Pa.) 261; Green v. Goodall, 1 Coldw. (Tenn.) 404; Rainey v. Gordon, 6 Humph. (Tenn.) 345; Montgomery V. Hobson, Meigs (Tenn.) 437; Ba- ker v. Westcott, 73 Tex. 129, 11 S. W. 157; Butler v. Dunagan, 19 Tex. 559; McCelvey v. Cryer, 8 Tex. Civ. App. 437, 28 S. W. 691; Skellinger V. Smith, 1 Wash. Ter. 369; Will- iams v. Milwaukee Industrial Expo- sition Assn., 79 Wis. 524, 48 N. W. 665. See also Smith v. Gale, 144 U. S. 509, 36 L. ed. 521, 12 Sup. Ct. 674 (construing the statute of Dakota Ter.); Farrel Foundry v. Dart, 26 Conn. 376. A subsequent purchaser must take notice of a mortgage de- fectively acknowledged but valida- ted by statute. Journeay v. Gibson, 56 Pa. St. 57. "* Certificate void for want of seal may be validated by statute. Cole V. Wright, 70 Ind. 179; Tidd v. Rines, 26 Minn. 201, 2 N. W. 497; Barton v. Morris, 15 Ohio 408; Jaques v. Weeks, 7 Watts (Pa.) 261; Williams v. Milwaukee Industrial Exposition Assn., 79 Wis. 524, 48 N. W. 665. See also Detroit v. Detroit &c. R. Co., 23 Mich. 173. If the absence of a seal is fatal to the validity of the certificate, the defect may be cured by statute. Maxey v. Wise, 25 Ind. 1; Kenyon v. Knipe, 2 Wash. Ter. 422, 7 Pae. 854. '"Curative acts relating to the ac- knowledgment of conveyances, have been held to operate retrospectively only, in the following cases: Logan V. Williams, 76 111. 175 (under Illi- nois act of 1829); Jones v. Berk- shire, 15 Iowa 248, 83 Am. Dec. 412 (under act of 1858); Reynolds v. Kingsbury, 15 Iowa 238; Stevens v. Hampton, 46 Mo. 404 (act of 1855); Mercer v. Watson, 1 Watts (Pa.) 330, affd. in Watson v, Mercer, 8 Pet. (U. S.) 88, 8 L. ed. 876; Spinning V. Home Bldg. &c. Assn., 26 Ohio St. 483. "Logan V. Williams, 76 111. 175; Bishop V. Schneider, 46 Mo. 472, 2 Am. Rep. 533; Stevens v. Hampton, 46 Mo. 404. See also McFaddin v. Evans-Snider-Duel Co., 185 U. S. 505, 46 L. ed. 1012, 22 Sup. Ct. 758; Gillespie v. Reed, 3 McLean (U. S.) 377, Fed. Cas. No. 5436; Wallace v. Moody, 26 Cal. 387; Reed v. Kemp, 16 111. 445; Buckley v. Early, 72 Iowa 289, 33 N. W. 769; Brown v. Simpson, 4 Kans. 76; German- Amer- ican Bank v. White, 38 Minn. 471, 38 N. W. 361; Allen v. Moss, 27 Mo. 354; Barnet v. Barnet, 15 Serg. & R. (Pa.) 72, 16 Am. Dec. 516; Ma- ley V. Tipton, 2 Head (Tenn.) 403. "Logan V. Williams, 76 111. 175. See also Carson v. Thompson, 10 Wash. 295, 38 Pac. 1116. "The Illinois Act of 1837, relat- ing to defectively acknowledged in- struments, is not retrospective, but intended only to give effect to rec- ords made after its enactment. Deininger v. McConnell, 41 111. 227. The Ohio Act of 1858, validating acts of notaries public after the ex- piration of their terms of oflSce, is not retroactive and will not operate to cure an acknowledgment taken § 522 EECORDING AS AFFECTING PRIOEITX 830 § 522. Unrecorded or defectively recorded mortgage as an equi- table lien. — A deed or mortgage defectively recorded, or not recorded at all, is in some states a good equitable lien, so that, while it has no effect as against subsequent purchasers in good faith, yet it is su- perior to the claims of creditors under subsequent judgments;''* and in a few states such lien has been held superior to the claims of general creditors who were such at the date of the mortgage;'^ and it is su- perior to a subsequent voluntary assignment by the mortgagor for the benefit of creditors.'" In like manner a mortgage defectively exe- cuted, as, for instance, attested by only one witness when two are re- quired, is a good equitable mortgage.'" According to the authorities in some states, however, a mortgage defectively recorded, or not recorded at all, is subject to the lien of a judgment or attaching creditor.''* As against third parties having notice, such mortgage is also a good specific lien which will be en- forced in equity.'® The burden of proving actual notice is upon the before the act was passed. Bernier V. Becker, 37 Ohio St. 72. " See ante § 464. '= Lake v. Doud, 10 Ohio 415; Bank of Muskingum v. Carpenter, 7 Ohio 21, 28 Am. Rep. 616; otherwise, however, under later cases in Ohio: White V. Denman, 1 Ohio St. 110; Bloom V. Noggle, 4 Ohio St. 45; Sixth Ward Bldg. Assn. v. Willson, 41 Md. 506. See also Bibb v. Baker, 17 B. Mon. (Ky.) 292; Phillips v. Pearson, 27 Md. 242; Price v. Mc- Donald, 1 Md. 403, 54 Am. Dec. 657; Armstrong v. Carwille, 56 S. Car. 463, 35 S. E. 196. It has been held in . Georgia that a mortgage takes pre- cedence over debts due general cred- itors, whether created before or sub- sequent to the mortgage. Seaboard Air Line R. Co. v. Knickerbocker Trust Co., 125 Ga. 463, 54 S. E. 138. In Missouri a mortgage unrecorded before a judgment is good against the judgment if recorded before the execution sale under the judgment. Shaw V. Padley, 64 Mo. 519; Valen- tine V. Havener, 20 Mo. 133. General creditors are not within the protec- tion of the recording laws of North Dakota relating to real estate. Val- lely V. First Nat. Bank, 14 N. Dak. 580, 106 N. W. 127, 5 L. R. A. (N. S.) 387, 116 Am. St. 700. The Indi- ana statute, providing that every conveyance or mortgage of lands not recorded within forty-five days shall be void as against any subsequent purchaser, lessee, or mortgagee in good faith, does not protect general creditors against unrecorded convey- ances. State Bank v. Backus, 160 Ind. 682, 66 N. E. 475, 67 N. B. 512, construing Burns' Ann. Stat. 1901, § 3350. See also Burns' Ann. Stat. 1914, § 3962. "•Nice's Appeal, 54 Pa. St. 200. "Abbott V. Godfrey, 1 Mich. 178. See ante §§ 166, 168. " Henderson v. McGhee, 6 Heisk. (Tenn.) 55. '"Coonrod v. Kelly, 113 Fed. 378, 119 Fed. 841; Wyatt v. Stewart, 34 Ala. 716; Dearing v. Watkins, 16 Ala. 20; Carpenter v. Lewis, 119 Cal. IS, 50 Pac. 925; Racouillat v. Sanse- vain, 32 Cal. 376; Gardner v. Moore, 51 Ga. 268; Columbus Buggy Co. v. Graves, 108 111. 459; Maxwell v. Brooks, 54 Ind. 98; Blackman v. Henderson, 116 Iowa 578, 87 N. W. 655, 56 L. R. A. 902; Flowers v. Moorman, 27 Ky. L. 728, 86 S. "W. 545; "Verges v. Prejean, 24 La. Ann. 78; Russum v. Wanser, 53 Md. 92; Dyson v. Simmons, 48 Md. 207; Whitney v. Browne, 180 Mass. 597, 62 N. E. 979; Lamberton v. Mer- chants' Nat. Bank, 24 Minn. 281; Harrington v. Allen, 48 Miss. 492; 831 EFFECT OF EECOED DULY MADE 523 party seeking to establish title by the -unrecorded mortgage.*" Such an equitable mortgage has been held to be superior to the claims of the mortgagor's general creditors. This was the rule in South Carolina before the Act of 1843, later embodied in the Eevised Statutes of that state. A legal mortgage not recorded, or an equita- ble mortgage incapable of record, was preferred to a subsequent cred- itor without notice. The consequence of imparting validity to unre- corded mortgages is said to have wrought much injury by impairing confidence in titles, and thereby depreciating the value of real estate. The act above referred to placed subsequent creditors and purchasers upon the same footing.*^ V. The Effect of a Record Duly Section 523. Record as constructive notice. 524. Record as notice of the con- tents of a mortgage. 525. Priority fixed by original rec- ord. 526. Effect of destruction of record. 526a. Destroyed records — Procedure for establishing title. 527. Bona fide purchasers without notice of unrecorded mort- gage. 528. Estoppel of mortgagor subse- quently acquiring title. 529. Mortgage recorded before grantor acquires title. § 523. Record as constnictive notice. — The record of a deed or mortgage is constructive notice to all subsequent purchasers and mort- gagees in the line of title. ^ As to them the instrument takes effect, not because of its prior execution, but by reason of its prior record. Sub- Section 530. Record of subsequent deeds by the mortgagor. 531. Extent of the lien. 532. Extension of mortgage. 533. Rate of interest. 534. Mortgages executed and re- corded simultaneously. 535. Simultaneous mortgages for purchase-money. 536. Simultaneous mortgages of which one is for purchase- money. 537. English doctrine of tacking. Pinley v. Babb, 173 Mo. 257, 73 S. W. 180; Trigg v. Vermillion, 113 Mo. 230, 20 S. W. 1047; Enyart v. Moran, 64 Nebr. 401, 89 N. "W. 1045; Kline V. Grannis, 61 N. J. Bq. 397, 48 Atl. 566; Matthews v. Everitt, 23 N. J. Eq. 473; Harrison v. New Jersey R. &c. Co., 19 N. J. Eq. 488; Moore v. Davey, 1 N. Max. 303; Westbrook v. Gleason, 79 N. Y. 23; People v. Woodruff, 75 App. Div. (N. Y.) 90, 77 N. Y. S. 722; Nice's Appeal, 54 Pa. St. 200; King v. Eraser, 23 S. Car. 543. See also English v. Lind- ley, 194 111. 181, 62 N. B. 522. But see Wood v. Tinsley, 138 N. Car. 507, 51 S E. 59. ™Schoonover v. Foley (Iowa), 94 N. W. 492; Sidelinger v. Bliss, 95 Maine 316, 49 Atl. 1094. But see Sanely v. Crapenhoft, 1 Nebr. (Unoff.) 8, 95 N. W. 352. »»Boyce v. Shiver, 3 S. Car. 515. "There is not a single modern writer, whose opinion carries weight, who does not regret that the courts ever favored the introduction of secret liens." »In re The Vigilancia, 68 Fed. 781, 73 Fed. 452, 19 C. C. A. 528; McCormack v. James, 36 Fed. 14; Kent V. Williams, 146 Gal. 3, 79 Pac. 527; Hager v. Spect, 52 Cal. 579; McCabe v. Grey, 20 Cal. 509; § 523 EECOKDING AS AFFECTING PEIOEITT 822 sequent purchasers are bound conclusively by the record of a deed, or other conveyance in the line of their title, as much as the mortgagor himself.^ It is notice only to subsequent purchasers and incumbran- Dennls v. Burritt, 6 Cal. 670; Me- sick V. Sunderland, 6 Cal. 298; Smith V. Russell, 20 Colo. 554, 80 Pac. 474; Beach v. Osborne, 74 Conn. 405; Ensign v. Batterson, 68 Conn. 298; Hamilton v. Nutt, 34 Conn. 501; Bush v. Golden, 17 Conn. 594; Orvis V. Newell, 17 Conn. 97; Sum- ner V. Rhodes, 14 Conn. 135; Os- born V. Carr, 12 Conn. 195; Bolles V. Chauncey, 8 Conn. 389; Peters V. Goodrich, 3 Conn. 146; Arm- strong V. Ashley, 22 App. D. C. 368; Havighorst v. Bowen, 214 111. 90, 73 N. E. 402; Buchanan v. In- ternational Bank, 78 III. 500; Schmidt v. Zahrndt, 148 Ind. 447, 47 N. B. 335; Begein v. Brehm, 123 Ind. 160, 23 N. E. 496; Blair v. Whittaker, 31 Ind. App. 664, 69 N. E. 182; Wilson v. Godfrey, 145 Iowa 696, 124 N. W. 875; Stastny v. Pease, 124 Iowa 587, 100 N. W. 482; Crooks v. Jenkins, 124 Iowa 317, 100 N. W. 82, 104 Am. St. 326; Thomas v. Kennedy, 24 Iowa 397, 95 Am. Dec. 740; Ogden v. Walters, 12 Kans. 282; Banton v. Shorey, 77 Maine 48; Humphreys v. Newman, 51 Maine 40; Cushing v. Ayer, 25 Maine 383; Hall v. McDuff, 24 Maine 311; Clabaugh v. Byerly, 7 Gill (Md.) 354, 48 Am. Dec. 575; Shaw v. Poor, 6 Pick. (Mass.) 86, 17 Am. Dec. 347; McMechan v. Grifflng, 3 Pick. (Mass.) 149, 15 Am. Dec. 198; Campbell v. Keys, 130 Mich. 127, 89 N. W. '720; Mee v. Benedict, 98 Mich. 260, 57 N. W. 175, 22 L. R. A. 641, 39 Am. St. 543; Edwards v. McKernan, 55 Mich. 520, 22 N. W. 20; Doyle v. Stevens, 4 Mich. 87; Robley v. Withers, 95 Miss. 318, 51 So. 719; Tripe v. Marcy, 39 N. H. 439; Locker v. Riley, 30 N. J. Eq. 104; Hoy v. Bramhall, 19 N. J. Eq. 563, 97 Am. Dec. 687; Mitchell v. D'Olier, 68 N. J. L. 375, 53 Atl. 467, 59 L. R. A. 949; Wallace v. Silsby, 42 N. J. L. 1; McPherson v. Rol- lins, 107 N. Y. 316, 14 N. E. 411, 1 Am. St. 826; Youngs v. Wilson, 27 N. Y. 351; Matthews v. Damain- ville, 43 Misc. 546, 89 N. Y. S. 493; Schutt V. Large, 6 Barb. (N. Y.) 373; James v. Morey, 2 Cow. (N. Y.) 246, 14 Am. Dec. 475; Wendell V. Wadsworth, 20 Johns. (N. Y.) 659; Brinckerhoff v. Lansing, 4 Johns. Ch. (N. Y.) 65, 8 Am. Dec. 538; Berry v. Mutual Ins. Co., 2 Johns. Ch. (N. Y.) 603; Johnson v. Stagg, 2 Johns. (N. Y.) 510; Park- ist v. Alexander, 1 Johns. Ch. (N. Y.) 394; Grandin v. Anderson, 15 Ohio St. 286; Irvin v. Smith, 17 Ohio 226; Souder v. Morrow, 33 Pa. St. 83; Hetherington v. Clark, 30 Pa. St. 393; Barbour v. Nichols, 3 R. I. 187; Annely v. De Saussure, 12 S. Car. 488; Martin v. Sale, Bailey Eq. (S. Car) 1; Edwards v. Barwise, 69 Tex. 84, 6 S. W. 677; Wells V. Smith, 2 Utah 39; Clason V. Shepherd, 6 Wis. 369. A duly recorded mortgage has priority over an unrecorded vendor's lien. Na- tional Bank v. Spot Cash Coal Co., 98 Ark. 597, 136 S. W. 953. The re- cording of a mortgage is notice to an assignee of a subsequent mort- gage, who is considered a purchaser. Elgin City Banking Co. v. Center, 83 111. App. 405, affd. 185 111. 534, 57 N. E. 439. A subsequent mort- gagee without notice of a prior mort- gage or deed obtains a superior lien by recording his mortgage first. Brown v. Sartor, 87 S. Car. 116, 69 S. E. 88. See also Gay v. Hudson River Electric Power Co., 190 Fed. 773; Bennett v. United States Land &c. Co. (Ariz.), 141 Pac. 717 (rec- ord as notice to subsequent lessee of mortgaged premises) ; Hunter v. State Bank, 65 Fla. 202, 61 So. 497; Anderson v. Casey-Swasey Co. (Tex. Civ. App.), 120 S. W. 918; Coolidge V. Schering, 32 Wash. 557, 73 Pac. 682; Keene Guaranty Sav. Bank v. Lawrence, 32 Wash. 572, 73 Pac. 680. = North V. Knowlton, 23 Fed. 163; Tripe v. Marcy, 39 N. H. 439; Grandin v. Anderson, 15 Ohio St. 286. See also Leiby v. Wolf, 10 Ohio 83. A recital in a recorded mortgage indicating the mort- gagor's source of title, and posses- sion of the premises by a tenant claiming under the same title, con- 823 EFFECT OF RECORD DULY MADE § 533 cers under the same grantor, or through one who is the common source of title in the line of title to -which the recorded deed belongs.^ Of course, the record of a mortgage operates as notice to persons subse- quently acquiring title to the mortgaged premises from the mort- gagor,* and, so long as the mortgage remains undischarged, the record protects not only the rights of the mortgagee, but those of an assignee of the mortgage as ■well." Eecord of an equitable title is not notice to a purchaser of the legal title from one who appears to be the record owner." And likewise the record of an executory agreement to give a mortgage on the happen- ing of a future event, is not notice to a subsequent purchaser or mort- gagee.'' A mortgage by a stranger to the record title is not construc- ive notice to an intending purchaser of a prior unrecorded deed to the mortgagor; nor is the fact that the property is assessed to another than the record owner such notice.' It is not notice to those who have stitui,e notice to subsequent pur- chasers and mortgagees, putting them upon inquiry, and depriving them of the character of bona fide purchasers. Prest v. Black, 63 Kans. 682, 66 Pac. 1017; Hubbard v. Knight, 52 Nebr. 400, 72 N. W. 473. 'Hager v. Spect, 52 Cal. 579; Long v. Dollarhide, 24 Cal. 218; McCabe v. Grey, 20 Cal. 509; Den- nis V. Burritt, 6 Cal. 670; Whitting- ton V. Wright, 9 Ga. 23; Kerfoot v. Cronin, 105 111. 609; Doolittle v. Cook, 75 111. 354; Iglehart v. Crane, 42 111. 261; Tilton v. Hunter, 24 Maine 29; Roberts v. Boune, 23 Maine 165, 39 Am. Dec. 614; George V. Wood, 9 Allen (Mass.) 80, 85 Am. Dec. 741; Bates v. Norcross, 14 Pick. (Mass.) 224; Cooper v. Bigly, 13 Mich. 463; James v. Brown, 11 Mich. 25; Baker v. Griffin, 50 Miss. 158; Harper v. Hopkins, 34 Miss. 472; Odle v. Odle, 73 Mo. 289; Draude v. Rohrer Mfg. Co., 9 Mo. App. 249; Traphagen v. Irwin, 18 Nebr. 195; Ross v. Leavitt, 70 N. H. 602, 50 Atl. 110; Hill v. McCar- ter, 27 N. J. Eq. 41 ; Ward v. Hague, 25 N. J. Eq. 397; Hoy v. Bramhall, 19 N. J. Eq. 563, 97 Am. Dec. 687; Vanorden v. Johnson, 14 N. J. Eq. 376; Losey v. Simpson, 11 N. J. Eq. 246; Blair v. Ward, 10 N. J. Eq. 119; Tarbell v. West, 86 N. Y. 280; Page V. Waring, 76 N. Y. 463; How- ard Ins. Co. V. Halsey, 8 N. Y. 271, 59 Am. Dec. 478; Stuyvesant v. Hall, 2 Barb. Ch. (N. Y.) 251; Wheel- wright V. De Peyster, 4 Edw. Ch. (N. Y.) 232, 3 Am. Dec. 345; Kyle V. Thompson, 11 Ohio St. 616; Blake V. Graham, 6 Ohio St. 580, 67 Am. Dec. 360; Leiby v. Wolf, 10 Ohio 83; Collins V. Aaron, 162 Pa. St. 539, 29 Atl. 724; Maul v. Rider, 59 Pa. St. 167; Calder v. Chapman, 52 Pa. St. 359; King v. McCarthy, 38 Pa. St. 76; Taylor v. Maris, 5 Rawle (Pa.) 51; Keller v. Nutz, 5 Serg. & R. (Pa.) 246; Woods v. Farmere, 7 Watts (Pa.) 382; Simpkinson v. McGee, 4 Lea (Tenn.) 432; Helms V. Chadbourne, 45 Wis. 60. * Commercial Bank v. Pritchard, 126 Cal. 600, 59 Pac. 130; Thompson V. Flathers, 45 La. Ann. 120, 12 So. 245. A subsequent purchaser with actual or constructive notice ac- quires the legal title conveyed him, subject to the lien of the mortgage. Davis V. Lanier, 94 Tex. 455, 61 S. W. 385. "Curtis V. Moore, 152 N. Y. 159, 46 N. E. 168, 57 Am. St. 506. See also Babcock v. Young, 117 Mich. 155, 75 N. W. 302. "Tarbell v. West, 86 N. Y. 280; Odle V. Odle, 73 Mo. 289. ' Matthews v. Damainville, 100 App. Div. 311, 91 N. Y. S. 524, 15 Ann. Cas. 436. * Advance Thresher Co. v. Esteb, § 534 EECOEDING AS AFFECTING PEIORITX 824 prior rights of record, or even to those whose rights are contempo- raneous with those of the grantor, as, for instance, to his cotenants; therefore, a mortgage by one tenant in common, though duly recorded, is no notice to his cotenant of its existence, or of the claim of the mortgagor to the exclusive ownership of the land." When a mortgage is recorded prior to another conveyance from the mortgagor, it does not matter that this conveyance was made in pur- suance of a contract entered into after the execution of the mortgage, and before the record of it, if nothing had been done toward carrying the contract into execution at the time of the filing of the mortgage for record.^" From that time it is constructive, notice to all who may afterward acquire any interest in the same property. The constructive notice resulting from the record of a mortgage does not deprive a pur- chaser of the right to rely upon the vendor's positive statements, fraudulently made, that the property was unincumbered, nor does it prevent him from suing for false representation; for such statements if true would have rendered a search of the records unnecessary.^^ But, on the other hand, it has been held that a purchaser of land, in- cumbered by a duly recorded and unsatisfied mortgage, can not rely upon the assurance of the mortgagor that it has been paid, without making further inquiries, and that he is not protected against a prior unrecorded assignment of the mortgage by procuring a discharge from the mortgagee and recording it.^^ § 524. Record as notice of the contents of a mortgage. — A mort- gage duly recorded is notice not only of the existence of the mortgage, but of all its contents, so far as these fall within the line of the chain 41 Ore. 469, 69 Pac. 447. Stern- 20 S. E. 293; Maddox v. Arp, 114 N. berger v. Ragland, 57 Ohio St. 148, Car. 585, 19 S. E. 665; Lumpkin v. 48 N. E. 811. In this case Mr. Jus- Adams, 74 Tex. 96, 11 S. W. 1070; tice Williams said: "When a pros- Williams v. Slaughter (Tex. Civ. pective purchaser finds a complete App.), 42 S. W. 327; Peterson v. record title in the proposed seller, McCauley (Tex.), 25 S. W. 826; he is not bound to examine for Sayward v. Thompson, 11 Wash. mortgages made to the latter after 706, 40 Pac. 379. he became the owner. Such a mort- ° Leach v. Beattie, 33 Vt. 195. gage is not in the chain of his title, *" Kyle v. Thompson, 11 Ohio St. and is not, therefore, constructive 616. notice to a subsequent purchaser of "Weber v. Weber, 47 Mich. 569, a prior unrecorded deed made by 11 N. W. 389. him to the mortgagor." See also " Babcock v. Young, 117 Mich. Truitt V. Grandy, 115 N. Car. 54, 155, 75 N. W. 302. 835 EFFECT OF EECOED DULY MADE § 524 of title.^^ It is notice, too, of the covenants contained in it.^* It is notice of the debt which the mortgage secured. ^^ It is notice of any easements or privileges created by the deed, or referred to in it.^° It is notice that trustees in a trust deed should have an estate in fee sim- ple in order to execute its provisions, and therefore that an estate in fee passes although words of inheritance have been inadvertently omitted.^^ Although the debt or the property be not fully described, the record is notice of all that is said about it, and a purchaser is bound by the statements made, and by the information he is put upon the inquiry to find out.^^ It is notice of the statements in it regarding the debt, whether the description be fully set out, or consists of references to other instruments.^' It is notice of a prior unrecorded mortgage re- ferred to in the covenant against incumbrances.^" It is notice not only to purchasers, but to the subsequent creditors as well. They can not complain that the transaction is fraudulent, unless they can show that the object of the conveyance was to avoid subsequent indebtedness.^^ The record imparts notice of all the facts which could have been ascertained by an actual examination thereof, including not only those recited in the record,^^ but also material matters suggested thereby, "Beach v. Osborne, 74 Conn. 405, Y. 816, 14 N. E. 411, 1 Am. St. 826; 50 Atl. 1019; Matt v. Matt, 156 Iowa Weldon v. Tollman, 67 Fed. 986, 15 503, 137 N. W. 489; Sowden v. C. C. A. 138; citing Williams v. Craig, 26 Iowa 156, 96 Am. Dec. Jackson, 107 U. S. 478, 27 L. ed. 529, 125; Bancroft v. Cousen, 13 Allen 2 Sup. Ct. 814; Livermore v. Max- (Mass.) 50; George v. Kent, 7 Al- well, 87 Iowa 705, 55 N. W. 37. len (Mass.) 16; Roussain v. Nor- "Bright v. Buckman, 39 Fed. ton, 53 Minn. 560, 55 N. W. 747; 243; Young v. Wilson, 27 N. Y. 351, Harrison T. Cachelin, 23 Mo. 117; revg. 24 Barb. 510. See also Liv- Stark V. Kirkley, 129 Mo. App. 353, ingstone v. Murphy, 187 Mass. 315, 108 S. W. 625; McPherson v. Rol- 72 N. E. 1012, 105 Am. St. 400 (in- lins, 107 N. Y. 316, 14 N. E. 411, 1 sufficient recital in mortgage to put Am. St. 826; Thomson v. Wilcox, 7 purchaser upon inquiry concerning Lans. (N. Y.) 376; Grandin v. An- ohligees on the note secured), derson, 15 Ohio St. 286; Kyle v. "Dimon v. Dunn, 15 N. Y. 498. Thompson, 11 Ohio St. 616; Leihy 2orpa,yior v. Mitchell, 58 Kans. V. Wolf, 10 Ohio 83; Gulf C. &c. R. 194, 48 Pac. 859. Co v Gill, 86 Tex. 284, 24 S. W. '^Hickman v. Perrin, 6 Coldw. 502. (Tenn.) 135. "Morris v Wadsworth, 17 Wend. ^'^ Weldon v. Tollman, 67 Fed. 986, (N Y ) 103 15 C. C. A. 138; The W. B. Cole, 59 >=Dean v De Lezardi, 24 Miss. Fed. 182, 8 C. C. A. 78; Mettart v. 424- Whitney v. Lowe, 59 Nebr. 87, Allen, 139 Ind. 644, 39 N. E. 239; 80 N W 266; Youngs v. Wilson, 27 Taylor v. Mitchell, 58 Kans. 194, 48 N. Y 351. See post § 531. Pac. 859; Livingstone v. Murphy, "Bellas V. Lloyd, 2 Watts (Pa.) 187 Mass. 315, 72 N. E. 1012, 105 401 Am. St. 400; Pleasants v. Blodgett, "Randolph v. New Jersey West 39 Nebr. 741, 58 N. W. 423, 42 Am. Line R Co 28 N. J. Eq. 49. See St. 624; Mitchell v. D'Olier, 68 N. also McPherson v. Rollins, 107 N. J. L. 375, 53 Atl. 467, 59 L. R. A. 524 KECOKDING AS AFFECTIXG PEIOEITT 826 whicli might be disclosed by reasonable inquiry.^ ^ But constructive notice from the record of a mortgage can not be more extensive than the facts stated therein, and only embraces information which could have been obtained from an actual inspection of the record.^* 949; Coon v. Bosque Bonita Land &c. Co., 8 N. Mex. 123, 42 Pac. 77; McPherson v. Rollins, 107 N. Y. 316, 14 N. E. 411, 1 Am. St. 826; Ford V. Green, 121 N. Car. 70, 28 S. E. 132 (record of mortgage as notice of default) ; Hall v. Donagan, 186 Pa. St. 300, 40 Atl. 493; Waggoner V. Dodson, 96 Tex. 415, 73 S. W. 517; Fulkerson v. Taylor, 102 Va. 314, 46 S. E. 309; Hancock v. McAvoy, 151 Pa. St. 439, 25 Atl. 48; Garrett v. Parker (Tex.), 39 S. W. 147; Powers V. Smith (Tex.), 29 S. W. 416. ==Mattlage v. Mulherin, 106 Ga. 834, 32 S. E. 940; Talmadge v. In- terstate Bldg. &c. Assn., 105 Ga. 550, 31 S. E. 618; Mettart v. Allen, 139 Ind. 644, 39 N. B. 239; Loser V. Plainfield Sav. Bank, 149 Iowa 672, 128 N. "W. 1101; Layman v. Vicknair, 47 La. Ann. 679, 17 So. 265; Carter v. Leonard, 65 Nebr. 670, 91 N. "W. 574; McPherson v. Rollins, 107 N. Y. 316, 14 N. E. 411, 1 Am. St. 826; Collins v. Davis, 132 N. Car. 106, 43 S. B. 579; Living- stone V. Murphy, 187 Mass. 315, 72 N. E. 1012, 105 Am. St. 400; Cole- man V. Reynolds, 181 Pa. St. 317, 37 Atl. 543; Jenkins v. Adams, 71 Tex. 1, 8 S. W. 603; Taylor v. Harrison, 47 Tex. 454, 26 Am. Rep. 304. See also Northwestern Nat. Bank v. Freeman, 171 U. S. 620, 43 L. ed. 307, 19 Sup. Ct. 36; Mitchell v. D'Olier, 68 N. J. L. 375, 53 Atl. 467, 59 L. R. A. 949. The record show- ing a deed of property worth $575, for an expressed consideration of $125, with a land contract at the same time, reciting a like amount as the purchase-price. Is suflScient notice that the transaction is a mortgage to put one upon inquiry. Cumps V. Kiyo, 104 Wis. 656, 80 N. W. 937. A recorded mortgage by the wife of the owner of property, in which the husband joined only in release of dower, is not con- structive notice to persons claiming under the husband, nor sufficient to put them on inquiry, though the note secured was actually signed by both. In any event, a mortgage which has been satisfied, does not amount to notice of recitals there- in. Livingstone v. Murphy, 187 Mass. 315, 72 N. E. 1012, 105 Am. St. 400. »Mims V. MIms, 35 Ala. 23; John- son v. Wheelock, 63 Ga. 623; Shep- herd V. Burkhalter, 13 Ga. 443, 58 Am. Dec. 523; Metropolitan Bank v. Godfrey, 23 111. 579; Smith v. Low- ry, 113 Ind. 37, 15 N. E. 17; Singer V. Schelble, 109 Ind. 575, 10 N. B. 616; Gilchrist v. Gough, 63 Ind. 576, 30 Am. Rep. 250; Glassburn v. Wire- man, 126 Iowa 478, 12 N. W. 421; Fetes V. O'Laughlin, 62 Iowa 532, 17 N. W. 764; DIsque v. Wright, 49 Iowa 538; Barney v. McCarty, 15 Iowa 510, 83 Am. Dec. 427; Haynes V. Seachrest, 13 Iowa 455; Hill v. McNichol, 76 Maine 314; Norman V. Towne, 130 Mass. 52; Hinchman V. Town, 10 Mich. 508; Barrows v. Baughman, 9 Mich. 213; Lash v. Edgerton, 13 Minn. 210; Whittacre V. Fuller, 5 Minn. 508; Parret v. Shaubhut, 5 Minn. 323, 80 Am. Dec. 424; Hart v. Gardner, 81 Miss. 650, 33 So. 442; Bishop v. Schneider, 46 Mo. 472, 2 Am. Rep. 533; Stevens V. Hampton, -46 Mo. 404; Wester- velt V. Wyckoffi, 32 N. J. Eq. 188; Bunker v. Anderson, 32 N. J. Eq. 35; Gale v. Morris, 29 N. J. Eq. 222; Peck V. Mallams, 10 N. Y. 509, Seld. Notes 199; Beekman v. Frost, 18 Johns. (N. Y.) 544, 9 Am. Dec. 246; Branch v. Griffin, 99 N. Car. 173, 5 S. E. 393; Ijames v. Gaither, 93 N. Car. 358; Brown v. Kirkman, 1 Ohio St. 116; Jennings v. Wood, 20 Ohio 261; Schell v. Stein, 76 Pa. St. 398, 18 Am. Rep. 416; Speer v. Evans, 47 Pa. St. 141; In re Luch's Appeal, 44 Pa. St. 519; McLouth v. Hurt, 51 Tex. 115; Sawyer v. Adams, 8 Vt. 172, 30 Am. Dec. 459; Colquhoun T. Atkinson, 6 Munf. (Va.) 550; Davison v. Waite, 2 Munf. (Va.) 527; George v. Butler, 827 EFFECT OF EECOED DULY MADE § 524 Subsequent purchasers are entitled to rely upon the record, and can not be charged with notice of latent equities or facts not disclosed or suggested by the record itself. ^° Thus, where a mortgage appears satisfied of record by one having apparent authority to discharge it, a subsequent purchaser from the mortgagor, relying upon the record, will be protected although such discharge of record was fraudulently made.^^ The record of a mortgage on land is constructive notice to a pur- chaser that the mortgagor claims some interest in the mortgaged land necessitating inquiry,^' and that the mortgagee has a right therein as the owner of an existing incumbrance; but it is not notice of an assignment or the rights of an assignee.^* The record of a mortgage containing a power of sale puts subse- quent purchasers upon inquiry whether any proceedings have been had thereunder; so that if there has been a sale under the power, al- though the deed has not been recorded, a subsequent purchaser from the mortgagor, instead of acquiring an equity of redemption, may find that this has been cut ofE by sale under the power.^* The deed execut- ing the power of sale relates back to the execution of the mortgage; and when the mortgage is recorded, it is not necessary to record the deed under the power in order to protect the grantee against attaching creditors of the mortgagor.^* A recorded mortgage providing that no action can be brought by bondholders upon the bonds secured, until 26 Wash. 456, 67 Pac. 263, 57 L. R. Boynton v. Haggart, 120 Fed. 819, A. 396, 90 Ann. St. 756; State v. 57 C. C. A. 301; Forrest Milling Co. Titus, 17 Wis. 241. v. Cedar Falls Mill Co., 103 Iowa '' Johnson v. Wilson, 137 Ala. 468, 619, 72 N. W. 1076. 34 So. 392, 97 Am. St. 52; Peck r. ''^ Slaughter v. State, 132 Ind. 465, Dyer, 147 111. 592, 35 N. B. 479; 31 N. E. 1112; Day v. Brenton, 102 Glassburn v. Wireman, 126 Iowa Iowa 482, 71 N. W. 538, 63 Ann. St. 478, 102 N. W. 421; Bordelon v. 460; Cornog v. Fuller, 30 Iowa 212; Gumbel, 118 La. 645, 43 So. 264; Lowry v. Bennett, 119 Mich. 301, Lawson v. ConoUy, 51 La. Ann. 77 N. W. 935; Lindauer v. Young- 1753, 26 So. 612; Lacassagne v. love, 47 Minn. 62, 49 N. W. 384; Abraham, 48 La. Ann. 1160, 20 So. Evans v. Roanoke Sav. Bank, 95 Va. 672; McCusker v. Goode, 185 Mass. 294, 28 S. E. 323. 607, 71 N. E. 76; Hooper v. De "Pleasants v. Blodgett, 39 Nebr. Vries, 115 Mich. 231, 73 N. W. 132; 741, 58 N. W. 423, 42 Am. St. 624. Wallach v. Schulze, 22 App. Div. =» Friend v. Yahr, 126 Wis. 291, 57, 47 N. Y. S. 936; Thompson v. 104 N. W. 997, 1 L. R. A. (N. S.) Rust, 32 Tex. Civ. App. 441, 74 S. 891, 110 Am. St. 924. W. 924; Fullenwider v. Ferguson, ''Heaton v. Prather, 84 111. 330; 30 Tex. Civ. App. 156, 70 S. W. 222; Dixie Grain Co. v. Quinn (Ala.), 61 Attebery v. O'Neil, 42 Wash. 487, 85 So. 886. Pac. 270; Sengfelder v. Hill, 21 =»Farrar v. Payne, 73 111. 82. Wash. 371, 58 Pac. 250. See also § 525 EECOEDING AS AFFECTING PEIOEITT 828 the trustee is notified of default, constitutes constructive notice of such provision to purchasers of the bonds.^^ The record of a chattel mortgage of something attached to the realty, such as standing timber, is not notice to a subsequent purchaser or mortgagee of the land.'° Where mortgages and deeds are recorded in different books, it has been held that a deed recorded in the mort- gage record or a mortgage recorded in the deed record is not construct- ive notice.^^ § 525. Priority fixed by original record. — Priority once gained can not be lost. The registry of a deed or mortgage is equivalent to a notice of it to all persons who may subsequently become interested ia the property, and fully protects the grantee's rights. A mortgage hav- ing once obtained priority by record does not lose its place by being held by any one under an unrecorded assignment.^* And although the mortgagee had notice of a prior unrecorded mortgage, or there are equities such that his own mortgage is in his hands subject to them, yet if he assigns his mortgage for a valuable consideration to one who has no notice of the earlier mortgage or of such equities, the assignee is entitled to hold the mortgage as a prior lien upon the land, solely upon the ground that it was first recorded.^^ Having recorded his mortgage, the mortgagee is not bound to give personal notice of his mortgage to one who purchases of the mort- gagor ; and a delay" of ten years, or for any other period less than the statute period of limitation, to make any claim of the purchaser under the mortgage, does not impair his rights under the mortgage either at law or in equity ; and the fact that the mortgagor has in the meantime become insolvent does not prejudice his claim upon the property.^ . 36 =1 Belleville Sav. Bank v. Southern v. Lansing, 4 Johns. Ch. (N. Y.) 65, Coal &c. Co., 173 111. App. 250. 8 Am. Dec. 538; Parkist v. Alex- == Williams v. Hyde, 98 Mich. 152, ander, 1 Johns. Ch. (N. Y.) 394; 57 N. W. 98. See also Alliance Campbell v. Vedder, 3 Keyes (N. Trust Co. V. Nettleton Hardwood Y.) 174, 1 Abb. Dec. 295. See also Co., 74 Miss. 584, 21 So. 396, 36 L. People's Trust Co. v. Tonkonogy, R. A. 155, 60 Am. St. 531. 144 App. Div. 333, 128 N. Y. S. 1055; =^Neslin v. Wells, 104 U. S. 428, Douglass v. Peele, Clarke (N. Y.) 26 L. ed. 802; In re Luch's Appeal, 563; Johnson v. Stagg, 2 Johns. (N. 44 Pa. St. 519; Drake v. Reggel, 10 Y.) 510; Williams v. Brown, 127 N. Utah 376, 37 Pac. 583. See ante Car. 51, 37 S. E. 86; Bacon v. Wood, §§ 457, 511. 22 R. I. 255, 47 Atl. 388; King v. =*Zehner v. Johnston, 22 Ind. App. Harrington, 2 Aik. (Vt.) 33, 16 Am. 452, 53 N. E. 1080; Neosho Valley Dec. 675. Inv. Co. V. Sharpless, 63 Kans. 885', ^ Corning v. Murray, 3 Barb. (N. 65 Pac. 667; Jackson v. Dubois, 4 Y.) 652. Johns. (N. Y.) 216; Brinckerhoff '"Dick v. Balch, 8 Pet. (U. S.) 829 EFFECT OF EECOED DULY MADE § 525 A mortgage being duly recorded, the subsequent dealings of the mortgagor and others claiming under him have no effect whatever upon it. If, for instance, the mortgagor subsequently sells the land and reserves a right of way, this right remains subject to the title of the mortgagee, and a sale under a mortgage destroys this, as well as the title to the remainder of the land.^^ In accordance with these principles, it follows that a junior deed or mortgage duly recorded, without notice of a prior unrecorded deed or mortgage, has precedence of it.^' And, as between a mortgage and a deed of the same land, the instrument first recorded takes priority, notwithstanding its subsequent execution.^" In other words, deeds and mortgages take precedence in the order of the record. This precedence follows them through any subsequent transfer, or through any pro- ceedings to enforce the liens. When the mortgage first recorded is foreclosed, a purchaser at the foreclosure sale obtains a complete and absolute title. But a purchaser at a foreclosure sale, under the mort- gage recorded next in order of time, obtains only an equity of redemp- tion of the prior mortgage.*" 30, 8 L. ed. 856; Mason v. Philbrook, 69 Maine 57; Rice v. Dewey, 54 Barb. (N. Y.) 455. ='King V. McCully, 38 Pa. St. 76. =»Routh V. Spencer, 38 Ind. 393; Cook V. Stone, 63 Iowa 352, 19 N. W. 280; Harang v. Plattsmier, 21 La. Ann. 426; Peychaud v. Citizens' Bank, 21 La. Ann. 262; Burns v. Berry, 42 Mich. 176, 3 N. W. 924; Harrington v. Allen, 48 Miss. 492; Pomet V. Scranton, 1 Walk. (Miss.) 406; Taylor v. Thomas, 5 N. J. Eq. 331; Grant v. Bissett, 1 Gaines Cas. (N. Y.) 112; Ramsey v. Jones, 41 Ohio St. 685. so Ferry v. Burnell, 5 McCrary (U. S.) 1, 14 Fed. 807; Gay v. Hudson River &c. Power Co., 190 Fed. 773; North v. Knowlton, 23 Fed. 163; Hibernia Sav. &c. Soc. v. Farnham, 153 Cal. 578, 86 Pac. 9, 126 Am. St. 129; Bmeric v. Alvarado, 90 Cal. 444, 27 Pac. 356; Miller v. Shaw, 103 111. 277; Reasoner v. Edmundson, 5 Ind. 393; Ogden v. Walters, 12 Kans. 282; Boyer v. Joffrion, 40 La. Ann. 657, 4 So. 872; Somes v. Skinner, 3 Pick. (Mass.) 52; Harrington v. Al- len, 48 Miss. 492; Westbrook v. Gleason, 89 N. Y. 641, 79 N. Y. 23; Frost V. Peacock, 4 Edw. (N. Y.) 678; Cowan v. Green, 9 N. Car. 384; Hulett V. Mutual Life Ins. Co., 114 Pa. St. 142, 6 Atl. 554; Whiteside V. Watkins (Tenn.), 58 S. W. 1107; Anderson v. Casey-Swasey Co. (Tex. Civ. App.), 120 S. W. 918; Hays v. Tilson, 18 Tex. Civ. App. 610, 45 S. W. 479; Stuart v. Ferguson, Hayes 452; Lee v. Glutton, 46 L. J. Ch. 48, 35 L. T. (N. S.) 84, 24 Wkly. Rep. 942; Bay v. Kearns, 4 Brit. Col. 536; Renwick v. Berry- man, 3 Manitoba 387; Scrafton v. Quincey, 2 Ves. 413, 28 Eng. Reprint 264. See also Robley v. Withers, 95 Miss. 318, 51 So. 719; Farmers' &c. Bank v. Citizens' Nat. Bank, 25 S. Dak. 91, 125 N. W. 642. A mort- gage actually recorded but defect- ively acknowledged does not attain priority. Evans v. Btheridge, 99 N. Car. 43, 5 S. E. 386. A power of sale contained in a mortgage, is a part of the security, and protected by the statute against a prior unre- corded deed. Bell v. Twilight, 22 N. H. 500. *> Buchanan v. International Bank, 78 111. 500; Mathews v. Aikin, 1 N. Y. 595; Gilbert v. Averill, 15 Barb. (N. Y.) 20; Tice v. Annin, 2 Johns. Ch. (N. Y.) 125; Vanderkemp v. Shelton, 11 Paige (N. Y.) 28. § 526 EECOEDING AS AFFECTING PRIORITY 830 § 526. Effect of destruction of record. — The destruction of the record in no manner affects the constructive notice afforded by the re- cording of the deed.*^ And likewise a subsequent mutilation of the record does not affect the rights of persons holding under a recorded instrument, who had nothing to do with the making of the altera- tion.*^ If the deed itself has been preserved, the recorder's certificate of its having been duly recorded is of the highest class of evidence,*^ and has even been held conclusive.** So, also, the index book in which the deed is described, and its record certified in the proper book, are good evidence of the fact that the deed was recorded.*^ Other secondary evidence may show that the deed was filed for record ;*° and when this is the case, the testimony of an attorney of a purchaser, that he examined an abstract of the title to the property, which purported to be a full and complete abstract, and did not find a prior deed of trust upon the premises, is not sufficient to show that there was no record of it, as it does not follow that the abstract was what it purported to be.*' It has been held that the partial or total destruction of a record book containing a deed duly recorded does not impair the lien thereof, or affect the record as legal notice ;*^ but the record of a deed partially destroyed, so as not to show that the deed was properly acknowledged for registration, was held not to charge subsequent purchasers with constructive notice.*' ^Taxson v. Brown, 61 Fed. 874, Clapp, 98 Pa. St. 581; Mattfeld v. 10 C. C. A. 135; Franklin Sav. Bank Huntington, 17 Tex. Civ. App. 716, v. Taylor, 53 Fed. 854, 4 C. C. A. 43 S. W. 53; Fitch v. Boyer, 51 Tex. 55; Ashburn v. Spivey, 112 Ga. 474, 336; Armentrout v. Gibbons, 30 37 S. E. 703; Sbarp v. American Grat. (Va.) 632. Freehold L. Mtg. Co., 95 Ga. 415, 22 « Dodd v. Doty, 98 111. 393; Mer- S. B. 633; Quinn v. Perkins, 159 111. rick v. Wallace, 19 111. 486; Reck 572, 43 N. B. 759; Tucker v. Shaw, v. Clapp, 98 Pa. St. 581. 158 111. 326, 41 N. E. 914; Franklin '"Paxson v. Brown, 61 Fed. 874, Sav. Bank v. Taylor, 131 111. 376, 10 C. C. A. 135; Alvis v. Morrison, 23 N. E. 397; Hall v. Shannon, 85 63 111. 181, 14 Am. Rep. 117. 111. 473; Curyea v. Berry, 84 111. «"Webb v. Austin, 22 Ky. L. 764, 600; Heaton v. Prather, 84 111. 330; 58 S. W. 808. Steele v. Boone, 75 111. 457; Gam- « Alvis v. Morrison, 63 III. 181,, mon V. Hodges, 73 111. 140; Shannon 14 Am. Rep. 117; Smith v. Lindsey, v. Hall, 72 111. 354; Alvis v. Mor- 89 Mo. 76, 1 S. W. 88. rison, 63 111. 181; Hyatt v. Cochran, *° Stebbins v. Duncan, 108 U. S. 69 Ind. 436; Thomas v. Hanson, 59 32, 27 L. ed. 641, 2 Sup. Ct. 313; Minn. 274, 61 N. W. 135; Myers v. Smith v. Lindsey, 89 Mo. 76, 1 S. Buchanan, 46 Miss. 397; Geer v. W. 88; Cowles v. Hardin, 91 N. Car. Missouri Lumber &c. Co., 134 Mo. 85, 231. 34 S. W. 1099, 56 Am. St. 489; Crane « Steele v. Boone, 75 111. 457. V. Dameron, 98 Mo. 567, 12 S. W. *« Myers v. Buchanan, 46 Miss. 251; Addis v. Graham, 88 Mo. 197; 397. Deming v. Miles, 35 Nebr. 739, 53 "Weber v. Moss, 3 Tex. Civ. App. N. W. 665, 37 Am. St. 464; Reck v. 13, 21 S. W. 609. 831 EFFECT OP EECOED D0LY MADE § 526a Where the registry office and its records have been destroyed by fire, evidence of the execution of a mortgage and of its loss, with slight circumstances in regard to the recording of it, have been held enough to sustain a presumption that it was recorded, as against a prior mort- gagee who claims priority on the ground that such mortgage was never recorded.^" A landowner, in order to protect his rights, need not, unless he choose, incur the trouble and expense of restoring the record under an act providing for tlie restoration of burnt records.^^ A mortgagee may foreclose his mortgage, although in the meantime the mortgagor has sold and conveyed the mortgaged premises to one who had no knowl- edge of the existence of the mortgage, and who took possession and retained it several years with the knowledge of the mortgagee, who did not file his bill to foreclose his mortgage for six years afterward. ^^ A restoration of the record may be had, if desired, upon proof of pro- ceedings for foreclosure of a mortgage in a court of general jurisdic- tion, a decree of sale, a sale under it, and its approval by the court, and the delivery of a certificate of purchase ; and the court will there- upon order the execution of a deed to the purchaser, and a surrender of possession to him.^^ § 526a. Destroyed records — ^Procedure for establishing title. — In a few states, including Illinois and California, there are statutes, sometimes known as Burnt Eecords acts, providing special procedure in equity for establishing title to property evidenced by public records which have been lost or destroyed." Under the Illinois statute, an =°Hunt V. Innis, 2 "Woods (U. S.) "^Hall v. Shannon, 85 111. 473; 103; Heacock v. Lubuke, 107 111. Shannon v. Hall, 72 111. 354, 22 Am. 396; Alston v. Alston, 4 S. Car. 116; Rep. 146. Harrison v. McMurray, 71 Tex. 122, "' Curyea v. Berry, 84 111. 600. See 8 S. "W. 612. as to effect of decree re-establishing "'Ashburn v. Spivey, 112 Ga. 474, a record under a statute, Hunt v. 37 S. B. 703; Gammon v. Hodges, 73 Innis, 2 Woods (U. S.) 103. 111. 140; Hyatt v. Cochran, 69 Ind. =* American Land Co. v. Zeiss, 219 436; Evans v. Templeton, 69 Tex. U. S. 47, 55 L. ed. 82, 31 Sup. Ct. 375, 6 S. "W. 843. But see Greer v. 200 (California statute construed); Willis (Tex.), 81 S. W. 1185; Weber Gormley v. Clark, 134 U. S. 338, 33 V. Moss, 3 Tex. Civ. App. 13, 21 S. L. ed. 909, 10 Sup. Ct. 554; Lofstad W. 609 (under statutory provision v. Murasky, 152 Cal. 64, 91 Pac. requiring re-recording within four 1008; Title &c. Restoration Co. v. years after destruction). A burnt Kerrigan, 150 Cal. 289, 88 Pac. 356, record will not be restored on the 8 L. R. A. (N. S.) 682; Seaboard petition of one whose title would not Nat. Bank v. Ackerman, 16 Cal. be aided by such restoration, and App. 55, 116 Pac. 91; Harding v. when the title of another would be Fuller, 141 111. 308, 30 N. E. 1053. clouded. Beattie v. Whipple, 154 See also Arnett v. Birmingham Coal 111. 273, 40 N. E. 340. &c. Co., 173 Ala. 532, 55 So. 831. § 537 EECOEDING AS AFFECTING PEIOEITT 833 action to establish title may be maintained by a party out of posses- sion against another in possession of land/' but the California statute expressly requires actual possession as a prerequisite to maintenance of the action. "" The right to maintain such an action is not affected by the fact that there are adverse claimants/" or that other questions relating to the title are involved/' or that the claimant's title rests upon the statute of limitations.'* § 527. Bona fide purchasers without notice of unrecorded mort- gage. — Any one purchasing land in good faith, without notice of an unrecorded mortgage, takes it discharged of the lien/* and he can "= Harding v. Fuller, 141 IlL 308. 30 N. B. 1053. "American Land Co. v. Zeiss, 191 Fed. 125, 111 C. C. A. 605; Lofstad V. Murasky, 152 Cal. 64, 91 Pac. 1008 (constructive possession insuffi- cient). "Harding v. Fuller, 141 111. 308, 30 N. E. 1053; Gage v. Caraher, 125 111. 447, 17 N. B. 777. See also Mc- Camptell v. Mason, 151 111. 500, 38 N. E. 672. =»Gage T. Thompson, 161 111. 403, 43 N. E. 1062; Harding v. Fuller, 141 111. 308, 30 N. E. 1053; Gage v. Du Puy, 134 111. 132, 24 N. B. 866; Gage V. Caraher, 125 111. 447, 17 N. E. 777. »» Miller v. Stalker, 158 111. 514, 42 N. E. 79. ""Neslin v. "Wells, 104 U. S. 428, 26 L. ed. 802; Steiner v. Clisby, 95 Ala. 91, 10 So. 240; Wood v. Lake, 62 Ala. 489; De Vendal v. Malone, 25 Ala. 272; Ohio Life Ins. &c. Co. v. Ledyard, 8 Ala. 866; Nestor v. Holt, 1 Alaska 567; Brown v. Nelms, 86 Ark. 368, 112 S. "W. 373; Fry v. Mar- tin, 33 Ark. 203; Jacoway v. Gault, 20 Ark. 190, 73 Am. Dec. 494; Beach V. Osborne, 74 Conn. 405; McRaney V. Perry, 9 Ga. App. 738, 72 S. E. 188; English v. Lindley, 194 III. 181, 62 N. E. 522; Huebsch v. Scheel, 81 111. 281; Hodgen v. Guttery, 58 111. 431; Holbrook v. Dickenson, 56 111. 497; Brazleton v. Brazleton, 16 Iowa 417; Louisville Bldg. &c. Assn. v. Greene, 22 Ky. L. 959, 59 S. W. 508; White V. Union Bank, 6 La. Ann. 162; Belding Sav. Bank v. Moore, 118 Mich. 150, 76 N. W. 368; Burns T. Berry, 42 Mich. 176, 3 N. W. 924; Pancoast v. Duval, 26 N. J. Bq. 445; Westbrook v. Gleason, 89 N. Y. 641; Jackson v. McChesney, 7 Cow. (N. Y.) 360, 17 Am. Dec. 521; Ward v. Isbill, 73 Hun 550, 56 N. Y. St. 185, 26 N. Y. S. 141; Riley v. Hoyt, 29 Hun (N. Y.) 114; Jackson v. Camp- bell, 19 Johns. (N. Y.) 281; Gouver- neur v. Lynch, 2 Paige (N. Y.) 300; Burke v. Allen, 3 Yeates (Pa.) 351; Williams v. Beard, 1 S. Car. 309; Barnwell v. Porteus, 2 Hill Bq. (S. Car.) 219; Burke v. Allen, 3 Yeates (Pa.) 351; Openshaw v. Dean (Tex. Civ. App.), 125 S. W. 989; Garner v. Boyle (Tex.), 79 S. W. 1066; Roberts v. W. H. Hughes Co., 86 Vt. 76, 83 Atl. 807; Hunton v. Wood, 101 Va. 54, 43 S. E. 186; Preston v. Nash, 76 Va. 1; Coolidge V. Schering, 32 Wash. 557, 73 Pac. 682; Cox v. Wayt, 26 W. Va. 807; Allison V. Manzke, 118 Wis. 11, 94 N. W. 659; Battison v. Hobson, 2 Ch. 403, 65 L. J. Ch. 695, 74 L. T. (N. S.) 689, 44 Wkly. Rep. 615; Credland v. Potter, L. R. 10 Ch. 8, 44 L. J. Ch. 169, 31 L. T. (N. S.) 522, 23 Wkly. Rep. 36; In re Wight, L. R. 16 Eq. 41, 43 L. J. Ch. 66, 28 L. T. (N. S.) 491, 21 Wkly. Rep. 667; Vansickler v. Pettit, 5 Can. L. J. 41. See also Tennis Coal Co. v. Asher, 143 Ky. 223, 136 S. W. 197; King V. Huni, 25 Ky. L. 2266, 81 S. W. 254. A bona fide purchaser has also been held to be protected against a prior unrecorded mort- gage, although the mortgage was subsequently registered before the purchaser's deed. Hawley v. Ben- nett, 5 Paige (N. Y.) 104. See also McGuire v. Barker, 61 Ga. 339. 833 EFFECT OF EECOED DULY MADE § 537 convey a good title to it, although the mortgage is recorded before he conveys and his vendee has notice of it."^ In order to take title free from the lien of an unrecorded mortgage, a subsequent purchaser must be a bona fide purchaser in the full sense ; he must have taken without actual notice of the unrecorded mortgage,'^ for valuable considera- tion,*' under some form of conveyance purporting to grant him a title, lien or other interest in the property."* A purchaser of land without notice of a prior unrecorded mortgage is not charged with notice because his vendor was a purchaser with notice.*^ An unrecorded mortgage is void as against a purchaser with- out notice, at a sale under execution against the mortgagor;"" but a mortgage recorded before the sale was held valid although unrecorded when the writ issued."' A purchaser having no actual notice of the mortgage, is not bound to look beyond the line of title in his grantor, and, finding that he acquired a good title, he is not bound to look further; he acquires all the right and title that his grantor acquired. His grantor being en- titled to protection against a prior unrecorded mortgage, he is entitled to the same protection, notwithstanding the notice he himself has of such mortgage, and although he is not a purchaser for a valuable consideration."* '^Losey v. Simpson, 11 N. J. Bq. 246; Tarbell v. "West, 86 N. Y. 280; Bush V. Lathrop, 22 N. Y. 535; Cook v. Travis, 20 N. Y. 400; Jackson v. Van Valkenburgh, 8 Cow. (N. Y.) 260; Jackson v. McChesney, 7 Cow. (N. Y.) 360, 17 Am. Dec. 521; Jack- son V. Given, 8 Jokns. (N. Y.) 137, 5 Am. Dec. 328. "'Johnston v. Shortridge, 93 Mo. 227, 6 S. W. 64. See also Varick v. Briggs, 6 Paige (N. Y.) 323. •^Schultze V. Houfes, 96 111. 335; Freeburg v. Eksell, 123 Iowa 464, 99 N. W. 118; Merriman v. Hyde, 9 Nebr. 113, 2 N. W. 218; Roberts v. W. H. Hughes Co., 86 Vt. 76, 83 Atl. 807. A purchaser of land receiving no- tice of a prior unrecorded mortgage thereon, after he has paid part of the purchase-money is not entitled to the protection of a purchaser without notice, as to the unpaid bal- ance. Warner v. Whittaker, 6 Mich. 133, 72 Am. Dec. 65; Thomas v. Stone, Walk. Ch. (Mich.) 117. The payment and satisfaction in whole or in part of a pre-existing debt is sufficient to make the creditor a bona fide purchaser for a valuable consideration. Sipley v. Wass, 49 N. J. Eq. 463, 24 Atl. 233. But merely giving credit for the amount of the purchase-money, on claims held by the purchaser against the vendor, was held not a sufficient considera- tion to accord the protection of a bona fide purchaser. Zorn v. Savan- nah &c. R. Co., 5 S. Car. 90. "*An assignee for the benefit of creditors is not a bona fide pur- chaser within the meaning of these rules. In re Mellon's Appeal, 32 Pa. St. 121. See also Garner v. Boyle, 97 Tex. 460, 79 S. W. 1066. °= Varick v. Briggs, 6 Paige (N. Y.) 323. See also Ward v. Isbill, 73 Hun 550, 56 N. Y. St. 185, 26 N. Y. S. 141. «" Barker v. Bell, 37 Ala. 354. "' Sappington v. Oeschli, 49 Mo. 244. «Wood V. Chapin, 13 N. Y. 509, 67 Am. Dec. 62; Webster v. Van Steen- 53— Jones Mtg.— Vol. I. § 528 EECOEDING AS AFFECTING PEIOEITT 834 ITot only is a purchaser witlioiit notice of a prior unrecorded mort- gage, or of other equitable claim to the property, entitled to protec- tion, even though he takes the title from one who had actual notice of such claim, but also a purchaser with notice from one who was entitled to protection as a bona fide purchaser without notice is him- self entitled to protection against the previous equitable claim upon the estate; for otherwise a bona fide purchaser might be deprived of the power of selling his property for its full value. This protection extends to all persons claiming through the mortgage, whether they had notice at the time of the purchase or not.^^ Although an unre- corded mortgage may be defeated by a subsequent conveyance to a purchaser for value without notice ; a mortgagee under an unrecorded mortgage who participated with the mortgagor in organizing a cor- poration and conveying the mortgaged property to it, is not defeated in asserting his lien against the mortgagor and the corporation which had paid no value for the conveyanceJ" Where an owner of land failed to record his deed, and gave a trust deed thereon which was not re- corded, a purchaser without notice from him, or from a commissioner authorized to sell his estate, acquired his title free from such incum- brance.'^ § 528. Estoppel of mortgagor subsequently acquiring title. — If one having no title to land conveys it by a duly recorded mortgage with covenants of warranty, and afterward the mortgagor acquires title to the land, the estoppel by which he is bound under the covenants is turned into a good estate in the mortgagee, so that by operation of law the title is considered as vested in him in the same manner as if it had been conveyed to the mortgagor before he executed the mort- gage. The mortgagor is estopped to say he was not then seised. Then, if the mortgagor executes another mortgage, and this and the deed by which the mortgagor acquired his title are both recorded together, which mortgagee has the better title ? The estoppel binds not only the mortgagor and his heirs, but his assigns as well. A second mortgagee is therefore estopped to aver that the grantor was not seised at the time of his making the first mortgage, and that mortgage being first recorded must have priority.'^ bergh, 46 Barb. (N. Y.) 211; Clark "Roberts v. "W. H. Hughes Co., 86 V. Mackin, 30 Hun (N. Y.) 411; Vt. 76, 83 Atl. 807. Crane v. Turner, 7 Hun (N. Y.) 857. "Hunton v. Wood, 101 Va. 54, 43 ™ Cook v. Travis, 22 Barb. 338, 20 S. E. 186. N. Y. 400; Varick v. Briggs, 6 Paige "Christy v. Dana, 34 Cal. 548, 42 (N. Y.) 323. Cal. 174; Kirkaldie v. Larrabee, 31 835 EFFECT OF EECOED DULY MADE § 528 But if a mortgagor has title at the time of executing two mort- gages, the fact that one contains covenants of warranty does not give it priority over the other which contains no such covenants, if the lat- ter be first filed for recordJ^ Where the mortgagor was part owner of the mortgaged premises, at the time of giving the mortgage, it was held that the mortgage, though containing a general warranty, conveyed only the interest which the mortgagor had in the land at the time of the execution of the mortgage, and did not pass an interest subsequently acquired by will.'* Where the mortgagor was in possession at the date of the mortgage, under a parol contract of sale, the record of the mortgage was held effective though the mortgagor had not yet acquired title, and the holder of a subsequent mortgage was bound thereby.''^ And, where a homestead entrywoman mortgaged her property before obtaining her patent, the recording of the mortgage prior to final proof was held constructive notice, the same as though the mortgage had been exe- cuted and recorded after patent. ''^ A quitclaim deed or other deed without warranty does not have the effect of estopping the grantor from setting up a superior right and Cal. 455, 89 Am. Dec. 205; Salisbury pt. 1, p. 212. Under a covenant of Sav. Soc. V. Cutting, 50 Conn. 113; warranty, a title subsequently ac- Yerkes v. Hadley, 5 Dak. 324, 40 N. quired by the mortgagor will inure W. 340, 2 L. R. A. 363; Boone v. to the benefit of the mortgagee. Armstrong, 87 Ind. 168; Warburton Hoyt v. Dimon, 5 Day (Conn.) 479; V. Mattox, Morris (Iowa) 367; New- Yerkes v. Hadley, 5 Dak. 324, 40 N. ell v. Burnside Banking Co. (Ky.), W. 340, 2 L. R. A. 363; Holbrook v. 118 S. W. 267; Perkins v. Coleman, Debo, 99 111. 372; Elder v. Derby, 90 Ky. 611, 12 Ky. L. 501, 14 S. W. 98 111. 228; Pratt v. Pratt, 98 111. 184; 640; Pike v. Galvin, 29 Maine 183; Gibbons v. Hoag, 95 111. 45; Goche- White V. Patten, 24 Pick. (Mass.) nour v. Mowry, 33 111. 331; Wells v. 324; Somes v. Skinner, 3 Pick. Somers, 4 111. App. 297; Iowa L. &c. (Mass.) 52; Gotham v. Gotham, 55 Co. v. King, 58 Iowa 598, 12 N. W. N. H. 440; Ward v. Willard, 13 N. 595; Doswell v. Buchanan, 3 Leigh H. 389; Kimball v. Blaisdell, 5 N. (Va.) 365, 23 Am. Dec. 280; Trust H. 533, 22 Am. Dec. 476; Semon v. &c. Co. v. Covert, 32 U. C. Q. B. 222; Terhune, 40 N. J. Eq. 364, 2 Atl. See ante §472, and post §§ 529, 679, Rep. 18; Cooke v. Watson, 30 N. J. 782, 825, 1483, 1656, 1671. Eq. 345; Crane v. Turner, 67 N. Y. " Vandercook v. Baker, 48 Iowa 43; Tefft v. Munson, 57 N. Y. 97; 199. Doyle V. Peerless Petroleum Co., 44 "Newell v. Burnside Banking Co. Barb. (N. Y.) 239; Farmers' Loan (Ky.), 118 S. W. 267. &c. Co. V. Maltby, 8 Paige (N. Y.) "Crane v. Turner, 7 Hun (N. Y.) 361; Philly v. Sanders, 11 Ohio St. 357, affd. 67 N. Y. 437. 490, 78 Am. Dec. 316; Jarvis v. Aik- "Adam v. McClintock, 21 N. Dak. ens, 25 Vt. 635; Doswell v. Buchan- 483, 131 N. W. 394. See also Ber- an, 3 Leigh (Va.) 365, 23 Am. Dec. nardy v. Colonial & United States 280. But see White & Tudor's Lead. Mortg. Co., 17 S. Dak. 637, 98 N. W. Cases in Eq. (4th Am. ed.), vol. 2, 166, 106 Am. St. 791. § 529 EECOEDING AS AFFECTING PEIOEITT 836 title subsequently acquired from another source.''^ A grantee under a quitclaim deed is not a bona fide purchaser under the recording acts, and his 'rights are subordinate to a prior unrecorded mortgage.''* § 529. Mortgage recorded before grantor acq[uires title. — To sus- tain a deed made before the grantor acquires title is certainly a viola- tion of the spirit of the registry system, under which a record is notice only to subsequent purchasers and incumbrancers, in the line of the title to which the recorded deed belongs. It has been insisted there- fore, with much force, that a second grantee, under a deed made after the grantor had acquired title and recorded his deed to himself, should be preferred to the first grantee, whose deed the second grantee, in following the title back to the time his grantor acquired title, would not find of record. There are some decisions to the effect that a sub- sequent purchaser or creditor is not bound to take notice of a convey- ance not lying in the line of the title, though actually recorded ; and that he is not bound to search for conveyances as against his grantor previous to the time when the grantor obtained his title to the land." But notwithstanding the objections, the title by estoppel in such cases is generally sustained; and if a purchaser fails to examine the record, to ascertain whether the grantor had made a conveyance prior to the time of receiving and recording the conveyance to himself, he runs the risk of acquiring an imperfect title.'" Where a mortgage of certain land is made and recorded before the mortgagor himself acquires title, in order to raise part of the pur- chase-money, the record thereof is not, under the recording act, notice to the vendor of the land, who subsequently conveys to the mortgagor and takes back a purchase-money mortgage.'^ Where a mortgagor incumbered land to which he had no title, but subsequently became the mortgagee of the property by a mortgage from the true owner, the record of the first mortgage did not operate "Boswell V. Buchanan, 3 Leigh han v. Reeside, 9 Watts (Pa.) 508, (Tenn.) 365, 23 Am. Dec. 280; Smith 36 Am. Dec. 136; Woods v. Farmere, V. Pollard, 19 Vt. 272. 7 Watts (Pa.) 382. See also Crosby "Snow V. Lake, 20 Fla. 656, 51 v. Ridout, 27 App. D. C. 481; Mc- Am. Rep. 625. See post § 582. Cusker v. McEvey, 9 R. I. 528, 10 R. '"Salisbury Sav. Soc. v. Cutting, I. 606; Rawle on Covenants (4th 50 Conn. 113; Prince v. Case, 10 ed.), 428; Bigelow on Estoppel, 331. Conn. 375, 27 Am. Dec. 675; Way V. '"Digman v. McCollum, 47 Mo. Arnold, 18 Ga. 181; Bingham v. 372; Buckingham v. Hanna, 2 Ohio Kirkland, 34 N. J. Eq. 229; Farmers' St. 551, and cases cited in post § 561. Loan &c. Co. v. Maltby, 8 Paige (N. »' Schoch v. Birdsall, 48 Minn. 441, Y.) 361; Calder v. Chapman, 52 Pa. 51 N. W. 382. St. 359, 91 Am. Dec. 163; McLana- 837 EFFECT OF EECOED DULY MADE § 530 as notice to the owner of the property, as he was not holding the prem- ises under the first mortgagor, and hence a satisfaction of the second mortgage defeated whatever interest passed to the first mortgagee. This decision was rendered under a statute prescribing that if any one makes a conveyance of real estate, not having the legal title, but afterward acquires the same, such after-acquired estate, legal or equi- table, shall immediately pass to the grantee.*^ § 530. Record of subsequent deeds by the mortgagor. — After the mortgage is made and recorded, the record of any deeds subsequently made by the mortgagor is not notice to the mortgagee f^ and if he has no actual Imowledge of any such subsequent deed, he may, without re- ceiving anything upon the mortgage debt, release any portion of the mortgaged property to the mortgagor without impairing his security upon the remainder for the whole mortgage debt ; although, if he had notice of a sale of any part of the remaining land, he might be obliged to abate a proportionate part of the mortgage debt in order to protect the purchaser.** The equity which entitles a subsequent mortgage in- cumbrancer to the benefit of such release arises only when the first mortgagee gives it with knowledge at the time of the existence of the subsequent incumbrance. If the subsequent incumbrance be a me- chanic's lien, the mere fact that the building was commenced after the '"Turman v. Sanford; 69 Ark. 95, N. Y. 271, 59 Am. Dec. 478; Truscott 61 S. W. 167. v. King, 6 Barb. (N. Y.) 346; Stuy- »= McLean v. Lafayette Bank, 4 vesant v. Hall, 2 Barb. Cb. (N. Y.) McLean (U. S.) 30; Bright v. Buck- 151; Talmadge v. Wllgers, 4 Edw. man, 39 Fed. 243; Blrnle v. Mam, 29 Ch. (N. Y.) 239; Wheelwright v. De Ark. 591; Small v. Stagg, 95 111. 39; Peyster, 4 Edw. Ch. (N. Y.) 232, 3 Meacham v. Steele, 93 111. 135; Hea- Am. Dec. 232; Raynor v. Wilson, 6 ton V. Prather, 84 111. 330; Doolittle Hill (N. Y.) 469; Westbrook v. Glea- V. Cook, 75 111. 354; Iglehart v. son, 14 Hun (N. Y.) 245; King v. Crane, 42 111. 261; Burnham v. Citi- McVickar, 3 Sandf. Ch. (N. Y.) 192; zens' Bank, 55 Kans. 545, 40 Pac. Stuyvesant v. Hone, 1 Sandf. Ch. (N. 912; Halstead v. Bank of Kentucky, Y.) 419; Union Nat. Bank v. Moline, 4 J. J. Marsh. (Ky.) 554; Clarke v. 7 N. Dak. 201, 73 N. W. 527; Sarles Cowan, 206 Mass. 252, 92 N. E. 474; v. McGee, 1 N. Dak. 365, 48 N. W. George v. Wood, 9 Allen (Mass.) 80, 231; Ranney v. Hardy, 43 Ohio St. 85 Am. Dec. 316; Dewey v. Ingersoll, 157; Leiby v. Wolf, 10 Ohio 83; Tay- 42 Mich. 17, 3 N. W. 235; Cooper v. lor v. Maris, 5 RawIe (Pa.) 51; Lake Bigly, 13 Mich. 463 ; James v. Brown, v. Shumate, 20 S. Car. 23; Howard 11 Mich. 25; Brown v. Simons, 44 v. Clark, 71 Vt. 424, 45 Atl. 1042; N. H. 475; Cogswell v. Stout, 32 N. Johnson v. Valido Marble Co., 64 Vt. J. Eq. 240; Kipp v. Merselis, 30 N. 337, 25 Atl. 441; Hall v. Williamson J. Eq. 99; Hill v. McCarter, 27 N. J. Grocery Co., 69 W. Va. 671, 72 S. E. Eq. 41; Hoy v. Bramhall, 19 N. J. 780. See post § 723. Eq. 563, 97 Am. Dec. 687; Vanorden '^Hall v. Edwards, 43 Mich. 473, V. Johnson, 14 N. J. Eq. 376, 82 Am. 5 N. W. 652; Cogswell v. Stone, 32 Dec. 254; Blair v. Ward, 10 N. J. Eq. N. J. Eq. 240. 119; Howard Ins. Co. v. Halsey, 8 § 530 EECOEDING AS AFFECTING PRIORITY 838 mortgage was given, and that the mortgagee knew this, is not sufficient to charge him with knowledge of the lien.*^ The holder of a duly recorded deed of trust, given to secure future advances, is affected only by actual notice of a lien subsequently ac- quired on the property, and his deed of trust is a valid and prior se- curity for all advances made before actual notice of a subsequent lien.*° An agreement between a prior mortgagee and the mortgagor, by which insurance money received by the former was used by the latter in rebuilding, does not affect the priority of his lien as against a sub- sequent mortgage of which he had no actual knowledge.^' Whatever may be the equities of the subsequent mortgagee, a prior mortgagee is not bound by them unless he has actual notice, or such notice as should put him upon inquiry.** There can be no retrospec- tive effect to the record. A mortgagee, having recorded his deed, se- cures the protection of the registry laws, and he is not required to search the record from time to time to see whether other conveyances have been put upon the record. While the law requires every man to deal with his own so as not to injure another, it imposes a greater obligation on the second mortgagee to take care of his own interests than upon the first mortgagee to take care of them for him. To make it the duty of the first mortgagee to inquire before he acts, lest he may injure some one, would be to reverse this rule, and make it his duty to do for the second mortgagee what the latter should do for himself.*' In like manner, the recording of a mortgage affords no notice what- ever to a prior purchaser of the land, who is in possession under a bond for a deed, so that the mortgagee had constructive notice of his rights, and without actual notice he may lawfully complete his pay- ments to his vendor without becoming liable to such mortgagee.'" "''Ward T. Hague, 25 N. J. Bq. N. Y. 380. See also Bell v. Flem- 397; Mcllvain v. Mutual Assn. Co., Ing, 12 N. J. Eq. 13 (record of mort- 93 Pa. St. 30. gage securing future advances). ='Babcock v. Lisk, 57 111. 327; *' Johnson v. Valido Marble Co., 64 Dean v. De Lezardi, 24 Miss. 424; Vt. 337, 25 Atl. 441. Whitney v. Lowe, 59 Nebr. 87, 80 ^ Dewey v. Ingersoll, 42 Mich. 17, N. W. 266; Youngs v. Wilson, 27 3 N. W. 235; Straight v. Harris, N. Y. 351; Gumps v. Kiyo, 104 Wis. 14 Wis. 509; Duester v. McCamus, 656, 80 N. W. 937. A recorded 14 Wis. 307. mortgage for an unlimited amount *° Birnie v. Main, 29 Ark. 591; is notice of all sums advanced upon James v. Brown, 11 Mich. 25. See it before the subsequent lien at- ante § 372. tached. Robinson v. Williams, 22 "Doolittle v. Cook, 75 111. 354. 839 EFFECT OF RECORD DULY MADE § 532 § 531. Extent of the lien. — The record of the mortgage is notice of an incnmbrance for the amount specified in it, or so referred to as to put subsequent purchasers upon inquiry as to the extent of the lien.^^ If it specifies the sum secured, it is notice only to the extent and amount of the debt stated, and can not be enlarged to include any other debts and claims not specified.^^ It is not notice of any claim which is not so specified or referred to.'' If the record of a mortgage does not disclose the nature and amount of the debt secured, it is not notice to subsequent purchasers or incumbrancers.®* The rec- ord itself must be examined, and it has been held that a record in the index specifying the amount, is not notice of the consideration of a mortgage.®^ Subsequent purchasers are bound by nothing more than is disclosed by record, unless express notice is proved.*'' As against them, if the mortgage debt is not payable with interest, they can not be prejudiced by any change of interest, although, in case there be other security for the debt, they can not object to the application of that to the pay- ment of interest in the first place.®^ But actual notice of the amount secured by a mortgage is binding upon a subsequent purchaser, al- though there be a mistake in the record.®^ § 532. Extension of mortgage. — An agreement for further time, and a higher rate of interest, is not binding upon the property, or upon subsequent purchasers, unless duly executed and recorded. It is merely a personal obligation between the parties, and the increased indebtedness can not operate as a lien upon the land.'* Where a defi- nite extension of the time of payment is granted, a mortgage for an " Hall V. Williamson Grocery Co., " Bullock v. Battenhousen, 108 111. 69 W. Va. 671, 72 S. E. 780; 28; Battenhousen v. Bullock, 11 111. Straight v. Harris, 14 Wis. 509. See App. 665; Bergman v. Bogda, 46 111. post § 723. App. 351; Lacour v. Carrie, 2 La. "2 Bacon v. Brown, 19 Conn. 29; Ann. 790; Whittacre v. Fuller, 5 Walden v. Grant, S Mart. (N. S.) Minn. 508; Du Bose v. Kell, 90 S. (La.) 565; Hinchman v. Town, 10 Car. 196, 71 S. E. 371. See ante Mich. 508; Mills v. Kellogg, 7 Minn. § 515. 469; "Whittacre v. Fuller, 5 Minn. »= Gilchrist v. Gough, 63 Ind. 576, 508; Ketcham v. Wood, 22 Hun (N. 30 Am. Rep. 250. Y.) 64; Beekman v. Frost, 18 Johns. ""See ante § 524. (N. y.) 544, 9 Am. Dec. 246. See «'Lash v. Edgerton, 13 Minn. 210. also Babcock v. Bridge, 29 Barb. See post § 533. (N. Y.) 427; Hall v. Read, 28 Tex. »' Frost v. Beekman, 1 Johns. Ch. Civ. App. 18, 66 S. W. 809. But see (N. Y.) 288. Keyes v. Bump, 59 Vt. 391, 9 Ul. =» Gardner v. Emerson, 40 111. 296; 598 (recital of consideration imma- Davis v. Jewett, 3 Greene (Iowa) terial). See ante §§ 515, 524. 226. See ante § 361. " Hinchman v. Town, 10 Mich. 508. § 533 EECOKDING AS AFFECTING PRIORITY 840 antecedent debt is supported by a sufficient consideration to constitute the mortgagee a purchaser for value within the protection of the re- cording act.^ An agreement for extension duly recorded, but which does not identify the mortgage by any sufficient reference, has no greater effect by reason of the record.^ § 533. Rate of interest. — The mortgage is a lien only for the rate of interest specified in it, or for the rate established by law when it is simply made payable with interest.* If the parties to the mort- gage subsequently agree upon an advanced rate, this agreement is not binding upon subsequent purchasers, unless it is executed with the formalities which entitle it to be recorded, and it is in fact duly re- corded before others acquire any interest in the property. In like manner, where a mortgage was given without interest, but with a verbal agreement that the mortgagee should receive certain rents in lieu of interest, he can not, as against a subsequent mort- gagee who had no notice of this agreement, enlarge his demand be- yond what appeared of record, and claim a lien upon the property for the payment of interest as well as principal.^ After the making of a mortgage, the parties to it can not make an agreement for the payment of a higher rate of interest than that stipulated for in the mortgage, that will be a lien upon the premises as against a purchaser of the property before such agreement was made, or after it was made but without notice of it.^ Such an agree- ment can not operate to the prejudice of the intervening rights of third persons, such as junior mortgagees, redeeming from the prior mortgage by paying the debt secured.* * Farmers' &c. Bank v. Citizens' of interest. Mills v. Kellogg, 7 Nat. Bank, 25 S. Dak. 91, 125 N. Minn. 469. See- also Taylor v. At- W. 642. See ante § 461. lantic &c. R. Co., 55 How. Pr. (N. "Bassett v. Hathaway, 9 Mich. 28. Y.) 275. See ante § 361. ' Where neither the mortgage nor * St. Andrews Church v. Tomp- its record disclosed the rate of in- kins, 7 Johns. Ch. (N. Y.) 14. terest, although the note secured ° Davis v. Jewett, 3 G. Greene drew two and one-half per cent, per (Iowa) 226; Bunker v. Barron, 79 month, the lien, operated as notice Maine 62, 8 Atl. 253, 1 Am. St. 282; only of the principal and seven per McGregor v. Mueller, 1 Cin. Super, cent, per annum, against subsequent Ct. 486, 13 Ohio Dec. 676; Bassett purchasers and incumbrancers, v. McDonel, 13 Wis. 444; Matson v. Whittacre v. Fuller, 5 Minn. 508. Swift, 5 Jur. 645; In re Houston, Where the record of a mortgage 2 Ont. 84; Totten v. Watson, 17 showed that the mortgagor agreed Grant Ch. (U. C.) 233; Murchie v. to pay a greater than the legal rate Theriault, 1 N. Brunsw. Eq. 588. of interest after maturity, subse- "Gardner v. Emerson, 40 III. 296; quent incumbrancers can not object Smith v. Graham, 34 Mich. 302. to such payments and application 841 EFFECT OF KBCOED DULY MADE § 534 But in case of a mortgage for the purchase-money, the wife having no right of dower except in the surplus above the mortgage, an agree- ment to pay a higher rate of interest in consideration of an extension of time may be enforced against the property, so far as the wife's dower is concerned.'' § 534. Mortgages executed and recorded simultaneously. — ^The re- cording acts have no application to mortgages execiited and recorded simultaneously.^ When two mortgages on the same property, given to different mortgagees are recorded at the same time there is no pri- ority between them, but they are equal liens.^ Neither have the re- cording acts any application to mortgages executed at the same time and held by the same person, for he has, of necessity, notice of both." The record of one before the other is in such case without effect.^^ Mortgages executed and recorded simultaneously are concurrent liens, whether in the hands of the mortgagee or in the hands of assignees. Kor have the acts any application when the mortgages expressly de- clare that neither is to have precedence of the other, but are to be alike security for the' several debts. ^^ Nor have they any application as between two mortgages given for purchase-money at the same time; and when this fact appears upon the face of the deeds, the prior record of one gives it no priority over the other.^^ The rights of the parties in such cases may sometimes be controlled by other considerations; and if there be any priority of one over the other, that priority is determined by considerations of equity.^* Equi- table rights and agreements as to priority are recognized and enforced only in courts of equity.^^ Priority may be given to one mortgage 'Thompson v. Lyman, 28 Wis. "Vredenburgh v. Burnet, 31 N. J. 266. Eq. 229; Gausen v. Tomlirison, 23 'Stafford v. Van Rensselaer, 9 N. J. Eq. 405. Cow. (N. y.) 316, afCg. Hopk. 569; "The mere fact that one mort- Douglass V. Peele, Clarke (N. Y.) gage was handed to the recorder 563. an Instant before the other does not "Koevenig v. Schmitz, 71 Iowa give it priority. Koevenig v. 175, 32 N. W. 320; Terry v. Moran, Schmitz, 71 Iowa 175, 32 N. W. 320. 75 Minn. 249, 77 N. "W. 777; Jones "Howard v. Chase, 104 Mass. 249. V. Phelps, 2 Barb. Ch. (N. Y.) 440; ^Greene v. Deal, 4 Hun 703. Bonstein v. Schweyer, 212 Pa. 19, " Schaeppi v. Glade, 195 111. 62, 61 Atl. 447 (no priority between 62 N. E. 874; Fischer v. Tuohy, 186 mortgages filed at the same mo- 111. 143, 57 N. E. 801; Stafford v. ment). See also Mason v. Daily Van Rensselaer, 9 Cow. (N. Y.) 316; (N. J. Eq.), 44 Atl. 839. A sale Wilcox v. Drought, 36 Misc. 351, 73 under one of two mortgages simul- N. Y. S. 587. taneously recorded discharges the '= Jones v. Phelps, 2 Barb. Ch. (N. other. Bonstein v. Schweyer, 212 Y.) 440. Pa. 19, 61 Atl. 447. § 534 EECOKDING AS AFFECTING PEIOEITX 843 over another by agreement of the parties, even though there was no actual difference in the time of recording.'^' As between two mortgages acknowledged the same day and recorded simultaneously, mortgaging the same premises to secure two notes made payable to the same nominal payee, for convenience in nego- tiating them, that one is entitled to priority which is first entered and numbered by the recorder for record and which secures the note bear- ing the earlier date, if such mortgage is the first one transferred for value. ^'^ When two mortgages executed at different dates are recorded on the same day, and there is nothing to show which was in fact first recorded, the presumption of law is that the recording of them was concurrent, and each party stands charged with notice of the equi- ties of the other on that day, at the same moment; though in such case the mortgage which is prior in execution is regarded as having the superior equity.^* When two mortgages are filed on the same day, they take priority according to the hour and minute when filed.^' The mere order in which two mortgages are inscribed in the record is not evidence to prove that one was filed before the other.^" "Corbin v. Klncaid, 33 Kans. 649, 7 Pac. 145; Gilman v. Moody, 43 N. H. 239. See also Naylor v. Throckmorton, 7 Leigh (Va.) 98, 30 Am. Dec. 492. See post § 607a. "Fischer v. Tuohy, 186 111. 143, 57 N. E. 801, affg. 87 111. App. 574. "Houfes v. Schultze, 2 Bradw. (III.) 196; Deininger v. McConnel, 41 111. 227; Hatch v. Haskins, 17 Maine 391. In Alabama, however, the junior mortgage Is given prior- ity. This result is based upon the provision of the Code, § 1811, de- claring all mortgages to be void as to purchasers for a valuable consid- eration and mortgages without no- tice, unless recorded before the ac- crual of the rights of such purchas- ers or mortgagees. In the case of mortgages simultaneously recorded, though the execution of one was prior to the execution of the other, it Is said that, at the time of the accrual of the right of the junior mortgagee, the prior mortgage was inoperative and void as to him, unless he had notice of it. Wood v. Lake, 62 Ala. 489. "The fact that both mortgages were filed for record at the same time does not change the effect of the statute of registration. It does not require the second mortgage to be recorded before the first is re- corded in order to preserve its pref- erence. It simply declares the un- recorded prior mortgage inoperative and void as against the subsequent mortgagees, when their mortgage is executed and received without no- tice of the first." Steiner v. Clisby, 95 Ala. 91, 10 So. 240, 11 So. 294; Coster V. Bank, 24 Ala. 37. In Min- nesota under Gen. Stat. 1894, § 767, Gen. Stat: 1913, §§ 904, 905, provid- ing that priority of registration shall prima facie depend upon the number of the instrument where several mortgages are executed and recorded at the same hour the doc- ument numbers given to the instru- ments in the register's office prima facie determine the priority in the order in which the instruments are numbered. Connecticut Mut. L. Ins. Co. v. King, 72 Minn. 287, 75 N. W. 376. '^Fischer v. Tuohy, 87 111. App. 574; Bonstein v. Schweyer, 212 Pa. 19, 61 Atl. 447. See also Lemon v. Staats, 1 Cow. (N. Y.) 592. ^ Hatch V. Haskins, 17 Maine 391. See also Bonstein v. Schweyer, 212 Pa. 19, 61 Atl. 447. 843 EFFECT OF KECOED DULY MADE § 534 In some states the order in which they are numbered by the re- corder, upon being filed or in the record book, is prima facie evidence of the order in which they were received for record, the one bearing the lower number being presumed the first lienj^i but where instru- ments are handed to the recorder at the same time, he can not fix their priority by the mere order in which he numbers them, either accidentally or by design.^^ The chief effect of recording an assignment of a mortgage is to pro- tect the assignee from a subsequent sale of the mortgage.^' The as- signment when not recorded is void as against a subsequent purchaser of the mortgage. Therefore, when two simultaneous mortgages of the same land are made under an agreement that they shall be equal liens, the prior record of one gives it no preference over the other. Such a mortgage is not within the terms of a statute declaring an unrecorded conveyance void against a subsequent conveyance first recorded. A simultaneous conveyance is not a subsequent conveyance. An assign- ment is a conveyance of a mortgage, and if it be not recorded it is void against a subsequent purchaser of the mortgage.^* There is a further use in recording an assignment in the indirect protection that the record affords the holder of the mortgage as against innocent sub- sequent purchasers of the mortgaged land; for there may be grounds for the purchaser's believing that the mortgage had been paid, and, the assignment not being recorded, the purchaser would be prevented from making inquiries of the real owner of the mortgage.^^ Accord- ingly, an unrecorded assignment is generally held invalid as against subsequent purchasers and lienors in good faith without actual no- tice.2« » Madlener v. Ruesch, 91 111. App. J. Eq. 17, 23 Atl. 285; Breed v. Au- 391; Connecticut Mut. Life Ins. Co. burn Nat. Bank, 171 N. Y. 648, 63 V. King, 72 Minn. 287, 75 N. W. 376; N. E. 1115; Spicer v. First Nat. Neve V. Pennell, 2 Hem. & M. 170, Bank, 170 N. Y. 562, 62 N. E. 1100; 33 L. J. Ch. 19, 9 L. T. Rep. (N. Crane v. Turner, 67 N. Y. 437; Hen- S.) 285, 11 Wkly. Rep. 986, 71 Eng. niges v. Paschke, 9 N. Dak. 489, 84 Reprint 427. N. W. 350, -81 Am. St. 588; State ^Schaeppl v. Glade, 195 111. 62, v. Coughran, 19 S. Dak. 271, 103 62 N. E. 874. N. W. 31; Seattle Nat. Bank v. Ally, »see ante § 474. 66 Wash. 610, 120 Pac. 94. The as- " Greene v. Warnick, 64 N. Y. 220. signee is thus left at the mercy of '"Brownhack v. Ozias, 117 Pa. St. the assignor in respect to payment 87, 11 Atl. 301. and discharge of the mortgage. * Citizens' State Bank v. Julian, Connecticut Mut. Life Co. v. Tal- 153 Ind. 655, 55 N. E. 1007; Jenks hot, 113 Ind. 373, 14 N. E. 586, 3 V. Shaw, 99 Iowa 604, 68 N. W. Am. St. 655; Peaks v. Dexter, 82 900, 61 Am. St. 256; Pritchard v. Maine 85, 19 Atl. 100; Lea v. Welsh, Kalamazoo College, 82 Mich. 587, 47 12 Ohio Cir. Ct. 670, 4 Ohio Cir. N. W. 31; Cannon v. Wright, 49 N. Dec. 190; Strait v. Ady, 6 Ohio S. § 535 RECORDING AS AFFECTING PRIORITY 844 If an assignee of one of two simultaneous mortgages be regarded as a subsequent purchaser of some interest in the real estate, then he is afEected by the record of the other mortgage, as well as that of which he has taken an assignment; and if either or both contain a recital showing that they are simultaneous, or that both were given for the purchase-money of the same land, then the prior record of one can give it no preference over the other.'" If one of two simultaneous mortgages made to the same person be assigned with the representation that it is a first lien upon the premises, this representation will make it so as against the assignor. But as against a subsequent assignee of the other, without notice, such representation is a secret equity by which he is not bound.^* § 535. Simultaneous mortgages for purchase-money. — ^Where two or more mortgages are made simultaneously to different persons, and are so connected with each other that they may be regarded as one transaction, each mortgagee having notice of the other mortgage, they will be held to take effect in such order of priority or succession as shall best carry into effect the intention and best secure the rights of all the parties.^^ When the equities of the two mortgages are equal in point of merit, the oldest in point of time will prevail.^" If there be no intention to give any preference to either, no preference as be- tween the mortgagees can be obtained by priority of record.^^ And a mere undisclosed desire or intention of a mortgagor to give priority to one mortgage over the other will not accomplish such purpose.^^ The recording acts in such case have no application. But if one of such mortgages be assigned to a purchaser in good faith without no- tice of any superior equity in the holder of the other mortgage, such assignee is entitled to the priority gained by an earlier record of his & C. PI. Dec. 273, 4 Ohio N. P. 86; Ch. (N. Y.) 440; Douglass v. Peele, In re Mortgage, 5 Ohio S. & C. PI. Clarke (N. Y.) 563. See also Mu- Dec. 556, 7 Ohio N. P. 534; Pas- tual Loan &c. Assn. v. Blwell, 38 sumpsic Sav. Bank v. Buck, 71 Vt. N. J. Eq. 18; Crombie v. Rosentock, 190, 44 Atl. 92. 19 Abb. N. Gas. (N. Y.) 312; Her- "'Van Aken v. Gleason, 34 Mich, ron v. Herron, 19 Ohio Cir. Ct. 160, 477; Greene v. Warnick, 64 N. Y. 10 Ohio Cir. Dec. 525. 220. '"Houfes v. Schultze, 2 Bradw. ^Vredenburgh v. Burnet, 31 N. J. (111.) 196; Naylor v. Throckmorton, Eq. 229. In Lane v. Nickerson, 17 7 Leigh (Va.) 98, 30 Am. Dec. 492. Hun (N. Y.) 148, it was held such ''Sparks v. State Bank, 7 Blackt representation would give priority (Ind.) 469; Koevenig v. Schmitz, 71 even as against the purchaser of the Iowa 175, 32 N. W. 320; Van Aken other mortgage. v. Gleason, 34 Mich. 477; Rhoades ^Pomeroy v. Latting, 15 Gray v. CanHeld, 8 Paige (N. Y.) 545. (Mass.) 435; Gilman v. Moody, 43 '^ Koevenig v. Schmitz, 71 Iowa N. H. 239; Jones v. Phelps, 2 Barb. 175, 32 N. W. 320. 845 EFFECT OF EECOKD DULY MADE § 536 mortgage, even if the other mortgage was superior in equity.^' Upon a foreclosure sale under such mortgage the purchaser would be en- titled to the same priority which the assignee would have.^* If two mortgages be made to the same person to secure purchase- money, though in the mortgagee's hands one has no priority over the other, he may assign one in such a way as to give it priority over the other subsequently assigned by him. A foreclosure, under a power of sale, of one of two mortgages de- signed to be simultaneous, is not effectual to settle the relative rights of the purchaser and the holder of the other mortgage, a bill in equity being necessary to determine them and to marshal the assets. To effect this a sale is necessary, unless one of the parties take up the other's mortgage. ^° § 536. Simultaneous mortgages of which one is for purchase- money. — If a purchaser of land, at the instant of receiving his deed, executes and delivers two mortgages of it, one to his grantor to secure a payment of a part of the purchase-money, and the other to a third person, and all the deeds are entered for record at the same moment, the mortgage to his grantor takes precedence. The deed and the mort- gage for the purchase-money are parts of one transaction, and give the purchaser only an instantaneous seisin. Moreover, the deed and mortgages being all delivered at the same time, the several grantees must be considered as knowing all that took place concerning them, and the third person, therefore, as knowing of the mortgage for the purchase-money, to which his own became subject as effectually, by his knowledge of its existence, as it would have been if it had been posterior in time of entry for record.^" A vendor of real estate who records his mortgage at the same in- stant that the deed from him is recorded has no occasion to examine the records for incumbrances created by his vendee upon the property prior to the recording of his deed. If there be delay in recording such deed and mortgage, and the vendee executes another mortgage of the same property to a stranger, and this is recorded before the deed to the vendee and his mortgage for the purchase-money are recorded, the =«Westbrook v. Gleason, 79 N. Y. '"Clark v. Brown, 3 Allen (Mass.) 23; Corning v. Murray, 3 Barb. (N. 509; Heferon v. Flanigan, 37 Mich. Y,) 652; Decker v. Boice, 19 Hun 274; Brasted v. Sutton, 29 N. J. (N. Y.) 152, 83 N. Y. 215. Bq. 513; City Nat. Bank Appeal, »* Decker v. Boice, 19 Hun (N. 91 Pa. St. 163. See also Hassell Y.) 152, 83 N. Y. 215. v. Hassell, 129 Ala. 326, 29 So. 695; '=Van Aken v. Gleason, 34 Mich. Ivy v. Yancey, 129 Mo. 501, 81 S. 477. W. 937. § 537 RECORDING AS AFFECTING PRIORITY 846 recording of the mortgage to such third person is not notice to the vendor, becaiise at that time the deed to the vendee had not been xe- corded.^^ For the same reason, a purchase-money mortgage has precedence of mechanics' liens placed upon a building between the execution of the contract of purchase and the conveyance, although the conveyance and mortgage are made when the building is almost finished.^* But if a purchase-money mortgage and another mortgage be exe- cuted and delivered at the same time, so that they take effect upon the estate at the same instant, and the recording of the purchase- money mortgage is delayed and the other is first recorded, the latter will, in the absence of any notice of the purchase-money mortgage, be held to be superior in right.^^ Where three mortgages are filed for record simultaneously, the question of priority may be determined by parol evidence that the money secured by two of them was to be advanced certainly without conditions, for erection of buildings at all events, while the third was not to become effective unless it became necessary to draw the money upon it to pay interest on the other two, and that the money was not so drawn until after the money had been advanced on the two mort- § 537. English doctrine of tacking. — The English doctrine of tacking incumbrances, or adding to the mortgage debt, arose under a system of titles where there was no registration.*^ It has no appli- cation to registered mortgages in this country, and a mortgage given as security for a particular debt can not be enlarged to cover any ad- • "Boyd V. Mundorf, 30 N. J. Eq. &c. Co. v. Gashe, 56 Ohio St. 273, 545; Losey v. Simpson, 11 N. J. Eq. 46 N. E. 985. 246; Continental L. Soc. v. Wood, == Houston v. Houston, 67 Ind. 276; 168 111. 421, 48 N. B. 221 (quoting Dusenbury v. Hulbert, 2 Thomp. & text). C. (N. Y.) 177. =« Gibbs V, Grant, 29 N. J. Eq. 419; *> Schaeppi v. Glade, 195 111. 62, Paul V. Hoeft, 28 N. J. Eq. 11; Mac- 62 N. E. 874. Intosli V. Thurston, 25 N. J. Eq. ** Tacking in England was abol- 242; Strong v. Van Deursen, 23 N. ished by the Vendor and Purchaser J. Eq. 369; Lamb v. Cannon, 38 N. Act of 1874. The dimensions to J. L. 382. See also Van Loben Sels which the learning on this subject V. Bunnell, 120 Cal. 680, 53 Pac. had grown may be gathered from 266; Hillhouse v. Pratt, 74 Conn, the fact that In Mr. Coventry's edi- 113, 49 Atl. 905; Anglo-American &c. tion of Powell on Mortgages, pub- Bldg. Assn. V. Campbell, 13 App. D. lished in 1822, it occupies one hun- C. 581, 43 L. R. A. 622; Wilson v. dred and twenty-five pages. See Lubke, 176 Mo. 210, 75 S. W. 602, Lloyd v. Attwood, 3 De G. & J. 614, 98 Am. St. 503; New Jersey Bldg. 5 Jur. (N. S.) 1322, 29 L. J. Ch. &c. Assn. V. Bachelor, 45 N. J. Eq. 97, 60 Eng. Ch. 614, 44 Eng. Reprint 600, 35 Atl. 745; Mutual Aid Bldg. 1405; Ex parte Berridge, 7 Jur. 847 EFFECT OF EECOKD DULY MADE § 537 ditional claim, either in respect to redemption or foreclosure.^^ Reg- istered mortgages are payable according to the priority of their rec- ord.*^ It is well settled here that a mortgage given as security for a par- ticular debt, whether present or prospective, can not be enforced for another and different debt.^* Even apart from the question of notice, the doctrine could have no application in states where a mortgage is a mere equitable lien and does not convey a legal title. Another kind of tacking arises when the mortgagee attaches to the mortgage lien other debts not included in the mortgage. This he may do, so far as the mortgagor is concerned, when an express or implied agreement exists allowing him to do so; but he can not tack other debts to his mortgage as against intervening mortgagees and judgment creditors.*^ 1141, 3 Mont. D. & De G. 464. See also Frere v. Moore, 8 Price 475, 22 Rev. Rep. 759. Even under the English doctrine the first mortgagee must have no notice of the second lien. Toulmin v. Steere, 3 Meriv. 210, 17 Rev. Rep. 67, 86 Eng. Re- print 81. "Parmer v. Parmer, 74 Ala. 285; Cohn V. Hoffman, 56 Ark. 119, 19 S. "W. 233; Chase v. McDonald, 7 Harr. & J. (Md.) 160; Wing v. Mc- Dowell, Walk. (Mich.) 175; Bacon V. Cottrell, 13 Minn. 194; White v. Rovall, 121 App. Div. 12, 105 N. Y. S. 624; James v. Morey, 2 Cow. (N. Y.) 246, 14 Am. Dec. 475; Bur- net T. Denniston, 5 Johns. Ch. (N. Y.) 35; Borrow v. Kelly, 1 Dall. (Pa.) 142, 1 L. ed. 73; Siter v. Mc- Clanachan, 2 Grat. (Va.) 280. See ante § 360. "Parrell v. Lewis, 56 Conn. 280, 14 Atl. 931; Osborn v. Carr, 12 Conn. 195; Averill v. Guthrie, 8 Dana (Ky.) 82; Equitable Securities Co. V. Talbert, 49 La. Ann. 1393, 22 So. 762; Loring v. Cooke, 3 Pick. (Mass.) 48; Wing v. McDowell, Walk. (Mich.) 175; Grant v. United States Bank, 1 Caines' Cas. (N. Y.) 112; Brazee v. Lancaster Bank, 14 Ohio 318; Anderson v. Neff, 11 Serg. & R. (Pa.) 208; Chandler v. Dyer, 37 Vt. 345; Siter v. McClanachan, 2 Grat. (Va.) 280. It is prohibited by statute in Georgia. Code 1911, § 3265. See ante §§ 357, 360, and post § 1082. "In re Shevill, 11 Fed. 858; Bald- win v. Raplee, 2 Fed. Cas. No. 801, 4 Ben. 433; Morris v. Alston, 92 Ala. 502, 9 So. 315; Ross v. Hodges, 108 Ark 270, 157 S. W. 391; Butler v. Adler-Goldman Commission Co., 62 Ark. 445, 35 S. W. 1110; Neumann V. Moretti, 146 Cal. 25, 79 Pac. 510; Lewter v. Price, 25 Fla. 574, 6 So. 439; Fleming v. Georgia Railroad Bank, 120 Ga. 1023, 48 S. B. 420; Stone V. Palmer, 68 111. App. 338; Des Moines Sav. Bank v. Kennedy, 142 Iowa 272, 120 N. W. 742; Scha- del V. St. Martin, 11 La. Ann. 175; Heyhurst v. Morin, 105 Maine 169, 71 Atl. 707; Harris v. Hooper, 50 Md. 537; Woodin v. Sparta Furni- ture Co., 59 Mich. 58, 26 N. W. 504; Parkes v. Parker, 57 Mich. 57, 23 N. W. 458; Lambertville Nat. Bank V. McCready Bag &c. Co. (N. J. Eq.), 15 Atl. 388, 1 L. R. A. 334; White V. Rovall, 121 App. Div. 12, 105 N. Y. S. 624; Powell v. Harrison, 88 App. Div. 228, 85 N. Y. S. 452; Nor- ris V. W. C. Belcher Land Mtg. Co., 98 Tex. 176, 82 S. W. 500, 83 S. W. 799; Beardsley v. Tuttle, 11 Wis. 74. "Orvis V. Newell, 17 Conn. 97; Hughes V. Worley, 1 Bibb. (Ky.) 200; Averill v. Guthrie, 8 Dana (Ky.) 82; Chase v. M'Donald, 7 Har. & J. (Md.) 160; Towner v. Wells, 8 Ohio 136; Siter v. McClanachan, 2 Grat. (Va.) 280; Colquhoun v. Atkinsons, 6 Munf. (Va.) 550. 537a EECOEDING AS AFFECTING PEIOHITY 848 § 537a. Origin and adoption of Torrens System. — In several states, including California, Colorado, Illinois, Massachusetts, Minnesota, New York, Oregon and Washington, there now exist statutory pro- visions for a system of judicial registration of land titles commonly known as the Torrens system.^ The system was formulated by Sir Eobert Torrens, an Irish emigrant to Australia, where the system was first adopted in 1857. The same general plan of registration has been in use in parts of Europe for centuries, and there is nothing new about the fundamental principles involved f but the statutes have been discussed as most radical in their operation, and frequently attacked as unconstitutional.^ The effect of such registration is to make a cer- tificate of title, issued by the official designated in the statute, con- elusive as to the character of the title of the person to whom it is is- sued, and as to all the rights, liens and incumbrances of other persons. ^California (adopted 1897), Rob- inson v. Kerrigan, 151 Gal. 40, 90 Pac. 129, 121 Am. St. 90. Colorado (adopted 1903), People v. Crissman, 41 Colo. 450, 92 Pac. 949. Illinois (enacted in 1895 and 1897), People v. Simon, 176 111. 165, 52 N. E. 910, 44 L. R. A. 801, 68 Am. St. 175. See also Peters v. Dicus, 254 111. 379, 98 N. E. 560. Massachusetts (adopt- ed 1898), McQuesten v. Common- wealth, 198 Mass. 172, 83 N. B. 1037; Tyler v. Judges of Court of Registration, 175 Mass. 71, 55 N. E. 812, 51 L. R. A. 433; Battelle v. New York, N. H. &c. R. Co., 211 Mass. 442, 97 N. E. 1004; Baxter V. Bickford, 201 Mass. 495, 88 N. E. 7. Minnesota (adopted 1901), Baart v. Martin, 99 Minn. 197, 108 N. W. 945, 116 Am. St. 394; Peters V. Duluth, 119 Minn. 96, 137 N. "W. 390; Kuby v. Ryder, 114 Minn. 217, 130 N. W. 1100; Hendricks v. Hess, 112 Minn. 252, 127 N. W. 995; Doyle V. Wagner, 108 Minn. 443, 122 N. W. 316; State v. Westfall, 85 Minn. 437, 89 N. W. 175, 57 L. R. A. 297, 89 Am. St. 571. The New York stat- ute, adopted in 1908, embodies the essential features of the other Tor- rens laws, but contains certain pro- visions peculiar to itself. See 8 Co- lumbia L. Rev. 438, article by Al- fred Reeves. Oregon (adopted 1901). See Lewis v. Chamberlain, 61 Ore. 150, 121 Pac. 430. Washing- ton (adopted 1907). See Reming- ton's Code 1910, §§ 8806-8905.- The system was adopted in Hawaii and the Philippines in 1903. See 41 American Law Review 751, report of attorney-general concerning court of land registration. See also In re Building &c. Assn., 13 Philippine 575; De Aldecoa v. Government, 13 Philippine 159. See generally Brew- ster on Conveyancing, ch. xxix, § 432, et seq.; 14 Bench & Bar 1, edi- torial; Niblack on the Torrens Sys- tem. " Land Transfer by Registration of Title in Germany and Austria- Hungary, Am. Law Rev., Vol. 31, p. 827. = See post § 537b. 849 TOEKENS SYSTEM § 537b in connection with the title.* Considering the objections to the pro- posed system, the chief justice of South Australia demurred to it as "both unwise and impracticable/' but in 1857 it was adopted in that colony and has since been adopted throughout Australia, where its popularity has brought most of the land of Australia under the law. Xew Zealand and several Canadian provinces then adopted the sys- tem, and England finally followed the colonies.^ § 537b. Constitutionality of statutes. — In the United States, the original Illinois statute of 1895 was declared unconstitutional, on the ground that it conferred judicial powers upon registrars and exam- iners of title ;° but the subsequent Illinois statute of 1897 was upheld as constitutional.'' The Ohio statute of 1896 was declared unconsti- tutional and repealed;* but the statutes in other jurisdictions have generally been sustained by the courts.' The constitutional objections most generally urged, but usually without success, against the statutes have been that they deprive persons of their property without due process of law,^" that they deny equal protection of the laws,^^ that they confuse judi- « See post § 537c. " Similar acts were adopted in 1861 by Queensland; in 1862 by New South Wales, Victoria and Tas- mania; in 1870 by New Zealand; in 1874 by Western Australia; and in 1876 by Fiji. 8 Columbia L. Rev. 438. The Canadian Act is discussed in 29 Can. L. T. 695, article by A. McLeod. McKillop v. Alexander, 45 Can. Sup. Ct. 551, 4 Sask. L. R. Ill; 38 and 39 Vict, ch. 87, 1875; 60 and 61 Vict, ch. 65, 1897. "People V. Chase, 165 111. 527, 46 N. E. 454, 36 L. R. A. 105. 'People V. Simon, 176 111. 165, 52 N. E. 910, 68 Am. St 175, 44 L. R. A. 801. » State V. Guilbert 56 Ohio St 575, 47 N. E. 551, 38 L. R. A. 519, 60 Am. St 756; 65 Cent L. J. 449, article by W. F. Meier; 8 Columbia L. Rev. 438. 'Robinson v. Kerrigan, 151 Cal. 40, 90 Pac. 129, 121 Am. St 90; People v. Crissman, 41 Colo. 450, 92 Pac. 949. In 1898 the system was adopted in Massachusetts and up- held by a divided court. Tyler v. Judges of Court of Registration, 175 Mass. 71, 55 N. E. 812, 51 L. R. A. 433. See also Tyler v. Judges of 54 — ^JoNES Mtg. — Vol. I. Court of Registration, 179 TI. S. 405, 45 L. ed. 252, 21 Sup. Ct 206; Lancy v. Snow, 180 Mass. 411, 62 N. E. 735; In re Welsh, 175 Mass. 68, 55 N. E. 1043. The Minnesota act of 1901 was also declared constitu- tional. State V. Westfall, 85 Minn. 437, 89 N. W. 175, 57 L. R. A. 297, 89 Am. St 571; Dewey v. Kimball, 89 Minn. 454, 95 N. W. 317, 895, 96 N. W. 704; Reed v. Carlson, 89 Minn. 417, 95 N. W. 303. "■Robinson v. Kerrigan, 151 Cal. 40, 90 Pac. 129, 121 Am. St 90; People V. Crissman, 41 Colo. 450, 92 Pac. 949; People v. Simon, 176 111. 165, 52 N. E. 910, 44 L. R. A. 801, 68 Am. St 175; Tyler v. Judges of Court of Registration, 175 Mass. 71, 55 N. B. 812, 51 L. R. A. 433; State V. Westfall, 85 Minn. 437, 89 N. W. 175, 89 Am. St 571, 57 L. R. A. 297. "Robinson v. Kerrigan, 151 Cal. 40, 90 Pac. 129, 121 Am. St 90; People V. Crissman, 41 Colo. 450, 92 Pac. 949. See also Jackson v. Glos, 249 111. 388, 94 N. E. 502; Culver V. Walters, 248 111. 163, 93 N. E. 747. The provision for receiving in evidence abstracts made in the or- dinary course of business has re- cently been held constitutional. § 537c EECOHDINQ AS AFFECTING PRIORITY 850 eial and administrative and executive functions, and delegate ju- dicial powers to ministerial officers such as registrars, recorders, and examiners of title,^^ that they are special legislation,^* that they pro- vide for new county officers not chosen by election or appointment under the constitution,^* and that their enactment under vote by coun- ties is a delegation of legislative power.^' Further objections have been urged that the statutes make no provision for notice before reg- istration of transfers after the initial registration,'^" and that no ac- tion to recover the land can be maintained after sixty days.''' The ob- jection to the provision for an indemnity fund was sustained among other objections rendering the Ohio statute unconstitutional.'^* Under our constitution, too close adherence to the foreign statutes seems detrimental, and both the Ohio and Illinois acts were declared uncon- stitutional because the Australian model was followed too closely.'" Many of the constitutional objections have been met in framing the later statutes and others have been surmounted by the courts in sus- taining them. § 537c. General principles of registration. — The details of Ameri- can statutes vary, but the underlying principles are the same. The distinguishing feature of the Torrens system is the registration of the title itself, instead of the evidence of title.^" It provides not merely Brooke v. Glos, 243 111. 392, 90 N. been urged that examiners were to E. 751, 134 Am. St. 374, construing be appointed instead of elected, and Kurd's Rev. Stat. 1908, ch. 30, § 61. that such appointment was by the "Robinson v. Kerrigan, 151 Cal. court. State v. Westtall, 85 Minn. 40, 90 Pac. 129, 121 Am. St. 90; 437, 89 N. W. 175, 57 L. R. A. 297, People v. Crissman, 41 Colo. 450, 92 89 Am. St. 571. Pac. 949; People v. Simon, 176 111. "People v. Simon, 176 111. 165, 52 165, 52 N. E. 910, 44 L. R. A. 801, N. E. 910, 44 L. R. A. 801, 68 Am. 68 Am. St. 175; Tyler v. Judges of St. 175. Court of Registration, 175 Mass. 71, " Tyler v. Judges of Court of Reg- 55 N. E. 812, 51 L. R. A. 433; State Istration, 175 Mass. 71, 55 N. E. V. Westfall, 85 Minn. 437, 89 N. "W. 812, 51 L. R. A. 433. 175, 57 Li. R. a. 297, 89 Am. St. "State v. Westfall, 85 Minn. 437, 571. 89 N. "W. 175, 57 L. R. A. 297, 89 "Robinson v. Kerrigan, 151 Cal. Am. St. 571. 40, 90 Pac. 129, 121 Am. St. 90; "State v. Guilbert, 56 Ohio St. Milhalik v. Glos, 247 111. 597, 93 N. 575, 47 N. B. 551, 38 L. R. A. 519, E. 372; People v. Simon, 176 111. 60 Am. St. 756. 165, 52 N. E. 910, 44 L. R. A. 801, "People v. Chase, 165 111. 527, 46 68 Am. St. 175; National Bond &c. N. E. 454, 36 L. R. A. 105; State Co. v. Hopkins, 96 Minn. 119, 104 v. Guilbert, 56 Ohio St. 575, 47 N. N. W. 678, 816. See also State v. E. 551, 38 L. R. A. 519, 60 Am. St. Westfall, 85 Minn. 437, 89 N. W. 756. 175, 57 K R. A. 297, 89 Am. St. ^'' State v. Westfall, 85 Minn. 437, 571. 89 N. W. 175, 57 L. R. A. 297, 89 " People v. Crissman, 41 Colo. 450, Am. St. 571. 92 Pac. 949. The objection has also 851 TOERENS SYSTEM § 537d for the recording of deeds or instruments affecting the title; but for an official registration, under which the title to the land passes by entry of the transfer, and not by the execution and delivery of the deed. It is intended that the register shall show the exact condition of the title to real property upon a single page or folio, and all deal- ings with the land must be entered thereon. The objects of the system are the creation of an indefeasible title in the registered owner, simplification in the transfer of land, cer- tainty and facility in the proof of title by reference to a certificate is- sued by a government official, made conclusive by law, and finally the saving to the community of the cost of a new examination of title in connection with each transfer or transaction affecting the land. Eegistration under the Torrens system is a purely voluntary act on the part of the applicant,^^ and he may withdraw his application at any time before the final decree.^^ A formal document called a cer- tificate of title, is issued after a judicial proceeding in the nature of a suit to quiet title and all subsequent transactions affecting the title are noted on this certificate, or on a new one substituted therefor. § 537d. Procedure for registration. — In order to meet the consti- tutional requirement of due process of law and to establish a start- ing point binding upon all the world, the initial registration of title, upon which the certificate is issued, must be the result of judicial pro- ceedings.^^ There must be notice to all having interests adverse to those of the applicant for registration ; and only judicial officers may exercise judicial functions, whether as to the initial registration or subsequent transactions concerning the title. The statutes usually provide all details of procedure for registration.^* Ordinarily the first step under the acts is a written application for =* Tyler v. Judges of Court of Reg- 68 Am. St. 175; McQuesten v. Com- istration, 175 Mass. 71, 55 N. E. 812, monwealth, 198 Mass. 172, 83 N. E. 51 L. R. A. 433. 1037; Tyler v. Judges of Court of '^Foss V. Atkins, 204 Mass. 337, Registration, 175 Mass. 71, 55 N. B. 90 N. E. 578; McQuesten v. Com- 812, 51 L. R. A. 433; Kuby v. Ry- monwealth, 198 Mass. 172, 83 N. E. der, 114 Minn. 217, 130 N. W. 1100; 1037 State v. Westfall, 85 Minn. 437, 89 " State V. "Westfall, 85 Minn. 437, N. "W. 175, 57 L. R. A. 297, 89 Am. 89 N. W. 175, 57 L. R. A. 297, 89 St. 571. See Smith v. Martin, 69 Am. St. 571. But see Loewenstein Misc. 108, 124 N. Y. S. 1064; Flores V. Page, 16 Philippine 84. v. Director, 17 Philippine 512; « Robinson v. Kerrigan, 151 Cal. Aguillon v. Director, 17 Philippine 40, 90 Pac. 129, 121 Am. St. 90; 506. See also Beers Torrens Sys- People V. Crissman, 41 Colo. 450, 92 tem, §§ 52-63; 65 Cent. L. J. 449, Pac. 949; People v. Simon, 176 111. article by "W. F. Neier; 8 Columbia 165, 52 N. E. 910, 44 L. R. A. 801, L. Rev. 438; 14 Bench & Bar 1. § 537d EECOEDING AS ArFECTING PEIOKITT 852 registration by the person claiming ownership of the land in fee sim- ple, fully describing the land and showing the source of title and the existence of adverse claims, liens and incumbrances.^^ The applica- tion is signed and sworn to by the applicant and addressed to the court having jurisdiction under the statute. Upon the filing of the application it is referred to the official exam- iners of title who make a thorough examination and report to the court.''* Under the Massachusettb statute the examiner deals with the application, merely as a conveyancer at common law examining a title ;^^ but under the Illinois statute the examiner is analogous to a master in chancery.^* The ordinary rules of evidence and objection thereto, apply.^" Ex parte examinations of abstracts are improper.^" Objections to the report of the examiner, in the nature of a special de- murrer may be filed, and should specify the grounds therefor with clearness and certainty.''^ The court, however, may require further proof to determine the rights of the parties, and is not bound by the opinion of the examiner.^^ ""Robinson v. Kerrigan, 151 Cal. 40, 90 Pac. 129, 121 Am. St. 90; People v. Crissman, 41 Colo. 450, 92 Pac. 949; Tyler v. Judges of Court of Registration, 175 Mass. 71, 55 N. E. 812, 51 L. R. A. 433; Baart v. Martin, 99 Minn. 197, 108 N. W. 945, 116 Am. St. 394; State v.Westfall, 85 Minn. 437, 89 N. W. 175, 57 L. R. A. 297, 89 Am. St. 571; Lachman V. People, 127 N. Y. S. 912; Duffy v. Shirden, 139 App. Div. 755, 124 N. Y, S. 529. Several lots of land in- cluded in one application must be contiguous or be related by chain of title. Culver v. Waters, 248 111. 163, 93 N. B. 747. See Beers Tor- rens System, §§ 41-50. In Illinois the application is addressed to the judges of the circuit court for the county in chancery. In Massachu- setts it is addressed to the judge of the court of land registration, a court specially constituted by the registration act with exclusive orig- inal jurisdiction of such applica- tions. In Colorado and Minnesota it is made to the district court of the county in which the land is sit- uated. '" People V. Crissman, 41 Colo. 450, 92 Pac. 949; Glos v. Holberg, 220 111. 167, 77 N. E. 80; McQuesten V. Commonwealth, 198 Mass. 172, 83 N. B. 1037; Tyler v. Judges of Court of Registration, 175 Mass. 71, 55 N. B. 812, 51 L. R. A. 433; Dewey V. Kimball, 89 Minn. 454, 95 N. W. 317, 895, 96 N. W. 704; State v. Westfall, 85 Minn. 437, 89 N. W. 175, 57 L. R. A. 297, 89 Am. St. 571. See Mundt v. Glos, 246 111. 636, 93 N. B. 49; Lachman v. People, 127 N. Y. S. 912. See also McMahon v. Rowley, 238 111. 31, 87 N. B. 66; Tor- rens System § 23. " McQuesten v. Commonwealth, 198 Mass. 172, 82 N. E. 1037. ^Glos V. Holberg, 220 111. 167, 77 N. E. 80; Gage v. Consumers' Elec- tric Light Co., 194 111. 30, 64 N. E. 653. =»Glos T. Grant Bldg. &c. Assn., 229 111. 387, 82 N. E. 304; Glos v. Holberg, 220 111. 167, 77 N. E. 80; Glos v. Cessna, 207 111. 69, 69 N. E. 634. '"Glos T. Grant Bldg. &c. Assn., 229 111. 387, 82 N. B. 304; Glos v. Holberg, 220 111. 167, 77 N. E. 80. ^'Glos V. Hoban, 212 111. 222, 72 N. E. 1. " People V. Crissman, 41 Colo. 450, 92 Pac. 949; Duffy v. Shirden, 139 853 TOEEENS SYSTEM 537f § 537e. Notice and hearing — Incumbrances on title. — The next step is the service of personal process, or notice by publication, upon all parties interested in the property,^^ and any one claiming an in- terest in or lien upon the property may appear and answer,^* whether named in the summons or not.^° All persons known to claim an in- terest or lien upon the property must be made defendants,^" but per- sons unknown who have such interest may be included under a gen- eral designation.^' After due notice to all parties, the court orders and determines all transfers in regard to the property,^* and the existence and validity of all claims, liens and mortgages.^' The court may determine the existence and priority of conflicting liens, but a lien can not be fore- closed in a proceeding to register title.*" § 537f. Decree and certificate of title and incumbrances. — If the applicant for registration establishes a title entitled to registration, a decree is entered to that effect and the claims of defendants are set aside as mere clouds upon his title.* ^ If the applicant fails to prove App. Div. 755, 124 N. Y. S. 529. See also Lachman v. People, 127 N. Y. S. 912. ■"Robinson v. Kerrigan, 151 Cal. 40, 90 Pac. 129, 121 Am. St. 90; People v. Crissman, 41 Colo. 450, 92 Pac. 949; Tyler v. Judges of Court of Registration, 175 Mass. 71, 55 N. E. 812, 51 L. R. A. 433; Baart v. Martin, 99 Minn. 197, 108 N. W. 945, 116 Am. St. 394; Dewey v. Kimball, 89 Minn. 454, 95 N. W. 317, 895, 96 N. W. 704; Reed v. Siddall, 89 Minn. 417, 95 N. W. 303; State v. West- fall, 85 Minn. 437, 89 N. W. 175, 57 L. R. A. 297, 89 Am. St. 571; Lach- man v. People, 127 N. Y. S. 912. See also Alba v. De la Cruz, 17 Philippine 49; Escueta v. Director, 16 Pbilipplne 482. '"People V. Crissman, 41 Colo. 450, 92 Pac. 949; State v. Westfall, 85 Minn. 437, 89 N. W. 175, 57 L. R. A. 297, 89 Am. St. 571; Sunder- mann v. People, 148 App. Div. 124, 132 N. Y. S. 68; Hawes v. United States Trust Co., 142 App. Div. 789, 127 N. Y. S. 632. See Smith v. Mar- tin, 142 App. Div. 60, 126 N. Y. S. 877. '' People T. Crissman, 41 Colo. 450, 92 Pac. 949; Sunderman v. People, 130 N. Y. S. 453; Hawes v. United States Trust Co., 142 App. Div. 789, 127 N. Y. S. 632. »» Baart v. Martin, 99 Minn. 197, 108 N. W. 945, 116 Am. St. 394; Dewey v. Kimball, 89 Minn. 454, 95 N. W. 317, 895, 96 N. W. 704; Sun- derman V. People, 148 App. Div. 124, 132 N. Y. S. 68; Hawes v. United States Trust Co., 142 App. Div. 789, 127 N. Y. S. 632; Duffy v. Shirden, 139 App. Div. 755, 124 N. Y. S. 529. »' People T. Crissman, 41 Colo. 450, 92 Pac. 949; People v. Simon, 176 111. 165, 52 N. E. 910, 44 L. R. A. 801, 68 Am. St. 175; State v. Westfall, 85 Minn. 437, 89 N. W. 175, 57 L. R. A. 297, 89 Am. St. 571. 'SReed v. Siddall, 94 Minn. 216, 102 N. W. 453; Barkenthien v. Peo- ple, 136 N. Y. S. 178; Crabbe v. Hardy, 77 Misc. 1, 135 N. Y. S. 119. See also Peters v. Dicus, 254 111. 379, 98 N. E. 560; Woodvine v. Dean, 194 Mass. 40, 79 N. E. 882. "• First Nat. Bank v. Woburn, 192 Mass. 220, 78 N. E. 307; Reed v. Siddall, 94 Minn. 216, 102 N. W. 453. "Reed v. Siddall, 94 Minn. 216, 102 N. W. 453. "See Glos v. Kingman, 207 111. 26, 69 N. E. 632; Smith v. Martin, 142 App. Div. 60, 126 N. Y. S. 877. 537f EECOKDING AS AFFECTING PRIORITY 854 a title, entitled to registration, the proceedings are dismissed and no decree is entered against the adverse claimants.*^ The statutes usually provide for an appeal from the decree, as in other civil actions,*^ and only questions raised by objection or excep- tion before the examiner or the lower court can be urged on appeal.** In Massachusetts the appeal is taken from the land court to the su- perior court with the right to claim a jury, or to the supreme judicial court upon questions of law.*' When the decree for registration has been entered and the record duly made, the certificate is issued, completing the registry,** and al- though the original registration was voluntary, the proceedings for registration constitute an agreement running with the land that it shall remain registered land subject to the provisions of the statute.*^ The certificate of title is conclusive that no outstanding interests or incumbrances exist in other persons, with certain exceptions speci- fied in the statute, such as liens for taxes, short term leases and cer- tain easements, ascertainable by inspection of the premises.** All other existing liens and incumbrances, equitable or statutory, are ■"Glos T. Cessna, 207 111. 69, 69 N. E. 634; Glos T. Kingman, 207 111. 26, 69 N. E. 632; Magsocay v. Fernando, 17 Philippine 120. ■"Robinson v. Kerrigan, 151 Cal. 40, 90 Pac. 129, 121 Am. St. 90; Luce v. Parsons, 192 Mass. 8, 77 N. B. 1032 ; Peters v. Duluth, 119 Minn. 96, 137 N. W. 390; Baart v. Martin, 99 Minn. 197, 108 N. W. 945, 116 Am. St. 394; State v. Westfall, 85 Minn. 437, 89 N. W. 175. 57 L. R. A. 297, 89 Am. St. 571; People v. O'Lough- lin, 136 N. y. S. 339; Lewis v. Chamberlain, 61 Ore. 150, 121 Pac. 430 (prayer for appeal must be at time of decree). See also Glos v. Hoban, 212 111. 222, 72 N. B. 1; Boss v. Atkins, 201 Mass. 158, 87 N. E. 189, 204 Mass. 337, 90 N. E. 578; Kurby v. Ryder, 114 Minn. 217, 130 N. W. 1100; Lachmann v. Brook- field, 135 N. Y. S. 261; Beers Tor- rens System, § 65; 14 Bench & Bar 1, editorial. ■"McMahon v. Rowley, 238 111. 31, 87 N. E. 66; Cregar v. Spitzer, 244 111. 208, 91 N. E. 418; Gage v. Con- sumers' Electric Light Co., 194 111. 30, 64 N. B. 653. See also Glos T. Hoban, 212 111. 222, 72 N. E. 1. " Weeks v. Brooks, 205 Mass. 458, 92 N. B. 45 (denial of jury by land court) ; McQuesten v. Common- wealth, 198 Mass. 172, 83 N. B. 1037 ; Luce V. Parsons, 192 Mass. 8, 77 N. E. 1032; Tyler v. Judges of Court of Registration, 175 Mass. 71, 55 N. B. 812, 51 L. R. A. 433. See also Blake v. Rogers, 210 Mass. 588, 97 N. B. 68; Bigelow Carpet Co. v. "Wig- gin, 209 Mass. 542, 95 N. E. 938; Bishop V. Burke, 207 Mass. 133, 93 N. E. 254; Old Colony St. R. Co. v. Thomas, 205 Mass. 529, 91 N. E. 1006; Cohasset v. Moors, 204 Mass. 173, 90 N. E. 978; Welsh v. Briggs, 204 Mass. 540, 90 N. E. 1146; Wood- bine V. Dean, 194 Mass. 40, 79 N. E. 882; Boss v. Atkins, 193 Mass. 486, 79 N. E. 763; First Nat. Bank v. Woburn, 192 Mass. 220, 78 N. B. 307; McQuesten v. Attorney-Gen- eral, 187 Mass. 185, 72 N. E. 965. ^"Robinson v. Kerrigan, 151 Cal. 40, 90 Pac. 129, 121 Am. St. 90. See Cusar V. Government, 13 Philippine 319. *' Tyler v. Judges of Court of Registration, 175 Mass. 71, 55 N. E. 812, 51 L. R. A. 433. « Baart v. Martin, 99 Minn. 197, 855 TOEKENS SYSTEM § 537f noted upon the record and the certificate, and the holder thereof ac- quires an indefeasible title to the property/" free from all incum- brances except those so noted.°° "Where a mortgage for purchase-money was lost by a failure of the court, in registering land under the Torrens act, to note it in the de- cree, and a new mortgage was duly executed and registered upon dis- covery of the mistake, the new mortgage was held to be a prior lien to that of an unregistered mortgage executed prior to the renewal mortgage, but subsequent to the original purchase-money mortgage. In such case the new mortgage was not considered an ordinary mort- gage given to secure an antecedent debt, but was entitled to greater Consideration in equity, as relating back to the original mortgage.^^ The statutes usually provide a short period within which persons having an adverse claim or lien upon the property, who were not served with process, may come in and assert their claims,^ ^ and con- tain special exceptions in regard to fraud."^ An assignment or dis- charge of the mortgage is also noted in the certificate and registra- tion book. Subsequent mortgages are also required to be noted upon the cer- tificate and record, generally by filing with the registrar a copy of the proceedings or instrument upon which the lien is based."** In case of a subsequent mortgage on the land, the statutes sometimes provide for a duplicate certificate of title to be issued to the mortgagee, a memorandum thereof being noted on the original certificate in the registration book; while some times the mortgage itself is given to the mortgagee, a duplicate being held by the registrar for notation in the registration book. In a case where the duplicate "certificate of registration was wrong- 108 N. W. 945, 116 Am. St. 394; "Brace v. Superior Land Co., 65 Beers Torrens System, §§ 27, 28. Wash. 681, 118 Pac. 910. See also 8 Columbia L. Rev. 438. "Robinson v. Kerrigan, 151 Cal. « Robinson v. Kerrigan, 151 Cal. 40, 90 Pac. 129, 121 Am. St. 90; 40, 90 Pac. 129, 121 Am. St. 90; Baart v. Martin, 99 Minn. 197, 108 State V. Westfall, 85 Minn. 437, 89 N. W. 945, 116 Am. St. 394; Reed N. W. 175, 57 L. R. A. 297, 89 Am. v. Siddall, 89 Minn. 417, 95 N. W. St. 571. See Hawes v. Clark, 136 N. 303. See also Doyle v. Wagner, 108 Y. S. 188. Minn. 443, 122 N. W. 316; Beers ™ Robinson v. Kerrigan, 151 Cal. Torrens System, § 65; 65 Cent. L. 40, 90 Pac. 129, 121 Am. St. 90; J. 449. State V. Westfall, 85 Minn. 437, 89 '=' Baart v. Martin, 99 Minn. 197, N. W. 175, 57 L. R. A. 297, 89 Am. 108 N. W. 945, 116 Am. St. 394 (ex- St. 571. See also Boyle v. Wagner, ception in case of fraud implied in 108 Minn. 443, 122 N. W. 316; 65 equity); 8 Columbia L. Rev. 438. Cent. L. J. 449, article by W. F. "Buzon v. Licauco, 13 Philippine Neier. 354; 8 Columbia L. Rev. 438. § 537f EECOEDING AS AFFECTING PRIORITY 856 fully obtained by the owner of the land from the holder of an unreg- istered mortgage, and used in procuring registration of a later mort- gage, it was held that it did not affect the rights of the mortgagee under the later mortgage, where the latter had no knowledge of the fact or of any claim in the certificate by the holder of the unregistered mortgage. ^° Where a conveyance is executed, a new certificate is generally issued to the grantee,^* the deed being considered merely as a contract be- tween the parties ■ conferring authority for the transfer of the regis- tered title to the grantee.^^ An indemnity fund provided by the statutes is raised by a fee for registration based upon the assessed value of the property,^' and set aside for compensation of parties having an interest or lien against the property, whose rights have been cut off by the decree without their fault.^" "'Brace v. Superior Land Co., 65 Am. St. 571; Beers Torrens System, Wash. 681, 118 Pac. 910. § 89. "' Robinson v. Kerrigan, 151 Cal. " People v. Simon, 176 111. 165, 52 40, 90 Pac. 129, 121 Am. St. 90; N. E. 910, 44 L. R. A. 801, 68 Am. State V. Westfall, 85 Minn. 437, 89 St. 175; State v. Westfall, 85 Minn. N. W. 175, 57 L. R. A. 297, 89 Am. 437, 89 N. W. 175, 57 L. R. A. 297, St. 571; 65 Cent. L. J. 449. See 89 Am. St. 571; 43 Am. L. Rev. 97, Buzon V. Llcauco, 13 Philippine 354. article by Richard W. Hale; 14 "65 Cent. L. J. 449. See Buzon Bench & Bar 1, editorial; 65 Cent. V. Licauco, 13 Philippine 354. L. J. 449; 8 Columbia L. Rev. 438; ™ State V. Westfall, 85 Minn. 437, Beers Torrens System, §§ 8, 9, 89-93. 89 N. W. 175, 57 L. R. A. 297, 89 CHAPTEE XIII NOTICE AS AFFECTING PEIOEITT I. Notice as Affecting Priority under the Registry Acts, §§ 538-643 II. Actual Notice, §§ 543-559 III. Implied Notice, §§ 560-570 IV. Constructive Notice, §§ 571-582 V. Lis Pendens, §§ 583-585 VI. Possession as Notice, §§ 586-601 VII. Fraud as Affecting Priority, §§ 602-603 VIII. Negligence and Miscellaneous Matters Affecting Priority, §§ 60^609 I. Notice as Affecting Priority under the Registry Acts Section Section 538. General doctrine of notice in 540. Record of subsequent convey- XJnited States. ances ■with notice. 539. Contrary doctrine in Arkansas, 541. Examination of records for in- Louislana, North. Carolina cumbrances against prior un- and Ohio. recorded conveyances. 542. Notice of a secret trust. § 538. General doctrine of notice in United States. — The doctrine of notice as affecting priority is generally adopted in this country. Subsequent purchasers, who have notice of a prior unrecorded mort- gage, are affected by their knowledge of it in the same way that the prior record of the mortgage would affect them.^ A mortgagee who has ^Lord V. Doyle, 15 Fed. Cas. No. E. 342; Mtna. L. Ins. Co. v. Ford, 8505, 1 Cliff. (U. S.) 453; Wyatt 89 111. 252; Erickson v. RafEerty, 79 V. Stewart, 34 Ala. 716; Bearing v. 111. 209; Willis v. Henderson, 5 111. Watkins, 16 Ala. 20; San Luis Obis- 13, 38 Am. Dec. 120; Aurora Nat. po County Bank v. Pox, 119 Cal. 61, Loan Assn. v. Spencer, 81 111. App. 51 Pac. 11; May v. Borel, 12 Cal. 622; Mann v. State, 116 Ind. 383, 19 91; Hartford &c. Transp. Co. v. N. E. 181; Jones v. Bamford, 21 First Nat. Bank, 46 Conn. 569; Iowa 217; Bell v. Thomas, 2 Iowa Mead v. New York &c. R. Co., 45 384; Foster Lumber Co. v. Harlan Conn. 199; Hamilton v. Nutt, 34 County Bank, 71 Kans. 158, 80 Pac. Conn. 501; Thompson v. Maxwell, 49, 114 Am. St. 470; Short v. Fogle, 16 Pla. 773; English v. Lindley, 194 42 Kans. 349, 22 Pac. 323; King v. 111. 181, 62 N. E. 522 (burden of Huni, 118 Ky. 450, 81 S. W. 254, 25 proving notice); Interstate Bldg. Ky. L. 2266, 85 S. W. 723; Flowers &c. Assn. V. Ayres, 177 111. 9, 52 N. v. Moorman, 27 Ky. L. 728, 86 S. W. 857 NOTICE AS ArrECTIXG PEIOEITT 858 actual knowledge or legal notice of a prior conveyance, mortgage, or other lien on the premises, takes subject thereto, and is not protected as a bona fide purchaser.^ Thus a subsequent mortgagee, who has 545; Copeland v. Copeland, 28 Maine 525; Ohio L. Ins. &c. Co. v. Ross, 2 Md. Ch. 25; Livingstone v. Murphy, 187 Mass. 315, 72 N. B. 1012, 105 Am. St. 400; Boxheimer V. Gunn, 24 Mich. 372; Fitzhugh v. Barnard, 12 Mich. 104; Seiberling V. Tipton, 113 Mo. '373, 21 S. W. 4; Knox County v. Brown, 103 Mo. 223, 15 S. W. 382; Whitman v. Taylor, 60 Mo. 127; Beatie v. Butler, 21 Mo. 313, 64 Am. Dec. 234; Chancellor v. Bell, 45 N. J. Eq. 538, 17 Atl. 684; Conover v. Von Mater, 18 N. J. Eq. 481; Smallwood v. Lewin, 15 N. J. Eq. 60; Hendrickson v. Woolley, 39 N. J. L. 307; McPherson v. Rollins, 107 N. Y. 316, 14 N. E. 411, 1 Am. St. 826; Farmers' L. &c. Co. v. Wal- worth, 1 N. Y. 433; Butler v. Viele, 44 Barb. (N. Y.) 166; Stoddard v. Rotton, 5 Bosw. (N. Y.) 378; Jack- son V. Van Valkenburgh, 8 Cow. (N. Y.) 260; Fort v. Burch, 5 Den. (N. Y.) 187; Frost v. Beekman, 1 Johns. Ch. (N. Y.) 288; Dunham v. Dey, 15 Johns. (N. Y.) 556, 8 Am. Dec. 282; Wiggins v. Campbell, 4 Ohio Dec. (Reprint) 410, 2 Cleve. Law J. 122; Hall v. Donagan, 186 Pa. St. 300, 30 Atl. 493; Solms v. McCul- loch, 5 Pa. St. 473; Stroud v. Lock- art, 4 Dall. (Pa.) 153, 1 L. ed. 779; Hibberd v. Bovier, 1 Grant (Pa.) 266; Barr v. Kinard, 3 Strob. (S. Car.) 73; Martin v. Sale, Bailey Eq. (S. Car.) 1; Parker v. Randolph, 5 S. Dak. 549, 59 N. W. 722, 29 L. R. A. 33; Grotenkemper v. Carver, 9 Lea (Tenn.) 280; Klrkpatrick v. Ward, 5 Lea (Tenn.) 434; Hoffman v. Blume, 64 Tex. 334; Griffin v. Stone River Nat. Bank (Tex. Civ. App.), 80 S. W. 254; Hicks v. Hicks (Tex. Civ. App.), 26 S. W. 227; Buzzell v. Still, 63 Vt. 490, 22 Atl. 619, 25 Am. St. 777; Morrill v. Morrill, 53 Vt. 74, 38 Am. Rep. 659; Rootes V. HoUiday, 6 Munf. (Va.) 251; Reichert v. Neuser, 93 Wis. 513, 67 N. W. 939; Rowell v. Will- lams, 54 Wis. 636, 12 N. W. 86; Mueller v. Brigham, 53 Wis. 173, 10 N. W. 366; Carter v. Carter, 4 Jur. (N. S.) 63, 3 Kay & J. 617, 27 L. J. Ch. 74, 69 Eng. Reprint 1256; Carlisle City &c. Banking Co. v. Thompson, 33 Wkly. Rep. 199; Hiern v. Mill, 13 Ves. Jr. 114, 9 Rev. Rep. 149, 33 Eng. Reprint 1256 (equitable mortgage by deposit of title deeds preferred to subsequent purchase with notice) ; Greaves v. Tofield, 14 Ch. D. 563, 50 L. J. Ch. 118, 43 L. T. Rep. (N. S.) 100, 28 Wkly. Rep. 840; Lee v. Glutton, 46 L. J. Ch. 48, 35 L. T. Rep. (N. S.) 84, 24 Wkly. Rep. 942; Wormald v. Maitland, 35 L. J. Ch. 69, 12 L. T. Rep. (N. S.) 535, 6 New Rep. 218, 13 Wkly. Rep. 832. See also Pan- cake V. Cauftman, 114 Pa. St. 113, 7 Atl. 67; Jones v. Hudson, 23 S. Car. 494; Conner v. Chase, 15 Vt. 764; Bank v. Doherty, 42 Wash. 317, 84 Pac. 872, 4 L. R. A. (N. S.) 1191, 114 Am. St. 123. But see Butler t. Wheeler, 82 Ky. 475, 6 Ky. L. Rep. 477; Building Assn. v. Clark, 43 Ohio St. 427, 2 N. E. 846. In Arkan- sas, Louisiana, North Carolina and Ohio the rule does not apply, and actual notice in lieu of recording is not sufficient to charge subse- quent purchasers and mortgagees. See post § 539. ^German Sav. &c. Soc. v. Tull, 136 Fed. 1, 69 C. C. A. 1; Camp v. Peacock &c. Co., 129 Fed. 1005, 64 C. C. A. 490; Kent v. Williams, 146 Cal. 3, 79 Pac. 527; De Leonis v. Hammel, 1 Cal. App. 390, 82 Pac. 349; Patterson v. De Long, 11 Colo. App. 103, 52 Pac. 687; Norton v. Birge, 35 Conn. 250; Slater v. Ha- macher, 15 App. Cas. (D. C.) 558; Goodwynne v. Bellerby, 116 Ga. 901, 43 S. E. 275; Interstate Bldg. &c. Assn. V. Ayres, 177 111. 9, 52 N. E. 342; Boyd v. Boyd, 128 Iowa 699, 104 N. W. 798, 111 Am. St. 215; Glassburn v. Wireman, 126 Iowa 478, 102 N. W. 421; Heively v. Mat- teson, 54 Iowa 505, 6 N. W. 732; Strong V. Centers (Ky.), 128 S. W. 69 (evidence sufficient as notice); Averill v. Guthrie, 8 Dana (Ky.), 82; Bates v. Frazier, 27 Ky. L. 576, 85 S. W. 757; Gore v. Condon, 82 Md. 649, 33 Atl. 261; McMechen v. 859 UNDEE EEGISTET ACTS § 538 actual or constructive notice of a prior mortgage, will take subject to it.3 A judgment creditor with actual knowledge or notice, takes subject to a prior unrecorded deed or mortgage;* and whatever is sufficient Maggs, 4 Harr. & J. (Md.) 132; Arnold v. Whitcomb, 83 Mich. 19, 46 N. W. 1029; Jackson &c. R. Co. V. Davison, 65 Mich. 437, 37 N. W. 537; Gothainer v. Grigg, 32 N. J. Eq. 567; Olyphant v. Phyfe, 166 N. Y. 630, 60 N. E. 1117; Newton v. McLean, 41 Barb. (N. Y.) 285; King V. Wilcomb, 7 Barb. (N. Y.) 263; Spears v. New York, 10 Hun (N. Y.) 160; Martin v. Eagle Creek Devel- opment Co., 41 Ore. 448, 69 Pac. 216; Babcock v. "Wells, 25 R. I. 23, 54 Atl. 596, 105 Am. St. 848; Kuker v. Jarrott, 61 S. Car. 265, 39 S. E. 530; Messervey v. Barelli, 2 Hill Eq. (S. Car.) 567; Hanrick v. Gurley, 93 Tex. 458, 54 S. W. 347; Spurlock v. Sullivan, 36 Tex. 511; "Wells v. Houston, 23 Tex. Civ. App. 629, 57 S. W. 584; Smith v. Smith, 23 Tex. Civ. App. 304, 55 S. W. 541; Hamp- shire V. Greeves (Tex. Civ. App.), 130 S. "W. 665; Rogers v. Tompkins (Tex. Civ. App.), 87 S. "W. 379; Pat- terson V. Tuttle (Tex. Civ. App.), 27 S. "W. 758; Bank v. Doherty, 42 Wash. 317, 84 Pac. 872, 4 L. R. A. (N. S.) 1191; Scott V. Isaacsen, 56 W. Va. 314, 49 S. E. 254; Lowrey v. Finkleston, 149 "Wis. 222, 134 N. "W. 344; Gall v. Gall, 126 "Wis. 390, 105 N. "W. 953, 5 L. R. A. (N. S.) 603; John V. Larson, 28 "Wis. 604; Eyre V. Dolphin, 2 Ball & B. 290, 12 Rev. Rep. 94; Hennessey v. Bray, 33 Beav. 96, 55 Eng. Reprint 302; De "W'itte V. Addison, 80 L. T. Rep. (N. S.) 207. 'Nelson v. Dunn, 15 Ala. 501; En- nesser v. Hudek, 169 111. 494, 48 N. E. 673; ■ Council Bluffs Lodge v. Billups, 67 Iowa 674, 25 N. "W. 846; Bell v. Thomas, 2 Iowa 384; Mutual Benefit Life Ins. Co. V. Huntington, 57 Kans. 744, 48 Pac. 19; Flowers v. Moorman, 27 Ky. L. 728, 86 S. W. 545; Underwood v. Ogden, 6 B. Mon. (Ky.) 606; "Wat- tles V. Slater, 154 Mich. 666, 118 N. "W. 486; Morris v. "White, 36 N. J. Eq. 324; Conover v. "Van Mater, 18 N. J. Eq. 481; Willink v. Morris Canal Co., 4 N. J. Eq. 377; La Farge Fire Ins. Co. v. Bell, 22 Barb. (N. Y.) 54; Fort v. Burch, 6 Barb. (N. Y.) 60; Jackson r. "Van Valken- burgh, 8 Cow. (N. Y.) 260; Kirk- patrick v. "Ward, 5 Lea (Tenn.) 434; National Mut. Bldg. &c. Assn. v. Blair, 98 Va. 490, 36 S. B. 513; Beverley v. Brooke, 2 Leigh ("Va.) 425; Power v. Standish, 8 Ir. Eq. 526; Rolland v. Hart, L. R. 6 Ch. 678, 40 L. J. Ch. 701, 25 L. T. Rep. (N. S.) 191, 19 "Wkly. Rep. 962; Bradley v. Riches, 9 Ch. Div. 189, 47 L. J. Ch. 811, 38 L. T. Rep. (N. S.) 810, 26 "Wkly. Rep. 910; Punch- ard v. Tomkins, 31 "Wkly. Rep. 286; Evans v. Bicknell, 6 Ves. Jr. 174, 5 Rev. Rep. 245, 31 Eng. Reprint 998. But see McAllister v. Purcell, 124 N. Car. 262, 32 S. E. 715. "Jordan v. Mead, 12 Ala. 247; "Wallis v. Rhea, 10 Ala. 451, 12 Ala. 646; Larkin v. Hagan, 14 Ariz. 63, 126 Pac. 268; Byers v. Engles, 16 Ark. 543; Newhall v. Hatch, 134 Cal. 269, 66 Pac. 266, 55 L. R. A. 673; Columbus Buggy Co. v. Graves, 108 111. 459; "Williams v. Tatnall, 29 111. 553; Sinking Fund Comrs. V. "Wilson, 1 Ind. 356; Fords v. Vance, 17 Iowa 94; Bunker v. Gor- don, 81 Maine 66, 16 Atl. 341; Lam- berton v. Merchants' Nat. Bank, 24 Minn. 281; Bass v. Estill, 50 Miss. 300; Walker v. Gilbert, Freem. Ch. (Miss.) 85; Hutchinson v. Bram- hall, 42 N. J. Eq. 372, 7 Atl. 873; Britton's Appeal, 45 Pa. St. 172; Barnett v. Squyres (Tex. Civ. App.), 52 S. W. 612; Stovall v. Odell, 10 Tex. Civ. App. 169, 30 S. "W. 66. See also Duke v. Clark, 59 Miss. 465 (bona fide assignee of judgment not chargeable with assignor's knowl- edge) ; Hulings v Guthrie, 4 Pa. St. 123; Hibberd v. Bovier, 1 Grant (Pa.) 266. But see "Winston v. Hodges, 102 Ala. 304, 15 So. 528; Coward v. Culver, 12 Helsk. (Tenn.) 540; Lillard v. Rucker, 9 Yerg. (Tenn.) 64; March v. Chambers, 30 Grat. (Va.) 299; Eidson v. Huff, 29 Grat. (Va.) 338. See ante § 466. Creditors whose judgments are re- § 538 NOTICE AS APFECTING PEIOIJITY 860 to charge a purchaser with notice will charge a Judgment creditor.^ According to some authorities, notice to the creditor must be given before judgment, and notice after judgment before levy of execution is insufficient.® The doctrine of notice is the same under statutes which declare without qualification that an unacknowledged or unrecorded deed shall be void as against purchasers, or as against all persons who are not parties to the conveyance/ The record is constructive notice only; but it is notice to all the world that comes after ; and it is conclusively presumed that every person interested has knowledge not only of the deed, but of its precise language.* Any other notice must in the nature of things be limited in its extent, but, so far as it goes, its effect is equitably not any less, certainly, than that of the record. Having no- tice of a mortgage defectively executed or recorded, or not recorded at all, a subsequent purchaser can not claim priority for his own deed.' As between him and the mortgagee, it is the same as if the prior mortgage had been duly recorded.'" Therefore priority among mortgagees and grantees depends not only upon the date of their deeds and the date of their record, but also upon the knowledge they have of the true state of the facts as to the title, and of the rights and covered after notice of a recorded Stark v. Kirkley, 129 Mo. App. 353, deed, which had a parol defeasance, 108 S. W. 625. See ante § 524. take subject to such mortgage and "Gardner v. Moore, 51 Ga. 268 are not bona fide purchasers. Mil- (defective attestation); Coe v. Win- ler V. Wroton, 82 S. Car. 97, 63 S. ters, 15 Iowa 481 (defective ree- ls. 62, afed. 63 S. E. 449. crd); Forepaugh v. Appold, 17 B. "H. C. Tack Co. v. Ayers, 56 N. Mon. (Ky.) 625; Russum v. Wan- J. Eq. 56, 38 Atl. 194. See also ser, 53 Md. 92 (notice of mortgage Clark V. Greene, 73 Minn. 467, 76 without affidavit of consideration N. W. 263 (inclosure and sign in- sufficient); Johnston v. Canby, 29 sufficient notice); Condit v. Wll- Md. 211 (defective acknowledgment, son, 36 N. J. Eq. 370 (debtor's state- indorsement of consideration, or ment insufficient). defective record immaterial in case "Columbus Buggy Co. T. Graves, of actual notice); Work v. Harper, 108 III. 459; Uhler v. Hutchinson, 24 Miss. 517 (actual notice of a 23 Pa. 110. See also Davidson v. mortgage, defectively acknowledged Cowan, 16 N. Car. 470. and recorded, insufficient, after 'Westerly Sav. Bank v. Stillman levy). Mfg. Co., 16 R. I. 497, 17 Atl. 918; "Smith v. Nettles, 13 La. Ann. Bullock v. Whipp, 15 R. I. 195, 2 241; Hill v. McNichoI, 76 Maine 314; Atl. 309; Rowell v. Williams, 54 Copeland v. Copeland, 28 Maine Wis. 636, 12 N. W. 86; Mueller v. 525; Ohio Life Ins. &c. Co. v. Ross, Brigham, 53 Wis. 173, 10 N. W. 366. 2 Md. Ch. Dec. 25; Smallwood v. See ante § 456. Lewin, 15 N. J. Eq. 60; Jackson v. = Beach v. Osborne, 74 Conn. 405, Van Valkenburgh, 8 Cow. (N. Y.) 50 Atl. 1019, 1118; Ensign v. Bat- 260; Pike v. Armstead, 1 Dev. Eq. terson, 68 Conn. 298, 36 Atl. 51; (N. Car.) 110; Solms v. McCuUoch, Hamilton v. Nutt, 34 Conn. 501; 5 Pa. St. 473. Hunt V. Mansfield, 31 Conn. 488; Sumner v. Rhodes, 14 Conn. 135; 861 UNDER EEGISTEY ACTS § 538 equities of those who have not fixed their priority by duly recording their deeds.^^ And if a mortgagee once had knowledge of facts re- garding a prior incumbrance or claim, it is immaterial that he failed to recall them when he accepted the mortgage/^ or misapprehended their legal effect.'-^ But a lien which has once attached can not be di- vested by the mortgagee's subsequent discovery of facts which would have affected its priority.^* Notice of an invalid deed or mortgage does not affect a purchaser.^^ Thus, under the statutes of Kew York, a deed in fee of a freehold estate not duly acknowledged or attested does not take effect as against a subsequent purchaser; and consequently a purchaser with notice of a prior deed which is void under this statute may treat such prior deed as void.^" But a purchaser may have actual notice of a valid deed from a record of it which does not operate as constructive notice by reason of its not having been executed according to the statute.^' There is a presumption that the first recorded mortgage has priority; and the burden of proving that the mortgagee in such mortgage had knowledge of the existence of a mortgage or prior execution rests upon the party who makes this claim.^" Any material evidence, including parol testimony, is admissible to prove whether the mortgagee in fact had actual notice of prior liens or claims. '° The notice, however, may lose its effect through the agreement of "Coonrod v. Kelly, 113 Fed. 378; ^"Nellis v. Munson, 108 N. Y. 453, Continental Inv. &c. Soc. v. Wood, 15 N. E. 739; Chiamberlain v. Spar- 168 111. 421, 48 N. B. 221; Inter- gur, 86 N. Y. 603. State Build. &c. Assn. v. Ayers, 117 "Hastings v. Cutler, 24 N. H. 111. 9, 52 N. E. 342 (quoting text); 48; Musgrove v. Bonser, 5 Ore. 313, Lemon v. Terhune, 40 N. J. Eq. 364, 20 Am. Rep. 737. But see Cumber- 2 Atl. 18; Vredenburgh v. Burnet, land Bldg. &c. Assn. v. Sparks, 111 31 N. J. Eq. 229; La Farge Fire Fed. 647, 49 C. C. A. 510 (under Ins. Co. V. Bell, 22 Barb. (N. Y.) Arkansas statute). 54; Merchants' Bank v. Ballou, 98 "Sheffey v. Bank of Lewisburg, Va. 112, 32 S. E. 481. 33 Fed. 315; Pollak v. Davidson, 87 "Hunt T. Clark, 6 Dana (Ky.) Ala. 551, 6 So. 312; Bush v. Golden, 56. 17 Conn. 594; Hyder v. Rush, 102 '= Willis V. Vallette, 4 Mete. 111. 338; Citizens' State Bank v. (Ky.) 186; Ledos y. Kupfrian, 28 N. Julian, 153 Ind. 655, 55 N. E. 1007; J. Eq. 161. Peoria Stone &c. Works v. Sin- "DavisT. Greve, 32 La. Ann. 420; clair, 146 Iowa 56, 124 N. W. 772 Barrett v. Eastham (Tex. Civ. (chattel mortgage); SpoflEord v. App.), 86 S. W. 1057. Weston, 29 Maine 140; Pomroy v. "Erwin v. Shuey, 8 Ohio St. 509. Stevens, 11 Mete. (Mass.) 244; Hen- See also Fisk v. Osgood, 58 Nebr. drickson v. Woolley, 39 N. J. Eq. 486 78 N. W. 924 (deed without 307; Barnett v. Squyres, 93 Tex. consideration). A creditor is not 193, 54 S. W. 241, 77 Am. St. 654. affected by notice of a void Incum- "Hodges v. Winston, 94 Ala. 576, brance. Hubbard v. Savage, 8 10 So. 535; Wittenbrock v. Cass, 110 Conn. 215. Cal. 1, 42 Pac. 300. § 539 NOTICE AS ATFECTING PEIOKITT 863 the mortgagee of the unrecorded mortgage. Thus where a mortgagee agreed to keep his mortgage off the record in order to enable the mort- gagor to borrow money on the property by giving a first mortgage, and such agreement was made known to the mortgagee taking the mort- gage second in date, at or before its execution, and his mortgage was first recorded, such notice will not give the unrecorded mortgage pri- ority.^" Undoubtedly it was the purpose of the laws providing for the regis- try of conveyances of land to enable every one by this means to de- termine fully the title to the land, without depending upon the pos- session of the title deeds, or upon inquiry or notice outside of the registry. The symmetry of the registry system has been disturbed and broken in upon by judicial construction, in order to prevent a fraudulent use of the statute, which it is to be presumed the statute did not intend. To allow one who has actual or implied notice of a prior unrecorded deed of the same property, or such notice of equita- ble rights of other persons in the property, to obtain priority by re- cording his own deed, would be to enable Mm to take advantage of the registry laws to obtain an unfair or fraudulent advantage by means of them. Exceptions to the literal application of the law have there- fore been engrafted upon it to meet the equitable consequences of such notice.^^ The general principle that actual notice is equivalent to recording, applies only where there is nothing in the statute to indicate a con- trary intention. Where recording is expressly made necessary to the validity of the instrument, it is held that actual notice will not operate as an equivalent.^^ § 539. Contrary doctrine in Arkansas, Louisiana, North Carolina and Ohio. — ^As already noticed, it has been questioned whether the courts ought ever to have suffered the question of actual notice to be agitated against one whose conveyance is duly registered.^' The basis of the doctrine of notice is, that it is unconscientious and fraudulent *" Hendrlckson T. Woolley, 39 N. '^ Per Colcock, J., in Price v. J. Eq. 307. White, Bailey Eq. (S. Car.) 240; " See Hart v. Farmers' &o. Bank, per Sir Williom Grant, in Wyatt v. 33 Vt. 252, per Chief Justice Red- Barwell, 19 Ves. 435; Benham v. field. Keane, 1 Jolins. & Hem. 685; Ford '^'Ross V. Menefee, 125 Ind. 432, v. White, 16 Beav. 120; Donahue v. 25 N. E. 545; Lockwood v. Slevin, Mills, 41 Ark. 421; Canal Co. v. Rus- 26 Ind. 124; Chenyworth v. Daily, sell, 68 111. 426; Allen v. Cadwell, 7 Ind. 284; Travis v. Bishop, 13 55 Mich. 8, 20 N. W. 692; 'Moore v. Mete. (Mass.) 304. Thomas, 1 Ore. 201. 863 UNDER EEGISTEY ACTS § 539 to permit a junior purchaser to defeat a prior conveyance or incum- brance of which he has knowledge.^* But it has been doubted whether this doctrine does not give occasion to more fraud than it prevents; and whether vigilance in recording a mortgage should not be rewarded as much as vigilance in obtaining it.^" Accordingly, as regards mort- gages, the statutes of a few states make the recording of them essential to their validity as against third persons. Thus in Arkansas it is pro- vided that a mortgage shall be a lien from the time the same is filed in the recording office, and not before ; and actual notice does not avail to give it validity as against third persons.^^ And since, under the statute of Arkansas, an .improperly recorded mortgage does not create a valid lien as against subsequent purchasers, the federal court has held that a mortgagee can not impute fraud to the purchaser of the mortgaged property although he bought with actual knowledge of the mortgage, and with the intention of defeating it.^^ Under a similar statute in Louisiana, an unrecorded mortgage is invalid against third persons, though they have full knowledge of it.^* Under the registration law in North Carolina it is held that no no- tice, however full and formal, will supply the place of registration of a deed of trust or mortgage; the statute declaring that they shall not be valid at law to pass any property as against creditors or pur- chasers for a valuable consideration but from their registration.^" Con- ** Harrington v. Allen, 48 Miss. Ann. 315. See Merrick's Rev. Civ. 492. The object of the doctrine of Code 1912, § 3329 et seq. Under the notice is to prevent a person from early Louisiana cases actual notice doing an act which will do an in- was equivalent to record. Planters' jury to another. Spencer v. Spen- Bank of Georgia v. AUard, 8 Mart, car, 3 Jones Eq. (N. Car.) 404. See (N. S.) (La.) 136; Rachal r. Nor- post § 572. mand, 6 Rob. (La.) 88; Smith v. ^Per Hitchcock, J., in Mayham Nettles, 13 La. Ann. 241. See also V. Coombs, 14 Ohio 428. Noble v. Cooper, 7 Rob. (La.) 44; '"Dig. of Stats. 1904, § 5396; Parker v. "Walden, 6 Mart. (N. S.) Cumberland Bldg. &c. Assn. v. (La.) 713. Sparks, 111 Fed. 647, 49 C. C. A. ^McAllister v. Purcell, 124 N. 510; Dodd v. Parker, 40 Ark. 536; Car. 262, 32 S. E. 715; Blalock v. Fry V. Martin, 33 Ark. 203; Jacoway Strain, 122 N. Car. 283, 29 S. E. v. Gault, 20 Ark. 190, 73 Am. Dec. 408; Hooker v. Nichols, 116 N. Car. 494. But see Rubel v. Parker, 107 157, 21 S. E. 207; Quinnerly v. Ark. 314, 155 S. W. 114; American Quinnerly, 114 N. Car. 145, 19 S. E. Bldg. &c. Assn. v. Warren, 101 Ark. 99; Killebrew v. Hines, 104 N. Car. 163, 141 S. W. 765 (notice by pos- 182, 10 S. E. 159, 17 Am. St. 672; session). Hinton v. Leigh, 102 N. Car. 28, 8 =' Cumberland Bldg. &c. Assn. v. S. E. 890; Traders' Nat. Bank v. Sparks, 111 Fed. 647, 49 C. C. A. Woodlawn Mfg. Co., 100 N. Car. 345, 510. 5 S. E. 81; Traders' Nat. Bank v. '^ Ridings v. Johnson, 128 U. S. Lawrence Mfg. Co., 96 N. Car. 298, 212, 32 L. ed. 401, 9 Sup. Ct. 72 3 S. E. 363; Todd v. Outlaw, 79 N. (under act of 1855, Rev. Stat. 1870, Car. 235; King v. Portis, 77 N. Car. p. 617); Adams v. Daunis, 29 La. 25; Deal v. Palmer, 72 N. Car. 582; § 540 NOTICE AS APFECTING PRIORITY 864 sequently, a second mortgagee will have priority over an tinregistered mortgage, though he took with actual notice of the j&rst mortgage.^" But if a mortgage states that the land conveyed had previously been conveyed in trust to secure the payment of a certain debt, although such first mortgage was not recorded till after the second mortgage was recorded, and therefore was inoperative as to the second mortgage, yet the holder of the first mortgage is entitled to satisfaction out of the land in preference to the holder of the second mortgage; for the latter mortgage is regarded as creating a trust for the payment of the prior mortgage in preference to the second mortgage.^^ However, it has been held that recitals in a deed that the purchase-price has been paid will not protect a subsequent mortgagee of the land conveyed, who has been told otherwise before making the loan.*^ Under the recording acts of Ohio, the doctrine of notice has no place, inasmuch as all mortgages take effect from the time they are delivered to the recorder,*^ A judgment recovered after the date of the mortgage, and before it is recorded, takes precedence of it.^* The admission of evidence of actual notice of a prior unrecorded deed, as affecting a mortgagee's right of priority, is attended with all the dan- ger and imcertainty incident to parol evidence, when used for the purpose of affecting written instruments and disturbing titles, and for this reason the policy has been adopted in this state of allowing the whole question of priority to be settled by the simple fact of prior reg- istry. This furnishes a clear and certain standard of decision inca- pable of variation, and thus avoids a very fruitful source of litiga- tion.»= § 540. Record of subsequent conveyances with notice. — The right of the first purchaser or mortgagee to preserve his title by recording Robinson v. Willoughby, 70 N. Car. ing Assn. v. Clark, 43 Ohio St 427, 358; Leggettv. Bullock, Busb. L. (N. 2 N. E. 846; Bercaw v. Cockerlll, 20 Car.) 283; Fleming v. Burgin,, 2 Ohio St. 163, and cases there cited; Ired. Eq. (N. Car.) 584. See also Erwin v. Shuey, 8 Ohio St. 509; for rule under earlier statutes. Da- Bloom t. Noggle, 4 Ohio St. 45; vidson V. Cowan, 16 N. Car. 470; Boos v. Ewing, 17 Ohio 500, 49 Am. Pike V. Armstead, 16 N. Car. 110. Dec. 478; Holliday v. Franklin Code 1883, i 1254; Pell's Revisal Bank, 16 Ohio 533; White v. Den- 1908, § 982. man, 16 Ohio 59; Mayham v. »° McAllister v. Purcell, 124 N. Coombs, 14 Ohio 428; Stansell v. Car. 262, 32 S. E. 715. Roberts, 13 Ohio 148, 42 Am. Dec. " Hinton v. Leigh, 102 N. Car. 28, 193. See also Astor v. Wells, 4 8 S. E. 890. Wheat. (U. S.) 466. '''Wilson V. Shocklee, 94 Ark. 301, >* Holliday v. Franklin Bank, 16 126 S. W. 832. Ohio 533; Mayham v. Coombs, 14 ^Ohlo Rev. Stat. 1890, § 4133; Ohio 428. Gen. Code 1910, § 8542; Home Build- ''Per Ranney, J., in Bloom v. 865 UNDEK KEGISTRY ACTS § 540 his deed continues after any number of subsequent conveyances in the chain of title derived from the second grantee of the original grantor, although the deeds in this chain of title have all been duly recorded, provided that such subsequent purchasers, one and all, have bought either with knov?ledge of the prior unrecorded deed or without paying valuable consideration. So long as this state of things continues, the prior title will hold, and may be perfected by record. But so soon as any one in the chain of title under the second conveyance purchases in good faith for a valuable consideration, and places his deed on rec- ord, the title under the first unrecorded deed is gone forever,^" unless it be conveyed to a former owner who was charged with notice of the prior equity. Noggle, 4 Ohio St. 45; Kemper t. Campbell, 44 Ohio St. 210, 6 N. E. 566; Building Assn. v. Clarlt, 43 Ohio St. 427, 2 N. B. 846. ^''This point is fully illustrated in the case of Failass v. Pierce, 30 Wis. 443, which was several times argued before the court, and was finally de- cided in a well-considered opinion by Chief Justice Dixon. Using the same illustration given above, he says: "If, for example, in the case supposed, C took his deed with knowledge of the prior conveyance to B, and had then conveyed to D, who had like knowledge, and D should convey to E, and so on, con- veyances should be executed to the end of the alphabet, each subse- quent grantee having knowledge of B's prior right, and all of their con- veyances being recorded, yet then, if B should record his deed before the last grantee with knowledge, and Z should make conveyance, the purchaser from Z would be bound to take notice of B's rights, and of the relations existing between them, and all the subsequent purchasers from C to Z inclusive. And in the same case, if Z should sell to a purchaser in good faith for value from him, yet if B should get his conveyance recorded before that of such purchaser, his title would be preferred because of such lirst record. And it is manifest that the same result would follow if in the case supposed none of the subse- quent grantees, from C to Z in- clusive, paid any valuable consid- eration for the land; or if, in the S5_joNES Mtg.— Vol. I. case of such successive grantee, his title was defective and invalid as against B, either by reason of his knowledge of B's title, or because he was a mere volunteer, paying no consideration whatever for the con- veyance." The case of Ely v. Wil- cox, 20 Wis. 523, 91 Am. Dec. 436, is overruled. Fallass v. Pierce, 30 Wis. 443, is followed in Girardin v. Lampe, 58 Wis. 267, 16 N. W. 614; Erwin v. Lewis, 32 Wis. 276; and discussed in Marling v. Milwaukee Realty Co., 127 Wis. 363, 106 N. W. S44, 5 L. R. A. (N. S.) 412, 115 Am. St. 1017. See White and Tudor's Lead. Cas. in Eq. (4th Am. ed.), vol. 2, pt. 1, p. 212, for a dissent to this line of decisions, because they make it requisite to search for con- veyances from two persons during the same period. The authorities cited in support of this view are the earlier cases in Massachusetts and Wisconsin. In Day v. Clark, 25 Vt. 397, the rule is laid down that the record of the prior deed after the second is notice to a purchaser from the vendee in the second that there is such a prior deed; but the record of it is no notice that the vendee in the second deed, at the time he secured it, had notice of the first deed, and without such notice the title of the purchaser from the ven- dee in the second but first recorded deed would not be affected by the fraud or knowledge of his vendor. The doctrine of the text is also sup- ported by Mahoney v. Middleton, 41 Cal. 41; Bayles v. Young, 51 111. § 541 NOTICE AS AFFECTING PRIORITY 866 This class of cases very frequently presents questions of the great- est difficulty; and the language of Lord Chancellor Xorthington is generally applicable to any one of them : "This is one of those cases which are always very honorably labored by the counsel at the bar, and determined with great anxiety by the court, as some of the parties must be shipwrecked in the event."^^ § 541. Examination of records for iacumbraiices against prior un- recorded conveyances. — As a general rule a purchaser is not bound to search the records for incumbrances as against a title that does not appear of record.^* Generally, therefore, the record of any mortgage prior to the conveyance by which the mortgagor took his title is no notice of the incumbrance to a subsequent purchaser.^ ^ The record of a conveyance by a grantor who appears to be a stranger to the record title, is not notice to one subsequently dealing in good faith with the person holding the record title.*" Otherwise a subsequent purchaser would have to examine the records indefinitely to protect himself, and the practical advantages of the recording system would be nulli- fied." 127; Sims v. Hammond, 33 Iowa 368; English v. Waples, 13 Iowa 57; Hill v. McNicliol; 76 Maine 314. See Woods V. Garnett, 72 Miss. 78, 16 So. 390, 4 Ballard R. P. § 715, and cases cited and criticised. See post § 559. " See Stanhope v. Verney, 2 Eden 81. ^'Stockwell V. State, 101 Ind. 1; Stead V. Grosfield, 67 Mich. 289, 34 N. W. 871; Schoch v. Birdsall, 48 Minn. 441, 51 N. "W. 382 (citing text) ; Losey v. Simpson, 11 N. J. Eq. 3, 246; Oliphant v. Burns, 146 N. Y. 218, 40 N. E. 980; Cook v. Travis, 20 N. Y. 400; Clark v. Mack- in, 30 Hun (N. Y.) 411. '"Tolman v. Smith, 85 Cal. 280, 24 Pac. 743; Montgomery v. Keppel, 75 Cal. 128, 19 Pac. 178; Faircloth V. Jordan, 18 Ga. 350; Continental Ins. &c. Soc. V. Wood, 168 111. 421, 48 N. E. 221; Elder v. Derby, 98 111. 228; Ely v. Pingry, 56 Kans. 17, 42 Pac. 330; Wing v. McDowell, Walk. (Mich.) 175; Schoch v. Birdsall, 48 Minn. 441, 51 N. W. 382 (citing text) ; Daly v. New York &c. R. Co., 55 N. J. Eq. 595, 38 Atl. 202; Pro- tection BIdg. &c. Assn. v. Knowles, 54 N. J. Eq. 519, 34 Atl. 1083; Bing- ham v. Kirkland, 34 N. J. Eq. 229; Boyd v. Mundorf, 30 N. J. Eq. 545; Tarbell v. West, 86 N. Y. 280; Page v. Waring, 76 N. Y. 463; Farmers' Loan &c. Co. v. Maltby, 8 Paige (N. Y.) 361 Calder v. Chapman, 52 Pa. St. 359, 91 Am. Dec. 163; Sayward V. Thompson, 11 Wash. 706, 40 Pac. 379. See also Hinton v. Hicks, 156 N. Car. 24, 71 S. E. 1086. But see Tefft v. Munson, 57 N. Y. 97. See ante §§ 471, 523. "Texas Lumber Mfg. Co. v. Branch, 60 Fed. 201, 8 C. C. A. 562; Tennessee Coal &c. R. Co. v. Gard- ner, 131 Ala. 599, 32 So. 622; Pearce v Smith, 126 Ala. 116, 28 So. 37; Bates V. Norcross, 14 Pick. (Mass.) 224; Robertson v. Rentz, 71 Minn. 489, 74 N. W. 133; Hart v. Gardner, 81 Miss. 650, 33 So. 442, 497; Ford V. Unity Church Soc, 120 Mo. 498, 25 S. W. 394, 23 L. R. A. 561, 41 Am. St. 711; Shackleton v. Allen Chapel African M. E. Church, 25 Mont. 421, 65 Pac. 428; Oliphant v. Burns, 146 N. Y. 218, 40 N. E. 980; Advance Thresher Co. v. Esteb, 41 Ore. 469, 69 Pac. 447. But see Balch v. Ar- nold, 9 Wyo. 17, 59 Pac. 434. ■^Hetzel V. Barber, 69 N. Y. 1; Buckingham v. Hanna, 2 Ohio St. 867 UNDER ItEGISTRT ACTS § 541 The whole object of the registry acts is to protect subsequent pur- chasers and incumbrancers against previous conveyances which are not recorded, and to deprive the holder of previous unregistered convey- ances of his right of priority which he would have at the common law. The title upon record is the purchaser's protection. The registry of a deed is notice only to those who claim through or under the grantor by whom the deed was executed.^^ When one link in the chain of title is wanting, there is no clue to guide the purchaser in his search to the next succeeding link by which the chain is continued. When the pur- chaser has traced the title down to an individual, out of whom the record does not carry it, the registry acts make that title the pur- chaser's protection.*^ There is, however, a well recognized exception to the rule that the record is notice only to persons claiming under it. Where the subse- quent purchaser, first recording his instrument, is chargeable with actual notice of a prior conveyance, a purchaser from him after record of the prior conveyance, is chargeable with constructive notice from such record, and is put on inquiry as to whether his grantor took a good title.** Thus the circumstances may be such that a purchaser V. Dazey, 5 N. Dak. 167, 64 N. W. 1023, 57 Am. St. 550; Sternberger v. Ragland, 57 Ohio St. 148, 48 N. B. 811; Blake v. Graham, 6 Ohio St. 580, 67 Am. Dec. 360; Leiby v. "Wolf, 10 Ohio 83; Collins v. Aaron, 162 Pa. St. 539, 29 Atl. 724; Maul V. Rider, 59 Pa. St. 167; Woods v. Farmere, 7 Watts (Pa.) 382, 32 Am. Dec. 772; Kansas City Land Co. v. Hill, 87 Tenn. 589, 11 S. W. 797, 5 L. R. A. -45; Parker v. Meredith (Tenn.), 59 S. W. 167; Runge v. Gilbough (Tex. Civ. App.), 87 S. W. 832; Williams v. Slaughter (Tex. Civ. App.), 42 S. W. 327; Jenkins V. Adams, 71 Tex. 1, 8 S. W. 603; Holmes v. Buckner, 67 Tex. 107, 2 S. W. 452; Drake v. Reggel, 10 Utah 376, 37 Pac. 583; Claiborne v. Hol- land, 88 Va. 1046, 14 S. E. 915. See also Lewis v. Jackson, 165 Mass. 481, 43 N. B. 206. " Per Chancellor Williamson, in Losey v. Simpson, 11 N. J. Eq. 246; Roll V. Rea, 50 N. J. L. 264, 12 Atl. 905. See also Cook v. Travis, 20 N. Y. 400; Parkist v. Alexander, 1 Johns. Ch. (N. Y.) 394, « North V. Knowlton, 23 Fed. 163; County Bank v. Fox, 119 Cal. 61, 51 Pac. 11; Mahoney v. Middleton, 551; Sands v. Beardsley, 32 W. Va. 594, 9 S. B. 925. See also Salis- bury Sav. Soc. V. Cutting, 50 Conn. 113, and note. But see Bdwards v. McKernan, 55 Mich. 520, 22 N. W. 20; Digman v. McCollum, 47 Mo. 372; Van Diviere v. Mitchell, 45 S. Car. 127, 22 S. E. 759. "Tennessee Coal &c. R. Co. v. Gardner, 131 Ala. 599, 32 So. 622; Turman v. Sanford, 69 Ark. 95, 61 S. W. 167; Goodkind v. Bartlett, 153 111. 419, 38 N. B. 1045; Grundies v. Reid, 107 111. 304; Miller v. Larned, 103 111. 562; Irish v. Sharp, 89 111. 261; Manly v. Pettee, 38 111. 128; Roberts v. Richards, 84 Maine 1, 24 Atl. 425; SpofEord v. Weston, 29 Maine 140; Hart v. Gardner, 81 Miss. 650, 33 So. 442, 497; Harper V. Bibb, 34 Miss. 472, 69 Am. Dec. 397; Becker v. Stroeher, 167 Mo. 306, 66 S. W. 1083; Odle v. Odle, 73 Mo. 289; Digman v. McCollum, 47 Mo. 372; Crockett v. Maguire, 10 Mo. 34; Chowen v. Phelps, 26 Mont. 524, 69 Pac. 54; Sharon v. Minnock, 6 Nev. 377; Cook v. Travis, 20 N. Y. 400; Todd v. Eighmie, 4 App. Div. 9, 38 N. Y. S. 304, 73 N. Y. St. 671; Abraham v. Mayer, 7 Misc. 250, 58 N. Y. St. 29, 27 N. Y. S. 264; Doraa § 543 NOTICE AS APFECTING PKIOEITT 868 will be bound to search the records for incumbrances as against a title which does not appear upon the records ; as, for instance, when he has actual notice of the existence of a mortgageable estate in another prior to the date of the conveyance to himself. One holding an executory contract of purchase, or one in possession of land under a contract of sale, though the contraci be by parol, has a mortgageable interest, and a mortgage of it may be legally and properly recorded, so as to take precedence of a subsequent conveyance of the property if the sub- -sequent purchaser had actual notice of the existence of the mort- gageable estate in the mortgagor prior to his receiving his own deed.*^ A recital in a deed that the grantee had been in possession of the granted farm since a given date, several months prior to the deed, under a contract for the purchase of it, is actual notice to one claiming under the title of such deed that the grantee had been in possession before he received a deed of the land; and the law charges him with notice that such grantee had, during such possession, a mortgageable interest in the land ; and he is bound to search the records for incum- brances against the title from the time the grantee entered into pos- session under the contract, and he is bound by a mortgage made by such grantee while in possession under the contract of sale and before receiving a deed.*' § 542. Notice of a secret trust. — It is frequently the case that an estate which appears by the record to be absolutely the property of the grantee is in fact held by him in trust for another person. In such 41 Cal. 41; Morrison v. Kelly, 22 111. "Crane v. Turner, 7 Hun (N. Y.) 609, 74 Am. Dec. 169; English v. 357. Mr. Justice Follett, by way of Waples, 13 Iowa 57; Van Aken v. illustration, said: "If, January first, Gleason, 34 Mich. 477; Woods v. a grantee reeives a deed and enters Garnett, 72 Miss. 78, 16 So. 390; into possession, but neglects to re- Schutt v. Large, 6 Barb. (N. Y.) cord the deed, or it is destroyed, 373; Jackson v. Post, 9 Cow. (N. and subsequently he receives a new Y.) 120, 15 Wend. 588; Goelet v. deed bearing a later date, and re- McManus, 1 Hun (N. Y.) 306; Ring citing that it is confirmatory of a v. Steele, 3 Keyes (N. Y.) 450; Van deed dated January first, under Rensselaer v. Clark, 17 Wend. (N. which he has been in possession Y.) 25, 31 Am. Dec. 280; Parrish v. since that date, and which deed has Mahany, 10 S. Dak. 276, 73 N. W. been lost, it would not be held that 97, 66 Am. St. 715; Butler v. Ma- a search back to the date of the zeppa Bank, 94 Wis. 351, 68 N. W. confirmatory deed was due dili- 998; Fallass v. Pierce, 30 Wis. 443 genoe in a person who had actual disapproving the authority of Ely notice of the recital, even though V. Wilcox, 20 Wis. 523, 91 Am. Dec. accompanied by the inquiry of the 436 to the contrary; Erwin v. Lewis, grantee, and if he should take a 32 Wis. 276. But see Morse v. Cur- mortgage, and record it, it would tls, 140 Mass. 112, 54 Am. Rep. 456. not have precedence over a duly re- " Crane v. Turner, 7 Hun (N. Y.) corded mortgage given between the 357. See ante § 469. dates of the first and second deeds." 869 UNDEK EEGISTET ACTS § 543 case, any one who deals with him in respect to this estate, with knowl- edge of the trust, takes it subject to the trust, and will be required to perform it and discharge the lien.*^ If the conveyance, though abso- lute in form, be in fact a mortgage, a purchaser with knowledge of this fact takes the estate subject to the mortgage. "Though a pur- chaser may buy in an incumbrance, or lay hold on any plank to pro- tect himself, yet he shall not protect himself by the taking a convey- ance from a trustee after he had notice of the trust, for, by taking a conveyance with notice of the trust, he himself becomes the trustee, and must not, to get a plank to save himself, be guilty of a breach of trust."" If a trustee conveys land to one who has notice of the trust, the grantee is put upon inquiry as to the terms of the trust.*' Since a trustee is not presumed to have authority to mortgage the trust prop- erty, a person taking such a mortgage is bound to use due diligence to ascertain whether the act of the trustee is in violation of the trust f and if such mortgagee or one holding under him has actual or con- structive notice of a breach of trust, his rights are subordinate to those of the cestui que trust, and he holds the mortgage as trustee.'^'- Where an instrument limiting the trustee's authority to mortgage the ■"Wormley v. Wormley, 8 Wheat, v. Boon, 17 Tex. 143; Mansfield v. (U. S.) 421, 5 L. ed. 651; Boone v. Wardlow (Tex. Civ. App.), 91 S. Chiles, 10 Pet. (U. S.) 177, 9 L. ed. W. 859; Schenck v. Wicks, 23 Utah 388; Caldwell v. Carrington, 9 Pet. 576, 65 Pac. 732; Haslam v. Haslam, (U. S.) 86, 9 L. ed. 60; Oliver v. 19 Utah 1, 56 Pac. 243; Anon. 2 Piatt, 3 How. (U. S.) 333, 11 L. ed. Freem. 137, pi. vii; Cory v. Eyre, 1 622; Jones v. Shaddock, 41 Ala. De G. J. & S. 149; Ferrars V. 262; Learned v. Tritch, 6 Colo. 432; Cherry, 2 Vern. 384. Jackson v. Blackwood, 4 McAr. (D. "Saunders v. Dehew, 2 Vern. 271. C.) 188, 1 Ky. L. 71; Harris v. See also Hall v. Savill, 3 G. Greene Brown, 124 Ga. 310, 52 S. E. 610, 2 (Iowa) 37, 54 Am. Dec. 485. L R. A. (N. S.) 828; Butler v. But- "Mayfield v. Turner, 180 111. 332, ler, 164 111. 171, 45 N. E. 426; West 54 N. E. 418. V. Fitz, 109 111. 425; Graham v. Gra- °° Sternfels v. Watson, 139 Fed. ham, 85 111. App. 460; Lyons v. 505; Snyder v. Collier, 85 Nebr. 552, Bodenhamer, 7 Kans. 455; Harwood 123 N. W. 1023, 133 Am. St. 682; V. Pearson, 122 Mass. 425; Wright Kenworthy v. Levi, 214 Pa. 235, 63 V. Dame, 22 Pick. (Mass.) 55; Smith Atl. 690; Sweeny v. Montreal Bank, v. Walser, 49 Mo. 250; McWaid v. 12 Can. Sup. Ct. 661. Blair State Bank, 58 Nebr. 618, 79 '^'Griffin v. Blanchar, 17 Cal. 70; N. W. 620; Dillaye v. Commercial Dotterer v. Pike, 60 Ga. 29; Union Bank, 51 N. Y. 345; Smith v. Bowen, Mut. L. Ins. Co. v. Spaids, 99 111. 35 N. Y. 83; Murray v. Ballou, 1 249; Bomar v. Gist, 25 S. Car. 340; Johns. Ch. (N. Y.) 566; James v. Mathews v. Heyward, 2 S. Car. 239; Cowing, 17 Hun (N. Y.) 256; Dixon Mansfield v. Wardlow (Tex. Civ. V. Caldwell, 15 Ohio St. 412, 86 Am. App.), 91 S. W. 859; Fitch v. Cur- Dec. 487; Sadler's Appeal, 87 Pa. rie, 19 Nova Scotia 522; Birkheck St. 154; Sergeant v. IngersoU, 7 Pa. Loan Co. v. Johnston, 3 Ont. L. St. 340; Luscombe v. Grigsby, 11 S. Rep. 497, 1 Ont. Wkly. Rep. 163. See Dak. 408, 78 N. W. 357; Wethered also De Leonis v. Hammel, 1 Cal. 543 NOTICE AS AFFECTING PEIOEITT 870 property is on record, it is notice of such limitation on the trustee's authority.''^ One who acquires the legal title to land with notice of an equitable mortgage in another will be decreed to hold the legal title for the benefit of the equitable mortgagee.^ ^ An equitable mortgage in favor of a third party advancing money to a vendee to purchase land, under an agreement to execute a mortgage to secure such advance, will be given priority over a mortgage on the land taken by a party who has notice of the rights of the equitable mortgagee.^* II. Actual Notice Section 543. Forms of notice. 544. Actual notice defined. 545. Actual notice implied from cir- cumstances. 546. Degrees of actual notice — Ru- mors, and sources of informa- tion. 547. Facts and circumstances put- ting purchaser upon inquiry. 548. Sufficiency of notice or ground of inquiry. 549. Notice of owner's intention to execute mortgage. 550. Inquiry concerning deeds not in the chain of title. 551. Inquiry of reliable and disin- terested parties. Section 552. Diligence in prosecuting in- quiry — Erroneous descrip- tions. 553. Effect of due Inquiry— Evi- dence. 554. Burden of proof. 555. Notice before payment of con- sideration. 556. Part payment before notice — Payment by notes. 557. Purchaser with notice from one without notice. 558. Repurchase by grantee with no- tice — Revival of existing eq- uities. 559. Purchaser without notice from one with notice of prior eq- uity. § 543. Porms of notice. — There are three kinds of notice, actual, implied, and constructive. Since the doctrine of notice as affecting the priority of incumbrances arises from the equitable view that it is fraud in one, who has notice of an adverse claim in another, to attempt to acquire a title to the prejudice of the interest of which he has been made aware, it is obvious that the actual culpability involved by the notice must depend altogether upon the kind and degree of notice re- ceived. Yet the legal consequences are the same, whatever the kind App. 390, 82 Pac. 349; Boyer v. Li- bey, 88 Ind. 235. '^"Marx v. Clisby, 126 Ala. 107, 28 So. 388. But it has been held that where the record of a trust deed ex- pressly prohibiting the creation of incumbrances has been destroyed by fire and re-established by decree of court without such prohibition, it is no longer notice of the trustee's want of authority. Franklin Sav. Bank v. Taylor, 53 Fed. 854, 4 C. C. A. 55. ^^ Lounsbury v. Norton, 59 Conn. 170, 22 Atl. 153; Gale v. Morris, 29 N. J. Eq. 222. "* Foster Lumber Co. v. Harlan Co. Bank, 71 Kans. 158, 80 Pac. 49, 114 Am. St. 470. 871 ACTUAL NOTICE § 543 and degree of the notice may be, provided the notice is imputed at all. Notice, however, is not necessarily or commonly knowledge, though in legal effect it may be equivalent to knowledge. In its broad legal sense, notice has been defined as positive information, concerning a fact, actually communicated to a party by an authorized person, or actually derived by him from a proper source, or else presumed by law to have been acquired by him, which information is regarded as equiv- alent, in its legal effects, to full knowledge of the fact, and to wliich the law attributes the same consequences as would be imputed to knowledge.^ § 544. Actual notice defined. — Actual notice literally means di- rect personal knowledge.^ Yet the term is often used in a broader sense as including notice implied from indirect or circumstantial evi- dence.^ Actual notice is not liriiited to express knowledge directly com- municated, for it is seldom that ultimate facts can be communicated in a manner so direct and unequivocal as to exclude all doubt as to their existence and authenticity. Actual notice includes knowledge of facts and circumstances so pertinent in character as to enable reasonably cautious and prudent persons to investigate and ascertain the ulti- * Cleveland Woolen Mills t. Sibert, 81 Ala. 140, 1 So. 773, 2 Pom. Eq. Jur., § 594. * Story's Eq. Jur. § 399; Crassen V. Swoveland, 22 Ind. 427; Spofford V. Weston, 29 Maine 140; Baltimore V. Williams, 6 Md. 235; Keith v. Wheeler, 159 Mass. 161, 34 N. E. 174; Lamb v. Pierce, 113 Mass. 72; Abbe V. Justus, 60 Mo. App. 300, 1 Mo. App. 144; Casey v. Steinmeyer, 7 Mo. App. 556; Rogers v. Jones, 8 N. H. 264; Williamson v. Brown, 15 N. Y. 354. See also Jordan v. Pollock, 14 Ga. 145 (notice directly and personally given) ; Kirkham v, Moore, 30 Ind. App. 549, 65 N. E. 1042 (actual knowledge not equiva- lent to actual notice); Jackson v. Waldstein (Tex. Civ. App.), 27 S. W. 26 (express information of a fact). It is immaterial how actual knowledge is obtained, and a verbal communication is sufficient notice. Schmidt v. Hedden (N. J. Eq.), 38 Atl. 843. And it has been held im- material from whom the informa- tion comes. Willcox v. Hill, 11 Mich. 256 ; Jaeger v. Hardy, 48 OTiio St. 335, 27 N. E. 863. The statutes of Massachusetts provide that no unrecorded deed shall be valid save as against the grantors and persons having "ac- tual notice thereof." By actual no- tice is not meant necessarily that a person must actually have seen or been told of the deed by the grantor, but it means any intelli- gible information of it, either ver- bal or in writing, coming from a source which a party ought to give heed to. Curtis v. Mundy, 3 Mete. (Mass.) 405; George v. Kent, 7 Al- len (Mass.) 16. This provision was first adopted in the Rev. Stat, of 1836, before which time implied or constructive notice was held to be sufficient, but now has no effect. Parker v. Osgood, 3 Allen (Mass.) 487. See also Lawrence v. Stratton, 6 Cush. (Mass.) 163; Pomroy v. Stevens, 11 Mete. (Mass.) 244; Sib- ley V. Lefflngwell, 8 Allen (Mass.) 584; Dooley v. Wolcott, 4 Allen (Mass.) 406. spope V. Nichols, 61 Kans. 230, 59 Pac. 257; Knapp v. Bailey, 79 Maine 195, 9 Atl. 122. § 544 NOTICE AS AFFECTING PEIOEITT 872 mate facts.* Whether it exists in any particular case, and whether it is sufficient to charge the party whom it is sought to affect by it, is a question of fact to be considered and determined upon the evidence in each particular ease. It is deemed effectual and sufficient when the evidence shows that the matters relating to the prior claim or interest of another, constituting notice of it, are brought distinctly to the knowledge and attention of the person it is sought to affect.^ Whether "actual notice" means actual knowledge or includes con- structive knowledge, in statutes requiring actual notice to afEect a purchaser, is a question upon which the decisions are not in harmony. In Massachusetts it is held that, although a purchaser has knowledge that the lands had been sold and purchased by another person, yet if no deed had been recorded, and the purchaser had no knowledge that a deed had been made, he is not chargeable with actual notice." There- fore proof of open and notorious occupation and improvement, or of other facts which would reasonably put a purchaser upon inquiry, is not sufficient ;' but one claiming under an unrecorded deed must prove that the subsequent purchaser had actual knowledge of some claim or right of the person holding possession, or actual knowledge or notice of the unrecorded deed. It is competent, however, to present to the jury evidence of implied or constructive notice to the purchaser of an unrecorded deed in connection with direct evidence that he had actual notice of such deed.* Moreover, actual knowledge of an unrecorded deed does not mean that the purchaser shall have positive and certain knowledge of its existence, or such knowledge. as he would acquire by seeing the deed, or being told of it by the grantor. It is such knowl- edge as men usually act upon in their ordinary affairs.® This con- *Pope V. Nichols, 61 Kans. 230, 427. But see White v. Fisher, 77 59 Pac. 257. See also White v. Ind. 65, 40 Am. Rep. 287. In Mis- Fisher, 77' Ind. 65, 40 Am. Rep. 287. souri, possession under the mort- ^ Jackson L. &c. R. Co. v. Davison, gagee will not charge the purchaser 65 Mich. 437, 37 N. W. 537; Mich- with notice, but may be considered igan Mut. L. Ins. Co. v. Conant, 40 with other evidence in proof of ac- Mich. 530; Vest v. Michie, 31 Grat. tual notice. Whitman v. Taylor, 60 (Va.) 149. Mo. 127. In Maine, an entry under " Lamb v. Pierce, 113 Mass. 72, an unrecorded deed, followed by con- 6 Gray's Cas. 462; Pomroy v. Ste- tinuous, visible occupancy, is only vens, 11 Mete. (Mass.) 244, 6 Gray's implied notice of a change of title; Cas. 446. and is not equivalent to the registry 'White v. Foster, 102 Mass. 375; of the deed. -Hewes v. Wiswell, 8 Sibley v. Leffingwell, 8 Allen Greenl. (Maine) 94. (Mass.) 584; Parker v. Osgood, 3 'Sibley v. Leffingwell, 8 Allen Allen (Mass.) 487; Mara v. Pierce, (Mass.) 584. 9 Gray (Mass.) 306; Pomroy v. "In Curtis v. Mundy, 3 Mete. Stevens, 11 Mete. (Mass.) 244. See (Mass.) 405, Putnam, J., said: "We also Crassen v. Swoveland, 22 Ind. think the notice should be so ex- 873 ACTUAL NOTICE § 544 struction of the requirement of actual notice to affect a subsequent purchaser gives full effect to the words, and is in accordance with the definition of them given by the best writers. This construction, more- over, gives full effect to the registry laws, and enables purchasers to rely upon them fully and implicitly without searching the outside world to ascertain the true state of the title. It simply requires of all persons who hold or claim any interest in real estate, that they shall use due care and diligence in placing their rights beyond all danger by obtaining and putting upon record proper deeds. It is true, however, that in most other states in which there are statutes requiring "actual notice" or "knowledge" to affect a pur- chaser, a less strict interpretation of the word is adopted, and actual notice does not imply actual knowledge. "While actual notice of an unrecorded deed is distinguished from mere notice such as would be imputed from actual, open, and visible occupation, whether known to the purchaser or not, yet the words are held to include constructive knowledge, imputed from actual, open, and visible occupation, where such occupation is in fact known to the purchaser,^" or from other facts which constructively charge him with notice. Notice is regarded as actual when the purchaser either knows of the existence of the ad- press and satisfactory to the party 15 Ohio St. 162; Kelley v. Stanbery, as that it would be a fraud in him 13 Ohio 408; Manaudas v. Mann, 14 subsequently to purchase, attach, or Ore. 450, 13 Pac. 449; Musgrove v. levy upon the land, to the prejudice Bonser, 5 Ore. 313, 26 Am. Rep. of the first grantee." 737; Bohlman v. Coffin, 4 Ore. 313; "Vattier v. Hinde, 7 Pet. (U. S.) Toland v. Corey, 6 Utah 392, 24 Pac. 252 8 L. ed. 675; Hunt v. Dunn, 74 190; Gall v. Gall, 126 Wis. 390, 105 Ga. 120; Crooks v. Jenkins, 124 N. W. 953, 5 L. R. A. (N. S.) 6U3; Iowa 317, 100 N. W. 82, 104 Am. St. Brinkman v. Jones, 44 Wis. 498. The 326; Allen v. McCalla, 25 Iowa 464, court says: "We recognize the ob- 96 Am. Dec. 56; Wilson v. Miller, 16 ligation to give some effect to the Iowa 111; Pope v. Nichols, 61 Kans. term 'actual notice,' as distinguished 230, 59 Pac. 257; Greer v. Higgins, from mere 'notice,' and must there- 20 Kans. 420; Johnson v. Clark, 18 fore hold that no constructive knowl- Kans. 157; Knapp v. Bailey, 79 edge shall be imputed to the pur- Maine 195, 9 Atl. 122; Porter v. Se- chaser as a ground of notice. For vey, 43 Maine 519; Webster v. Mad- example, this court has held that dox' 6 Maine 256; Ringgold v. actual, open, and visible occupa- Bry'an, 3 Md. Ch. 488; Price v. Mc- tion, whether known to the pur- Donald, 1 Md. 403, 54 Am. Dec. 567; chaser or not, shall be deemed suffi- Teal V.' Scandinavian-American &c. cient notice to the purchaser of Bank, 114 Minn. 435, 131 N. W. 486; the rights and equities of such oc- Niles' V. Cooper, 98 Minn. 39, 107 cupant. This rule could not be ap- N. W. 744; State Bank v. Frame, plied to a case like the one at bar, 112 Mo. 502, 20 S. W. 620; Maupin unless such actual occupation was v Emmons, 47 Mo. 304; Speck v. known to the purchaser." See also Riggin, 40 Mo. 405; Vaughn v. Cunningham v. Brown, 44 Wis. 72. Tracy, ' 22 Mo. 415, 25 Mo. 318, 69 See ante § 253. Am. Dec. 471; McKinzie v. Perrill, § 545 NOTICE AS AFFECTING PEIOKITT 874 verse claim of title, or is conscious of having the means of such knowl- edge.^^ In other states, under statutes that speak of "notice" instead of "actual notice," for stronger reasons, actual knowledge or actual no- tice is not meant, but such notice only as might be charged upon a purchaser if he had used the means of knowledge he actually pos- The South Carolina statute, expressly providing that possession of real property shall not operate as notice of an instrument required to be recorded, and that actual notice shall be deemed sufiBeient to supply the place of registration only when such notice is of the instrument or its nature or purport, has been held not to affect the rule that posses- sion by a grantor in a deed which was in fact a mortgage is notice to a subsequent purchaser of the rights of such grantor.^* § 545. Actual notice implied from circumstances. — Notice implied from circumstances has been called actual notice in the second de- gree.^* Most of the courts have construed the statutes requiring actual notice or knowledge so as to include this species of actual notice as well as notice by direct evidence. Actual notice under this broader use of the term includes all instances of actual notice established by circum- stantial evidence. "If a party has knowledge of such facts as would lead a fair and prudent man, using ordinary caution, to make further inquiries, and he avoids the inquiry, he is chargeable with notice of the facts which by ordinary diligence he would have ascertained. He has no right to shut his eyes against the light before him. He does a wrong not to heed the 'signs and signals' seen by him. It may be well concluded that he is avoiding notice of that which he in realty be- lieves or knows. Actual notice of facts which, to the mind of a pru- " Gaines v. Summers, 50 Ark. 322, 499, 59 S. E. 534, construing S. Car. 7 S. W. 301; Brickson v. Raffierty, Code 1902, § 2457; Johnson v. 79 111. 209; White v. Fisher, 77 Ind. Badger M. &c. Co., 13 Nev. 351. See 65, 40 Am. Rep. 287; Clark v. Hoi- also Larkin v. Hagan, 14 Ariz. 63, land, 72 Iowa 34, 33 N. W. 350, 2 Am. 126 Pac. 268 (actual notice to cred- St. 230; Michigan Mut. L. Ins. Co. itors, of mortgage defectively ac- V. Conant, 40 Mich. 530; Drey v. knowledged by corporation). Boyle, 99 Mo. 459, 12 S. W. 287; "Wilson v. Miller, 16 Iowa 111; Speck V. Riggin, 40 Mo. 405; Will- Knapp v. Bailey, 79 Maine 195; iamson v. Brown, 15 N. Y. 354, 6 Maupin v. Emmons, 47 Mo. 304; Gray's Cas. 449. Speck v. Riggin, 40 Mo. 405. Notice " Protection Bldg. &c. Assn. v. may be inferred from circum- Knowles, 54 N. J. Eq. 519, 34 Atl. stances as well as proved by di- 1083; Traylor v. Townsend, 61 Tex. rect evidence. Fisher v. Borden, 144. Ill Va. 535, 69 S. E. 636, "Manigault v. Lofton, 78 S. Car. 875 ACTUAL NOTICE § 546 dent man, indicate notice, is proof of notice."^ ^ In the -vrords of Mr. Justice Strong, "Means of knowledge, with the duty of using them, are in equity equivalent to knowledge itself."^" Notice of a prior deed or mortgage thus imputable from an opportunity to acquire knowl- edge, coupled with the duty to seek it, whether termed actual or con- structive notice, has the effect of postponing the subsequent grantee or mortgagee charged therewith.^^ § 546. Degrees of actual notice — Rumors, and sources of informa- tion. — The degrees and kinds of actual notice are of course with- out number, ranging from a formal written statement of the lien, giving all its details, to a mere verbal declaration of the fact of its existence; it may be one given expressly as a notice, or it may have come in an accidental way. But neither the manner of the notice nor the purpose of it is material,^^ even a verbal communication being sufficient.^^ The degree of the notice, however, is material. "Flying reports are many times fables and not truth. "^° The information must be sufiBcient to furnish a basis of investigation, and a mere rumor or suspicion that some other person claims an interest in the property will not affect a person with notice of such interest.^^ ^=Knapp V. Bailey, 79 Maine 195, per Peters, C. J., denying the views expressed in SpofEord .v. Weston, 29 Maine 140. "Cordova v. Hood, 17 Wall. (U. S.) 1, 21 L. ed. 587. " Montgomery v. Keppel, 75 Cal. 128, 19 Pac. 178, 7 Am. St. 125; Russell V. Ranson, 76 111. 167; Dun- can V. Miller, 64 Iowa 223, 20 N. W. 161; Livingstone v. Murphy, 187 Mass. 315, 72 N. B. 1012, 105 Am. St. 400; Quimby v. Williams, 67 N. H. 489, 41 Atl. 862, 68 Am. St. 685. See also Beeman v. Cooper, 64 "Vt. 305, 23 Atl. 794; Fidelity Ins. &c. Co. v. Shenandoah Valley R. Co., 32 W. Va. 244, 9 S. B. 180. See post §§ 547, 571, 579. "Wailes v. Cooper, 24 Miss. 208; Smith V. Smith, 2 Compt. & M. 231; North British Ins. Co. v. Hallett, 7 Jur. (N. S.) 1263. ^"Schmidt v. Hedden (N. J. Eq.), S8 Atl. 843; Jackson v. Condict, 57 N. J. Eq. 522, 41 Atl. 374; Wattles v. Slater, 154 Mich. 666, 118 N. W. 486. ^Wildgoose v. Wayland, Gouldsb. 147, pl. 67, per Lord Keeper Bger- ton. See also Doyle v. Teas, 5 111. 202; Butler v. Stevens, 26 Maine 484; Buttrick v. Holden, 13 Mete. (Mass.) 355; Wilson v. McCullough, 23 Pa. St. 440. ^ Hardy v. Harbin, 1 Sawyer (U. S.) 194; Flagg v. Mann, 2 Sumn. (U. S.) 486; Satterfield v. Malone, 35 Fed. 445; Parkhurst v. Hosford, 21 Fed. 827; Tompkins v. Hender- son, 83 Ala. 391, 3 So. 774; Lambert V. Newman, 56 Ala. 623; Smith v. Yule, 31 Cal. 180, 89 Am. Dec. 167; Hall V. Livingston, 3 Del. Ch. 348; Ratteree v. Conley, 74 Ga. 153; Otis V. Spencer, 102 111. 622, 40 Am. Rep. 617; Slattery x- RafCerty, 93 111. 277; Chicago V. Witt, 75 111. 211; Pitt- man V. Sofley, 64 111. 155; First Nat. Bank v. Farmers' &c. Nat. Bank, 171 Ind. 323, 82 N. E. 1013, 86 N. E. 417 (equivocal circumstances); Foust V. Moorman, 2 Ind. 17; Weare v. Williams, 85 Iowa 253, 52 N. W. 328; Wilson v. Miller, 16 Iowa 111; Butler v. Stevens, 26 Maine 484; Buttrick v. Holden, 13 Mete. (Mass.) 355; Shepard v. Shepard, 36 Mich. 173; Loughridge v. Bow- land, 52 Miss. 546; Brick v. Paine, 546 KOTICE AS AFFECTING PEIORITT 876 Formerly the rule was, that such notice, to be binding, must pro- ceed from some person interested in theproperty.^^ But this limita- tion is too restricted to be accurate, and a better statement of the rule is that information coming from a stranger, in order to charge a pur- chaser with notice, must be more specific and direct than that coming from a party in interest. °^ Under some of the later cases, casual or accidental information seems to be insuflBcient, and the knowledge con- stituting notice must be acquired by the purchaser while making in- quiries for the protection of his own interests, or in dealing in some way with the property or the title to it, in his own interest and be- half.^* Thus, where an attorney at law had drawn a mortgage and attested and acknowledged it, and the mortgage remained unrecorded for nine years, when he himself took a mortgage upon the same prop- erty from the same grantor, it was held that he would not be presumed to still have knowledge of the prior mortgage; since mere casual knowledge, without his interests being affected, imposed on him no duty to remember.^^ It has been held that knowledge that a mortgagor was a married man at the time he acquired title to the premises, did 50 Miss. 648; Wailes v. Cooper, 24 Miss. 208; Protection Bldg. &c. Assn. V. Knowles,' 54 N. J. Eq. 519, 34 Atl. 1083; Green v. Morgan (N. J. Bq.), 21 Atl. 857; Condit v. Wil- son, 36 N. J. Eq. 370; Fort v. Burcli, 6 Barb. (N. Y.) 60; Jackson v. Van Valkenburgh, 8 Cow. (N. Y.) 260; Allen V. Allen, 121 N. Car. 328, 28 S. E. 513; Fleming v. Burgin, 37 N. Car. 584; Jaeger v. Hardy, 48 Ohio St. 335, 27 N. B. 863, per Williams, C. J.; Woodworth v. Paige, 5 Ohio St. 70; Raymond v. Flavel, 27 Ore. 219, 40 Pac. 158; Bugbee's Appeal, 110 Pa. St. 331, 1 Atl. 273; Hotten- stein V. Lerch, 104 Pa. St. 454; Maul V. Rider, 59 Pa. St. 167; Churcher V. Guernsey, 39 Pa. St. 84; Wilson V. McCullough, 23 Pa. St. 440, 62 Am. Dec. 347; Jaques v. Weeks, 7 Watts (Pa.) 261; Kerns v. Swope, 2 Watts (Pa.) 75; Rutherford v. Jenkins (Tenn.), 54 S. W. 1007; Hawley v. Bullock, 29 Tex. 216; Martel v. Som- ers, 26 Tex. 551; Bacon v. O'Con- nor, 25 Tex. 213; Wethered v. Boon, 17 Tex. 143; College &c. Line v. Ide, 15 Tex. Civ. App. 273, 40 S. W. 64; French v. Loyal Co., 5 Leigh (Va.) 627; Connell v.' Connell, 32 W. Va. 319, 9 S. E. 252; Lamont v. Stim- son, 5 Wis. 443; Parker v. Kane, 4 Wis. 1, 65 Am. Dec. 283; Jolland \. Stainbridge, 3 Ves. Jr. 478. See post § 548. ^Rogers v. Hoskins, 14 Ga. 166; Van Duyn^ v. Vreeland, 12 N. J. Eq. 142; Woodworth v. Paige, 5 Ohio St. 70; Peebles v. Reading, 8 Serg. & R. (Pa.) 484; Ripple v. Ripple, 1 Rawle (Pa.) 386; Lamont v. Stim- son, 5 Wis. 443, 62 Am. Dec. 696; Natal Land Co. v. Good, 2 L. R. P. C. 121; Barnhart v. Greenshields, 9 Moore P. C. 18, 36. See also Park- hurst v. Hosford, 21 Fed. 827. =" Wilcox V. Hill, 11 Mich. 256. See also Butcher v. Yocum, 61 Pa. St. 168, 100 Am. Dec. 625; Martel v. Somers, 26 Tex. 551; McNames v. Phillips, 9 Grant Ch. (U. C.) 314. The extent to which a purchaser is charged with notice of a claim and its character may be determined by the interest of the person making the communication. Wahl v. Stoy, 72 N. J. Eq. 607, 66 Atl. 176. "Arden v. Arden, 29 Ch. D. 702, 54 L. J. Ch. 655, 52 L. T. Rep. (N. S.) 610, 33 Wkly. Rep. 593. See also Smith v. Wofford (Tex. Civ. App.), 97 S. W. 143. =* Goodwin v. Dean, 50 Conn. 517. 877 ACTUAL' NOTICE § 547 not charge* one who accepted a mortgage from him, four years later, with knowledge that the marriage relation continued to exist.^" Of course, formal and technical notice can be given only by the person directly interested ; but a stranger can give information which will affect a purchaser by putting him upon inquiry as to the fact. In- formation from a person directly interested in the property is entitled to more weight than the statements of a stranger are entitled to ; but it may be gtated as a general proposition that, if the information be derived from any other source entitled to credit, and it be definite, it will be equally binding as if it came from the party himself.^^ Infor- mation sufficient to put one upon inquiry may consist of statements made by the claimant of an adverse right,^* or by his friend or rela- tive or any disinterested third person in a position to know and im- part the facts with reasonable certainty.^' And it has been held that the knowledge of one of two parties jointly interested may be imputed to the other.^" Thus, if one about to purchase land is informed by the recorder that the vendor had already given a deed of the same property to another person who had deposited his deed for record, but had withdrawn it before it was recorded, this information, being from a trustworthy source, and being definite as regards the existence of the prior deed, and affording the means of pursuing the inquiry, operates as notice to the purchaser of such prior unrecorded deed.^^ § 547. Facts and circumstances putting purchaser upon inquiry. — It is a well-settled principle in equity, that information sufficient to put one on inquiry in regard to an adverse right is prima facie suffi- cient to charge him with notice of such right. But what is sufficient to put a purchaser upon inquiry, and affect him with the facts which "^Webb V. John Hancock Mut. Am. Dec. 144; Epley v. Witherow, Life Ins. Co., 162 Ind. 616, 69 N. E. 7 Watts (Pa.) 163. 1006, 66 L. R. A. 632. ^Lawton v. Gordan, 37 Cal. 202; ■"Lawton v. Gordon, 37 Cal. 202; Cox v. Milner, 23 111. 476; Curtis v. Curtis V. Mundy, 3 Mete. (Mass.) Mundy, 3 Mete. (Mass.) 405; Jack- 405; Willcox v. Hill, 11 Mich. 256; son, L. & S. R. Co. v. Davison, 65 Bartlett v. Glasscock, 4 Mo. 62; Mich. 416, 32 N. W. 726; Jaeger v. Jackson v. Van Valkenburgh, 8 Cow. Hardy, 48 Ohio St. 335, 27 N. E. (N. Y.) 260; Jaeger v. Hardy, 48 863; Butcher v. Yocum, 61 Pa. St. Ohio St. 335, 27 N. E. 863; Tucker 168, 100 Am. Dec. 625. V. Constable, 16 Ore. 407, 19 Pac. 13; "Haven v. Emery, 33 N. H. 66 Mulliken v. Graham, 72 Pa. St. 484; (notice to bondholders through Butcher v Yocum, 61 Pa. St. 168, trustee); Freeman v. Laing (1899), 100 Am Rep. 625; Philips v. Bank 2 Ch. 355, 68 L. J. Ch. 586, 81 L. T. of Lewiston, 18 Pa. St. 394; Martel Rep. (N. S.) 167, 48 Wkly. Rep. 9 v. Somers, 26 Tex. 551. (joint tenants). ^ Davis v. Kennedy, 105 111. 300; "^Lawton v. Gordon, 37 Cal. 202. Nelson v. Sims, 23 Miss. 383, 57 § 547 NOTICE AS AFFECTING PRIORITY 878 the inquiry might lead to, is determined by equitable considerations, and is difficult to state in the form of a rule universally applicable. In each ease it must be determined whether the facts and circumstances disclosed are such as to charge the conscience of the purchaser with the duty of following up the inquiry.^^ In general, a notice of a claim, right, or interest affecting a title is suiBcient if it is such a notice as a man of ordinary intelligence would act upon if it affected his ordi- nary business affairs.^ ^ It has been said that any form of notice suffi- cient to excite attention, and put a party upon his guard or call for inquiry, is notice of everything to which such inquiry would have led; every unusual circumstance being a ground of suspicion and demand- ing investigation.^* A very brief and general statement by an adverse claimant is suffi- cient to charge a purchaser with the duty of further investigation.^^ «= Chicago V. Witt, 75 111. 211; Wil- son v. Hunter, 30 Ind. 466; Deason V. Taylor, 53 Miss. 697; Barrett v. Baker, 136 Mo. 512, 37 S. W. 130; Arlington State Bank v. Paulsen, 57 Nebr. 717, 78 N. W. 303; Baker v. Bliss, 39 N. Y. 70; Fassett v. Smith, 23 N. Y. 252; Williamson v. Brown, 15 N. Y. 354; In re Tabor Street, 26 Pa. Sup. Ct. 167; Harrison v. Bor- ing, 44 Tex. 255; Passumpic Sav. Bank v. First Nat. Bank, 53 Vt. 82. "= Ringgold V. Waggoner, 14 Ark. 69; Prouty v. Devin, 118 Cal. 258, 50 Pac. 380; Booth v. Barnum, 9 Conn. 286, 23 Am. Dec. 339; O'Con- nor V. Mahoney, 159 111. 69, 142 N. E. 378; Mason v. Mullahy, 145 111. 383, 34 N. B. 36; Frick v. Godare, 144 Ind. 170, 42 N. E. 1015; France V. Holmes, 84 Iowa 319, 51 N. W. 152; Shoemaker v. Smith, 80 Iowa 655, 45 N. W. 744; Millar &c. Co. v. Olney, 69 Mich. 560, 37 N. W. 558; Willcox V. Hill, 11 Mich. 256; Bar- rett v. Baker, 136 Mo. 512, 37 S. W. 130; Hedrick v. Atchison, T. &c. R. Co., 120 Mo. 516, 25 S. W. 759; State Bank v. Frame, 112 Mo. 502, 20 S. W. 620; Barrett v. Davis, 104 Mo. 549, 16 S. W. 377; Drey v. Doyle, 99 Mo. 467, 12 S. W. 287; Meier v. Blume, 80 Mo. 179; Musgrove v. Bonser, 5 Ore. 313, 20 Am. Rep. 737; Bohlman v. Coffin, 4 Ore. 313; Brad- lee V. Whitney, 108 Pa. St. 362; Barnes v. M'Clinton, 3 Pa. St. 67; Harrison v. Boring, 44 Tex. 255; Helms V. Chadbourne, 45 Wis. 60; Lloyd V. Banks, L. R. Ch. 488, 37 L. J. Ch. 881, 16 Wkly. Rep. 988. In Curtis v. Mundy, 3 Mete. (Mass.) 405, Putnam, J., said: "In- formation of the giving of a deed brought home to a party with as much authority as the fact of the marriage or death of a friend in the newspaper would be, as we think, actual notice within the statute. And if such actual notice or infor- mation should prove to be true, the party receiving It would be affected by it as much as if he had seen the transaction, and so had actual knowledge of the fact; as if, for ex- ample, after he had witnessed the conveyance he had gone with great haste and put an attachment upon the estate before the grantee, with ordinary diligence, had time to put his deed upon record. The statute, which is declaratory of the princi- ples of common law, considers such conduct to be fraudulent and will protect the party, who was thus in- tended to be deprived of his estate, as completely as if his deed had been recorded before the attach- ment." See post § 548. « Russell V. Ranson, 76 111. 167; Webb V. John Hancock Mut. Life Ins. Co., 162 Ind. 616, 69 N. E. 1006, 66 L. R. A. 632. «> Russell V. Petree, 10 B. Men. (Ky.) 184. 879 ACTUAL NOTICE § 547 Notice may be inferred from slight circumstances -when it is shown that the purchaser and the vendor, who has made a prior conveyance or incumbrance of the same property, are intimately associated in business, or intimately related by blood or connected by marriage.'^ Thus, also where an entry of a satisfaction of a mortgage is made by one who occupies a double position of owner and trustee under a mort- gage of the land, it has been held, that the purchaser is put on inquiry as to his authority to discharge it.^^ And where the records show that an administrator, in violation of law, was indirectly the purchaser of property at his own sale, the facts are suflScient to put an ordinarily prudent man on inquiry, and a subsequent mortgagee or grantee of the property is not a bona fide purchaser.^' A trustee can not lawfully release a trust deed for the benefit of his wife, without payment of the note or debt secured ; and the fact that the payee has possession of the uncanceled note before maturity is suflScient to put the mortgage cred- itor on inquiry whether the note has been paid in fact.^° But in general it may be said that a mere want of caution does not charge a purchaser with notice.*" It is not enough that he might en- tertain a mere suspicion of an unknown equity or interest. It is not enough that an over-prudent and cautious man, if his attention had been called to the suspicious circumstance, would have been likely to seek an explanation of it. There must be some clear neglect to in- quire, after having some notice of some definite equity or interest in another. The mere fact that a purchaser knows of the existence of a debt for unpaid purchase-money does not make him chargeable with notice of an unrecorded mortgage securing such purchase-money.*^ The fact that a mortgage was given to release an attachment does not charge another mortgagee of the same premises, whose mortgage was first ^^Trefts y. King, 18 Pa. St. 157. Mass. 50; Buttrlck v. Holden, 13 "Kirsch v. Tozier, 143 N. Y. 390, Mete. (Mass.) 355; Woodworth. v. 38 N. E. 375. Paige, 5 Ohio St. 70; Raymond v. =»Veeder v. McKinley-Lanning Flavel, 27 Ore. 219, 40 Pac. 158; Loan &c. Co., 61 Nebr. 892, 86 N. W. Ware v. Egmont, 4 De G., M. & G. 982. 460; Parker v. Conner, 93 N. Y. 118, ^Lang V. Metzger, 86 III. App. 45 Am. Rep. 178. Some of these 117. cases probably go too far in stating "Dudley v. Witter, 46 Ala. 664; that the purchaser's negligence Hall V. Livingston, 3 Del. Ch. 348; must go to the extent of being gross Reynolds v. Carlisle, 99 Ga. 730, 27 or culpable in order to affect him S. E. 169; Grundies v. Reid, 107 111. with notice. See post § 572. 304; Cavin v. Middleton, 63 Iowa "^Pollak v. Davidson, 87 Ala. 551, 618, 19 N. W. 805; Wilson v. Miller, 6 So. 312; Bell v. Tyson, 74 Ala. 16 Iowa 111; Willis v. Valette, 4 353. Mete. (Ky.) 186; Briggs v. Rice, 130 § 547 NOTICE AS JlPFECTING peioeity 880 recorded, with constructive notice of the first named mortgage.*" A mortgagee's knowledge of the existence of bonds issued by the mort- gagor does not charge him with knowledge of a mortgage made to se- sure them.*^ But such knowledge may be notice of a vendor's lien.** But a purchaser of land with notice that his vendor holds under a bond for title, and that one of the purchase-notes mentioned in the bond is not paid, is not a bona tide purchaser for value as against the assignee of such note by assignment previously made.*^ And so a mortgagee of land who took with knowledge that the purchase-price therefor had not been paid, took subject to the vendor's lien.** And, likewise, a mortgagee of land who has notice that the mortgagor has not made full payment for the property and that his title deed is still in escrow, is chargeable with notice of facts which he could have ac- quired in the exercise of ordinary diligence and prudence, including the fact that a purchase-money mortgage was deposited with the deed.*^ Where a judgment upon a note exists against a mortgagor, though apparently satisfied of record, and there is a recital on the docket of a subsequent assignment of the judgment in trust to the indorsers of the note, who were in fact mere sureties, such recital was sufficient to put subsequent mortgagees of land belonging to the makers of the note on inquiry as to the rights of such indorsers ; and neglecting such inquiry, they took subject to such rights.** The mere fact that one who was a witness to an unrecorded mortgage afterward became the purchaser of the land from the mortgagor is not sufficient to affect him with notice of the mortgage.*" But it was held that one who took an acknowledgment of a deed and delivered it ^Beeman v. Cooper, 64 Vt. 305, So. 738; Kocli v. Roth, 150 111. 212, 23 Atl. 794. 37 N. B. 317. ^ JolinBon v. Valido Marble Co., * Dishmore v. Jones, 1 Coldw. C4 Vt. 337, 25 Atl. 441. Where a (Tenn.) 555; Payne v. Abercromhie, mortgagor had assumed a prior 10 Heisk. (Tenn.) 161; Lytle v. Tur- mortgage recited in his title deed, ner, 12 Lea (Tenn.) 641. the mortgagee was chargeable with ^'Harter v. Capital City Brew. notice of the fact, which could have Co., 66 N. J. Eq. 432, 57 Atl. 1132, been ascertained by inquiry, that atfg. 64 N. J. Eq. 155, 53 Atl. 560. the former mortgage was given to " Balfour v. Parkinson, 84 Fed. secure coupon bonds still outstand- 855, affd. Balfour v. Hopkins, 93 ing in a third person; and there- Fed. 564, 35 C. C. A. 445. fore the bondholders will have pri- "Patton v. Cooper, 132 N. Car. ority over the subsequent mort- 791, 44 S. E. 676. gagee. Farmers' and Drovers' Bank *" Goodwin v. Dean, 50 Conn. 517; v. German Ins. Bank, 23 Ky. L. Vest v. Michie, 31 Grat. (Va.) 149, 2008, 66 S. W. 280. 31 Am. Rep. 722. " Overall v. Taylor, 99 Ala. 12, 11 881 ACTUAL NOTICE § 548 to the grantee is chargeable with notice of the grantee's title.'^" An attorney who has drafted a mortgage for a client upon certain land and afterward accepts from the mortgagor a deed of the same land, takes with notice of the mortgage.^^ If an assignee of a mortgage has notice that it was made to his as- signor without consideration for the purpose of raising money by its sale, he is put upon inquiry whether any liens intervened between its date and his purchase of it; and the fact that the mortgagor offers it for sale is a circumstance to put the purchaser upon inquiry.^^ A purchaser may be charged with notice by the fact that he is pay- ing a very inadequate price for the property. ^^ The fact that the value of the mortgaged premises is not sufficient to secure two loans is evi- dence, though not conclusive, that a second mortgagee had -no notice of a prior incumbrance.^* A purchaser may also be charged with notice from any suspicious circumstances affecting the transaction.''^ Thus, where a debtor, under circumstances showing great embarrassment, and otherwise suspicious, gave to a creditor an assignment of a mortgage covering tlae amount of the debt, it was held that there was enough in the circumstances of the transaction to put the creditor upon inquiry as to a prior assign- ment by the same debtor to another person, and he was therefore charged with notice thereof.^" The mere possession and control of a mortgage by the mortgagor raises no presumption that it has been paid, and the production of the mortgage with the seals torn off has been held not alone sufficient to relieve a subsequent purchaser from the duty to make inquiry as to cancelation. '*'' § 548. Sufficiency of notice or ground of inquiry. — Notice, to sup- ply the place of registry, must be sufficient to make inquiry upon; it must be more than what is barely suflScient to put the party upon in- " Greenlee v. Smith, 4 Kans. App. Car. 367; Hoppln v. Doty, 25 Wis. 733, 46 Pac. 543. 573. ^^ Wittkowsky v. Gidney, 124 N. " Matteson v. Blackmer, 46 Mich. Car. 437, 32 S. E. 731. But see 393, 9 N. W. 445. Goodwin v. Dean, 50 Conn. 517 °° Eck v. Hatcher, 58 Mo. 235; Til- ( where nine years intervened). linghast v. Champlin, 4 R. I. 173, 67 "^ Mullison's Estate, 68 Pa. St. 212. Am. Dec. 510. ==Lounsbury v. Norton, 59 Conn. ""Hoyt v. Hoyt, 8 Bosw. (N. Y.) 170, 22 Atl. 153, per Andrews, C. X; 511. Hume v. Franzen, 73 Iowa 25, 34 '"Harrison v. Johnson, 18 N. J. N. W. 490; Runkle v. Gaylord, 1 Bq. 420, revd. 19 N. J. Ect. 488. Nev. 123; Durant v. Crowell, 97 N. 56 — ^JoNES Mtg. — Vol. I. § 548 NOTICE AS AFFECTING PEIOEITT quiry."^ In some eases it is even said that, to break in upon the regis- try acts, the notice must be such as will, with the attending circum- stances, affect the party with fraud.^^ Circumstances which are merely equivocal will not charge a subse- quent purchaser or incumbrancer with the duty of making inquiry."" The notice must be clear and undoubted;"^ and when that is the case it is regarded as per se evidence of fraud for one to attempt to defeat a prior incumbrance by setting up a subsequent deed."^ A grantee or mortgagee of realty is chargeable with notice of a prior mortgage or deed, if he is acquainted with facts which would raise a doubt in the mind of an ordinarily prudent man, and demand inves- tigation, which if diligently and properly pursued would lead to the discovery of the prior conveyance. In general it may be said that the facts disclosed amount to notice when they are such as render it ia- cumbent on the purchaser or mortgagee to inquire, and at the same time enable him to prosecute the inquiry successfully.*^ If in such case "' Tompkins v. Henderson, 83 Ala. 391, 3 So. 774; Reed v. Gannon, 50 N. y. 345; Williamson v. Brown, 15 N. Y. 354; Webster v. Van Steen- bergh, 46 Barb. (N. Y.) 211; Fort V. Burch, 6 Barb. (N. Y.) 60; Jack- son V. Van Valkenburgh, 8 Cow. (N. Y.) 260; Day v. Dunham, 2 Johns. Ch. (N. Y.) 182; College &c. Line v. Ide, 15 Tex. Civ. App. 273. 40 S. W. 64. ""Goodwin v. Dean, 50 Conn. 517; Hall V. Livingston, 3 Del. Ch. 348; Pittman v. Sofley, 64 111. 155; Holmes v. Stout, 10 N. J. Eq. 419; Day V. Dunham, 2 Johns. Ch. (N. Y.) 182; Woodworth v. Paige, 5 Ohio St. 70; Vast v. Michie, 31 Grat. (Va.) 149, 31 Am. Rep. 722; Mun- day V. Vawter, 3 Grat. (Va.) 518; Jones V. Smith, 1 Hare 43. See ante § 546. '"Arnold v. Barnett, 90 Ga. 334, 17 S. E. 91; Slattery v. Rafferty, 93 111. 277; First Nat. Bank v. Farm- ers' &c. Nat. Bank, 171 Ind. 323, 82 N. E. 1013, 84 N. E. 1077, 86 N. B. 417; Sheldon v. Holmes, 58 Mich. 138, 24 N. W. 795; Protection Bldg. &c. Assn. v. Knowles, 54 N. J. Eq. 519, 34 Atl. 1083. See ante § 546. "^ Smith v. Yule, 31 Cal. 180, 89 Am. Dec. 167; Rogers v. Wiley, 14 111. 65, 56 Am. Dec. 491; Condit v. Wilson, 36 N. J. Eq. 370; Riley v. Hoyt, 29 Hun (N. Y.) 114; Wilson V. McCullough, 23 Pa. St. 440, 62 Am. Dec. 347; West v. Reid, 2 Hare 249; Hine v. Dodd, 2 Atk. 275. "^Pittman v. Sofley, 64 111. 155; Loughridge v. Rowland, 52 Miss. 546; Morris v. White, 36 N. J. Eq. 324; Cambridge Valley Bank v. De- lano, 48 N. Y. 326; Acer v. Wescott, 46 N. Y. 384, 7 Am. Rep. 255; Dun- ham V. Dey, 15 Johns. (N. Y.) 554, 8 Am. Dec. 282. ^Balfour v. Parkinson, 84 Fed. 855; Tompkins v. Henderson, 83 Ala. 391, 3 So. 774; Webb v. Rob- bins, 77 Ala. 176; Prouty v. Devin, 118 Cal. 258, 50 Pac. 380; Stockton Bldg. &c. Assn. v. Chalmers, 65 Cal. 93, 3 Pac. 101; Thompson v. Pioche, 44 Cal. 508; Galland v. Jackman, 26 Cal. 80, 85 Am. Dec. 172; Boswell v. Goodwin, 31 Conn. 74, 81 Am. Dec. 169; Booth v. Barnum, 9 Conn. 286, 23 Am. Dec. 339; Goodwynne v. Ballerby, 116 Ga. 901, 43 S. E. 275; Slmms v. Freiherr, 100 Ga. 607, 28 S. B. 288; Hunt v. Dunn, 74 Ga. 120; Stokes V. Riley, 121 111. 166, 11 N. E. 877; Hunter v. Stoneburner, 92 111. 75; Heaton v. Prather, 84 111. 330; Chicago v. Witt, 75 111. 211; Hankinson v. Barbour, 29 111. 80; Rupert V. Mark, 15 111. 540; Gar- rett V. Simpson, 115 111. App. 62; Clark V. Plumstead, 11 111. App. 57; Slocum V. Slocum, 9 111. App. 142; Webb V. John Hancock Mut. Life 883 ACTUAL NOTICE § 548 he wilfully closes his eyes and remains ignorant of facts he would as- certain by a reasonable inquiry, he is affected with notice of them just as much as he would be had he made the inquiry.** Ins. Co., 162 Ind. 616, 69 N. E. 1006, 66 L. R. A. 632; Indiana B. &c. R. Co. V. McBroom, 114 Ind. 198, 15 N. E. 831; Wilson v. Godfrey, 145 Iowa 696, 124 N. W. 875; Shoemaker v. Smith, 80 Iowa 655, 45 N. W. 744; Leas V. Garverich, 77 Iowa 275, 42 N. W. 194; "Wilson v. Miller, 16 Iowa 111; Hull V. Noble, 40 Maine 459; Spofford V. Weston, 29 Maine 140; Border State Sav. Inst. v. Wilcox, 63 Md. 525; Stockett v. Taylor, 3 Md. Ch. 537; Allen v. Cadwell, 55 Mich. 8, 20 N. W. 692; Michigan Mut. L. Ins. Co. V. Conant, 40 Mich. 530; Converse v. Blumrach, 14 Mich. 109, 90 Am. Dec. 230; Lindauer v. Younglove, 47 Minn. 62, 49 N. W. 384; Plant v. Shryock, 62 Miss. 821; Loughridge v. Bowland, 52 Miss. 546; Buck v. Paine, 50 Miss. 648; McLeod V. First Nat. Bank, 42 Miss. 99; Conn. Mut. Life Ins. Co. v. Smith, 117 Mo. 261, 22 S. W. 623, 38 Am. St. 656; Seiberling v. Tipton, 113 Mo. 373, 21 S. W. 4; Loring v. Groomer, 110 Mo. 632, 19 S. W. 950; Taafee v. Kelley, 110 Mo. 127, 19 S. W. 539; Meier v. Blume, 80 Mo. 179; Maupin v. Emmons, 47 Mo. 304; Bartlett v. Glasscock, 4 Mo. 62; Mc- Waid V. Blair State Bank, 58 Nebr. 618, 79 N. W. 620; Arlington State Bank v. Paulsen, 57 Nebr. 717, 78 N. W. 303; Eiseman v. Gallagher, 24 Nebr. 79; Janvrin v. Janvrin, 60 N. H. 169; Nute v. Nute, 41 N. H. 60; Rogers v. Jones, 8 N. H. 264; Kel- logg V. Randolph, 71 N. J. Eq. 127, 63 Atl. 753; Parker v. Parker (N. J.), 56 Atl. 1094; Kline v. Grannis, 61 N. J. Eq. 397, 48 Atl. 566; Jack- son V. Condict, 57 N. J. Eq. 522, 41 Atl. 374; Ledos v. Kupfrian, 28 N. J. Eq. 161; Hoy v. Bramhall, 19 N. J. Eq. 563, 97 Am. Dec. 687; Willink V. Morris Canal &c. Co., 4 N. J. Eq. 377; Ellis v. Horrman, 90 N. Y. 466; Hoyt V. Hoyt, 85 N. Y. 142, 17 Hun 192; Cambridge Bank v. Delano, 48 N. Y. 326; Acer v. Westcott, 46 N. Y. 384, 7 Am. Rep. 355; Baker v. Bliss, 39 N. Y. 70; Williamson v. Brown, 15 N. Y. 554; Howard Ins. Co. V. Halsey, 4 Sandf. (N. Y.) 565; Williams v. Lewis, 158 N. Car. 571, 74 S. B. 17; Patton v. Cooper, 132 N. Car. 791, 44 S. E. 676; Branch v. Griffin, 99 N. Car. 173, 5 S. E. 393; Blackwood v. Jones, 4 Jones Eq. (N. Car.) 54; Hibbs v. Union Cent. Life Ins. Co., 40 Ohio St. 543; Scott v. Lewis, 40 Ore. 37, 66 Pac. 299; Exon V. Dancke, 24 Ore. 110, 32 Pac. 1045; Carter v. Portland, 4 Ore. 339; Flit- craft V. Commonwealth Title &c. Trust Co., 11 Pa. 114, 60 Atl. 557; Bradlee v. Whitney, 108 Pa. St. 362; Mulliken v. Graham, 72 Pa. St. 484; Maul V. Rider, 59 Pa. St. 167; Wil- son V. McCullough, 23 Pa. St. 440, 62 Am. Dec. 347; Dunning v. Reese, 7 Kulp (Pa.) 201; Wolfe v. Citizens' Bank (Tenn.), 42 S. W. 39; Paine V. Abercrombie, 10 Heisk. (Tenn.) 161; Ramirez v. Smith, 94 Tex. 184, 59 S. W. 258; Traylor v. Townsend, 61 Tex. 144; Powell v. Haley, 28 Tex. 52; Wells v. Houston, 23 Tex. Civ. App. 629, 57 S. W. 584; Smith V. Smith, 23 Tex. Civ. App. 304, 55 S. W. 541; Moody v. Martin (Tex. Civ. App.), 117 S. W. 1015; Keyser V. Clifton (Tex. Civ. App.), 50 S. W. 957; Brown v. Wilson (Tex. Civ. App.), 29 S. W. 530; Adams v. Soule, 33 Vt. 538; Stevens v. Goodenough, 26 Vt. 676; Blaisdell v. Stevens, 16 Vt. 179; Fisher v. Borden, 111 Va. 535, 543, 69 S. E. 636; Hall v. Cald- well, 97 Va. 311, 33 S. E. 596; Rob- inson V. Crenshaw, 84 Va. 348, 5 S. E. 222; Effinger v. Hall, 81 Va. 94; Wood v. Krebbs, 30 Grat. (Va.) 708; Long V. Weller, 29 Grat. (Va.) 347; Crumlish v. Railroad Co., 32 W. Va. 244; Cain v. Cox, 23 W. Va. 594; Helms V. Chadbourne, 45 Wis. 60; Parker v. Kane, 4 Wis. 1, 65 Am. Dec. 283; Pilcher v. Rawlings, L. R. 11 Eq. 53, 40 L. J. Ch. 105, 23 L. T. Rep. (N. S.) 756, 19 Wkly. Rep. 217; Birch V. Ellames, Anstr. 427, 3 Rev. Rep. 601; Monteflore v. Browne, 7 H. L. Cas. 241, 4 Jur. (N. S.) 1201, 11 Eng. Reprint 96. See also First Nat. Bank v. Farmers &c. Nat. Bank, 171 Ind. 373, 86 N. E. 417. •"Kyle V. Ward, 81 Ala. 120, 1 So. 468; Montgomery v. Keppel, 75 Cal. § 549 NOTICE AS AFFECTING PEIOEITT 884 A second mortgagee is chargeable with notice of facts which he might have learned by inquiry of the first mortgagee, where he was told by the mortgagor of the existence of an unrecorded first mort- gage ; and an examination of the records by the second mortgagee and a search by an abstracter at his instance did not constitute proper or sufficient inquiry.*' § 549. Notice of owner's intention to execute mortgage. — Knowl- edge of the actual existence of a prior conveyance or incumbrance is essential to actual notice; and information of the grantor's intention or agreement to execute it is insufficient.*" Notice of an intention on the part of the ovnier of property to execute a lien upon it does not prevent the person having such notice from taking a valid incumbrance upon it. But where a prior mortgage, which was intended to be a con- veyance in fee, was by mistake, as executed, only a conveyance for life, and a second mortgagee had such actual notice of it as induced him to believe that the mortgage was in fee, it was, as against him, held to be a mortgage in fee.*^ Moreover, notice of an intention to execute a deed is not notice of the contents of the deed as executed.** A creditor may by his vigilance secure his demand, if possible, by taking a mortgage from his debtor, just as he might by an attaclmient, although he knew that another creditor intended to make an attachment in the one case, or to take a mortgage in the other, and had taken steps for effecting this.*' Wotice 128, 19 Pac. 178; Hankinson v. Bar- ster v. Clough, 4 OMo Dec. (reprint) ber, 29 111. 80; Allen v. McCalla, 25 25; Clark v. Paquette, 66 Vt. 386, 29 Iowa 464, 96 Am. Dec. 56; Baker v. Atl. 370. But see Dye v. Forbes, 34 Bliss, 39 N. Y. 70; Williamson v. Minn. 13, 24 N. W. 309. Knowledge Brown, 15 N. Y. 554; Burnham v. by one secured under a trust deed Brennan, 10 J. & S. (N. Y.) 49; for future advances, that his debtor Bunting v. Ricks, 2 Dev. & Bat. Eq. intends to give a second trust deed (N. Car.) 130; Musgrove v. Bonser, does not affect his security. Hall 5 Ore. 313, 20 Am. Rep. 737; Bonner v. Williamson Grocery Co., 69 W. V. Stephens, 60 Tex. 616; Blaisdell Va. 671, 72 S. E. 780. A purchaser V. Stephens, 16 Vt. 179; Brinkman with notice of an agreement be- V. Jones, 44 Wis. 498; White & Tu- tween the vendor and another, dor's Lead. Cas., 4th Am. ed., vol ii, amounting to an equitable mortgage part 1, pp. 152-155. on the land, takes subject to the «= Wattles V. Slater, 154 Mich. 666, rights of the equitable mortgagee. 118 N. W. 486; Munroe v. Eastman, Blackburn v. Tweedie, 60 Mo. 505; 31 Mich. 283; Shotwell v. Harrison, Foster Lumber Co. v. Harlan 30 Mich. 179. See also Blatchley v. County Bank, 71 Kans. 158, 80 Pac. Osborn, 33 Conn. 226. 49, 114 Am. St. 470. See post § 550. «« Ponder v. Scott, 44 Ala. 241; «' Gale v. Morris, 30 N. J. Eq. 285. Koon v. Tramel, 71 Iowa 132, 32 N. «« Ponder v. Scott, 44 Ala. 241. W. 243; Butler v. Stevens, 26 Maine "» Warden v. Adams, 15 Mass. 233; 484; Gushing v. Hurd, 4 Pick. Gushing v. Hurd, 4 Pick. (Mass.) (Mass.) 253, 16 Am. Dec. 335; Brew- 253, 16 Am. Dec. 335. 885 ACTUAL NOTICE § 551 of an unrecorded mortgage will defeat an attachment levied upon the land as property of the grantor, but mere knowledge of his intention to mortgage will not have that efEect." § 550. Inquiry concerning deeds not in the chain of title. — A pur- chaser is not put upon inquiry by notice of a deed not in the line of title under which he claims.'^ He is not put upon inquiry by notice of a deed which does not necessarily affect the property in question, especially if he is at the same time told that in fact it does not affect it, but relates to other property.'^ But if the notice be of an instru- ment that actually does affect the land, though there may be some doubt on the information obtained whether the land is included or not, the purchaser will be charged with full notice of the instrument if he fails to make suitable inquiry.'^ An equitable mortgage in favor of one advancing money to a vendee to purchase land, under an oral agreement to execute a mortgage to secure the loan, will be given priority over a mortgage on the land to a party who has notice of the rights of the equitable mortgagee.'* If a purchaser buys either the legal estate or an equitable interest in land, having knowledge of an outstanding equitable interest, he is chargeable with notice of any record of a conveyance or incumbrance of that interest. Knowledge of an equitable interest carries with it notice of the condition of such interest as it appears upon the public records.''^ But it is held that a purchaser of the legal title is not bound to take notice of a registered lien or incumbrance against the former owner of' the equitable title, through whom the purchaser does not deraign title, and whose name does not appear in the chain of title.'' § 551. Inquiry of reliable and disinterested parties. — The inquiry should be prosecuted by recourse to reliable and disinterested sources "Gushing v. Hurd, 4 Pick. (Mass.) "Price v. McDonald, 1 Md. 403, 54 253, 16 Am. Dec. 335. Am. Dec. 657; Doran v. Dazey, 5 N. " Satterfield v. Malone, 35 Fed. Dali. 167, 64 N. "W. 1023, 57 Am. St. 445; Continental Inv. &c. See. v. 550; Hudson v. Warner, 2 H. & G. Wood, 168 111. 421, 48 N. E. 221; 415. St. John v. Conger, 40 111. 535; Ely "Poster Lumber Co. v. Harlan V. Pingry, 56 Kans. 17, 42 Pac. 330; County Bank, 71 Kans. 158, 80 Pac. Schoch v. Birdsall, 48 Minn. 441, 51 49, 114 Am. St. 470; Blackburn v. N. W. 382.; Hetherington v. Clark, Tweedie, 60 Mo. 505. 30 Pa. St. 393; Woods v. Farmere, 7 ^' Jones v. Lapham, 15 Kans. 540. Watts (Pa.) 382, 32 Am. Dec. 772; '"Harper v. Bibb, 34 Miss. 472, 69 Ely V. Wilcox, 20 Wis. 523. See ante Am. Dec. 397; Baker v. Griffin, 50 § 541. Miss. 158. "Jones V. Smith, 1 Phillips 244, 1 Hare 43. § 551 NOTICE AS ArrECTING PRIOEITX 886 of information. It is not safe to rely upon the statements of the vendor, or of one who has a motive for misleading the inquirer,'" but all other reasonable and available sources of information must be ex- hausted.'^ Thus where a mortgagee knows that at least part of the purchase-price remains unpaid by his mortgagor, an inquiry of the mortgagor and a denial by him of the existence of any lien on the land is not sufiBcient to entitle the mortgagee to protection as a bona fide purchaser, since it was his duty to inquire directly from the original vendor; the mortgagor being interested adversely to the vendor's lien.'» If the claimant of an adverse interest be questioned by a purchaser regarding such interest, and he refuses to answer or is unable to do so, he should not be allowed to allege that the purchaser was put upon inquiry and is chargeable with notice.*" The purchaser in such case can hardly be charged with bad faith in not prosecuting the inquiry, and not obtaining information which was peculiarly within the knowl- edge of such adverse claimant. On the contrary, the adverse claimant might, under some circumstances, be chargeable with bad faith in at- tempting to mislead the purchaser.*^ And so, if a person in possession of land misleads the purchaser making inquiry, by misrepresentation or suppression of material facts, he is thereby estopped from afterward asserting against the purchaser, the claim or equity he ought to have disclosed.*^ By merely examining the records, a purchaser put upon inquiry as to a prior unrecorded deed does not discharge his duty in following up " Singer y. Jacobs, 11 Fed. 559; worth, 62 Ala. 547; Moody v. Martin Overall v. Taylor, 99 Ala. 12, 11 So. (Tex. Civ. App.), 117 S. W. 1015. 738; Blatchley v. Osborn, 33 Conn. '° McGehee v. Gindrat, 20 Ala. 95; 226; Russell v. Petree, 10 B. Men. Kelly v. Fairmount Land Co., 97 (Ky.) 184; Price v. McDonald, 1 Md. Va. 227, 33 S. E. 598. 403, 54 Am. Dec. 657; Littleton v. "Broome v. Beers, 6 Conn. 198; Giddings, 47 Tex. 109; Moody v. Piatt v. Squire, 12 Mete. (Mass.) Martin (Tex. Civ. App.), 117 S. W. 494; Fay v. Valentine, 12 Pick. 1015. The fact that a purchaser has (Mass.) 40, 22 Am. Dec. 397; Lesley been misled by false statements of v. Johnson, 41 Barb. (N. Y.) 359; his vendor is not suflScient to pro- Brinckerhoff v. Lansing, 4 Johns, tect him. Skeel v. Spraker, 8 Paige Ch. (N. Y.) 65, 8 Am. Dec. 528; (N. Y.) 182. Carr v. "Wallace, 7 Watts (Pa.) 394; "Dudley v. Witter, 46 Ala. 664; Epley v. Witherow, 7 Watts (Pa.) Skeel V. Spraker, 8 Paige (N. Y.) 163; Miller v. Bingham, 29 Vt. 82; 182; Littleton v. Giddings, 47 Tex. Stafford v. Ballon, 17 Vt. 329. 109. «^ Yates v. Hurd, 8 Colo. 343, 8 '"Overall v. Taylor, 99 Ala. 12, 11 Pac. 575; Losey v. Simpson, 11 N. J. So. 738. See also Poster v. Stall- Eq. 246. 887 ACTUAL NOTICE 552 the inquiry, for the records can give him no information respecting an unrecorded deed.*^ § 552. Diligence in prosecuting inquiry — ^Erroneous descriptions. — If a purchaser put upon inquiry fails to prosecute it with due dili- gence, he is conclusively presumed to have notice of the facts that a due inquiry would have disclosed.^* When it is shown that a purchaser had knowledge of facts sufficient to put him on inquiry as to the exist- ence of some right or title in conflict with the title or interest he is about to purchase, he is presumed to have made the inquiry, and as- certained the extent of such prior right, or to have been guilty of a degree of negligence equally fatal to his claim to be considered a bona fide purchaser.*^ He is chargeable with notice of all facts that he might have learned by the exercise of reasonable diligence, prosecuting «=Blatchley v. Osborn, 33 Conn. 226; "Wattles v. Slater, 154 Mich. 666, 118 N. W. 486; Munroe v. East- man, 31 Mich. 283; Shotwell v. Har- rison, 30 Mich. 179; Reck v. Clapp, 98 Pa. St. 581. "Rankin Mfg. Co. v. Bishop, 137 Ala. 271, 34 So. 991; Poster v. Stall- worth, 62 Ala. 547; Kenniff v. Caul- field, 140 Cal. 34, 73 Pac. 803; Bryan V. Tormey, 84 Cal. 126, 21 Pac. 725, 24 Pac. 319; Montgomery v. Keppel, 75 Cal. 128, 19 Pac. 178; Filmore v. Relthman, 6 Colo. 120; Walker v. Neil, 117 Ga. 733, 45 S. E. 387; Hunt V. Dunn, 74 Ga. 120; Stokes v. Riley, 121 111. 166, 11 N. E. 877; Chicago, R. I. &c. R. Co. V. Kennedy, 70 111. 350; Hankinson v. Barbour, 29 111. 80; Doyle v. Teas, 5 111. 202; Webb V. John Hancock Mut. L. Ins. Co., 162 Ind. 616, 69 N. E. 1006, 66 L. R. A. 632; Blair v. Whitaker, 31 Ind. App. 664, 69 N. E. 182; Wilson v. Miller, 16 Iowa 111; Russell v. Pe- tree, 10 B. Mon. (Ky.) 184; Mayor V. Williams, 6 Md. 235; Price v. McDonald, 1 Md. 403, 54 Am. Dec. 657; Schweiss v. Woodruff, 73 Mich. 473, 41 N. W. 511; Oliver v. Sanborn, 60 Mich. 346, 27 N. W. 527; Con- verse V. Blumrich, 14 Mich. 109, 90 Am. Dec. 230; Loughridge v. Bow- land, 52 Miss. 546; Buck v. Paine, 50 Miss. 648; McLeod v. First Nat. Bank, 42 Miss. 99; Bradford v. An- derson, 60 Nebr. 368, 83 N. W. 173; Biseman v. Gallagher, 24 Nebr. 79, 37 N. W. 941; Nute v. Nute, 41 N. H. 60; Warren v. Swett, 31 N. H. 332; Sweet v. Henry, 175 N. Y. 268, 67 N. E. 574; Parker v. Conner, 93 N. Y. 118, 45 Am. Rep. 178; Cam- bridge Valley Bank v. Delano, 48 N. Y. 326; Howard Ins. Co. v. Halsey, 4 Sandf. (N. Y.) 577, 8 N. Y. 271, 59 Am. Dec. 478; Patton v. Cooper, 132 N. Car. 791, 44 S. E. 676; Collins v. Davis, 132 N. Car. 106, 43 S. E. 579; Wittkowsky v. Gidney, 124 N. Car. 437, 32 S. E. 731; Maul v. Rider, 59 Pa. St. 167; Jaques v. Weeks, 7 Watts (Pa.) 61; Maybin v. Kirby, 4 Rich. Eq. (S. Car.) 105; Traylor V. Townsend, 61 Tex. 144; Bacon v. O'Connor, 25 Tex. 213; Blalsdell v. Stevens, 16 Vt. 179; Effinger v. Hall, 81 Va. 94; Bigelow v. Brewer, 29 Wash 670, 70 Pac. 129; Clark v. Sayres, 55 W. Va. 512, 47 S. E. 312; Ward V. Russell, 121 Wis. 77, 98 N. W. 939; Beebe v. Wisconsin Mortg. Loan Co., 117 Wis. 328, 93 N. W. 1103; Helms v. Chadbourne, 45 Wis. 60; Brinkman v. Jones, 44 Wis. 498; Pringle v. Dunn, 37 Wis. 449, 19 Am. Hep. 772; Whitbread v. Boulnois, 1 Young & Coll. Ex. 303; Kennedy v. Green, 3 Myl. & Keene 699; Han- bury v. Litchfield, 2 Myl. & Keene 629; Maxfield v. Burton, 17 L. R. Bq. 15; Hoxie v. Carr, 1 Sumn. 173. '= Williamson v. Brown, 15 N. Y. 354, per Selden, J.; Maul v. Rider, 59 Pa. St. 167. § 553 NOTICE AS AITECTING PEIORITT 888 the inquiry in the right direction.^'' Having notice of the existence of an unrecorded deed, he has notice of all its contents.''' A description of land which is ambiguous or inconsistent may be sufficient to put the purchaser upon inquiry as to the land intended to be conveyed.** The purchaser is certainly chargeable with notice if he knows that the description is erroneous, and from his knowledge of the property is able to interpret the deed as it was intended to be made.** And a mortgage containing an incomplete or erroneous de- scription of the property conveyed, is a valid lien against a subsequent purchaser or mortgagee with notice of the mortgage and of the mis- take in it, so that it retains priority upon reformation in equity.^" The peculiar coincidence of the identity of description by metes and bounds in three mortgages executed by the same mortgagor to the same mortgagee, was held sufficient to put a subsequent mortgagee upon inquiry, and charge him with knowledge of the existence of all three mortgages, which were explainable only on the theory of a mis- take in the description."^ § 553. Effect of due inquiry — ^Evidence. — A purchaser put upon inquiry may rebut the presumption of notice by showing that he made due investigation without discovering the prior right or title he was bound to investigate.'^ The question whether he has made due inquiry '° Passumpsic Sav. Bank v. First mine v. Burnham, 76 111. 362; Shoe- Nat. Bank, 53 Vt. 82; Fisher v. Bor- maker v. Smith, 80 Iowa 655, 45 N. den, 111 Va. 535, 69 S. E. 636; Sey- W. 744; Peters v. Ham, 62 Iowa 656, mour V. Darrow, 31 Vt. 122. 18 N. W. 296; Warhurton v. Lau- " Martin v. Cauble, 72 Ind. 67; man, 2 Greene (Iowa) 420; Kimble George v. Kent, 7 Allen (Mass.) 16; v. Harrington, 91 Mich. 281, 51 N. Willink V. Morris Canal &c. Co., 4 "W. 936; Hunt v. Hunt, 38 Mich. 161; N. J. Eq. 377; Steere v. Childs, 15 Brown v. Morrill, 45 Minn. 483, 48 Hun (N. Y.) 511; Wells v. Houston, N. W. 328; Cox v. Esteb, 81 Mo. 393; 23 Tex. Civ. App. 629, 57 S. W. 584; Young v. Cason, 48 Mo. 259; Kel- Hill v. Murray, 56 Vt. 177; Jones v. logg v. Randolph, 71 N. J. Eq. 127, Williams, 24 Beav. 47. Knowledge 63 Atl. 753; Use v. Seinsheimer, 76 of the existence of an incumbrance Tex. 459, 13 S. W. 329; McLaughlin is constructive notice of its extent, v. Job, 41 Wis. 465; Lumber Co. v. Willink V. Morris Canal &c. Co., 4 Rennie, 21 Can. S. Ct. 218. See also N. J. Eq. 377; Skeel v. Spraker, 8 Stewart v. Huff, 19 Iowa 557 (total Paige (N. Y.) 182. misdescription of mortgaged prem- ^ Shoemaker v. Smith, 80 Iowa ises, not notice). 655, 45 N. W. 744; Kellogg v. Ran- '' Kellogg v. Randolph, 71 N. J. dolph, 71 N. J. Eq. 127, 63 Atl. 753; Eq. 127, 63 Atl. 753. Carter v. Hawkins, 62 Tex. 393. See "'McGehee v. Gindrat, 20 Ala. 95; also Michigan Mut. Life Ins. Co. v. Thompson v. Pioche, 44 Cal. 508; Conant, 40 Mich. 530. Gregory v. Savage, 32 Conn. 250; »» Carter v. Hawkins, 62 Tex. 393. Bell v. Davis, 75 Ind. 314; Schweiss ■"Woodworth v. Guzman, 1 Cal. v. Woodruff, 73 Mich. 473, 41 N. W. 203; Yarnell v. Brown, 170 111. 362, 511; Barnard v. Campau, 29 Mich. 48 N. E. 909, 62 Am. St. 380; Mil- 162, 165; Rhodes v. Outcalt, 48 Mo. 889 ACTUAL NOTICE § 553 is one of fact, to be investigated by the jury;'^ and consequently the results of the inquiry, including the statements made in reply to the inquiry, may be given in evidence, though such evidence is not com- petent upon the question of the evidence of the prior right or title in regard to 'which the i.iquiry was made.®'* If a purchaser put upon inquiry as to some claim or title affecting the validity of the title to the land he is about to purchase, makes proper inquiry in regard to the matter of the persons having or claim- ing an adverse interest in the property, and they conceal or withhold the information sought, such persons can not afterward charge him with notice of the right or claim not disclosed.®^ The person put upon inquiry is in the first instance only bound to apply to the party in interest for information, and is not obliged to press his inquiries further unless the answer he receives corroborates the prior statements, or reveals the existence of other sources of infor- mation. When he has followed the best sources of information to as- certain the truth of the rumors or statements which have put him upon inquiry, and has been misled, he ought not to be chargeable with notice of statements which he has endeavored in vain to verify, es- S67; Rogers v. Jones, 8 N. H. 264; Parker v. Conner, 93 N. Y. 118, 45 Am. Rep. 178; Cambridge 'Valley Bank v. Delano, 48 N. Y. 326; Acer V. Westcott, 46 N. Y. 384, 7 Am. Rep. 355; Williamson v. Brown, 15 N. Y. 354; Hoyt v. Shelden, 3 Bosw. (N. Y.) 267; Brownback v. Ozias, 117 Pa. St. 87, 11 Atl. 301; Wilson v. Williams, 25 Tex. 54. »= Doyle V. Teas, 5 III. 202; Wilson v. Miller, 16 Iowa 111; Knapp v. Bailey, 79 Maine 195, 9 Atl. 122, 1 Am. St. 295; Vaughn v. Tracy, 22 Mo. 415; Nute v. Nute, 41 N. H. 60; Griffith V. Griffi:th, 1 Hoffm. Ch. (N. Y.) 153, reversed 9 Paige 315; Trefts V. King, 18 Pa. St. 157; College Park Electric Belt Line v. Ide, 15 Tex. Civ. App. 273, 40 S. W. 64; French V. Loyal Co., 5 Leigh (Va.) 627; Hiern v. Mill, 13 Ves. Jr. 120. See also Williamson v. Brown, 15 N. Y. 354; Whitebread v. Jordan, 1 Y. & C. Exch. 303; Jones v. Smith, 1 Hare 43. The sufficiency of the evi- dence is for the jury, but its com- petency is for the court. Pollak v. Davidson, 87 Ala. 551, 6 So. 312; Vaughn v. Tracy, 22 Mo. 415; Nute V. Nute, 41 N. H. 60; Morris v. Dan- iels, 35 Ohio St. 406. It has been held that actual notice is to be proved by direct evidence, and not implied from circumstances. Pee- ples v. Reading, 8 Serg. & R. (Pa.) 484. 'See also Keith v. Wheeler, 159 Mass. 161, 34 N. B. 174. Where ac- tual notice has been divided into express and implied notice, it has been said that express notice is to be proved by direct evidence, but that implied notice may be estab- lished by proof of circumstances from which it is inferable as a fact. Williamson v. Brown, 15 N. Y. 354. See also Knapp v. Bailey, 79 Maine 195, 9 Atl. 122, 1 Am. St. 295; Rhodes v. Outcalt, 48 Mo. 367. ""Rogers v. Wiley, 14 111. 65, 56 Am. Dec. 491; Chiles v. Conley, 2 Dana (Ky.) 21; McMechan v. Grif- flng, 3 Pick. (Mass.) 149, 15 Am. Dec. 198; Nute v. Nute, 41 N. H. 60; Parker v. Conner, 93 N. Y. 118, 45 Am. Rep. 178; Schutt v. Large, 6 Barb. (N. Y.) 373. "= Kelly V. Fairmount Land Co., 97 Va. 227, 33 S. E. 598. See also Mc- Gehee v. Gindrat, 20 Ala. 95. § 554 NOTICE AS AITECTIXG PEIOEITY 890 pecially in favor of the party misleading him. The equitable doctrine of constructive notice can not be invoked to relieve a party from re- sponsibility for his own misstatements. "^ The omission to make inquiry is immaterial vrhere such inquiry ■would not have led to a knowledge of material facts constituting no- tice. If the conduct of the party sought to be charged would have been the same whether or not he had made the inquiry, his omission can not be ground for charging him. with notice." § 554. Burden of proof. — The burden of proof is upon the person who claims priority, and charges another with notice, to make out af- firmatively that the other has such notice.*' But in case fraud has been proved, the party claiming through the fraudulent transaction has the burden of proving his own good faith and want of notice."^ Even where no fraud is shown, it is held in some cases that the burden of proof is upon the party claiming under the second deed that he is a purchaser in good faith and for a valuable consideration without notice.^ It has been held to be prima facie proof of lack of notice to ""' Converse v. Blumrich, 14 Mich. 109, 90 Am. Dec. 230. " Cambridge Valley Bank v. De- lano, 48 N. Y. 326; Birdsall v. Rus- sell, 29 N. Y. 220; King v. Travis, 4 Hayw. (Tenn.) 280; Meux v. Bell, 1 Hare 86. "» Pollak V. Davidson, 87 Ala. 551, 6 So. 312; Lambert v. Newman, 56 Ala. 623 ; Bartlett v. Varner, 56 Ala. 580; Center v. Planters' &c. Bank, 22 Ala. 743; Gerson v. Pool, 31 Ark. 85; Ryder v. Rush, 102 111. 338; Brown v. Welch, 18 111. 343, 68 Am. Dec. 549; Rogers v. Wiley, 14 111. 65, 56 Am. Dec. 491; Boyd v. Boyd, 128 Iowa 699, 104 N. W. 798, 111 Am. St. 215; McCormick v. Leonard, 38 Iowa 272; Miles v. Blanton, 3 Dana (Ky.) 525; Marshall v. Dun- ham, 66 Maine 539; Butler v. Ste- vens, 26 Maine 484; Livingstone v. Murphy, 187 Mass. 315, 72 N. E. 1012, 105 Am. St. 400; Sheldon v. Holmes, 58 Mich. 138, 24 N. W. 795; Sheldon v. Powell, 31 Mont. 249, 78 Pac. 491, 107 Am. St. 429; Atlantic City v. New Auditorium Pier Co., 67 N. J. Eq. 610, 59 Atl. 158; Van Wag- enen v. Hopper, 8 N. J. Bq. 684; Newton v. McLean, 41 Barb. (N. Y.) 285; Fort v. Burch, 6 Barb. (N. Y.) 60; Giles v. Hunter, 103 N. Car. 194, 9 S. B. 549; Lane v. De Bode, 29 Tex. Civ. App. 602, 69 S. W. 437; Vest V. Michie, 31 Grat. (Va.) 149, 31 Am. Rep. 722. See also Barnett V. Squyres, 93 Tex. 193, 54 S. W. 241. 77 Am. St. 854; Turner v. Coch- ran (Tex. Civ. App.), 63 S. W. 151. A purchaser from a grantee with notice must prove lack of notice on his own part. Gallatian v. Cunning- ham, 8 Cow. (N. Y.) 361. ""Whelan v. McCreary, 64 Ala. 319; Davis v. Nolan, 49 Iowa 683; Letson v. Reed, 45 Mich. 27, 7 N. W. 231; Berry v. Whitney, 40 Mich. 65; McLeod V. Lloyd, 43 Ore. 260, 71 Pac. 795 74 Pac. 491. ^Yeend v! Weeks, 104 Ala. 331, 16 So. 165; Bell v. Pleasant, 145 Cal. 410, 78 Pac. 957, 104 Am. St. 61; KennifE v. Caulfield, 140 Cal. 34, 73 Pac. 803; Beattie v. Crewdson; 124 Cal. 577, 57 Pac. 463; Bassick Min. Co. V. Davis, 11 Colo. 130, 17 Pac. 294; Rush v. Mitchell, 71 Iowa 333, 32 N. W. 367; Sillyman v. King, 36 Iowa 207; Arlington State Bank v. Paulsen, 57 Nebr. 717, 78 N. W. 303; American Bxch. Bank. v. Pockler, 49 Nebr. 713, 68 N. W. 1039; Bow- man v. Griffith, 35 Nebr. 361, 53 N. W. 140; Ferry v. Laible, 31 N. J. Eq. 566; Weber v. Rothchild, 15 Ore. 891 ACTUAL NOTICE § 555 show that the prior instrument was not recorded.^ It has also beea held that want of notice may be inferred from proof that the junior claimant took for value and in due course of business.^ Under the Texas decisions, it seems that the burden is on a junior purchaser to show that he purchased for value and without notice; but in the case of a lien creditor the burden is placed on the prior pur- chaser to show that the creditor had notice before his lien attached.* A' recital in the purchaser's deed that he had paid the purchase-money is not sufficient evidence to establish that fact so as to constitute him an innocent purchaser for value.' § 555. Notice before payment of consideration. — Notice has effect if received at any time before the trade is completed by the payment of the consideration. A subsequent purchaser is bound by notice of a prior unrecorded conveyance, or of any other right or title to the property, although not received till after he has agreed upon the terms of the trade, if it be received before he has actually paid the considera- tion, or in any way put himself to disadvantage by a partial comple- tion of the transaction.® The reason assigned in support of this rule is 385, 15 Pac. 650; Richards v. Sny- der, 11 Ore. 501, 6 Pac. 186; Lupo v. True, 16 S. Car. 579; Green v. Rob- ertson, 30 Tex. Civ. App. 236, 70 S. W. 345. ''Lake v. Hancock, 38 Fla. 53, 20 So. 811, 56 Am. St. 159. = Wright V. Larson, 51 Minn. 321, 53 N. "W. 712, 38 Am. St. 504; New- ton V. Newton, 46 Minn. 33, 48 N. W. 450. * Turner v. Cochran, 94 Tex. 480, 61 S. W. 923. See also Barnett v. Squyres, 93 Tex. 193, 54 S. W. 241, 77 Am. St. 854; Green v. Robertson, 30 Tex. Civ. App. 236, 70 S. W. 345. "Bremer v. Case, 60 Tex. 151; Watkins v. Edwards, 23 Tex. 443. "Wormley v. Wormley, 8 "Wheat (U. S.) 421, 5 L. ed. 651; Flagg v. Mann, 2 Sumn. (U. S.) 486; Wood v. Mann, 1 Sumn. (U. S.) 506; Hoxie V. Carr, 1 Sumn. (U. S.) 173; Bank of United States v. Lee, 5 Cranch (U. S.) 319, Fed. Cas. No. 922; Trice V. Comstock, 121 Fed. 620, 57 C. C. A. 646, 61 L. R. A. 176; Balfour v. Parkinson, 84 Fed. 855; Wells v. Morrow, 38 Ala. 125; Nelson v. Dunn, 15 Ala. 501; Moore v. Clay, 7 Ala. 742; Cooper v. Ryan, 73 Ark. 37, 83 S. W. 328; Duncan v. John- son, 13 Ark. 190; Mackey v. Bowles, 98 Ga. 730, 25 S. E. 834; Schultze v. Houfes, 96 111. 335; Baldwin v. Sa- ger, 70 111. 503; Keys v. Test, 33 111. 316; Moshier v. Knox College, 32 111. 155; Brown v. Welch, 18 III. 343, 68 Am. Dec. 549; Anderson v. Hub- ble, 93 Ind. 570, 47 Am. Rep. 394; Heck V. Fink, 85 Ind. 6; Rhodes v. Green, 36 Ind. 7; Wilson v. Hunter, 30 Ind. 466; Walker v. Cox, 25 Ind. 271; Lewis v. Phillips, 17 Ind. 108, 79 Am. Dec. 457; Dugan v. Battier, 3 Blackf. (Ind.) 245, 25 Am. Dec. 105; Gallion v. McCaslin, 1 Blackf. (Ind.) 91, 12 Am. Rep. 208; Kitteridge v. Chapman, 36 Iowa 348; Barney v. McCarty, 15 Iowa 510, 83 Am. Dec. 427; English v. Waples, 13 Iowa 57; Blight v. Banks, 6 T. B. Mon. (Ky.) 191, 17 Am. Dec. 136; Nantz v. Mc- pherson, 7 T. B. Mon. (Ky.) 597, 18 Am. Dec. 216; Halstead v. Bank of Kentucky, 4 J. J. Marsh. (Ky.) 554; Palmer v. Williams, 24 Mich. 328; Blanchard v. Tyler, 12 Mich. 329, 86 Am. Dec. 57; Warner v. Whittaker, 6 Mich. 133, 72 Am. Dec. 65; Dixon v. Hill, 5 Mich. 404; Thomas v. Stone, Walk. Ch. (Mich.) § 555 NOTICE AS AFFECTING PEIOEITT 893 that the completion of the purchase, after notice of the prior equity, is a fraud upon the prior claimant.'' There is some conflict of authority in the application of the rule, and" considerations of natural justice and equity are frequently al- lowed to modify its rigor, to suit the exigencies of the particular facts. As a general rule, the purchaser is not entitled to protection if he re- ceives notice before he acquires title by deed,^ even though he has paid the entire purchase-price before notice;^ and the same principle has been applied to cases of part pa3nDient.^° Under the general rule prevailing in the TJnited States, if the pur- chaser has not obtained the legal title before notice of the prior equity, even though he may have an equitable title by contract and payment without notice, he can not defeat or postpone the prior equity by ac- quiring the legal estate after notice, unless his own equity is of su- perior merit; for in order to obtain priority as a bona fide purchaser 117; Minor v. Willoughby, 3 Minn. 239; Parker v. Foy, 43 Miss. 260, 5 Am. Rep. 484; Kilcrease v. Lum, 36 Miss. 569; Bishop v. Schneider, 46 Mo. 472, 2 Am. Rep. 533; Aubuchon V. Bender, 44 Mo. 560; Paul v. Pul- ton, 25 Mo. 156; Halsa v. Halsa, 8 Mo. 303; Patten v. Moore, 32 N. H. 382; Brinton v. Scull, 55 N. J. Eq. 747, 35 Atl. 843; Dean v. Anderson, 34 N. J. Bq. 496; Haughwort v. Mur- phy, 21 N. J. Bq. 118; Losey v. Simp- son, 11 N. J. Eq. 246; Weaver v. Harden, 49 N. Y. 286; Penfield v. Dunbar, 64 Barb. (N. Y.) 239; Jew- ett V. Palmer, 7 Johns. Ch. (N. Y.) 65, 11 Am. Dec. 401; Heatley v. Pin- ster, 2 Johns. Ch. (N. Y.) 159; Mur- ray v. Ballou, 1 Johns. Ch. (N. Y.) 566; Frost v. Beekman, 1 Johns. Ch. (N. Y.) 288, reversed 18 Johns. 544, 9 Am. Dec. 246; Farmers' Loan Co. V. Maltby, 8 Paige (N. Y.) 361; Hewlett V. Thompson, 1 Ired. Eq. (N. Car.) 369; Morris v. Daniels, 35 Ohio. St. 406; Wood v. Rayburn, 18 Ore. 3, 22 Pac. 521; Musgrove v. Bonser, 5 Ore. 313, 20 Am. Rep. 737; Henry v. Raiman, 25 Pa. St. 354, 64 Am. Dec. 703; Hoffman v. Stro- hecker, 7 Watts. (Pa.) 86, 32 Am. Dec. 740; Bush v. Bush, 3 Strob. Eq. (S. Car.) 131, 51 Am. Dec. 675; Peay v. Selgler, 48 S. Car. 496, 26 S. E. 885, 59 Am. St. 731; Lynch v. Hancock, 14 S. Car. 66; Otis v. Payne, 86 Tenn. 663, 8 S. W. 848; Pillow V. Shannon, 3 Yerg. (Tenn.) 508; Bonner v. Stephens, 60 Tex. 616; Praim v. Frederick, 32 Tex. 294; Wilcox v. Calloway, 1 Wash. (Va.) 38; Tibbs v. Zlrkle, 55 W. Va. 49, 46 S. E. 701, 104 Am. St. 977; Everts v. Agnes, 4 Wis. 343, 65 Am. Dec. 314; Beckett v. Cordley, 1 Bro. C. C. 353. 'Gallion v. McCaslin, 1 Blackf. (Ind.) 91, 12 Am. Dec. 208; Praim v.- Frederick, 32 Tex. 294; Curtis v. Lunn, 6 Munf. (Va.) 42. * Mackey v. Bowles, 98 Ga. 730, 25 S. E. 834; Hoover v. Donally, 3 Hen. & M. (Va.) 316; Blair v. Owles, 1 Munf. (Va.) 38; Clark v. Sayres, 55 W. Va. 512, 47 S. E. 312; More v. May how, Ch. Cas. (pt. 1) 34, Preem. Ch. 175, 18 Vin. Abr. 115. See also Frost V. Beekman, 1 Johns. Ch. (N. Y.) 288, 9 Am. Dec. 246. "Fash V. Ravesies, 32 Ala. 451; Gallion v. McCaslin, 1 Blackf. (Ind.) 91, 12 Am. Dec. 208; Corn v. Sims, 3 Mete. (Ky.) 391; Peabody v. Fen- ton, 3 Barb. Ch. (N. Y.) 451; Wlgg V. Wigg, 1 Atk. 384. See also Halley V. Oldham, 5 B. Mon. (Ky.) 233, 41 Am. Dec. 262; Bush v. Bush, 3 Strob. Eq. (S. Car.) 131, 51 Am. Dec. 675. "Mackey v. Bowles, 98 Ga. 730 (recovery of partial payment) ; Har- rison v. Boring, 44 Tex. 255. 893 ACTUAL NOTICE § 556 without notice, he must acquire not only the equitable, but the legal title without notice. ^^ In England, however, and some of the states, a purchaser who with- out notice and for value has acquired an equitable title may thereafter, even with notice of the prior equity, acquire the legal estate and be- come entitled to full protection as a bona tide purchaser ;i^ provided he acquires such interest without, breach of trust." If a mortgagee has notice of a prior unrecorded mortgage before paying over the money secured by his mortgage, he takes subject to the unrecorded mortgage, though his own mortgage has already been recorded.^* But after the sale is completed by the payment of the con- sideration, notice of a prior mortgage is without effect.^^ § 556. Part payment before notice — ^Payment by notes. — A pur- chaser who has paid a part of the purchase-money before receiving no- tice of prior equities or rights is protected to the extent of such pay- ment, but no further.^^ He is entitled to invoke the aid of the equita- "Fash V. Ravesies, 32 Ala. 451; Dodd V. Doty, 98 111. 393 (burden upon holder of prior equity) ; Corn V. Sims, 3 Mete. (Ky.) 391; Wing v. McDowell, Walk. Ch. (Mich.) 175; Nulsen v. Wishon, 68 Mo. 383; Bos- kowitz V. Davis, 12 Nev. 446; Grim- stone V. Carter, 3 Paige (N. Y.) 421, 24 Am. Dec. 230; Goldsborough v. Turner, 67 N. Car. 403; Craig v. Leiper, 2 Yerg. (Tenn.) 193, 24 Am. Dec. 479; Lewis v. Madisons, 1 Munf. (Va.) 303. See also Mackey V. Bowles, 98 Ga. 730, 25 S. E. 834; Halley v. Oldham, 5 B. Mon. (Ky.) 233, 41 Am. Dec. 262; Bush v. Bush, 3 Strob. Eq. (S. Car.) 131, 51 Am. Dec. 675. But see Carroll v. John- ston, 2 Jones Eq. (55 N. Car.) 120; Jones v. Zollicoffer, 4 N. Car. 645, 7 Am. Dec. 708. "Campbell v. Brackenridge, 8 Blackf. (Ind.) 471; Weston v. Dun- lap, 50 Iowa 183; Gjerness v. Mathews, 27 Minn. 320, 7 N. W. 355; Zellman v. Moore, 21 Grat. (Va.) 313; Lewis v. Madisons, 1 Munf. (Va.) 303; Sanders v. Deligne, 2 Freem. Ch. 124; Huntington v. Greenville, 1 Vern. 52; Bassett v. Nosworthy, Finch 102; Goleborn v. Alcock, 2 Sim. 552; Stanhope v. Verney, 2 Eden 85; Bailey v. Barnes, 1 Ch. 25; Blackwood v. London Chartered Bank, L. R. 5 P. C. 92; Carter v. Carter, 3 Kay & J. 636, criticising Sherley v. Fagg, Ch. Cas. (pt. 1) 68, and Turner v. Buck, 22 Vin. Abr. 21. See also Phelps v. Morrison, 24 N. J. Eq. 195; Gibler v. Trimble, 14 Ohio 323. But see Gal- lion V. McCaslin, 1 Blackf. (Ind.) 91, 12 Am. Dec. 208; Curtis v. Lunn, 6 Munf. (Va.) 42. " Saunders v. Dehew, 2 Vern 271; Allen V. Knight, 5 Hare 272, 11 Jur. 527; Baillie v. McKewan, 35 Beav. 177; Munford v. Stohwasser, L. R. 18 Eq. 556; Carter v. Carter, 3 Kay & J. 617. "Schultze V. Houfes, 96 111. 335; Otis V. Payne, 86 Tenn. 663, 8 S. W. 848. ^Redden v. Miller, 95 111. 336; Syer v. Bundy, 9 La. Ann. 540; Wat- kins V. Reynolds, 123 N. Y. 211, 25 N. E. 322; Lynch v. Hancock, 14 S. Car. 66; Jamison v. Gjemenson, 10 Wis. 411. '"Flagg V. Mann, 2 Sumn. (U. S.) 547; Craft v. Russell, 67 Ala. 9; Florence S. M. Co. v. Zeigler, 58 Ala. 221; Wells v. Morrow, 38 Ala. 125; Dufphey v. Frenaye, 5 Stew. & P. (Ala.) 215; Marchbanks v. Banks, 44 Ark. 48; Combination Land Co. V. Morgan, 95 Cal. 548, 30 Pac. 1102; Redden v. Miller, 95 111. 336; Slat § 556 NOTICE AS AFFECTING PEIOEITT 894 ble principle, that he who asks equity must do equity, and therefore the adverse claimant should reimburse the amount actually paid by the purchaser before receiving notice of the claim. ^'' In accord with this view it is held that where the purchaser has paid part of the price before notice, and taken possession under contract, he may complete his purchase by paying the balance and taking a conveyance ; and can only be deprived of the estate so acquired on condition of being reim- bursed for the sums paid before notice.^' Although a purchaser has obtained a conveyance of the legal title before notice, if he receives notice before paying any part of the purchase-money, he is not pro- tected as a bona fide purchaser. In such case, notice before payment is equivalent to notice before the contract, for he could still protect him- self by withholding payment.^* But he is not protected in any pay- tery v. Rafferty, 93 111. 277; Bald- win V. Sager, 70 111. 503; Moshler V. Knox College, 32 111. 155; Lewis V. Phillips, 17 Ind. 108, 79 Am. Dec. 457; Kitteridge v. Chapman, 36 Iowa 348; Hardin v. Harrington, 11 Bush (Ky.) 367; Eubank v. Poston, 5 T. B. Mon. (Ky.) 285; Lain v. Morton, 23 Ky. L. 438, 63 S. W. 286; Sheldon V. Holmes, 58 'Mich. 138, 24 N. W. 795; Warner v. Whittaker, 6 Mich. 133, 72 Am. Dec. 65; Dixon v. Hill, 5 Mich. 404; Thomas v. Stone, "Walk. Oh. (Mich.) 117; Parker v .Poy, 43 Miss. 260, 5 Am. Rep. 484; Servis V. Beatty, 32 Miss. 52. See also Dig- by V. Jones, 67 Mo. 104; Paul v. Fulton, 25 Mo. 156; Brlnton v. Scull, 55 N. J. Eq. 747, 35 Atl. 843; Haugh- wout V. Murphy, 22 N. J. Eq. 531; Losey v. Simpson, 11 N. J. Eq. 246; Macauley v. Smith, 132 N. Y. 524, 30 N. E. 997, 10 N. Y. S. 578; Pickett v. Barron, 29 Barb. (N. Y.) 505; Stalker v. McDonald, 6 Hill (N. Y.) 93, 40 Am. Dec. 389; Farmers' L. &c. Co. V. Maltby, 8 Paige (N. Y.) 361; Tufts V. Tufts, 18 Wend. (N. Y.) 621; Fessler's Appeal, 75 Pa. St. 483; Juvenal v. Jackson, 14 Pa. St. 519; Beck V. Uhrich, 13 Pa. St. 636, 53 Am. Dec. 507, 16 Pa. St. 499; Uhrich V. Beck, 13 Pa. St. 639; Lewis v. Bradford, 10 Watts (Pa.) 82; Kun- kle V. Wolfersberger, 6 Watts (Pa.) 126; Evans v. Templeton, 69 Tex. 375, 6 S. W. 843, 5 Am. St. 71; Fralm v. Frederick, 32 Tex. 294; Duval v. Bibb, 4 Hen. & M. (Va.) 113, 4 Am. Dec. 506; Webb v. Bailey, 41 W. Va. 463, 23 S. E. 644; Mitchell v. Daw- son, 23 W. Va. 86; Everts v. Agnes. 4 Wis. 343, 65 Am. Dec. 314. See also Wood V. Mann, 1 Sumn. (U. S.) 512; Cox V. Romine, 9 Grat. (Va.) 27. But see Doswell v. Buchanan, 3 Leigh (Va.) 365, 23 Am. Dec. 280. "Kiteridge v. Chapman, 36 Iowa 348; Youst v. Martin, 3 Serg. & R. (Pa.) 423; Bellas v. McCarty, 10 Watts (Pa.) 13. "Youst V. Martin, 3 Serg. & R. (Pa.) 423. See also Phelps v. Mor- rison, 24 N. J. Eq. 195; Union Canal Co. V. Young, 1 Whart. (Pa.) 410, 30 Am. Dec. 212. "Wormley v Wormley, 8 Wheat. (U. S.) 421, 5 L. ed. 651; Garnett V. Macon, 2 Brock. (U. S.) 185, Fed. Cas. No. 5245, 6 Call 308; Trice V. Comstock, 57 C. C. A. 646, 121 Fed. 620, 61 L. R. A. 176; Ken- nlff V. Caulfleld, 140 Cal. 34, 73 Pac. 803; Beattie v. Crewdson, 124 Cal. 577, 57 Pac. 463; Combination Land Co. V. Morgan, 95 Cal. 548, 30 Pac. 1102; Eversdon v. Mayhew, 65 Cal. 163, 3 Pac. 641; Redden v. Miller, 95 111. 336; Citizens' State Bank v. Julian, 153 Ind. 655, 55 N. E. 1007; Smith V. Schweigerer, 129 Ind. 363, 28 N. E. 696; Anderson v. Hubble, 93 Ind. 570, 47 Am. Rep. 394; Hol- croft V. Hunter, 3 Blackf. (Ind.) 147; Kitteridge v. Chapman, 36 Iowa 348; Sillyman v. King, 36 Iowa 207; Halstead v. Bank of Kentucky, 4 J. J. Marsh. (Ky.) 554; Price v. Mc- 895 ACTUAL NOTICE 556 ment made by him after receiving notice of any prior right or equity in another.^" A payment by giving a mortgage for a part of the pur- chase-money, after the purchaser had received notice of a prior unre- corded conveyance, does not protect the purchaser, and any payment made by him upon such mortgage is made in his own wrong. ''^ While the weight of authority supports the rule that a purchaser having made part payment before notice will be protected pro tanto, yet in some jurisdictions, including Indiana, partial payment does not seem to alter the rule, and a purchaser is entitled to no protection unless he has taken a conveyance and paid the purchase-money in full before notice.^^ Donald. 1 Md. 403, 54 Am. Dec. 657; Matson v. Melchor, 42 Mich. 477, 4 N. W. 200; Palmer v. "Williams, 24 Mich. 328; Blanchard v. Tyler, 12 Mich. 339, 86 Am. Dec. 57; Minor v. Willoughby, 3 Minn. 225; Cassady V. Wallace, 102 Mo. 575, 15 S. W. 138; Bishop v. Schneider, 46 Mo. 472, 2 Am. Rep. 533; Paul v. Fulton, 25 Mo. 156; Greenlee v. Marquis, 49 Mo. App. 290; Veith v. McMurtry, 26 Nebr. 341, 42 N. W. 6; Keyser v. Angle, 40 N. J. Eq. 481, 4 Atl. 641; Dean v. Anderson, 34 N. J. Eq. 496; Harris v. Norton, 16 Barb. (N. Y.) 264; Jewett v. Palmer, 7 Johns. Ch. (N. Y.) 65, 11 Am. Dec. 401; Mur- ray V. Finster, 2 Johns. Ch. (N. Y.) 155; Howlett v. Thompson, 1 Ired. Eq. (N. Car.) 369; Halloran v. Holmes, 13 N. Dak. 411, 101 N. W. 310; Wood V. Rayburn, 18 Ore. 3, 22 Pac. 521; Juvenal v. Jackson, 14 Pa. St. 519; Ellis v. Young, 31 S. Car. 322, 9 S. E. 955; Hutchlns v. Chap- man, 37 Tex. 612; Fraim v. Fred- erick, 32 Tex. 294; Hardingham v. Nicholls, 3 Atk. 304; Tildesley v. Lodge, 3 Smale & G. 543. See also Wells V. Morrow, 38 Ala. 125; Hay- den V. Charter Oak Driving Park, 63 Conn. 142, 27 Atl. 232; Walton v. Hargroves, 42 Miss. 18, 97 Am. Dec. 429; Corrigan v. Schmidt, 126 Mo. 304, 28 S. W. 874; Arnholt V. Hartwig, 73 Mo. 485; Wallace v. Wilson, 30 Mo. 335; Cheek v. Wal- dron, 39 Mo. App. 21; McNichols v. Richter, 13 Mo. App. 515; Frost v. Beelnnan, 1 Johns. Ch. (N. Y.) 288, reversed 18 Johns. 544, 9 Am. Dec. 246; Bush v. Bush, 3 Strob. Eq. (S. Car.) 131, 51 Am. Dec. 675; Will- iams V. HoUingsworth, 1 Strob. Eq. (S. Car.) 103, 47 Am. Dec. 527; Bar- stow, V. Beckett, 122 Fed. 140, re- versed in 148 Fed. 562, 78 C. C. A. 248, on the ground that purchaser relied on an attorney employed by her to pass upon the title, and she was not chargeable with his fraud in the matter affecting the title. =i» Wells V. Morrow, 38 Ala. 125; Redden v. Miller, 95 111. 336; Slat- tery v. Rafferty, 93 111. 277; Blanch- ard V. Tyler, 12 Mich. 339, 86 Am. Dec. 57; Warner v. Whittaker, 6 Mich. 133, 72 Am. Dec. 65; Edwards V. Missouri &c. R. Co., 82 Mo. App. 96; Frost v. Beekman, 1 Johns. Ch. (N. Y.) 288; Fraim v. Frederick, 32 Tex. 294; Bullock v. Sprowls (Tex. Civ. App), 54 S. W. 657; Tate v. Kramer, 1 Tex. Civ. App. 427, 23 S. W. 255; Duval v. Bibb, 4 Hen. & M. (Va.) 113, 4 Am. Dec. 506; Hamlin V. Wright, 26 Wis. 50. See also Pal- mer V. Williams, 24 Mich. 328; Gar- mire V. Willy, 36 Nebr. 340, 54 N. W. 562; Murray v. Finster, 2 Johns. Ch. (N. Y.) 155; Curtis v. Hitch- cock, 10 Paige (N. Y.) 399. "Marchbanks v. Banks, 44 Ark. 48; Quirk v. Thomas, 6 Mich. 76; Losey v. Simpson, 11 N. J. Eq. 246; Jewett v. Palmer, 7 Johns. Ch. (N. Y.) 65, 11 Am. Dec. 401. "Heck V. Fink, 85 Ind. 6; Dugan v. Vattier, 3 Blackf. (Ind.) 245, 25 Am. Dec. 105; Gallion v. McCaslin, 1 Blackf. (Ind.) 91, 12 Am. Dec. 208; Tourville v. Naish, 3 P. Wms. 306; Henderson v. Graves, 2 U. C. Err. & App. 21. See also Anderson § 557 NOTICE AS APFECTIHQ PEIOEITT 896 Even if the purchaser has given a mortgage, receiving a bond or a note not negotiable, before receiving notice of a prior unrecorded deed, but receives such notice afterward, before making payment of the note and mortgage, he is not entitled to claim the protection of a bona fide purchaser, and a subsequent payment of the note is in his own wrong.^^ This is upon the ground that it is in the power of the purchaser to re- sist the payment of his mortgage, in whosesoever hands it may be. But if the purchaser has given a negotiable note secured by mortgage for a part of the purchase-money, the assignee of such mortgage takes it free from all prior equities, and it is not in the power of the mort- gagor to resist the payment ; and therefore the giving of such a mort- gage for a part of the purchase-money is a payment which protects the purchaser against any equities of which he had no notice before the giving of the mortgage, though he may have received notice while the mortgage is still outstanding.^* When the purchase has been completed by payment of the purchase- money and conveyance of the legal title, before actual or constructive notice to the purchaser, notice reaching him thereafter is ineffectual against the estate he has acquired and his rights as a bona fide pur- chaser.^^ § 557. Purchaser with notice from one without notice. — A pur- chaser with notice may acquire a good title from one who was a pur- chaser for value without notice. The rule that a purchaser of property, with notice of some prior adverse claim to or interest in such property, takes subject to such interest, is subject to the limitation that, if a per- son with such notice acquires a legal title to the property from one who is without such notice, he is entitled to the same protection as his vendor, as otherwise it would very much clog the sale of estates."" A pur- V. Hubble, 93 Ind. 570, 47 Am. Rep. Ann. 540; Gouverneur v. Lynch, 2 394; Lewis v. Phillips, 17 Ind. 108, Paige, (N.Y.) SOO; Newlin v. Os- 79 Am. Dec. 457. borne, 6 Jones L. (51 N. Car.) 128, ^Rhodes v. Green, 36 Ind. 7; 72 Am. Dec. 566; Juvenal v. Jack- Lewis V. Phillips, 17 Ind. 108, 79 son, 14 Pa. St. 519; Hoult v. Dona- Am. Dec. 457; Green v. Green, 41 hue, 21 W. Va. 294. See also Chew Kans. 472, 21 Pac. 586; Blanchard v. Barnet, 11 Serg. & R. (Pa.) 389. V. Tyler, 12 Mich. 339, 86 Am. Dec. '"Piatt v. Vattier, 1 McLean (U. 57; Haughwout v. Murphy, 21 N. J. S.) 146; Bean v. Smith, 2 Mason Eq. 118. (U. S.) 252; Wood v. Mann, 1 Sumn. « Hall V. Hall, 38 Ala. 131; Digby (U. S.) 506; Boone v. Chiles, 10 v. Jones, 67 Mo. 104. Pet. (U. S.) 177, 9 L. ed. 388; Mead ^'Mundine v. Pitts, 14 Ala. 84; v. Gallatin, 151 Fed. 1006, 81 C. C. A. English V. Lindley, 194 111. 181, 62 192; Reed v. Munn, 148 Fed. 737, 80 N. E. 522; Baldwin v. Sager, 70 111. C. C. A. 215; Ryan v. Staples, 78 503; Owings v. Joult, 2 A. K. Marsh. Fed. 563, 23 C. C. A. 551; Whitfield (Ky.) 380; Syer v. Bundy, 9 La. v. Riddle, 78 Ala. 99; Bartlett v. 897 ACTUAL NOTICE 557 chaser without notice ■would otherwise be deprived of the full measure of protection to which he is entitled, that is, a free right of disposal, — Varner, 56 Ala. 580; Cahalan v. Monroe, 56 Ala. 303; White v. Mof- fett, 108 Ark. 490, 158 S. W. 505; Fargason v. Edrington, 49 Ark. 207, 4 S. W. 763; Abadle v. Lobero, 36 Cal. 390; Moore v. Allen, 26 Colo. 197, 57 Pac. 698, 77 Am. St. 255; Blatchley v. Osborn, 33 Conn. 226; Doyle V. Wade, 23 Fla. 90, 1 So. 516; Eldridge v. Post, 20 Fla. 579; Mays V. Redman, . 134 Ga. 870, 68 S. E. 738; Peavy v. Dure, 131 Ga. 104, 62 S. B. 47; Lee v. Cato, 27 Ga. 637, 73 Am. Dec. 746; Colquitt v. Thomas, 8 Ga. 258; English v. Lindley, 194 111. 181, 62 N. E. 522; Peck v. Are- hart, 95 111. 113; St. Joseph Manuf. Co. V. Daggett, 84 111. 556; Shinn v. Shinn, 15 Bradw. (111.) 141; Buck V. Foster, 147 Ind. 530, 46 N. E. 920, 62 Am. St. 427; Klinger v. Lemler, 135 Ind. 77, 34 N. E. 698; Old Nat. Bank v. Findley, 131 Ind. 225, 31 N. E. 62; Trentman v. Eldridge, 98 Ind. 525; Arnold v. Smith, 80 Ind. 417; Studabaker v. Langard, 79 Ind. 320; Sharpe v. Davis, 76 Ind. 17; Evans v. Nealis, 69 Ind. 148; Mc- Shirley v. Birt, 44 Ind. 382; East v. Pugh, 71 Iowa 162, 32 N. W. 309; Hurley v. Osier, 44 Iowa 642; Ash- craft V. De Armond, 44 Iowa 229; Chambers v. Hubbard, 40 Iowa 432; Varney v. Deskins, 146 Ky. 27, 141 S. W. 411; Lindsey v. Rankin, 4 Bibb (Ky.) 482; Hill v. McNichol, 76 Maine 314; Brackett v. Ridlon, 54 Maine 426; Pierce v. Faunce, 47 Maine 507; Livingstone v. Murphy, 187 Mass. 315, 72 N. E. 1012, 105 Am. St. 400; Trull v. Bigelow, 16 Mass. 406, 8 Am. Dec. 444; Dana v. New- hall, 13 Mass. 498; Glidden v. Hunt, 24 Pick. (Mass.) 221; Boynton v. Rees, 8 Pick. (Mass.) 329, 19 Am. Dec. 326; Shotwell v. Harrison, 22 Mich. 410; Godfrey v. Disbrow, Walk. Ch. (Mich.) 260; Equitable Securities Co. v. Sheppard, 78 Miss. 217, 28 So. 842; Fulton v. Woodman, 54 Miss. 158; Price v. Martin, 46 Miss. 489; Lusk v. MicNamer, 24 Miss. 58; Hendricks v. Calloway, 211 Mo. 536, 111 S. W. 60; Van Syckel V Beam, 110 Mo. 589, 19 S. W. 946; Drey v. Doyle, 99 Mo. 459, 12 S. W. S7_joNES Mtg.— Vol. I. 287; Craig v. Zimmerman, 87 Mo. 475, 56 Am. Rep. 466; Funkhouser V. Lay, 78 Mo. 458; Ford v. Axelson, 74 Nebr. 92, 103 N. W. 1039; Bell v. Twilight, 18 N. H. 159, 45 Am. Dec. 367; Holmes v. Stout, 10 N. J. Eq. 410; Paul v. Kerswell, 60 N. J. L. 273, 37 Atl. 1102; Roll v. Rea, 50 N. J. L. 264, 12 Atl. 905; Jospe v. Danis, 138 App. Div. 544, 123 N. Y. S. 360; Lacustrine Fer. Co. v. Lake Guano &c. Co., 82. N. Y. 476; Wood V. Chapin, 13 N. Y. 509, 67" Am. Dec. 62; Webster v. Van Steen- bergh, 46 Barb. (N. Y.) 211; Cook v. Travis, 22 Barb. (N. Y.) 338, affd. 20 N. Y. 400; Demarest v. Wynkoop, 3 Johns. Ch. (N. Y.) 147, 8 Am. Dec. 467; Bumpus v. Platner, 1 Johns. Ch. (N. Y.) 213; Varick v. Briggs, 6 Paige (N. Y.) 323; Allison v. Ha- gan, 12 Nev. 38; Phillips v. Buchan- an Lumber Co., 151 N. Car. 519, 66 S. B. 603; Taylor v. Kelly, 3 Jones Eq. (N. Car.) 240; Card v. Patter- son, 5 Ohio St. 319; Ash ton's Appeal, 73 Pa. St. 153; Church v. Ruland, 64 Pa. 432; Filby v. Miller, 25 Pa. St. 264; Bracken v. Miller, 4 Watts & S. (Pa.) 102; Hood v. Fahnestock, 8 Watts (Pa.) 489, 34 Am. Dec. 489; Southern R. Co. v. Carroll, 86 S. Car. 56, 67 S. E. 4, 138 Am. St. 1017; Perkins v. Hays, Cooke (Tenn.) 189, 5 Am. Dec. 680; Long v. Shelton (Tex. Civ. App.), 155 S. W. 945; Masterson v. Crosby (Tex. Civ. App.), 152 S. W. 173; Phillips v. Campbell (Tex. Civ. App.), 146 S. W. 319; Thomason v. Berwick, 52 Tex. Civ. App. 153, 113 S. W. 567; Laffare v. Knight (Tex. Civ. App.), 101 S. W. 1034; Allen v. Anderson (Tex. Civ. App.), 96 S. W. 54; Gar- ner V. Boyle, 34 Tex. Civ. App. 42, 77 S. W. 987; Long v Fields, 31 Tex. Civ. App. 241, 71 S. W. 774; Hick- man V. Hoffman, 11 Tex. Civ. App. 605, 33 S. W. 257; Goddard v. Rea- gan, 8 Tex. Civ. App. 272, 28 S. W. 352; Barber v. Richardson, 57 Vt. 408; Day v. Clark, 25 Vt. 397; Rorer Iron Co. V. Trout, 83 Va. 397, 2 S. E. 713; Bernard v. Benson, 58 Wash. 191, 108 Pac. 439, 137 Am. St. 1051; Hawkes v. Hoffman, 56 Wash. 120, § 557 NOTICE AS AFFECTING PEIOEITT 898 the right to sell and transfer a perfect title to any purchaser. The rule is obviously necessary to secure a purchaser, without notice, the full benefit of his purchase.^^ Therefore, if a person takes a mortgage or other conveyance with no- tice of a prior incumbrance, but takes it from one who purchased for value without such notice, and therefore acquired a title good against such incumbrance, such subsequent purchaser with notice may shelter himself under the protection which the law affords his grantor; he takes the latter's rights.^* Thus a person charged with notice may take a valid conveyance from a purchaser of realty for value without notice of a prior unrecorded conveyance,^^ or incumbrance.'"' The grantor must, however, have been a purchaser for value, and not merely a volunteer who took a title subject to equities, as in such case the purchaser from him would take subject to the same equities.^^ Furthermore the grantor must have purchased the legal title, and if he held the equitable title only, the rule does not apply.*^ When the party without notice is only a nominal party, and the real party in interest has notice, neither can be considered a purchaser without notice. ^^ And the fact that the trustee in a trust deed has no notice of an existing incumbrance will not protect the beneficiary, purchas- ing with notice at a sale by the trustee under a power in the deed.^* One who takes a mortgage, with notice of a prior unrecorded mort- gage, is not the less a purchaser with notice, and subject to such mort- gage, because he is at the same time informed that the debt secured by such mortgage is usurious.^ ° By the weight of authority a judgment creditor who has notice of 105 Pac. 156, 24 L. R. A. (N. S.) 522; Shotwell v. Harrison, 22 Mich. 1038; Pringle v. Dunn, 37 Wis. 449, 410; Bell v. Twilight, 18 N. H. 159, 467, 19 Am. Rep. 772; Lowther v. 45 Am. Dec. 367; Holmes v. Stout, Carlton, 2 Atk. 242; Brandlyn v. 10 N. J. Eq. 419; Roll v. Rea, 50 N. Ord, 1 Atk. 571; Harrison v. Forth, J. L. 264, 12 Atl. 905; Webster v. Van Prec. Ch. 51; Sweet v. Southcote, 2 Steenbergh, 46 Barb. (N. Y.) 211; Bro. Ch. 66, 1 Bro. C. C. 353. See Foster v. Bailey, 82 S. Car. 378, 64 also Houston Oil Co. v. Bayne (Tex. S. E. 423. Civ. App.), 141 S. W. 544. '"Ashmore v. Whatley, 99 Ga. 150, "Lee V. Cato, 27 Ga. 637, 73 Am. 24 S. E. 941. Dec. 746; Truluck v. Peeples, 3 Ga. =' Johns v. Sewell, 33 Ind. 1. 446; Studabaker v. Langard, 79 Ind. '^ Boone v. Chiles, 10 Pet. (U. S.) 320; Johns v. Sewell, 33 Ind. 1; 177, 9 L. ed. 388. Holmes v. Stout, 10 N. J. Eq. 419. =' Runkle v. Gaylord, 1 Nev. 123; =* Chance v. McWhirter, 26 Ga. Murphy v. Nathans, 46 Pa. St. 508. 315; Harrington v. Allen, 48 Miss. See also Chance v. McWhorter, 26 492. Ga. 315. ^Chandler v. Tardy, 58 Ala. 150; »*Gerson v. Pool, 31 Ark. 85. Mallory v. Stodder, 6 Ala. 801; Eng- ^Beverley v. Brooke, 2 Leigh lish v. Lindley, 194 111. 181, 62 N. E. (Va.) 425. 899 ACTUAL NOTICE § 558 an unrecorded mortgage at the time of docketing or entering the_ Judgment, holds his lien subject to the mortgage.^" In several states, however, actual notice is not sufficient, where the conveyance is not recorded.^'' It is no defense to one who takes a deed of land, with actual knowl- edge on his part of a previous mortgage upon it, that the parties to the mortgage agreed that it should not be recorded, and the mortgagee received a written guaranty "to hold him harmless from any loss by reason of not recording the deeds."^* § 558. Repurchase by grantee with notice — Revival of existing equities. — But the title of a purchaser without notice can not be transferred free from equities back to a prior grantor who was charged with notice at the time he acquired his former title, for a purchaser can not be allowed to clear ofif the existing equities, of which he had notice, by transferring the title to an innocent purchaser, and then repurchasing the property. The existing equities of which he had knowledge revive and attach to the property to the same extent that they formerly attached to it in his hands.^" Thus, a second mortgage, wMch in the hands of the mortgagee is subject to a prior subsisting mortgage by reason of his notice thereof, it not being a lien of record, '= United States v. Griswold, 8 15 So. 528; Smith v. Jordan, 25 Ga. Fed. 556, 7 Sawy. (U. S.) 311; 687; Coward v. Culver, 12 Heisk. Byers v. Engles, 16 Ark. 543; (Tenn.) 540; Lillard v. Rucker, 9 Thomas v. Vanlieu, 28 Cal. 616; Yerg-. (Tenn.) 64; March v. Cham- Columbus Buggy Co. V. Graves, bers, 30 Grat. (Va.) 299; !Bidson v. 108 111. 459; Williams v. Tatnall, Huff, 29 Grat. (Va.) 338. 29 111. 553; Sinking Fund Comrs. =«Lord V. Doyle, 1 Cliff. (U. S.) V. Wilson, 1 Ind. 356; Fords v. 453. Vance, 17 Iowa 94; Lamberton v. "^Bourquin v. Bourquin, 120 Ga. Merchants' Nat. Bank, 24 Minn. 115, 47 S. E. 639; Johnson v. Gib- 281; Bass v. Estill, 50 Miss. 300; son, 116 111. 294, 6 N. B. 205; Trent- Walker V. Gilbert, Freem. Ch. man v. Bldridge, 98 Ind. 525; Dur- (Miss.) 85; Hutchinson v. Bram- ham v. Craig, 79 Ind. 117; Mitchell hall, 42 N. J. Eq. 372, 7 Atl. 873; v. Aten, 37 Kans. 33, 14 Pac. 497; Britton's Appeal, 45 Pa. St. 172; Brophy Min. Co. v. Brophy &c. Gold Barnett v. Squyres (Tex. Civ. App.), &c. Min. Co., 15 Nev. 101; Allison v. 52 S. W. 612; Stovall v. Odell, 10 Hagan, 12 Nev. 38; Clark v. McNeal, Tex. Civ. App. 169, 30 S. W. 66. See 114 N. Y. 287, 21 N. E. 405; Schutt also Clark v. Greene, 73 Minn. 467, v. Large, 6 Barb. (N. Y.) 373; Bum- 76 N. W. 263 (insufficient notice by pus v. Plainer, 1 Johns. Ch. (N. Y.) posting signs); H. C. Tack Co. v. 213; Church v. Ruland, 64 Pa. St. Ayers, 56 N. J. Eq. 56, 38 Atl. 194; 432; Church v. Church, 25 Pa. St. Condit V. Wilson, 36 N. J. Eq. 370 278; Ely v. Wilcox, 26 Wis. 91; Troy (insufficient statement by debtor); City Bank v. Wilcox, 24 Wis. 671; Hulings V. Guthrie, 4 Pa. St. 123; In re Stapleford Colliery Co., 14 Ch. Hibberd v. Bovier, 1 Grant Cas. D. 445, 49 L. J. Ch. 498, 42 L. T. (Pa.) 266. See ante § 461. Rep. (N. S.) 891; Bovey v. Smith, " Winston v. Hodges, 102 Ala. 304, 1 Vern. Ch. 60, 23 Eng. Reprint 310. § 559 NOTICE AS AFFECTING PKIOKITT 900 becomes, in the hands of an assignee for value and without notice, free of such prior equitable lien. But the priority of the second mortgage is lost if it be again assigned to the former owner, who had notice of the prior equity of the first mortgage; and it is also lost, and the equity of the first mortgage reattaches, in case there is a foreclosure sale under the second mortgage, and the second mortgagee, who had notice of the prior equity of the first mortgage, becomes the purchaser at such foreclosure sale.*" Where land included in a trust deed had previously been conveyed to a third person and reconveyed to the grantor, and the third person, while holding title, had informed the grantee in the trust deed of a fraud of the grantor, it was held that such previous wrongful conduct of the grantor in his dealings with such third person was not sufficient to require the grantee to make inquiries as to the reconveyance exe- cuted by the third person, and did not prevent the grantee from being a bona fide purchaser.*^ Where a grantee of certain land gave a mortgage thereon to secure joint notes of the grantor and grantee, and reconveyed the property to the grantor before the mortgage was recorded, the mortgage being recorded before the deed of reconveyance, it was held that the mort- gage was entitled to priority, and was a valid lien on the property, since it was given with the approval and for the benefit of the grantee.*^ § 559. Purcliaser without notice from one with notice of prior equity. — A person without notice may in good faith acquire a legal title from one who has notice of a prior equitable right or outstanding unrecorded title. *^ In Massachusetts this is declared to be a rule of "Clark V. McNeal, 114 N. Y. 287, Colgin v. Courrege, 106 La. 684, 31 21 N. E. 405. So. 144; Hill v. McNichol, 76 Maine "Smith v. "Wofford (Tex. Civ. 314 App.), 97 S. "W. 143. 426 '"Kehl V. Burgener, 106 111. App. 507 336. 201 Brackett v. Ridlon, 54 Maine Pierce v. Faunce, 47 Maine Knox V. Silloway, 10 Maine Morse v. Curtis, 140 Mass. 112, "Bean v. Smith, 2 Mason (U. S.) 2 N. E. 929, 54 Am. Rep. 456; Trull 252; Mallory v. Stodder, 6 Ala. 801; v. Bigelow, 16 Mass. 406; Connecti- SearsV. Douthitt, 18 Cal. App. 774, cut v. Bradish, 14 Mass. 296; Glid- 124 Pac. 453; Lee v. Cato, 27 Ga. den v. Hunt, 24 Pick. (Mass.) 221; 637, 73 Am. Dec. 746; Truluck v. Somes v. Brewer, 2 Pick. (Mass.) Peeples, 3 Ga. 446; Paris v. Lewis, 184, 13 Am. Dec. 406; Price v. Mar- 85 111. 597; Dawkins v. Kions, 53 tin, 46 Miss. 489; Mullins v. Butte Ind. 164; Brown v. Budd, 2 Ind. Hdw. Co., 25 Mont. 525, 65 Pac. 442; Arnett's Committee v. Owens, 1004, 87 Am. St. 430; Hoit v. Rus- 23 Ky. L. 1409, 65 S. W. 151; Hard- sell, 56 N. H. 559; Bell v. Twilight, in V. Harrington, 11 Bush (Ky.) 367; 18 N. H. 159, 45 Am. Dec. 367; Smith Willis V. Valette, 4 Mete. (Ky.) 186; v. Vreeland, 16 N. J. Eq. 198; Dan- 901 ACTUAL NOTICE § 559 property established by the early decisions cited, which ought not to be departed from. The owner of land mortgaged it to A, and then mortgaged it to B, who had notice of the earlier mortgage, and who recorded his mortgage before th6 mortgage to A was recorded. After both mortgages were recorded, B assigned his mortgage to C, who had no actual notice of the mortgage to A. It was held, on a writ of entry by A against C, that C had the better title to the land.*^ The last purchaser's "own bona fides is a good defense, and the mala fides of his vendor ought not to invalidate it." Therefore, although one who has notice of a prior unrecorded mortgage can not himself pur- chase the land, or take a mortgage upon it, without its being subject to such unrecorded mortgage, yet if he sells the land or the mortgage to a purchaser in good faith, before the recording of the prior mortgage, the purchaser from him will acquire a title superior to the unrecorded mortgage; but should such purchaser omit to record his deed or as- signment until the mortgage is recorded, he would stand in no better position than his assignor.^^ In like manner an attaching creditor without notice of an unre- corded deed will hold the estate, although the debtor had notice of it.*° And in accord with the general rule, a bona fide purchaser without bury V. Robinson, 14 N. J. Eq. 213, light of dicta, and not as overruling 82 Am. Dec. 244; Slattery v. the earlier adjudications. "The bet- Schwannecke, 118 N. Y. 543, 23 N. ter rule, and the one the least likely E. 922; Wood v. Chapin, 13 N. Y. to create confusion of titles, seems 509, 67 Am. Dec. 62; Jackson v. Van to us to be, that, if a purchaser, up- Valkenburgh, 8 Cow. (N. Y.) 260; on examining the registry, finds a Demarest v. Wynkoop, 3 Johns. Ch. conveyance from the owner of the (N. Y.) 129, 8 Am. Dec. 467; Varick land to his grantor, which gives him V. Briggs, 6 Paige (N. Y.) 323; a perfect record title completed by Phillips V. Stroup, 1 Monag. (Pa.) what the law, at the time it is re- 517, 17 Atl. 220; Jones v. Hudson, corded, regards as equivalent to 23 S. Car. 494; Moore v. Curry, 36 a livery of seisin, he is entitled to Tex. 668; Pringle v. Dunn, 37 "Wis. rely upon such record title, and is 449, 19 Am- Rep. 772; Mertins v. not obliged to search the records Joliffe, Amb. 311, 313; Attorney- afterward, in order to see if there General v. Wilkins, 17 Beav. 285; has been any prior unrecorded deed Harrison v. Forth, Prec. Ch. 51; of the original owner." M'Queen v. Farquhar, 11 Ves. 467. ^Harrington v. Allen, 48 Miss. See also Robertson v. United States 492; Westbrook v. Gleason, 79 N. Live Stock Co. (Iowa), 145 N. W. Y. 23, revg. 14 Hun 245; Fort V. 535. Burch, 5 Denio (N. Y.) 187; Jack- " Morse v. Curtis, 140 Mass. 112. son v. Van Valkenburgh, 8 Cow. ( N. The court refers to Flynt v. Arnold, Y. 260; Doherty v. Stimmel, 40 Ohio 2 Mete. (Mass.) 619, where Shaw, St. 294; Stroud v. Lockhart, 4 Dall. C. J., expresses his individual opin- (Pa.) 153, 1 L. ed. 779; Claiborne ion against the earlier decisions; v. Holland, 88. Va. 1047, 14 S. E. but the judgment of the court was 915. See ante § 475. put upon another ground, and his '"Coffin v. Ray, 1 Mete. (Mass.) remarks are to be considered in the 212. § 560 NOTICE AS ATFECTING PEIOEITT 903 notice, from a fraudulent grantee, will be protected in his purchase.*^ And where a purchaser at sheriff's sale, by fraudulent representations, purchases land at . a mere nominal price, a bona fide purchaser from him without notice of the fraud, will be protected in his purchase.*^ And so, where one obtains a deed of land without consideration, by fraud and imposition upon the grantor, and has it duly recorded, a bona fide purchaser from him without notice of the fraud, paying a valuable consideration, will take a valid title against the first grantor.*" Likewise, where one, who has made a voluntary conveyance, subsequently conveys the land for a valuable consideration to one who knows of the voluntary conveyance, and the grantee in the latter deed conveys the land to another who has no notice, the last grantee will be protected against the voluntary deed.°° III. Implied Notice Section Section 560. Notice to agents, attorneys, and 565. Rule when attorney is the trustees. mortgagor. 561. Principle underlying doctrine. 566. Fraudulent concealment from 562. Notice acquired in same trans- principal. action. 567. Relationship of husband and wife. 563. Duty to impart notice material 568. Notice of joint owner's or co- to transaction. partner's interest. 564. Rule when agent or attorney 569. Notice of partnership equities. acts for both parties. 570. Notice to corporations through officers and agents. § 560. Notice to ag^ents, attorneys, and trustees. — Implied notice arises out of the legal relation of a person who has no notice with an- other who has notice. Thus notice to the principal is implied from no- tice to his agent. When an agent acquires a knowledge of any matters or instruments affecting the title of any lands, about the purchase or mortgage of which he is employed, and this knowledge is such that it is his duty to communicate it to his principal, the law imputes this knowledge to the principal ; or, in other words, notice to the principal *''Lee V. Cato, 27 Ga. 637, 73 Am. 13 Am. Dec. 406. Green v. Tanner, Dec. 746; Herndon v. Kimball, 7 49 Mass. (8 Mete.) 411; Hoffman v. Ga. 432, 50 Am. Dec. 406; Colgin v. Noble, 47 Mass. 68, 39 Am. Dec. 711; Courrege, 106 La. 684, 31 So. 144; See also Rowley v. Bigelow, 29 Mass. Hoffman v. Noble, 47 Mass. 68, 39 307, 23 Am. Dec. 607; Anderson v. Am. Dec. 711; Phillips v. Buchanan Blood, 152 N. Y. 285, 46 N. E. 493, Lumber Co., 151 N. Car. 519, 66 S. 57 Am. St. 515; Whitehorn v. Hines, E. 603. 1 Munf. (Va.) 557. « Herndon v. Kimball, 7 Ga. 432, ""West v. "Wright, 121 Ga. 470, 49 50 Am. Dec. 406. S. E. 285. *" Somes v. Brewer, 19 Mass. 184, 903 IMPLIED NOTICE § 560 of such matters or instruments is implied.^ Such notice is sometimes called constructive, but it is really implied from the identity of prin- cipal and agent, and not imputed by virtue of a construction placed upon their conduct or relation. Notice to an agent, to bind the principal, must be brought home to the agent while engaged in the business and negotiation of the principal, and when it would be a breach of trust in the former not to communicate the knowledge to the latter.^ The actual relation of 1 Smith V. Ayer, 101 U. S. 320, 25 L. ed. 955; May v. Le Claire, 11 Wall. (U. S.) 217, 20 L. ed. 50; Dennis v. Atlanta Nat. Bldg. &c. Assn., 136 Fed. 539, 69 C. C. A. 315; Chapman v. Hughes, 134 Cal. 641, 58 Pac. 298, affd. 66 Pac. 982; Don- ald V. Beals, 57 Cal. 399; Bauer v. Plerson, 46 Cal. 293; Clark v. Ful- ler, 39 Conn. 238; First Nat. Bank V. New Milford, 36 Conn. 93; Bou- ton v. Cameron, 205 111. 50, 68 N. E. 800; Fischer v. Tuohy, 186 111. 143, 57 N. E. 801; Inter-State Bldg. &c. Assn. V. Ayers, 177 111. 9, 52 N. E. 342; Miller v. Whelan, 158 111. 544; 42 N. B. 59; Haas v. Stern- bach, 156 111. 44, 41 N. E. 51; Whit- ney V. Burr, 115 111. 289, 3 N. B. 434; Blair v. Whitaker, 31 Ind. App. 664, 69 N. E. 182; Sowler v. Day, 58 Iowa 252, 12 N. W. 297; Yerger v. Barz, 56 Iowa 77, 8 N. W. 769; Walker v. Schreiber, 47 Iowa 529; Smith V. Dunton, 42 Iowa 48; Greer V. Higgins, 8 Kans. 519; Willis v. Vallette, 4 Mete. (Ky.) 186; Spona- ble V. Hanson, 87 Mich. 204, 49 N. W. 644; Taylor v. Young, 56 Mich. 285, 22 N. W. 799; Allen v. Poole, 54 Miss. 323; Johnston v. Short- ridge, 93 Mo. 227, 6 S. W. 64 (notice to president and secretary of cor- poration); Meier v. Blume, 80 Mo. 179; Coggswell v. Griffith, 23 Nebr. 334, 36 N. W. 538; Hovey v. Blanch- ard, 13 N. H. 145; Losey v. Simpson, II N. J. Eq. 246; Stanley v. Cham- berlin, 39 N. J. L. 565; Benedict v. Arnoux, 154 N. Y. 715, 49 N. E. 326; Constant v. University of Rochester, III N. Y. 604, 19 N. E. 631, 2 L. R. A. 734, 7 Am. St. 769; Dusenbury V. Hulbert, 59 N. Y. 541; William- son V. Brown, 15 N. Y. 354; Jack- son V. Van Valkenburgh, 8 Cow. (N. Y.) 260; Bank of U. S. v. Davis, 2 Hill. (N. Y.) 451; Josephthal v. Heyman, 2 Abb. N. Cas. (N. Y.) 22; Josephthal v. Steffen, 8 N. Y. Wkly. Dig. 61; Bigley v. Jones, 114 Pa. St. 510, 7 Atl. 54; Farrington v. Wood- ward, 82 Pa. St. 259; Myers v. Ross, 3 Head. (Tenn.) 59; Tagg v. Tenn. Nat. Bank, 9 Heisk. (Tenn.) 479; Hampshire v. Greeves (Tex. Civ. App.), 130 S. W. 665 (notice of prior unrecorded mortgage to presi- dent of bank taking subsequent mortgage); Schreckhise v. Wise- man, 102 Va. 9, 45 S. E. 745; Fuller V. Bennett, 2 Hare 394; Nixon v. Hamilton, 2 Dr. & Wal. 364, 1 Ir. Eq. 46. See also Lindley v. Martin- dale, 78 Iowa 379, 43 N. W. 233; Russell V. Sweezey, 22 Mich. 235; Hickman v. Green, 123 Mo. 165, 22 S. W. 455, 27 S. W. 440, 29 L. R. A. 39; Cowan v. Withrow, 111 N. Car. 306, 16 S. E. 397. ^'Satterfield v. Malone, 35 Fed. 445; Farmer v. American Mtg. Co., 116 Ala. 410, 22 So. 426; Pepper v. George, 51 Ala. 190; May v. Borel, 12 Cal. 91; Clark v. Fuller, 39 Conn. 238; Fry v. Shehee, 55 Ga. 208; Roderick v. McMeekin, 204 111. 625, 68 N. B. 473; Yerger v. Barz, 56 Iowa 77, 8 N. W. 769; Smith v. Dun- ton, 42 Iowa 48; Ely v. Pingry, 56 Kans. 17, 42 Pac. 330; Mitchell v. Aten, 37 Kans. 33, 14 Pac. 497; Greer v. Higgins, 20 Kans. 420; School District v. Taylor, 19 Kans. 287; Willis v. Vallette, 4 Mete. (Ky.) 186; Russell v. Sweezey, 22 Mich. 235; Tucker v. Tilton, 55 N. H. 223; Constant v. University of Rochester, 111 N. Y. 604, 19 N. E. 631, 2 L. R. A. 734, 7 Am. St. 769; Weisser v. Denison, 10 N. Y. 68, 61 Am. Dec. 731; Hodgkins v. Mont- gomery County Ins. Co., 34 Barb. (N. Y.) 213; New York Cent. Ins. (!!o. V. National Protection Ins. Co., 20 Barb. (N. Y.) 468; Haywood v. 560 NOTICE AS AFFECTING PRIORITY 904 agency must also be established;' and a mortgagor, merely intrusted with a mortgage for record, does not become the agent of the mort- gagee in such sense that his knowledge of a prior incumbrance will be imputed to the mortgagee.* Notice to an attorney not retained in the matter in regard to which notice to the attorney is shown is not notice to the principal. ° Thus, where a mortgagee's attorney had acquired knowledge of a prior un- recorded deed against the mortgaged premises, through inquiry of the grantee's husband concerning an abstract, it was held that the attornejr's knowledge could not be imputed to the mortgagee, since it was not acquired in foreclosing the mortgage or transacting business for the mortgagee.® The knowledge or notice of facts acquired by an attorney, while engaged in the business of his client, is knowledge or notice of them by the client himself,'' unless he is party to a fraud or his adverse interest is such as to induce him to conceal the infor- Shaw, 16 How Pr. (N. Y.) 119; Barbour v. Wiehel, 116 Pa. St. 308, 9 Atl. 520; Houseman v. Girard Loan Assn., 81 Pa. St. 256; Caugh- man v. Smith, 28 S. Car. 605, 5 S. B. 362; Schreckhise v. Wiseman, 102 Va. 9, 45 S. E. 745; Morrison v. Bausemer, 32 Grat. (Va.) 225; Pa- cific Mfg. Co. V. Brown, 8 Wash. 347, 36 Pac. 273; Connell v. Con- nell, 32 W. Va. 319, 9 S. E. 252; Pringle v. Dunn, 37 Wis. 449, 19 Am. Rep. 772; Hoppock v. Johnson, 14 Wis. 303; Lloyd v. Attwood, 3 De G. & J. 614, 5 Jur. (N. S.) 1322, 29 L. J. Ch. 97, 60 Eng. Ch. 475, 44 Eng. R. 1405. 'Farmer v. American Mtg. Co., 116 Ala. 410, 22 So. 426; Ely v. Pingry, 56 Kans. 17, 42 Pac. 330; Caughman v. Smith, 28 S. Car. 605, 5 S. E. 362. See also Wyllie v. Pol- len, 32 L. J. (N. S.) Ch. 782 (act- ing in ministerial capacity insuflS- clent). A purchaser of land, tak- ing a deed in his own name, does not by selling it to another, erasing his own name from the deed, and inserting the name of the other, thereby become the agent of the other so as to charge him with no- tice which he had. Kenney v. Jaynes, 26 Colo. 154, 56 Pac. 562. *Anketel v. Converse, 17 Ohio St. 11, 91 Am. Dec. 115; Hoppock v. Johnson, 14 Wis. 303. "Mack V. Mcintosh, 181 111. 633, 54 N. E. 1019; Geyer v. Geyer, 75 N. J. Eq. 124, 78 Atl. 449; Slattery V. Schwannecke, 118 N. Y. 543, 23 N. E. 922; Arrington v. Arrington, 114 N. Car. 151, 19 S. E. 351; Stein- meyer v. Stelnmeyer, 55 S. Car. 9, 33 S. E. 15; Melms v. Pabst Brew- ing Co., 93 Wis. 153, 66 N. W. 518, 57 Am. St. 899. • Slattery v. Schwannecke, 118 N. Y.' 543, 23 N. E. 922. ' Smith V. Ayer, 101 U. S. 320, 25 L. ed. 955; McNitt v. Turner, 16 Wall. (U. S.) 352, 21 L. ed. 341; May V. Le Claire, 11 Wall. (U. S.) 217, 20 L. ed. 50; Polk v. Cosgrove, 4 Biss. (U. S.) 437, Fed. Cas. No. 11248; Jennings v. Carter, 53 Ark. 242, 13 S. W. 800; Thomas v. Van- lieu, 28 Cal. 616; Stokes v. Riley, 121 111. 166, 11 N. E. 877; SennefE V. Brackey (Iowa), 146 N. W. 24; Foy V. Armstrong, 113 Iowa 629, 85 N. W. 753; Shoemake v. Smith, 80 Iowa 655, 45 N. W. 744; Sowler V. Day, 58 Iowa 252, 12 N. W. 297; Jones V. Bamford, 21 Iowa 217; Lee V. Bermingham, 30 Kans. 312; Bunker v. Gordon, 81 Maine 66, 16 Atl. 341; Low v. Low, 177 Mass. 306, 59 N. E. 57; Den v. Richman, 13 N. J. L. 43; Josephthal v. Heyman, 2 Abb. N. Cas. (N. Y.) 22; Jackson v. Van Valkenburgh. 8 Cow. (N. Y.) 260; Griffith v. Griffith, 9 Paige (N. Y.) 315; Westervelt v. Haff, 2 Sandf. Ch. (N. Y.) 98; Jackson v. Chamber- lain, 8 Wend. (N. Y.) 620; Holmes V. Buckner, 67 Tex. 107, 2 S. W. 905 IMPLIED NOTICE 560 mation.' It has been held that a mortgagee is charged with knowledge of a prior incumbrance, acquired by his attorney, though the latter was the only attorney employed in the transaction and acted for both par- ties." Notice imparted to the proper agent or officer of a mortgagee cor- poration will be imputed to the corporation.^" Notice to one interested in the purchase of land, though his name does not appear in the con- veyance, this being made to another, is notice to the latter.^^ Notice to a trustee is generally notice to the cestui que trust.^^ Notice to one of several trustees jointly holding title is notice to all.^^ The general rule of partnership that notice to an active partner concerning partnership affairs operates as notice to the firm is applied to a partner purchasing with notice of the condition of a title in re- lation to incumbrances.^* Thus where a mortgage is executed to a firm, knowledge by one of its members that the mortgagor had not paid the purchase-money for the land mortgaged, whereby his vendor had a lien thereon for the purchase-money, will affect all the mem- bers of the firm with notice of such fact, so that the lien is superior to the mortgage.^' 452; Sickles v. "White, 66 Tex. 178, 17 S. W. 543; Ayres v. Duprey, 27 Tex. 593, 86 Am. Dec. 657; Ford- tran v. Cunningham (Tex. Civ. App.), 141 S. W. 562; Ehle v. Brown, 31 Wis. 405; Maxfield v. Burton, 17 L. R. Eq. 15; Berwick V. Price (1905), 1 Ch. 632, 74 L. J. Ch. 249, 92 L. T. Rep. (N. S.) 110 Tweedale t. Tweedale, 23 Beav. 341, 53 Eng. Reprint 134. See also Ber- wick V. Price, 74 Law J. Ch. 249, (1905) 1 Ch. 632, 92 Law T. 110. See ante § 466. »Cave V. Cave, 15 Ch. Div. 639, 49 L. J. Ch. 505, 42 L. T. (N. S.) 730, 28 Wkly. Rep. 793. •Atterbury v. Wallis, 8 De G. M. & G. 454, 2 Jur. (N. S.) 117, 25 L. J. Ch. 792, 4 Wkly. Rep. 734, 57 Eng. Ch. 353, 44 Eng. Reprint 465. The mortgagor's attorney who pre- pares the papers and Is the only at- torney employed, will not be con- sidered the attorney for the mort- gagee without the latter's consent to such relation. Espin v. Pember- ton, 2 De G. & J. 547, 5 Jur. (N. S.) 157, 28 L. J. Ch. 311, 7 Wkly. Rep. 221, 60 Eng. Ch. 425, 44 Eng. Reprint 1380. "Wilson v. McCullough, 23 Pa. St. 440, 62 Am. Dec. 347; Kirklin v. Atlas Savings &c. Assn. (Tenn.), 60 S. W. 149. See post § 570. "Stanley v. Green, 12 Cal. 148; Wise v. Tripp, 13 Maine 9; Little- ton T. Giddings, 47 Tex. 109. "Pope V. Pope, 40 Miss. 516; Schoolfield v. Cogdell, 120 Tenn. 618, 113 S. W. 375 (notice to a trustee of a prior unrecorded mort- gage suflBcient). See also Willis v. Vallette, 4 Mete. (Ky.), 186 (re- mote notice to trustee taking sub- sequent mortgage insufficient) ; Al- len V. Stewart, 214 Mass. 109, 100 N. E. 1092. But see Gritchell v. Kreidler, 12 Mo. App. 497; Morrison V. Bausemer, 32 Grat. (Va.) 225. " Chapman v. Chapman, 91 Va. 367, 21 S. E. 813, 50 Am. St. 846; Meux V. Bell, 1 Hare 73; Smith v. Smith, 2 Cromp. & M. 231 (notice to one of several trustees sufficient, though he was not then acting). See also Browne v. Savage, 4 Drew 635, 5 Jur. (N. S.) 1020, 7 W. R. 571. "Renfro v. Adams, 62 Ala. 302; Watson V. Wells, 5 Conn. 468; Loeb V. Stern, 198 111. 371, 64 N. E. 1043. " Overall t. Taylor, 99 Ala. 12, 11 So. 738. § 560 NOTICE AS APFECTING PEICEITT • 906 But it seems that in the absence of agency, partnership or some trust or fiduciary relationship, raising a mutual obligation to impart knowledge, a contrary doctrine obtains, and consequently notice of a prior incumbrance or conveyance to one of several joint owners or tenants in common, will not operate as notice to the others by mere force of the relationship.^" It has been held that one taking mortgaged lands by descent is chargeable with knowledge of the terms and con- ditions of the mortgage.^' Where a solicitor induced a client to take a mortgage upon the lands of a third person situate in the county of Middlesex, in England, and soon afterward induced a second client to advance money on a mortgage of the same lands, without informing him of the existence of the first mortgage, and the second mortgage was registered before the first mortgage was registered, it was held that the holder of the second mortgage must be taken to have had, through the solicitor, no- tice of the first mortgage, and could not by the prior registration ob- tain priority.^' Lord Chancellor Hatherley said: "It has been held over and over again that notice to a solicitor of a transaction, and about a matter as to which it is part of his duty to inform himself, is actual notice to the client. Mankind would not be safe if it were held that, under such circumstances, a man has not notice of that which his agent has actual notice of. The purchaser of an estate has, in ordi- nary cases, no personal knowledge of the title, but employs a solicitor, and can never be allowed to say that he knew nothing of some prior incumbrance because he was not told of it by his solicitor." Notice to an agent of facts rendering a note and mortgage pur- chased by him for his principal a second lien, is notice to the principal, where the latter is informed that the agent is exercising his own dis- cretion as to the investment and accepts his action without objection, receiving the note and mortgage from him and afterward receiving four semi-annual instalments of interest.^* •'Wait V. Smith, 92 111. 385; Burt 2 Barb. 270); Rippetoe v. Dwyer, V. Batavia Paper Mfg. Co., 86 111. 65 Tex. 703 (notice of prior incum- 66 (knowledge of one of several brance to one purchaser not charge- corporators of an incumbrance on able to his joint purchaser). See property purchased by corporation, also Parker v. Kane, 4 Wis. 1, 65 not chargeable to his association) ; Am. Dec. 283. Snyder v. Sponable, 1 Hill (N. Y.) "Fleming v. Hager, 121 Iowa 205, 567, affd. 7 Hill 427 (notice of prior 96 N. W. 752. unrecorded mortgage imparted to "Holland v. Hart, L. R. 6 Ch. husband, not chargeable to wife as App. 678. joint tenant) ; Wiswall v. McGowan, ''Fischer v. Tuohy, 186 111. 143, 57 1 Hoff. Ch. (N. Y.) 125 (modified N. E. 801, aflEg. 87 111. App. 574. 907 IMPLIED NOTICE § 561 § 561. Principle underlying doctrine. — "It is a moot question upon ■what principle this doctrine rests," says Vice Chancellor Kindersley,^" "it has been held by some that it rests on this : that the probability is so strong that the solicitor would tell his client what he knows him- self, that it amounts to an irresistible presumption that he did tell him ; and so you must presume actual notice on the part of the client. I confess my own impression is, that the principle on which the doc- trine rests is this : that my solicitor is alter ego, — he is myself ; I stand in precisely the same position as he does in the transaction, and there- fore his knowledge is my knowledge ; and it would be a monstrous in- justice that I should have the advantage of what he knows without the disadvantage. But whatever be the principle upon which the doctrine rests, the doctrine itself is unquestionable." , "In such a case," said Lord Chancellor Brougham,^^ "it would be most iniquitous and most dangerous, and give shelter and encourage- ment to all kinds of fraud, were the law not to consider the knowledge of one as common to both, whether it be so in fact or not." It is an elementary principle of the law of agency, applying also to attorneys, that loyalty to the principal's interests requires an agent to disclose every material fact concerning the subject-matter of the agen- cy that comes within his knowledge and memory, in the course of his agency. The law, following the inference of fact, conclusively pre- sumes the agent to have performed this duty of informing his prin- cipal, and the latter is therefore affected with knowledge of all the material facts of which the agent receives notice or acquires knowl- edge while acting in the course of his employment and within the scope of his authority. These principles of agency have been repeated- ly applied to purchasers of realty, affected by notice to their agents and attorneys.^^ ^'"Boursot V. Savage, L. R. 2 Eq. 78 Atl. 324; Bryant v. Booze, 55 Ga. 134. 438; Bouton v. Cameron, 205 111. 50, ^Kennedy v. Green, 3 Myl. & K. 68 N. E. 800; Roderick v. McMeek- 699. See also Bradley v. Riches, L. in, 204 111. 625, 68 N. E. 473; Fisch- R. 9 Ch. D. 189. er v. Tuohy, 186 111. 143, 57 N. E. =^ Harris v. American Bldg. &c. 801; Field v. Campbell, 164 Ind. Assn., 122 Ala. 545, 25 So. 200; 389, 72 N. E. 260, 108 Am. St. 301; Farmer v. American Mortgage Co., Condon v. Barnum (Iowa), 106 N. 116 Ala. 410, 22 So. 426; Conti- W. 514; Gardner v. Early, 72 Iowa nental Bldg. &c. Assn. v. Boggess, 518, 34 N. W. 311; Gael v. Goulden, 158 Gal. 469, 111 Pac. 357; Chap- 168 Mich. 413, 134 N. W. 484; Hick- man V. Hughes, 134 Cal. 641, 58 Pac. man v. Green, 123 Mo. 165, 22 S. \/. 298, 60 Pac. 974, 66 Pac. 982; North- 455, 27 S. W. 440, 29 L. R. A. 39; crn Assur. Co. v. Stout, 16 Cal. App. Brown v. Columbus (N. J. Eq.), 75 548, 117 Pac. 617; New York, N. H. Atl. 917; Fordtran v. Cunningham &c. R. Co. v. Russel, 83 Conn. 581, (Tex. Civ. App.), 141 S. W. 562. § 563 NOTICE AS AFFECTING PKIOEITX 908 § 562. Notice acquired in same transaction. — The notice must be in the same transaction. Notice to the agent binds the principal only when it is given to or acquired by him in the transaction in which the principal employs him.^^ The reason for this limitation has been stated to be, that an agent can not stand in the place of the principal until the relation is constituted; and that, as to all the information which he has previously acquired, the jfrincipal is a mere stranger.''* Another explanation commonly made of the rule is, that the agent may have forgotten the former transaction. Under this latter view of the doctrine, the criticism of Lord Eldon^^ might well be regarded as shaking it ; but it is suggested in later cases that it was not the purpose of his dictum to question the general doctrine itself. At any rate this has been insisted upon ever since his time, and may be regarded as settled.^' Upon such considerations, the rule imputing notice to a purchaser == Warrick v. Warrick, 3 Atk. 291, per Lord Hardwicke; Fitzgerald v. Fauconberge, Fitz. G. 207; 2 White & Tudor's Lead. Cas. in Eq. (4th Am. ed.), pt. 1, pp. 170, 173; Rol- land V. Hart, L. R. 6 Ch. App. 678; Fuller v. Benett, 2 Hare 394; Pep- per V. George, 51 Ala. 190; Lewis v. Equitable Mtg. Co., 94 Ga. 572, 21 S. E. 224; Boardman v. Taylor, 66 Ga. 638; Roderick v. McMeekin, 204 111. 625, 68 N. E. 473; McCor- mick V. Wheeler, 36 111. 114; Farm- ers' Bank v. Butterfield, 100 Ind. 229; Foulks v. Reed, 89 Ind. 370; Yerger v. Barz, 56 Iowa 77, 8 N. W. 769; Roach v. Karr, 18 Kans. 529, 26 Am. Rep. 788; Willis v. Vallette, 4 Mete. (Ky.) 186; Weisser v. Deni- son, 10 N. Y. 68, 61 Am. Dec. 731; Howard Ins. Co. v. Halsey, 8 N. Y. 271, 59 Am. Dec. 478; New York Central Ins. Co. v. National Ins. Co., 20 Barb. (N. Y.) 468; Houseman v. Girard Mut. B. &c. Assn., 81 Pa. St. 256; Barnes v. McClinton, 3 Pa. St. 67, 23 Am. Dec. 62; Hood v. Fahne- stock, 8 Watts (Pa.) 489, 34 Am. Dec. 489; Boggs v. Varner, 6 Watts & S. (Pa.) 469; Bracken v. Miller, 4 Watts & S. (Pa.) 102; Caughman v. Smith, 28 S. Car. 605, 5 S. B. 362; Blumenthal v. Brainerd, 38 Vt. 402, 91 Am. Dec. 350. It was said in substance by Lord Hardwicke, in Warrick v. Warrick, 3 Atk. 291, 26 Eng. Reprint 970, that notice to the agent or counsel, who was employed in the business by another person, or in another business, and at another time, is no notice to his client who employs him afterward. It would be very mischievous if it was so; for the man of most practice and greatest eminence would then be the most dangerous to employ. See ante § 560. '"Mountford v. Scott, 3 Madd. 40. See also Morrison v. Bausemer, 32 Grat. (Va.) 225; Fuller v. Benett, 2 Hare 394, per Sir J. Wigram. But see Sowler v. Day, 58 Iowa 252, 12 N. W. 297. ""When the case of Mountford v. Scott was on appeal before Lord El- don, L. C. (Turn. & R. 274), he re- marked that "it might fail to be considered whether one transac- tion might not follow so close upon the other as to render it impossible to give a man credit for having for- gotten it. I should be unwilling to go so far as to say that, if an at- torney has notice of a transaction in the morning, he shall be heM in a court of equity to have forgotten it in the evening." See also Con- stant V. American Bap. Soc, 21 J. & S. (N. Y.) 170; Brotherton v. Hatt, 2 Vern. 574; Hargreaves v. Rothwell, 1 Keen 154. =" Fuller V. Benett, 2 Hare 394. 909 IMPLIED NOTICE § 563 from knowledge of his agent has sometimes been qualified with the provision that the knowledge must have been present in the agent's mind at the time of the purchase.^' But it has been held that notice to an agent is notice to his principal, even where the latter interferes before the agent has concluded the negotiations and completes the transaction in person, the agent not participating in the final stages of the transaction.^^ When the agent or attorney is employed by a person in several mort- gage transactions, and he acts for the mortgagees also in all of them, although the transactions are distinct, the later mortgagees are said to be affected with notice of the earlier mortgages, on the ground that the transactions follow each other so closely that they amount to a continuous dealing with the same title.^" This exception would remain good only when the mortgagor was the same in all the transactions, and the same attorney is employed in all. § 563. Duty to impart notice material to transaction. — The notice must be of some matter material to the transaction; of some thing which it is the duty of the agent to make known to the principal.^" Thus the principal is not charged with notice of his agent's secret in- formation, acquired confidentially as attorney for a former client, and which he was bound by professional confidence to withhold.^^ Where an attorney acting in his individual capacity, sells land to a layman who employs no attorney, the former sustains no relation of trust or confidence, and owes no duty to impart his professional knowledge concerning the title. ^^ If the agent acts merely in a ministerial capacity, as, for instance, in obtaining the execution of a deed, the principal is not affected with the agent's knowledge.^^ In like manner, a mortgagor to whom a '^ Satterfleld v. Malone, 35 Fed. burn, 18 Ore. 3, 22 Pac. 521. See 445, 1 Li. R. a. 35; Armstrong v. also Day v. Wamsley, 33 Ind. 145; Abbott, 11 Colo. 220, 17 Pac. 517; Fairfield Sav. Bank v. Chase, 72 Mack V. Mcintosh, 181 111. 633, 54 N. Maine 226, 39 Am. Rep. 319; Tren- E 1019- Constant v. Rochester XJni- tor v. Pothen, 46 Minn. 298, 49 N. versity 111 N Y. 604, 19 N. E. 631, W. 129, 24 Am. St. 225. See ante 2 L. R.'a. 734, 7 Am. St. 769. § 560. "s Bryant v. Booze, 55 Ga. 438. ''^ Hunter v. Watson, 12 Cal. 363, ^Brotherton v. Hatt, 2 Vern. 574; 73 Am. Dec. 543; Mack v. Mcintosh, Hargreaves v. Rothwell, 1 Keen 181 111. 633, 54 N. E. 1019; DriffiU 154; Winter v. Anson, 1 Sim. & St. v. Goodwin, 23 Grant Ch. (U. C.) 434, 3 Russ. 488. See also Distilled 431. Spirits, 11 Wall. (U. S.) 356, 20 L. "'Rykert v. Miller, 14 Grant Ch. ed 167 (U. C.) 25. See post § 565. ''»Wyllle V. Pollen, 32 L. J. (N. »=Wyllie v. Pollen, 32 L. J. (N. S.) Ch. 782; Mack v. Mcintosh, 181 S.) Ch. 782 (obtaining execution). 111. 633, 54 N. E. 1019; Wood v. Ray- § 564 NOTICE AS AFFECTING PEIORITT 910 mortgage is intrusted for record is not such an agent of the mort- gagee that notice to him of an incumbrance, or his knowledge of it, is constructive notice to the mortgagee.'* As pointed out by Lord West- bury,'' a solicitor whose notice affects his client must be a solicitor "for the confidential purpose of advising;" otherwise there is no duty on his part to communicate the knowledge to the client, and the doc- trine of implied notice has no application. Notice of the existence of an unrecorded mortgage upon the prop- erty to an officer employed to make- an attachment is notice to the plaintiff, and is equivalent to a record in protecting it against the at- tachment.' ° But such knowledge on the part of an attorney who makes the writ, but has no agency in procuring the attachment, has been held not to affect the plaintiff.''' The mere relation of mortgagor and mort- gagee is not sufficient to charge the latter with notice of facts known to the former." § 564. Rule when agent or attorney acts for both parties. — ^When the same agent or attorney is employed by both parties in the same transaction, his knowledge is then the knowledge of both the vendor and vendee, of both the mortgagor and mortgagee.'" A principal who knows that his agent is also acting as agent for the party adverse- ly interested in a transaction with him, and yet consents that he may act as his agent, is estopped from denying the notice and knowledge which the agent has during the negotiation.*" Since the interest of vendor and purchaser are diametrically opposed, such knowledge and consent to the dual agency is essential to effectual notice through the agent. To permit the seller or his agent to act as the agent of the buyer inaugurates so dangerous a conflict between self-interest and "Anketel v. Converse, 17 Ohio St. 546, 40 S. W. 3; Sheldon v. Cox, 11, 91 Am. Dec. 115; Hoppock v. Amb. 624. See also Aster v. Wells, Johnson, 14 Wis. 303. 4 Wheat. (U. S.) 466, 4 L. ed. 616; ^^ In Wyllie v. Pollen, 32 Li. J. Constant v. Am. Bap. See, 21 J. & (N. S.) Ch. 782. S. (N. Y.) 170; Fischer v. Tuohy, =" Tucker v. Tilton, 55 N. H. 223. 186 111. 143, 57 N. B. 801, where the ^ Tucker v. Tilton, 55 N. H. 223. agent making a loan was an invest- "* Tritch V. Norton, 10 Colo. 337, ment company. 15 Pac. 680. «Astor v. Wells, 4 Wheat. (U. S.) ''Pine Mountain Iron &c. Co. v. 466, 4 L. ed. 616; Pine Mountain Bailey, 94 Fed. 258, 36 C. C. A. Iron &c. Co. v. Bailey, 94 Fed. 258, 229; Griffin v. Franklin, 224 Mo. 36 C. C. A. 229; Pitzsimmons v. 667, 123 S. W. 1092 (grantor's at- Southern Express Co., 40 Ga. 330; torney also agent for purchaser) ; Alexander v. Northwestern Chris- Smith v. Farrell, 66 Mo. App. 8; tlan University, 57 Ind. 466; Leek- Losey v. Simpson, 11 N. J. Bq. 246; ins v. Nordyke &c. Co., 66 Iowa 471, Holley v. Still, 91 S. Car. 487, 74 24 N. W. 1; Adams Mining Co. V. S. E. 1065; Baldwin v. Root, 90 Tex. Senter, 26 Mich. 73. 911 IMPLIED NOTICE § 565 duty that the law has wisely removed the temptation by forbidding the relation. ISTo one can be a vendor or the agent of a vendor and the purchaser or the agent of the purchaser at the same time, unless he first obtains the consent of the party with whom he deals, after a com- plete disclosure of all the facts which condition his relation. The law absolutely prohibits the vendor from being at the same time the agent of a purchaser, unless the latter consents to the relation after he knows that his agent is the seller.*^ In such cases of dual agency it seems that the rule that the agent's notice must be in the same transaction is less strictly adhered to.*^ Thus, where a person made two successive mortgages of the same prop- erty, and then gave a further charge to the first mortgagee, and the same solicitor was employed in all three transactions, it was held that the first mortgagee had implied notice of the second mortgagee's in- cumbrance, and that the latter was entitled to priority over the further charge to the first mortgagee.*^ A mortgagee is not chargeable with notice of facts within 'the knowledge of the borrower's agents who ne- gotiated the loan for the borrower, and are not the agents of the mort- gagee in any way.** Where a solicitor is employed and acts for both mortgagor and mortgagee notice of a prior incumbrance held by such solicitor is im- putable to the mortgagee.*^ But where the mortgagor's solicitor is the only solicitor employed in the transaction, he will not be consid- ered the attorney for the mortgagee unless there is some consent on the part of the latter to constitute the relation.*" § 565. Rule when attorney is the mortgagor. — When the attorney himself is the mortgagor, the rule, that the knowledge of the attorney is the knowledge of the client, does not apply; it does not follow in such case that the mortgagee has constructive notice of facts con- nected with the title which are known to the mortgagor.*^ Therefore, ■"Pine Mountain Iron &c. Co. v. '^Hargreaves v. Rothwell, 1 Bailey, 94 Fed. 258, 36 C. C. A. 229; Keen 154. See also Jamison v. McKinley v. Williams, 74 Fed. 94, Gjemenson, 10 Wis. 411. 20 C. C. A. 312; Warren v. Burt, 58 "Allen v. McCullough, 99 Ala. 612, Fed. 101, 7 C. C. A. 105; Bunton v. 12 So. 810. Palm (Tex.), 9 S. W. 182. See also "Atterbury v. Wallis, 8 De G. M. Thomson-Houston Elec. Co. v. Cap- & G. 454, 2 Jur. (N. S.) 117, 2 L. J. ital Elec. Co., 56 Fed. 849; Frenkel Ch. 792, 4 Wkly. Rep. 734, 57 Eng. V. Hudson, 82 Ala. 158, 2 So. 758, 60 Ch. 353, 44 Eng. Reprint 465. Am. Rep. 736; DeKay v. Hacken- ^"Espin v. Pemberton, 2 De G. & sack Water Co., 38 N. J. Eq. 158; J. 547, 5 Jur. (N. S.) 158, 28 L. J. Voltz V. Blackmar, 64 N. Y. 440. Ch. 311. "Puller V. Benett, 2 Hare 403; « Bang v. Brett, 62 Minn. 4, 63 N. Brotherton v. Hatt, 2 Vern. 574. ,W. 1067; Hope F. Ins. Co. v. Cam- § 566 NOTICE AS AFFECTING PEIOEITT 912 where one was attorney for two persons, and executed to one of them a mortgage, which was not recorded, and afterward executed another mortgage of the same premises to the other, and this mortgage was recorded, it was held that the priority of the latter mortgage was not affected by the attorney's knowledge of the mortgage first executed.*^ Whenever the agent is "the contriver, the actor, and the gainer of the transaction," the reason for charging the principal with notice of the facts no longer exists.** And as a general rule, knowledge of an agent in relation to the matter in which he is acting will not be imputed to his principal, when his interests are adverse to those of the principal.^" § 566. Fraudulent concealment from principal. — In like manner, when the agent is guilty of any fraud, for the carrying out of which it is necessary that he should conceal it from his principal, notice of it can not be imputed to the latter."^ Thus, where an agent fraudu- lently and eollusively with a borrower, loaned his principal's money upon security of a mortgage of homestead lands, contrary to his in- structions, the agent's knowledge that the premises were a homestead will not be imputed to the principal. ^^ And generally where a land brelling, 1 Hun (N. Y.) 493; Hewitt V. Loosemore, 9 Hare 449; Espin v. Pemberton, 3 De G. & J. 547. But Sheldon v. Cox, Amb. 624, is re- garded as an authority to the con- trary, followed in Majoribanks v. Hovenden, 6 Ir. Eq. 238; Rorke v. Lloyd, 13 Ir. Ch. 273; Tucker v. Henzill, 4 Ir. Ch. 513. ■" Hope F. Ins. Co. v. Cambrelling, 1 Hun (N. Y.) 493. See also McCor- mick V. Wheeler, 36 111. 114, 85 Am. Dec. 388; Winchester v. Baltimore & S. R. Co., 4 Md. 231; Rolland v. Hart, 6 Ch. App. 678, per Lord Hath- erley; Kennedy v. Green, 3 Myl. & K. 699. "Kennedy v. Green, 3 Myl. & K. 699. " Frenkel v. Hudson, 82 Ala. 158, 2 So. 758, 60 Am. Rep. 736; Booker V. Booker, 208 111. 529, 70 N. B. 709, 100 Am. St. 250; Jummel v. Mann, 80 111. App.. 288, affd. 183 111. 523, 56 N. E. 161; Smith v. Boyd, 162 Mo. 146, 62 S. W. 439; Bunton v. Palm (Tex.), 9 S. W. 182. See also Cen- tral Coal &c. Co. v. Good, 120 Fed. 793, 57 C. C. A. 161; Bank of Over- ton v. Thompson, 118 Fed. 798, 56 C. C. A. 554; Brown v. Harris, 139 Mich. 372, 102 N. W. 960; Luton v. Sharp, 94 Mich. 202, 53 N. W. 1054; Traber v. Hicks, 131 Mo. 180, 32 S. W. 1145; ^tna Indemnity Co. v. Schroeder, 12 N. Dak. 110, 95 N. W. 436. °^ Western Mtg. &c. Co. v. Ganzer, 63 Fed. 647, 11 C. C. A. 371; Cowan V. Curran, 216 111. 598, 75 N. E. 322; Dillaway v. Butler, 135 Mass. 479; Traber v. Hicks, 131 Mo. 180, 32 S. W. 1145; Benedict v. Arnoux, 154 N. Y. 715, 49 N. E. 326; Fulton Bank V. New York &c. Canal Co., 4 Paige (N. Y.) 127; Musser v. Hyde, 2 Watts & S. (Pa.) 314; Allen v. Gar- rison, 92 Tex. 546, 50 S. W. 335; Cooper V. Ford, 29 Tex. Civ. App. 253, 69 S. W. 487; Scripture v. Scot- tish-American Mtg. Co., 20 Tex. Civ. App. 153, 49 S. W. 644; Kennedy v. Green, 3 Myl. & K. 699; In re Eu- ropean Bank, 5 Ch. App. 358. See also Thomson-Houston Electric Co. V. Capitol Electric Co., 65 Fed. 341, 12 C. C. A. 643; Geyer v. Geyer, 75 N. J. Eq. 124, 78 Atl. 449. "^ Scripture v. Scottish-American Mtg. Co., 20 Tex. Civ. App. 153, 49 S. W. 644. See also Western Mfg. Co. V. Ganzer, 63 Fed. 647, 11 C. C. A. 371 ; Cooper v. Ford, 29 Tex. Civ. App. 253, 69 S. W. 487. 913 IMPLIED NOTICE § 567 agent professes to act for both the seller and the buyer, the law exacts from him the most perfect good faith, fairness and honesty, when it is sought to enforce the contract, or to impute to the principal knowl- edge of the agent.'^^ The fraud must exist independently of the question whether the act was communicated to the principal of not."* "It must be made out that distinct fraud was intended in the very transaction, so as to make it necessary for the solicitor to conceal the facts from his client, in order to defraud him."=^ The High Court of Justice of England, ap- plying these principles in a case where a trustee who was a solicitor used trust funds in purchasing an estate which was conveyed to his brother, and afterward acted as solicitor for the mortgagee in raising money on the estate, held that the fraud of the solicitor ran through the whole transaction, and prevented the imputation of notice."" In other words, if the act done by the agent is such as can not be said to be done by him in the character of agent, but is done by him in the character of a party to an independent fraud on his principal, it is not to be imputed to the principal as an act done by his agent. °' Or, to state the matter somewhat differently, notice is imputed to the principal by reason of the agent's knowledge, unless there are such circumstances in the case, independent of the fact under inquiry, as to raise an inevitable conclusion that the notice had not been commu- nicated.^^ "As soon as the agent forms the purpose of dealing with his principal's property for his own benefit and advantage, or for the benefit and advantage of other persons who are opposed in interest, he ceases, in fact, to be an agent acting in good faith for the interest of his principal, and his action thereafter based upon such purpose is deemed to be in fraud of the rights of his principal, and the presump- tion that he has disclosed all the facts that have come to his knowl- edge no longer prevails.""" § 567. Eelationship of husband and wife. — Notice is not neces- sarily implied out of the relationship of husband and wife. A mar- ■" Cowan v. Curran, 216 111. 598, »» Thompson v. Cartwright, 33 75 N. E. 322. Beav. 178. "Atterbury v. Wallis, 8 De G., '» Benedict v. Arnoux, 154 N. Y. M. & G. 454; Sharpe v. Foy, 4 Ch. 715, 49 N. E. 326, per Haight, J., App. 35; Hewitt v. Loosemore, 9 citing Innerarity v. Merchants' Nat. Hare, 499. Bank, 139 Mass. 332, 1 N. E. 282, ""Rolland v. Hart, 6 Ch. App. 678. 52 Am. Rep. 710; Hudson v. Ran- ""Cave V. Cave, 15 Ch. D. 639. dolph, 66 Fed. 216; Weissar v. Deni- "'Cave v. Cave, 15 Ch. D. 639, per son, 10 N. Y. 68; Frenkel v. Hud- Fry, J.; Espin v. Pemberton, 3 De son, 82 Ala. 158, 2 So. 758; Kettle- , G. & J. 547. 58 — Jones Mtg. — Vol. I. § 568 NOTICE AS AFFECTING PKIOEITT 914 ried woman is not chargeable with knowledge of facts affecting the title to real estate purchased by her, because her husband has knowl- edge of such facts, in case the purchase is not made through his agency, and he takes no part in the negotiations.""" But the wife purchasing land through her husband acting as her agent, takes subject to the incumbrances or other defects of which he had knowledge.^^ Thus the wife is chargeable with notice, in purchasing land through her hus- band, who has knowledge that the transfer is made in fraud of the grantor's wife.°^ Where a loan agent, negotiating a loan for a married woman, agreed to investigate the title offered her as security, the fact that her husband verified such examination was held insufiScient to constitute him her agent in the transaction so as to charge her with his knowledge of facts affecting the title. ^' § 568. Notice of joint owner's or copartner's interest. — A pur- chaser from one of two joint owners is chargeable with notice of the interest of the other, when this interest is shown by the conveyance to which he must look for his vendor's title."* Thus, if the deed to his grantor shows that the land was bought with partnership funds or for partnership purposes, the purchaser from one of the joint owners is chargeable with notice of the partnership equities.'^^ The purchaser is not chargeable with notice that the land is partnership property merely from knowledge that the owners are partners, and that they use the lands for partnership purposes, in case there is nothing in the purchase-deeds of such owners to indicate that it was bought for part- ■well V. Watson, 21 Ch. D. 685, 707; W. 167 (presumption of notice from Cave v. Cave, 15 Ch. D. 639. husband to wife rebutted by their ™ Satterfleld v. Malone, 35 Fed. direct testimony); Allen v. Garri- 445; Leowen v. Forsee, 137 Mo. 29, son, 92 Tex. 546, 50 S. W. 335; 38 S. W. 712; Snyder v. Sponable, Smith v. Miller, 66 Tex. 74, 17 S. 1 Hill (N. Y.) 567, 7 Hill 427; W. 399. Smith V. Miller, 66 Tex. 74, 17 S. °= Tate v. Tate, 10 Ohio C. D. 321, W. 399; Pringle v. Dunn, 37 Wis. 19 Ohio C. C. 532. 449, 19 Am. Rep. 772. See also »= Francis v. Reeves, 137 N. Car. Weightman v. Washington Critic 269, 49 S. E. 213. Co., 4 App. D. C. 136; Graham Pa- "Campbell v. Roach, 45 Ala. 667. per Co. V. St. Joseph &c. Pub. Co., See also Patrick v. Chenault, 6 B. 79 Mo. App. 504. Mon. (Ky.) 315; Gibson v. Wins- " Miller v. Whelan, 158 111. 544, low, 46 Pa. St. 380, 84 Am. Dec. 42 N. B. 59; Forsythe v. Branden- 552. A mortgage of joint property burg, 154 Ind. 588, 57 N. E. 247; is not binding on co-tenants who do Retherford v. Wright, 41 Ind. App. not join in its execution, unless 163, 83 N. E. 520; Gardner v. Early, they are estopped to deny it by 72 Iowa 518, 34 N. W. 311; Tate v. knowledge or acquiescence. South Tate, 10 Ohio C. D. 321, 19 Ohio C. Carolina State Bank v. Campbell, C. 532. See also SatterHeld v. Ma- 2 Rich. Eq. (S. Car.) 179. lone, 35 Fed. 445, 1 L. R. A. 35; '"Brewer v. Browne, 68 Ala. 210. Parker v. Meredith (Tenn.), 59 S. See also United States v. Groome, 915 IMPLIED NOTICE § 569 nership purposes.*' And a bona fide purchaser of a partner's legal title in partnership realty, having no notice of equitable rights of the copartners or their creditors, will be protected both in law and equity."^ § 569. Notice of partnership equities. — But if a purchaser has knowledge that the land is partnership property, and he attempts to purchase the individual interest of one partner, he buys subject to the equitable rights of the other partners. The purchaser is put upon in- quiry by such knowledge as to the equitable rights of the other part- ners, and takes subject to such rights."* The purchaser with such knowledge is also bound by the equities of the partnership creditors. Thus, where one purchased of a surviving partner the undivided half of a parcel of land upon which there was a planing mill, knowing that the land was purchased and the mill built with partnership funds, and had always been applied to partnership uses, that the firm was largely indebted, if not insolvent, and that none of its debts had been paid by the surviving partner, who conducted the sale secretly, and absconded with the proceeds of the sale immediately upon its com- pletion, the purchaser was held to be affected by his knowledge, and by the circumstances of the transaction, so that he took the title sub- ject to the trust with which it was affected in the hands of his ven- dor."" 13 App. D. C. 460; Williams v. bound to take notice." But see Ber- Love, 39 Tenn. 80, 73 Am. Dec. 191; geron v. Rlcliardott, 55 Wis. 129, Mansfield v. Neese, 21 Tex. Civ. 12 N. W. 384. App. 584, 54 S. W. 370. "Robinson Bank v. Miller, 153 "Brewer v. Browne, 68 Ala. 210; 111. 244, 38 N. E. 1078, 27 L. R. A. Kepler v. Erie Dime Sav. &c. Co., 449, 46 Am. St. 883; Rivarde v. 101 Pa. St. 602; Lefevre's Appeal, Rousseau, 7 La. Ann. 3; Tillinghast 69 Pa. St. 122, 8 Am. Rep. 229; Til- v. Champlin, 4 R. I. 173, 67 Am. lingbast v. Champlin, 4 R. I. 173, Dec. 510. See also Bond Realty Co. 67 Am. Dec. 510; Reynolds v. Buck- v. Pounds, 128 App. Div. 91, 112 N. man, 35 Micb. 80, Cooley, C. J., Y. S. 433. said: "Real estate held by part- ««Hoxie v. Carr, 1 Sumn. (U. S.) ners may or may not be partnership 173; Sigourney v. Munn. 7 Conn. property, but usually it is not so 324; Dyer v. Clark, 5 Mete. (Mass.) unless partnership assets have been 562; Tillinghast v. Champlin, 4 R. used to purchase it, unless it was I. 173, 67 Am. Dec. 510. put in originally as a part of the ""Tillinghast v. Champlin, 4 R. joint estate. But generally the I. 173, 67 Am. Dec. 510. The cir- fact that two or more persons make cumstance that a mortgage was ex- use of property, in which their in- ecuted to three persons does not terests are apparently several for create a mutual agency, so that no- partnership purposes, is very far tice to one will affect the others, from indicating an understanding Snyder v. Sponable, 1 Hill (N. Y.) that it is partnership estate, much 567; Steiner v. Clisby, 95 Ala, 91, less any such conclusive under- 10 So. 240, 11 So. 294. standing that others would be § 570 NOTICE AS AFFECTING PRIORITY 916 "Where the record title of property appears in two persons, and the purchaser is informed hefore completion of the purchase that a claim to the whole of the land is made by one of such persons or his grantee, the title is taken subject to this claim, and may be defeated by evi- dence that the land was acquired by the owners of record as partners and had been awarded to one of them upon a settlement of partner- ship affairs.'" "Eeal estate held by partners may or may not be part- nership property, but usually it is not so unless partnership assets have been used to purchase it, or unless it was put in originally as a part of the joint estate. But generally the fact that two or more persons make use of property in which their interests are apparently several, for partnership purposes, is very far from indicating an un- derstanding that others would be found to take notice. The several interests still remain several, and each may deal with his own as he will, and any private arrangement that would change this could not bind third parties who had acted in ignorance of it."'^ § 570. Notice to corporations through officers and agents. — Notice, to affect a corporation, must be brought home to the president and directors, or to some officer to whom the matter to which the notice relates has been specially given in charge.'^ Thus, to affect a bank, which is about to take a mortgage, with notice of a prior unrecorded deed, it is not sufficient to show that the cashier had such notice." Especially where there are several agents or officers acting for the same principal or corporation, it seems that notice of prior rights to an agent or officer entirely unconcerned in the subsequent transac- tion will not charge his principal. And it has been held that a bank or other corporation may sustain its position as a bona fide purchaser of a mortgage by proof that its officers, through whom the business was actually transacted, had no knowledge of the mortgagor's fraud upon his vendor, and it is not necessary for the bank to disprove notice to every officer or agent through whom notice might have been eom- "Murrell v. Mandelbaum, 85 Tex. 665 (notice to president suflBcient). 22, 19 S. W. 880, 34 Am. St. 777. "Wilson v. McCullough, 23 Pa "Reynolds v. Ruckman, 35 Mich. St. 440, 60 Am. Dec. 347. But see 80. Johnston v. Shortridge, 93 Mo. 227, "Robertson v. United States Live 6 S. W. 64 (cashier and manager). Stock Co. (Iowa), 145 N. W. 535; Notice concerning the fraudulent Wilson V. McCullough, 23 Pa. St. release of a mortgage can not be im- 440, 62 Am. Dec. 347; Kirklin v. puted to a bank from knowledge of Atlas Savings &c. Assn. (Tenn.), the agents of another bank, in an 60 S. W. 149. See also In re Buch- antagonistic relation to it. In re ner, 202 Fed. 979; Hampshire v. Buchner, 205 Fed. 454, 123 C. C. A. Greeves (Tex. Civ. App.), 130 S. W. 522. 917 IMPLIED NOTICE § 570 municated.''* Even notice to an individual director, ■who has no duty to perform in relation to such notice or the matter to which the notice relates, can not be considered notice to the corporation.''^ A corporation purchasing real estate is not chargeable with knowledge of outstanding equities therein, although its managing officer had such knowledge, when it was obtained years before the or- ganization of the corporation, unless such knowledge is shown to be present in the mind of the officer at the time of the transaction.''^ ISTotice to an agent of a corporation has the same effect as notice to an agent of an individual. The agent is not affected by notice except while he is acting in the matter to which the notice relates. Notice to an individual director is not notice to the corporation, unless the di- rector at the time is officially engaged in the business of the corpora- tion.''^ Notice to a director, while he is acting solely for himself and not for the corporation, is not notice to the corporation, and can not affect its rights. ^^ When, however, the director has official duties to perform in respect to the matterj and the faithful performance of these duties renders it incumbent upon him to communicate the in- formation to the other officers of the corporation, then the corporation stands affected with the director's knowledge in the same manner as if he had acquired it while in the discharge of his official duties.''" A corporation is chargeable with the knowledge of its general manager that a mortgage assigned to it was in fraud of creditors.*" A corpora- tion taking a mortgage of land is not chargeable with constructive notice of a prior conveyance of it by the mortgagor, because the latter was, at the date of the deed and of the mortgage, a director of the company, for in such a transaction the mortgagor deals with the com- pany as a third party on his own behalf acting for himself, with and against the company, and not for it.*^ '* Robertson v. United States Live " In re Sweet, 20 R. I. 557, 40 Stock Co. (Iowa), 145 N. W. 535. Atl. 502. '= Fulton Bank v. New York &c. ^ La Farge F. Ins. Co. v. Bell, 22 Canal Co., 4 Paige (N. Y.) 127. Barb. (N. Y.) 54. "If his position as "Red River Valley Land &c. Co. a director," says Mr. Justice Emott, v. Smith, 7 N. Dak. 236, 74 N. W. "could make him the agent, or 194_ rather identify him entirely with "Bank of United States v. Davis, the plaintiffs in such sort as to 2 Hill (N. Y.) 451. charge them with constructive no- " Winchester v. Baltimore &c. R. tice of all the facts with which he Co., 4 Md. 231; Barnes v. Trenton was personally acquainted as to the Gas Light Co., 27 N. J. Eq. 33; La title to lands in which they had Farge F. Ins. Co. v. Bell, 22 Barb, any Interest, In any case, it could (N. Y.) 54. iio*- ^^ s" when he did not become '"'Fulton Bank v. New York &c. concerned as their -especial agent. Canal Co., 4 Paige (N. Y.) 127. or transact business in their be- 571 NOTICE AS AFFECTING PEIOKITT 918 liotice to the president of a corporation can not be considered no- tice to the corporation where the president is acting in his own in- terests or for interests ad.verse to the corporation. Hence, if he is a member of a real estate fi.rm through which a loan is negotiated with the corporation for a third person, in the interest of the firm, the corporation is not chargeable with the knowledge of its president, which he does not communicate, concerning payment of prior incum- brances out of the money loaned.^^ IV. Constructive Notice Section 571. General principles of construct- ive notice. 572. Constructive notice based upon fraud or negligence. 573. Notice of adverse interest, with- out particulars. 574. Notice from recitals in deeds. 575. Recital of existing mortgage. 576. Recital of credit in prior deed. 577. Effect of notice upon mort- gaged premises sold in par- cels. Section 578. Notice of prior incumbrances recited in mortgage. 579. Inquiry concerning debt se- cured. 580. Reasonable diligence in in- quiry. 581. Conveyance of equity of re- demption to mortgagee as no- tice of assignment of mort- gage. 582. Release or quitclaim of mort- gagor's interest. § 571. General principles of constructive notice. — Constructive notice is that which is imputed to a person upon strictly legal infer- ence of matters which he necessarily ought to know, or which, by the exercise of ordinary diligence, he might know.'^ Constructive notice half. Most clearly it can not be the case where the facts concerned his private affairs, and the transaction was one in which he was dealing with the company as a third party on his own behalf, and acting for himself with and against them." ^^Leaverns v. Presbyterian Hospi- tal, 173 111. 414, 50 N. E. 1079, 64 Am. St. 125. See also Central Nat. Bank v. Pipkin, 66 Mo. App. 592. 'Townsend v. Little, 109 U. S. 504, 27 L.. ed. 1012, 3 Sup. Ct. 357; Griffith v. Griffith, Hof£. (U. S.) 153; Mettart v. Allen, 139 Ind. 644, 39 N. E. 239; Knapp v. Bailey, 79 Maine 195, 9 Atl. 122; Rice v. Win- ters. 45 Nebr. 517, 63 N. "W. 830; Rogers v. Jones, 8 N. H. 264; Weild- er V. Farmers' Bank, 11 Serg. & R. (Pa.) 134; Kennedy v. Green, 3 Myl. & K. 699; Hewitt v. Loosemore, 9 Hare 449; Espin v. Pemberton, 3 De G. & J. 547; Hiern v. Mill, 13 Ves. 121. See article on Constructive Notice by William L. Scott, 17 Am. Law Rev. 849. As to the term ordi- nary diligence, see Pasumpsic Sav. Bank v. Nat. Bank, 53 Vt. 82. Con- structive notice has been defined as evidence of notice, the presumption of which is so violent that the court will not even allow of its being con- troverted. Townsend v. Little, 109 U. S. 504, 27 L. ed. 1012, 3 Sup. Ct. 357; White v. Fisher, 77 Ind. 65, 40 Am. Rep. 287; Puller v. McMahon (Iowa), 94 N. W. 205; Baltimore v. Whittington, 78 Md. 231, 27 Atl. 984; Schweiss v. Woodruff, 73 Mich. 473, 41 N. W. 511; Francis v. Kan- sas City &c. R. Co., 110 Mo. 387, 19 S. W. 935; Rogers v. Jones, 8 N. H. 264; Van Doren v. Robinson, 16 N. J. Eq. 256; Cambridge Valley Bank V. Delano, 48 N. Y. 326; Kirklin v. Atlas Savings &c. Assn. (Tenn.), 60 S. W. 149; Hewitt v. Loosemore, 9 919 COIs'STEUCTIVE NOTICE § 572 of a prior deed or mortgage, arising out of an opportunity to acquire knowledge, coupled with a duty to seek it, has the same effect as actual notice in postponing the rights of a subsequent grantee or mortgagee, taking with such notice.^ In its broad sense, constructive notice thus borders upon actual notice, and includes facts and circum- stances demanding inquiry; but inferences of fact are more properly classified under actual notice, where this subject is more fully treated.' The most familiar instance of constructive notice is that which under the registry laws is afforded by the record of a deed. Every subsequent inquirer is bound to know the existence and contents of such deed, and it is not admissible for him to show that his attorney examined the records and failed to find the deed of record.* But there are various other kinds of constructive notice, and a pur- chaser or mortgagee is as much bound by the knowledge thus imputed to him, of matters and instruments affecting the title to property, as he would be if he were informed of them by a deed properly recorded. Whether the person charged with such notice actually had knowledge of the facts affecting the property in question, or might have learned them by inquiry, or whether he studiously abstained from inquiry for the very purpose of avoiding notice, he is alike presumed to have had notice.^ § 572. Constructive notice based upon fraud or negligence. — Con- structive notice is imputed either upon the ground of fraud or of neg- ligence. It does not exist without one or the other. "If, in short, there is not actual notice that the property is in some way affected," says Vice Chancellor Wigram," "and no fraudulent turning away from a knowledge of facts which the res gestje would suggest to a prudent Hare 450; Plumb v. Fluitt, 2 Anst. from inquiry to avoid notice. Es- 432, per Eyre, C. B. pin v. Pemberton, 3 De G. & J. 547; ^Montgomery v. Keppel, 75 Cal. Gress v. Evans, 1 Dali. 387, 46 N. 128, 19 Pac. 178, 7 Am. St. 125; W. 1132. Russell V. Ranson, 76 111. 167; Dun- = See ante §§ 545, 547, 548. can V. Miller, 64 Iowa 223, 20 N. W. * Edwards v. Barwise, 69 Tex. 84, 161; Livingstone v. Murpby, 187 6 S. W. 677. See ante §§ 523, 524, Mass. 315, 72 N. E. 1012, 105 Am. 546. St. 400; Quimby v. Williams, 67 ^Whitbread v. Jordan, 1 Y. & C. N. H. 489, 41 Atl. 862, 68 Am. St. Exch. 303; Bisco v. Banbury, 1 Ch. 685- Fidelity Ins. &c. Co. v. Sben- Gas. 287; Jones v. Smith, 1 Hare 43; and'oab Valley R. Co., 32 W. Va. 244, Ware v. Egmont, 4 De G., M. & G. 9 S E 180. See also Beeman v. 460. See also cases collected in 2 Cooper, 64 Vt. 305, 23 Atl. 794. Con- White & Tudor's Lead. Cas. 4th Am. structive notice arises from a party's ed., p. 121 ; Jackson v. Blackwood, knowledge of facts which ought to 4 McAr. (U. S.) 188. have put him on further inquiry, "Jones v. Smith, 1 Hare 43, affd. or from his wilfully abstaining 1 Ph. 244. § 573 NOTICE AS AFFECTING PEIOEITT 920 minrl ; if mere want of caution, as distinguished from fraudulent and wilful blindness, is all that can be imputed to a purchaser, — there the doctrine of constructive notice will not apply; there the purchaser will in equity be considered, as in fact he is, a bona fide purchaser without notice." In another case Vice Chancellor Turner said : "When this court is called upon to postpone a legal mortgage, its powers are invoked to take away a legal right, and I see no ground which can justify it in doing so, except fraud, or gross and wilful negligence, which in the eye of this court amounts to fraud."' Following the English doctrine, there is a line of American de- cisions restricting constructive notice to cases of gross negligence or fraud in the conduct of the purchaser; and holding that he is only chargeable where he purposely avoided knowledge or knowingly and designedly abstained from making inquiry: in other words, that wil- ful and fraudulent blindness, as distinct from mere want of caution is essential to constructive notice.' § 573. Notice of adverse interest ■without particulars. — Notice of the existence of an adverse right, title, or lien, without the particulars of it, is sufficient to charge a purchaser, if the nature of it could have been ascertained by inquiry;" and knowledge of the existence of an instrument such as a contract or conveyance will charge a purchaser 'Hewitt V. Loosemore, 9 Hare Reading, 8 Serg. & R. (Pa.) 484; 449. Lodge v. Simonton, 2 P. & Watts 'Simmons Creek Coal Co. v. Do- (Pa.) 446, 23 Am. Dec. 36; Vest v. ran, 142 U. S. 417, 35 L. ed. 1063, Micliie, 31 Grat. (Va.) 149, 31 Am. 12 Sup. Ct. 239; Dudley v. "Witter, Rep. 722; Le Neve v. Le Neve, 3 46 Ala. 664; Hall v. Livingston, 3 Atk. 646, 26 Eng. Reprint 1172; Del. Ch. 348; Reynolds v. Carlisle, Ware v. Egmont, 4 De G., M. & G. 99 Ga. 730, 27 S. E. 169; Anthony 460. See also Trinidad v. Milwau- V. Wheeler, 130 111. 128, 22 N. E. kee &c. Smelting &c. Co., 63 Fed. 494, 17 Am. St. 281; Grundies v. 883, 11 C. C. A. 479; McClanachan Raid, 107 111. 304; Calvin v. Middle- v. Siter, 2 Grat. (Va.) 280; Hewitt ton, 63 Iowa 618, 19 N. W. 805; Wil- v. Loosemore, 9 Hare 449. Mere son V. Miller, 16 Iowa 111; Willis v. negligent omission to make inquiry Vallette, 4 Mete. (Ky.) 186; Briggs is not alone sufficient. Reynolds v. V. Rice, 130 Mass. 50; Buttrick v. Carlisle, 99 Ga. 730, 27 S. E. 169. Holden, 13 Mete. (Mass.) 355; Mil- The fact that the purchaser re- lar V. Olney, 69 Mich. 560, 37 N. W. quired security in addition to the 558; Larzelere v. Starkweather, 38 covenants of warranty is not alone Mich. 96; Loughridge v. Rowland, sufficient proof that he had notice 52 Miss. 546; Parker v. Conner, 93 of outstanding equities. Lamont v. N. Y. 118, 45 Am. Rep. 178; Dutch- Stimson, 5 Wis. 443. ess County Mut. Ins. Co. v. Hach- "Poulet v. Johnson, 25 Ga. 403; field, 73 N. Y. 226; Acer v. West- Martin v. Cauble, 72 Ind. 67; Ridge- cott, 46 N. Y. 384, 7 Am. Rep. 355; way v. Holliday, 59 Mo. 444; Wer- Woodworth v. Paige, 5 Ohio St. 70; ner v. Litzsinger, 45 Mo. App. 106; Crossen v. Oliver, 37 Ore. 514, 61 Pearson v. Daniel, 22 N. Car. 360. Pac. 885; Raymond v. Plavel, 27 Notice of a claim is insufficient, if Ore. 219, 40 Pac. 158; Peebles v. the nature of it could not be ascer- 921 CONSTRUCTIVE NOTICE § 573 with notice of its terms," If a purchaser of land has notice of any lien or incumbrance, he is chargeable with notice of the extent there- of," although misstated to him by the vendor," and he is bound by any information he might have obtained by inquiry of the lienor or incumbrancer.^^ "The rules in respect to notice to purchasers, of adverse titles or claims, other than such as is imparted by the records, are not founded upon any arbitrary provisions of law, but have their origin in the considerations of prudence and honesty which guide men in their ordinary business transactions. No man, on being told by the recorder that a certain deed had been filed in his ofRce, and that it had been withdrawn, would doubt that the deed existed ; and if he was intending to purchase the property, common prudence would dictate to him the necessity of making inquiry of the grantee for the deed, unless he was incorrectly advised that deeds took precedence solely from priority of record."^* One who has knowledge of a prior unrecorded mortgage upon some portion of the premises of which he is about to purchase a part is bound by such knowledge to ascertain the extent of that mortgage, and whether it covers the portion of the property he is about to ac- quire an interest in, and he will be postponed to such prior mortgage, even if this proves to be an incumbrance upon the whole property.^^ Having notice of its existence, he is chargeable with constructive no- tice of all its contents.^^ One having notice of the existence of a mort- gage can only acquire an interest subordinate to it, though the mort- tained. Massie v. Greenhow, 2 547; Martin v. Cauble, 72 Ind. 67; Patt. & H. (Va.) 255. Ormes v. Weller, 21 Ky. L. 763, 52 "Mayfield v. Turner, 180 111. 332, S. W. 937. 54 N. B. 418 (Instrument creating "Lawton v. Gordon, 37 Cal. 202. a trust); Kidder v. Flanders, 73 N. '=2 White & Tudor's Lead. Gas. H. 345, 61 Atl. 675 (contract); in Eq. (4tli ed.), pt. 1, 190; Willink Wahl V. Stoy, 72 N. J. Eq. 607, 66 v. Morris C. &c. Co., 4 N. J. Eq. Atl. 176; Hill v. Murray, 56 Vt. 177 377; Guion v. Knapp, 6 Paige (N. (conveyance); Hamilton v. Royse, Y.) 35, 27 Am. Dec. 741; Jones v. 2 Sch. & Let 315. Williams, 24 Beav. 47; Hall v. "Foster v. Stallworth, 62 Ala. Smith, 14 Ves. 426. 547; Martin v. Cauble, 72 Ind. 67; "Webb v. Robbins, 77 Ala. 176 Skeel V. Spraker, 8 Paige (N. Y.) Martin v. Cauble, 72 Ind. 67; Pike 182; Fidelity Ins. Co. v. Shenan- v. Goodnow, 12 Allen (Mass.) 472; doah Valley Co., 32 W. Va. 244, 9 George v. Kent, 7 Allen (Mass.) 16; S. E. 180; Farrow v. Rees, 4 Beav. Willink v. Morris Canal &c. Co., 4 18, 4 Jur. 1028, 49 Eng. Reprint 243. N. J. Eq. 377; Skeel v. Spraker, 8 "Foster v. Stallworth, 62 Ala. Paige (N. Y.) 182; Ijames v. 547; Skeel v. Spraker, 8 Paige (N. Gaither, 93 N. Car. 358; Barr v. Kin- Y.) 182; Beauce v. Muter, 5 Moore ard, 3 Strobh. (S. Car.) 73; Fidelity P. C. 69, 13 Eng. Reprint 416; Tay- Ins. &c. Co. v. Shenandoah Valley lor V. Baker, 5 Price 306, 19 Rev. Co., 32 W. Va. 244, 9 S. E. 180. See Rep. 625. ante § 524. "Foster v. Stallworth, 62 Ala. § 574 NOTICE AS AFFECTING PKIOHITY 922 gage fails to recite the amount of the note which it was given to se- cure," or it recites that it was given to secure "any indebtedness" of the mortgagor to the mortgagee, and these words referred only to a future indebtedness.^* A purchaser of real estate, having notice that his vendor still owes part of the purchase-money is put upon inquiry as to the amount unpaid."^" One having notice that an estate is incumbered is not justified in assuming that the incumbrance is one already known to him; he is bound to inquire into the nature and extent of the charge referred to.^" A mortgagee having notice that his mortgagor had only an es- tate on condition subsequent is postponed to the grantor's equity, al- though he did not know the condition had been broken.^^ A notice of a lease is notice of all the covenants and provisions contained in it.^^ § 574. notice from recitals in deeds. — When a person claims under a deed which by its recitals leads him to other facts affecting the title to the property, he is presumed to know such facts; for it would be gross negligence in him not to make inquiry as to the facts he is thus put in the way of ascertaining.^'' A recital or description in a deed. ^' Wilson v. Vaughan, 61 Miss. 472. >» Morris v. Murray, 82 Ky. 36; Simons v. First Nat. Bank, 93 N. Y. 269. See ante § 344. " Wilson V. Hunter, 30 Ind. 466. ="> Jones V. Williams, 24 Beav. 47. ^^Gall V. Gall, 126 Wis. 390, 105 N. W. 953, 5 L. R. A. (N. S.) 603. 2= Taylor v. Stibbert, 2 Ves. Jr. 437; Hall v. Smith, 14 Ves. Jr. 426, 9 Rev. Rep. 313, 33 Eng. Reprint 584; Brydges v. Chandos, 2 Ves. Jr. 417, 30 Eng. Reprint 702. =« Cordova v. Hood, 17 Wall. (U. S.) 1, 21 L. ed. 587; Oliver v. Piatt, 3 How. (U. S.) 333, 11 L. ed. 622; Rafferty v. Mallory, 3 Diss. (U. S.) 362; Lipse v. Spear, 4 Hughes (U. S.) 535; Reeves v. Vinacke, 1 Mc- Crary (U. S.) 213; Central Trust Co. V. Wabash, St. L. &c. R. Co., 29 Fed. 546; Tennessee &c. R. Co. v. East Alabama R. Co., 73 Ala. 426; Corbitt V. Clenny, 52 Ala. 480; Burch V. Carter, 44 Ala. 115; Cos- tello V. Graham, 9 Ariz. 257, 80 Pac. 336; White v. Moffett, 108 Ark. 490, 158 S. W. 505; Thompson v. Bowen, 87 Ark. 490, 113 S. W. 26; Hardy V. Heard, 15 Ark. 184; Rea v. Haf- fenden, 116 Cal. 596, 48 Pac. 716; Hassey v. Wilke, 55 Cal. 525; Ham- ilton V. Nutt, 34 Conn. 501; Sigour- ney v. Munn, 7 Conn. 324; Shoe- maker V. Chappell, 4 Mack. (D. C.) 413; Simms v. Frelherr, 100 Ga. 607, 28 S. E. 288; Rosser v. Cheney, 61 Ga. 468; Stager v. Crabtree, 177 111. 59, 52 N. E. 378; Lagger v. Mutual Union Loan &c. Assn., 146 111. 283, 33 N. E. 946; Dean v. Long, 122 111. 447, 14 N. E. 34; United States Mortgage Co. v. Gross, 93.111. 483; Russell V. Ranson, 76 111. 167; Chi- cago, R. I. &c. R. Co. V. Kennedy, 70 111. 350; ^tna Life Ins. Co. v. Ford, 39 111. 252; Morris v. Hoyle, 37 111. 150, 87 Am. Dec. 243; Clark V. Plumstead, 11 111. App. 57; Fos- ter V. Strong, 5 Bradw. (111.) 223; Smith V. Lowry, 113 Ind. 37, 15 N. E. 17; State v. Davis, 96 Ind. 539; Hazlett V. Sinclair, 76 Ind. 488, 40 Am. Rep. 254; Wiseman v. Hutch- inson, 20 Ind. 40; Larrance v. Lewis, 51 Ind. App. 1, 98 N. E. 892; Gregory v. Arms, 48 Ind. App. 562, 96 N. E. 196; Shoemake v. Smith, 80 Iowa 655, 45 N. W. 744; Clark v. Holland, 72 Iowa 34, 33 N. W. 350, 2 Am. St. Rep. 230; Huber v. Bos- sart, 70 Iowa 718, 29 N. W. 608; .^tna Life Ins. Co. v. Bishop, 69 Iowa 645, 29 N. W. 761; Clark v. 923 CONSTRUCTIVE NOTICE § 574 to have this effect, must be in the course of the title under which the Bullard, 66 Iowa 746, 24 N. "W. 561; Fetes V. O'Laughlin, 62 Iowa 532, 17 N. W. 764; State v. Shaw, 28 Iowa 67; Crossdale v. Hill, 78 Kans. 140, 96 Pac. 37; Prest v. Black, 63 Kans. 682, 66 Pac. 1017; Knowles v. Will- lams, 58 Kans. 221, 48 Pac. 856; Taylor v. Mitchell, 58 Kans. 194, 48 Pac. 859; Dotson v. Merritt, 141 Ky. 155, 132 S. W. 181; Louisville H. &c. R. Co. V. Baskett (Ky.) 121 S. W. 957; Deskins v. Big Sandy Co., 121 Ky. 601, 28 Ky. L. 565, 89 S. W. 695; Bailey v. Southern R. Co., 112 Ky. 424, 22 Ky. L. 1397, 60 S. W. 631, 61 S. W. 31; Anderson v. Layton, 3 Bush (Ky.) 87; Bakewell v. Ogden, 2 Bush (Ky.) 265; Pike v. Collins, 33 Maine 38; Green v. Early, 39 Md. 223; Bryan v. Harvey, 18 Md. 113; Sargent v. Hubbard, 102 Mass. 380; George v. Kent, 7 Allen (Mass.) 16; Wait V. Baldwin, 60 Mich. 622, 27 N. W. 697; Baker v. Mather, 25 Mich. 51; Fitzhugh v. Barnard, 12 Mich. 104; Mason v. Payne, Walk. Ch. (Mich.) 459; Bergstrom v. Johnson, 111 Minn. 247, 126 N. W. 899; Ross v. Worthington, 11 Minn. 438, 88 Am. Dec. 95; Daughaday v. Paine, 6 Minn. 443 (Gil. 304) ; Bald- win V. Anderson, 103 Miss. 462, 60 So. 578; Spellman v. McKeen, 96 Miss. 693, 51 So. 914; Binder v. Weinberg, 94 Miss. 817, 48 So. 1013; Stovall V. Judah, 74 Miss. 747, 21 So. 614; Deason v. Taylor, 53 Miss. 697; Gulf Coast Canning Co. v. Fos- ter (Miss.), 17 So. 683; Wailes v. Cooper, 24 Miss. 208; Case v. Good- man, 250 Mo. 112, 156 S. W. 698; Marshall v. Hill, 246 Mo. 1, 151 S. W. 131; Adams v. Gossom, 228 Mo. 566, 129 S. W. 16; Gross v. Watts, 206 Mo. 373, 104 S. W. 30, 121 Am. St. 662; Freeman v. Moffitt, 119 Mo. 280, 25 S. W. 87; Mason v. Black, 87 Mo. 329; Bronson v. Wanzer, 86 Mo. 408; Tydings v. Pitcher, 82 Mo. 379 ; Poage v. Wabash R. Co. 24 Mo. App. 199; Lyon v. Gombert, 63 Nebr. 630, 88 N. W. 774; Buchanan v. Balkum, 60 N. H. 406; Brown v. Eastman, 16 N. H. 588; Jennings V. Dixey, 36 N. J. Eq. 490; Sea Grove Build. Assn. v. Parsons (N. J. Eq.), 17 Atl. 834; Van Doren v. Robinson, 16 N. J. Eq. 256; Mitchell V. D'Olier, 68 N. J. L. 375, 53 Atl. 467, 59 L. R. A. 949; Roll v. Rea, 50 N. J. L. 264, 12 Atl. 905; Sweet V. Henry, 175 N. Y. 268, 67 N. B. 574; Reed v. Gannon, 50 N. Y. 345; Cambridge Valley Bank v. De- lano, 48 N. Y. 326; Acer v. West- cott, 46 N. Y. 384, 7 Am. Rep. 355; Howard Ins. Co. v. Halsey, 8 N. Y. 271, 59 Am. Dec. 478; Gibert v. Peteler, 38 Barb. (N. Y.) 488; Dun- ham V. Dey, 15 Johns. (N. Y.) 554, 8 Am. Dec. 282; Whistler v. Cole, 81 Misc. 519, 143 N. Y. S. 478; Holmes v. Holmes, 86 N. Car. 205; Christmas v. Mitchell, 38 N. Car. 535; O'Toole v. Omlie, 8 N. Dak. 444, 79 N. W. 849; Bonner v. Ware, 10 Ohio 465; Reeder v. Bar, 4 Ohio 446, 22 ^.m. Dec. 762; Martin v. Eagle Development Co., 41 Ore. 448, 69 Pac. 216; In re Mulholland's Es- tate, 224 Pa. St. 536, 73 Atl. 932, 132 Am. St. 791; Pyles v. Brown, 189 Pa. St. 164, 42 Atl. 11, 69 Am. St. 794; Parke v. Neeley, 90 Pa. St. 52; Ogden v. Porterfield, 34 Pa. St. 191; Kerr v. Kitchen, 17 Pa. St. 433; Knouff v. Thompson, 16 Pa. St. 357; Bellas v. Lloyd, 2 Watts (Pa.) 401; Teague v. Sowder, 121 Tenn. 132, 114 S. W. 484; Kansas City Land Co. v. Hill, 87 Tenn. 589, 11 S. W. 797; Pulliam v. Wilkerson, 7 Baxt. (Tenn.) 611; McGavrock v. Deery, 1 Coldw. (Tenn.) 265; Payne V. Abercrombie, 10 Heisk. (Tenn.) 161; Waggoner v. Dodson, 96 Tex. 415, 73 S. W. 517; Kirby v. Estill, 75 Tex. 484, 12 S. W. 807; Polk v. Chaison, 72 Tex. 500, 10 S. W. 581; Renick v. Frazier, 55 Tex. 102; Peters v. Clements, 46 Tex. 114; McRimmon v. Martin, 14 Tex. 318; Loomis V. Cobb (Tex. Civ. App.), 159 S. W. 305; Freund v. Sabin (Tex. Civ. App.), 159 S. W. 168; Carver v. Ledbetter (Tex. Civ. App.), 147 S. W. 348; Hawkins v. Potter (Tex. Civ. App.), 130 S. W. 643; Davidson v. Ryle, 103 Tex. 209, 124 S. W. 616, 125 S. W. 881; Car- lisle V. King (Tex. Civ. App.), 122 S. W. 581, affd. 103 Tex. 620, 133 S. W. 241; Nelson v. Brown (Tex. Civ. App.), Ill S. W. 1106; Houston Ice &c. Co. V. Henson (Tex.), 93 S. W. 713; San Augustine County v. Mad- § 574 NOTICE AS AFFECTING PEIOEITT 924 purchaser claims.^* A purchaser is affected with notice of recitals in conveyances forming his chain of title and material thereto, whether recorded or not;^° and a purchaser under a conveyance referring to an unrecorded deed is chargeable with notice of its contents.^' But recitals in collateral and immaterial deeds incidentally referred to, den, 39 Tex. Civ. App. 257, 87 S. v. Carter, 44 Ala. 115; Hazlett v. W. 1056; King v. Summerville Sinclair, 77 Ind. 488, 40 Am. Rep. (Tex.), 80 S. W. 1050, affd. 98 Tex. 254; Corbln v. Sullivan, 47 Ind. 356; 332, 83 S. W. 680; O'Mahoney v. Sullivan v. Mefford, 143 Iowa 210, Flannagan, 34 Tex. Civ. App. 244, 121 N. W. 569; Mueller v. Engeln, 78 S. W. 245; Robinson v. Cren- 12 Bush (Ky.) 441; Burke v. Bev- shaw, 84 Va. 348, 5 S. E. 222; Ar- eridge, 15 Minn. 205; Knox Co. v. genbright v. Campbell, 3 Hen. & M. Brown, 103 Mo. 223, 15 S. W. 382; (Va.) 144; Pocahontas Tanning Co. Mason v. Black, 87 Mo. 329; Tyd- V. St. Lawrence Boom &c. Co., 63 Ings v. Pitcher, 82 Mo. 379; Ding- W. Va. 685, 60 S. B. 890; Reichert man v. McCoUum, 47 Mo. 372; V. Neuser, 93 Wis. 513, 67 N. W. Chandler v. Robinson (N. J. Eq.), 939; Bennett v. Keehn, 67 Wis. 154, 75 Atl. 180; McCrea v. Newman, 46 29 N. W. 207, 30 N. W. 12; Dailey N. J. Eq. 473, 19 Atl. 198; Coleman V. Kastell, 56 Wis. 444, 14 N. W. v. Barklew, 27 N. J. L. 357; Tread- 635; Wier v. Simmons, 55 Wis. 637, well v. Inslee, 120 N. Y. 458, 24 N. 13 N. W. 873; Pringle v. Dunn, 37 E. 651; Boggs v. Varner, 6 Watts Wis. 449, 19 Am. Rep. 772; Bacon & S. (Pa.) 469; Bellas v. Lloyd, 2 V. Bacon, Tothill 133; Moore v. Watts (Pa.) 401; Ramiriz v. Smith, Bennett, 2 Ch. Cas. 246; Pilcher v. 94 Tex. 184, 59 S. W. 258; Brokel v. Rawlins, L. R. 11 Eq. 53. It Is a McKechnie, 69 Tex. 32, 6 S. W. 623. familiar and thoroughly well-settled ^ Abbott v. Parker, 103 Ark. 425, principle of realty law that a pur- 147 S. W. 70; Stidham v. Matthews, chaser has constructive notice of 29 Ark. 650; Bailey v. Southern R. every matter connected with or af- Co., 112 Ky. 424, 22 Ky. L. 1397, 60 fecting his estate which appears by S. W. 631, 61 S. W. 31; White v. recital, reference, or otherwise, upon Foster, 102 Mass. 375; Daughaday v. the face of any deed which forms Paine, 6 Minn. 443; Buchanan v. an essential link in the chain of Balkum, 60 N. H. 406; Sweet v. instruments through which he de- Henry, 175 N. Y. 268, 67 N. E. 574; raigns his title. The rationale of Hancock v. McAvoy, 151 Pa. St. the rule is that any description, re- 439, 25 Atl. 48; Woodward v. Ross cital of fact, or reference to other (Tex. Civ. App.), 153 S. W. 158; documents puts the purchaser upon Runge v. Gilbough (Tex.), 87 S. W. inquiry, and he is bound to follow 832; Davis v. Tebbs, 81 Va. 600. up this inquiry, step by step, from See also Haas v. Fontenot, 132 La. one discovery to another and from 812, 61 So. 831. one instrument to another, until the "" Stanley v. Schwalby, 162 TJ. S. whole series of title deeds is ex- 255, 40 L. ed. 960, 16 Sup. Ct. 754; hausted and a complete knowledge Cincinnati, I. &c. R. Co. v. Smith, of all the matters referred to and 127 Ind. 461, 26 N. E. 1009; White affecting the estate is obtained, v. Foster, 102 Mass. 375; Cook v. Being thus put upon inquiry, the Farrington, 10 Gray (Mass.) 70; purchaser Is presumed to have Henderson v. Cameron, 73 Miss. 843, prosecuted it until its final result 20 So. 2; Paul v. Kerswell, 60 N. J. and with ultimate success. Loomis L. 273, 37 Atl. 1102; Hancock v. V. Cobb (Tex. Civ. App.), 159 S. W. McAvoy, 151 Pa. St. 439, 25 Atl. 48; 305. See ante § 524. Graham v. Hawkins, 1 Tex. Unrep. *'Polk V. Cosgrove, 4 Biss. (U. Cas. 514. S.) 437, 19 Fed. Cas. 11248; Burch 925 CONSTRUCTIVE NOTICE § 574 not as relating in any way to the title of the property, or to the con- sideration paid for it, do not affect the purchasers.^'' The recitals must be sufficiently clear to put the purchaser upon inquiry, and to lead him to the requisite information.^* If the recital does not explain itself, it must refer to some deed or fact which will explain it, to make it constructive notice.^" Notice flowing from mat- ters of record can never be more extensive than the facts stated or referred to.*" A purchaser put upon inquiry by recitals, is not entitled to rely upon his vendor's representations contradicting such recitals.'^ The description of a grantee as trustee in a recorded deed is notice of a trust of some description and puts a subsequent purchaser or mortgagee upon inquiry as to the existence or nature of such trust."^ If a deed shows that it was made under a decree of court, the pur- chaser is bound to take notice of the facts disclosed by the record of the proceedings in which the decree was rendered.'^ "Kansas City Land Co. v. Hill, 87 Tenn. 589, 11 S. W. 797; Burcti V. Carter, 44 Ala. 115; Mendelsohn V. Armstrong, 52 La. Ann. 1300, 27 So. 735. ^Racouillat v. Rene, 32 Cal. 450; Russell V. Ranson, 76 111. 167; Briggs v. Rice, 130 Mass. 50; Spell- man V. McKeen, 96 Miss. 693, 51 So. 914; Bell v. Twilight, 22 N. H. 500; Acer V. Westcott, 46 N. Y. 384, 7 Am. Rep. 355; McDaniel v. Harley (Tex.), 42 S. W. 323; McBride v. Moore (Tex.), 37 S. W. 450; Durst v. Daugherty, 81 Tex. 650, 17 S. W. 388. Vague and indefinite recitals do not amount to notice. Pyles v. Brown, 186 Pa. St. 164, 42 Atl. 11, 69 Am. St. 794. See post § 576. =» Morris v. Murray, 82 Ky. 36; Van Slyck v. Skinner, 41 Mich. 186 ; Bell V. Twilight, 22 N. H. 500, 45 Am. Dec. 367; Cambridge Valley Bank v. Delano, 48 N. Y. 326 ; White V. Carpenter, 2 Paige (N. Y.) 217; Kaine v. Denniston, 22 Pa. St. 202; French v. Loyal Land Co., 5 Leigh (Va.) 627. In Sanborn v. Robin- son, 54 N. H. 239, at the close of the description in a mortgage, the following words were inclosed in parenthses : (Of six hundred dollars said premises are subject to a former ) It was held that this was notice of a prior mortgage of that amount. =° Norman v. Towne, 130 Mass. 52; Briggs v. Rice, 130 Mass. 50; Gale v. Morris, 29 N. J. Eq. 222; Branch V. Griffin, 99 N. Car. 173, 5 S. B. 393. See ante § 624. "Bergstrom v. Johnson, 111 Minn. 247, 126 N. W. 899; Wag- goner V. Dodson, 96 Tex. 415, 73 S. W. 517; Patman v. Harland, 17 Ch. D. 353, 50 L. J. Ch. 642, 44 L. T. (N. S.) 728, 29 Wkly. Rep. 707. On the other hand it has been held that recitals in a deed that the purchase- price had been paid will not pro- tect a subsequent mortgagee who had been told otherwise before mak- ing the loan. Wilson v. Shocklee, 94 Ark. 301, 126 S. W. 832. '''Mercantile Nat. Bank v. Par- sons, 54 Minn. 56, 55 N. W. 825, 40 Am. St. 299; Case v. Goodman, 250 Mo. 112, 156 S. W. 698; Snyder v. Collier, 85 Nebr. 652, 123 N. W. 1023, 133 Am. St. 682; Studebaker Bros. Mfg. Co. V. Hunt (Tex.), 38 S. W. 1134. See also Knowles v. Williams, 58 Kans. 221, 48 Pac. 856; Marbury v. Ehlen, 72 Md. 206, 19 Atl. 648, 20 Am. St. 467; Turner v. Edmonston, 210 Mo. 411, 109 S. W. 33, 124 Am. St. 739; Tradesmen's Nat. Bank v. Looney, 99 Tenn. 278, 42 S. W. 149, 38 L. R. A. 837, 63 Am. St. 830. ''Gulf Coast Canning Co. v. Fos- ter (Miss.), 17 So. 683. See as to bond not referred to in court record § 575 NOTICE AS AFrECTING PEIOEITX 926 A recital of a mortgage which defectively describes the land in a deed under which a purchaser from the mortgagor claims title charges him with notice of it.'* A purchaser by a deed which refers to a recorded mortgage of the same land by his grantor has notice of a statement in such mortgage that the grantor reserved the trees growing on the land, the same having been sold to a third person.'^ A description of a portion of the land described in a deed as "land, the title to which is in A, given as collateral security to pay certaia notes," is sufficient notice to the purchaser of an unrecorded mortgage to A to preserve the priority of the mortgage.'" But a purchaser from one who has covenanted to pay all legal mortgages and incumbrances of whatever nature and description on the premises is not put upon inquiry as to any incumbrance not of record, when there is a mort- gage of record to which the covenant could properly refer. Neither could he be charged with constructive notice of a mortgage impropeily recorded, as, for instance, one without seal.'^ A note secured by a mortgage or deed of trust, and referring to such mortgage or deed by a statement that the note is secured by a mort- gage or deed of trust, as the case may be, gives notice of the terms of the mortgage or deed of trust, so far as these terms in any way qualify the terms of the note, and the holder of the note is bound by such provisions of the mortgage;'* thus, he is bound by a provision in the mortgage that the nonpayment of interest on the note shall have the effect of making the note due and payable at once." § 575. Recital of existing mortgage. — One who purchases land by a deed, which expressly recites that the premises are subject to a mort- gage, has notice of the mortgage from the recital, and can not claim against it, although it be not recorded.*" And a purchaser or mort- for payment of attorney fees. In- 38 N. E. 177; Garrett v. Puckett, 15 terstate Bldg. &c. Assn. v. McCar- Ind. 485; .Sltna L. Ins. Co. v. Bish- tha, 43 S. Car. 72, 20 S. E. 807. op, 69 Iowa 645, 29 N. W. 761; Tay- ''Knox Co. V. Brown, 103 Mo. 223. lor v. Mitchell, 58 Kans. 194, 48 Pac. == White V. Faster, 102 Mass. 375. 859; Howard v. Chase, 104 Mass. == Dunham v. Dey, 15 Johns. (N. 249; George v. Kent, 7 Allen Y.) 555, 8 Am. Dec. 282. (Mass.) 16; Kitchell v. Mudgett, 37 =' Racouillat v. Rene, 32 Cal. 450. Mich. 81 ; Baker v. Mather, 25 Mich. =»Orrick v. Durham, 79 Mo. 174. 51; Carter v. Leonard, 65 Nebr. 670, =° Clark V. Bullard, 66 Iowa 747, 91 N. W. 574; Westervelt v. Wyck- 24 N. "W. 561; Noel! v. Gaines, 68 off, 32 N. J. Eq. 188; Lafayette Mo. 649. Bldg. &c. Assn. v. Erh, 5 Sad. (Pa.) "Reeves v. Vinacke, 1 McCrary 40, 8 Atl. 62; Reichert v. Neuser, 93 (U. S.) 213; Hull v. Sullivan, 63 Wis. 513, 67 N. W. 939. See post Ga. 126; Walls v. State, 140 Ind. 16, §§ 736, 744. 92r CONSTEUCTIVB NOTICE § 575 gagee is likewise chargeable with knowledge of a mortgage or other incumbrance which is recited or distinctly referred to in any deed in the chain of title under which he claims.*^ "The principle of equity is well established that a purchaser of land is chargeable with notice, by implication, of every fact affecting the title which would be dis- covered by an examination of the deeds, or other muniments of title of his vendor, and of every fact as to which the purchaser, with rea- sonable prudence or diligence, ought to become acquainted. If there is sufficient contained in any deed or record, which a prudent pur- chaser ought to examine, to induce an inquiry in the mind of an in- telligent person, he is chargeable with knowledge or notice of the facts so contained."*^ A grantee who knowingly accepts a conveyance containing a clause assuming the payment of an existing mortgage becomes personally liable therefor.^^ The grantee must, however, have knowledge that the " Talmadge v. Interstate Bldg. &c. Assn., 105 Ga. 550, 31 S. E. 618; ^tna L. Ins. Co. v. Ford, 89 111. 252; Rose v. Provident Sav. &c. Assn., 28 Ind. App. 25, 62 N. B. 293; ^tna L. Ins. Co. v. Bishop, 69 Iowa 645, 29 N. W. 761; Clark v. Bullard, 66 Iowa 747, 24 N. W. 561; Brest V. Black, 63 Kans. 682; 66 Pac. 1017; Hall v. "Wright, 137 Ky. 39, 127 S. W. 516; Farmers' &c. Bank v. German Ins. Bank, 23 Ky. L. 2008, 66 S. W. 280; Mounot v. Williamson, 7 Mart. (N. S.) (La.) 381; Michigan Mut. L. Ins. Co. v. Conant, 40 Mich. 530; Baker v. Mather, 25 Mich. 51; Knox v. Brown, 103 Mo. 223, 15 S. W. 382; Hubbard v. Knight, 52 Nebr. 400, 72 N. W. 473; "Westervelt v. Wyck- off, 32 N. J. Eq. 188; Bentley v. Gardner, 45 App. Div. 216, 60 N. Y. S. 1056; Newton v. Manwarring, 56 Hun 645, 32 N. Y. St. 389, 10 N. Y. S. 347; Hinton v. Leigh, 102 N. Car. 28, 8 S. E. 890; LaFayette Bldg. &c. Assn. V. Erb, 5 Sad. (Pa.) 40, 8 Atl. 62; Arlington Heights Realty Co. v. Citizens' R. &c. Co. (Tex. Civ. App.), 160 S. W. 1109; Hiser v. Hiser, 13 Montg. Co. Rep. 49; Greenwood v. Churchill, 6 Beav. 314, 12 L. J. Ch. 400, 49 Eng. Reprint 846; Farrow V. Rees, 4 Beav. 18, 4 Jur. 1028, 49 Eng. Reprint 243 (general recital of existence of mortgage sufficient without specification). See also Bragg V. Lamport, 96 Fed. 630, 38 C. C. A. 467; Foster v. Jett, 74 Fed. 678, 20 C. C. A. 670; Central Trust Co. v. Wabash &c. R. Co., 29 Fed. 546; Foster v. Bowles, 138 Cal. 346, 71 Pac. 494, 649; Patton v. Eber- hart, 52 Iowa 67, 2 N. W. 954; Ful- lerton v. McBride, 90 Miss. 420, 43 So. 684; Frye v. Hubbell, 74 N. H. 358, 68 Atl. 325, 17 L. R. A. (N. S.) 1197; Peck v. Mallams, 10 N. Y. 509; Crofut V. Wood, 3 Hun (N. Y.) 571, 6 Thomps. & C. 314. A mortgagee who accepts a mortgage note, ex- pressly reciting that the mortgage is a second mortgage, is estopped to deny the validity and priority of the first mortgage. Setze v. First Nat. Bank, 140 Ga. 603, 79 S. E. 540. A mortgagee is chargeable with knowledge disclosed by an abstract showing that the mortgaged land was community property. Tomlin- son V. Drought (Tex. Civ. App.), 127 S. W. 262. A recital of incum- brances in a real estate mortgage does not give the mortgagee notice of a chattel mortgage upon a build- ing and machinery forming a part of the realty. Peoria Stone &c. Works V. Sinclair, 146 Iowa 56, 124 N. W. 772. *° Cambridge Valley Bank v. De- lano, 48 N. Y. 329. "" Foster v. Atwater, 42 Conn. 244; Hadley v. Clark, 8 Idaho 497, 69 Pac. 319; Thomas v. Home Mut. § 575 NOTICE AS AFFECTING PEIOEITT 928 deed contains the assumption clause;** and if he accepts the convey- ance in ignorance thereof he may repudiate the transaction upon dis- covery of the facts,*° provided he acts promptly before exercising acts of ownership.*^ In like manner, and for stronger reasons, one who has purchased land subject to a mortgage, -which he agrees to pay, takes a title subject to the mortgage, although it be not recorded, or be re- corded in such a way that it is not notice.*^ Where a mortgagor's title deed recites his assumption of a prior mortgage, a subsequent mort- gagee is charged with notice thereof, and of the rights of bondholders secured thereunder.*' Many authorities lay down the rule that a grantee is estopped to deny the .validity of any mortgage to which his deed recites that the conveyance to him is subject.*" But some authorities hold that such Bldg. & Loan Assn., 243 111. 550, 90 N. E. 1081; Bay v. Williams, 112 111. 91, 1 N. E. 340, 54 Am. Rep. 209; Dean v. Walker, 107 111. 540, 47 Am. Rep. 467; Blakeslee v. Hoit, 116 111. App. 83; Martindale v. Parsons, 98 Ind. 174; Beeson v. Green, 103 Iowa 406, 72 N. W. 555; Hendricks v. Brooks, 80 Kans. 1, 101 Pac. 822, 133 Am. St. 186; Neiswanger v. Mc- Clellan, 45 Kans. 599, 26 Pac. 18; Williams v. Fowle, 132 Mass. 385; Reed v. Paul, 131 Mass. 129; Locke V. Homer, 131 Mass. 93, 41 Am. Rep. 199; Furnas v. Durgin, 119 Mass. 500, 20 Am. Rep. 341; Kollen v. Sooy, 172 Mich. 214, 137 N. W. 808; Unger v. Smith, '44 Mich. 22, 5 N. W. 1069; Crawford v. Edwards, 33 Mich. 354; Smith v. Davis, 90 Mo. App. 533; MacAdaras v. King, 10 Mo. App. 578;, Huyler v. Atwood, 26 N. J. Eq. 504; Sparkman v. Gove, 44 N. J. L. 252; Bowen v. Beck, 94 N. Y. 86, 46 Am. Rep. 124; Campbell V. Smith, 71 N. Y. 26, 27 Am. Rep. 5; Ranney v. McMullen, 5 Abb. N. Cas. (N. Y.) 246; Windle v. Hughes, 40 Ore. 1, 65 Pac. 1058; Connor v. Jones (S. Dak.), 72 N. W. 463; Davis V. Hulett, 58 Vt. 90, 4 Atl. 139; Ludington v. Harris, 21 Wis. 239. See also Merriman v. Schmitt, 211 111. 263, 71 N. E. 986; Swisher v. Palmer, 106 111. App. 432; Elser v. Williams, 104 111. App. 238; Boisot V. Chandler, 82 111. App. 261; Baer V. Knewitz, 39 111. App. 470; Mun- sell V. Beals, 5 Kans. App. 736, 46 Pac. 984; Rutland Sav. Bank v. White, 4 Kans. App. 435, 46 Pac. 29; Heffernan v. Weir, 99 Mo. App. 301, 72 S. W. 1085. Effect of recital as estoppel against grantee, see Lynch v. Moser, 72 Conn. 714, 46 Atl. 153; Cram v. Ingalls, 18 N. H. 613; Moulton v. Haskell, 50 Minn. 367, 52 N. W. 960. "Keller v. Ashford, 3 Mackey (D. C.) 444; Merriman v. Schmitt, 211 111. 263, 71 N. E. 986; Adams v. Wheeler, 122 Ind. 251, 23 N. E. 760; Kelly T. Geer, 101 N. Y. 664, 5 N. B. 332. " Metzger v. Huntington, 139 Ind. 501, 37 N. E. 1084, 39 N. E. 235; Green v. Stone (N. J.), 32 Atl. 706; Cordts V. Hargrave, 29 N. J. Eq. 446. *■ Keller v. Ashford, 133 U. S. 610, 33 L. ed. 667, 10 Sup. Ct. 494; Ver Planck V. Lee, 19 Wash. 492, 53 Pac. 724. "Ross V. Worthlngton, 11 Minn. 438, 88 Am. Dec. 95. See also Smith V. Lowry, 113 Ind. 37, 15 N. B. 17; Higgins V. Dennis, 104 Iowa 605, 74 N. W. 9; Fitzgerald v. Barker, 85 Mo. 13; Carter v. Leonard, 65 Nebr. 670, 91 N. W. 574. A covenant to pay a prior mortgage to which a later one Is made subject, may be implied from the exception of the covenant against incumbrances. Ja- maica Sav. Bank v. Butler, 79 Vt 372, 65 Atl. 92. ■"Farmers' &c. Bank v. German Ins. Bank, 29 Ky. L. 2008, 66 S. W. 280. *° American Water Works Co. v. Farmers' L. &c. Co., 73 Fed. 956, 20 929 CONSTHDCTIVE NOTICE 575 a recital does not estop the grantee where the incuinhranee recited is not expressly assumed by the grantee or made a part of the consid- eration.^" A mortgagee, whose mortgage recites that another mort- gage is a first lien upon the property, can not claim that his mortgage takes precedence of a new mortgage afterward executed and recorded, to correct a mistake in the description of the property in the first mortgage.^ ^ Furthermore, the recitals in a deed under which a mort- gagor holds title are constructive notice to a mortgagee.'*^ Where two mortgages made by the same person upon the same land, as parts of one transaction, though dated on different days, refer to each other, the question of priority depends upon the intention of the parties as determined by the terms in which the references are made.^* Where a mortgage takes effect only from its delivery for record, and its priority is not affected by notice of a prior unrecorded mortgage, of course the mere mention of a prior mortgage in the deed, as, for instance, excepting it from the covenants of warranty,^* does not affect the priority given by the record ; yet, if the mortgage be express- ly made subject to another, priority of record will avail nothing.^' Moreover, one taking a mortgage made expressly subject to a prior mortgage can not avoid it and acquire a larger lien than contracted C. C. A. 133; Garrett v. Puckett, 15 Ind. 485; Foy v. Armstrong, 113 Iowa 629, 85 N. W. 753; Fuller v. Hunt, 48 Iowa 163; Taylor v. Riggs, 8 Kans. App. 323, 57 Pac. 44; Citi- zens' Bank v. Webre, 44 La. Ann. 334, 10 So. 728; Johnson v. Thomp- son, 129 Mass. 398; Howard v. Chase, 104 Mass. 249; Tuite v. Stevens, 98 Mass. 305; Moulton v. Haskell, 50 Minn. 367, 52 N. "W. 960; Alt V. Banholzer, 36 Minn. 57, 29 N. W. 674; Hopkins v. Wolley, 81 N. Y. 77; Freeman v. Auld, 44 N. Y. 50; Styles v. Price, 64 How. Pr. (N. Y.) 227; Pittman v. Hall, 5 N. Y. St. 853; Riley v. Rice, 40 Ohio St. 441; Mott V. Maris (Tex.), 29 S. W. 825; Walsh v. Ford, 27 Tex. Civ. App. 573, 66 S. W. 854. See also Stein v. Indianapolis Bldg., L. &c. Assn., 18 Ind. 237, 81 Am. Dec. 353; Hopkins v. Wolley, 81 N. Y. 77; Russell v. Kinney, 1 Sandf. Ch. (N. Y.) 34; Hartley v. Tatham, 24 How. Pr. (N. Y.) 505, 23 N. Y. Super. Ct. 273. But see Purdy v. Coar, 109 N. Y. 448, 17 N. E. 352, 4 Am. St. 491. "> Brooks V. Owen, 112 Mo. 251, 19 59— Jones Mtg.— Vol. I. S. W. 723, 20 S. W. 492; Briggs v. Seymour, 17 Wis. 255; Farmers' L. &c. Co. V. Commercial Bank, 15 Wis. 424, 82 Am. Dec. 689. See also Robinson Bank v. Miller, 153 III. 244, 38 N. B. 1078, 27 L. R. A. 449, 46 Am. St. 883; Hasenritter v. Kirch- hoffer, 79 Mo. 239. Estoppel to set up usury where incumbrance is part of consideration. Stiger v. Bent, 111 111. 328; Trusdell v. Dowden, 47 N. J. Eq. 396, 20 Atl. 972; Pinnell v. Boyd, 33 N. J. Eq. 190; Conover v. Hobert, 24 N. J. Eq. 120; Dolman v. Cook, 14 N. J. Eq. 56. "'Council Bluffs Lodge v. Billups, 67 Iowa 674, 25 N. W. 846. "Steere v. Childs, 15 Hun (N. Y.) 511; Wells v. Houston, 23 Tex. Civ. App. 629, 57 S. W. 584. ^ Iowa College v. Fenno, 67 Iowa 244, 25 N. W. 152. See also Cole- man V. Carhart, 74 Ga. 392; Pom- eroy v. Latting, 15 Gray (Mass.) 435; Jones v. Phelps, 2 Barb. Ch. (N. Y.) 440. "Bercaw v. Cockerill, 20 Ohio St. 163. °'Coe V. Columbus, P. &c. R. Co., 10 Ohio St. 372, 75 Am. Dec. 518. 576 NOTICE AS AFFECTING PEIOKITT 930 for, although that mortgage be invalid as against the mortgagor.^* When a mortgage is expressly excepted from a covenant of warranty in a deed, this exception charges the purchaser with notice of the mortgage, although the mortgage be not recorded. ^^ i§ 576. Recital of credit in prior deed. — ^Where there is a recital in a prior deed that the sale was made upon credit, a subsequent pur- chaser is bound to inquire whether the purchase-money has been paid, or whether the vendor has a lien for it;^' and the mere fact that the time of payment of the purchase-money, as recited in the deed, has elapsed does not authorize him to presume that it was paid.^° Only the lapse of the period of limitations will excuse failure to make such inquiry."" Eecitals relied upon as constructive notice must be so clear and distinct as to put an ordinarily prudent purchaser upon inquiry, and must be so far correct and intelligible that upon proper inquiry they would lead the purchaser to knowledge of the incumbrance or defect in title with which he is sought to be charged."^ It has been said that the purchaser must have been guilty of gross negligence in not properly investigating the title in question."^ 'So more than ordi- ■i' Freeman v. Auld, 44 N. Y. 50, revg. 44 Barb. 14, 37 Barb. 587; Hardin v. Hyde, 40 Barb. (N. Y.) 435. °' Morrison v. Morrison, 38 Iowa 73. ''^ Cordova v. Hood, 17 Wall. (U. S.) 1, 21 L. ed. 587; Whitfield v. Riddle, 78 Ala. 99; Atlanta Land &c. Co. v. Haile, 106 Ga. 498, 32 S. E. 606; Croskey v. Chapman, 26 Ind. 333; Wiseman v. Hutchinson, 20 Ind. 40; Johnston v. Gwathney, 4 Litt. (Ky.) 317, 14 Am. Dec. 135; Woodward v. Woodward, 7 B. Mon. (Ky.) 116; Thornton v. Knox, 6 B. Mon. (Ky.) 74; Honore v. Bakewell, 6 B. Mon. (Ky.) 67, 43 Am. Dec. 147; Deason v. Taylor, 53 Miss. 697; Hog- gatt V. Wade, 10 Smed. & M. (Miss.) 143; Tydlngs v. Pitcher, 82 Mo. 379; Orrick v. Durham, 79 Mo. 174; Ma- jor V. Bukley, 51 Mo. 227; Scott v. McCullock, 13 Mo. 13; Lytle v. Tur- ner, 12 Lea (Tenn.) 641; Simmons v. Redmond (Tenn.), 62 S. W. 366; Willis V. Gay, 48 Tex. 463, 26 Am. Rep. 328; Moore v. Scott (Tex.), 38 S. W. 394; Bergman v. Blackwell (Tex. Civ. App.), 23 S. W. 243; At- terberry v. Burnett (Tex. Civ. App.), 130 S. W. 1028. See also Warford v. Hankins, 150 Ind. 489, 50 N. E. 468; Shuttleworth v. Ken- tucky Coal &c. Co., 22 Ky. L. 1806, 61 S. W. 1013. But see Robinson v. Owens, 103 Tenn. 91, 52 S. W. 870. =' Deason v. Taylor, 53 Miss. 697. But see Robinson v. Owens, 103 Tenn. 91, 52 S. W. 870. ""Allen V. Poole, 54 Miss. 323. «i Wood V. Pitman Coal Co., 90 Ky. 588, 12 Ky. L. 499, 14 S. W. 588; Mendelsohn v. Armstrong, 52 La. Ann. 1300, 27 So. 735; Jennings v. Dockham, 99 Mich. 253, 58 N. W. 66; Spellman v. McKeen, 96 Miss. 693, 51 So. 914; Bell v. Twilight, 22 N. H. 500; McDaniel v. Harley (Tex.), 42 S. W. 323; Lewis v. Mad- isons, 1 Munf. (Va.) 303. See also Harrison v. Johnson, 18 N. J. Eq. 420; Acer v. Westcott, 46 N. Y. 384, 7 Am. Rep. 355; McBride v. Moore (Tex.), 37 S. W. 450; Durst v. Daugherty, 81 Tex. 650, 17 S. W. 388. See ante § 574. "^Acer v. Westcott, 46 N. Y. 384, 7 Am. Rep. 355; Moore v. Kane, 24 Ont. 541. 931 CONSTKDCTIVE NOTICE § 577 nary prudence and diligence is required, however, on the part of a purchaser, and therefore, if the reference be to an incumbrance which has been discharged of record, it does not charge him with notice of the existence of another and entirely different incumbrance.^^ The reservation by deed of a vendor's lien is a substantial charge upon the land and affects all subsequent purchasers;"* and a reser- vation of such a lien in a final decree of a court of record has the same effect."^ "Where a deed of trust recites that it is made to secure promissory notes, and the laws of the state recognize notes under seal which are barred in ten years and notes not under seal which are barred in five years, and it is not specified whether the notes secured are under seal or not, one who accepts a subsequent mortgage on the same property, more than five, but less than ten years from the making of the first mortgage, is bound to inquire whether the notes secured by the first incumbrance were executed under seal, and having failed to do so the first incumbrancer is not estopped from showing that the notes held by him were sealed instruments."^ § 577. Effect of notice upon mortgaged premises sold in parcels. — As elsewhere shown, where the mortgaged premises have been sold in parcels to different persons at different times, in the absence of any intervening equities, the several parcels are subject to the mortgage, and are to be resorted to in the inverse order of alienation."'' This rule applies where the successive purchasers have actual or construc- tive notice of the prior sales."* But the parcel last sold can not be applied in satisfaction of the mortgage, in exoneration of the parcels first sold, unless the last purchaser had notice of the earlier sales."" When, however, the first purchaser expressly takes subject to the mortgage, he has, of course, no equity as against the mortgagor that "'Cambridge "Valley Bank v. De- hart v. Crane, 42 111. 261; Miami Ex- lano, 48 N. Y. 326. porting Co. v. United States Bank, '"Lincoln v. Purcell, 2 Head Wright (Ohio) 249; Root v. Collins, (Tenn.) 142, 73 Am. Dec. 196. 34 Vt. 173; Lyman v. Lyman, 32 «= Martin v. Neblett, 86 Tenn. 383, Vt. 79, 76 Am. Dec. 151; State v. 7 S. W. 123. Titus, 17 Wis. 241. See also Stern- « Foster v. Jett, 74 Fed. 678, 20 berger v. Hanna, 42 Ohio St. 305 C. C. A. 670. (possession as notice). "Iglehart v. Crane, 42 111. 261; »°Ricker v. Greenbaum, 13 Fed. McKinney v. Miller, 19 Mich. 142; 363; Brown v. Simons, 44 N. H. 475; First Nat. Bank v. Cox (Tex. Civ. Hill v. Howell, 36 N. J. Eq. 25; App.), 139 S. W. 1; Hawkins v. Pot- Sanborn v. Adair, 27 N. J. Eq. 425; ter (Tex. Civ. App.), 130 S. W. 643. Ellison v. Pecare, 29 Barb. (N. Y.) See post § 1620. 333; Stanly v. Stocks, 16 N. Car. "Sanford v. Hill, 46 Conn. 42; 314; Warwick Inst, for Savings v. Lock V. Fulford, 52 111. 166; Igle- Providence, 12 R. I. 144. § 578 NOTICE AS AFFECTING PEIOEITT 933 the portion still held by the latter shall be first applied to the payment of the incumbrance; and having no equity against him, he has none against his grantee. By taking such a deed he consents that the land shall remain subject to its pro rata share of the debtJ" § 578. Notice of prior incumbrances recited in mortgage. — ^A pur- chaser having actual notice of a mortgage is affected with any other incumbrances which are referred to in that mortgage, or in other deeds to which the deeds first referred to may in turn refer.''^ Where a mortgage contains a recital of a former mortgage, the subsequent mortgagee is not a bona fide purchaser.''^ And a recital in a mortgage that it is second to one previously executed to a third party is binding upon the mortgagee accepting it.''* Having notice of the mortgage the purchaser is bound to know the contents of it, and that would lead him to other deeds, in which, pursued from one to another, the whole case would be discovered to him.'* Though the contents of a deed be stated to a purchaser, and he relies upon such statement, and the statement be erroneous, he is bound by its real contents j"' and, in like manner, if he has knowledge of an unrecorded mortgage, and rests upon the vendor's assurance that the debt secured by it has been satisfied, he does so at his peril.'" § 579. Inquiry concerning debt secured. — A general description of the debt is sufiicient to put all parties interested upon inquiry, and to charge them with notice of all facts that could be obtained by the exercise of ordinary diligence and the prosecution of the inquiry in "> Briscoe v. Power, 47 111. 447. '^ Jones v. Smith, 1 Hare 43, on " Howard Ins. Co. v. Halsey, 8 appeal affirmed, 1 Ph. 244 and cases N. Y. 271, 59 Am. Dec. 475; Green cited. But see Drysdale v. Mace, 2 v. Slayter, 4 Johns. Ch. (N. Y.) 38; Sm. & G. 225, 5 De G. M. & G. 103. Bisco V. Banbury, 1 Ch. Cas. 287; Where recitals put a purchaser up- Coppin V. Fernyhough, 2 Bro. C. C. on inquiry, he is not entitled to re- 291; Hope v. Liddell, 21 Beav. 183. ly upon the vendor's contradictory See also Bent v. Coleman, 89 111. statements. Bergstrom v. Johnson, 364; Cambridge Valley Bank v. De- 111 Minn. 247, 126 N. W. 899; Wag- lano, 48 N. Y. 326; Fidelity Ins. Co. goner v. Dodson, 96 Tex. 415, 73 S. V. Shenandoah Val. R. Co., 32 W. W. 517; Patman v. Harland, 17 Ch. Va. 244, 9 S. E. 180. D. 353, 50 L. J. Ch. 642, 44 L. T. "Rose V. Provident Sav. &c. Rep. (N. S.) 728, 29 Wkly. Rep. 707. Assn., 28 Ind. App. 25, 62 N. E. 293. " Overall v. Taylor, 99 Ala. 12, 11 ™ Herring v. Fitts, 43 Fla. 54, 30 So. 738; Price v. McDonald, 1 Md. So. 804, 99 Am. St. 108. 403, 54 Am. Dec. 657; Hudson v. "Bisco V. Banbury, 1 Ch. Cas. 287, Warner, 2 Harris & G. (Md.) 415; per Lord Chancellor. See also Wil- Moody v. Martin (Tex. Civ. App.), link V. Morris Canal &c. Co., 4 N. 117 S. W. 1015. See ante § 551. J. Eq. 377; Skeel v. Spraker, 8 Paige (N. Y.) 182. 933 CONSTEUCTIVE NOTICE § 579 the right direction.'"' A party wilfully closing his eyes against the lights to which his attention has been directed, and which, if followed, would lead to a knowledge of all the facts, is chargeable with notice of every fact that he could have obtained by the exercise of reasonable diligence.''* While literal exactness in describing the mortgage liabil- ity is not essential, so as to preclude the necessity of extraneous in- quiry, yet the description of the debt secured must be sufficiently defi- nite to enable subsequent purchasers and mortgagees or creditors to discover the amount or extent of the incumbrance by the exercise of common prudence and ordinary diligence.'* In other words, to render a mortgage valid as against strangers, it must give reasonable notice of the liability secured.*" A few of the earlier cases, under certain codes, have held that where the mortgage is given to secure an ascertained debt, the amount of that debt must be stated or specified, but even these cases can not be con- sidered authority that the sum secured must be recited, in the mort- gage.*^ It is sufficient notice of an incumbrance to put a purchaser upon inquiry, that the mortgage, duly recorded, names a sum of $500 in addition to a note secured.*^ In like manner, where a mortgage secured several notes, but in the record the description of one of them was omitted, though the aggre- gate amount of the notes was given correctly, it was held that the mortgage was notice to a purchaser for the full amount of the mort- " Curtis V. Flinn, 46 Ark. 70; 774. A mortgage to be valid must Ricketson v. Kichardson, 19 Cal. in some way describe and identify 330; Stoughton v. Pasco, 5 Conn, the indebtedness intended to be se- 442 13 Am. Deo. 72; Gardner v. cured. Bowen v. Ratcliff, 140 Ind. Cohn, '191 111. 553, 61 N. E. 492; 393, 39 N. E. 860, 49 Am. St. 203. Pearce v. Hall, 75 Ky. 209; Morris ^Sbepard v. Sbepard, 6 Conn. 37; V Murray, 5 Ky. L. (abstract) 774; Stoughton v. Pasco, 5 Conn. 442, 13 Williams v. Moniteau Nat. Bank, 72 Am. Dec. 72; Pettibone v. Griswold, Mo 292; Burnett v. Wright, 135 N. 4 Conn. 158, 10 Am. Dec. 106. y 543 32 N. E. 253; Passumpsic ^Hart v. Chalker, 14 Conn. 77; Sav Bank v. First Nat. Bank, 53 Gibson v. Hough, 60 Ga. 588; Vt 82- Seymour v. Darrow, 31 Vt. Thomas v. OIney, 16 111. 53. 122 But see Bullock v. Batten- === Passumpsic Sav. Bank v. First hou'sen 108 111. 28; Morris v. Mur- Nat. Bank, 53 Vt. 82 (quoting ray 82* Ky 36; McCrea v. Newman, text); Babcock v. Lisk, 57 111. 327; 46 N J Eq 473, 19 Atl. 198. See Heaton v. Prather, 84 111. 330; ante 'sS 343 471 Vredenburgh v. Burnet, 31 N. J. '« Jackson L. &c. R. Co. v. Davi- Eq. 229. But where a mortgage re- son 65 Mich 416, 37 N. W. 537; cites a specified indebtedness, less Converse v Blumrich, 14 Mich. 109. a certain credit due the mortgagor ™ Ricketson v. Richardson, 19 Cal. for material furnished, the descrip- 330- Hart v Chalker, 14 Conn. 77; tion of the mortgage debt was held Booth v Barnum, 9 Conn. 286, 23 too indefinite to operate as notice Am Dec 339" Stoughton v. Pasco, against a subsequent mortgagee. fSonn 442 13 C Dec. 72; Mor- Morris v. Murray, 82 Ky. 36, 5 Ky. ris V? Murray. 5 Ky. L. (abstract) L. 821. See ante § 343. § 580 NOTICE AS AFFECTING PEIOEITT 934 gage notes.'^ Where a deed was made subject to "two mortgages for two thousand dollars," with warranty against all claims, "except said mortgages," and there were two prior mortgages, one for one thousand five hundred dollars, which was recorded, and of which the purchaser had actual knowledge, and one of two thousand dollars, which was not recorded, and of which he had no notice except such as was given by the deed, it was held that the recitals in the deed were sufficient to put him upon inquiry, and to charge him with actual knowledge of the unrecorded mortgage.** § 580. Reasonable diligence in inquiry. — The limit of inquiry necessary in any case is that required by the use of reasonable dili- gence. What is reasonable diligence can not be determined by any general rule, but must vary with the circumstances of each case.^^ Thus where a mortgage was given to a retiring partner, to secure him against the liabilities of the partnership, and also for the "halance which should be due him on the purchase of such property," and notes were given for such purchase-money, but no mention of them was made in the mortgage, it was held that a second mortgagee, who had taken his mortgage after inquiring of both the mortgagor and the mortgagee whether anything was due for purchase-money, and received the answer from both that it was all paid, was entitled to priority over the prior mortgagee, and even as against the assignee of one of the notes given for purchase-money.*" Where a subsequent purchaser or mortgagee knows that some paper has been executed which may or may not affect the title to the prop- "Dargln v. Beeker, 10 Iowa 571. subsequent incumbrancer proceeds See also Merrills v. Swift, 18 Conn, at his peril. The parties to the 257, 46 Am. Dec. 315. mortgage have furnished him the "^ Hamilton v. Nutt, 34 Conn. 501. means of finding out the facts; But see McCrea v. Nev/man, 46 N. therefore he must find them out. J. Bq. 473, 19 Atl. 198. But such is not this case. Here the ^ See ante § 552. parties gave no clue to any discov- ™Passumpsic Sav. Bank v. Na- ery attainable beyond themselves, tional Bank, 53 Vt. 82. Veazey, J., Under such circumstances, it seems delivering the opinion of the court, to us that inquiry of those persons said: "Where the form or specifica- is the use of that degree of dili- tion of the obligation intended to be gence which the law requires; and secured is described or referred to, that, in view of the facts alluded to, or where the description indicates the defendant's mortgage should that the debt is specified in some prevail." See also Blatchley v. Os- written form, or is of such a charac- born, 33 Conn. 226; Leiman's Es- ter that it is practicable to be pur- tate, 32 Md. 225; Lindauer v. sued by inquiry beyond the parties Younglove, 47 Minn. 62, 49 N. "W. to the mortgage, and the facts as to 384; Maupin v. Emmons, 47 Mo. 304; its payment determined, the author!- Cambridge "Valley Bank v. Delano, ties indicate that a purchaser or 48 N. Y. 326. 935 CONSTRUCTIVE NOTICE § 583 erty, it is his duty to ascertain its eisact nature and effect f^ and like- •n-ise, if he knows there are liens on the property, he must ascertain their particulars.** The record of a foreclosure suit may affect one who derives title under a foreclosure sale with knowledge of another unsatisfied mort- gage upon the premises, and of the equity of the holder of that mort- gage as against the purchaser at that sale.*' § 581. Conveyance of equity of redemption to mortgagee as notice of assignment of mortgage. — A conveyance of land to the mortgagee subject to a mortgage may or may not imply that he has assigned the mortgage. It has already been noticed that a deed conveying land subject to a certain mortgage, or warranting it against all incum- brances except the mortgage, is notice to all persons claiming under such deed of the existence of the mortgage. If such a deed of the equity of redemption be made to the mortgagee himself, it is a ques- tion of fact for a jury whether such recital or warranty implies that the mortgage is not then held by the mortgagee, or is notice to his attaching creditors that the mortgage has been assigned to another."" A conveyance of the equity of redemption by the mortgagor to the mortgagee after the latter has assigned the mortgage in good faith to a third person, does not effect a merger or extinguish the lien of the mortgage.'^ The record of a purchase-money mortgage is not notice of the con- veyance for which such mortgage was given, so as to invalidate the title of one who subsequently purchases of the vendor before the first deed given by him is recorded."^ § 582. Release or quitclaim of mortgagor's interest. — One who merely takes a release of all the interest of the mortgagor, while an ''In re Rixstine's Estate, 3 Pa. 111. 500; Edgerton v. Young, 43 111. Dist. 227. See also In re Burns, 171 464; Cole v. Beale, 89 111. App. 426; Fed. 1008; W. C. Belcher Land Mort- Durham v. Craig, 79 Ind. 117; White gage Co. V. Norris, 29 Tex. Civ. App. v. Hampton, 13 Iowa 259; Feigner 361, 68 S. W. 548. v. Slingluff, 109 Md. 474, 71 Atl. "* Jones V. Williams, 24 Beav. 47, 978; Lime Rock Nat. Bank v. 3 Jur. (N. S.) 1066, 5 Wkly. Rep. Mowry, 66 N. H. 598, 22 Atl. 555, 13 775 53 Eng. Reprint 274. L. R. A. 294; Curtis v. Moore, 152 »''' Locker v. Riley, 30 N. J. Eq. 104. N. Y. 159, 46 N. E. 168, 57 Am. St. °» Clark V. Jenkins, 5 Pick. (Mass.) 506; Purdy v. Huntington, 42 N. Y. 280 334, 1 Am. Rep. 532. ""Case V. Fant, 53 Fed. 41, 3 C. C. "^ Pierce v. Taylor, 23 Maine 246; A 418; Oregon &c. Trust Inv. Co. v. Losey v. Simpson, 11 N. J. Eq. 246 Shaw, Fed. Cas. No. 10557, 6 Sawy. (and it is not notice to one claim- (U S) 52; Chicago International ing under the mortgagee); Center Bank v. Wilkshire, 108 111. 143; Bu- v. Planters' &c. Bank, 22 Ala. 743. chanan v. International Bank, 78 § 582 NOTICE AS ArPECTING PRIOEITT 936 unrecorded mortgage made by him is outstanding, obtains only the mortgagor's equity of redemption subject to such mortgage."^ By the weight of authority a grantee in a quitclaim, deed can not be accorded the protection of a purchaser for value without notice, since such instrument purports to convey only such interest as the grantor may then have in the property, thus putting the purchaser upon inquiry as to any defects in the title by way of outstanding in- cumbrances or otherwise.'* In some jurisdictions the rule has been al- tered by the recording acts ; and it is held that a grantee by quitclaim deed may obtain, as against a prior unrecorded mortgage or convey- ance, the protection accorded a bona fide purchaser.'^ In other juris- dictions, under statutes making a quitclaim deed equivalent to a deed "'Smith V. Branch Bank, 21 Ala. Pac. 173; Fowler v. "Will, 19 S. Dak. 125. 131, 102 N. W. 598, 117 Am. St. 938; "Villa V. Rodriguez, 12 Wall. (U. Parker v. Randolph, 5 S. Dak. 549, S.) 323, 20 L. ed. 406; Gest v. Pack- 59 N. W. 722, 29 L. R. A. 33; Hows wood, 34 Fed. 368, 13 Sawy. (U. S.) v. Butterworth (Tenn.), 62 S. W. 202; Dodge v. Briggs, 27 Fed. 160; 1114; Huff v. Crawford, 89 Tex. 214, Runyonv. Smith, 18 Fed. 579; Clem- 34 S. "W. 606; Threadgill v. Bick- mons V. Cox, 114 Ala. 350, 21 So. erstaffi, 87 Tex. 520, 29 S. W. 757; 426; Wood v. Holly Mfg. Co., 100 Harrison v. Boring, 44 Tex. 255; Ala. 326, 13 So. 948, 46 Am. St. 56; Hamman v. Keigwin, 39 Tex. 34; Morris v. Wheat, 8 App. Cas. (D. Rodgers v. Burchard, 34 Tex. 441, C.) 379; Fries v. Griffin, 35 Fla. 212, 7 Am. Rep. 283; Dupree v. Frank 17 So. 66; Leland v. Isenbeck, 1 (Tex.), 39 S. W. 988; Clark v. Say- Idaho 469; O'Neill v. Wilcox, 115 ers, 55 W. Va. 512, 47 S. E. 312. Iowa 15, 87 N. W. 742; Young v. See also Steele v. Sioux Valley Charnquist, 114 Iowa 116, 86 N. W. Bank, 79 Iowa 339, 44 N. W. 564, 7 205; Hannan v. Seidentopf, 113 L. R. A. 524, 18 Am. St. 370; Mar- Iowa 658, 86 N. W. 44; Davis v. No- shall v. Roberts, 18 Minn. 405, 10 Ian,. 49 Iowa 683; Springer v. Bar- Am. Rep. 201; Prentice v. Duluth tie, 46 Iowa 688; Smith v. Rudd, 48 Storage &c. Co., 58 Fed. 437, 7 C. Kans. 296, 29 Pac. 310; Goddard v. C. A. 293 (construing the Minne- Donaha, 42 Kans. 754, 22 Pac. 708; sota statute); Virginia &c. Coal Co. Kelly v. McBlaine, 6 Kans. App. 523, v. Fields, 94 Va. 102, 26 S. E. 426. 50 Pac. 963; Peters v. Cartier, 80 « White v. McGarry, 47 Fed. 420 Mich. 124, 45 N. W. 73, 20 Am. St. (construing the Michigan statute); 508; Condit v. Maxwell, 142 Mo. 266, Boynton v. Haggart, 120 Fed. 819, 57 44 S. W. 467; Eoff v. Irvine, 108 Mo. C. C. A. 301 (quitclaim in chain of 378, 18 S. W. 907, 32 Am. St. 609; title); Nidever v. Ayers, 83 Cal. 39, Mason v. Black, 87 Mo. 329; Mann 23 Pac. 192; Graff v. Middleton, 43 v. Best, 62 Mo. 491; Stoffel v. Schroe- Cal. 341; Smith v. McClain, 146 Ind. der, 62 Mo. 147; Ridgev.-ay v. Hoi- 77, 45 N. E. 41; Elliott v. Buffing- liday, 59 Mo. 444; McAdow v. Black, ton, 149 Mo. 663, 51 S. W. 408; 6 Mont. 601, 13 Pao. 377; Bowman Hope v. Blair, 105 Mo. 85, 16 S. W. V. Griffith, 35 Nebr. 361, 53 N. W. 140; 595, 24 Am. St. 366; Bbersole v. Pleasants v. Blodgett, 32 Nebr. 427, 49 Rankin, 102 Mo. 488, 15 S. W. 422; N. W. 453, 39 Nebr. 741, 58 N. W. 423, Munson v. Ensor, 94 Mo. 504, 7 S. 42 Am. St. 624; Hoyt v. Schuyler, 19 W. 108; Campbell v. Laclede Gas Nebr. 652, 28 N. W. 306; Low v. Light Co., 84 Mo. 352; Willingham Shaffer, 24 Ore. 239, 33 Pac^ 678; v. Hardin, 75 Mo. 429; Boogher v. American Mortgage Co. v. Hutch- Neece, 75 Mo. 383; Fox v. Hall, 74 Inson, 19 Ore. 334, 24 Pac. 515; Mo. 315, 41 Am. Rep. 316. Baker v. Woodward, 12 Ore. 3, 6 937 LIS PENDENS § 583 of bargain and sale, it has been held that a grantee by a quitclaim is protected as a purchaser for value without notice."'' V. Lis Pendens Section 583. Doctrine of lis pendens. 584. Service of writ is notice. Section 585. Lis pendens as affected by ac- tual notice. § 583. Doctrine of lis pendens. — The force and effect of the record- ing of a deed or mortgage are limited not only by the actual notice which the grantee may have of prior unrecorded conveyances, but also by constructive notice of rights and claims of other parties, furnished by the pendency of an action in relation to the title of the property, no- tice of the pendency of which has been filed according to law.^ Al- »= Bradbury v. Davis, 5 Colo. 265; Morgan v. Clayton, 61 111. 35; Smith v. McClain, 146 Ind. 77, 45 N. E. 41. See also Brady v. Spurck, 27 111. 478; Butterfield v. Smitli, 11 111. 485; McConnel v. Reed, 4 Scam. (5 111.) 117, 38 Am. Dec. 124; Citizens' Bank v. Shaw, 14 S. Dak. 197, 84 N. W. 779. " Lacassagne v. Chapuis, 144 U. S. 119, 36 L. ed. 368, 12 Sup. Ct. 659; Whiteside v. Haselton, 110 U. S. 296, 28 L. ed. 152, 4 Sup. Ct. 1; Tilton v. Cofield, 93 U. S. 163, 23 L. ed. 858; Hargrove v. Cherokee Nation, 129 Fed. 186, 63 C. C. A. 276, affg. 4 Ind. Ter. 129, 69 S. W. 823; Pitt v. Rodgers, 104 Fed. 387, 43 C. C. A. 600; Center v. P. &c. Bank, 22 Ala. 743. The suit is notice from the time when service is perfected. Hoole V. Attorney-General, 22 Ala. 190; Galbreath v. Estes, 38 Ark. 599; Holman v. Patterson, 29 Ark. 357; Ashley v. Cunningham, 16 Ark. 168; Di Nola v. Allison, 143 Cal. 106, 76 Pac. 976, 65 L. R. A, 419, 101 Am. St. 84; Partridge v. Shep- ard, 71 Cal. 470, 12 Pac. 480; Sharp V. Lumley, 34 Cal. 611; Long v. Neville, 29 Cal. 132; Wattson v. Dowling, 26 Cal. 124; Montgomery v. Byers, 21 Cal. 107; Cheever v. Minton, 12 Colo. 557, 21 Pac. 710, 13 Am. St. 258; Powell v. National Bank of Commerce, 19 Colo. App. 57, 74 Pac. 536; Norton v. Birge, 35 Conn. 250; King v. Bill, 28 Conn. 593; Elizabethport Cordage Co. v. Whitlock, 37 Fla. 190, 20 So. 255; Swift V, Dederick, 106 Ga. 35, 31 S. E. 788; Seabrook v. Brady, 47 Ga. 650; Rubel v. Title Guarantee &c. Co., 101 111. App. 439, affd. 199 111. 110, 64 N. E. 1033; Williams v. Chicago Exhibition Co., 188 111. 19, '58 N. E. 611; Harms v. Jacobs, 160 111. 589, 43 N. E. 745; Walker v. Douglas, 89 111. 425; Roberts v. Fleming, 53 111. 196; Jackson v. Warren, 32 III. 331; Loomis v. Riley, 24 111. 307; Buser v. Shepard, 107 Ind. 417, 8 N. E. 280; Wilson v. Hefflin, 81 Ind. 35; Truitt v. Truitt, 38 Ind. 16; Kern v. Hazelrigg, 11 Ind. 443, 71 Am. Dec. 360; Jackson V. Centerville &c. R. Co., 64 Iowa 292, 20 N. W. 442; Tredway v. Mc- Donald, 51 Iowa 663, 2 N. W. 567; Blanchard v. Ware, 37 Iowa 305, 43 Iowa 530; McGregor v. McGregor, 21 Iowa 441; Wilkinson v. Elliott, 43 Kans. 590, 23 Pac. 614, 19 Am. St. 158; Boyd v. Emmons, 103 Ky. 393, 45 S. W. 364, 20 Ky. L. 107; Wallace V. MarQuett, 88 Ky. 130, 10 S. W. 374, 10 Ky. L. 750; Gossom v. Don- aldson, 18 B. Mon. (Ky.) 230, 68 Am. Dec. 723; Middleton v. Davis- Rankin Bldg. &c. Co., 20 Ky. L. 263, 45 S. W. 896; Bell v. Chicago &c. R. Co., 34 La. Ann. 785; Smith V. Hodsdon, 78 Maine 180, 3 Atl. 276; Snowman v. Harford, 62 Maine 434; Berry v. Whittaker, 58 Maine 422; Snowman v. Harford, 57 Maine 397; Sinclair v. Auxiliary Realty Co., 99 Md. 223, 57 Atl. 664; Boulden v. Lanahan, 29 Md. 200; Schaferman V. O'Brien, 28 Md. 565, 92 Am. Dec. 708; Inloe v. Harvey, 11 Md. 519; Tongue v. Morton, 6 Har. & J. (Md.) § 583 NOTICE AS AFFECTING PEIOKITX 938 though lis pendens has the effect of constructive notice, it has fre- quently been held that the doctrine is not founded upon notice, but upon reasons of public policy and necessity.^ The doctrine of lis pen- dens is founded upon the consideration that no suit could be success- fully terminated if, during its pendency, the property could be trans- 21; Haven v. Adams, 8 Allen (Mass.) 363; Barrowscale v. Tut- tle, 5 Allen (Mass.) 377; Steele v. Taylor, 1 Minn. 274* Osborne v. Crump, 57 Miss. 622; Allen v. Poole, 54 Miss. 323; Bailey v. Winn, 113 Mo. 155, 20 S. W. 21; Real Est. Sav. Inst. V. Collonious, 63 Mo. 290; Tur- ner V. Babb, 60 Mo. 342; Martin v. Abbott, 72 Nebr. 89, 100 N. W. 142; Scudder v. Sargent, 15 Nebr. 102, 17 N. W. 369; McPherson v. Housel, 13 N. J. Eq. 299; Allen v. Morris, 34 N. J. L. 159; Ladd v. Stevenson, 112 N. Y. 325, 19 N. B. 842, 8 Am. St. 748; Ayrault v. Murphy, 54 N. Y. 203; Mitchell v. Smith, 53 N. Y. 413; Harrington v. Slade, 19 Barb. (N. Y.) 162; Young v. Guy, 23 Hun (N. Y.) 1, afEd. 87 N. Y. 457; Law- rence V. Conklin, 17 Hun (N. Y.) 228; Murray v. Ballon, 1 Johns. Ch. (N. Y.) 566; Salsbury v. Benton, 7 Lans. (N. Y.) 352; Dancy v. Duncan, 96 . N. Car. Ill, 1 S. E. 455; Stewart v. ^*»Wheeling &c. R. Co., 53 Ohio St. 151, 41 N. E. 247, 29 L. R. A. 438; Brundage v. Biggs, 25 Ohio St. 652; Ludlow V. Kidd, 2 Ohio 541; Berg- man V. Inman, 43 Ore. 456, 72 Pac. 1086, 73 Pac. 341, 99 Am. St. 771; Youngman v. Elmira R. Co., 65 Pa. St. 278; Hersey v. Turbett, 27 Pa. St. 418; Martin v. Neblett, 86 Tenn. 383, 7 S. W. 123; American Ex- change Bank v. Andrews, 12 Heisk. (Tenn.) 306; Tharpe v. Dunlap, 4 Heisk. (Tenn.) 674; Wortham v. Boyd, 66 Tex. 401, 1 S. W. 109; Lee V. Salines, 15 Tex. 495; Hicks v. Porter, 38 Tex. Civ. App. 334, 85 S. W. 437; Virginia Iron &c. Co. v. Roberts, 103 Va. 661, 49 S. E. 984; Wood V. Krebbs, 30 Grat. (Va.) 708; Stout V. Philippi Mfg. &c. Co., 41 W. Va. 339, 23 S. E. 571, 56 Am. St. 843; Wilfong V. Johnson, 41 W. Va. 283, 23 S. E. 730; Brown v. Cohn, 95 Wis. 90, 69 N. W. 71, 60 Am. St. 83; Helms V. Chadbourne, 45 Wis. 60; In Louisiana, a purchaser is not chargeable with notice of judicial proceedings in which the title of the property is involved, unless he is a party to such proceedings. No- tice in this state is not as a rule equivalent to registry. Boyer v. Joffrion, 40 La. Ann. 657, 4 So. 872; Tyler v. Thomas, 25 Beav. 47; Wors- ley V. Scarborough, 3 Atk. 392; Bel- lamy V. Sabine, 1 De G. & J. 566, 2 White & Tudor's Lead. Cas. in Eq. (4th Am. ed.), pt. 1, pp. 192 et seq. See post § 1411. ^Greenwood v. Warren, 120 Ala. 71, 23 So. 686; Durand v. Lord, 115 111. 610, 4 N. E. 483; First Nat. Bank V. Farmers' &c. Bank, 171 Ind. 323, 86 N. E. 417; Smith v. Kimball, 36 Kans. 474, 13 Pac. 801; Watson v. Wilson, 2 Dana (Ky.) 406, 26 Am. Dec. 459; Turner v. Babb, 60 Mo. 342; O'Reilly v. Nicholson, 45 Mo. 160; Dodd v. Lee, 57 Mo. App. 167; Carr v. Lewis Coal Co., 15 Mo. App. 551, affd. 96 Mo. 149, 8 S. W. 907, 9 Am. St. 328; Geishaker v. Pancoast, 57 N. J. Eq. 60, 40 Atl. 200; Haugh- wout V. Murphy, 22 N. J. Eq. 531; Lament v. Cheshire, 65 N. Y. 30; Arrington v. Arrington, 114 N. Car. 151, 19 S. E. 351; Houston v. Tim- merman, 17 Ore. 499, 21 Pae. 1037, 4 L. R. A. 716, 11 Am. St. 848; Dovey's Appeal, 97 Pa. St. 153; Bowen v. Kirkland, 17 Tex. Civ. App. 346, 44 S. W. 189; Newman v. Chap- man, 2 Rand. (Va.) 93, 14 Am. Dec. 766; Cresap v. Brown, 69 W. Va. 658, 72 S. E. 751 ; Kellogg v. Fancher, 23 Wis. 21, 99 Am. Dec. 96. It is imma- terial for practical purposes, whether the doctrine of lis pendens is considered as based on construc- tive notice or on public policy. Nor- ris V. He, 152 111. 190, 38 N. E. 762, 43 Am. St. 233. 939 LIS PEN-DEN'S § 583 ferred so that it would not be bound by the decree or judgment in the hands of the assignee.' The doctrine of lis pendens is applied to mortgagees* and incum- brancers pendente lite,= as well as purchasers in general." A party, taking a trust deed of land pending a suit against the grantor, is charged with notice of the title asserted, and the particular relief demanded in such suit.'' This doctrine of lis pendens, however, is not carried to the extent of making it constructive notice of a prior un- registered deedf as, for instance, proceedings to foreclose an unre- ' Allen V. Poole, 54 Miss. 323; Hiern v. Mill, 13 Ves. 114. * Stout V. Lye, 103 U. S. 66, 26 L. ed. 428; Laporte v. Northern Trust Co., 187 Fed. 20, 109 C. C. A. 74; Owen V. Kilpatrick, 96 Ala. 421, 11 So. 476; Burleson v. McDermott, 57 Ark. 229, 21 S. W. 222; Brown v. Bocquin, 57 Ark. 97, 20 S. "W. 813; Whitney v. Higgins, 10 Cal. 547, 70 Am. Dec. 748; Elizabethport Cord- age Co. V. Whitlock, 37 Fla. 190, 20 So. 255; Magnusson v. Charlson, 32 111. App. 580; Warford v. Sullivan, 147 Ind. 14, 46 N. E. 27; Fee v. Moore, 74 Ind. 319; Harlock v. Barn- hizer, 30 Ind. 370; Cooley v. Bray- ton, 16 Iowa 10; Taylor v. United States Building &c. Assn., 110 Ky. 84, 22 Ky. L. 1560, 60 S. W. 927; Middleton v. Davis-Rankin Bldg. &c. Co., 20 Ky. L. 263, 45 S. W. 896; Hart V. Hayden, 79 Ky. 346, 2 Ky. L. (abstract) 219, 2 Ky. L. 359; Wat- son V. Wilson, 2 Dana (Ky.) 406, 26 Am. Dec. 459; Lacassagne v. Abra- ham, 48 La. Ann. 1160, 20 So. 672; Masson v. Saloy, 12 La. Ann. 776; Gillespie v. Cammack, 3 La. Ann. 248; Campbell's Case, 2 Bland. (Md.) 209, 20 Am. Dec. 360; Becker V. Stroeher, 167 Mo. 306, 66 S. W. 1083; Parrotte v. Dryden, 73 Nebr. 291, 102 N. W. 610; Turner v. Houpt, 53 N. J. Eg. 526, 33 Atl. 28; Cook v. Mancius, 5 Johns. Ch. (N. Y.) 89; Hovey v. Hill, 3 Lans. (N. Y.) 167; Sears v. Hyer, 1 Paige (N. Y.) 483; Youngman v. Elmira &c. R. Co., 65 Pa. St. 278; Portland &c. R. Co. v. Ladd, 47 Wash. 88, 91 Pac. 573. " Masson v. Saloy, 12 La. Ann. 776; Steele v. Taylor, 1 Minn. 274. The assignee of a mortgage is an incum- brancer. Hovey v. Hill, 3 Lans. (N. Y.) 167. And an assignee of a mort- gage pending an action to fore- close, set aside, or enjoin enforce- ment thereof, takes subject to the decree. Case v. Bartholow, 21 Kans. 300; Craig v. Ward, 1 Abb. Dec. (N. Y.) 454, 3 Keyes 387, 3 Abb. Pr. (N. S.) 235; Zeiter v. Bowman, 6 Barb. (N. Y.) 133. "Lewers v. Atcherly, 222 U. S. 285, 56 L. ed. 202, 32 Sup. Ct. 94; Rexford v. Brunswick-Balke-Collen- der Co., 181 Fed. 462, 104 C. C. A. 210; Boynton v. Chicago Mill &c. Co., 84 Ark. 203, 105 S. W. 77; Ab- bott V. Land &c. Co., 161 Cal. 42, 118 Pac. 425; Roach v. Riverside Water Co., 74 Cal. 263, 15 Pac. 776; Nemo V. Farrington, 7' Cal. App. 443, 94 Pac. 874; Buckhorn Plaster Co. v. Consolidated Plaster Co., 47 Colo. 516, 108 Pac. 27; Schmuck v. Mis- souri &c. R. Co., 87 Kans. 152, 123 Pac. 887; Bell v. Diesem, 86 Kans. 364, 121 Pac. 335; Kitchener v. Jeh- lik, 85 Kans. 684, 118 Pac. 1058; Parker v. Vaughn, 85 Kans. 324, 116 Pac. 882; Missouri, K. &c. R. Co. v. Murphy, 75 Kans. 707, 90 Pac. 290; Sherburne v. Strawn, 52 Kans. 39, 34 Pac. 405; Fletcher v. Wireman, 152 Ky. 565, 153 S. W. 982; Smith V. Munger, 93 Miss. 627, 47 So. 676; Leerburger v. Hennessey Realty Co., 154 App. Div. 158, 138 N. Y. S. 921; Oilman v. Carpenter, 22 S. Dak. 123, 115 N. W. 659; Hosack v. Darman, 44 Tex. 15'4; Lyne v. Wilson, 1 Rand. (Va.) 114; Portland &c. R. Co. v. Ladd, 47 Wash. 88, 91 Pac. 573; Goft v. McLain, 48 W. Va. 445, 37 S. B. 566, 86 Am. St. 64; McCord v. Ake- ley, 132 Wis. 195, 111 N. W. 1100, 122 Am. St. 956. But see Gardner V. Peckham, 13 R. I. 102. ' New England L. &c. Co. v. Miller (Tex.), 40 S. W. 646. 'Douglass V. McCrackin, 52 Ga. 596; Newman v. Chapman, 2 Rand. § 584 NOTICE AS AFI'ECTING PKIOEITT 940 corded mortgage do not constitute such a lis pendens as would be no- tice to a purchaser of the mortgaged property. Only those persons are charged -with notice, or are affected by a lis pendens, who pending the suit purchase from a party to the suit,' or derive title from one so purchasing.^" A third person acquiring rights before the action is pending, or before the filing of notice thereof as required, is not bound by the judgment or decree.^^ It is now generally provided by statute that notice of lis pendens, in order to affect subsequent purchasers, shall be filed in the registry of deeds where the land is situated. ^^ § 584. Service of writ is notice. — Notice from a lis pendens arises from the time of the service of the writ, and not from the time of the issuance of it, or the time of filing the bill.^' The lis pendens is notice (Va.) 93, 14 Am. Dec. 766; 1 Story's Eq. Jur., § 406. See also Page v. Street, Spears Eq. (S. Car.) 159; Wyatt V. Barwell, 19 Ves. Jr. 435, 13 Rev. Rep. 236, 34 Eng. Reprint 578. But see Boiling v. Carter, 9 Ala. 921; Mayne v. Jones, 34 Cal. 483; Dickson v. Todd, 43 111. 504; National Bank of Metropolis v. Sprague, 21 N. J. Eq. 530. » Bright V. Buckman, 39 Fed. 243; Scarlett v. Gorham, 28 111. 319; Par- sons V. Hoyt, 24 Iowa 154; Herring- ton V. Herrington, 27 Mo. 560; Allen V. Morris, 34 N. J. L. 159; Stuyve- sant V. Hone, 1 Sandf. Ch. (N. Y.) 419; Parks v. Jackson, 11 Wend. (N. Y.) 442, 25 Am. Dec. 656; Green v. Rick, 124 Pa. St. 130, 15 Atl. 497; French v.- Loyal Co., 5 Leigh (Va.) 627. " Norton v. Birge, 35 Conn. 250. "Farmers' Loan &c. Co. v. Me- ridian Waterworks Co., 139 Fed. 661; Dalander v. Howell (Colo. App.), 124 Pac. 744; Kennedy v. Af- dal, 229 111. 295, 82 N. E. 291; Noyes v. Crawford, 118 Iowa 15, 91 N. W. 799, 96 Am. St. 363; Farmers' Nat. Bank v. Fletcher, 44 Iowa 252; Thomas v. Smith, 8 Kans. App. 855, 54 Pac. 695; Parks v. Smoot, 105 Ky. 63, 48 S. W. 146, 20 Ky. L. 1043; Lacassagne v. Abraham, 48 La. Ann. 1160, 20 So. 672; Bennett v. Hotch- kiss, 20 Minn. 165; Snowden v. Ty- ler, 21 Nebr. 199, 31 N. W. 661; Hunt v. Haven, 52 N. H. 162; Haughwout V. Murphy, 22 N. J. Eq. 531; People V. Connolly, 8 Abb. Pr. (N. Y.) 128; Hopkins v. McLaren, 4 Cow. (N. Y.) 667; Murray v. Lyeburn, 2 Johns. Ch. (N. Y.) 441; Buxton v. Sargent. 7 N. Dak. 503, 75 N. W. 811; Trimble v. Boothby, 14 Ohio 109, 45 Am. Dec. 526; Appleby v. Mullaney, 9 Ohio S. & C. P. Dec. 765, 7 Ohio N. P. 120; Walker v. Goldsmith, 14 Ore. 125, 12 Pac. 537; Rodgers v. Dibrell, 6 Lea (Tenn.) 69; Curtis v. Lunn, 6 Munf. (Va.) 42. "Richardson v. White, 18 Cal. 102; Snow v. Russell, 94 Maine 322, 47 Atl. 536; Jorgenson v. Minneap- olis &c. R. Co., 25 Minn. 206. "Wheeler v. Walton &c. Co., 65 Fed. 720; Watford v. Dates, 57 Ala. 290; Center v. Planters' &c. Bank, 22 Ala. 743; Majors v. Cowell, 51 Cal. 478; Figge v. Rowlen, 84 111. App. 238, affd. 185 111. 234, 57 N. E. 195; Farmers' Nat. Bank v. Fletcher, 44 Iowa 252; Straeffer v. Rodman, 146 Ky. 1, 141 S. W. 742, Ann. Cas. 1913 C, 549; Sanders v. McDonald, 63 Md. 503; Spencer Co. V. Koell, 91 Minn. 226, 97 N. W. 974; Allen V. Poole, 54 Miss. 323; Allen V. Mandeville, 26 Miss. 397; Bailey V. McGinnis, 57 Mo. 362; O'Neill v. Clark, 33 N. J. Eq. 444; Haughwout V. Murphy, 22 N. J. Eq. 545; Fuller V. Hilton, 76 N. Y. 190; Leitch v. Wells, 48 N. Y. 585; Murrav v. Bal- lou, 1 Johns. Ch. (N. Y.) 566; Hay- den v. Bucklin, 9 Paige (N. Y.) 512; Jackson v. Roberts, 1 Wend. (N. Y.) 478; Bennet v. Williams, 5 Ohio St. 941 LIS PENDENS ■§ 584 of every fact in the pleadings pertinent to the matter in issue or the relief sought,^* and of the contents of the exhibits filed and proved." If the facts suggest further inquiry, the lis pendens is notice of any other facts vfhich could have been ascertained in the pursuit of such inquiry with ordinary prudence and diligence.^" But a purchaser or mortgagee acquiring interest pendente lite is not affected with notice of facts not alleged in the pleadings or put in issue. ^^ Notice by lis pendens that a party to an action is the real owner of land, or of the equity of redemption therein, is equivalent to actual notice of such party's claim thereto.^* In order that the notice may attach, the property involved in the suit must be so pointed out in the proceedings that it may be identi- fied by those interested in it.^^ Since questions of title and boundary are not put in issue or determined in an action to enforce a lien for the purchase-money of land, such matters are not lis pendens.^" 461; Staples v. White, 88 Tenn. 30, 12 S. W. 339; Humphrey v. Beau- mont Irr. Co., 41 Tex. Civ. App. 308, 93 S. W. 180. See also United States V. Cooper, 196 Fed. 584; Armstrong Corli Co. V. Merchants' Refrigerator Co., 184 Fed. 199, 107 C. C. A. 93. " Center v. Planters' &c. Bank, 22 Ala. 743; Davis v. Miller Signal Co., 105 111. App. 657; Ray v. Roe, 2 Blackf. (Ind.) 258, 18 Am. Dec. 159; Smith V. Kimhall, 36 Kans. 474, 13 Pac. 801; Jones v. McNarrin, 68 Maine 334, 28 Am. Rep. 66; Allen v. Poole, 54 Miss. 323; Bryant Timber Co. V. "Wilson, 151 N. Car. 154, 65 S. B. 932, 134 Am. St. 982; Davis v. Christian, 15 Grat. (Va.) 11; Stout v. Philippi Mfg. &c. Co., 41 W. Va. 339, 23 S. E. 571, 56 Am. St. 843. See also Fash v. Ravesies, 32 Ala. 451; Cossett V. O'Riley, 160 Mich. 101, 125 N. W. 39. >= Center v. Planters' &c. Bank, 22 Ala. 743; Davis v. Miller Signal Co., 105 111. App. 657; Allen v. Poole, 54 Miss. 323. "Laporte v. Northern Trust Co., 187 Fed. 20, 109 C. C. A. 74; Seibert V. Louisville, 125 Ky. 292, 30 Ky. L. 1317, 101 S. W. 325; Jones v. Mc- Narrin, 68 Maine 334, 28 Am. Rep. 66; Bryant Timber Co. v. Wilson, 151 N. Car. 154, 65 S. E. 932, 134 Am. St. 982. " Alexander v. Pendleton, 8 Cranch (U. S.) 462, 3 L. ed. 624; Weller v. Dreyfus, 26 Fed. 824; Sanford v. Hill, 46 Conn. 42; Ray v. Roe, 2 Blackf. (Ind.) 258, 18 Am. Dec. 159; St. John V. Strauss, 60 Kans. 136, 55 Pac. 845; Morton v. Jones, 136 Ky. 797, 125 S. W. 247; Griffith v. Griffith, Hoffm. Ch. (N. Y.) 153, revd. 9 Paige 315; Walker v. Goldsmith, 14 Ore. 125, 12 Pac. 537; Cowie v. Har- ker, 32 S. Dak. 516, 143 N. W. 895; New England L. &c. Co. v. Miller (Tex.), 40 S. W. 646; Davis v. Chris- tian, 15 Grat. (Va.) 11. See also Leavell v. Poore, 91 Ky. 321, 15 S. W. 858, 13 Ky. L. 51; Green v. Slay- ter, 4 Johns. Ch. (N. Y.) 38. "Wilson V. Hefflin, 81 Ind. 35; ..zEtna L. Ins. Co. v. Stryker, 42 Ind. App. 57, 83 N. E. 647. ™ Miller v. Sperry, 2 Wall. (U. S.) 237, 17 L. ed. 827; Low v. Pratt, 53 111. 438; Allen v. Poole, 54 Miss. 323; Drake v. Crowell, 40 N. J. L. 58; Green v. Slayter, 4 Johns. Ch. (N. Y.) 38; Potter v. Rowland, 8 N. Y. 448; Todd v. Outlaw, 79 N. Car. 235. See also Jaffray v. Brown, 17 Hun (N. Y.) 575 (all the real property in a specified county too indefinite); McLean v. Baldwin, 136 Cal. 565, 69 Pac. 259 (erroneous description in addition to boundaries rejected as surplusage); Watson v. Wilcox, 39 Wis. 643, 20 Am. Rep. 63. "Real V. Arnold, 1 Ky. L. (ab- stract) 403. § 585- NOTICE AS AFFECTING PRIORITY 942 The mention, in a creditor's bill against the debtor's interest as a devisee, concerning an existing mortgage on that interest, and in- cluding the mortgagee as a defendant, without putting in issue the validity of the mortgage, or asking any relief in regard to it, does not create such lis pendens as to affect the validity of a sale under the mortgage.^*- The law of lis pendens does not apply to a suit for divorce and alimony,^^ unless the petition is that the alimony be assigned out of a particular parcel of land.^^ Neither does it apply to a common law- suit brought to obtain a money judgment for a debt.^* Consequently, where the holder of a vendor's lien sues the vendee to recover the amount of the lien, but does not attempt to enforce the lien itself, the suit is not constructive notice to a purchaser from the defendant, while the suit is pending.^^ § 585. lis pendens as aifected by actual notice. — If the plaintiff in a suit, before tiling the statutory notice of lis pendens, had knowl- edge that the defendant had conveyed his land by a valid deed, but that the purchaser had not recorded it, he can not by a levy upon the land of an execution obtained in such writ acquire any lien upon such land as against the purchaser.^" On the other hand, one who par- ^''Cockrill V. Maney, 2 Tenn. Ch. "Carson v. Pears, 91 Ga. 4S2, 17 49. S. E. 342; St. Joseph Mfg. Co. v. 2» McClelland v. Phillips, 6 Colo. Daggett, 84 111. 556; Gales v. Christy, App. 47, 39 Pac. 893; Ulrich v. Ul- 4 La. Ann. 293; Armstrong v. Car- rich, 3 Mackey (D. C.) 290; Frakes wile, 56 S. Car. 463, 35 S. E. 196; V. Brown, 2 Blackf. (Ind.) 295; Shearon v. Henderson, 38 Tex. 245; Scott v. Rogers, 77 Iowa 483, 42 N. White v. Perry, 14 W. Va. 66; Ful- W. 377; Feigley v. Peigley, 7 Md. ton Bldg. Assn. v. Hooker, 6 Ohio 537, 61 Am. Dec. 375; Daniel v. Dec. (reprint) 1123, 10 Am. L. Rec. Hodges, 87 N. Car. 95; Gilmore v. 559, 7 "Wkly. L. Bui. 48. Gilmore, 58 N. Car. 284; Hamlin v. 2= Briscoe v. Bronaugh, 1 Tex. 326, Bevans, 7 Ohio 161, 28 Am. Dec. 625; 48 Am. Dec. 108. Brightman v. Brightman, 1 R. I. ™ Lament v. Cheshire, 65 N. Y. 112; Almond v. Almond, 4 Rand. 30; Welsh v. Schoen, 59 Hun (N. (Va.) 662, 15 Am. Dec. 781. Y.) 356, 36 N. Y. St. 538, 13 N. Y. S. ^Ulrich V. Ulrich, 3 Mackey (D. 71; Powell v. Jenkins, 14 Misc. 83, C.) 290; Wilkinson v. Elliott, 43 69 N. Y. St. 582, 35 N. Y. S. 265; Kans. 590, 23 Pac. 614, 19 Am. St. Coe v. Manseau, 62 Wis. 81, 22 N. 158; Garver v. Graham, 6 Kans. W. 155. See also Hibernia Sav. &c. App. 344, 51 Pac. 812; Powell v. Soc. v. Cochran, 141 Cal. 653, 75 Pac. Campbell, 20 Nev. 232, 20 Pac. 156, 315; Kursheedt v. Union Dime Sav. 2 L. R. A. 615, 19 Am. St. 350; Inst., 118 N. Y. 358, 23 N. E. 473, 7 Daniel v. Hodges, 87 N. Car. 95; L. R. A. 229; Bell v. Gittere, 14 N. Tolerton v. Wllliard, 30 Ohio St. Y. St. 61; Slattery v. Schwannecke, 579; Spencer v. Spencer, 9 R. I. 150; 44 Hun 75, 7 N. Y. St. 430, alfd. 118 Brightman v. Brightman, 1 R. I. 112. N. Y. 543, 23 N. E. 922; Payson v. But see Houston v. Timmerman, 17 Jacobs, 38 Wash. 203, SO Pac. 429; Ore. 499, 21 Pac. 1037, 4 L. R. A. 716, Eldridge v. Stenger, 19 Wash. 697, 11 Am. St. 848. 54 Pac. 541. But see Colllngwood 943 LIS PENDENS chases with actual notice of the pendency of a suit aSecting the land takes subject to the decree, and can not object that statutory notice of the pendency of the suit was not filed.^^ Notice by lis pendens is notice only of pending proceedings. It is not notice to a purchaser whose conveyance was made before the com- mencement of the action.^* The lis pendens continues until the fruits of the litigation are secured, or until terminated by a judgment or decree against the party entitled to the benefit of the lis pendens. When the litigation is ended, and the rights of all parties have been determined, the notice ceases.^^ Under many of the recording acts, a suit will not be constructive notice after the rendition of a judgment, decree, or order affecting real estate, unless such judgment is duly registered or recorded against the property, like a deed or other conveyance.^* Some statutes expressly provide for the cancelation or discharge of the notice upon the record, after final disposition of the cause ;^^ and others empower V. Brown, 106 N. Car. 362, 10 S. E. 868. ^'King V. Davis, 137 Fed. 222; Phelps v. Elliott, 35 Fed. 455; Daggs V. Wilson, 6 Ariz. 388, 59 Pac. 150; Jennings v. Bouldin, 98 Ark. 105, 134 S. W. 948; Hibernia Sav. &c. Soc. V. Lewis, 117 Cal. 577, 47 Pac. 602, 49 Pac. 714; Wise v. Griffith, 78 Cal. 152, 20 Pac. 675; Powell v. Na- tional Bank of Commerce, 19 Colo. App. 57, 74 Pac. 536; Ray v. Hooker, 65 Pla. 265, 61 So. 500; Richards v. Cline, 176 111. 431, 52 N. E. 907; Mc- Cauley v. Rogers, 104 111. 578; Row- ell V. Klein, 44 Ind. 290, 15 Am. Rep. 235; Baker v. Pierson, 5 Mich. 456 (filing of statutory notice im- material); Dorr V. Steichen, 18 Minn. 26; Parrotte v. Dryden, 73 Nebr. 291, 102 N. W. 610; Varnum V. Bolton Shoe Co., 171 N. Y. 658, 63 N. E. 1123; Uhl v. Irwin, 3 Okla. 388, 41 Pac. 376; Pacific Mfg. Co. v. Brown, 8 Wash. 347, 36 Pac. 273. See also Shumaker v. Davidson, 116 Iowa 569, 87 N. W. 441; Bruff v. Thompson, 31 W. Va. 16, 6 S. E. 352. *' Coulter V. Lumpkin, 94 Ga. 225, 21 S. E. 461; Farmers' Nat. Bank v. Fletcher, 44 Iowa 252. ^Grattan v. Wiggins, 23 Cal. 16; Empire Land &c. Co. v. Engley, 18 Colo. 388, 33 Pac. 153; Cheever v. Minton, 12 Colo. 557, 21 Pac. 710, 13 Am. St. 258; Page v. Waring, 76 N. Y. 463; Sheridan v. Andrews, 49 N. Y. 478; Arrington v. Arrington, 114 N. Car. 151, 19 S. E. 351. See also Breen v. Lennon, 10 App. Div. (N. Y.) 36; St. Regis Paper Co. v. Santa Clara Lbr. Co., 34 Misc. 428, 69 N. Y. S. 904, affd. 62 App. Div. 538, 71 N. Y. S. 82. But see Carpenter v. Lewis, 119 Cal. 18, 50 Pac. 925; Moreland v. Strong, 115 Mich. 211, 73 N. W. 140, 69 Am. St. 553; Ben- nett V. Hotchkiss, 20 Minn. 165; Shaw V. Barksdale, 25 S. Car. 204; Frank v. Jenkins, 11 Wash. 611, 40 Pac. 220. =" Dudley v. Witter, 46 Ala. 664; Boyer v. Joffrion, 40 La. Ann. 657, 4 So. 872; Hall v. Sauntry, 72 Minn. 420, 75 N. W. 720, 71 Am. St. 497; Berryhill v. Smith, 59 Minn. 285, 61 N. W. 144; Prank v. Jenkins, 11 Wash. 611, 40 Pac. 220; Prickett v. Muck, 74 Wis. 199, 42 N. W. 256; Cutler V. James, 64 Wis. 173, 24 N. W. 874, 54 Am. Rep. 603; Helms v. Chadbourne, 45 Wis. 60; Hoyt v. Jones, 31 Wis. 389. See also Laws Maine 1893, ch. 301, § 3; Gen. Laws R. I. 1896, ch. 246, § 13; and stat- utes of the various states. "Arrington v. Arrington, 114 N. Car. 151, 19 S. E. 351; Washington Dredging &c. Co. v. Kinnear, 24 Wash. 405, 64 Pac. 522 (notice as cloud upon title); King v. Bran- scheid, 32 Wash. 634, 73 Pac. 668. § 586 NOTICE AS AFFECTING PEIOKITX 944 the court to order cancelation of the notice upon other grounds, such as failure to make a bona fide and full prosecution.^^ The cancelation of the notice of lis pendens terminates its efEect as against those sub- sequently dealing with the title. ^^ If the plaintifE does not diligently prosecute the action, the effect of lis pendens ceases, and a person acquiring rights pending the litigation is not affected thereby.^* VI. Possession as Notice Section 586. Possession by tenant, purchas- er, or other occupant as no- tice. 587. Inquiry by purchaser concern- ing adverse possession. 588. Nature of adverse claim. 589. Possession of tenant as notice. 590. Possession notice during con- tinuance. 591. Open notorious and exclusive possession. 592. Occupation of an easement — ■ Railways and crossings. 593. Equivocal or temporary pos- session. 594. Possession Inconsistent with purchaser's title. Section 595. Possession of part of the prem- ises described In a convey- ance. 596. Possession as notice of home- stead rights. 597. Continued possession of grant- or as notice of rights re- served. 598. Long continued possession of grantor. 599. Possession of mortgagor after foreclosure. 600. Continued possession of mort- gagor under unrecorded de- feasance. 601. Estoppel of occupant to rely upon possession as notice. § 586. Possession by tenant, purchaser, or other occupant, as notice. — Possession by one who is not the owner of record is a fact which should induce one proposing to purchase to inquire whether the possession is founded on any right or title. It is notice of the rights of the occupant, whatever they may be ; and if he claim by deed his possession is regarded by most authorities as equivalent to the ^^Pooley V. Bosanquet, 7 Ch. Div. 541; Baxter v. Middleton, 1 Ch. 313 (1898); Jervls v. Berridge, 44 L. J. Ch. 164, 31 L. T. (N. S.) 426, 23 Wkly. Rep. 43. See also concerning discontinuance or unreasonable neg- lect to proceed in the action: Cohen V. Ratkowsky, 43 App. Div. 196, 59 N. Y. S. 344; Jarvis v. American &c. Mfg. Co., 93 App. Div. 234, 87 N. Y. S. 742; Shandley v. Levine, 44 Misc. 23, 89 N. Y. S. 717; Wagner v. Perry, 51 Hun 199, 21 N. Y. St. 386, 3 N. Y. S. 880; McKean v. National Life Assn., 24 Misc. 511, 53 N. Y. S. 980, 28 Civ. Proc. 146, 6 N. Y. Ann. Cas. 179; Parks v. Murray, 40 Hun 640, 2 N. Y. St. 135. A long delay in prosecution, pending a continuance was held insufficient as a ground for cancelation, under a statute which did not specify the grounds for cancelation of notice. Herring V. Bender, 48 W. Va. 498, 37 S. B. 568. "'Valentine v. Austin, 58 Hun 398, 34 N. Y. St. 638, 12 N. Y. S. 196; McVay v. Tousley, 20 S. Dak. 258, 105 N. W. 932. See also Mitchell v. Smith, 53 N. Y. 413. ^Johnston v. Standard Min. Co., 148 U. S. 360, 37 L. ed. 480, 13 Sup. Ct. 585; Bridger v. Exchange Bank, 126 Ga. 821, 56 S. E. 97, 8 L. R. A. (N. S.) 463, 115 Am. St. 118; Tins- ley V. Rice, 105 Ga. 285, 31 S. B. 174; Davis v. Bonar, 15 Iowa 171; Roberts v. Cardwell, 154 Ky. 483, 945 POSSESSION AS NOTICE § 586 recording of such deed.^ Thus, possession by a person other than the mortgagor, at the time of the execution of a mortgage, is sufficient to 157 S. W. 711; "Woodward v. Jolin- son, 122 Ky. 160, 28 Ky. L. 1091, 90 S. W. 1076; Kelley v. Culver, 116 Ky. 241, 25 Ky. L. 443, 75 S. W. 272; Taylor v. Carroll, 89 Md. 32, 42 Atl. 920, 44 L. R. A. 379; Hammond v. Paxton, 58 Mich. 393, 25 N. W. 321; Boice V. Conover, 69 N. J. Eq. 530, 61 Atl. 159; Bybee v. Summers, 4 Ore. 354; Preston v. Tubbln, 1 Vern. Ch. 286, 23 Eng. Reprint 474. See also Johnson v. Gartman, 173 Ala. 290, 55 So. 906. ^Kirby v. Tallmadge, 160 U. S. 379, 40 L. ed. 463, 16 Sup. Ct. 349; Horbach v. Porter, 154 U. S. 549, 18 L. ed. 30, 14 Sup. Ct. 1160; Noyes V. Hall, 97 U. S. 34, 24 L. ed. 909; Lea V. Polk Co. Copper Co., 21 How. (U. S.) 493, 16 L. ed. 203; Landes V. Brant, 10 How. (U. S.) 348, 13 L. ed. 449; Weld v. Madden, 2 Cliff. (U. S.) 584; Johnson v. Glancy, 4 Blatchf. (U. S.) 94, 28 Am. Dec. 45; Gamble v. Black Warrior Coal Co., 172 Ala. 669, 55 So. 190; Lester v. Walker, 172 Ala. 104, 55 So. 619; Rankin Mfg. Co. v. Bishop, 137 Ala. 271, 34 So. 991; Kent v. Dean, 128 Ala. 600, 30 So. 543; Scheuer v. Kel- ly, 121 Ala. 323, 26 So. 4; Reynolds V. Kirk, 105 Ala. 446, 17 So. 95; Price V. Bell, 91 Ala. 180, 8 So. 565; Anthe v. Heide, 85 Ala. 236, 4 So. 380; Headley v. Bell, 84 Ala. 346, 4 So. 391; Tutwiler v. Montgomery, 73 Ala. 263; Bernstein v. Humes, 71 Ala. 260; Sawyers v. Baker, 66 Ala. 292; Phillips v. Costley, 40 Ala. 486; Garrett v. Lyle, 27 Ala. 586; Burt V. Cassety, 12 Ala. 734; Campbell V. Southwestern Tel. &c. Co., 108 Ark. 569, 158 S. W. 1085; Rubel v. Parker, 107 Ark. 314, 155 S. W. 114; Barrett v. Durbin, 106 Ark. 332, 153 S. W. 265; Sproull v. Miles, 82 Ark. 455, 102 S. W. 204; Kendall v. Davis, 55 Ark. 318, 18 S. W. 185; Turman V. Bell, 54 Ark. 273, 15 S. W. 886; Gill V. Hardin, 48 Ark. 409; Byers V. Engles, 16 Ark. 543; Beattie v. Crewdson, 124 Cal. 577, 57 Pac. 463; Stonesifer v. Kilburn, 122 Cal. 659, 55 Pac. 587; Austin v. Pulschen, 112 Cal. 528, 44 Pac. 788; Peasley v. McPadden, 68 Cal. 611, 10 Pac. 179; Jones V. Marks, 47 Cal. 242; Thomp- 60— Jones Mtg. — Vol. I. son V. Pioche, 44 Cal. 508; Moss v. Atkinson, 44 Cal. 3; Smith v. Yule, 31 Cal. 180, 89 Am. Dec. 167; Fair v. Stevenot, 29 Cal. 486; Davis v. Pursel, 55 Colo. 287, 134 Pac. 107; Runyan v. Snyder, 45 Colo. 156, 100 Pac. 420; Allen v. Moore, 30 Colo. 307, 70 Pac. 682; Harral v. Leverty, 50 Conn. 46, 47 Am. Rep. 608; Tate v. Pensacola &c. Land &c. Co., 37 Fla. 439, 20 So. 542, 53 Am. St. 251; Massey v. Hubbard, 18 Fla. 688; McRae v. McMinn, 17 Fla. 876; Ter- rell V. McLean, 130 Ga. 633, 61 S. E. 485; Garbutt v. Mayo, 128 Ga. 269, 57 S. B. 495, 13 L. R. A. (N. S.) 58; Bridger v. Exchange Bank, 126 Ga. 821, 56 S. B. 97, 8 L. R. A. (N. S.) 463, 115 Am. St. 118; Austin v. Southern Home Bldg. &c. Assn., 122 Ga. 439, 50 S. E. 382; Baldwin v. Sherwood, 117 Ga. 827, 45 S. E. 216; Collins V. Moore, 115 Ga. 327, 41 S. E. 609; Cox v. Jones, 76 Ga. 296; Pinch V. Beal, 68 Ga. 594; Jewell v. Holland, 61 Ga. 608; Feirbough v. Masterson, 1 Idaho 135; Merchants' &c. State Bank v. Dawdy, 230 111. 199, 82 N. E. 606; Heppe v. Szoze- panski, 209 111. 88, 70 N. E. 737, 101 Am. St. 221; Prouty v. Tilden, 164 111. 163, 45 N. E. 445; Parker v. Shannon, 137 111. 376, 27 N. E. 525;. Jaques v. Lester, 118 111. 246, 8 N. E. 795; Tillotson v. Mitchell, 111 111. 518; Clevinger v. Ross, 109 111. 349; White V. White, 105 111. 313; Brain- ard v. Hudson, 103 111. 218; Cowen V. Loomis, 91 111. 132; Strong v. Shea, 83 111. 575;- Doolittle v. Cook, 75 111. 354; Cabeen v. Breckenridge, 48 111. 91; Ti-uesdale v. Ford, 37 111. 210; Keys v. Test, 33 111. 316; Brown V. Gaffney, 28 111. 149; Morrison v. Kelly, 22 111. 609; Santee v. Day, 111 111. App. 495; Helm v. Kaddatz, 107 111. App. 413; Stags v. Small, 4 Bradw. (111.) 192; Adams v. Betz, 167 Ind. 161, 78 N. E. 649; Barnes V. Union School Township, 91 Ind. 301; Sutton v. Jervis, 31 Ind. 265, 99 Am. Dec. 631; Rothschild v. Leon- hard, 33 Ind. App. 452, 71 N. B. 673; Blsbury v. Shull, 32 Ind. App. 556, 70 N. B. 287; Blair v. Whittaker, 31 Ind. App. 664, 69 N. E. 182; Kirkhan V. Moore, 30 Ind. App. 549, 65 N. E. § 586 NOTICE AS AFFECTING PEIOBITT 946 put the mortgagee upon inquiry as to the rights of the person in pos- 1042; Sanders V. Sutlive (Iowa), 143 N. W. 492; Jolm v. Penegar, 158 Iowa 366, 139 N. W. 915; Seberg v. Iowa Trust &c. Bank, 141 Iowa 99, 119 N. W. 378; Crooks v. Jenkins, 124 Iowa 317, 100 N. E. 82, 104 Am. St. 326; Truth Lodge No. 213 v. Bar- ton, 119 Iowa 230, 93 N. W. 106, 97 Am. St. 303; Zuber v. Johnson, 108 Iowa 273, 79 N. W. 76; Kruger v. "Walker, 94 Iowa 506, 63 N. W. 320; Leebrick v. Stahle, 68 Iowa 515, 27 N. W. 490; Moore v. Pierson, 6 Iowa 279, 71 Am. Dec. 409; Penrose v. Cooper, 86 Kans. 597, 121 Pac. 1103; Gray v. Zellmer, 66 Kans. 514, 72 Pac. 228; Deetgen v. Richter, 33 Kans. 410, 6 Pac. 595; Greer v. Hlg- gins, 20 Kans. 420; School District V. Taylor, 19 Kans. 287; Johnson V. Clark, 18 Kans. 157; Lyons v. Bo- denhamer, 7 Kans. 455; Bryant v. Main, 25 Ky. L. 1242, 77 S. W. 680; Coins V. Allen, 4 Bush (Ky.) 608; Hackwlth v. Damron, 1 Mon. (Ky.) 235; Duval v. Wilmer, 88 Md. 66, 41 Atl. 122; Border State Sav. Inst. V. Wilcox, 63 Md. 525; Bryan v. Har- vey, 18 Md. 113; Ringgold v. Bryan, 3 Md. Ch. 488; Toupin v. Peabody, 162 Mass. 473, 39 N. B. 280; Cun- ningham V. Pattee, 99 Mass. 248; Holden v. Butler, 173 Mich. 116, 138 N. W. 1071; Delosh v. Delosh, 171 Mich. 175, 137 N. W. 81; Brady v. Sloman, 156 Mich. 4'23, 120 N. "W. 795; Howatt v. Green, 139 Mich. 289, 102 N. "W. 734; Banks v. Allen, 127 Mich. 80, 86 N. W. 383; Holmes v. Deppert, 122 Mich. 275, 80 N. W. 1094; Oconto v. Lundquist, 119 Mich. 264, 77 N. W. 950; Miner v. Wilson, 107 Mich. 57, 64 N. W. 874; Corey V. Smalley, 106 Mich. 257, 64 N. W. 13; Weisberger v. Wisner, 55 Mich. 246, 21 N. W. 331; Allen v. Cadwell, 55 Mich. 8, 20 N. W. 692; Parsell v. Thayer, 39 Mich. 467; Russell v. Sweezey, 22 Mich. 235; Doyle v. Ste- vens, 4 Mich. 87; Niles v. Cooper, 98 Minn. 39, 107 N. W. 744, 13 L. R. A. (N. S.) 49; Thompson v. Borg, 90 Minn. 209, 95 N. W. 896; New V. Wheaton, 24 Minn. 406; Groff v. Ramsey, 19 Minn. 43; Morrison v. March, 4 Minn. 325; Bolton v. Roe- buck, 77 Miss. 710, 27 So. 630; Hiller V. Jones, 66 Miss. 636, 6 So. 465; Taylor v. Mosely, 57 Miss. 544; Strickland T. Kirk, 51 Miss. 795; Squires v. Kimball, 208 Mo. 110, 106 S. W. 502; Shaffer v. Detie, 191 Mo. 377, 90 S. W. 131; Davis v. Wood, 161 Mo. 17, 61 S. W. 695; Wiggen- horn V. Daniels, 149 Mo. 160, 50 S. W. 807; Pike v. Robertson, 79 Mo. 615; Roberts v. Moseley, 64 Mo. 507; Vaughn v. Tracy, 22 Mo. 415, 25 Mo. 318, 69 Am. Dec. 471; Bartlett V. Glasscock, 4 Mo. 62; McParland V. Peters, 87 Nebr. 829, 128 N. W. 523; Fall v. Fall, 75 Nebr. 104, 106 N. W. 412, 113 N. W. 175, 121 Am. St. 767; Oberlender v. Butcher, 67 Nebr. 410, 93 N. W. 764; Lipp v. Land Syndicate, 24 Nebr. 692, 40 N. W. 129; Coulee v. McDowell, 15 Nebr. 184; Brophy Min. Co. v. Bro- phy &c. Gold Min. Co., 15 Nev. 101; Stillings V Stillings, 67 N. H. 584, 42 Atl. 271; Janvrin v. Janvrin, 60 N. H. 169; Forest v. Jackson, 56 N. H. 357; Patten v. Moore, 32 N. H. 382; Emmons v. Murray, 16 N. H. 385; Rogers v. Jones, 8 N. H. 264; Wood V. Price, 79 N. J. Eq. 620, 81 Atl. 983, 38 L. R. A. (N. S.) 772, Ann. Cas. 1913 A, 1210; Schwoebel v. Storrie, 76 N. J. Eq. 466, 74 Atl. 969; Brown v. Columbus (N. J. Eq.), 75 Atl. 917; English v. Rainear (N. J.), 55 Atl. 41; Hodge v. Amerman, 40 N. J. Eq. 99, 2 Atl. 257; Losey v. Simpson, 11 N. J. Eq. 246; Holmes V. Stout, 10 N. J. Eq. 419; Cox v. Devinney, 65 N. J. L. 389, 47 Atl. 569; Roll v. Rea, 50 N. J. L. 264, 12 Atl. 905; Van Keuren v. Central R. Co., 38 N. J. L. 165; Carthage Tis- sue Paper Mills v. Carthage, 200 N. Y. 1, 93 N. E. 60; Gibson v. Thomas, 180 N. Y. 483, 73 N. E. 484, 70 L. R. A. 768; Sanders v. Riedinger, 164 N. Y. 564, 58 N. E. 1092, affg. 30 App. Div. 277, 51 N. Y. S. 937; Hallinan v. Murphy, 159 N. Y. 554, 54 N. E. 1092, affg. 88 Hun 72, 68 N. Y. St. 674, 34 N. Y. S. 618; Ward v. Metro- politan El. R. Co., 152 N. Y. 39, 46 N. E. 319, affg. 82 Hun 545, 31 N. Y. S. 527; Phelan v. Brady, 119 N. Y. 587, 23 N. E. 1109, 8 L. R. A. 211; Seymour v. McKinstry, 106 N. Y. 230, 12 N. E. 348, 14 N. E. 94; West- brook v. Gleason, 79 N. Y. 23; Union College Trustees v. Wheeler, 61 N. 947 POSSESSION AS NOTICE § 586 Y. 88; Cavalli v. Allen, 57 N. Y. 508; Moyer v. Hinman, 13 N. Y. 186; Cac- cioppoll V. Lemmo, 152 App. Div. 650, 137 N. Y. S. 643; Webster v. Van Steenbergh, 46 Barb. (N. Y.) 211; Orleans Bank v. Plagg, 3 Barb. Ch. (N. Y.) 318; Chesterman v. Gardner, 5 Johns. Ch. (N. Y.) 29; Bank v. Rubenstein, 78 Misc. 465, 138 N. Y. S. 647; Farmers Loan &c. Co. V. Maltby, 8 Paige (N. Y.) 361; Grimstone v. Carter, 3 Paige Ch. (N. Y.) 421; Gouverneur v. Lynch, 2 Paige (N. Y.) 300; Tuttle v. Jack- son, 6 Wend. (N. Y.) 213; Lee v. Giles, 161 N. Car. 541, 77 S. E. 852; Falls of Neuse Mfg. Co. v. Hen- dricks, 106 N. Car. 485, 11 S. E. 568; Mayo V. Leggett, 96 N. Car. 237, 1 S. E. 622; Staton v. Davenport, 95 N. Car. 11; Tankard v. Tankard, 79 N. Car. 54; Edwards v. Thompson, 71 N. Car. 177; Laws of North Caro- lina 1885, ch. 147, § 1, Pell's Revisal 1908, § 980; O'Toole v. Omlie, 8 N. Dak. 444, 79 N. W. 849; Ranney v. Hardy, 43 Ohio St. 157, 1 N. E. 523; McKinzie v. Perrill, 15 Ohio St. 162; Kelley v. Stanberry, 13 Ohio St. 408; Williams v. Sprigg, 6 Ohio St. 585; Brown v. Trent, 36 Okla. 239, 128 Pac. 895; Randall v. Lingwall, 43 Ore. 383, 73 Pac. 1; Scott v. Lewis, 40 Ore. 37, 66 Pac. 299; Manaudas V. Mann, 14 Ore. 450, 13 Pac. 449; Wertheimer v. Thomas, 168 Pa. St. 168, 31 Atl. 1096; Bidwell v. Evans, 156 Pa. St. 30, 26 Atl. 817; Ander- son V. Brinser, 129 Pa. St. 376, 11 Atl. 809, 18 Atl. 520, 6 L. R. A. 205; Bugbee's Appeal, 110 Pa. St. 331, 1 Atl. 273; Rowe v. Ream, 105 Pa. St. 543; Kerr v. Day, 14 Pa. St. 112, 53 Am. Dec. 526; Randall v. Silver- thorn, 4 Pa. St. 173; Lightner v. Mooney, 10 Watts (Pa.) 407; Woods V. Farmere, 7 Watts (Pa.) 372, 52 Am. Dec. 772; Harris v. Arnold, 1 R. I. 125; Folk v. Brooks, 91 S. Car. 7, 74 S. E. 46; Daniel v. Hester, 29 S. Car. 147, 7 S. B. 65; Sweatman V. Edmunds, 28 S. Car. 58, 5 S. E. 165; Graham v. Nesmith, 24 S. Car. 285; Biemann v. White, 23 -S. Car. 490; Sheorn v. Robinson, 22 S. Car. 32; Phillis v. Gross, 32 S. Dak. 438, 143 N. W. 373; Johnson v. Olberg, 32 S. Dak. 346, 143 N. W. 292; Huff- man V. Cooley, 28 S. Dak. 475, 134 N. W. 49; Kuteman v. Carroll (Tex.), 80 S. W. 842; Jinks v. Mop- pin (Tex.), 80 S. W. 390; Glenden- ning V. Bell, 70 Tex. 632, 8 S. W. 324; Cameron v. Romele, 53 Tex. 238; Mullins v. Wimberly, 50 Tex. 457; Hawley v. Bullock, 29 Tex. 216; Watkins v. Edwards, 23 Tex. 443; Tolar V. Dev. Co. (Tex. Civ. App.), 153 S. W. 911; Hudson v. Jones (Tex. Civ. App.), 143 S. W. 197; Parrish v. Williams (Tex. Civ. App.), 79 S. W. 1097; Smith v. James, 22 Tex. Civ. App. 154, 54 S. W. 41; Brown v. Wilson (Tex. Civ. App.), 29 S. W. 530; Stahn v. Hall, 10 Utah 400, 37 Pac. 585; Sowles v. Butler, 71 Vt. 271, 44 Atl. 355; Orr V. Clark, 62 Vt. 136, 19 Atl. 929; Canfield v. Hard, 58 Vt. 217, 2 Atl. 136; Perkins v. West, 55 Vt. 265; Rublee v. Mead, 2 Vt. 544; Ely v. Johnson, 114 Va. 31, 75 S. E. 748; Chapman v. Chapman, 91 Va. 397, 21 S. E. 813, 50 Am. St. 846; Rorer Iron Co. V. Trout, 83 Va. 397, 2 S. E. 713, 5 Am. St. 285; Bffinger v. Hall, 81 Va. 94; Preston v. Nash, 76 Va. 1; Bendon v. Parfit, 74 Wash. 645, 134 Pac. 185; Turner v. Creech, 58 Wash. 439, 108 Pac. 1084; Peterson V. Philadelphia Mtg. &c. Co., 33 Wash. 464, 74 Pac. 585; Lowther Oil Co. v. Miller-Sibley Oil Co., 53 W. Va. 501, 44 S. E. 433, 97 Am. St. 1027; West- ern Min. &c. Co. V. Peytona Cannel Coal Co., 8 W. Va. 406; Keilly v. Severson, 149 Wis. 251, 135 N. W. 875; Roberts v. Decker, 120 Wis. 102, 97 N. W. 519; Prickett v. Muck, 74 Wis. 199, 42 N. W. 256; Lamo- reaux v. Huntley, 68 Wis. 24, 31 N. W. 331; Meade v. Gilfoyle, 64 Wis. 18, 24 N. W. 413; Coe v. Manseau, 62 Wis. 81, 22 N. W. 155; Brinkman v. Jones, 44 Wis. 498; Cunningham V. Brown, 44 Wis. 72; Ehle v. Brown, 31 Wis. 405; Wicke v. Lake, 21 Wis. 410, 94 Am. Dec. 552, 25 Wis. 71; Fery v. Pfeiffer, 18 Wis. 510; James V. Lichfield, L. R. 9 Eq. 51; Taylor V. Stibbert, 2 Ves. Jr. 437; Daniels V. Davidson, 16 Ves. 240; Holmes V. Powell, 8 De G. M. & G. 572; Bai- ley V. Richardson, 9 Hare 734; Moreland v. Richardson, 24 Beav. 33; Wilson v. Hart, L. R. 1 Ch. App. 463; Butcher v. Stapely, 1 Vern Ch. 363, 23 Eng. Reprint 524. In Maine the rule prevailed prior to Rev. Stat, of 1841; Beal v. Gordon, 55 Maine 482; Clark v. Bosworth, 51 Maine 528; Hull v. Noble, 40 Maine 459; § 586 NOTICE AS AFFECTING PRIOEITT 948 session, and he takes the mortgage subject to such rights.^ Thus also the possession of a tenant is notice of his interest in the land, what- ever that interest may be, and, perhaps, notice also of his landlord's title ;^ and so, the possession of a cestui que trust is notice of his beneficial interest in the property.* Possession by a vendee under a contract of purchase, vs^hether it be Hanly v. Morse, 32 Maine 287; Mat- thews V. Demerritt, 22 Maine 312; Webster v. Maddox, 6 Maine 256. See also Lyon v. Moore, 259 111. 23, 102 N. E. 179. But see Norfolk &c. Tract. Co. v. White, 113 Va. 102, 73 S. E. 467. The mere fact that a per- son other than the vendor is in pos- session of property is not suffiiCient to charge a purchaser with notice, where possession is delivered to the purchaser upon demand. Pancake V. Cauffman, 114 Pa. St. 113, 7 Atl. 67. ? Dennis v. Atlanta Nat. Bldg. &c. Assn., 136 Fed. 539, 69 C. C. A. 315; Bright V. Buckman, 39 Fed. 243; Ferguson v. Dent, 24 Fed. 412 ; Kent V. Bean, 128 Ala. 600, 30 So. 543; Reynolds v. Kirk, 105 Ala. 446, 17 So. 95; Anthe v. Heide, 85 Ala. 236, 4 So. 380; American Building &c. Assn. v. Warren, 101 Ark. 163, 141 S. W. 765; Jowersv. Phelps, 33 Ark. 465; Waters v. Williamson, 21 D. C. 24; Linder v. Whitehead, 116 Ga. 206, 42 S. E. 358; Sanford v. Davis, 181 111. 570, 54 N. E. 977; Joiner v. Duncan, 174 111. 252, 51 N. E. 323; Brainard v. Hudson, 103 111. 218; Weber v. Shelby, 116 111. App. 31; Griffin v. Haskins, 22 111. App. 264; .Crooks V. Jenkins, 124 Iowa 317, 100 N. W. 82, 104 Am. St. 326; Scha- fer V. Wilson, 113 Iowa 475, 85 N. W. 789; Humphrey v. Moore, 17 Iowa 193; International Harvester Co. V. Myers, 86 Kans. 497, 121 Pac. 500, 39 L. R. A. (N. S.) 528; Martin V. Hall, 30 Ky. L. 1110, 100 S. W. 343; Boggs v. Anderson, 50 Maine 161; McLaughlin v. Shepherd, 32 Maine 143, 52 Am. Dec. 646; Van Baalen v. Cotney, 113 Mich. 202, 71 N. W. 491; Hubbard v. Smith, 2 Mich. 207; Teal v. Scandinavian- American Bank, 114 Minn. 435, 131 N. W. 486; Jelllson v. Halloran, 44 Minn. 199, 46 N. W. 332; New v. Wheaton, 24 Minn. 406; Abbey v. Taber, 134 N. Y. 615, 32 N. E. 649; Schneider v. Mahl, 84 App. Div. 1, 82 N. Y. S. 27; Bassett v. Wood, 55 Hun 587, 29 N. Y. St. 901. 9 N. Y. S. 79; Swanstrom v. Day, 46 Misc. 311, 93 N. Y. S. 192; Braman v. Wilkin- son, 3 Barb. (N. Y.) 151; Lawrence V. Conklin, 17 Hun (N. Y.) 228; Union College v. Wheeler, 5 Lans. (N. Y.) 160; New York L. Ins. &c. Co. V. Cutler, 3 Sand. Ch. (N. Y.) 176; Ranney v. Hardy, 43 Ohio St. 157, 1 N. E. 523; Edwards v. Mont- gomery, 26 Okla. 862, 110 Pac. 779; Sweatman v. Edmunds, 28 S. Car. 58, 5 S. B. 165; Ramirez v. Smith, 94 Tex. 184, 59 S. W. 258; Pride v. Whit- field (Tex.), 51 S. W. 1100; Compton V. Seley (Tex.), 27 S. W. 1077; Gall V. Gall, 126 Wis. 390, 105 N. W. 953, 5 L. R. A. (N. S.) 603; Matesky v. Feldman, 75 Wis. 103, 43 N. W. 733. See also La Forest v. Downer, 63 Ore. 176, 126 Pac. 995; Mcintosh v. Bowers, 143 Wis. 74, 126 N. W. 548. A mortgagee may rely upon a state- ment of one In possession that he is tenant of the mortgagor. Bush v. Roberts, 57 Ore. 169, 110 Pac. 790. 'See post § 589. *McVey v. McQuality, 97 111. 93; McDaniel v. Peabody, 54 Iowa 305, 6 N. W. 538; Rogers v. Scarff, 3 Gill (Md.) 127; Oberlender v. Butcher, 67 Nebr. 410, 93 N. W. 764; Jones v. Johnston Harvester Co., 8 Nebr. 446, 1 N. W. 443; Perrin v. Errol, 59 N. H. 234; Pritchard v. Brown, 4 N. H. 397, 17 Am. Dec. 431; Flaherty v. Cramer, 62 N. J. Eq. 758, 48 Atl. 565; Ross v. Hendrix, 110 N. Car. 403, 15 N. E. 4; Petrain v. Kiernan, 23 Ore. 455, 32 Pac. 158; Hawley v. Geer (Tex.), 17 S. W. 914; Klender V. Fenske, 53 Wis. 118, 10 N. W. 370. But see Scott v. Gallagher, 14 Serg. & R. (Pa.) 333, 16 Am. Dec. 508; Yocom v. Morris, 3 Phila. (Pa.) 414 (direct and express notice nec- essary). 949 POSSESSION AS NOTICE § 587 pergonal or by a tenant, is constnictive notice of his equitable rights as purchaser, and any one taking a mortgage under such circum- stances from his vendor takes subject to his rights.''' The mortgage lien in such case covers the property only to the extent of the unpaid purchase-money." The rule that possession is equivalent to notice prevails generally in the United States. In a few states, however, "actual notice" is essen- tial in order to dispense with registration, and consequently possession does not amount to notice, and does not have the effect of putting a purchaser upon inquiry, though proof of possession may be made in connection with evidence of actual notice.'' But in these states knowl- edge of adverse possession, though it be open and notorious, does not of itself amount to notice of the occupant's title or right. § 687. Inquiry by purchaser concerning adverse possession. — The prevailing rule, however, is that possession is notice although it be not actually known to the purchaser.' It is a fact which the purchaser = Reynolds v. Kirk, 105 Ala. 446, 17 So. 95; Sawyers v. Baker, 66 Ala. 292; American Bldg. &c. Assn. V. Warren, 101 Ark. 163, 141 S. W. 765; Collins v. Moore, 115 Ga. 327, 41 S. E. 609; Tillotson v. Mitcliell, 111 111. 518; Doolittle v. Cook, 75 111. 354; Van Baalen v. Cotney, 113 Mich. 202, 71 N. W. 491; Kirby v. Bank of Carrollton, 102 Miss. 190, 59 So. 10; Braman v. Wilkinson, 3 Barb. (N. Y.) 151; Orleans Bank v. Flagg, 3 Barb. Ch. (N. Y.) 316; Ran- ney v. Hardy, 43 Ohio St. 157, 1 N. B. 523; Mclntosb v. Bowers, 143 Wis. 74, 126 N. W. 548; First Nat. Bank v. Chafee, 98 Wis. 42, 73 N. W. 318; Cunningham v. Brown, 44 Wis. 72. See also Francis v. Jefferson County Sav. Bank, 167 Ala. 548, 52 So. 906. But see Gray v. Harvey, 17 N. Dak. 1, 113 N. W. 1034 (possession of tenant). Possession of land by a purchaser under a parol contract of purchase is sufilcient to charge a subsequent purchaser or mortgagee with notice of the purchaser's rights. Mowrey v. Davis, 12 Ind. App. 681, 40 N. E. 1108; Duval v. Wilmer, 88 Md. 66, 41 Atl. 122; Whitsett V. Miller, 1 Tex. Unre- ported Cas. 203; Cunningham v. Brown, 44 Wis. 72. "Westbrook v. Gleason, 14 Hun (N. Y.) 245, 79 N. Y. 23; Young v. Guy, 12 Hun (N. Y.) 325, 23 Hun 1, affd. 87 N. Y. 457; Houzik v. Dela- glise, 65 Wis. 494, 27 N. W. 171. i,! 'Harrall v. Leaverty, 50 Conn. 46; Moore v. Jourdan, 14 La. Ann. 414; Poydras v. Laurens, 6 La. Ann. 772; In Maine, since Rev. Stat, of 1841, Boggs v. Anderson, 50 Maine 161; Beal v. Gordon, 55 Maine 482; Clarke v. Bosworth, 51 Maine 528; Goodwin v. Cloudman, 43 Maine 577. See also Knapp v. Bailey, 79 Maine 195; Lamb v. Pierce, 113 Mass. 72; Sibley v. Leffingwell, 8 Allen (Mass.) 5&4; Dooley v. Wal- cott, 4 Allen (Mass.) 406; Parker V. Osgood, 3 Allen (Mass.) 487; Mara v. Pierce, 9 Gray (Mass.) 306; Pomroy v. Stevens, 11 Mete. (Mass.) 224; Boynton v. Rees, 8 Pick. (Mass.) 329, 19 Am. Dec. 326; McMechan v. Griffing, 3 Pick. (Mass.) 149, 15 Am. Dec. 198. 'Scroggins v. McDougal, 8 Ala. 382; Scheerer v. Cuddy, 85 Cal. 270, 24 Pac. 713; Tate v. Pensacola &c. Land Co., 37 Fla. 439, 20 So. 542, 53 Am. St 251; Smith v. Jackson, 76 111. 254; Moreland v. Lemasters, 4 Blackf. (Ind.) 383; Wolf v. Zabel, 44 Minn. 90, 46 N. W. 81; Hodge v. Amerman, 40 N.. J. Eq. 99, 2 Atl. 257; McCall v. Yard, 11 N. J. Eq. 58; Royce v. Flint, 1 Alb. L. J. (N. Y.) 238; Ranney v. Hardy, 43 Ohio § 587 NOTICE AS AFFECTING PEIOEITX 950 should know, and he is thereby put upon inquiry as to the possess- or's rights." Possession does not amount to constructive notice of the nature and extent of the rights of the person in possession ; but it puts the purchaser upon inquiry as to such rights. He is bound to pursue the inquiry with diligence, and to ascertain what those rights are.^" Inquiries should be made, in the first instance, of the person in actual possession; and the mortgagee is chargeable with notice of all the facts affecting the validity of the mortgage, which he could have as- certained by proper inquiry of such person.^ "^ A purchaser who negli- gently or intentionally fails to inquire as to the fact of possession, or as to the title or interests of the person in possession, is affected with notice of such title or interest as the possessor actually has. Such a purchaser can not claim the position of a purchaser in good faith without notice. But a subsequent purchaser or mortgagee can dis- prove his knowledge of the claims of a person in possession by show- ing that he made every proper inquiry concerning the rights of the occupant and failed to obtain information.^^ A purchaser's knowledge St. 157, 1 N. E. 523; Sheorn v. Rob- inson, 22 S. Car. 32; HufCman v. Cooley, 28 S. Dak. 475, 134 N. W. 49; Betts v. Letcher, 1 S. Dak. 182, 46 N. W. 193; Brinkman v. Jones, 44 Wis. 498. The rule is particu- larly applicable where the purchaser could have easily acquired knowl- edge of the fact, but neglected to visit the premises. Smith v. Jack- son, 76 111. 254. But it has been held that possession charges the purchaser with notice, although he lives in another state. Edwards v. Thompson, 71 N. Car. 177. In Missouri it seems that knowl- edge of adverse possession is es- sential to charge the purchaser. Masterson v. West End &c. R. Co., 5 Mo. App. 64, aftd. 72 Mo. 342; Casey v. Stelnmeyer, 7 Mo. App. 556. * Pique V. Arendale, 71 Ala. 91; American Bldg. &c. Assn. v. War- ren, 101 Ark. 163, 141 S. W. 765 (citing text); Hughes Bros. v. Redus, 90 Ark. 149, 118 S. W. 414; Button V. Warschauer, 21 Cal. 609, 82 Am. Dee. 765; International Har- vester Co. V. Myers, 86 Kans. 497, 121 Pao. 500, 39 L. R. A. (N. S.) 528; Loughrldge v. Bowland, 52 Miss. 546; Schwoebel v. Storrle, 76 N. J. Eq. 466, 74 Atl. 969; Hodge v. Amerman, 40 N. J. Eq. 99, 2 Atl. 257; Losey v. Simpson, 11 N. J. Eq. 246; Smith v. Puller, 152 N. Car. 7, 67 S. E. 48; Edwards v. Thompson, 71 N. Car. 177; Ranney v. Hardy, 43 Ohio St. 157, 1 N. E. 523; Ran- dall V. Lingwall, 43 Ore. 383, 73 Pac. 1; Hottenstein v. Lerch, 104 Pa. St. 454; Kerr v. Day, 14 Pa. St. 112, 53 Am. Dec. 526; Bilman v. White, 23 S. Car. 490; Sheorn v. Robinson, 22 S. Car. 32; Chapman v. Chapman, 91 Va. 397, 21 S. E. 813, 50 Am. St. 846. See also Kirby v. Tallmadge, 160 U. S. 379, 40 L. ed. 463, 16 Sup. Ct. 349. "Flagg V. Mann, 2 Sumn. (U. S.) 486; Thompson v. Pioche, 44 Cal. 508; International Harvester Co. V. Myers, 86 Kans. 497, 121 Pac. 500, 39 L. R. A. (N. S.) 528; Rogers V. Jones, 8 N. H. 264; Williamson v. Brown, 15 N. Y. 354; Grimstone v. Carter, 3 Paige (N. Y.) 421, 24 Am. Dec. 230; Kerr v. Day, 14 Pa. St. 112, 53 Am. Dec. 526; Hoppin v. Doty, 25 Wis. 573; Daniels v. Davi- son, 16 Ves. 249. "Collins V. Moore, 115 Ga. 327, 41 S. E. 609. See also Austin v. Southern Home Bldg. Assn., 122 Ga. 439, 50 S. E. 382. "Hellman v. Levy, 55 Cal. 117. 951 POSSESSION AS NOTICE 588 of the condition of tlie land, as by the presence of structures thereon, may be sufficient to put him on inquiry concerning the existence of some adverse right or easement.^^ § 588. Nature of adverse claim. — Possession is not necessarily evi- dence of any particular title ; it is evidence of some title, and puts the purchaser upon inquiry as to the title or interest the occupant holds or claims.'* Possession under an apparent claim of ownership has been held to constitute notice to purchasers of whatever interest the person actually in possession has in the fee,'^ whether the interest be either legal or equitable.'^ If the person in possession has no title or right of possession whatever, but is a mere intruder, his possession is not notice and does not put a purchaser on inquiry.^' Although the principle of constructive notice may be applied to pro- tect an occupant with equitable rights, it may not be invoked to pro- tect one who has no equity, and an occupant without any just claim will not be protected as against a purchaser for value,'* especially where the occupant seeks the aid of the doctrine to cover his own fraud or misrepresentation.'** If the purchaser makes due inquiry. '^Webb V. Robbins, 77 Ala. 176'; Blatcbley v. Osborn, 33 Conn. 226; Paul V. Connersville &c. R. Co., 51 Ind. 527; Randall v. Silverthorn, 4 Pa. St. 173. See post § 592. "Kent v. Dean, 128 Ala. 600, 3 So. 543; Munn v. Surges, 70 111. 604; Leach v. Ansbacher, 55 Pa. St. 85; Jaques v. Weeks, 7 Watts (Pa.) 261; Harris v. Arnold, 1 R. I. 126; Smith V. Miller, 63 Tex. 72. A pur- chaser of land in the possession of another should inquire by what ten- ure possession is then held, and not merely the character in which the possession was originally obtained. Williams v. Brown, 14 111. 200. See ante § 587. '=Kirby v. Tallmadge, 160 U. S. 379, 40 L. ed. 463, 16 Sup. Ct. 349; Walker v. Neil, 117 Ga. 733, 45 S. E. 387; Carr v. Brennan, 166 111. 108, 47 N. E. 721, 57 Am. St. 119; Rock Island &c. R. Co. v. Dimick, 144 111. 628, 32 N. E. 291, 19 L. R. A. 1*05 ; Morrison v. Morrison, 140 111. 560, 30 N. E. 768; Farmers' Nat. Bank v. Sperling, 113 111. 273; Ha- worth V. Taylor, 108 111. 275; San- ford V. Weeks, 38 Kans. 319, 16 Pac. 465, 5 Am. St. 748; Dengler v. Fow- ler, 94 Nebr. 621, 143 N. W. 944; Losey v. Simpson, 11 N. J. Eq. 246; Cornell v. Maltby, 165 N. Y. 557, 59 N. E. 291; Phelan v. Brady, 119 N. Y. 587, 23 N. E. 1109, 8 L. R. A. 211; Betts V. Letcher, 1 S. Dak. 182, 46 N. W. 193; Chapman v. Chapman, 91 Va. 397, 21 S. E. 813, 50 Am. St. 846. "Kirhy v. Tallmadge 160 U. S. 379, 40 L. ed. 463, 16 Sup. Ct. 349; Houston Oil Co. v. Green, 202 Fed. 874, 121 C. C. A. 232; Brunson v. Brooks, 68 Ala. 248; Rock Island &c. R. Co. v. Dimick, 144 111. 628, 32 N. E. 291, 19 L. R. A. 105; Sanford v. Weeks, 38 Kans. 319, 16 Pac. 465, 5 Am. St. 748; Dengler v. Fowler, 94 Nebr. 621, 143 N. W. 944. "Wright V. Wood, 23 Pa. St. 120; Western Mining &c. Co. v. Coal Co., 8 W. Va. 406. ^ Gill V. Hardin, 48 Ark. 409, 3 S. W. 519; Minton v. New York El. R. Co., 130 N. Y. 332, 29 N. E. 319. '^ Yates v. Kurd, 8 Colo. 343, 8 Pac. 575; Groton Sav. Bank v. Batty, 30 N. J. Eq. 126; Losey v. Simpson, 11 N. J. Eq. 246. See also Brous- sard V. Broussard, 45 La. Ann. 10S5, 13 So. 699; Converse v. Blumrich, 14 Mich. 109, 90 Am. Dec. 230. § 589 KOTICE AS APFECTING PEIORITT 952 and such inquiry fails to disclose any title or interest in the person in possessiojij the presumptive notice from possession is rebutted.^" A mortgagee who, in reliance upon the record title, takes a mort- gage upon property from one to whom it has been transferred by a fraudulent grantee, is not chargeable with constructive notice of the fraud, although the person defrauded occupies the property, where at the time such person was ignorant of the fraud perpetrated and could not have disclosed the fact to the mortgagee had he made inquiry.^'- § 589. Possession of tenant as notice. — A purchaser of land in the possession of a tenant of the vendor has notice of the actual interest of the tenant and of the whole extent of that interest, and is bound to admit the tenant's claim so far as it could be enforced against the vendor.^^ And likewise, a subsequent mortgagee is charged with con- structive notice of the legal and equitable rights of a tenant in posses- "Flagg V. Mann, 2 Sumn. (U. S.) 486; Thompson v. Pioche, 44 Cal. 508; Pell v. McEIroy, 36 Cal. 268; Fair v. Stevinot, 29 Cal. 486; Austin V. Southern Home Bldg. &c. Assn., 122 Ga. 439, 50 S. B. 382; Riley v. Quigley, 50 III. 304, 99 Am. Dec. 516; Brown v. Anderson, 1 T. B. Mon. (Ky.) 198; M'Mechan v. Griffing, 3 Pick. (Mass.) 149, 15 Am. Dec. 198; Brophy Min. Co. v. Brophy &c. Gold &c. Min. Co., 15 Nev. 101; Nutting V. Herbert, 37 N. H. 346; Rogers v. Jones, 8 N. H. 264; Fassett v. Smith, 23 N. Y. 252; Williamson v. Brown, 15 N. Y. 354; Lower v. "Wlghtman, 5 Leg. Gaz. (Pa.) 45; Harris v. Ar- nold, 1 R. I. 126; Huffman v. Cooley, 28 S. Dak. 475, 134 N. W. 49; Betts v. Letcher, 1 S. Dak. 182, 46 N. W. 193; Hewitt v. Loosemore, 9 Hare 449; Jones v. Smith, 1 Hare 43. " Cornell v. Maltby, 165 N. Y. 557, 59 N. E. 291. =^Flagg V. Mann, 2 Sumn. (U. S.) 486, 1 Fed. Cas. No. 4847; Scheerer v. Cuddy, 85 Cal. 270, 24 Pac. 713; Dreyfus v. Hirt, 82 Cal. 621, 23 Pac. 193; Peasley v. McFadden, 68 Cal. 611, 10 Pac. 179; McRae v. McMinn, 17 Fla. 876; Parker v. Gortatowsky, 127 Ga. 560, 56 S. E. 846; Clarke v. Beck, 72 Ga. 127; Coari v. Olsen, 91 111. 273; Williams v. Brown, 14 111. 200; Joseph v. Wild, 146 Ind. 249, 45 N. E. 467; Leebrick v. Stable, 68 Iowa 515, 27 N. W. 490; Russell v. Moore, 3 TIetc. (Ky.) 436; Hull v. Noble, 40 Maine 459; Toupin v. Pea- body, 162 Mass. 473, 39 N. E. 280; Cunningham v. Pattee, 99 Mass. 248; Brady v. Sloman, 156 Mich. 423, 120 N. W. 795; Trumpower v. Marcey, 92 Mich. 529, 52 N. W. 999; Lam- bert V. Weber, 83 Mich. 395, 47 N. W. 251; Starkey v. Horton, 65 Mich. 96, 31 N. W. 626; McKee v. Wilcox, 11 Mich. 358, 83 Am. Dec. 743; Og- den V. Garrison, 82 Nebr. 302, 117 N. W. 714, 17 L. R. A. (N. S.) 1135; Priedlander v. Rider, 30 Nebr. 783, 47 N. W. 83, 9 L. R. A. 700; Smith V. Gibson, 25 Nebr. 511, 41 N. W. 360; Havens v. Bliss, 26 N. J. Eq. 363; McCall v. Yard, 11 N. J. Bq. 58; Seymour v. McKinstry, 106 N. Y. 230, 12 N. E. 348, 14 N. E. 94; Page v. Waring, 76 N. Y. 463; Trus- tees Union College v. Wheeler, 61 N. Y. 88; De Ruyter v. Trustees, 2 Barb. Ch. (N. Y.) 555; Chesterman V. Gardner, 5 Johns. Ch. (N. Y.) 29, 9 Am. Dec. 265; Spofford v. Man- ning, 6 Paige (N. Y.) 383; Bassett V. Wood, 9 N. Y. S. 79; Whitham v. Lehmer, 22 Okla. 627," 98 Pac. 351; Hottenstein v. Lerch, 104 Pa. St. 454; Marsh v. Nelson, 101 Pa. St. 57; Ev- ans V. Bidwell, 76 Pa. St. 497; Kerr V. Day, 14 Pa. St. 112, 53 Am. Dec. 526; Hood v. Pahnestock, 1 Pa. St. 470, 44 Am. Dee. 147; Glendenning V. Bell, 70 Tex. 632, 8 S. W. 324; Mullins V. Wimberly, 50 Tex. 457; Howell V. Denton (Tex.), 68 S. W. 1002; Ehle v. Brown, 21 Wis. 405; 953 POSSESSIOK AS NOTICE § 589 sion under a lease ;^^ as well as the claims of a third person, through such tenant.^* Although the rule is otherwise in England,^" it is now well settled in the United States that a tenant's possession of real estate is con- structive notice of his landlord's title j^" for such possession imposes upon the purchaser the obligation of inquiring by what right the ten- ant holds. In order that a tenant's possession may be notice of his landlord's title, the tenancy must have begun after the lessor acquired his title." By the weight of authority, where an owner conveys land in posses- Fery v. Pfeiffer, 18 Wis. 510; Dan- iels V. Davison, 16 Ves. 249. == Kerr v. Kingsbury, 39 Mich. 150, 33 Am. Rep. 362; Toland v. Corey, 6 Utah 392, 24 Pac. 190; Allen v. Gates, 73 Vt. 222, 50 Atl. 1092. See also Bell v. Twilight, 18 N. H. 159, 45 Am. Dec. 367; Staples v. Fenton, 5 Hun (N. Y.) 172. ^ Collins V. Moore, 115 Ga. 327, 41 S. B. 609; Wrede v. Cloud, 52 Iowa 371, 3 N. W. 400; Morrison v. March, 4 Minn. 422; Baldwin v. Johnson, 1 N. J. Eq. 441; Welsh v. Schoen, 59 Hun 356, 36 N. Y. St. 538, 13 N. Y. S. 71; Martin v. Jackson, 27 Pa. St. 504, 67 Am. Dec. 489. ^=Hunt V. Luck, 1 Ch. 428, 71 L. J. Ch. 239, 86 L. T. (N. S.) 68, 18 T. L. R. 265, 50 Wkly. Rep. 291; Barnhart v. Greenshields, 9 Moore P. C. 18, 14 Eng. Reprint 204; Han- bury V. Litchfield, 2 Mylne & K. 629. ^United States v. Sliney, 21 Fed. 894; Price v. Bell, 91 Ala. 180, 8 So. 565; Brunson v. Brooks, 68 Ala. 248; Storthz V. Chapline, 71 Ark. 31, 70 S. W. 465; Peasley v. McFadden, 68 Cal. 611, 10 Pac. 179; Thompson v. Pioohe, 44 Cal. 508; O'Rourke v. O'Connor, 39 Cal. 442; Landers v. Bolton, 26 Cal. 393; Dutton v. War- schauer, 21 Cal. 609, 82 Am. Dec. 765; Clarke v. Beck, 72 Ga. 127; Peck V. Bartelme, 220 111. 199, 77 N. B. 216; Mallett v. Kaehler, 141 111 70, 30 N. B. 549; Thomas v. Burnett, 128 111. 37, 21 N. E. 352, 4 L. R. A. 222; Crawford v. Chicago &c. R. Co., 112 111. 314; Haworth v. Taylor, 108 111. 275; Whitaker v. Miller, 83 III. 381; Smith v. Jack- son, 76 111. 254; Frary v. Orton, 75 111. 100; Townsend v. Blanchard, 117 Iowa 36, 90 N. W. 519; O'Neill V. Wilcox, 115 Iowa 15, 87 N. W. 742; Rogers v. Turpin, 105 Iowa 183, 74 N. W. 925; Dickey v. Lyon, 19 Iowa 544; Penrose v. Cooper, 86 Kans. 597, 121 Pac. 1103; Deetjen V. Richter, 33 Kans. 410, 414, 6 Pac. 595; Hanly v. Morse, 32 Maine 287; Thompson v. Borg, 90 Minn. 209, 95 N. W. 896; New v. Wheaton, 24 Minn. 406; Morrison v. March, 4 Minn. 325; Levy v. Holberg, 67 Miss. 526, 7 So. 431; Conlee v. McDowell, 15 Nebr. 184, 18 N. W. 60; Wood v. Price, 79 N. J. Bq. 620, 81 Atl. 983, 38 L. R. A. (N. S.) 772, Ann. Cas. 1913 A, 1210; Purcell v. Enright, 31 N. J. Eq. 74; Wanner v. Sisson, 29 N. J. Eq. 141; Bank v. Plagg, 3 Barb. Ch. (N. Y.) 316; Edwards v. Thomp- son, 71 N. Car. 177; Randall v. Ling- wall, 43 Ore. 383, 73 Pac. 1; Duff v. McDonough, 155 Pa. St. 10, 25 Atl. 608; Hottenstein v. Lerch, 104 Pa. St. 454; Kerr v. Day, 14 Pa. St. 112, 53 Am. Dec. 526; Hood v. Fahne- stock, 1 Pa. St. 470, 44 Am. Dec. 147; Collum V. Sanger, 98 Tex. 162, 82 S. W. 459, 83 S. W. 184; McCamant v. Roberts, 80 Tex. 316, 15 S. W. 580, 1054; Glendenning v. Bell, 70 Tex. 632, 8 S. W. 324; Woodson v. Collins, 56 Tex. 168; Mainwarring v. Tem- pleman, 51 Tex. 205; Huntington v. Mattfield (Tex.), 55 S. W. 361; Matt- field V. Huntington, 17 Tex. Civ. App. 716, 43 S. W. 53. But see Flagg V. Mann, 2 Sumn. (U. S.) 486; Beat- tie V. Butler, 21 Mo. 313, 64 Am. Dec. 234. ^ Conlee v. McDowell, 15 Nebr. 184, 18 N. W. 60; Burt v. Baldwin, 8 Nebr. 487, 1 N. W. 457. § 590 NOTICE AS AFFECTING PRIORITY 954 sion of his tenant, and the tenant merely attorns to the grantee -without any visible change of possession, the tenant's continued possession is not of itself constructive notice of the grantee's title, to a subsequent purchaser from the grantor.^' But in a few states the contrary doc- trine prevails, and the tenant's possession upon attornment is consid- ered suflBeient to excite inquiry on the part of the subsequent pur- chaser, and charge him with constructive notice of the prior grantee's title.^" If the tenant changes his character by taking an agreement to pur- chase, or he has this right under his lease and exercises his option to purchase, his possession amounts to notice of his equitable title as purchaser.'" The fact that one had been a tenant of a portion of a building, and continued to be a tenant until he took possession under his contract of purchase, does not impair the notice imparted by such possession.'^ § 590. Possession notice during continuance. — Possession is notice only during its continuance.'^ In order to operate as notice, or to suggest inquiry to a purchaser, the adverse possession must have ex- isted at the time of the purchase." A former possession which has ceased is not sufficient, although there is still evidence of it on the land.'* A purchaser is not bound to take notice of an antecedent pos- =» Griffin v. Hall, 111 Ala. 601, 20 ^'Coari v. Olsen, 91 111. 273; Rus- So. 485; Bynum v. Gold, 106 Ala. sell v. Moore, 3 Mete. (Ky.) 436; 427, 17 So. 667; Troy v. Walter, 87 Smith v. Gibson, 25 Nebr. 511, 41 N. Ala. 233, 6 So. 54; Fitzgerald v. W. 360; Ghesterman v. Gardner, 5 Williamson, 85 Ala. 585, 5 So. 309; Johns. Ch. (N. Y.) 32, 9 Am. Dee. King v. Paulk, 85 Ala. 186, 4 So. 265; Kerr v. Day, 14 Pa. St. 112; 825; Feinberg v. Stearns, 56 Fla. Knight v. Bowyer, 23 Beav. 609; 279, 47 So. 797, 131 Am. St. 119; Taylor v. Stibbert, 2 Ves. Jr. 437. Stockton v. Jacksonville Nat. Bank, ^ Phelan v. Brady, 119 N. Y. 587, 45 Fla. 590, 34 So. 897; Veaziev.Par- 23 N. E. 1109. ker, 23 Maine 170 ; Roberts v. Grace, "^ Masterson v. West-End Narrow- 16 Minn. 126; Loughridge v. Bow- Gauge R. Co., 5 Mo. App. 64, affd. In land, 52 Miss. 546; Burt v. Baldwin, 72 Mo. 342; Coleman v. Barklew, 27 8 Nebr. 487, 1 N. W. 457. But see N. J. L. 357; Meehan v. Williams, 48 Tutwiler v. Montgomery, 73 Ala. Pa. St. 238; Ely v. Wilcox, 20 Wis. 263; Brunson v. Brooks, 68 Ala. 248. 523, 91 Am. Dec. 436. "^Mallett V. Kaehler, 141 111. 70, "'Christopher v. Curtis-Attalla 30 N. E. 549; Haworth v. Taylor, Lumber Co., 175 Ala. 484, 57 So. 837; 108 111. 275; Hannan v. Seidentopf, Hunter v. Watson, 12 Cal. 363, 73 113 Iowa 658, 86 N. W. 44; Duff v. Am. Dec. 543; Roussain v. Norton, McDonough, 155 Pa. St. 10, 25 Atl. 53 Minn. 560, 55 N. W. 747; Bing- 608; Mainwarring v. Templeman, 51 ham v. Kirkland, 34 N. J. Eq. 229; Tex. 205; Duncan v. Matula (Tex.), Bost v. Setzer, 87 N. Car. 187. 26 S. W. 638; Mattfeld v. Hunting- "Aden v. Vallejo, 139 Cal. 165, 72 ton, 17 Tex. Civ. App. 716, 43 S. W. Pac. 905; Hayward v. Mayse, 1 App. 53. See also Smith v. James, 22 Tex. Cas. (D. C.) 133; Sanford v. Weeks, Civ. App. 154, 54 S. W. 41. 38 Kans. 319, 16 Pac. 465, 5 Am. 955 POSSESSION AS NOTICE § 591 session which has ceased prior to his negotiations to purchase, and he need not inquire as to the title or right of the former occupant.^'' How- ever, if the possession existed at the time of the purchase, the fact that tlie conveyance vras executed after possession had ceased, is imma- terial.^" An occupant's rights are not altered or prejudiced by a com- pulsory surrender of possession to a subsequent purchaser with notice of the contract and claim of ownership.^' § 591. Open notorious and exclusive possession. — Possession, to operate as implied notice, must be visible and open, notorious and ex- clusive, and not merely a constructive possession.^^ Possession is in- St. 748; Roussaln v. Norton, 53 Minn. 560, 55 N. W. 747; Hiller v. Jones, 66 Miss. 636, 6 So. 465; Best V. Setzer, 87 N. Car. 187; Wright V. Wood, 23 Pa. St. 120. See also Christopher v. Curtis-Attalla Lum- ber Co., 175 Ala. 484, 57 So. 837. '= Campbell v. Brackenridge, 8 Blackf. (Ind.) 471; Hewes v. Wls- well, 8 Maine 94; Meehan v. Will- iams, 48 Pa. St. 238; Ehle v. Brown, 31 Wis. 405. ^"Bergeron v. Richardott, 55 Wis. 129, 12 N. W. 384. ""Van Epps v. Clock, 53 Hun 638, 25 N. y. St. 896, 7 N. Y. S.- 21. ™Kirby v. Tallmadge. 160 U. S. 379, 40 L. ed. 463, 16 Sup. Ct. 349; Townsend v. Little, 109 U. S. 504, 27 L. ed. 1012; Noyes v. Hall, 97 U. S. 34, 24 L. ed. 909; Gum v. Equi- table Trust Co., 1 McCrary (U. S.) 51; Adams-Booth Co. v. Reid, 112 Fed. 106; Bright v. Buckman, 39 Fed. 243; Sloss &c. Steel &c. Co. v. Taff, 178 Ala. 382, 59 So. 658; Christopher v. Curtis-Attalla Lum- ber Co., 175 Ala. 484, 57 So. 837; O'Neal v. Prestwood, 153 Ala. 443, 45 So. 251; Wells v. American Mtg. Co., 109 Ala. 430, 20 So. 136; Bern- stein v. Humes, 71 Ala. 260; Schu- macher V. Truman, 134 Cal. 430, 66 Pac. 591; Hellman v. Levy, 55 Cal. 117; Smith v. Yule, 31 Cal. 180, 89 Am. Dec. 167; Fair v. Stevenot, 29 Cal. 486; Dutton v. Warschauer, 21 Cal. 609, 82 Am. Dec. 765; Jerome v. Carbonate Nat. Bank, 22 Colo. 37, 43 Pac. 215; Tate v. Pensacola &c. Co., 37 Fla. 439, 20 So. 542, 53 Am. Rep. 251; Sanford v. Davis, 181 111. 570, 54 N. E. 977; Adam v. Tolman, 180 111. 61, 54 N. E. 174; Robertson V. Wheeler, 162 111. 566, 44 N. E. 870; Thomas v. Burnett, 128 111. 37, 21 N. E. 352; Irwin v. Dyke, 114 111. 302, 1 N. E. 913; Smith v. Jackson, 76 111. 254; Bogue v. Williams, 48 111. 371; Morrison v. Kelly, 22 111. 610, 14 Am. Dec. 169; Poulks v. Reed, 89 Ind. 370; Jefferson, M. &c. R. Co. V. Oyler, 82 Ind. 394; Lindley v. Martindale, 78 Iowa 379, 43 N. W. 233; Gray v. Zelmer, 66 Kans. 514, 72 Pac. 228; Beaubien v. Hindman, 38 Kans. 471, 16 Pac. 796; Trezize V. Lacy, 22 Kans. 742; Butler v. Ste- vens, 26 Maine 484; Hawes v. Wis- well, 8 Maine 94; Kendall v. Law- rence, 22 Pick. (Mass.) 540; M'Me- chan V. Grifflng, 3 Pick. (Mass.) 149, 15 Am. Dec. 198; Smith v. Greenop, 60 Mich. 361, 26 N. W. 832; MoKee v. Wilcox, 11 Mich. 358, 83 Am. Dec. 743; Norton v. Metropoli- tan Life Ins. Co., 74 Minn. 484, 77 N. W. 298, 539; Stovall v. Judah, 74 Miss. 747, 21 So. 614; Brophy Min- ing Co. V. Brophy &c. M. Co., 15 Nev. 101; Patten v. Moore, 32 N. H. 382; Bell V. Twilight, 22 N. H. 500, 50 Am. Dec. 367; Schwoebel v. Storrie, 76 N. J. Eq. 466, 74 Atl. 969; Ran- kin v. Coar, 46 N. J. Eq. 566, 22 Atl. 177, 11 L. R. A. 661; Hodge v. Amer- man, 40 N. J. Eq. 99, 2 Atl. 257; McCall V. Yard, 11 N. J. Eq. 5S; Holmes v. Stout, 10 N. J. Eq. 419; Cox V. Devinney, 65 N. J. L. 389, 47 Atl. 569; Coleman V. Barklew, 27 N. J. L. 357; Holland v. Brown, 140 N. Y. 344, 35 N. E. 577; Pope v. Allen. 90 N. Y. 298; Page v. Waring, 76 N. Y. 463; Brown v. Volkenlng, 64 N. Y. 76; Webster v. Van Steen- bergh, 46 Barb. (N. Y.) 211; Merritt v. Northern R. Co., 12 Barb. (N. Y.) § 591 KOTICE AS AFFECTING PEIOEITT 956 sufficient if merely equivocal/ ° temporary, or occasional.'"' It must be unambiguous and not liable to be misconstrued.*'- Actual residence upon the land is not necessary to constructive no- tice of title ; actual possession and continuous acts of ownership being sufficient.*^ But the erection of permanent improvements is generally held sufBcient to constitute notice.*^ Possession of land by one who has built a house upon it and is living in it, or by one who has built fences around his lot, is sufficiently open and patent to put parties in interest upon inquiry, and to charge them with notice of all they might learn by such inquiry.** Possession of a city lot was held suflfi- 605 (constructive possession by sur- vey insufficient) ; Tuttle v. Jackson, 6 "Wend. (N. Y.) 213, 21 Am. Dec. 306; Bost v. Setzer, 87 N. Car. 187; Tankard v. Tankard, 79 N. Car. 54; Webber v. Taylor, 2 Jones Eq. (N. Car.) 91; Ranney v. Hardy, 43 Ohio St. 157; "Williams v. Sprlgg, 6 Ohio St. 585; Railroad Employes Bldg. &c. Assn. V. Dawson, 5 Ohio S. & C. PI. Dec. 583, 7 Ohio N. P. 601; Scott V. Lewis, 40 Ore. 37, 66 Pac. 299; Meehan v. "Williams, 48 Pa. St. 238; Martin v. Jackson, 27 Pa. St. 504, 67 Am. Dec. 489; Ellis v. Young, 31 S. Car. 322, 9 S. E. 955; Curry v. "Will- iams (Tenn.), 38 S. "W. 278; Satter- white V. Rosser, 61 Tex. 166; Blank- •enship v. Douglas, 26 Tex. 225, 82 Am. Dec. 608; Canfield v. Hard, 58 Vt. 217, 2 Atl. 136; Peery v. Elliott, 101 Va. 709, 44 S. B. 919; Peterson V. Philadelphia Mtg. &c. Co., 33 "Wash. 464, 74 Pac. 585; Wickes v. Lake, 25 "Wis. 71; Ely v. Wilcox, 20 Wis. 523, 91 Am. Dec. 436. =»Townsend v. Little, 109 U. S. 504, 27 L. ed. 1012, 3 Sup. Ct. 357; Sloss &c. Steel &c. Co. v. Taff, 178 Ala. 382, 59 So. 658; Morrison v. Kelly, 22 III. 609, 74 Am. Dec. 169; Rankin v. Coar, 46 N. J. Eq. 566, 2Z Atl. 177, 11 L. R. A. 661; Holland v. Brown, 140 N. Y. 344, 35 N. E. 577; Pope v. Allen, 90 N. Y. 298; Brown v. Volkening, 64 N. Y. 76; Billlngton v. Welsh, 5 Binn. (Pa.) 129, 6 Am. Dec. 406. " Kendrick v. Colyar, 143 Ala. 597, 42 So. 110; Jerome v. Carbonate Nat. Bank, 22 Colo. 37, 43 Pac. 215; Mas- terson v. West-End Narrow-Gauge R. Co., 5 Mo. App. 64, affd. 72 Mo. 342; Coleman v. Barklew, 27 N. J. L. 357; Holland v. Brown. 140 N. Y. 344, 35 N. E. 577; Brown v. "Volken- ing, 64 N. Y. 76; Williams v. Sprigg, 6 Ohio St 585; Meehan v. Williams, 48 Pa. St. 238. "Sloss &c. Steel &c. Co. v. Taff, 178 Ala. 382, 59 So. 658; Rankin Mfg. Co. V. Bishop, 137 Ala. 271, 34 So. 991; Wells v. American Mtg. Co., 109 Ala. 430, 20 So. 136; Lindley v. Martindale, 78 Iowa 379, 43 N. W. 233; Brown v. Volkening, 64 N. Y. 76; Wickes v. Lake, 25 Wis. 71. *^ Jerome v. Carbonate Nat. Bank, 22 Colo. 37, 43 Pac. 215;. Thomas v. Burnett, 128 111. 37, 21 N. E. 352, 4 L. R. A. 222; Morrison v. Kelly, 22 111. 609, 74 Am. Dec. 169; Hodge v. Amerman, 40 N. J. Eq. 99, 2 Atl. 257. See also Coleman v. Barklew, 27 N. J. L. 357; Phelan v. Brady, 19 Abb. N. Cas. (N. Y.) 289, affd. 49 Hun 607, 16 N. Y. St. 942, 1 N. Y. S. 626, 21 Abb. N. Cas. 286; Wickes v. Lake, 25 Wis. 71. '"Stagg V. Small, 4 III. App. 192; Barnes v. Union School, 91 Ind. 301; Crapo V. Cameron, 61 Iowa 447, 16 N. W. 523 (permanent brick build- ing upon city lot); Carthage Tissue Paper Mills v. Carthage, 200 N. Y. 1, 93 N. E. 60; Congdon v. Morgan, 14 S. Car. 587; Harold v. Sumner, 78 Tex. 581, 14 S. W. 995; Smith v. Profitt, 82 Va. 832, 1 S. E. 67; Kuhl V. Lightle, 29 Wash. 137, 69 Pac. 630. "Bright V. Buckman, 39 Fed. 243; Pride v. Whitfield (Tex.), 51 S. W. 1100. See also Williams v. Dongan, 20 Mo. 186 (building a dwelling, residence, and cultivation); Parrish V. Williams (Tex.), 79 S. W. 1097 (occupying a house and partly fenc- ing). 957 POSSESSION AS NOTICE § 591 ciently open and notorious where the purchaser fenced three sides of it, the fourth being inaccessible, cleared it of brush and timber, and planted shrubbery thereon.*' Possession by the purchaser of a tene- ment house, who had formerly been a tenant of a part of the house, and who, on purchase, removed to the rooms before occupied by the housekeeper of the vendor, and was known as owner, and collected the rent from all the tenants, is sufficiently open and visible to be notice of his ownership, so as to defeat a mortgage taken before his deed is recorded, and without knowledge of it.*° The cutting of wood or timber continued year after year or contin- uously is an act showing possession, and indicating a right or title.*^ So does openly ploughing or cultivating a field,*^ or fastening the doors and nailing up the windows of a house in which there is furni- ture,*" or any acts which clearly show such an appropriation of the property as one would exercise over his own property and not over property which he did not claim to own."^" The occasional cutting of wood upon the land under such circumstances that these acts might be regarded as acts of trespass rather than acts of ownership is not evidence of actual possession such as constitute notice. ^^ A notice posted on a board set up on the land that it is for sale, by an agent whose name and address is given, is notice of the owner's rights sufficient to put a purchaser upon inquiry.'^ Where a purchaser under an unrecorded contract was present from time to time with the record owner, during the construction of a building on the premises, his possession was not exclusive, in merely superintending the construction of the cellar, setting out shrubbery ■" Flint v. Long, 12 Wash. 342, 41 chasers and mortgagees with notice Pac. 49. of his rights. Gainer v. Jones, 176 " Phelan v. Brady, 119 N. Y. 587, Ala. 408, 58 So. 288. 23 N. E. 1109. See also Gall v. Gall, ^Wrede v. Cloud, 52 Iowa 371, 3 126 Wis. 390, 105 N. W. 953, 5 L. R. N. W. 400. A. (N. S.) 603. ""Jerome v. Carbonate Nat. Bank, ■" Nolan v. Grant, 51 Iowa 519, 1 22 Colo. 37, 43 Pac. 215, citing Ew- N. W. 709; Krider v. Lafferty, 1 ing v. Burnet, 11 Pet. (U. S.) 41, 9 Whart. (Pa.) 303. L. ed. 624; Simmons Creek Coal Co. « Lyman v. Russell, 45 111. 281; v. Doran, 142 U. S. 417, 35 L. ed Wickes V. Lake, 25 Wis. 71. See 1063, 12 Sup. Ct. 239; Mason v. Mul- also International Harvester Co. v. lahy, 145 111. 383, 34 N. E. 36; Hatch Myers, 86 Kans. 497, 121 Pac. 500, v. Bigelow, 39 111. 546; Brown v. 39 L. R. A. (N. S.) 528; Richards Volkening, 64 N. Y. 76. V. Snyder, 11 Ore. 501, 6 Pac. 186; " Holmes v. Stout, 10 N J. Eq. 419. Biemann v. White, 23 S. Car. 490. See also Brown v. Volkening, 64 N. But see Sanford v. Weeks, 38 Kans. Y. 76. 319, 16 Pac. 465. Possession of lands "^ Hatch v. Bigelow, 39 111. 546. by a contract purchaser who resided But see Clark v. Green, 73 Minn, thereon, cut timber, and cultivated 467, 76 N. W. 263; Lynde v. Williams, the land, charged subsequent pur- 68 Mo. 360. § 593 NOTICE AS AFFECTING PRIORITY 958 and cleaning windows, and was therefore not notice to a subsequent mortgagee of the record owner."^ The possession must be exclusive, and therefore possession by a purchaser under an unrecorded conveyance is no notice of title as against a subsequent incumbrancer, where the grantor also lived on the premises as a member of the grantee's family.'** Thus it has been held that possession by a son under a voluntary oral agreement and an un,delivered deed from his father, was not suflBcient to put a subse- quent mortgagee of his father upon inquiry as to the extent of the son's claim, since he possessed no equitable right to the land as against his father, in whom the legal title remained.^^ § 592. Occupation of an easement — Railways and crossings. — The use or occupation of an easement in land by a third party is notice to purchasers or mortgagees of whatever right the user of the easement may have to maintain it."*" The occupation by a grantor of an ease- ment in adjoining land which he has conveyed without a reservation of the easement, being inconsistent with the grant, is notice, to a pur- chaser from the grantee, of a parol reservation of the easement.''^ The easement may be patent, as in the case of a footpath; or there may be such occupation of it as to put a purchaser upon inquiry. The owner of a house sold to his adjoining neighbor the right of using two chimneys in the partition wall and received the consideration, but never made any grant of the easement. He afterward sold the house without saying anything about his neighbor's right to use two of the chimneys. But as there were fourteen chimney-pots on the wall, and "" Roderick v. McMeekln, 204 111. since the inquiry was not pursued 625, 68 N. E. 473. with due diligence the rights of the "Jerome v. Carhonate Nat. Bank, minor brothers were unaffected by 22 Colo. 37, 43 Pac. 215; Geyer v. the mortgage. International Har- Geyer, 75 N. J. Eq. 124, 78 Atl. 449; vester Co. v. Myers, 86 Kans. 497, Puckett V. Reed, 3 Tex. Civ. App. 121 Pac. 500, 39 L. R. A. (N. S.) 528. 350, 22 S. W. 515; Derrett v. Brit- ^» Huntley v. San Francisco Sav. ton, 35 Tex. Civ. App. 485, 80 S. W. Union, 130 Cal. 46, 62 Pac. 255. 562. See also Rubel v. Parker '^'' Smith v. Smith, 21 Cal. App. (Ark.), 155 S. W. 114. Where three 378, 131 Pac. 890; Ashelford v. Wil- brothers had equal interests in farm lis, 194 111. 492, 62 N. E. 817; Joseph land, the elder holding the legal v. Wild, 146 Ind. 249, 45 N. E. 467 title, it was held that occupancy by (stairway over adjoining vacant the two minor brothers in the usual lot) ; Kamer v. Bryant, 103 Ky. 723, manner of farming and stock rais- 46 S. W. 14, 20 Ky. L. 340; Ran- ing, though without residence, was dall v. Silverthorn, 4 Pa. St. 173. suflBciently open, notorious and ex- " Randall v. Silverthorn, 4 Pa. St. elusive to put a mortgagee of the 173. elder brother upon inquiry, and 959 POSSESSION AS NOTICE § 592 only twelve flues in the house, the court held that the purchaser was put on inquiry and had constructive notice of the neighbor's right.^' "UTiere the owner of certain lots and a narrow strip of land adjoin- ing them, erected a building on the property so that the wall extended upon the strip, and then mortgaged the three lots and the building, it was held that the mortgagee purchasing at foreclosure sale was en- titled to an easement upon the strip of land, necessary to the enjoy- ment of the building, as against one holding under a subsequent trust deed from the mortgagor.^' The existence of a railroad over a tract of land, with its embank- ments, excavations, and tracks, is notice to a purchaser of such land of an outstanding right or easement inconsistent with an absolute and exclusive title in the grantor. It is the duty of the purchaser to in- quire by what right the railroad is built over the land, and he has notice of such rights as the owners of the railroad may have ac- quired."" The possession is not restricted to the land actually fenced in.*^ But mere possession and use of a railroad track in a street abut- ting property is not notice to a purchaser of an unrecorded deed from his grantor, executed to the company several months previously and granting permission to lay additional tracks.'^ The existence of an open way for cattle, under a railroad, is notice of an easement for that purpose to subsequent purchasers and mortgagees of the railroad suffi- cient to put them upon inquiry."^ "Where a railroad with the power of eminent domain lays tracks with the consent of the landowner, a mortgage subsequently executed by him does not cover the tracks in •^Hervey v. Smith, 22 Beav. 299, Wright, 153 111. 307, 38 N. E. 1062; 302. The Master of the Rolls said: Indiana, B. &c. R. Co. v. McBroom, "Here the defendant buys the house 114 Ind. 198, 15 N. E. 831; Camp- and finds twelve flues in it, but bell v. Indianapolis &o. R. Co., 110 fourteen chimneys in the wall. The Ind. 490, 11 N. E. 482; Jefferson- question is, was he not bound to see ville, M. &c. R. Co. v. Oyler, 60 Ind. that he alone had twelve out of the 383; Paul v. Connersville &c. R. Co., fourteen, and does it not follow that 51 Ind. 527; Kamer v. Bryant, 103 two must have been used by the ad- Ky. 723, 20 Ky. L. 340, 46 S. W. 14; joining neighbor? He might not Edwards v. Missouri &c. R. Co., 82 have thought fit to count them or Mo. App. 96; Donovan v. Erie R. look at them, but I think he was Co., 77 Misc. 548, 137 N. Y. S. 113; put on inquiry, and that he can not Day v. Atlantic &c. R. Co., 41 Ohio now say that he had no notice of St. 392. the agreement by which Felton sold '^ Warner v. Fountain, 28 Wis. the right to Cubitt." 405. =°Carrigg v Mechanics' Sav. "^Varwig v. Cleveland &c. R. Co., Bank, 136 Iowa 261, 111 N. W. 329. 54 Ohio St. 455, 44 N. E. 92. •"Kindred v. Union Pac. R. Co., ''Rock Island & P. R. Co. v. Dim- 56 L. ed. 1216, 225 U. S. 582, 32 Sup. ick, 144 111. 628, 32 N. E. 291, 19 L. Ct. 780; Chicago &c. R. Co. v. R. A. 105. § 593 NOTICE AS AFFECTING PRIORITY 960 the roadbed, though the land was not condemned and no compensa- tion was paid.'* The nse of a ditch or mill-race through the land conveyed has been held sufficient notice of an easement to subsequent purchasers."'^ And likewise, a right outstanding in a third person to overflow the land conveyed by the erection of a mill-dam, or the flooding of land by a prior grantee, has been held notice to a subsequent purchaser.''^ § 593. Equivocal or temporary possession. — An equivocal, oc- casional, or temporary possession will not take the ease out of the operation of the registry laws."' The protection furnished by tliese laws can not be taken away except upon clear proof of a want of good faith in the party claiming their protection, and a clear right in him who seeks to establish notice by means of possession."^ To have that effect the adverse possession must be unequiv McNeil V. Poll!;, 57 Cal. 323; Smith V. Yule, 31 Cal. 180, 89 Am. Dec. 167; Staples v. Fenton, 5 Hun (N. Y.) 172. "The rule is universal that, if the possession be consistent with the recorded title, it is no no- tice of an unrecorded title." Kirby v. Tallmadge, 160 U. S. 379, 40 L. ed. 463, 16 Sup. Ct. 349. Schumach- er V. Truman, 134 Cal. 430, 66 Pac. 591 (husband's possession as co- tenant of wife). "Plumer v. Robertson, 6 Serg. & R. (Pa.) 179. »» Kirby v. Tallmadge, 160 U. S. 379, 40 L,. ed. 463, 16 Sup. Ct. 349; Townsend v. Little, 109 U. S. 504, 27 L. ed. 1012, 3 Sup. Ct. 357; Storthz V. Chapline, 71 Ark. 31, 70 S. W. 465; Fargason v. Edrington, 49 Ark. 207, 4 S. W. 763; Schuma- cher V. Truman, 134 Cal. 430, 66 Pac. 591; Smith v. Yule, 31 Cal. 180, 89 Am. Dec. 167; Sanguinetti v. Ros- sen, 12 Cal. App. 623, 107 Pac. 560; Wrede v. Cloud, 52 Iowa 371, 3 N. W. 400; Rogers v. Hussey, 36 Iowa 664; Behrens v. Crawford, 32 Ky. L. 1281, 108 S. W. 288; Dutton t. McReynolds, 31 Minn. 66, 16 N. W. 468. See also May v. Sturdivant, 75 Iowa 116, 39 N. W. 221, 9 Am. Rep. 463; Hafter v. Strange, 65 Miss. 323, 3 So. 190, 7 Am. St. 659; Hurley v. O'Neill, 26 Mont. 269, 67 Pac. 626; Mullins v. Butte Hard- ware Co., 25 Mont. 525, 65 Pac. 1004, 87 Am. St. 430; Dengler v. Fowler, 94 Nebr. 621, 143 N. W. 944; Great Falls Co. v. Worster, 15 N. H. 412; Red River Valley Land &c. Co. v. Smith, 7 N. Dak. 236, 74 N. W. 194; Farmers' &c. Nat. Bank v. Wallace, 45 Ohio St. 152, 12 N. E. 439; Woods V. Farmere, 7 Watts (Pa.) 382, 32 Am. Dec. 772; Stewart v. Crosby (Tex.), 26 S. W. 138; Kil- gore V. Graves, 2 Tex. Civ. Cas. § 409. The rule does not apply where the title by deed has been ap- parently extinguished by an execu- tion sale and sheriff's deed, and the occupant can not be presumed to be holding under his recorded deed. Wrede v. Cloud, 52 Iowa 371, 3 N. W. 400. Nor does the rule apply where It appears by the record that the occupant holds under a deed from a stranger to the title. Bank of Mendocino v. Baker, 82 Cal. 114, 22 Pac. 1037. 6 L. R. A. 833. § 595 NOTICE AS AFFECTING PEIOEITT 964 all persons that his possession iinder the deed is in his own right, and a purchaser from him is not required to make further inquiry as to the right by which he holds possession.*' His possession is not no- tice of any title or claim beyond that which he holds under his re- corded deed.°° Thus where a widow held possession of a homestead as guardian of a minor child and also as a parol licensee of her adult children, it was held that the latter possession was not so distinctive as to put a subsequent purchaser or mortgagee upon inquiry, or to operate as notice of secret equities."^ The owner and occupant of a house conveyed it in fee to a son, and, taking back a lease for life, remained in possession. The son, before the lease was recorded, gave a mortgage on the property to one who made reasonable inquiries as to liens. It was held that the possession of the former owner under the lease was not such as to give the mortgagee notice of any rights in the premises.'^ § 595. Possession of part of the premises described in a conveyance. — Possession of a part of the premises described in a deed or mort- gage may be notice to a purchaser or mortgagee of the condition of the title of the entire tract, if the purchaser or mortgagee has actual notice of the possession ; for, having such notice, he is bound to follow up the inquiry, and, if that would necessarily lead to the knowledge of the possession of the other part by another person under the same title, he is affected with notice of possession of such other part.*'' But if his notice of the possession of a part be constructive only, its effect can not be extended to lands outside the limits of the possession."* In such cases the possession of the occupant is deemed coextensive with the boundaries described in the deed."^ The rule that possession ^Pargason v. Edrington, 49 Ark. Terrell v. McLean, 130 Ga. 633, 61 207, 4 S. W. 763. S. E. 485; Feirbaugh v. Masterson, ■"Dutton V. McReynolds, 31 Minn. 1 Idaho 135; Boyer v. Chandler, 160 66, 16 N. W. 468; Great Falls Co. 111. 394, 43 N. B. 803, 32 L. R. A. V. Worster, 15 N. H. 412. 113; Morrison v. Morrison, 140 111. "Sanguinetti v. Rossen, 12 Cal. 560, 30 N. E. 768; Jeffersonville &c. App. 623, 107 Pac. 560. R. Co. v. Oyler, 82 Ind. 394; Wat- ^ Staples v. Fen ton, 5 Hun (N. ters v. Connelly, 59 Iowa 217, 13 N. Y.) 172. A like discussion on siml- W. 82; Nolan v. Grant, 51 Iowa 519, lar facts was made in Bell v. Twi- 1 N. "W. 709 ; Holland v. Brown, 140 light, 18 N. H. 159, 45 Am. Dec. N. Y. 344, 35 N. E. 577; Watkins v. 367; but the same reasons were not Edwards, 23 Tex. 443. But see assigned. The same view was Hodges v. Winston, 94 Ala. 576, 10 taken in a case where the grantors So. 535. conveyed a farm to their son, and "Daggs v. Ewell, 3 Woods (IT. took back a mortgage conditioned S.) 344; Jeffersonville, M. &c. R. for their support. Boggs v. Ander- Co. v. Oyler, 82 Ind. 394. son, 50 Maine 161. "Watson v. Mancill, 76 Ala. 600; »= Watson V. Mancill, 76 Ala. 600; Roberts v. Unger, 30 Cal. 676; Gale 965 POSSESSION AS NOTICE § 596 of part of a tract under color of title is notice of the occupant's claim to the whole only applies where there is no other person in possession claiming adversely to him."" And where the vendor retains possession of part of the land sold, the purchaser's possession of the remainder is not constructive notice as to the part in the possession of the vendor."^ But if a grantor sells -a part of his land, and the grantee enters into possession of this part, his possession is notice of his title though it rests in parol or the deed has not been recorded."* § 596. Possession as notice of homestead rights. — Possession may be notice of the homestead rights of the possessor. Thus in Texas, the Constitution of which state provides that no mortgage of the homestead shall be valid except for purchase-money, or for improve- ments thereon,"" the fact that certain land is occupied and used by the owner as a homestead is to he determined by the visible facts of use and enjoyment, though the husband and wife, in order to obtain a mortgage loan, have falsely declared under oath that the lands mort- gaged are not their homestead. Their representations do not estop them from claiming their homestead exemption under the statute, such representations being contrary to the visible and actual facts. The court in this case says: "The fact of actual possession and use as the home of the family was one against which the lender could not shut its eyes. Every person dealing with land must take notice of an actual, open, and exclusive possession; and where this, concurring with interest in the possessor, makes it a homestead, the lender stands charged with notice of that fact, it matters not what declarations to the contrary the borrower may make."^ The rule also applies to purchasers of vendor's lien notes with Imowledge that the security upon which they are based is a homestead held in visible and open possession.^ After refusing to make a loan upon certain homestead land, known to be in the possession of a hus- band and wife, a lender's agent agreed that if the land was sold and v. Shillock, 4 Dak. 182, 29 N. W. ^''Patton v. Hollidaysburg, 40 Pa. 661; Fletcher v. Ellison, 1 Tex. Tin- St. 206. rep. Cas. 661. °°Art. xvl, § 50: »■ Watson V. Mancill, 76 Ala. 600; > Texas L. &c. Co. v. Blalock, 76 Jeffersonville &c. R. Co. v. Oyler, Tex. 85, 13 S. "W. 12, per Chief Jus- 82 Ind. 394; Fletcher v. Ellison, 1 tlce Stayton; Equitable Mortgage Tex. Unrep. Cas. 661. Co. v. Lowry, 55 Fed. 165. '"Jeffersonville &c. R. Co. v. Oy- ''Felsher v. Halenza. (Tex.), 68 S. ler, 82 Ind. 394; Wade v. Hiatt, 32 W. 638; Harbers v. Levy, 33 Tex. N. Car: 302. See also Cincinnati &c. Civ. App. 480, 77 S. W. 261. R. Co. v. Smith, 127 Ind. 461, 26 N. E. 1009. § 597 NOTICE AS AFFECTING PRIORITY 966 a vendor's lien reserved thereon, he would purchase the lien note. A simulated sale was made to the brother of the owner, and such note executed and sold to the agent of the lender, though the conveyance was not recorded, and the husband and wife retained possession of the homestead. The facts were held sufficient to charge the agent with knowledge of the fraud, which would preclude recovery on the note by his principal.^ A party having knowledge of the occupancy of land as a homestead for many years, and knowing all the parties, made a loan upon collateral security of certain vendor's lien notes, which were in fact fraudulently executed under a simulated conveyance. Although having no direct knowledge of the fraud, the lender knew of the transaction under cover of which the notes were given by the owner of the homestead. It was held that he was not a bona fide pur- chaser being charged with notice by the mortgagor's possession of the homestead, and reasonable inquiry would have elicited the facts and uncovered the fraud in the execution of the notes.* § 597. Continued possession of grantor as notice of rights reserved. — Possession by a grantor, after a full recorded conveyance, is not constructive notice to subsequent purchasers of any right reserved in the land or claimed by the grantor.^ "It is the obvious design of our 'Felsher v. Halenza (Tex.), 68 S. not reasonably think to refer it to W. 838. a reserved right." Morgan v. Mc. ■'Harbers v. Levy, 33 Tex. Civ. Cuin, 96 Ark. 512, 132 S. "W. 459; App. 480, 77 S. W. 261. Malette v. Wright, 120 Ga. 735, 48 = Gill V. Hardin, 48 Ark. 409, 3 S. E. 229 Quick v. Milligan, 108 S. W. 519, per Hemingway, J.; in Ind. 419, 9 N. E. 392, 58 Am. Rep. Turman v. Bell, 54 Ark. 273, 15 S. 49; Jeffersonville &c. R. Co. v. Oy- W. 886. "On the other side it is ler, 82 Ind. 394; Tuttle v. Church- said that the execution of a war- man, 74 Ind. 311; Crossen v. Sword- ranty deed without reservation is a land, 22 Ind. 427; Work v. Bray- most solemn declaration by the ton, 5 Ind. 396; Dodge v. Davis, 85 grantor that he has parted with all Iowa 77, 52 N. W. 2; McCleery v. his rights in the property, and di- Wakefield, 76 Iowa 529, 41 N. W. rectly negatives the reservation of 210, 2 L. R. A. 529; May v. Sturdi- any right; that those who see the vant, 75 Iowa 116, 39 N. W. 221, 9 deed are warranted in relying upon Am. St. 463; Sprague v. White, 73 such declaration as much as if it Iowa 670, 35 N. W. 751; ^Coon v. had been made to them orally upon Tramel, 71 Iowa 132, 32 N. W. 243; an inquiry, and that, if they ac- Hockman v. Thuma, 68 Kans. 519, quire interests in faith of such re- 75 Pac. 486; McNeil v. Jordan, 28 liance, the grantor in possession Kans. 7; Hoffman v. Gosnell, 75 will be estopped to assert any rights Md. 577, 24 Atl. 28 ; Hennessey v. secretly reserved from the grant; Andrews, 60 Mass. (6 Cush.) 170; that, as the grantor has declared Newhall v. Pierce, 5 Pick. (Mass.) that he parted with his entire es- 450; McBwen v. Keary, 178 Mich, tate, strangers about to deal with 6, 144 N. W. 524; Abbott v. Greg- the property would reasonably re- ory, 39 Mich. 68; Humphrey v. fer his continuous possession to the Hurd, 29 Mich. 44; Bennett v. Rob- sufferance of his grantee, and would inson, 27 Mich. 26; Dawson v. Dan- 967 POSSESSION AS NOTICE § 597 recording laws to protect purchasers from latent legal or equitable titles. Hence, its operation in such cases in giving notice to the world protects all persons against fraud by the grantors wrongfully selling lands a second time. And, as a general rule, when the same person has executed two deeds for the same land, the first deed re- corded will hold the title, unless the junior grantee has purchased with notice, in which case a prior recording of his deed would not avail against the prior deed of which he had notice. The statute has only given the priority to the junior deed first recorded, when the grantee has acted in good faith. If, at the time he makes the pur- chase, he has notice of an elder unrecorded deed, he must be regarded as acting in bad faith, and neither principles of justice nor the policy of the law will permit him to avail of the priority of the record. It then follows that actual, visible, open possession being regarded as notice equal to the recording of the deed under which the grantee is in possession, the person holding the first conveyance, and being in open, visible possession before the junior deed is recorded, must be held to be the owner of the title, as against the grantee in the junior deed."" Where a grantor took a mortgage while in possession from his grantee after the latter had given a mortgage to another, the last named mortgage, being first recorded, was held to have priority.^ The reason for this exception to the general rule is in some cases said to be, that a subsequent purchaser is entitled to rely upon the presump- bury Bank, 15 Mich. 489; Bloomer 24 Ore. 110, 32 Pac. 1045; Eastham V. Henderson, 8 Mich. 295, 77 Am. v. Hunter, 98 Tex. 560, 86 S. W. 323; Dec. 453; Burt v. Baldwin, 8 Nebr. Hoffman v. Blume, 64 Tex. 334; 487; Brophy Min. Co. v. Brophy &c. Hurt v. Cooper, 63 Tex. 362; Eylay Min. Co., 15 Nev. 101; Bell v. Twi- v. Eylay, 60 Tex. 315; Summers v. light, 18 N. H. 159; Bingham v. Sheern (Tex.), 37 S. W. 246; Hick- Kirkland, 34 N. J. Eq. 229; Groton man v. Hoffman, 11 Tex. Civ. App. Sav. Bank v. Batty, 30 N. J. Eq. 605, 33 S. W. 257; Murry v. Carl- 133; Van Keuren v. Central R. Co., ton, 65 Wash. 364, 118 Pac. 332, 44 38 N. J. L. 165; Seymour v. McKin- L. R. A. (N. S.) 314; Mateskey strey, 106 N. Y. 230, 12 N. E. 348, v. Feldman, 75 Wis. 103, 43 N. W. 14 N E 94- Staples v. Fenton, 5 733; Schwallback v. Milwaukee &c. Hun '(N. Y.) 172; New York L. Ins. R. Co., 69 Wis. 292, 34 N. W. 128, 2 Co. T. Cutler, 3 Sandf. Ch. (N. Y.) Am. St. 740; Denton v. White, 26 176- Red River Valley Land &c. Co. Wis. 679. See also Scott v. Gal- T Smith, 7 N. Dak. 236, 74 N. W. lagher, 14 Serg. & R. (Pa.) 333, 16 194- Lowe V. Wheeling &c. R. Co., 12 Am. Dec. 508; Jinks v. Moppm Ohio Cir. Ct. 743, 4 Ohio Cir. Dec. (Tex.), 80 S. W. 390. 85- Forsha v. Longworth, 1 Ohio "Cabeen v. Breckenridge, 48 Dl. Cir. Ct. 271, 1 Ohio Cir. Dec. 149, 91, per Walker, J- affd in 22 Wkly. L. Bui. 354; La 'Koon v. Tramel, 71 Iowa 132, Forest v Downer, 63 Ore. 176, 126 32 N. W. 243. See also Murray v. Pac. 995; Randall v. Lingwall, 43 Carlton, 65 Wash. 364, 118 Pac. 332, Ore. 383, 73 Pac. 1; Exon v. Dancke, 44 L. R. A. (N. S.) 314. 597 NOTICE AS AFFECTING PEIOEITT 968 tion that possession retained after a conveyance may be presumed to be a mere holding over at will, until it becomes convenient for the grantor to remove from the land. Moreover, a party ought not to be al- lowed to contradict the force and effect of a full conveyance by the mere fact of possession after his deed has been recorded.^ He is estopped from setting up any claim or title founded upon possession against the terms of his own deed.® "When, however, the grantor's right or title under which he holds possession was acquired after the making of his deed, he is entitled to the same protection as a third person, and his possession is notice of his rights to the same extent that the possession of a third person is notice of his rights. Some courts, however, hold that the grantor's possession after a' conveyance by him, especially if long continued, is notice of some interest or title in him not disclosed in his deed. Pos- session by the grantor is not regarded as substantially different from possession by a third person.^" This view has frequently been recog- 'Koon V. Tramel( 71 Iowa 132, 32 N. W. 243; Bloomer v. Henderson, 8 Mich. 395, 77 Am. Dec. 453 ; Hafter V. Strange, 65 Miss. 323, 3 So. 190; Eylay v. Eylay, 60 Tex. 315; Mates- key V. Feldman, 75 Wis. 103, 43 N. W. 733. "Van Keuren v. Central R. Co., 38 N. J. L. 165. " Turman v. Bell, 54 Ark. 273, 15 S. W. 886, Hemingway, J., deliver- ing the opinion, said: "Those that sustain the application of this rule say that by the terms of the deed the grantor has not the right of possession, and that his continuing possession gives notice that he has rights reserved not expressed in the deed; that, inasmuch as the rec- ords disclose no right of posses- sion, it is hut reasonable to con- clude that the continuing posses- sion rests upon some right not dis- closed by the records, and that the reasonableness of such conclusion imposes upon persons about to deal with the land the duty to make in- quiry." Shift V. Andress, 147 Ala. 690, 40 So. 824; Pell v. McElroy, 36 Cal. 268; Daubenspeck v. Piatt, 22 Cal. 330; Ronan v. Bluhm, 173 111. 277, 50 N. E. 694; Rock Island &c. R. Co. V. Dimick, 144 111. 628, 32 N. E. 291, 19 L. R. A. 105; Ford v. Mar- call, 107 111. 136; White v. White, 89 111. 460; Illinois Cent. R. Co. v. Mc- Cullough, 59 111. 166; Metropolitan Bank V. Godfrey, 23 111. 579; Hop- kins V. Garrard, 7 B. Mon. (Ky. i 312; Lytle v. Fitzpatrick, 24 Ky. L. 93, 67 S. W. 988; Boggs v. Ander- son, 50 Maine 161; McLaughlin v. Shepherd, 32 Maine 143, 52 Am. Dec. 646; McKechnie v. Hosklns, 23 Maine 230; Webster v. Maddox, 6 Maine 256; New v. Wheaton, 24 Minn. 406; Groff v. Ramsey, 19 Minn. 44; Morrison v. March, 4 Minn. 325; Smith v. Myers, 56 Nebr. 503, 76 N. W. 1084; Kahre v. Run- die, 38 Nebr. 315, 56 N. W. 888; Han- sen V. Berthelsen, 19 Nebr. 433, 27 N. W. 423; Seymour v. McKinstry, 106 N. Y. 230, 12 N. E. 348, 14 N. E. 94; Smith v. Phillips, 9 Okla. 297, 60 Pac. 117; Wright v. Bates, 13 Vt. 341; Lamoreux v. Huntley, 68 Wis. 24, 31 N. W. 331; Hoppin v. Doty, 25 Wis. 573. See also Stevenson v. Campbell, 185 111. 527, 57 N. E. 414; Broussard v. Brous- sard, 45 La. Ann. 1085, 13 So. 699 (purchase with knowledge and ap- proval of vendor); Palmer v. Bates, 22 Minn. 532; Cornell v. Maltby, 165 N. Y. 557, 59 N. E. 291, affg. 35 App. Div. 630, 56 N. Y. S. 1111. But see Cook v. Travis, 20 N. Y. 400, affg. 22 Barb. 338. 969 POSSESSIOK AS NOTICE § 598 nized in eases where a grantor has given an absolute deed, which was intended to operate merely as a mortgage, there being no defeasance, or the defeasance given not being recorded. ^^ Where through fraud or mistake the grantor's deed includes land other than that intended to be conveyed, his continued possession is constructive notice to a subsequent purchaser from the grantee. ^^ § 598. long continued possession of grantor. — ^When the grantor's possession has continued for a long period, the presumption of a claim of right hostile to the title granted arises in every case where such possession is inconsistent with the rights of the grantee; and in such case a court or jury might find the possession adverse from the nature of the possession, without proof of an express declaration on the part of the occupant that he claimed to hold in hostility to his grant.^'^ If, on the other hand, the possession has continued after the making of the deed but a short time, it might be reasonably referred to the suf- ferance of the grantee.^* Thus possession of grantors, continuing eight days after their deed was given and recorded, was not notice to a mortgagee, then making a loan to the grantee on security of the premises, of any rights of the grantors inconsistent with their deed.^^ If the grantor's possession is consistent with the rights of his grantee, notice may be imparted by it." No notice is imparted by the joint possession of the grantor and grantee. ^^ The possession of a cestui que trust, exercising all the rights of own- ership, does not impart notice to a purchaser of the legal title from "Hulin V. Stevens, 53 Mich. 93, "American Bldg. &c. Assn. v. 18 N. W. 569; Bennett v. Robinson, Warren, , 101 Ark. 163, 141 S. W. 27 Mich. 26. This case is distin- 765 (citing text); Turman v. Bell, guished from Bloomer v. Henderson, 54 Ark. 273, 15 S. W. 886 ; Kelly v. 8 Mich. 395, above cited, for the rea- Palmer, 91 Minn. 133, 97 N. W. 578; son that the possession in that case Bloomer v. Henderson, 8 Mich. 395, was comparatively recent, while the 77 Am. Dec. 453; Horbach v. Boyd, possession in Bennett v. Robinson 64 Nebr. 129, 89 N. W. 644. had continued for nearly three '"McEwen v. Keary, 178 Mich. 6, years. See post § 600. 144 N. W. 524 (eight days). "Holland v. Brown, 140 N. Y. ^"Chalfin v. Malone, 9 B. Mon. 344, 35 N. E. 577; MuUins v. "Wim- (Ky.) 496, 50 Am. Dec. 525; Cramer berly, 50 Tex. 457; Bumpas v. Zach- v. Benton, 4 Lans. (N. Y.) 291; But- ary (Tex.), 34 S. W. 672. ler v. Phelps, 17 Wend. (N. Y.) 642; "American Bldg. &c. Assn. v. Brinkman v. Jones, 44 Wis. 49S. Warren, 101 Ark. 163, 141 S. W. 765; " McCarthy v. Nicrosi, 72 Ala. 332, Turman v. Bell, 54 Ark. 273, 15 S. 47 Am. Rep. 418; Foulks v. Reed, 89 W 886; Stevens v. Castel, 63 Mich. Ind. 370; Jeffersonville, M. &c. R. 11, 29 N. W. 828; Bennett v. Robin- Co. v. Oyler, 82 Ind. 394; Butler v. son 27 Mich. 26; Emmons v. Mur- Stevens, 26 Maine 484; Bell v. Twi- ray, 16 N. H. 385; Brinkman v. light, 18 N. H. 159, 45 Am. Dec. 367: Jones 44 Wis. 498, per Taylor, J. Bllllngton v. Welsh, 5 Binn. (Pa.) See also Morgan v. McCuin, 96 Ark. 129, 6 Am. Dec. 406; Cameron v. Ro 512, 132 S. W. 459. mele, 53 Tex. 238. § 599 NOTICE AS APFECTIITG PEIOKITT 970 the trustee. His possession does not become adverse until the legal title is conveyed in violation of the trusts* § 599. Possession of mortgagor after foreclosure. — The continued possession of the mortgagor after the premises have been sold under a foreclosure against him is not deemed constructive notice of any subsequent title or interest he may have acquired which does not ap- pear of record.^'' Due diligence on the part of the mortgagee in ob- taining information, after having been put upon inquiry, is a test of good faith.^" Where the owner of mortgaged premises remained in actual possession after a void foreclosure sale and execution of the sheriffs deed, it was held that parties accepting mortgages on such premises from the purchasers at the sheriffs sale, took the mortgages with full knowledge of the rights of the owner in possession, and were not innocent mortgagees, entitled to liens on the premises under their mortgages. ^^ A judgment debtor, continuing in possession of land which has been sold under execution against him, may be presumed to hold under the title of the purchaser. The debtor's possession sug- gests no further inquiry.^'' § 600. Continued possession of mortgagor under unrecorded de- feasance. — If the mortgage be by an absolute deed, the defeasance of which is not recorded, the mortgagor's continued possession and occupation of the premises, within the knowledge of grantees of the mortgagee, is held by some courts to be sufBcient notice of the mort- gagor's title ;^'' but by others his possession is not regarded as notice of the defeasance,"* for the principle that possession is notice of the possessor's title is intended to protect only equitable rights, and not " Scott V. Gallagher, 14 Serg. & "W. 203. One who accepts mortgages R. (Pa.) 333, 16 Am. Dec. 508. This from the grantee in a deed absolute doctrine is, however, repudiated In in form intended as a mortgage. Pell V. McBlroy, 36 Cal. 268. with knowledge of such grantor's *° Dawson v. Danhury Banli, 15 actual possession, and who fails to Mich. 489. See also Cook v. Travis, make inquiry concerning his rights, 20 N. Y. 400. is not a mortgagee in good faith. '"Reed v. Gannon, 50 N. Y. 345. Teal v. Scandinavian - American =^ Hedlin v. Lee, 21 N. Dak. 495, Bank, 114 Minn. 435, 131 N. W. 486. 131 N. W. 390. "Wooldridge v. Miss. Valley Bank, '^ Cook V. Travis, 20 N. Y. 400. 36 Fed. 97 ; Asher v. Mitchell, 9 ^Pellv. McElroy, 36 Cal. 268; Dau- Bradw. (111.) 335; Crassen v. Swove- benspeck v. Piatt, 22 Cal. 330; Hu- land, 22 Ind. 427; Parnsworth v. lin V. Stevens, 53 Mich. 93, 18 N. W. Childs, 4 Mass. 637, 3 Am. Dec. 249; 569; Teal v. Scandinavian-American Hennessey v. Andrews, 6 Cush. Bank, 114 Minn. 435, 131 N. W. 486; (Mass.) 170; Newhall v. Burt, 7 New V. Wheaton, 24 Minn. 406, 2 N. Pick. (Mass.) 157; Newhall v. 971 POSSESSION AS IfOTICE § 601 to cover the possessor's fraud, or to protect him when he has no equity.^'' In accord with this view, it has been held that the grantor's con- tinued possession, after conveyance subject to an oral agreement that the grantee would hold the title in trust for the grantor, was not such constructive notice to the grantee's mortgagee as to put the latter upon inquiry concerning the grantor's rights.^" It seems immaterial that the absolute deed itself is unrecorded, and it has been held that con- tinued possession by the grantor whose absolute deed remained un- recorded did not operate as notice of a vendor's lien, to a subsequent purchaser from the' grantee who exhibited his absolute deed upon the sale.^^ The fact that a grantor after an absolute conveyance remains in possession has frequently been regarded as a circumstance tending to show that the transaction was a mortgage, and sufficient to put others upon inquiry as to the fact.^^ In like manner it has been held that where land is conveyed, and at the same time mortgaged back for the security of the purchase-money, and the grantor becoming the mort- gagee continues in actual possession and occupation of the land, but neither the deed nor the mortgage is recorded, and the mortgagor in the meantime makes another mortgage of it to a third person, the mortgage for the purchase-money is entitled to priority.^" § 601. Estoppel of occupant to rely upon possession as notice. — An occupant of land may be estopped by his acts from claiming that his possession imparts notice.'"' Thus, as against an innocent Pierce, 5 Pick. (Mass.) 450; Brophy ™La Forest v. Downer, 63 Ore. Mining Co. v. Brophy &c. Min. Co., 176, 126 Pac. 995. 15 Nev. 101; Patten v. Moore, 32 N. « Bryant v. Grand Lodge (Tex. H. 382; Groton Savings Bank v. Bat- Civ. App.), 152 S. W. 714. ty, 30 N. J. Eq. 126; La Forest v. ^Mercer v. Morgan, 136 Ga. 632, Downer, 63 Ore. 176, 126 Pac. 995; 71 S. E. 1075; Campbell v. Dearborn, Bryant v. Grand Lodge (Tex. Civ. 109 Mass. 130, 12 Am. Rep. 671; App.), 152 S. W. 714; Brinkman v. Lawrence v. Du Bois, 16 W. Va. 443; Jones, 44 Wis. 498. Lincoln v. WrigM, 4 De G. & J. 16. '^ Stafford Nat. Bank v. Sprague, See also McLean v. Clapp, 141 U. S. 17 Fed. 784; Sawyers v. Baker, 66 429, 35 L. ed. 804, 12 Sup. Ct. 29. Ala. 292; Gill v. Hardin, 48 Ark. See ante §§ 274, 328. 409, 3 S. W. 519; Yates v. Hurd, 8 =* McKechnie v. Hoskins, 23 Maine Colo. 343, 8 Pac. 575; Atkins v. Paul, 230; Parsell v. Thayer, 39 Micb. 467; 67 Ga. 97; Groton Sav. Bank v. Bat- But see Koon v. Tramel, 71 Iowa 132, ty, 30 N. J. Eq. 126; Losey v. Simp- 32 N. "W. 243. See ante § 468 et seq. son 11 N. J. Eq. 246; Minton v. ™ Groton Sav. Bank v. Batty, 30 New York &c. R. Co., 130 N. Y. 332, N. J. Eq. 126; Minton v. New York 29 N E 319; Berryhill v. Kircbner, Elev. R. Co., 130 N. Y. 332, 29 N. B. 96 Pa St 489. 319; Gill v. Hardin, 48 Ark. 409, 3 S. W. 519. § 601 NOTICE AS APFECTING PEIOEITT 972 mortgagee, notice from possession can not be set up by an occupant who, for the purpose of concealing his interest from creditors, placed the title in the name of another, and, after the latter had given a mortgage upon the land, kept silent and permitted the mortgagor to borrow more money of the mortgagee on a second mortgage; when, if such occupant had notified the mortgagee of his claim upon his first being made aware of the existence of the earlier mortgage, the mortgagee might have collected the mortgage debt, and would not have made the second loan on the security of the land.^'^ "The object of the law in holding such possession constructive no- tice, where it has been so held, is to protect the possessor from the acts of others who do not derive their title from him; not to protect him against his own acts, and especially against his own deed. If a party executes and delivers to another a solemn deed of conveyance of the land itself, and suffers that deed to go upon record, he says to all the world, 'Whatever right I have, or may have claimed to have in this land, I have conveyed to my grantee ; and though I am yet in possession, it is for a temporary purpose, without claim of right, and merely as a tenant at sufferance to my grantee.' This is the natural inference to be drawn from the recorded deed, and in the minds of all men, would be calculated to dispense with the necessity of further inquiry upon the point. All presumption of right or claim of right is rebutted by his own act or deed. One of the main objects of the registry law would be defeated by any other rule."^^ The owner of land conveyed it by absolute deed intended as a mort- gage, and the grantee independently executed mortgages thereon to a third person, while the owner was still in actual possession and occu- pancy of the property. The mortgagee was expressly informed before the mortgages were executed that the owner was so in possession, and the owner promptly notified the mortgagee, that the mortgagor had no interest in the land and had no right to mortgage it, and demanded the release and discharge thereof. It was held that the owner in pos- session was not estopped to question the validity of the mortgages. ^^ " Groton Sav. Bank v. Batty, 30 " Teal v. Scandinavian-American N. J. Eq. 126. Bank, 114 Minn. 435, 131 N. W. 486. '^ Bloomer v. Henderson, 8 Mich. 395, 405, 77 Am. Dec. 453, and cases cited. 973 FEAUD § 603 VII. Fraud as Affecting Priority Section Section 602. Fraudulent concealment of in- 603. Estoppel of mortgagee ty fraud- cumbrance. ulent concealment or misrep- resentation. § 602. Fraudulent concealment of incumbrance. — Another instance of constructive fraud arises when a person having a mortgage upon an estate conceals or denies its existence, or so acts in relation to it as to induce another to purchase the estate, or to loan additional money upon it, in the belief that it is free from incumbrance. Such fraudu- lent concealment will estop the first mortgagee from asserting his lien.^ What circumstances will amount to a fraudulent concealment or misrepresentation may depend in some measure upon the inquiry whether the prior mortgage is recorded or not; and, moreover, dif- ferent considerations will control in cases of this sort, where a registry system is in full operation, as it is in this country, from those that prevail in England, where the possession of the title deeds for the most part stands in place of registration. But whatever the circum- stances may be, "the rule of law is clear that, where one by his words or conduct wilfully causes another to believe the existence of a certain state of things, and induces him to act on that belief so as to alter his own previous position, the former is concluded from averring against the latter a different state of things as existing at the same time."^ § 603. Estoppel of mortgagee by fraudulent concealment or mis- representation. — A mortgagee allowing or inducing another to pur- chase the property as unincumbered, without disclosing his mortgage, may be precluded from setting it up against such purchaser;^ such, for instance, is the case of an attorney who acts for the mortgagor in drawing a deed for the conveyance of land from the mortgagor to a purchaser, but does not disclose a mortgage he himself holds upon the ' Chapman v. Hamilton, 19 Ala. ' Per Lord Denman, C. J., in Plck- 121; Webb v. Austin, 22 Ky. L. 764, ard v. Sears, 6 Ad. & El. 469. See 58 S. W. 808; Short v. Currier, 153 also Carpenter v. Wright, 52 Kans. Mass. 182, 26 N. B. 444; Tucker v. 221, 34 Pac. 798; Matlack v. Shaffer, Jackson, 60 N. H. 214; Chester v. 51 Kans. 208, 32 Pac. 890; Curtis v. Greer, 5 Humph. (Tenn.) 26; Green Stilson, 38 Kans. 302, 16 Pac. 678; V. Price, 1 Munf. (Va.) 449; Ibbctt- Peter v. Russell, 1 Eq. Cas. Abr. 322; son V. Rhodes, 2 Vern. Ch. 554, 23 Savage v. Foster, 9 Mod. 35; Sharpe Eng. Reprint 958; Pickard v. Sears, v. Foy, L. R. 4 Ch. App. 35; Berrls- 6 Ad. & El. 469. See also Lorch v. ford v. Milward, 2 Atk. 49. Aultman, 75 Ind. 162; Geary v. Por- *See ante § 602. ter, 17 Ore. 465, 21 Pac. 442. § 603 KOTICE AS AFFECTING PEIOEITT 974 property, though he knoT^s that the purchaser is buying it for its value in ignorance of the mortgage.* A mortgagee, however, whose mortgage is recorded, will not be so postponed merely because he knew that the mortgagor was making a subsequent conveyance of the premises, and did not make known his title:'' to have this effect, there must be actual and intentional fraud on his part;* or he must have done some act, or made some represen- tation to influence the conduct of another by inducing a belief of a given state of facts, when such party, having acted upon such belief, would be injured by showing a different state of facts. An estoppel in pais then arises against him. But he loses no right by neglecting to give a personal notice of his mortgage to one who is purchasing. The purchaser is presumed to know of the mortgage which has been duly recorded. He is bound at his peril to investigate the title.^ So, also, if a first mortgagee, having notice of a second mortgage, does anything to the prejudice of the latter, — as for instance, if he releases any part of the mortgaged premises without receiving pay- ment of any part of his mortgage debt, — ^he is, to the extent of injury done, postponed to the second mortgage.^ A mortgagee may not as- sert his lien against a subsequent purchaser or mortgagee to whom he made misleading statements or false representations in regard to pay- ment of the debt secured by his mortgage, or the amount remaining due upon it, or the property covered by the mortgage, or his priority relative to other liens, or other material particulars.' *L'Anioureux v. Vanderburgh, 7 534; Rector v. Board of Improve- Paige (N. Y.) 316. See also Lee v. ment, 50 Ark. 116, 6 S. W. 519; Munroe, 7 Crancli (TJ. S.) 366; Lind- Bramble v. Kingsbury, 39 Ark. 131; ley V. Martindale, 78 Iowa 379, 43 Clabaugh v. Byerly, 7 Gill (Md.) N. "W. 233. 354, 48 Am. Dec. 575; Rice v. •^ Carter v. Champion, 8 Conn. 549, Dewey, 54 Barb. (N. Y.) 455; 21 Am. Dec. 695; Clabaugh v. Byer- Erinckerhoff v. Lansing, 4 Johns, ly, 7 Gill (Md.) 354, 48 Am. Dec. Ch. (N. Y.) 65, 8 Am. Dec. 538. 575; Collier v. Miller, 137 N. Y. 332, ^Bailey v. Gould, "Walk. (Mich.) S3 N. E. 374; Brinokerhoff v. Lan- 478. See post §§ 604a, 605. sing, 4 Johns. Ch. (N. Y.) 65, 8 "Freeman v. Brown, 96 Ala. 301, Am. Dec. 538; Paine v. French, 4 11 So. 249; Hendricks v. Kelly, 64 Ohio 318; Lipscomb v. Goode, 57 S. Ala. 388; Broome v. Beers, 6 Conn. Car. 182, 35 S. E. 493; Palmer v. 198; Lasselle v. Barnett, 1 Blackf. Palmer, 48 Vt. 69. (Ind.) 150, 12 Am. Dec. 217; Pick- " Brinckerhoff V. Lansing, 4 Johns, ersgill v. Brown, 7 La. Ann. 297; Ch. (N. Y.) 65, 8 Am. Dec. 538; Piatt v. Squire, 12 Mete. (Mass.) Paine v. French, 4 Ohio 318; Pal- 494; Newman v. Mueller, 16 Nebr. nier v. Palmer, 48 Vt. 69. See also 5S3, 20 N. W. 843; Bissell v. Reiss, Marston v. Brackett, 9 N. H. 336; 3 Alb. L. J. (N. Y.) 302. See also Story Eq. Juris. § 391. Wells v. Pierce, 42 N. Y. 102, 4 Abb. 'Reynolds v. Kirk, 105 Ala. 446, Dec. (N. Y.) 559. 17 So. 95; Steele v. Adams, 21 Ala. 975 FEAUD § 603 If a mortgagee represents to another person that the deht secured by the mortgage has been paid or satisfied, and that nothing is due on it, and thereby induces him to release other security and take a mortgage of the same land, the last mortgage, as between the two mort- gagees, will take priority of the iirst, although the first was on record when such representation was made, as the person making the repre- sentation is estopped from disputing the truth of it with respect to the other, who was thereby induced to alter his condition.^* And so if the first mortgagee in any way combines with the mortgagor to in- duce another to loan money upon the estate in ignorance of the first mortgage, this fraud will, without doubt, postpone his own mortgage. ^^ And so if a second mortgagee stands by and sees the mortgagor induce the first mortgagee to release his mortgage, and take an assignment of another mortgage which he supposes to be next in priority to his own, but which is in fact subsequent to the second mortgage, as against the second mortgagee, this subsequent mortgage will be pre- ferred to his own.^^ When the holder of one of two mortgage deeds, executed on the same day, has represented to a person about to take an assignment of the other mortgage that the deeds were delivered at the same time, and that there was no priority in his deed, he is pre- cluded from claiming a priority against such person.^^ On the other hand, if third persons having an interest, whether as owners, lienholders, or creditors, practice fraud upon the mort- gagee, in order to invalidate his security or postpone it to their own claims, they will be estopped to contest the validity and priority of his mortgage.^* "Freeman v. Brown, 96 Ala. 301, ment. Martin v. Poole, 36 App. D. 11 So. 249; Dasselle v. Barnett, 1 C. 281. Blackf. (Ind.) 150, 12 Am. Dec. 217; "Dennis v. Burritt, 6 Cal. 670; Piatt V. Squire, 12 Mete. (Mass.) Wight v. Prescott, 2 Barb. (N. Y.) 494; Fay v. Valentine, 12 Pick. 196; Peter v. Russell, 1 Bq. Cas. Abr. (Mass.) 40, 22 Am. Dec. 391; Ches- 322; Northern Counties &c. Ins. Co. ter V Greer, 5 Humph. (Tenn.) 26; v. Whipp, 26 Ch. Div. 482, 53 L. J. Miller v. Bingham, 29 Vt. 82; Heane Ch. 629, 51 L. T. R. (N. S.) 806, 32 V. Rogers, 9 Barn. & Cres. 577. The Wkly. Rep. 626. See also Thomas release of a trust deed can not be v. Kelsey, 30 Barb. (N. Y.) 268. relied upon by one chargeable with " Stafford v. Ballou, 17 Vt. 329. notice that the same is fraudulent. "Broome v. Beers, 6 Conn. 198. Abraham Lincoln Bldg. &c. Assn. "Grimes v. Kimball, 8 Allen V Zuelk 124 111. App. 109. Al- (Mass.) 153; Corey v. Alderman, though the release of a trust deed 46 Mich. 540, 9 N. W. 844; Waldo by the trustees before payment of v. Richmond, 40 Mich. 380; Bus- the debt secured is a breach of well v. Davis, 10 N. H. 413; Neligh trust such release will protect a v. Michenor, 11 N. J. Eq. 539; subsequent innocent mortgagee for Schurtz v. Colvin, 55 Ohio St. 274, value without notice of nonpay- 45 N. E. 527; Woodbury v. Bruce, § 603 NOTICE AS APFECTING PRIORITY 976 If the holder of a conveyance absolute in form but in fact intended as a mortgage, sets it up as a purchase, he can not be considered a bona fide mortgagee. ^'^ One who takes a mortgage in the form of an absolute deed is bound, when questioned by a creditor of the mort- gagor or other party in interest, to fully and truly disclose the nature of his security; and a false statement of a material fact in relation to. such security, or a failure to give the information required, will post- pone his mortgage.^^ Where a mortgage and a deed were executed by the same grantor upon the same property to different persons without any reference in either deed to the other, and the agent of the mortgagee was guilty of negligence or bad faith in not recording the mortgage until after the deed was filed for record, the agent can not afterward purchase the land from the grantee of the deed and hold the title as against the mortgagee, for the priority of the deed is founded upon his own negligence, and he must hold subject to the rights of the mortgagee for whom he acted as agent.^' Where a mortgagee's agent had refused a loan because the property offered as security had been attached as equitably belonging to the mortgagor's grantor, and the loan was finally induced by such grant- or's written statement that the mortgagor held the absolute title, the grantor may not assert want of good faith on the part of the mort- gagee's agent in failing to make further inquiry.^^ The presence of an agent of a mortgagee at a receiver's sale of mortgaged property and his attestation of such sale without disclosing the mortgagee's title, and without objection, does not estop the mort- gagee from objecting to the sale, where he was not a party to the proceeding and the agent was not authorized to waive his principal's rights.^" 59 Vt. 624, 11 Atl. 52; London Free- "Geary v. Porter, 17 Ore. 465, 21 hold &c. Property Co. v. Suffield, 2 Pac. 442. Ch. 608, 66 L. J. Ch. 790, 77 L. T. " Mitchell v. Aten, 37 Kans. 33, 14 Rep. (N. S.) 445, 46 Wkly. Rep. 102. Pac. 497. See also Jones v. Levering, 116 Mo. "La Forest v. Downer, 63 Ore. App. 377, 91 S. W. 980. 176, 126 Pac. 995. " Metropolitan Bank v. Godfrey, " Lorch v. Aultman, 75 Ind. 162, 23 III. 579. 977 NEGLIGENCE AND MISCELLANEOUS MATTERS 604 VIII. Negligence and Miscellaneous Matters Affecting Priority Section 604. Negligence as evidence of fraud. 604a. Renewal or substitution of mortgages. 605. Loss of priority' by release or satisfaction. 606. Priority between notes secured by same mortgage. Section 607. Priority between unrecorded mortgages. 607a. Priority between simultaneous mortgages. 608. Agreements fixing priority. 609. Priority between mortgages and mechanics' liens. § 604. Negligence as evidence of fraud. — Negligence is not fraud, though it may be evidence of it.^ When a person having a mortgage upon an estate, or other interest in it, negligently puts it in the power of another to sell or mortgage the property to a third person who is ignorant of such mortgage or interest, he can not afterward assert his own title in priority to the title of the party whom he has suffered to be deceived.^ By negligence is meant the want of that reasonable de- gree of diligence and care which a man of ordinary prudence and capacity would be expected to exercise in the same circumstances. A person talcing a mortgage or other conveyance of real estate is chargeable with notice of such facts as are indicated upon the face of the deeds, whether they indicate anything to him or not; for if he does not use the precaution, which common prudence requires, to em- ploy a solicitor, he is in the same situation, with respect to construct- ive notice, as he would have been had he employed a solicitor.^ A mortgagee is likewise estopped to assert his priority where he has previously neglected to insist upon it, under circumstances which imposed upon him such a duty toward third persons,* or where he has ^ Jones T. Smith, 1 Hare 43; Worthlngton v. Morgan, 16 Sim. 457. ^'Briggs v. Jones, L. R. 10 Eq. 92; Rice V. Rice, 2 Drew 73; Robin- son's Law of Priority, 54; 1 Fisher on Mtg. (3d ed.) 550. In Briggs v. Jones, L. R. 10 Eq. 92, Lord Ro- mllly thus stated the principle of this rule: "A person who puts it in the power of another to deceive and raise money must take the conse- quences. He can not afterward rely on a particular or a different equity." Most of the English cases upon this point relate to the mat- ter of the delivery of title-deeds, and therefore are for the most part of use in this country only as Illus- trating the general principles of the law of notice. See also Thorpe 62— Jones Mtg.— Vol. I. v. Hodsworth, L. R. 7 Eq. 139; Lay- ard V. Maud, L. R. 4 Eq. 397; North- ern Counties &c. Ins. Co. v. Whipp, 26 Ch. Div. 482, 53 L. J. Ch. 629, 51 L. T. R. (N. S.) 806, 32 Wkly. Rep. 626; Union College v. Wheeler, 61 N. Y. 88; Stafford v. Ballou, 17 Vt. 329. "Kennedy v. Green, 3 Myl. & K. 699. The Master of the Rolls refer- ring to this case in Greensdale v. Dare, 20 Beav. 284, said that the doctrine of this case requires to be administered with the greatest care and delicacy, and that probably each case must stand upon the peculiar facts belonging to It. * Sullivan v. Corn Exch. Bank, 154 App. Div. 292, 139 N. Y. S. 97; Ducros v. rortin, 8 Rob. (La.) 165 § 604a NOTICE AS AFFECTING PEIOEITT 978 already received satisfaction of his debt by judgment and sale on execution.^ However, it has been held that mere carelessness or want of prudence in guarding his own interests will not postpone the first mortgagee, when not accompanied by fraud or breach of good faith toward others.® Where owners of land failed to exercise ordinary business precau- tion, and were induced by fraud to convey their land to a corporation, a mortgagee who took the usual precautions before lending money to the corporation and accepted a mortgage on the land as security, ac- quired a valid raortgageJ Where the beneficiary of a trust deed loaned money in good faith and in reliance upon the record title, without any negligence or knowl- edge of fraud by the borrower in making the trust deed a first lien on the land tendered as security, it was held that the beneficiary could not be prejudiced by such fraud.* § 604a. Renewal or substitution of mortgages. — ^Whether a second mortgage between the same parties and upon the same lands given upon the release or cancelation of the first is taken merely as a re- newal or in payment and satisfaction of the first mortgage depends largely upon the intention of the parties. Where the intention of the parties is simply to make a renewal and extension of the old debt, and the satisfaction of the old mortgage and the taking of a new one are practically simultaneous acts or parts of the same transaction, the taking of the second mortgage is not considered an extinguishment of the first, but a renewal thereof, and does not give priority to inter- vening judgment or mortgage creditors of the mortgagor,* especially, (estoppel by acquiescence through Iowa 504, 43 N. W. 301; Teal v. failure to answer citation). See Scandinavian &c. Bank, 114 Minn. also Dugan v. Lyman (N. J. Eq.), 435, 131 N. W. 486. The mere fact 23 Atl. 657 (acquiescence of a mere that a mortgagee left the title deeds volunteer, acting for mortgagee. In- with the mortgagor is not alone suflScient) ; Blair v. St. Louis &o. suflacient to postpone the first mort- R. Co., 22 Fed. 471 (neglect to fore- gage to a second, taking without close upon default) ; Mayo v. Cart- notice. There must be fraud or Wright, 30 Ark. 407 (no presumption gross negligence. Berry v. Mutual of acquiescence when mortgage is Ins. Co., 2 Johns. Ch. (N. Y.) 603. recorded); Boyles v. Knight, 123 'Trammell v. Mower (Ala.), 62 Ala. 289, 26 So. 939. So. 528. "Delaware &c. Canal Co. v. Bon- 'Zimmer v. Farr, 225 111. 457, 80 nell, 46 Conn. 9; Exline v. Lowery, N. B. 261. 46 Iowa 556. "Griffin v. International Trust "Northern Counties of England Co., 161 Fed. 48, 88 C. C. A. 212; F. Ins. Co. V. Whipp, 26 Ch. D. 482, Swift v. Kortreoht, 112 Fed. 709, 50 63 L. J. Ch. 629, 51 L. T. Rep. (N. C. C. A. 429; Higman v. Humes, 127 S.) 806, 32 Wkly. Rep. 626. See Ala. 404, 30 So. 733 ; Dillon v. Byrne, also Martin v. Central L. &c. Co., 78 5 Cal. 455; Roberts v. Doan, 180 979 NEGLIGENCE AND MISCELLANEOUS MATTERS § 604a where the renewal or substitution is made in good faith, without no- tice of the intervening lien, and without any intention to release the original lien.^" The rule, however, does not apply where there is evidence of an intention to waive the lien of the prior mortgage or to effect a payment thereof ;^^ neither is the rule applicable where the new mortgage is given to a different person, from whom the debtor bor- 111. 187, 34 N. B. 207; Campbell v. Trotter, 100 111. 281; Shaver y. Wil- liams, 87 111. 469; Christie v. Hale, 46 III. 117; McChesney v. Ernst, 89 111. App. 164, affd. In 186 111. 617, 58 N. E. 399; Pouder v. Ritzlnger, 119 Ind. 597, 20 N. E. 654; Calvert V. Landgraf, 34 Ind. 388; Matchett V. Knisely, 27 Ind. App. 664, 62 N. E. 87; Watson v. Bowman, 142 Iowa 528, 119 N. W. 623; St. Croix Lum- ber Co. v. Davis, 105 Iowa 27, 74 N. W. 756; Young v. Shaner, 73 Iowa 555, 35 N. W. 629, 5 Am. St. 701; French v. Poole, 83 Kans. 281, 111 Pac. 488; Rowe v. Simmons, 14 Ky. L. 780, 21 S. W. 872; Eggeman V. Eggeman, 37 Mich. 436; Drane V. Newsom, 73 Miss. 422, 19 So. 200; Bramlett v. Watlin, 71 Miss. 902, 15 So. 934; Sledge v. Obenchain, 58 Miss. 670; Van Duyne v. Shann, 41 N. J. Eq. 311, 7 Atl. 429; Northeast- ern Perinanent Sav. &c. Assn. v. Barker, 66 Hun 635, 50 N. Y. St. 543, 21 N. Y. S. 832; Flagler v. Mal- loy. 56 Hun 643, 30 N. Y. St. 612, 9 N. Y. S. 573; Benson v. Maxwell, 10 Sad. (Pa.) 380, 14 Atl. 161; Parker v. Parker, 52 S. Car. 382, 29 S. E. 805; Maas v. Tacquard, 33 Tex. Civ. App. 40, 75 S. W. 350. See also Watson v. Bowman, 142 Iowa 528, 119 N. W. 623; Washington V. Slaughter, 54 Iowa 265, 6 N. W. 291; Fish V. Anstey Constr. Co., 71 Misc. 2, 130 N. Y. S. 927; Paris V. Lawyers' Title Ins. &c. Co., 141 App. Div. 866, 126 N. Y. S. 753; Lowenfeld v. Empire City Wood- working Co., 249 App. Div. 617, 124 N. Y. S. 178; United States v. Crookshank, 1 Edw. (N. Y.) 233. But see Stearns v. Godfrey, 16 Maine 158; Woollen v. Hillen, 9 Gill (Md.) 185, 52 Am. Dec. 690; Traders' Nat. Bank v. Woodlawn Mfg. Co., 100 N. Car. 345, 5 S. E. 81; Traders' Nat. Bank v. Law- rence Mfg. Co., 96 N. Car. 298, 3 S. E. 363; Union &c. Bank v. Smith, 107 Tenn. 476, 64 S. W. 756; Atkin- son v. Plum, 50 W. Va. 104, 40 S. E. 587, 58 L. R. A. 788; First Nat. Bank v. Citizens' State Bank, 11 Wyo. 32, 70 Pac. 726, 100 Am. St. 925. See also Mclntire v. Garmany, 8 Ga. App. 802, 70 S. E. 198; Low- enfeld V. Wimple, 203 N. Y. 646, 97 N. E. 1108. " GrlflBn v. International Trust Co., 161 Fed. 48, 88 C. C. A. 212; Wooster v. Cavender, 54 Ark. 153, 15 S. W. 192, 26 Am. St. 31; Side- ner v. Pavey, 77 Ind. 241; Drury V. Briscoe, 42 Md. 154; Laconia Sav. Bank v. Vittum, 71 N. H. 465, 52 Atl. 848, 93 Am. St. 561; Institute Building &c. Assn. v. Edwards, 81 N. J. Eq. 359, 86 Atl. 962; Hutchin- son V. Swartsveller, 31 N. J. Eq. 205; Barnes v. Camack, 1 Barb. (N. Y.) 392; Turner Bau Verein No. 3 V. Dalheimer, 1 Ohio S. & C. PI. Dec. 237, 2 Ohio N. P. 248; Pearce V. Buell, 22 Ore. 29, 29 Pac. 78; Upton V. Hugos, 7 S. Dak. 476, 64 N. W. 523; Workingman's Bldg. &c. Assn. V. Williams (Tenn.), 37 S. W. 1019. "Brown v. Dunckel, 46 Mich. 29, 8 N. W. 537; St. Albans Trust Co. V. Farrar, 53 Vt. 542. The mort- gagee may lose his priority upon substitution of mortgages by con- duct toward the junior incum- brancer operating as an equitable estoppel. McLeod v. Wadland, 25 Ont. 118. It has been held that the renewal is effective where the jun- ior mortgagee or creditor has not acted to his prejudice I'n reliance on the cancellation or discharge of the first mortgage. International Trust Co. V. Davis &c. Mfg. Co., 70 N. H. 118, 46 Atl. 1054. See also Geib V. Reynolds, 35 Minn. 331, 28 N, W. 923; Kidder v. Barnes, 18 N. Dak. 276, 122 N. W. 378. § 605 NOTICE AS AFFECTING PEIOKITT 980 rowed the money to pay ofE the old mortgage,^^ nor where the new mortgage secures a distinct debt from the old, or an additional debt ;^^ the satisfaction in such cases operating as a complete discharge of the first mortgage. To properly efEect a renewal of the first mortgage without loss of priority, it is necessary that the release or cancelation of the old mort- gage and the giving of the new should be parts of the same transac- tion, or so nearly simultaneous as to clearly evidence the intention of the parties to make the latter a mere continuation or renewal of the former. If a considerable interval of time elapses, the priority of lien is lost." A recital in the new mortgage that it is given in re- newal of the old is perhaps the best evidence of such intention, to preserve its priority; but the absence of such recital will not neces- sarily affect the right of priority, especially where the junior mort- gagee knew of the transaction.^" It has been held that an extension or renewal agreement need not be recorded to operate against subse- quent incumbrancers or purchasers.^" § 605. Loss of priority by release or satisfaction. — It sometimes happens that a mortgagee may lose his position of priority, and, with- out intending to impair his own security, find himself in the place of a subsequent mortgagee, through want of care in dealing with the mortgaged property. Thus, if a mortgagee knowingly and under- standingly cancels his mortgage when there is a second mortgage upon the property, and in lieu of the mortgage takes an absolute convey- ance of the property, or a new mortgage, in the absence of any fraud on the part of the holder of the second mortgage, the lien of the first mortgage will not be revived, nor the second mortgagee prevented from reaping the benefit of the priority of his mortgage upon the records.^^ "Holt V. Baker, 58 N. H. 276; Mclntire v. Garmany, 8 Ga. App. Banta v. Garmo, 1 Sandf. Ch. (N. 802, 70 S. E3. 198. Y.) 383. But see Elliott V. Tainter, "Lester v. Richardson, 69 Ark. 88 Minn. 377, 93 N. W. 124; Cliet- 198, 62 S. W. 62; Elizabethport v. wynd V. Allen, 1 Ch. 353, 68 L. J. Whitlock, 37 Fla. 190, 20 So. 255. Ch. 160, 80 L. T. Rep. (N. S.) 110, "Roberts v. McNeal, 80 111. App. 47 Wkly. Rep. 200. 536. >^ Edwards v. Thorn, 25 Fla. 222, >« Kraft v. Holzman, 206 111. 548, 5 So. 707; Brown v. Dunokel, 46 69 N. E. 574. See also Whittacre Mich. 29, 8 N. W. 537; McKeen v. v. Fuller, 5 Minn. 508. Haseltine, 46 Minn. 426, 49 N. W. " Prazee v. Inslee, 2 N. J. Eq. 239. 195; Smith v. Bynum, 92 N. Car. The chancellor said that to revive 108. See also Gerrity v. Wareham the mortgage in such case would be Sav. Bank, 202 Mass. 214, 88 N. E. giving encouragement to negli- 1084; Buzzell v. Still, 63 Vt. 490, 22 gence, and would destroy the value Atl. 619, 25 Am. St. 777. But see of a public record. Keohane v. 981 NEGLIGENCE AND MISCELLANEOUS MATTEES § 605 As a general rule the entry upon the record of a formal release or sat- isfaction of a mortgage, whatever may be its effect upon the rights or equities of the original parties, will operate in favor of a junior lienor without notice of such equities, thus giving his lien priority;^* un- less the release or satisfaction was made for a special purpose, such as a renewal, without any intention to displace the lien of the mortgage, and the Junior lienor had notice thereof.^" If the first mortgagee has knowledge of subsequent liens, he has no right to release his mortgage to the prejudice of such liens ;^° and if he would thus impair the security of a junior mortgagee by releasing the mortgagor from personal liability, the- first mortgagee thereby postpones his own lien to that of the second mortgagee.^^ Smith, 97 111. 156; Skeele v. Stock- er, 11 Bradw. (111.) 143; Daws v. Craig, 62 Iowa 515, 17 N. W. 778; Holt V. Baker, 58 N. H. 276; Hutch- inson V. Bramhall, 42 N. J. Eq. 372, 7 Atl. 873; Smith v. Brackett, 36 Barb. (N. Y.) 571; Banta v. Garmo, 1 Sandf. Ch. (N. Y.) 383. A par- tial release of the first mortgage inures pro tanto to the benefit of the second mortgage. Warner v. Blakeman, 36 Barb. (N. Y.) 501. See also Emery v. Vaughan, 18 Ky. L. 281, 36 S. W. 9. See rule of pro rata division, post §§ 822, 874c, 966- 971, 1701. "Persons v. ShaefCer, 65 Cal. 79, 3 Pac. 94; Havighorst v. Bowen, 214 111. 90, 73 N. E. 402; Oliver v. Gill, 48 111. App. 424; Smith v. Lowry, 113 Ind. 37, 15 N. E. 17; Valley Nat. Bank v. Des Moines Nat. Bank, 116 Iowa 541, 90. N. W. 342; Stanbrough v. Daniels, 88 Iowa 314, 55 N. W. 466; Bank of Indiana v. Anderson, 14 Iowa 544, 83 Am. Dec. 390; Mar- pie V. Marple, 63 Kans. 426, 65 Pac. 645; Golding v. Golding, 43 La. Ann. 655, 9 So. 638; Moran v. Roberge, 84 Mich. 600, 48 N. W. 164; Fergu- son V. Glassford, 68 Mich. 36, 35 N. W. 820; Harrison v. Johnson, 18 N. J. Eq. 420; New York Co-Operative Bldg. &c. Assn. v. Brennan, 62 App. Div. 610, 70 N. Y. S. 916; Traders' Nat. Bank v. Woodlawn Mfg. Co., 100 N. Car. 345, 5 S. B. 81; Morris V. Beecher, 1 N. Dak. 130, 45 N. W. 696; Steele v. Walter, 204 Pa. St. 257, 53 Atl. 1097; Quattlebaum v. Black, 24 S. Car. 48; Evans v. Roan- oke Sav. Bank, 95 Va. 294, 28 S. E. 323; Conner v. Welch, 51 Wis. 431, 8 N. W. 260. See also Tolman v. Smith, 85 Cal. 280, 24 Pac. 743; McCarthy v. Miller, 122 111. App. 299; Barnes v. Mott, 64 N. Y. 397, 21 Am. Rep. 625; Warner v. Blake- man, 36 Barb. (N. Y.) 501; Jamison V. Gjemenson, 10 Wis. 411; Engine Wks. Co. V. Livingstone, 7 Ont. L. R. 740, 3 Ont. W. R. 670. "Edwards v. Weil, 99 Fed. 822, 40 C. C. A. 105; Farmers' Bank v. Butterfield, 100 Ind. 229. '° McLean v. Lafayette Bank, 3 McLean (U. S.) 587, Fed. Cas. No. 8888. See also Nelson v. McKee (Ind. App.), 99 N. E. 447; Turner V. Parker, 10 Rob. (La.) 154; Schaad v. Robinson, 50 Wash. 283, 97 Pac. 104. ^Sexton V. Pickett, 24 Wis. 346. The junior mortgagee may insist upon payment or acts of satisfac- tion of the senior lien, in order to secure for himself the priority to which he has become entitled and to prevent reinstatement of the senior mortgage, to his prejudice. Cowley V. Shelby, 71 Ala. 122; Fox V. Blossom, 17 Blatchf. (U. S.) 352, Fed. Cas. No. 5008; Redin v. Bran- ham, 43 Minn. 283, 45 N. W. 445; Conlon V. Minor, 94 App. Div. 458, 88 N. Y. S. 224; Angel v. Boner, 38 Barb. (N. Y.) 425; Sawyer v. Senn, 27 S. Car. 251, 3 S. E. 298. See also Webster v. Ypsilanti Canning Co., 149 Mich. 489, 113 N. W. 7. § 605 NOTICE AS AFFECTING PRIORITY 982 In case the entry of the satisfaction of a mortgage is procured by fraud or deception, or is made without the proper authority, the lien of the mortgagee is not thereby postponed to a junior incumbrancer, but may be restored or the satisfaction canceled,^^ especially where the junior incumbrancer had actual or constructive notice of the con- tinuing rights of the senior mortgagee.^'' Where, however, the fraudu- lent or unauthorized entry of satisfaction was due to the mortgagee's own negligence or laches, the satisfaction must stand and his priority is lost.^* The same principles apply to the fraudulent release of a trust deed by the trustee, without receiving satisfaction.^^ Where a senior mortgage is released without being paid, and at the same time a new mortgage is taken for the same sum, the question arises whether the junior mortgage is thereby let into the position of priority. Although the transaction be a simultaneous one, and is not intended to impair the lien of the first mortgage, it is held that the "Appelman v. Gara, 22 Colo. 397, 45 Pac. 366; Stanley v. Valentine, 79 III. 544; McConnell v. American Nat. Bank (Ind. App.), 103 N. E. 809; Foster v. Paine, 63 Iowa 85, 18 N. W. 699, 56 Iowa 622, 10 N. W. 214; Bruse v. Nelson, 35 Iowa 157; Wiscomb v. Cubberly, 51 Kans. 580, 33 Pac. 330; Horton v. Cutler, 28 La. Ann. 331; De St. Homes v. Blanc, 20 La. Ann. 424, 96 Am. Dec. 415; Robinson v. Sampson, 23 Maine 388; Sheldon v. Holmes, 58 Mich. 138, 24 N. W. 795; Keeler v. Hannah, 52 Mich. 535, 18 N.' "W. 346; Whipple v. Fowler, 41 Nebr. 675, 60 N. W. 15; Collignon v. Col- lignon, 52 N. J. Eq. 516, 28 Atl. 794; Heyder v. Excelsior Bldg. &c. Assn., 42 N. J. Eq. 403, 8 Atl. 310, 59 Am. Rep. 49; Lockard v. Joines (N. J.), 23 Atl. 1075; Young v. Hill, 31 N. J. Eq. 429; Harris v. Cook, 28 N. J. Eq. 345; Harrison v. New Jersey R. &c. Co., 19 N. J. Eq. 488; Water- man V. Webster, 108 N. Y. 157, 15 N. E. 380; Fassett v. Smith, 23 N. Y. 252; Weaver v. Edwards, 39 Hun (N. Y.) 233, affd. 121 N. Y. 653, 24 N. E. 1092; King v. McVickar, 3 Sandf. Ch. (N. Y.) 192; 'Lambert V. Leland, 32 N. Y. Super. Ct. 218; Kern v. A. P. Hotaling Co., 27 Ore. 205, 40 Pac. 168, 50 Am. St. 710; Independent Bldg. &c. Assn. v. Real Estate Title Ins. &c. Co., 156 Pa. St. 181, 27 Atl. 62; Brown v. Henry, 106 Pa. St. 262; Wilton v. May- berry, 75 Wis. 191, 43 N. W. 901, 6 L. R. A. 61, 17 Am. St. 193. ^ Connecticut Gen. L. Ins. Co. v. Burnstine, 131 U. S. cliii, 24 L. ed. 706; Bldridge v. Connecticut Gen. L. Ins. Co., 8 MacArthur (D. C.) 301; Etzler v. Evans, 61 Ind. 56; Howe V. White (Ind. App.), 67 N. E. 203; Ferguson v. Glassford, 68 Mich. 36, 35 N. W. 820; Pierie v. Metz, 9 Pa. Dist. 341. =« Wittenbrock v. Parker, 102 Cal. 93, 36 Pac. 374, 24 L. R. A. 197, 41 Am. St. 172; Robbins v. Todman. 28 Kans. 491; Heyder v. Excelsior Bldg. &c. Assn., 42 N. "J. Eq. 403, 8 Atl. 310, 59 Am. Rep. 49; Harris V. Cook, 28 N. J. Eq. 345; Charles- ton V. Ryan, 22 S. Car. 339, 53 Am. Rep. 713. "Connecticut Gen. L. Ins. Co. v. Eldredge, 102 U. S. 545, 26 L. ed. 245; Jackson v. Blackwood, 4 Mao- Arthur & M. (D. C.) 188; Chicago &c. R. Land Co. v. Peck, 112 111. 408; Barbour v. Scottish- American Mtg. Co., 102 111. 121; Southerland v. Fremont, 107 N. Car. 565, 12 S. E. 237; Evans v. Roanoke Sav. Bank, 95 Va. 294, 28 S. E. 323. See also Havighorst v. Bowen, 214 111. 90, 73 N. E. 402. 983 NEGLIGENCE AND MISCELLANEOUS MATTEBS 606 release, if it be absolute in terms, will discharge the lien, and the new mortgage will be only a subordinate lien.^" But when a creditor to whom land has been conveyed in trust, to secure a debt, by a deed absolute in form reconveys it to his grantor, and simultaneously takes back a mortgage to secure the same debt, he does not lose his lien in equity as against a judgment rendered against the debtor subsequent to the original conveyance. ^^ § 606. Priority between notes secured by same mortgage. — Prior- ity of lien between the holders of several notes secured by a mortgage is, by some authorities, determined according to the order of their maturity.^* If judgment is obtained on one of the notes, that takes ^"Woollen V. Hillen, 9 Gill (Md.) 185. To the same effect, see also Neidig V. Whiteford, 29 Md. 178; Lester v. Richardson, 69 Ark. 198, 62 S. W. 62. ^Christie v. Hale, 46 111. 117; International Trust Co. v. Davis &c. Mfg. Co., 70 N. H. 118, 46 Atl. 1054; Holt V. Baker, 58 N. H. 276. See post §§ 927a and 971. ^ McVay v. Bloodgood, 9 Port. (Ala.) 547; Wilson v. Hayward, 6 Fla. 171; Schultz v. Plankinton Bank, 141 111. 116, 30 N. E. 346, 33 Am. St. 290; Koester v. Burke, 81 111. 436; Harrington v. McCollum, 73 111. 476; Gardner v. Diederichs, 41 111. 158; Funk v. McReynolds, 33 111. 481; Vansant v. Allmon, 23 111. 30; Sargent v. Howe, 21 111. 148; Chandler v. O'Neil, 62 111. App. 418; Horn V. Bennett, 135 Ind. 158, 34 N. E. 321, 24 L. R. A. 800; Park- hurst V. Watertown Steam Engine Co., 107 Ind. 594, 8 N. E. 634; Ger- ber f. Sharp, 72 Ind. 553; Doss v. Ditmars, 70 Ind. 451; People's Sav. Bank v. Finney, 63 Ind. 460; Minor V Hill, 58 Ind. 176, 26 Am. Rep. 71; Davis v. Langsdale, 41 Ind. 399; Grouse v. Holman, 19 Ind. 30; Mur- dock V. Ford, 17 Ind. 52; Harris v. Harlan, 14 Ind. 439; Hough v. Os- borne, 7 Ind. 140; Stanley v. Beatty, 4 Ind. 134; State Bank v. Tweedy, 8 Blackf. (Ind.) 447, 46 Am. Dec. 486; Gilman v. Heitman, 137 Iowa 336, 113 N. W. 932; Leavitt v. Reyn- olds, 79 Iowa 348, 44 N. W. 567, 7 L. R. A. 365; Walker v. Scheiber, 47 Iowa 529; Massie v. Sharpe, 13 Iowa 542; Sangster v. Love, 11 Iowa 580; Hinds v. Mooers, 11 Iowa 211; Robinson v. Waddell, 53 Kans. 402, 36 Pac. 730; Aultman-Taylor Co. v. McGeorge, 31 Kans. 329, 2 Pac. 778; Richardson v. McKim, 20 Kans. 346; Wilson v. Eigenbrodt, 30 Minn. 4, 13 N. W. 907; Huffard v. Gott- berg, 54 Mo. 271; Thompson v. Field, 38 Mo. 320; Mitchell v. La- dew, 36 Mo. 526, 88 Am. Dec. 156; Hunt V. Stiles, 10 N. H. 466; Speer V. Whitfield, 10 N. J. Eq. 107; Bridenbecker v. Lowell, 32 Barb. (N. Y.) 9; Anderson v. Sharp, 44 Ohio St. 260, 6 N. B. 900; Winters v. Franklin Bank, 33 Ohio St. 250; Kyle V. Thompson, 11 Ohio St. 616; Wohlgemuth v. Standard Drug Co., 8 Ohio Cir. Dec. 9, 14 Ohio Cir. Ct. Rep. 316; Belding v. Manly, 21 Vt. 550; Gwathmeys v. Ragland, 1 Rand. (Va.) 466; McClintic v. Wise, 25 Grat. (Va.) 448, 18 Am. Rep. 694; American Sav. Bank &c. Co. V. Helgesen, 64 Wash. 54, 116 Pac. 837, Ann. Cas. 1913A, 390; Norris V. Beaty, 6 W. Va. 477; Pierce v. Shaw, 51 Wis. 316, 8 N. W. 209; Lyman v. Smith, 21 Wis. 674; Ma- rine Bank v. International Bank, 9 Wis. 57; Wood v. Trask, 7 Wis. 566, 76 Am. Dec. 230. See also Shaw v. Crandon State Bank, 145 Wis. 639, 129 N. W. 794. The rule applies only where the holders of the re- spective notes stand equally in equity as to each other, and as to the acquisition of their security. Shaw V. Crandon State Bank, 145 Wis. 639, 129 N. W. 794. See post §§ 1699-1702, 1939. § 606 NOTICE AS AFFECTING PEIOEITT 984 the place of the note on which it was rendered.^' The holder of the note first maturing may, upon default, or at any time afterward, fore- close and sell the premises in satisfaction of his debt.^" His delay to enforce his rights does not impair his prior right.'^ But the mortgagee may, by agreement at the time of assigning a portion of the debt or one or more of the notes or bonds secured by his mortgage, give to the assignee priority to the extent of the amount assigned him, irrespective of the time of maturity.^^ And therefore, one who takes an assignment of a part of the notes secured by a mort- gage should inquire of the maker and of the payee whether the others have been sold with a preferred lien upon the security. It is negligence on his part not to make such inquiry; and if the preferred lien has been given, it will be valid against such assignee. ^^ And where the parties to a mortgage, securing several debts or notes, agree upon the order in which they shall be paid, by recital in the mortgage, such a stipulation is binding upon them and their assignees with notice.^* One holding a mortgage securing several promissory notes may assign part of the notes, and a corresponding interest in the mortgage, giv- ing priority to the assignee, or a pro rata interest in the security, ac- cording to the terms of the assignment.'^ But the rule having the greater weight of authority is a pro rata ap- plication of the security whereby the several holders of the notes secured by a mortgage though they mature at different times are en- ==> Funk v. McReynolds, 33 111. 481. Jennings v. Moore, 83 Mich. 231, 47 =° Lyman v. Smith, 21 Wis. 674; N. W. 127, 21 Am. St. 601. Marine Bank v. International Bank, ^ Walker v. Dement, 42 111. 272. 9 "Wis. 57; Wood v. Trask, 7 Wis. =* Richards v. Holmes, 18 How. 566, 76 Am. Dec. 230. Upon default (U. S.) 143, 15 L. ed. 304; Walters in payment of one note, the mort- v. Ward, 153 Ind. 578, 55 N. E. 735; gagee may take up that and the Dunham v. W. Steele Packing &c. other notes not due, and hold the Co., 100 Mich. 75, 58 N. W. 627; mortgage as security therefor, as Ellis v. Lamme, 42 Mo. 153; West against a subsequent mortgagor. End Trust Co. v. Wetherill, 77 N. Mead v. Hammond, 107 App. Div. J. Bq. 590, 78 Atl. 756 (priority of 575, 95 N. Y. S. 241. interest over principal) ; Coon v. "^ Lyman v. Smith, 21 Wis. 674. Bosque Bonita Land &c. Co., 8 N. "=Grattan v. Wiggins, 23 Cal. 16; Mex. 123, 42 Pac. 77; Wohlgemuth Walker v. Dement, 42 111. 272; Mor- v. Standard Drug Co., 14 Ohio Cir. gan V. Kline, 77 Iowa 681, 42 N. Ct. 316, 8 Ohio Cir. Dec. 9 (stipula- W. 558; Cooper v. Ulmann, Walk, tion binding only upon assignees Ch. (Mich.) 251; Solberg v. Wright, with notice). 33 Minn. 224, 22 N. W. 381; Thay- =° Romberg v. McCormick, 194 111. er's Appeal, 6 Sad. (Pa.) 392, 9 Atl. 205, 62 N. E. 537; Howard v. 498. See also Earle v. Sunnyside Schmidt, 29 La. Ann. 129; Lane v, Land Co.. 150 Cal. 214, 88 Pac. 920; Davis. 14 Allen (Mass.) 225. 985 NEGLIGENCE AND MISCELLANEOUS MATTERS 607 titled in the absence of any espress agreement to share pro rata the proceeds of a sale of the mortgaged property.^® A mortgage executed by one partner in the partnership name of real estate belonging to the firm, to secure a partnership debt, con- veys the legal interest of such partner and the equitable interest of the copartner; as where A executed a mortgage in the firm name of A & Bro., and himself acknowledged it. But a person taking a subsequent mortgage, properly executed by both partners, has priority as to the interest of the partner who did not execute the first mortgage.^'' A mortgage by one tenant in common of his interest in partnership real estate, made for a valid consideration to one who has no notice of the partnership, is not subject to any equities arising out of the partner- ship relation of the grantor.^* § 607. Priority between unrecorded mortgages. — As between sev- eral unrecorded mortgages or other conveyances, that of prior execu- tion takes precedence,^' and, in determining such priority, fractions sspenzel v. Brookmlre, 51 Ark. 105, 10 S. W. 15, 14 Am. St. 23; Grattan v. Wiggins, 23 Cal. 16; Hall V. McCormiok, 31 Minn. 280, 17 N. W. 620; Wilson v. Eigenbrodt, 30 Minn. 4, 13 N. W. 907; Henderson V. Herrod, 10 Smed. & M. (Miss.) 631, 49 Am. Dec. 41; Studebaker Bros. Mfg. Co. V. McCurgur, 20 Nebr. 500, 30 N. W. 686; Commer- cial Bank v. Jackson, 7 S. Dak. 135, 63 N. W. 548; Keyes v. Wood, 21 Vt. 331. See post §§ 822, 1699-1702. "Haynes v. Seachrest, 13 Iowa 455; Chavener v. Wood, 2 Ore. 182. See also Brazleton v. Brazleton, 16 Iowa 417. "'McDermot v. Laurence, 7 Serg. & R. (Pa.) 438, 10 Am. Dec. 468. See also Frink v. Branch, 16 Conn. 260; Frotbingnam v. Sbephard, 1 Aik. (Vt.) 65. See ante §§ 119, 120. =" Bragg V. Lamport, 96 Fed. 630, 38 C. C. A. 467; Scbimberg v. Waite, 93 111. App. 130; Houfes v. Schultze, 2 111. App. 196; Reagan v. First Nat. Bank, 157 Ind. 623, 61 N. B. 575 62 N. B. 701; Union Mut. L. Ins! Co. V. Abbott, 95 Ind. 238; Mc- Fadden v. Hopkins, 81 Ind. 459; Krutsinger v. Brown, 72 Ind. 466; Hoadley v. Hadley, 48 Ind. 452; Crowning v. Behn, 10 B. Mon. (Ky.) 383; Spaulding v. Scanland, 6 B. Mon. (Ky.) 353; Ker v. Ker, 42 La. Ann. 870, 8 So. 595; Wing v. Mc- Dowell, Walk. Ch. (Mich.) 175; Westervelt v. Voorbis, 42 N. J. Eq. 179, 6 Atl. 665; Ely v. Scofield, 35 Barb. (N. Y.) 330; Berry v. Mutual Ins. Co., 2 Johns. Ch. (N. Y.) 603; Marbury v. Jones, 112 Va. 389, 71 S. E. 1124; Nay lor v. Throckmor- ton, 7 Leigh (Va.) 98, 30 Am. Dec. 492; Kelso v. Russell, 33 Wash. 474, 74 Pac. 561. See also Bragg v. Lam- port, 96 Fed. 630, 38 C. C. A. 467; Louisville Bldg. Assn. v. Kerb, 79 Ky. 190, 2 Ky. L. (abst.) 71. The rule applies as between successive mortgages of after-acquired prop- erty; the mortgage first in point of time being the senior lien. Boston Safe Deposit &c. Co. v. Bankers' &c. Tel. Co., 36 Fed. 288. Execution de- termining the priority of mort- gages includes delivery, and it is the date of delivery rather than that of the written execution which determines priority. Koesenig v. Schmitz, 71 Iowa 175, 32 N. W. 320. Where acknowledgment is part of the execution, priority of proper ac- knowledgment may determine pri- ority of right. Fugman v. Jiri Washington Bldg. &c. Assn., 209 111. 176, 70 N. E. 644. A mortgage purporting to secure a note of even § 607 NOTICE AS AFFECTIXG PMOEITT 986 of a day will be considered.*" Generally successive mortgages upon the same property are entitled, to priority of payment out of its pro- ceeds in the order in ■wliicli they have attached as liens upon it,*^ though exceptional circumstances or special equities may entitle a junior lien to preference.*^ Where one of two equitable mortgages is first in time, it is first in right.*^ Also, when both of the mortgages are purely legal, and both are taken for value, the first in time is the first in right. But one who pays value without notice takes precedence of a prior taker without value.** The holder of a legal mortgage usually prevails in a conten- tion against the holder of an equitable mortgage where neither is re- corded, unless the former acquired his lien after the equitable mort- gage was taken, and either without value or with notice of the prior mortgage.*^ Of two mortgages executed at the same time, to secure debts which mature at different times, if there be no other ground of priority, according to the authorities in some states that is the prior lien which secures the payment of the note which first falls due. The rule is the same as it is when one mortgage secures debts maturing at different times; they are to be paid in the order of their maturity.*^ It makes date which is in fact not executed Warford v. Hankins, 150 Ind. 489, until six years later and is then 50 N. E. 468. But see Kaehler v. dated back to the date of the mort- Dibblee, 32 Wis. 19. gage, will be postponed to a second "Spring v. Short, 90 N. Y. 538; mortgage executed after the mak- Phillips v. Phillips, 4 De G., F. & ing of the first mortgage but before J. 218. the signing of the note. Ogden v. "McCracken v. Flanagan, 141 N. Ogden, 180 111. 543, 54 N. Y. 750. Y. 174, 36 N. E. 10; Ten Eyek v. " Wood v. Lordier, 115 Ind. 519, Witbeck, 135 N. Y. 40, 31 N. E. 994, 18 N. E. 34; Gibson v. Keyes, 112 31 Am. St. 809. Ind. 568, 14 N. E. 591. See also « Jones v. Van Doren, 130 U. S. Jones V. Phelps, 2 Barb. Ch. (N. 684, 32 L. ed. 1072; First Nat. Bank Y.) 440. But see Coleman v. Car- v. Connecticut M. Life Ins. Co., 129 hart, 74 Ga. 392. Ind. 241, 28 N. E. 695; Warnock v. "Goodbar v. Dunn, 61 Miss. 618; Harlow, 96 Cal. 298, 31 Pac. 166, 31 Ayers v. Staley (N. J. Eq.), 18 Atl. Am. St. 209; Fahn v. Bleckley, 55 1046; Lavalette v. Thompson, 13 N. Ga. 81; Martin v. Bower, 51 N. J. J. Eq. 274; Central Trust Co. v. Eq. 452, 26 Atl. 823; Drake v. Paige, West India Imp. Co., 169 N. Y. 314, 127 N. Y. 562, 28 N. E. 407; Ander- 62 N. E. 387, revg. 48 App. DIv. 147, son v. Blood, 152 N. Y. 285, 46 N. E. 63 N. Y. S. 853; Bank of Florence v. 493, 57 Am. St. 515; Stephens v. Gregg, 46 S. Car. 169, 24 S. E. 64. Weldon, 151 Pa. St. 520, 25 Atl. 28. •"' Brown v. Baker, 22 Nebr. 708, « Roberts v. Mansfield, 32 Ga. 228; 36 N. W. 273; McConnell v. Mul- Gardner v. Diederichs, 41 111. 158; doon, 24 N. Y. S. 902, 30 Abb. N. Murdock v. Ford, 17 Ind. 52; Harris Cas. 352; Bank of Ireland v. Cogry v. Harlan, 14 Ind. 439; Isett v. Lu- Spinning Co. (1900), 1 Ir. 219. The cas, 17 Iowa 503; Bank of U. S. v. fact that a mortgage is given to se- Covert, 13 Ohio 240; Marine Bank cure pre-existing debts will not give v. International Bank, 9 Wis. 57. it preference over prior equities. According to other authorities this 987 NEGLIGEXCE AND MISCELLANEOUS MATTERS 607a no difference in the order of payment that, after the assignment of the note first maturing to one person, the note next maturing is as- signed to another with the mortgage or trust deed. The holding of the mortgage security gives no preference in order of payment.*^ In other states such mortgages confer equal rights ; and the fact that one becomes due before the other gives no priority.''^ Mere recitals in a subsequent mortgage can not prejudice the rights of a prior mortgagee, acquired before its execution. ^° A prior mortgage barred by the statute of limitations will be post- poned to a junior lien.^" § 607a. Priority between simultaneous mortgages. — Where several mortgages are executed and recorded at the same time, whether the parties intended that one of them should have priority is a matter of fact for the jury to determine from the evidence of such' intention."'^ For the purpose of carrying such intention into effect the law will pre- sume that the mortgage which was intended to be preferred was first delivered.^^ Where mortgages on the same property are executed and delivered simultaneously to parties having knowledge of each other's rights, to secure debts of equal standing, and there is no evidence of intention to prefer one mortgage to the other, they are considered equal and concurrent liens, although not recorded simultaneously.^^ Though the mortgagor intended that one should have priority, and first delivered that one to the recorder, yet if the recorder's certificate circumstance is no evidence to de- has been barred, but before fore- termine the fact of priority. Gil- closure of the first mortgage is man v. Moody, 43 N. H. 239; barred, is not entitled to precedence Granger v. Crouch, 86 N. Y. 494. over the first mortgage. Mackie v. See post § 1699. Lansing, 2 Nev. 202. ^'Gwathmeys v. Ragland, 1 Rand. "'Rose v. Provident Sav. &c. (Va.) 466. Assn., 28 Ind. App. 25, 62 N. E. 293; *»Shaw V. Newsom, 78 Ind. 335; Utley v. Dunkelberger, 86 Iowa 469, Riddle v. George, 58 N. H. 25; Col- 53 N. W. 408; Gilman v. Moody, 43 lera v. Huson, 34 N. J. Eq. 38. Post N. H. 239; Butler v. Bank of Ma- li 1699-1707. zeppa, 94 Wis. 351, 68 N. W. 998; ^"Clabaugh v. Byerly, 7 Gill (Md.) Jones v. Parker, 51 Wis. 218, 8 N. 354 48 Am. Dec. 575. W. 124. See ante § 534. "»'a revival indorsed upon the ''^ Jones v. Phelps, 2 Barb. Ch. (N. first mortgage note, after execution Y.) 440; Trompczynski v. Struck, of the second mortgage, will not re- 105 Wis. 437; Butler v. Mazeppa store the first mortgage to priority. Bank, 94 Wis. 351. Lord V. Morris, 18 Cal. 482. Prior- '"Walker v. BufEandeau, 63 C-'. ity is not restored by a subsequent 312; Daggett v. Rankin, 31 Cal. 321; renewal Moore v. Porter (Tex. Lampkin v. First Nat. Bank, 96 Ga. Civ App.) 138 S. W. 426. But it 487, 23 S. E. 390; Cain v. Hanna, has been held that a second mort- 63 Ind. 408; Rhoades v. Canfleld, 8 gage, executed after suit upon the Paige (N. Y.) 545. note secured by the first mortgage § 608 NOTICE AS AFFECTING PEIORITT 988 showed that they were filed for record simultaneously, neither has pri- ority of record over the other."^* The fact that one instrument was handed to the recorder an instant before the other is immaterial. Neither is the intention with which the act was done important.^^ And where mortgages are handed to the recorder at the same time, he can not fix their priority by the mere order in which he numbers them.''* But it is said by the Supreme Court of Minnesota that, "when two mortgages on the same land, executed by a mortgagor to two dif- ferent mortgagees, and filed for record at the same time by the com- mon agent of the mortgagees, and no instructions are given, the priority of the liens is determined presumptively by the order in which the instruments are numbered by the register of deeds."''' § 608. Agreements fixing priority. — The parties may, as between themselves, make a valid agreement, though it be verbal only, that one of two mortgages shall be prior to the other, and the order of record is then immaterial unless they are subsequently assigned to other persons who have no notice of the agreement;'*^ although, ac- "Lampkin v. First Nat. Bank, 96 Ga. 487, 23 S. E. 390; Terry v. Mo- ran, 75 Minn. 249, 77 N. W. 777. Priority may be indicated by the numbering; Connecticut Mut. L. Ins. Co. V. King, 72 Minn. 287, 75 N. W. 376. °= Koevenig v. Schmitz, 71 Iowa 175, 32 N. W. 320. "Schaeppi v. Glade, 195 111. €2, 62 N. E. 874. " Edmonston v. Wilbur, 99 Minn. 495, 110 N. W. 3. =« "Wallace v. McKenzie, 104 Cal. 130, 37 Pac. 859; Beasley v. Henry, 6 Bradw. (111.) 485; McCaslin v. Advance Mfg. Co., 155 Ind. 298, 58 N. E. 67; Wayne &c. Loan Assn. v. Moats, 149 Ind. 123, 48 N. E. 793; Sparks v. State Bank, 7 Blackf. (Ind.) 469; Corbin v. Kincaid, 33 Kans. 649, 7 Pac. 145; New England Loan &c. Co. v. Wood, 2 Kans. App. 624, 42 Pac. 940; Fudickar v. Mon- roe Athletic Club, 49 La. Ann. 1457, 22 So. 381 ; Lehman v. Godberryi 40 La. Ann. 219, 4 So. 316; Grunert v. Becker, 100 Mich. 50, 58 N. W. 608; Dye V. Forbes, 34 Minn. 13, 24 N. W. 309; Chadbourn v. Rahilly, 28 Minn. 394, 10 N. W. 420; Union Mortgage &c. Co. v. Peters, 72 Miss. 1058, 18 So. 497, 30 L. R. A. 829; Loewen v. Forsee, 137 Mo. 29, 38 S. W. 712, 59 Am. St. 489; Hasen- ritter v. Kirchhoffer, 79 Mo. 239; Ryan v. West, 63 Nebr. 894, 89 N. W. 416; Rogers v. Central L. &c. Co., 49 Nebr. 676, 68 N. W. 1048; Shaw v. Abbott, 61 N. H. 254; New Jersey Bldg. &c. Ins. Co. V. Bachelor, 54 N. J. Eq. 600, 35 Atl. 745; New York Chemical Mfg. Co. v. Peck, 6 N. J. Eq. 37; Lovett v. Demarest, 5 N. J. Eq. 113; Abort v. Kornfeld, 128 App. Div. 547, 112 N. Y. S. 884; Taylor V. Wing, 84 N. Y. 471; Freeman v. Schroeder, 43 Barb. (N. Y.) 618, 29 How. Pr. 263; Jones v. Phelps, 2 Barb. Ch. (N. Y.) 440; Decker v. Boice, 19 Hun (N. Y.) 152; Rhoades V. Canfield, 8 Paige (N. Y.) 545; Raleigh Nat. Bank v. Moore, 94 N. Car. 734; Rigler v Light, 90 Pa. St. 235; Maze v. Burke, 12 Phila. (Pa.) 335; Parker v. Parker, 52 S. Car. 382, 29 S. E. 805; Bank v. Camp- bell, 2 Rich. Eq. (S. Car.) 179; Po- land v. Lamoille Valley R. Co., 52 Vt. 144; Trompczynski v. Struck, 105 Wis. 437, 81 N. W. 650. See also Mississippi Val. Trust Co. v. Wash- ington Northern R. Co., 212 Fed. 776; Newby v. Fox, 90 Kans. 317, 183 Pac. 890, 47 L. R. A. (N. S.) 302; Londner v. Perlman, 129 App. 989 NEGLIGENCE AND MISCELLANEOUS MATTERS § 608 cording to some authorities, the want of notice on the part of the assignee makes no difference, but the mortgage continues subject to the equity of this arrangement.^'' But such an agreement itself, when in writing, is not entitled to record, and therefore, if recorded, is not notice to subsequent purchasers;^" and in that case the record of it would not be constructive notice to an assignee of the deferred mort- gage. But if such assignee had knowledge of the agreement, he would take subject to the equities thereby conferred."^ An agreement between parties to a mortgage to continue its lien after payment in full is valid as between them; and if future ad- vances are made thereon, subsequent creditors or lienors with notice of the agreement are bound thereby."^ And parties interested in prop- erty may agree, on sufficient consideration that a foreclosure sale under a prior mortgage should be subject to a junior lien, and that the latter should remain a lien on the property after a sale under the former."^ A mortgagee has an unquestionable right to waive his priority in favor of a subsequent mortgagee.*'' If a prior mortgagee releases his mortgage in order to enable the mortgagor to raise money upon the same property, with which to make improvements thereon, such mort- gagee can not afterward be heard to object that the money was raised by the second mortgagee upon discount of other paper of the mort- gagor, or that the mortgagor failed to expend the money as he had agreed."^ If the holder of a first mortgage Imowing of the existence of a sec- ond mortgage releases his mortgage and takes a new one in its place, the second mortgage becomes the prior lien, although the first mort- Div. 93, 113 N. Y. S. 420; Matthews '=^Bank v. Frank. 13 J. & S. (N. V. Damainville, 43 Misc. 546, 89 N. Y.) 404. Y. S. 493. See also Horner v. Scott "' Girard Trust Co. v. Baird, 212 (Pa.), 89 Atl. 555. A parol agree- Pa. 41, 61 Atl. 507. ment by a debtor to substitute a "'Brown v. Barber, 244 Mo. 138, party advancing money to pay 148 S. "W. 892. liens on premises can not avail "Wayne &c. Loan Assn. v. Moats, against execution creditors whose 149 Ind. 123, 48 N. E. 793; Fudicker liens are otherwise superior. Lane v. Monroe Athletic Club, 49 La. Ann. V Lloyd 33 Ky. L. 570, 110 S. W. 1457, 22 So. 381; Mutual Life Ins. 401 ' Co. V. Sturges, 33 N. J. Eq. 328; ""I Cable T. Ellis, 86 111. 525; Wal- Taylor v. Wing, 84 N. Y. 471, 23 ters V Ward, 153 Ind. 578, 55 N. E. Hun 233; Frost v. Yonkers Sav. Bk., 735; Rose v. Provident Sav. &c. 70 N. Y. 553, 26 Am. Rep. 627; Assn., 28 Ind. App. 25; Hendrick- Raleigh Nat. Bank v. Moore, 94 N. son V. Woolley, 39 N. J. Eq. 307; Car. 734; Poland v. Lamoille Val- Conover v. Van Mater, 18 N. J. ley R. Co., 52 Vt. 144; Clason v. 481- Freeman v. Schroeder, 43 Shepherd, 6 Wis. 369. Barb. (N. Y.) 618, 29 How. Pr. 263. '"Darst v. Bates, 95 111. 493. See "' Gillig V Maass, 28 N. Y. 191. also Hendrickson v. Woolley, 39 N, J. Eq. 307. § 608 NOTICE AS AFFECTING PEIOKITX 990 gage was a release with an Tinderstanding with the mortgagor that he would arrange with the second mortgagee so as to give the new mort- gage the same priority that the discharged mortgage originally held.^* A mere admission by one of two mortgagees, whose mortgages were executed, delivered, and recorded on the same day, that there is no priority of one mortgage over the other, although made by a writing signed by him, does not preclude his afterward claiming a priority in time for his own mortgage, because such admission is, like a parol declaration, subject to be explained or contradicted."' But such writing would be admissible in evidence to show that the deeds took effect simultaneously."' But an agreement as to priority may be proved by parol."" Without any agreement, there may be facts and circumstances which will entitle one of two mortgages recorded at the same time to an equitable priority over the other ;'° and on the other hand, although one mortgage may have been recorded before another, there may be facts which will entitle the two mortgages to stand upon an equality. An instance of the latter kind occurs when a trustee, having two funds, loans them to the same person, upon two distinct mortgages, without the intention of giving one priority to the other. '^ Moreover, the mortgage first recorded, and therefore prima facie the prior lien, may be shown to have been conditionally recorded ; and a second mort- gage, recorded before the condition was complied with, may be entitled to precedence.'^ The party benefited by an agreement to subordinate need not be directly a party to such agreement. Thus the advancement of money by the makers of building loans is sufficient acceptance of the ven- dor's agreement to subordinate purchase-money mortgages to building loans on the same property, without such makers joining in the agree- ment.'^ A second mortgage executed to obtain money to redeem land from an execution sale against the mortgagor, under an express agree- ment that it should be a prior lien, is superior to the rights of the first mortgagee, benefited by the redemption.'* And so the maker of "° Workingman's Bldg. &c. Assn. "Rhoades v. Canfleld, 8 Paige (N. T. Williams (Tenn.), 37 S. W. 1019. Y.) 545. "'Beers v. Broome, 4 Conn. 247. "Freeman v. Schroeder, 43 Barb. See also Maze v. Burke (Pa.), 12 (N. Y.) 618. Phila. 335. "Londner v. Perlman, 129 App. «■ Beers v. Hawley, 2 Conn. 467. Div. 93, 113 N. Y. S. 420. ™Maze v. Burke, 12 Phila. (Pa.) "New England Mtg. .Sec. Co. v. 335. Fry, 143 Ala. 637, 42 So. 57, 111 Am. "Stafford v. Van Rensselaer, 9 St. 62. Cow. (N. Y.) 316. 991 NEGLIGENCE AND MISCELLANEOUS MATTERS § 608 notes secured by a trust deed need not be a consenting party to the postponement of the lien to a subsequent one, by the holders of the notes.'' "^ It is no ground for giving priority to a junior mortgage that the money received upon it was used in conserving the mortgaged prop- erty, or in improving it in any way. Although a portion of a line of railway subject to a mortgage be wholly constructed by money raised on a second mortgage, yet this fact gives the latter no priority over the former. The prior mortgage, although given before the road is built, attaches as fast as it is built, and to all property covered by the terms of the mortgage, as fast as it comes into existence.''^ Where the first mortgagee formally waives his lien, in favor of the second mortgagee, and the second mortgagee agrees that the money he loans shall be ap- plied to the improvement of the property, but allows mechanics' liens to accumulate against the property, he will be obliged to satisfy the me- chanics' liens out of his prior lien, so as to protect the first mortgagee therefrom.'^ And where the owner of land already incumbered ob- tains loans secured by trust deeds, under an agreernent that the pro- ceeds should be applied in satisfaction of the first incumbrance and in the erection of a building, the lenders are entitled to priority only in so far as the proceeds of the loan are actually applied in reduction of the first incumbrance and improvement of the property.'^ '= Jackson v. Grosser, 121 111. thereon. The practice of the coun- App. 363, affd. 218 111. 494, 75 N. E. try and its necessities are coinci- 1032. dent with the rule." See also Wil- '" Galveston Railroad Co. v. Cow- link v. Morris Canal &c. Co., 4 N. drey, 11 Wall. (U. S.) 459, 20 L. J. Bq. 377; Clarke v. Calvert, 72 ed. 199. "Had the first mortgage," App. Div. 630, 78 N. Y. S. 17. says Mr. Justice Bradley, "been "Wayne &c. Loan Assn. v. Moats, given before a shovel had been put 149 Ind. 123, 48 N. B. 793. into the ground toward construct- " Joralmon v. McPhee, 31 Colo. 26, ing the railroad, yet if it assumed 71 Pac. 419. Where a loan company to convey and mortgage the rail- failed to include in its building loan road, which the company was au- agreement a provision that the thorized by law to build, together mortgage should be a first lien, and with its superstructure, appurte- used part of the loan to pay off the nances, fixtures and rolling stock, first mortgage, it was held, under these several items of property, as a statute preferring a materialman they came into existence, would be- filing a lien under such circum- come instantly attached to and cov- stances, that the loan company had ered by the deed, and would have thereby subjected its interest in the fed the estoppel created thereby, property to the lien of the material- No other rational or equitable rule man," relying on the agreement that can be adopted for such cases. To the entire building loan should be hold otherwise would render it nee- devoted to the building under con- essary for a railroad company to struction. Pennsylvania Steel Co. borrow in small parcels as sections v. Title Guaranty &c. Co., 50 Misc. of the road were completed and 51, 100 N. Y. S. 299, affd. 120 App. trust deeds could be safely given Div. 879, 105 N. Y. S. 1135. § 609 NOTICE AS APFECTING PEIOEITr 992 § 609. Priority between mortgages and mechanics' liens. — ^A mort- gage executed before the commencement of a building erected on the land is paramount to a mechanic's lien for work and materials fur- nished for the building by one having actual or constructive notice of such mortgage.' ' A mortgage existing at the time of the accrual of a mechanic's lien retains its priority notwithstanding the fact that the value of the mortgage security is increased by the labor and material ™Folsom V. Cragen, 11 Colo. 205, 17 Pao. 515; Stone v. Tyler, 173 111. 147, 50 N. E. 688; Green v. Sprague, 120 111. 416, 11 N. E. 859; Ward v. Yarnelle, 173 Ind. 535, 548, 91 N. E. 7; Zehner v. Johnston, 22 Ind. App. 452, 53 N. E. 1080; Bartlett V. Bllger, 92 Iowa 732, 61 N. W. 233; Ryder v. Cobb, 68 Iowa 235, 26 N. W. 91; Hershee v. Hershey, 15 Iowa 185; Nixon v. Cydon Lodge, 56 Kans. 298, 143 Pac. 236 ; Jean v. Wil- son, 38 Md. 288; Davidson v. Stew- art, 200 Mass. 393, 86 N. E. 779; Hoover v. Wheeler, 23 Miss. 314; Elliott & Barry Engineering Co. v. Baker, 134 Mo. App. 95, 114 S. W. 71; Bradford v. Anderson, 60 Nebr. 368, 83 N. W. 173; Grand Island Banking Co. v. Koehler, 57 Nebr. 649, 78 N. W. 265; Eckels v. Stuart, 212 Pa. 161, 61 Atl. 820; Lyle v. Du- comb, 5 Binn. (Pa.) 585; Jessup v. Stone, 13 Wis. 466. See also AUis- Chalmers Co. v. Central Trust Co., 190 Fed. 700, 111 C. C. A. 428, 39 L. R. A. (N. S.) 84; Wimberly v. May- berry, 94 Ala. 240, 10 So. 157, 14 L,. R. A. 305; McClain v. Hutton, 131 Cal. 132, 61 Pac. 273, 63 Pac. 182, 622; Seely v. Neill, 37 Colo. 198, 86 Pac. 334; Pacific States Sav., Loan &c. Co. V. Dubois, 11 Idaho 319, 83 Pac. 513; Davidson v. Stewart, 200 Mass. 393, 86 N. B. 779; Boggs v. McEwen, 69 Nebr. 705, 96 N. W. 666; Henry &c. Co. v. Halter, 58 Nebr. 685, 79 N. W. 616. In Tritch v. Norton, 10 Colo. 337, 15 Pac. 680, there was a new commencement un- der a new contract after an inter- vening mortgage. See also 2 Jones on Liens, §§ 1457, 1492. Knowledge of the mortgagee's officers, when making the loan, that a building was being constructed on the prem- ises under contract will postpone their mortgage, although negotia- tions for the mortgage preceded the contract. Saucier v. Maine Supply &c. Co., 109 Maine 342, 84 Atl. 461. A mortgage placed on land after work on an unfinished building thereon had ceased, has priority over the lien of a contractor who subsequently finished the building, and such priority applies to both the land and the building. May v. Mode, 142 Mo. App. 656, 123 S. W. 523. A mortgage executed while a building is in process of construc- tion and near completion, which re- cites that it is executed to enable the mortgagor to raise funds to complete the building and to pay outstanding obligations. Is not in- ferior to lien claims arising after the execution of the mortgage, but the mortgage and the lien claims are equal, and neither have priority over the other. Such a mortgage amounts to an agreement that the proceeds shall be applied on the construction account, and material- men and laborers may have it so applied. Ward v. Yarnelle, 173 Ind. 535, 91 N. E. 7. Where the filing of notice of mechanics' liens is re- quired by statute, the mere fact that the mortgagee had knowledge that work was being performed on the mortgaged premises and that mate- rials were being furnished, did not constitute actual notice of the existence of a mechanic's lien for such labor and material; and al- though such performance of work might be considered constructive notice, putting the purchaser upon inquiry, it was not the constructive notice required by the statute. Scheas v. Boston, 31 Ky. L. 157, 101 S. W. 942; citing Foushee v. Grlgs- by, 12 Bush (Ky.) 75. See ante § 487. 993 NEGLIGENCE AND MISCELLANEOUS MATTERS § 609 upon which the lien is based/" or that the building is so altered or en- larged that little of the original structure remains. ^^ The fact that the mortgagor contemplated the improvements for which the lien is claimed, does not give the lien priority where the mortgage w^as executed before the contract for the improvements;'^ nor does the knowledge of the mortgagee that the mortgagor intends to build upon the property give the mechanic's lien priority.'^ And generally the mere fact that the mortgagee knew of the work and did not object thereto does not affect its priority;"* though under some statutes the mortgagee's consent to the improvement or failure to ob- ject upon notice, may have this effect.*" If a mortgagee encourages the improvement of the property by an agreement to subordinate his lien to the cost thereof, his mortgage is of course postponed to the liens for labor and material.*^ If a mortgagee, while in possession, erects a house on the premises, a mechanic's lien for this work is subject to the mortgage."'' A mort- gagee out of possession is not an owner within the meaning of a stat- ute giving a lien for labor and materials furnished under a contract with or by consent of the owner, nor can such mortgagee be held to 'have consented to the displacement of his own lien merely because ho had knowledge of the improvements."" In accordance with the general rule, a mortgage for purchase-money, gi%^en prior to the accrual of a mechanic's lien, will take priority there- of."* Even a subsequent purchase-money mortgage may have priority. Thus where a purchaser in possession of property under contract of sale or otherwise, makes improvements thereon, and executes and de- ™ Thorpe Block Sav. &c. Assn v. 837. See also Williams v. Santa James, 13 Ind. App. 522, 41 N. E. Clara Min. Assn., 66 Gal. 193, 5 Pac. 978 See also Toledo &c. R. Co. v. 85; Capital Lumbering Co. v. Ryan, Hamilton, 134 U. S. 296, 33 L. ed. 34 Ore. 73, 54 Pac. 1093. 905 10 Sup. Ct. 546; Soule v. Bo- "= Bristol-Goodson Electric Light rell'i, 80 Conn. 392, 68 Atl. 979. But &c. Co. v. Bristol Gas &c. Co., 99 see Climax Lumber Co. v. Bay City Tenn. 371, 42 S. W. 19. See also Mach Works, 163 Ala. 654, 50 So. Seely v. Neill, 37 Colo. 198, 86 Pac. 935. 334. " Equitable L. Ins. Co. v. Slye, 45 *° Cummings v. Emslie, 49 Nebr. Iowa 615. See ante § 487. 485, 68 N. W. 621, and cases cited. ''' Sullivan v. Texas Briquette &c. "' Ferguson v. Miller, 6 Cal. 402. Co 94 Tex. 541, 63 S. W. 307. *= Central Trust Co. v. Bodwell »»'Holmes' v. Hutchins, 38 Nebr. Water Power Co., 181 Fed. 735. 601 57 N W. 514. '"Hill v. Aldrich, 48 Minn. 73, 50 ^AUis-Chalmers Co. v. Central N. W. 1020; Hoagland v. Lowe, 39 Trust Co, 190 Fed. 700, 111 C. C. A. Nebr. 397, 58 N. W. 197; Clark v. 428 39 L R. A. (N. S.) 84; Pride Butler, 32 N. J. Bq. 664; Campbell's v Viles 3 Sneed (Tenn.) 125; Se- Appeal, 36 Pa. St. 247; Kelly's Ap- ciiritv Mortgage &c. Co. v. Caruth- peal, 1 Sad. (Pa.) 280, 2 Atl. 868. ers, 11 Tex. Civ. App. 430, 32 S. W. See ante §§ 468, 473, 473a. 63_joNES Mtg.— Vol. I. 609 NOTICE AS AFFECTING PEIORITY 994 livers to the Tender a purchase-money mortgage, upon receiving a deed to the property, such mortgage is prior to mechanics' liens aris- ing out of the improvements."" As" a general rule, a mechanic's lien has priority over a mortgage executed after lien accrued,"^ on commencement of the building,*^ or ""Erwin v. Acker, 126 Ind. 133, 25 N. E. 888; Thorpe v. Durbon, 45 Iowa 192; Missouri Valley Lumber Co. V. Reid, 4 Kans. App. 4, 45 Pac. 722; Eocliford v. Rochford, 188 Mass. 108, 74 N. E. 299, 108 Am. St. 465; Saunders v. Bennett, 160 Mass. 48, 35 N. B. Ill, 39 Am. St. 456; Perkins v. Davis, 120 Mass. 408; Moody v. Tschabold, 52 Minn. 51, 53 N. W. 1023; Oliver v. Davy, 34 Minn. 292, 25 N. W. 629; "Wilson V. Lubke, 176 Mo. 210, 75 S. W. 602, 98 Am. St. 503; Russell v. Grant, 122 Mo. 161, 26 S. W. 958, 43 Am. St. 563; Virgin v. Brubaker, 4 Nev. 31; Gibbs v. Grant, 29 N. J. Eq. 419; Paul v. Hoeft, 28 N. J. Eq. 11; Macintosh v. Thurston, 25 N. J. Eq. 242; Strong v. Van Deursen, 23 N. J. Eq. 369; Lamb v. Cannon, 38 N. J. L. 362; Rees v. Ludington, 13 AVis. 276, 80 Am. Dec. 741. »' Atkins V. Volmer, 21 Fed. 697; Spence v. Etter, 8 Ark. 69; Souls v. Hurlbut, 58 Conn. 511, 20 Atl. 610; Dunham v. Woodworth, 158 111. App. 486; Interstate Bldg. &c. Assn. v. Ayers, 71 111. App. 529; Carriger v. Mackey, 15 Ind. App. 392, 44 N. E. 266; Lamb v. Hanneman, 40 Iowa 41; Thomas v. Hoge, 58 Kans. 166, 48 Pac. 844; First Nat. Bank v. Chownlng Electric Co., 142 Ky. 624, 134 S. W. 1156; Lenel's Succession, 34 La. Ann. 868; Shaughnessy v. Isenberg, 213 Mass. 159, 99 N. E. 975; Brown v. Haddock, 199 Mass. 480, 85 N. E. 573; Osborne v. Barnes, 179 Mass. 597, 61 N. B. 276; Batchelder v. Hutchinson, 161 Mass. 462, 37 N. B. 452; Carew v. Stubbs, 155 Mass. 549, 30 N. E. 219; Buntyn v. Shippers' Compress Co., 63 Miss. 94; Goodwin v. Cunning- ham, 54 Nebr. 11, 74 N. "W. 315; Ans- ley V. Pasahro, 22 Nebr. 662, 35 N. W. 885; Graton &c. Mfg. Co. v. Woodworth-Mason Co., 69 N. H. 177, 38 Atl. 790; Currier v. Cum- mings, 40 N. J. Eq. 145, 3 Atl. 174; Gordon v. Torrey, 15 N. J. Eq. 112, 82 Am. Dec. 273; Morris County Bank v. Rockaway Mfg. Co., 14 N. J. Eq. 189; Cheesborough v. Ashe- ville Sanatorium, 134 N. Car. 245, 46 S. E. 494; Turner v. St. John, 8 N. Dak. 245, 78 N. W. 340; Blansh- ard V. Schwartz, 7 Okla. 23, 54 Pac. 303; Drewery v. Columbia Amuse- ment Co., 87 S. Car. 445, 69 S. E. 879, 1094; Gillespie v. Bradford, 7 Yerg. (Tenn.) 168, 27 Am. Dec. 494; Fields V. Daisy Gold Min. Co., 25 Utah 76, 69 Pac. 528; Powell v. Nolan, 27 Wash. 318, 67 Pac. 712, 68 Pac. 389; H. C. Houston Lumber Co. V. Wetzel & T. R. Co., 69 W. Va. 6S2, 72 S. E. 786. "2 Davis V. Bilsland, 18 Wall. (U. S.) 659, 21 L. ed. 969; In re Mat- thews, 109 Fed. 603; Joralman v. McPhee, 31 Colo. 26, 71 Pac. 419; Nixon V. Cydon Lodge, 56 Kans. 298, 43 Pac. 236; Rosenthal v. Mary- land Brick Co., 61 Md. 590; Kay v. Towsley, 113 Mich. 281, 71 N. W. 490; Ortonville v. Geer, 93 Minn. 501, 101 N. W. 963, 106 Am. St. 445; Miller v. Stoddard, 54 Minn. 486, 56 N. W. 131; Hewson-Herzog Sup. Co. V. Cook, 52 Minn. 534, 54 N. W. 751; Gardner v. Leek, 52 Minn. 522, 54 N. W. 746; Malmgren v. Phinney, 50 Minn. 457, 52 N. W. 915, 18 L. R. A. 753; Glass v. Free- berg, 50 Minn. 386, 52 N. W. 900, 16 L. R. A. 335; Landau v. Cottrill, 159 Mo. 308, 60 S. W. 64; Nold v. Ozen- berger, 152 Mo. App. 439, 133 S. W. 349; Schulenburg v. Hayden, 146 Mo. 583, 48 S. W. 472; DuBois v. Wilson, 21 Mo. 213; Hydraulic Press Brick Co. v. Bormans, 19 Mo. App. 664; Mur^'ay v. Swanson, 18 Mont. 533, 46 Pac. 441; Hahn v. Bonacum, 76 Nebr. 837, 107 N. W. 1001; Chapman v. Brewer, 43 Nebr. 890, 62 N. W. 320, 47 Am. St. 779; Cheshire Provident Inst. v. Stone, 52 N. H. 365; Federal Trust Co. v. Guigues, 76 N. J. Eq. 495, 74 Atl. 652; Gordon v. Torrey, 15 N. J. Eq. 995 NEGLIGEN-CE AND MISCELLANEOUS MATTERS 609 of the work, or the furnishing of materials;"' and the fact that the purchase-price of the land was paid out of the mortgage loan does not give the mortgage priority."* And so the fact that the mort- gagor concealed the existence of mechanics' liens from the mortgagee in obtaining the loan or himself procured the filing of such liens, will not defeat their priority over the mortgage."^ A mere preference agreement by the mortgagor with the mortgagee to keep the premises 112, 82 Am. Dec. 273; Morris County Bank v. Rockaway Mfg. Co., 14 N. J. Eq. 189; Robertson Lum- ber Co. V. Clarke, 24 N. Dak. 134, 138 N. W. 984; Bastien v. Barras, 10 N. Dak. 29, 84 N. W. 559; Hax- tun &c. Co. V. Gordan, 2 N. Dak. 246, 50 N. W. 708, 32 Am. St. 776; Harrisburg Lbr. Co. v. Wasbburn, 29 Ore. 150, 44 Pac. 390; Reynolds V. Miller, 177 Pa. St. 168, 35 Atl. 702; Hahn's Appeal, 39 Pa. St. 409; Bassett v. Swarts, 17 R. I. 215, 21 Atl. 352; H. C. Behrens Lumber Co. V. Lager, 26 S. Dak. 160, 128 N. "W. 698, Ann. Cas. 1913A, 1128; Farm- ers' &c. Nat. Bank v. Taylor, 91 Tex. 78, 40 S. W. 876; Oriental Ho- tel Co. V. Griffiths, 88 Tex. 574, 33 S. "W. 652, 30 L. R. A. 765, 53 Am. St. 790; Alfree Mfg. Co. v. Henry, 96 Wis. 327, 71 N. "W. 370; H. C. Houston Lbr. Co. v. "Wetzel, 69 "W. Va. 682, 72 S. E. 786; Mathwig v. Mann, 96 Wis. 213, 71 N. W. 105; Lampson v. Bowen, 41 Wis. 484. Under the Kentucky statute of 1909, § 2463, a mechanic's lien takes ef- fect from the commencement of the labor and furnishing of material, provided the lienor files his state- ment before record of the mort- gage. Trust Co. of America v. Casey, 131 Ky. 771, 115 S. W. 780; Scheas v. Boston, 31 Ky. L. 157, 101 S. W. 942. See also Reinhart T. Shutt, 15 Ont. 325. °^ Courtney v. Insurance Co., 49 Fed. 309, 1 C. C. A. 249; In re Hoyt, Fed. Cas. No. 6805, 3 Biss. (U. S.) 436 (Wisconsin statute); Pacific Mut. L. Ins. Co. v. Fisher, 106 Cal. 224, 39 Pac. 758; Crowell V. Gilmore, 18 Cal. 370, 17 Cal. 194, 13 Cal. 54; Tritch v. Nor- ton, 10 Colo. 337, 15 Pac. 680; Pa- cific States Sav., Loan &c. Co. v. Dubois, 11 Idaho 319, 83 Pac. 513; Sioux City Elec. Supply Co. v. Sioux City &c. Elec. R. Co., 106 Iowa 573, 76 N. W. 838; Iowa Mortg. Co. v. Shanquest, 70 Iowa 124, 29 N. W. 820; Humboldt Bldg. Assn. v. Vol- mering, 20 Ky. L. 899, 47 S. W. 1084 (actual notice to mortgagee) ; Milner v. Norris, 13 Minn. 455 (Gil. 424) ; General Fire Extinguisher Co. V. Schwartz Bros. Commission Co., 165 Mo. 171, 65 S. W. 318; Reilly v. Hudson, 62 Mo. 383; Viti v. Dixon, 12 Mo. 479; Keller v. Carterville Bldg. &c. Assn., 71 Mo. App. 465; Western Iron Works v. Montana Pulp &c. Co., 30 Mont. 550, 77 Pac. 413; Johnson v. Puritan Min. &c. Co., 19 Mont. 30, 47 Pac. 337; Mur- ray v. Swanson, 18 Mont. 533, 46 Pac. 441; H. F. Cady Lumber Co. v. Miles (Nebr.), 147 N. W. 210; Chap- man V. Brewer, 43 Nebr. 890, 62 N. W. 320, 47 Am. St. 779; Henry &c. Co. V. Fisherdick, 37 Nebr. 207, 55 N. W. 643; Cahn v. Romandorf, 4 Nebr. (Unoff.) 84, 93 N. W. 411; Morris County Bank v. Rockaway Mfg. Co., 14 N. J. Eq. 189; Duna- vant V. Caldwell &c. R. Co., 122 N. Car. 999, 29 S. E. 837; Lookout Lum- ber Co. V. Mansion Hotel &c. R. Co., 109 N. Car. 658, 14 S. E. 35; Wood- man v. Richardson, 1 Ohio Cir. Ct. 191, 1 Ohio Cir. Dec. 104; McDon- ald -V. Kelly, 14 R. I. 335; Electric Light &c. Co. V. Bristol Gas &c. Co., 99 Tenn. 371, 42 S. W. 19; Schultze V. Alamo Ice &c. Co., 2 Tex. Civ. App. 236, 21 S. W. 160; Cushwa v. Improvement Loan &c. Assn., 45 W. Va. 490, 32 S. E. 259. "* Wetmore v. Marsh, 81 Iowa 677, 47 N. W. 1021; Thomas v. Hoge, 58 Kans. 166, 48 Pac. 844. »= Gordon v. Torrey, 15 N. J. 112, 82 Am. Dec. 273. § 609 NOTICE AS AFFECTING PRIORITY 996 free from other incumbrances can not affect the priority of mechanics' liens.°° Where by statute, a mechanic's lien attaches at the time when the building contract is made, a mortgage given thereafter is subject to the mechanic's lien/'' although the mortgage is executed and recorded before work is performed or materials delivered. °* But, to entitle the lien claimant to priority there must have been a contract for the im- provement, in existence at the time of the mortgage, and the mort- gagee must have had actual or constructive notice thereof."" Lien laws in force at the time of the execution of a mortgage enter into and become a part of the contract ; and if these laws provide that certain liens shall be paramount over all other incumbrances, whether prior or subsequent, a mortgagee takes his mortgage subject to such liens as may afterward be acquired under the statute."^ But laws en- acted after the execution of a mortgage can not have the effect of creating a lien superior to such existing mortgage, for such laws »« Oriental Hotel Co. v. Griffiths, 88 Tex. 574, 33 S. W. 652, 30 L. R. A. 765, 53 Am. St. 790. Where a trust deed in the nature of a mort- gage provided that the mortgagor should pay all liens on the prop- erty, or that the trustee therein should be reimbursed for such pay- ment, it was held that such pro- vision did not in equity inure to the benefit of mechanic lienors. Cummings v. Consolidated Mineral Water Co., 27 R. I. 195, 61 Atl. 353. Where a written contract for a building loan, duly filed, provided that the mortgage securing the building loan should be a first mort- gage, and that an existing mort- gage should be satisfied, an oral agreement that the existing mort- gage should be paid out of the building loan was not a modifica- tion of the written contract, which would subject the mortgage secur- ing the loan to the mechanic's lien. Pennsylvania Steel Co. v. Title Guarantee &c. Co., 193 N. Y. 37, 85 N, E. 820. A claim of a lumber company for lumber used In con- structing a house on mortgaged premises can not of itself be deemed an incumbrance within the meaning of a clause in the mort- gage authorizing the mortgagee to pay off incumbrances, especially where the lumber company has taken no steps to assert a lien. Provident Mut. Bldg. Loan Assn. V. Shaffer, 2 Cal. App. 216, 83 Pac. 274. " Continental and Commercial Trust and Savings Bank v. Corey Bros. Const. Co., 208 Fed. 976; In- terstate Bldg. &c. Assn. v. Ayers, 177 111. 9, 52 N. E. 342; Paddock v. Stout, 121 111. 571, 13 N. E. 182; Saucier v. Maine Supply &c. Co., 109 Maine 342, 84 Atl. 461; Farn- ham V. Richardson, 91 Maine 559, 40 Atl. 553; Morse v. Dole, 73 Maine 351; McDowell v. Rockwood, 182 Mass. 150, 65 N. E. 65; Taylor v. Springfield Lumber Co., 180 Mass. 3, 61 N. E. 217; Sprague v. Mc- Dougall, 172 Mass. 553, 52 N. E. 1077; Carew v. Stubbs, 155 Mass. 549, 30 N. B. 219; Bachelder v. Rand, 117 Mass. 176; Dunklee v. Crane, 103 Mass. 470. See also Phoenix Mut. L. Ins. Co. v. Batch- en, 6 111. App. 621. =« Morse v. Dole, 73 Maine 351; Carew v. Stubbs, 155 Mass. 649, 30 N. E. 219. ™ Sly V. Pattee, 58 N. H. 102. ^Warren v. Sohn, 112 Ind. 213, 13 N. E. 863. 997 NEGLIGENCE AND MISCELLANEOUS MATTERS § 609 are repugnant to the pTOvisions of the Federal Constitution forbidding the impairment by any state of the obligations of a contract.^ Municipal assessments for improvements, which are declared by statute to be a lien, may be paramount to a mortgage of the prem- ises, whether the mortgage be prior or subsequent to the assessment.'' The lien of a drainage assessment, in Indiana, is subordinate to the lien of a pre-existing mortgage.* It is subordinate to a mortgage executed prior to the filing of a petition to enforce such lien.^ A mortgage lien will not be postponed in favor of a subsequent lien, on the ground that the judgment was obtained for material and work furnished in making improvements on the mortgaged premises, on the faith and reliance of a verbal agreement made by the mortgagee with the mortgagor to loan him money to make and pay for such im- provements.* ' Yeatman v. King, 2 N. Dak. 421, Beard, 138 Ind. 560, 38 N. B. 33. 51 N. W. 721. The fact that the prior mortgagee ' Hand v. Startup, 38 N. J. Eq. had notice of the construction of the 115; Murphy v. Beard, 138 Ind. 560, ditch and of the pendency of the 38 N. E. 33. The legislature may drainage proceedings is of no im- give an assessment for the con- portance. Killian v. Andrews, 130 struction of drains priority over pre- Ind. 579, 30 N. E. 700. existing mortgages. Baldwin t. ° State v. Loveless, 133 Ind. 600, Moroney, 173 Ind. 574, 91 N. E. 3, 33 N. E. 622; Pierce v. .^tna L. In- 30 L. R. A. (N. S.) 761. surance Co., 131 Ind. 284, 31 N. ■■ Chaney v. State, 118 Ind. 494, E. 68. 21 N. B. 45; State v. Insurance Co., ° Montrose Hardware Co. v. Mont- 117 Ind. 251, 20 N. E. 144; Cook v. rose Inv. Co., 10 Colo. App. 161, State, 101 Ind. 446; Deisner T. 50 Pac. 204. Simpson, 72 Ind. 435; Murphy v. CHAPTEE XIV VOID AND USURIOUS MORTGAGES I. Void Mortgages, §§ 609a-632 II. Usury, §§ 633-663 I. Void Mortgages Section 609a. Introductory. 610. Consideration. 611. Consideration prior or subse- quent to the mortgage. 612. Want or failure of considera- tion — To and against whom available. 612a. Acts of agents invalidating mortgage. 613. Mortgage under seal importing consideration. 614. When mortgage may be made by way of gift. 615. Mortgage made for accommo- dation of another. 616. Estoppel to deny consideration. 617. Effect of Illegality of considera- tion. 618. Contrary to public policy. 619. Who may take advantage of the illegality. 620. Where part of consideration legal and part illegal. 621. Mortgage valid in part and void in part. Section 622. Evidence — Burden of proof. 622a. Construction of statute declar- ing a mortgage void. 623. Mortgage for debt contracted on Sunday. 624. Cancelation of mortgage on ground of fraud. 625. Fraudulent intent — How shown. 626. Mortgage obtained by duress or undue influence. 627. Mortgage made to hinder, de- lay, or defraud creditors. 628. Mortgage fraudulent with ref- erence to particular persons. 629. Fraudulent preferences. 630. Who may take advantage of the fraud. 630a. Effect of conveyance to a trus- tee to pay debts. 631. Estoppel to deny validity. 632. When mortgage in fraud of creditors may not be invali- dated. § 609a. Introductory. — In this chapter it is proposed to treat briefly of some of the circumstances under which a mortgage duly executed and recorded may be declared defective or void. These circumstances are inherent in the transaction itself, and in some form vitiate the consideration of the mortgage. For the most part, they are the same vices which invalidate any contract. Want or failure of considera- tion, and fraud or usury in it, are not matters peculiar to mortgages ; and it is, of course, impossible to treat at length of these matters, which are themselves the subjects of general treatises under the titles of Contracts, Frauds, and Usury. Only adjudications relating es- pecially to mortgages are presented, and these not fully on those points 998 999 VOID MORTGAGES § 610 which are common to all contracts. The subject, however, opens one inquiry not presented in other contracts, and that is, whether the law of the place where the mortgaged land is situated, when the contract has been executed in another state or country, should govern as to the law of usury applicable to it ; or should govern, too, as to other statutes which may invalidate the contract ; and therefore this part of the sub- ject has been examined more fully than its importance would seem to justify, except upon the principle that the importance of questions treated of should be determined by the relative difficulty or unceT- tainty attending them. § 610. Consideration. — In general the same defenses may be made to an action on a mortgage, the statute of limitations excepted, that may be made to an action on the debt, — as that it was given for an illegal consideration, or was obtained by duress and fraud.^ But there are cases which hold that a mortgage shares the same immunity from defenses as the note it secures, where the note has been assigned to a bona jB.de purchaser for value before maturity.^ And it has been held that failure or want of consideration as between the parties to a mort- gage, can not be set up as a defense by a purchaser of the lands sub- ject to the mortgage, which is in fact part of the consideration, whether he has expressly assumed the mortgage as part of the pur- chase-money or not.^ A mortgage, like every other contract, must be founded on a valu- able consideration. The consideration need not be one moving directly from the mortgagee to the mortgagor; but any benefit to the mort- gagor or to a stranger, or damage or loss to the mortgagee, rendered or sustained at the request of the mortgagor, is sufficient.* An agree- ^Atwood T. Fisk, 101 Mass. 363, &c. Co. v. Helgesen, 67 Wash. 572, 100 Am. Dec. 124, per Ames, J.; 122 Pac. 26, 64 Wash. 64, 116 Pac. Vinton v. King, 4 Allen (Mass.) 837. 562; Bush v. Cooper, 26 Miss. 599, 'Patten v. Pepper Hotel Co., 153 59 Am. Dec. 270. See also Jones Cal. 460, 96 Pac. 296. v. Dannenberg Co., 112 Ga. 426, 37 " Rockafellow v. Peay, 40 Ark. 69; S. E. 729, 52 L. R. A. 271; Hodson Sykes v. Lafferry, 27 Ark. 407; Ma- V. Eugene Glass Co., 156 111. 397, 40 gruder v. State Bank, 18 Ark. 9; N. E. 971; Shippen v. Whittier, 117 Parsons v. Clark, 132 Mass. 569; 111. 282, 7 N. E. 642; Manley v. Popple v. Day, 123 Mass. 520; Har- Felty, 146 Ind. 194, 45 N. E. 74; Ian v. Harlan, 20 Pa. St. 303. See Walker v. Thompson, 108 Mich. 686, also Richardson v. Wren, 11 Ariz. 66 N. W. 584. See ante §§ 64, 70, 395, 95 Pac. 124, 16 L. R. A. (N. S.) and post chapters xxxli, division 3, 190; Thackaberry v. Johnson, 228 xxix, division 5. 111. 149, 81 N. E. 828; First Nat. 2 Carpenter v. Longan, 16 Wall. Bank v. Keller, 127 App. Div. 435, (U. S.) 271, 21 L. ed. 313; First '111 N. Y. S. 729; Heilig v. Heillg, Nat. Bank v. Flath, 10 N. Dak. 281, 28 Pa. Super. Ct. 396; 1 Selwyn's 86 N. W. 867; American Sav. Bank N. P. 43. See post § 1490. § CIO VOID AND USUEIOtrS MOKTGAGES 1000 ment to extend the time of payment of a debt is a sufficient considera- tion.^ In a mortgage of indemnity the liability of the mortgagee to loss or damage is a sufficient consideration for the mortgage.^ A liability to loss on the part of the mortgagee is a consideration for a mortgage given to secure him against it, as much as is a direct benefit to the mortgagor, of whatever nature it may beJ The real consideration may always be shown if it becomes material.* It is not necessary that there should be a money consideration.^ Nor is it essential that the consideration be valuable, otherwise the abso- lute control of the owner over his property would be taken away.^" A mortgage without a valuable consideration is good as against all persons except creditors whose claims existed at the time the mortgage was exeeuted.^^ Any valuable consideration sufficient to uphold a conveyance is a sufficient consideration to support a mortgage. The relationsMp of blood between a father and child is sufficient. Thus, a mortgage by a daughter to her father as security for the debts of her deceased hus- band, though they could not be enforced against her, will be upheld." But if a father furnishes money to his son for the purchase of land which is conveyed to the son, without any understanding concerning the repayment of the purchase-money, the presumption is that the money was an advancement, and the son did not become his father's debtor therefor. A mortgage afterward given by the son to the father "Hill V. Yarborougli, 62 Ark. 320, 'Haden r. Buddensick, 4 Hun (N. 35 S. W. 433; Maclaren v. Percival, Y.) 649, 49 How. Pr. 241. 102 N. Y. 675, 6 N. B. 582; Pennsyl- «Flynn v. Flynn, 68 Mich. 20, 35 vania Coal Co. v. Blake, 85 N. Y. N. W. 817. See also In re Farmers' 226; Forrester v. Parker, 14 Daly Supply Co., 170 Fed. 502; Perkins (N. Y.) 208. See also Franklin &c. Co. v. Drew (Ky.), 122 S. W. 526. Sav. Bank v. Taylor, 53 Fed. 854, =De Cells v. Porter, 65 Cal. 3, 2 4 C. C. A. 55; First Nat. Bank v. Pac. 257, 3 Pac. 120. Davis, 146 111. App. 462; Hufeman v. ^° Campbell v. Tompkins, 32 N. J. Darling, 153 Ind. 22, 53 N. E. 939; Eq. 170; Farnum v. Burnett, 21 N. Port V. Embree, 54 Iowa 14, 6 N. J. Eq. 87; JliU -Vr-Cfettys, 135 N. "W. 83; Morrill v. Skinner, 57 Nebr. Car. 373, 47 S. E. 449. 164, 77 N. "W. 375; O'Brien v. Fleck- "Brooks v. Dalrymple, 12 Allen enstein, 180 N. Y. 350, 73 N. E. 30, (Mass.) 102; Brigham v. Brown, 44 105 Am. St. 768; Dempsey v. Mc- Mich. 59, 6 N. W. 97; Campbell v. Kenna, 18 App. Div. 200, 45 N. Y. Tompkins, 32 N. J. Eq. 170; Buck- S. 973; Farmers' Nat. Bank v. lin v. Bucklin, 40 N. Y. 141, 1 Abb. James, 13 Tex. Civ. App. 550, 36 S. App. Dec. 242. W. 288. See ante § 461. "Ray v. Hallenbeck, 42 Fed. 381. "Simpson v. Robert, 35 Ga. 180. See also Gates v. Seagraves (Ind. See also Griffis v. First Nat. Bank App.), 105 N. E. 594. But see Welch (Ind. App.), 79 N.' E. 230; Kramer v. Graham, 124 N. Y. S. 945. V. Farmers' &c. Bank, 15 Ohio 253; Lyle V. Ducomb, 5 Binn. (Pa.) 585. 1001 VOID MOETGAGES § 610 to secure the repayment of such money is without consideration, and may be void as to his creditors.^'' If the consideration is valuable it need not be adequate. If there be no fraud or imposition, a mortgage deliberately made for the least consideration, with full knowledge by the mortgagor of all the circum- stances, is valid. A recital in the mortgage of a consideration of one dollar, the receipt of which is acknowledged by the mortgagor, prima facie shows a valuable and real consideration, and its actual payment ; and, in the absence of opposing proof, such a consideration is suffi- cient to support the mortgage.^* In Maryland, under a provision of statute that no mortgage shall be valid except as between the parties, unless there be indorsed there- on an oath or affirmation of the mortgagee that the consideration in said mortgage is true and bona fide as therein set forth,^^ the want of such affidavit is fatal to the validity of the mortgage when it is as- sailed by a creditor, or by a subsequent bona fide purchaser.^" One claiming under the mortgagor with notice stands in no better position in this respect than the mortgagor himself.^' As already noticed, a pre-existing debt is a sufficient consideration to support a mortgage as between the parties,^^ though it is not in ^Higham v. Vanosdol, 125 Ind. such affidavit. Code 1860, art. 20, 74, 25 N. E. 140. § 30, p. 137. If the certificate does "Lawrence v. McCalmont, 2 How. not show that the agent made oath (U. S.) 426, 11 L. ed. 326; Grimball that he was the agent of the mort- V. Mastin, 77 Ala. 553; Boiling v. gagee, the declaration of the justice Munchus, 65 Ala. 558. See also of the peace that the affiant ap- First Nat. Bank v. Bennett, 215 111. peared before him as the agent of 398 74 N. E. 405; Nelson v. Hall, 60 the mortgagee can not be construed N. H. 274; Todd v. Outlaw, 79 N. as meaning that he made oath that Car. 235. lie was the agent. Such a mortgage ^='Code' Pub. Civ. Laws (1912), does not comply with the statute art 21 §§ 32, 33. This affidavit and is fatally defective. Milhol- may be made at any time before land v. Tiffany, 64 Md. 455, 2 Atl. the mortgage is recorded, before 831. See also Gaboon v. Miers, 67 any one authorized to take the ac- Md. 573, 11 Atl. 278; Brown v. Stew- knowledgment of a mortgage, and art, 56 Md. 421. See ante § 366. the affidavit shall be recorded with ^^ Cockey v. Milne, 16 Md. 200. the mortgage. "Phillips v. Pearson, 27 Md. 242. The affidavit may be made by one ^ Evans v. Pence, 78 Ind. 439. See of several mortgagees, or by an also McLeish v. Hanson, 157 111. agent of a mortgagee, who shall, in App. 605; First Nat. Bank v. Davis, addition to the above affidavit, make 146 111. App. 462; Lehrenkrauss v. affidavit, to be indorsed on the Bonnell, 199 N. Y. 240, 92 N. E. 637; mortgage, that he is such agent, Hunt v. Hunt, 67 Ore. 178, 134 Pac. which affidavit is proof of such 1180; Reed v. Rochford, 62 N. J. Eq. agency; and the president or other 186, 50 Atl. 70; Sargent v. Cooley, officer of a corporation, or the ex- 12 N. Dak. 1, 94 N. W. 576. See ante ecutor of the mortgage, may make § 460. § 611 VOID AND USUEIOUS MOETGAGES 1003 some states sufficient to make the mortgagee a purchaser for value so as to protect him against the rights of third persons.^" It has been held that a moral obligation to pay a pre-existing debt is a sufficient consideration to support a mortgage.^" § 611. Consideration prior or subsequent to the mortgage. — It is not necessary that any consideration should pass at the time of the execution of the mortgage. That may he either a prior or a subsequent matter. Mortgages are very frequently given to secure existing debts, in which ease, though the consideration is generally altogether a past one, the mortgages are valid.^^ A mortgage given to indemnify a surety against loss is founded upon a sufficient consideration, although it is given after the surety has incurred the obligation.^^ Moreover, the renewal of a note, or extension of the time of pay- ment of a debt, is a sufficient consideration for a mortgage by a third person to secure such debt.^^ Sometimes, however, a mortgage is made for the purpose of raising money by a subsequent negotiation of the mortgage, or of bonds se- cured by it, in which case the consideration is subsequent, and the mortgage has no validity until it is transferred to some one for value, or the bonds are negotiated, and it is then subject to any incumbrance intervening before the record of it;^* but upon the negotiation of the mortgage, or of the bonds secured by it, the mortgage takes effect in "See ante § 460. See also Col- Hobart, 8 Iowa 358; Moore v. Ful- 11ns T. Moore, 115 Ga. 327, 41 S. E. ler, 6 Ore. 272, 25 Am. Rep. 524. 609; Schumpert v. Dillard, 55 Miss. See also Vaughan v. Marable, 64 348; Empire State Trust Co. v. Ala. 60; Wright v. Towle, 67 Mich. Fisher, 67 N. J. Eq. 602, 60 Atl. 940; 255, 34 N. W. 578; Egan v. Fuller, Reeves v. Evans (N. J.), 34 Atl. 35 Minn. 515, 29 N. W. 313; Long- 477; Martin v. Bowen, 51 N. J. Eq. fellow v. Barnard, 58 Nebr. 612, 79 452, 26 Atl. 823; O'Brien v. Fleck- N. W. 255, 76 Am. St. 117; Reed enstein, 86 App. Dlv. 140, 83 N. Y. v. Rochford, 62 N. J. Eq. 186, 50 S. 499, affirmed 180 N. Y. 350, 73 N. Atl. 70; Sargent v. Cooley, 12 N. E. 30, 105 Am. St. 768; Wilcox v. Dak. 1, 94 N. W. 576. Drought, 36 Misc. 351, 73 N. Y. S. *" Williams v. Silliman, 74 Tex. 587; Lewis v. Anderson, 20 Ohio St. 601, 12 S. W. 534. See also Stock- 281. ing V. Sage, 1 Conn. 519; Doty v. * Fourth Nat. Bank v. Craig, 1 Wilson, 14 Johns. (N. Y.) 378. Nebr. (Unoff.) 849, 96 N. W. 185. ^Magruder v. State Bank, 18 Ark. '^Wright V. Shumway, 1 Biss. (TJ. 9; Bank of Muskingum v. Carpen- S.) 23; Magruder v. State Bank, 18 ter, Wright (Ohio) 729. Ark. 9; Usina v. Wilder, 58 Ga. 178; ""De Lancey v. Stearns, 66 N. Y. Evans v. Pence, 78 Ind. 439; Wright 157; Schafer v. Reilly, 50 N. Y. 61; V. Bundy, 11 Ind. 398; Adams v. Cady v. Jennings, 17 Hun (N. Y.) Adams, 70 Iowa 253, 30 N. W. 795; 213; Johnson v. McCurdy, 83 Pa. Duncan v. Miller, 64 Iowa 223, 20 St. 282; Mulllson's Estate, 68 Pa. N. W. 161 (quoting text); Cooley t. St. 212. See ante § 86. 1003 VOID MORTGAGES § 613 favor of the holder of it or of the bonds." A mortgage for a larger amoiint than the loan at the time, but so made with a view of cover- ing future loans up to the amount of the mortgage, is not conclusive of fraud, but is open to explanation to show the good faith of the parties to the transaction.^" A mortgage given to secure a pre-existing debt of another is invalid unless supported by a new consideration," but if the mortgagee in- creases his risk in some manner, this will render the mortgagee a pur- chaser for value. ^^ i§ 612. Want or failure of consideration — To and against whom available. — ^Want of consideration, or the failure of it, is a good de- fense for the mortgagor or his grantee in good faith to an action upon the mortgage.^" But this defense can not be made against an assignee of a note and mortgage who has taken title thereto in good faith be- fore the maturity of the note.**" A grantee of land, who, as a part of the consideration for the con- veyance to him, has assumed and agreed to pay a mortgage debt on the land so purchased, can not avoid liability on the ground that there was no consideration for the mortgage debt.^^ A mortgage for a fixed sum, founded on no consideration except an undertaking to furnish goods which were never furnished, can not be enforced, except in the hands of a bona fide assignee for value.^'' Where a mortgage and accompanying bond are .given on no other ^Roberts v. Bauer, 35 La. Ann. Pick. (Mass.) 141; Anderson v. Lee, 453; Wood v. Condit, 34 N. J. Eq. 73 Minn. 397, 76 N. W. 24; Devlin 434; Thompson v. Humboldt Safe v. Quigg, 44 Minn. 534, 47 N. W. Deposit &c. Co. (Pa.), 9 Atl. 511. 258; Briggs v. Langford, 107 N. Y. ^^ Allen V. Fuget, 42 Kans. 672, 22 680, 14 N. B. 502, revg. 35 Hun 667. Pac. 725. See also Morris v. Mix, 4 Kans. ''' Richardson v. Wren, 11 Ariz. App. 654, 46 Pac. 58; Bigelow v. 395, 95 Pac. 124, 16 L. R. A. (N. S.) Bigelow, 93 Maine 439, 45 Atl. 513; 190; Bell v. Bell, 133 Mo. App. 570, Saunders v. Dunn, 175 Mass. 164, 55 113 S. W. 667. N. E. 893; Anderson v. Lee, 73 Minn. ^Riciiardson v. Wren, 11 Ariz. 397, 76 N. W. 24; Eakin v. Shultz, 395, 95 Pac. 124, 16 L. R. A. (N. 61 N. J. Eq. 156, 47 Atl. 274; Cas- S.) 190. sada v. Stabel, 98 App. Div. 600, 90 ^ Brown v. Witts, 57 Cal. 304; N. Y. S. 533; Roscoe v. Safford, 61 Scott V. Magloughlin, 133 111. 33, 24 App. Div. 289, 70 N. Y. S. 309. See N. E. 1030; Smith v. Newton, 38 post § 1297. Ill 230; Kramer v. Williamson, 135 ™ Campbell v. O'Connor, 55 Nebr. Ind. 655, 35 N. E. 388; Conwell v. 638, 76 N. W. 167. Clifford, 45 Ind. 392; Cotton v. Gra- =' Stuyvesant v. Western Mtg. &c. ham, 84 Ky. 672, 2 S. W. 674; Han- Co., 22 Colo. 28, 43 Pac. 144; Lang nan v. Hannan, 123 Mass. 441, 25 v. Dietz, 191 111. 161, 60 N. E. 841. Am. Rep. 121; Wearse v. Peirce, 24 == Fisher v. Meister, 24 Mich. 447. § 613 VOID AND USURIOUS MORTGAGES 1004 consideration than promises of the mortgagee, none of which he ful- fils, there is a failure of consideration.^^ A mortgage given for future credit, if no advances are made upon it and no further credit is given, is without consideration. If taken for that purpose it can not be enforced for a different purpose.^* The sum named in the deed as the consideration is of no importance when in terms the mortgage secures future advances.'^ It is security to the extent of the amount named in the mortgage, although it purports on its face to be given to secure an amount advanced at the time.^° It is security for the advances actually made upon it, and. for nothing further. When given to secure future advances, or the value of goods to be purchased, it is valid to the extent of the goods sold or the ad- vances made on account of the mortgage, although the mortgagor be in fact insolvent at the time, and becomes bankrupt shortly after- ward.^^ Where a deed of trust secures a sum of money, with interest, ''to- gether with the additional sum of ten thousand dollars, which the party of the first part hereby agrees to pay to the party of the second part without interest," and the promise to pay this additional sum, though not void for usury, is a mere bonus for the loan of the money, such promise is without consideration, and can not be enforced.'* Under laws which require every agreement or undertaking upon consideration of marriage, except mutual promises to marry, to be in writing, a mortgage made by a wife to secure the performance of her verbal agreement before marriage to pay her husband a certain sum of money, as an equivalent for any right of dower she might have in his property, is without consideration and void, because her agree- ment is void.'* A note and mortgage given in settlement of a claim for damages made by the payee on account of the adultery of the maker with the former's wife, and executed after the cause of action for the tort was barred by the statute, are without consideration and void.*" Whatever may be the recitals or statements in a mortgage as to the =' Newman v. Overbaugh, 116 N. (Ind.) 495; In re Johnson, Peti- y. S. 369. tioner, 20 R. I. 108, 37 Atl. 531. See '"Mitzner v. Kussel, 29 Mich. 229; also Du Bois v. First Nat. Bank, 43 Fisher v. Meister, 24 Mich. 447; Colo. 400, 96 Pac. 169. McDowell V. Fisher, 25 N. J. Eq. 93. =» More v. Calkins, 95 Cal. 435, 30 ^Miller v. Lockwood, 32 N. Y. Pac. 583. 293. "Ennis v. Ennls, 48 Hun (N. Y.) ''"Perkins &c. Co. v. Drew (Ky.), 11. 122 S. W. 526. ■"> Peterson v. Breitag, 88 Iowa 418 =' Marvin v. Chambers, 12 Blatchf. 55 N. W. 86. 1005 VOID JMOKTGAGES § 613a consideration, either party to it may show the truth in regard to it," and a third person having an interest may question the considera- tion." § 612a. Acts of agents invalidating mortgage. — When a mortgage has been intrusted to an agent for the purpose of raising money, and the agent uses it for another purpose, either wholly or in part, as, for instance, to secure a judgment against other persons, such use is a misappropriation of it, such as will invalidate the security,^-^ unless the assignee be entitled to the protection accorded to a bona fide holder of negotiable paper. If an agent who is authorized only to receive a conveyance of lands to his principal takes a conveyance to himself, and makes a mortgage to one having notice of the fact, it is void as against the principal.** An oflBcer or agent, who takes a mortgage to himself to secure the payment of a debt to his principal, holds it by implication of law as trustee for the principal.*'^ Where a mortgage is made for the purpose of paying existing in- cumbrances, and the mortgagee intrusts an agent, through whom the application for the loan was made, with a draft for payment of sucli incumbrances, and the agent absconds with the proceeds of the draft, the mortgage is without consideration and void, though the draft was made payable to the mortgagor, and he indorsed it at the request of tlie agent. The agent in such case is the mortgagee's agent, and not the agent of the mortgagor.*" A landowner applied to an agent, who had previously obtained a loan for him, for a new loan, with which to take up the first mortgage. The agent had at that time collected money for a person for whom he acted in making loans, and converted it to his own use. He sent the application for the loan to this person, who instructed him to make the loan out of the money collected. A note and mortgage were exe- cuted by the landowner, and delivered to the agent, who promised to pay the first mortgage. The agent sent the second mortgage to his "Murdock v. Cox, 118 Ind. 266, (N. S.) (N. Y.) 374; Davis v. Bech- 20 N. E. 786 ; Colt v. McConnell, 116 stein, 69 N. Y. 440, 25 Am. Rep. 218. Ind 249 19 N. E. 106; Flynn v. "Wisconsin Bank v. Morley, 19 Flyim, 68 Mich. 20, 35 N. W. 817; Wis. 62. Wimlberly v. Wortham (Miss.), 3 "^Rood v. Winlow, Walk. (Mich.) So. 459; McAteer v. McAteer, 31 S. 340. In this case the mortgage was Car. 313, 9 S. E. 966. to a county commissioner, the debt "Moss'op V. Creditors, 41 La. Ann. being due to the county. 296 6 So 134; Smith v. Conrad, 15 ^"Figley v. Bradshaw, 35 Nebr. La.' Ann. 579. 337, 53 N. W. 148. « Graver v. Wilson, 14 Abb. Pr. § 613 VOID AND USURIOUS MORTGAGES 1006 principal, and soon afterward absconded, leaving the first mortgage unpaid. The second mortgage was held to be without consideration.*'' Where it appeared that the mortgagor never received any consider- ation for his mortgage, but that the mortgagee paid the money to a conveyancer a fortnight and more before the mortgage was executed, relying upon the supposed honesty of the conveyancer, and without any evidence that he was authorized to receive it, the conveyancer having run away with the money, the mortgage was held to be in- valid.*« Where the consideration is paid to one designated in the application as the mortgagor's agent, and such agent never delivers same to his principal, but appropriates it to his own use, the mortgage may never- theless be enforced.** § 613. Mortgage under seal importing consideration. — A mortgage under seal implies consideration at common law, and none need be proved, and it is good if it is shown that none was given. Neither courts of law nor equity will allow the consideration to be inquired into for the sake of declaring the instrument void for want of consid- eration, but they will for the purpose of ascertaining what is due upon it.^" Also a trust deed under seal imports a consideration without proof. ^^ In New Jersey it is provided by statute that the defense of fraud in the consideration of a deed may be made as fully as if the instrument were not under seal f^ and in New York a seal aSords only presump- tive evidence of a sufficient consideration ; and this presumption may be rebutted in the same manner and to the same extent as if the in- strument were not under seal.^^ A mortgage imports a consideration, so that the burden is upon the party who sets up the want of consideration to prove that it was "Security Co. v. Kent, 83 Iowa Coy, 15 Nebr. 632, 20 N. W. 17; 30, 48 N. W. 1047. Campbell v. Tompkins, 32 N. J. Eq. *» Sergeant v. Martin, 133 Pa. St. 170. 122, 19 Atl. 568. "Thackaberry v. Johnson, 228 "American Mtg. Co. v. King, 105 111. 149, 81 N. E. 828. Ala. 358, 16 So. 889. "New Jersey: Compiled Stat. «Farnum v. Burnett, 21 N. J. 1907-1910, Vol. 2, p. 2622. See also Eq. 87; Calkins v. Long, 22 Barb. Peldman v. Gamble, 26 N. J. Eq. (N. y.) 97; Parker v. Parmele, 20 494. Johns. (N. Y.) 130, 11 Am. Dec. ^ New York: Code Civ. Pro. 1909, 632; Maxwell v. Hartmann, 50 Wis. § 840. Best v. Thiel, 79 N. Y. 15; 660, 8 N. W. 103. See also Ambrose Torry v. Black, 58 N. Y. 185; Gray V. Drew, 139 Cal. 665, 73 Pac. 543; v. Barton, 55 N. Y. 68, 14 Am. Rep. Cotton V. Graham, 84 Ky. 672, 8 Ky. 181; Craver v. Wilson, 47 N. Y. 673, L. 658, 2 S. W. 647; Forbes v. Mc- 14 Abb. Pr. (N. S.) 374. See also 1007 VOID JIOETGAGES § 614 made without consideration or was procured by fraud.^* There is also a presumption that the consideration stated in the mortgage is cor- rectly stated, and very convincing proof is required to rebut this pre- sumption. ^'^ This presumption is conclusive in favor of a bona fide pur- chaser of the mortgage. ^° % 614. When mortgage may be made by way of a gift. — A mort- gage may be made by way of gift, when the rights of creditors are not thereby interfered with.'*^ When executed and delivered it is as valid as if it were based upon a full consideration. It is not open to the objection that it is a voluntary executory agreement, but may be enforced according to its terms as an executed conveyance.^^ But the fact that a mortgage is given without consideration may have an important bearing on any disputed question concerning the delivery or recording of it."*" A mortgage made by a husband to his wife through a third person to secure her for money which he has obtained from her, and which he is in equity liable to her for, is founded upon a sufBcient considera- tion. Although the husband might have contested the wife's claim, by proof that she had given the money to her husband, so that no lia- bility to account for it arose, yet in the absence of such proof the wife is not required to show that the transaction was not a gift, or to es- tablish the continuance of her husband's equitable liability to her.^° The consideration for a mortgage and bond secured thereby is in- sufficient, where the transaction was intended merely as a gift by a father to his daughter, who is of age, married, and living apart from Quackenbush v. Mapes, 123 App. ™Brigham v. Brown, 44 Mich. 59, Div. 242, 107 N: Y. S. 1047; Hall v. 6 N. W. 97. Thomas, 111 N. Y. S. 979. ^ Cole v. Lee, 45 N. J. Eq. 779, 18 "Commercial Exchange Bank v. Atl. 854. Per Magie, J.: "It is well McLeod, 67 Iowa 718, 25 N. W. 894, settled that, on proof that a hus- 54 Am. Rep. 36. See also Feldman band has received his wife's money, V. Gamble, 26 N. J. Eq. 494; Best a court of equity will compel him V. Thiel, 79 N. Y. 15. and his representatives to account "^Wiswall V. Ayres, 51 Mich. 324, to her at least for the principal re- 16 N. W. 667. See also Schuster v. ceived, and they can only discharge Sherman, 37 Nebr. 842, 56 N. W. themselves by showing that the 707; Burnett v. Wright, 135 N. Y. husband disposed of the money ac- 543, 32 N. E. 253; Corbett v. Clute, cording to the wife's directions, or 137 N. Car. 546. that it was a gift to him," citing '"'Maxwell v. Hartmann, 50 Wis. Jones v. Davenport, 44 N. J. Eq. 660. 33, 13 Atl. 652; Greiner v. Greiner, "Gale V. Gould, 40 Mich. 515. 35 N. J. Eq. 140; Clawson v. Riley, "Peabody v. Peabody, 59 Ind. 34 N. J. Eq. 348; Black v. Black, 556; Brooks v. Dalrymple, 12 Allen 30 N. J. Eq. 215; Vreeland v. (Mass.) 102; Campbell V. Tompkins, Schoonmaker, 16 N. J. Eq. 512; 32 N J. Eq. 170; Bucklin v. Buck- Rusling v. Rusling, 47 N. J. L. 1; lin 1 Abb. App. Dec. (N. Y.) 242. Horner v. Webster, 33 N. J. L. 387. § 615 VOID AND USURIOUS MOKTGAGES 1008 Jiim with her husband, and it was not intended he should be called upon to pay it or any interest during his life.*^ § 615. Mortgage made for accommodation of another. — To support a mortgage made for the accommodation of another, there must be a consideration; but it is sufficient that this consideration arises upon the subsequent negotiation of the mortgage by the mortgagee. In states where a pre-existing debt is not regarded as a valid consideration, if the debt of a third person, which is secured by assigning the mort- gage, be already incurred, there must be a new and distinct considera- tion for the obligation incurred by the mortgagor as surety or guarantor of that debt. But if the debt secured be incurred at the same time that the mortgage is given, and this collateral undertaking enters into the inducement to the creditor for giving the credit, then the considera- tion for such contract is regarded as consideration also for the col- lateral undertaking by way of mortgage."^ A mortgage made for the accommodation of another, upon the un- derstanding that the money should be realized in a particular manner, is not fraudulently misappropriated though the mongy be obtained in a way different from that which was intended, provided it be negoti- ated so that the substantial purpose for which it was designed is at- tained. It is not material that it be negotiated in the precise manner contemplated, unless the interest of the party making it be preju- diced by the manner in which it is used.'*^ It is sufficient consideration for a mortgage to secure the debt or obligation of a third person that the mortgagee agrees to refrain from bringing threatened proceedings to set aside a conveyance of property from the debtor to the mortgagee.** So the release of a mortgage has been held to be a valid consideration for the execution of another mortgage by a third person upon a different piece of land."^ "Where a debt was past due and the creditor demanded payment or security, the tender by the debtor and the acceptance by the creditor of the mortgage of a third person is sufficient consideration for such mortgage, even though there is no release of the debtor or express ex- tension of time of payment."* "1 Welch V. Graham, 124 N. Y. S. "First Nat. Bank v. Keller, 127 945. '■ App. Div. 435, 111 N. Y. S. 729. »^ Davidson v. King, 51 Ind. 224. »» Englert v. Dale, 25 N. Dak. 587, See ante § 458. 142 N. W. 169. ™Wood V. Condit, 34 N. J. Eq. ™ Perkins v. Trinity Realty Co., 434; Jacobsen v. Dodd, 32 N. J. Eq. 69 N. J. Eq. 723, 61 Atl. 167. 403; Duncan v. Gilbert, 29 N. J. L. 521. 1009 VOID MOETGAGES § 616 § 616. Estoppel to deny consideration. — A mortgagor may be estopped to deny a consideration for his mortgage. He is not, how- ever, estopped from showing a failure or want of consideration for the note secured by the mortgage as against the mortgagee, except by his own representations, or those made by others with his knowledge and consent.*^ Thus it is good defense to foreclosure that the mortgagee had no title to another tract than that mortgaged, but which he con- veyed to the mortgagor with a warranty and for the purchase-price of which the mortgage was given."^ But this defense can not be taken against an assignee for value before maturity.^' It is held that the assignee of a mortgage or other security collateral to negotiable paper takes the collateral subject to defenses in a court of equity, although the paper secured is not subject to defenses at law.'" Such mortgage, though void between the original parties, is valid in the hands of a bona fide assignee without notice of the illegal con- sideration for which it was given.''^ It is held in Illinois that a grantor in a trust deed may make any defense against foreclosure by an assignee of the note and trust deed, although assignment was made before maturity of the note, that he can make to a foreclosure proceeding instituted by the original owner of the note and trust deed.^' »' Jones V. Jones, 20 Iowa 388; Wearse v. Peirce, 24 Pick. (Mass.) 141. See also Nelson v. McPike, 24 Ind. 60. «« Smith V. Newton, 38 111. 230. ^Stilwell V. Kellogg, 14 Wis. 461; Cornell v. Hichens, 11 Wis. 353. See also Carpenter v. Longan, 16 Wall. (U. S.) 271, 21 L. ed. 313; Camp- bell V. O'Connor, 55 Nebr. 638, 76 N W. 167; First Nat. Bank v. Flath, 10 N. Dak. 281, 86 N. W. 867; Wright V. Pipe Line Co., 101 Pa. St. 204, 47 Am. Rep. 701. But see Walker v. Thompson, 108 Mich. 686, 66 N. W. 584, where the note was nonnegotiable. "Towner v. McClelland, 110 111. 542; Miller v. Larned, 103 111. 562; Equitable Securities Co. v. Talbert, 49 La. Ann. 1393, 22 So. 762; But- ler V. Slocomb, 33 La. Ann. 170, 39 Am Rep. 265; Bacon v. Abbott, 137 Mass. 397; Baily v. Smith, 14 Ohio St 396 84 Am. Dec. 385; Dearman V. Trimmier, 26 S. Car. 506, 2 S. E. 501. 64 — Jones Mtg.— Vol. I. '^Taylor v. Page, 6 Allen (Mass.) 86; Brigham v. Potter, 14 Gray (Mass.) 522; Cazet v. Field, 9 Gray (Mass.) 329; Earl v. Clute, 2 Abb. App. Dec. (N. Y.) 1, and cases cited. In North Carolina: It is pro- vided by statute that no convey- ance or mortgage, made to secure the payment of a debt, shall be void in the hands of a purchaser for value without notice, for the reason that consideration of the debt was forbidden by law. Pell's Revisal of 1908, Vol. 1, § 965. This statute applies to usurious mortgages. Coor v. Splcer, 65 N. Car. 401. See also Cattle v. Cleaves, 70 Maine 256; Doe v. Burnham, 31 N. H. 426; Norris v. Langley, 19 N. H. 423; Cowing V. Altman, 71 N. Y. 435, 27 Am. Rep. 70; Campbell v. Jones, 2 Tex. Civ. App. 263, 21 S. W. 723. "Lauf v. Cahill, 231 111. 220, 83 N. E. 155. § 616 VOID AND USURIOUS MORTGAGES 1010 Sometimes the mortgagee may, in effect, give a better title than he himself holds. "In the ease of a conveyance of real estate to defraud creditors, the grantee can not hold, but one who takes it from him without notice may. But the law goes further in favor of commerce, and gives a high degree of character and honor to bills of exchange and promissory notes in the hands of an indorsee without actual or constructive notice of anything affecting their validity or credit."'^ But this rule does not apply to notes which are by statute made absolutely null and void, as notes made in violation of statutes against usury and gaming sometirhes are.'* A certificate made by a mortgagor at the time of giving the mort- gage, that there is no defense to it, estops him as against a purchaser of the mortgage from setting up fraud or want of consideration.'^ A married woman is estopped by such certificate equally with any other mortgagor.'" Admissions which estop the husband also estop his wife who has Joined in the mortgage to release her dower and homestead rights." A mortgagor may be estopped from denying the validity of his mortgage by reason of representations made with his knowledge and assent representing its validity, or based upon the assumption of its validity. Thus, where a trustee of a savings bank, to make up a de- ficiency in its assets caused by a loss for which the trustees were sup- posed to be personally liable, executed a mortgage which was assigned to the bank, he was not allowed to set up the defense of want of con- sideration, inasmuch as the mortgage was with his knowledge and assent reported to the banking department, and represented to the depositors of the bank as a portion of its assets, and the bank was upon the strength thereof, and of other similar securities, permitted to continue business.'* A note and mortgage deposited in escrow, and afterward fraudu- lently taken and put in circulation, without the terms and conditions of the deposit having been complied with, are doubtless void in the '= Per Shaw, C. J., in Cazet v. St. 253. The court in the latter case Field, 9 Gray (Mass.) 329. remark that it is unnecessary to "Kendall v. Robertson, 12 Cush. say what would be the effect of ac- (Mass.) 156; Bowyer v. Bampton, tual fraud in procuring the "no de- 2 Stra. 1155. See also Bozeman v. fense" paper. See also Silver v. Allen, 48 Ala. 512; Shank v. Wash- Kent, 105 Fed. 840. ington Exch. Bank, 124 Ga. 508, 52 '"Payne v. Burnham, 62 N. Y. 69; S. E. 621; Glenn v. Farmers' Bank, Smyth v. Munroe, 19 Hun (N. Y.) 70 N. Car. 191; Brisbane v. Lestar- 550. jette, 1 Bay (S. Car.) 113. "Casler v. Byers, 129 111. 657, 22 "Schenck v. O'Neill, 23 Hun (N. N. B. 507. Y.) 209; Hutchison v. Gill, 91 Pa. '^Best v. Thell, 79 N. Y. 15. 1011 VOID MORTGAGES § 61'J' hands of a purchaser or assignee for value without notice. In such case the mortgage never has a legal existence, and the rules of com- mercial paper have no application to the note accompanying it, al- though it be negotiable in form.'® § 617. Effect of illegality of consideration. — Illegality of consid- eration avoids a mortgage, whether it consist in a violation of the common law or of a statute.^ But knowledge on the part of the mort- gagee that the mortgage-money is to be used for an illegal purpose is no defense to foreclosure proceedings.^ The consideration of a note may be so far illegal as to invalidate it, even in. the hands of a bona fide holder, where such note is given in violation of the express terms of a statute.^ A mortgage given to secure a debt made illegal by statute, as, for instance, a debt incurred for intoxicating liquors illegally sold to the mortgagor, can not be enforced; and such a mortgage is invalid al- though not given to the seller of the liquors, but at his request to a creditor of his, who knew that the consideration was illegal.* But if the mortgage be given for an illegal consideration, and the considera- tion not being performed the mortgagee enters to foreclose, and keeps possession till foreclosure is complete, he then has an absolute title, and the value of the land is applied by operation of law to the pay- ment of the debt secured by the mortgage. The land is then irretriev- ably gone, unless the law be such that the illegal consideration, when paid, can be recovered back, not merely in money but in land. It has been held that a payment in land for intoxicating liquors illegally sold could not be recovered back, and therefore that, upon the fore- closure of a mortgage for such a debt, the land can not be recovered by the mortgagor.^ '"Cressinger v. Dessenburg, 42 kes v. Wideman, 143 Mich. 181, 106 Mich. 580, 4 N. W. 269; Powell v. N. W. 735; Corhett v. Clute, 137 N. Conant, 33 Mich. 396; Burson v. Car. 546, 50 S. E. 216; Pierson v. Huntington, 21 Mich. 415, 4 Am. Green, 69 S. Car. 559, 48 S. E. 624. Rep. 497; Chipman v. Tucker, 38 ''Hines v. Union Savings Bank Wis. 43, 20 Am. Rep. 1; Andrews v. &c. Co., 120 Ga. 711, 48 S. E. 120. Thayer, 30 Wis. 228; Tisher v. «Kuhl v. M. Gaily Univ. Press Beckwith, 30 Wis. 55, 11 Am. Rep. Co., 123 Ala. 452, 26 So. 535, 82 Am. 546; Walker v. Ebert, 29 Wis. 194. St. 135; Wyatt v. Wallace, 67 Ark. See ante § 87. 575, 55 S. W. 1105; Irwin v. Mar- ^Gibert v. Holmes, 64 111. 548. quett, 26 Ind. App. 383, 59 N. E. See also Dixon v. Cuyler, 27 Ga. 38, 84 Am. St. 297. 248; Henry v. State Bank, 131 Iowa ^ Baker v. Collins, 9 Allen (Mass.) 97, 107 N. W. 1034; Sheldon v. 253. See also Brigham v. Potter, Pr'uessner, 52 Kans. 579, 35 Pac. 14 Gray (Mass.) 522. 201, 22 L. R. A. 709; Brigham v. "McLaughlin v. Cosgrove, 99 Potter, 14 Gray (Mass.) 522; Dier- Mass. 4. § 617 VOID AND USUKIOUS MORTGAGES 1012 A mortgage and note given to secure wagering contracts, such as the purchase of stocks on margins without any intention to complete the purchase by an actual delivery and receipt of the stocks and the payment of the price therefore, are illegal and void, and a bill in equity will lie to restrain a foreclosure of the mortgage and compel the surrender and cancelation of the note.® A mortgage by a citizen of Tennessee, executed to a citizen of Ken- tucky after the proclamation of the President declaring the state of Tennessee to be in a state of insurrection, and forbidding all inter- course with its inhabitants, was held void, although the land was sit- uate in the state of Kentucky.'' A mortgage given in Tennessee dur- ing the Civil "War, in consideration of a loan in Confederate treasury notes, was after the war held void, on the ground that the considera- tion of the contract was illegal, being notes issued by an unlawful con- federation of states. Such contracts are against public policy, and the courts will not lend their aid to enforce them.' But on the contrary such a mortgage was sustained in Alabama, on the ground that it was valid under the de facto government existing when it was executed." The fact that a note and mortgage given to secure it were executed in consideration of the mortgagee settling a criminal prosecution against the mortgagor's husband may be shown as a defense to the foreclosure of the mortgage so given, even in the hands of a bona fide holder of such note for value, before due, and without notice.^" Where a note secured by a mortgage has been transferred for the sole purpose of evading the payment of taxes, such facts may be pleaded as a defense in a suit to foreclose the mortgage.^^ But an an- swer alleging that the note and mortgage were taken in the name of the plaintiff in order to enable the real owner to evade taxation, pre- sents no issue and should be stricken out.^^ A party is not precluded from availing himself of a defense of this character by the fact that the paper in controversy is under seal.^* Where the consideration is "Rice V. Winslow, 182 Mass. 273, = Stillman v. Looney, 3 Cold, citing Lyons v. Coe, 177 Mass. 382, (Tenn.) 20. 59 N. B. 59; Harvey v. Merrill, 150 "Mieou v. Ashurst, 55 Ala. 607; Mass. 1, 22 N. B. 49; Sampson v. Scheible v. Baclio, 41 Ala. 423. Shaw, 101 Mass. 145. See also Dix- "Jones v. Dannenberg, 112 Ga. on V. Cuyler, 27 Ga. 248; Thompson 426, 37 S. E. 729, 52 L. R. A. 271. V. Brady, 182 Mass. 321, 65 N. B. "Sheldon v. Pruessner, 52 Kans. 419. 579, 35 Pac. 201, 22 L. R. A. 709. 'Hyatt T. James, 2 Bush (Ky.) "Crowns v. Forest Land Co., 99 463, 92 Am. Dec. 505. Wis. 103, 74 N. W. 546. " Calfee v. Burgess, 3 W. Va. 274. 1013 VOID MORTGAGES § 618 partly legal and partly illegal, the mortgage will be sustained to the extent of the legal consideration if it is separable from the illegal.^* § 618. Contrary to public policy. — If land be conveyed to one ab- solutely as security for a sum of money to be due him upon his doing an unlawful act, as, for instance, procuring witnesses to testify to a certain state of facts in behalf of the grantor, the transaction is not a mortgage. The title is not divested upon the grantor's failure to per- form the illegal stipulation, but is absolute in him, and the grantor can not recover it either in law or in equity.^^ A mortgage and note given in consideration thab the mortgagee shall not oppose his debtor's discharge in insolvency, and for an as- signment of the creditor's claim against the insolvent, which was of the same amount as the note, the estimated value of which was only one-sixth of its face, are void as against public policy.^" A mortgage executed in consideration that the mortgagee would use his efforts to obtain a nolle prosequi to an indictment pending against the mortgagor, is against public policy and void.^^ So is one given in composition of a felony, or of a promise not to prosecute for a crime of lower degree than a felony.^* Where a wife executes a mortgage to raise money with which to compromise a criminal prosecution against her husband, the amount so paid is not recoverable at a foreclosure sale when the mortgagee knew the object for which the money was raised and assisted in such compromise.^* But it is no defense to a mortgage that it was given to stop a threatened criminal prosecution, unless an agreement not to prosecute if the mortgage was given is shown.^" A note and mortgage given in lieu or in renewal of a note and mort- gage, void for this reason are equally void, even in the hands of an assignee for value but with notice of the illegality of the considera- tion.^^ A mortgage given by a cashier of a bank to a surety on his ^* Lepper v. Conradt, 15 Wye. 394, ^= Small t. Williams, 87 Ga. 681, 89 Pac. 575. 13 S. E. 589; Atwood v. Fisk, 101 »= Patterson v. Donner, 48 Cal. Mass. 363, 100 Am. Dec. 124; 369. Pearce v. Wilson, 111 Pa. St. 14, 2 "Benicla Agricultural Works v. Atl. 99, 56 Am. Rep. 243; Collins v. Bstes (Cal.), 32 Pac. 938; Estudillo Blantern, 2 Wils. 341. v Meyerstein, 72 Cal. 317, 13 Pac. " Pierson v. Green, 69 S. Car. 559, 869; Rice v. Maxwell, 13 Sm. & M. 48 S. B. 624. (Miss) 289, 53 Am. Dec. 85; Bell ™Moyerv. Dodson, 212 Pa. 344, V. Leggett, 7 N. Y. 176. 61 Atl. 937. "Crowder v. Reed, 80 Ind. 1; Wil- ""Pierce v. Kibbee, 51 Vt. 559. dey V. Collier, 7 Md. 273, 61 Am. Dec. 346. § 619 VOID AND USURIOUS MORTGAGES 1014 bond for the amount paid by the surety in settlement of a civil lia- bility growing out of the cashier's defalcations, there being no agree- ment not to prosecute the cashier criminally, does not contravene pub- lic policy.^^ A mortgage or a deed in the nature of a mortgage, given to secure the performance of a contract contrary to the policy of the law, will not be enforced by a court of equity; such, for instance, as a gambling contract/^ or a contract which is subject to the objection of cham- perty.^* If the mortgagee had no knowledge of the illegal transac- tion, and no connection with it except to loan money to a surety on the illegal contract to pay a judgment obtained against him, the mortgage is not invalid.^^ A mortgage given upon lands held by a settler under the pre-emp- tion act, before he has entered the lands at the landoffice, is void under the Act of Congress forbidding any conveyance before such entry.'* A mortgage executed to secure a loan and duly recorded is not void on the ground of public policy because it was taken in the name of the lender's agent, and by him assigned to the lender, the assignment be- ing withheld from record in order that the lender might thereby es- cape taxation thereon.^^ § 619. Who may take advantage of the illegality. — As a general rule contracts prohibited by statute are void, and courts wUl neither enforce them nor aid in the recovery of money paid in pursuance of them. "The meaning of the familiar maxim, In pari delicto potior est conditio defendentis, is simply that the law leaves the parties exactly where they stand; not that it prefers the defendant to the plaintifi, but that it will not recognize a right of action, founded on the illegal contract, in favor of either party against the other. They must settle their own questions in such cases without the aid of the courts."^* The principle in such cases is the same in equity as at law ; while the courts will not aid the mortgagee to enforce payment of an illegal mortgage, they will not aid the mortgagor to obtain a cancelation of the incum- ^"Moog v. Strang, 69 Ala. 98. 249. As to mortgage of cemetery '^Krake v. Alexander, 86 Va. 206, lot, Lautz v. Buckingham, 4 Lans. 9 S. E. 991. See also Dixon v. Cuy- (N. Y.) 484. See ante § 176. ler, 27 Ga. 248. =^Callicott v. Allen, 31 Ind. App. « Gilbert v. Holmes, 64 111. 548. 561, 67 N. E. 196; Thorp v. Smith, See also Muir v. Hamilton, 152 Cal. 65 N. J. Eq. 400, 54 Atl. 412. 634, 93 Pac. 857. ^Atwood v. Fisk, 101 Mass. 363, "Krake v. Alexander, 86 Va. 206, 100 Am. Deo. 124, per Mr. Justice 9 S. E. 991. Ames. 2" Brewster v. Madden, 15 Kans. 1015 VOID MOETGAGES § 619 brance. Both parties are left without remedy when the contract is one that is prohibited as immoral or against public policy.^ ^ But there are cases which hold that in the interest of the public a defendant may set up the defense of illegality to an action on an il- legal contract, although such defense amounts to an allegation of his own turpitude.^" When the illegal consideration has been paid to one of two persons interested in it, the court will not" aid the other to recover his share of it; it does not enforce the sentiment of "honor among thieves."^^ In a case in Nevada this principle was carried to the extent of de- claring void a mortgage given for a full, adequate, and legal consid- eration, merely because the mortgagee had the mortgage given to a nonresident of the state for the purpose of enabling him to escape tax- ation upon the amount of the loan. Although the revenue laws of the state contained no prohibition of such a contract, the mortgage was nevertheless declared illegal, as against the policy of the law, and the court refused, for that reason only, to enforce it against the mort- gagor.^^ And it was held, moreover, that it was immaterial that the mortgagee afterward paid the full amount of taxes upon the money loaned. The fraud, it was said, consisted in the turpitude of the mo- tive which influenced the mortgagee at the time of the execution of the mortgage.^^ =» Snyder v. Snyder, 51 Md. 77; Haddock v. Salt Lake City, 23 Utah James v. Roberts, 18 OMo 548. But 521, 65 Pac. 491. see Sackner v. Sackner, 3 9" Mich. 39. "'"Woodworth v. Bennett, 43 N. Y. In Cox V. Wightman, 4 Hun (N. Y.) 273, 3 Am. Rep. 706. In the lan- 799, the principle was applied to a guage of Lord Chief Justice Wil- case where a mortgage had been mot: "You shall not stipulate for assigned for the purpose of escap- iniquity; all writers upon our law ing taxation. The assignor, or his agree in this, no polluted hand shall administrator, was not allowed to touch the pure foundations of jus- get back the mortgage and bond, tice; whoever is a party to an un- though transferred without consid- lawful contract, if he hath once eration. paid the money stipulated to be " See" also McMullen v. Hoffman, paid in pursuance thereof, he shall 174 U. S. 639, 43 L. ed. 1117, 19 Sup. not have the help of a court to fetch Ct. 839; William Wilcox Mfg. Co. it back again; you shall not have V. Brazos, 74 Conn. 208, 50 Atl. 722; a right of action when you come Jones v. Dannenberg, 112 Ga. 426, into a court of justice in this un- 37 S. B. 729, 52 L. R. A. 271; Fields clean manner to recover it back. V. ferown, 188 111. Ill, 58 N. E. 977; Procul 0! procul este profani." Pinney v. First Nat. Bank, 68 Kans. Collins v. Blantern, 2 Wils. 341. 223, 75 Pac. 119; Hardie v. Scheen, ^"Drexler v. Tyrrell', 15 Nev. 114. no' La. 612, 34 So. 707; Somers v. ^But the cases cited in support Johnson, 70' N. J. L. 695, 59 Atl. of the decision are cases in which 224- Cuip V. Love, 127 N. Car. 457, the consideration of the contract, 37 S E. 476; Burck v. Abbott, '22 as between the parties themselves; Tex. Civ. App. 216, 54 S. W. 314; was either illegal or contravened § 619 VOID AND DSUEIOUS MORTGAGES 1016 Gaming contracts,'* contracts made on Sunday, contracts of cham- perty and maintenance, contracts made in composition of felony, and many others of like nature, might be mentioned as examples. But sometimes contracts are prohibited for the mere protection of one of the parties against an undue advantage which the other party is sup- posed to possess over him. In such cases the parties are not regarded as being equally guilty, and so the rule is not deemed applicable, though both have violated the law.'^ As an example of this kind, a usurious contract is mentioned, vrhich may be void as to the mort- gagee while valid as to the mortgagor. In accordance with this distinction, a law providing that school funds shall be loaned only upon unincumbered real estate does not render void a mortgage taken in violation of this statute by the officer charged with making the loan. The mortgagor can not claim that such a mortgage is illegal and unenforcible against him.'° And so under the national banking law a mortgage for a loan upon real estate security, though impliedly prohibited, is valid between the parties.'*' A statute providing that a trustee, before entering upon the dis- charge of his duties, shall give a bond for the faithful discharge of his duties, does not prevent the legal estate vesting in him under a mort- gage or deed of trust regularly executed.'^ the policy of the law. In the case ford v. Lord, 57 Hun (N. Y.) 572, before the court, however, there 11 N. Y. S. 597. was nothing illegal in the contract '"Deming v. State, 23 Ind. 416. as between the parties. It was a Cowles v. Raguet, li Ohio 38. See contract they were not prohibited also Raguet v. Roll, 7 Ohio 77, 4 from making, and there was a full Ohio 419; McQuade v. Rosecrans, 36 and complete consideration for it. Ohio St. 442. An important element The only taint in the transaction in this case was, that Raguet not was the intended fraud upon the only agreed not to prosecute, but revenue laws of the state. For this agreed to use his influence to pre- intended fraud the court upheld vent a prosecution. The Ohio cases the mortgagor in refusing payment go further than this general rule of the mortgage; they upheld him would warrant because they hold in a monstrous injustice, when the that, in an action by a mortgagee revenue laws of the state provided against the mortgagor to recover proper and ample punishment for possession of the mortgaged lands, an evasion of them by criminal the fact that such mortgage was prosecution. The decision is re- given to compound a felony is no garded as wrong in principle. This defense. Williams v. Englebrecht, decision is also regarded as incor- 37 Ohio St. 383. rect by Learned, J., in Nichols v. '"Deming v. State, 23 Ind. 416. Weed Sewing Machine Co., 27 Hun See also Mann v. Best, 62 Mo. 491. (N. Y.) 200, affd. 97 N. Y. 650. =' National Bank v. Matthews, 98 ^As to the effect of a mortgage U. S. 621, 25 L. ed. 188. t6 secure such contracts under the ™ Gardner v. Brown, 21 Wall. (U. statutes of New York, see Luetch- S.) 36, 22 L. ed. 527. 1017 VOID MORTGAGES § 620 i§ 620. Where part of consideration legal and part illegal. — The mortgage may be upheld for such part of the consideration as was free from the taint of illegality, when the consideration of a mortgage is made up of several distinct transactions, some of which are legal and others are not, and the one can be separated with certainty from the other.^^ Thus a mortgage undertaking to secure two or more notes has been upheld as security for a legal note, though invalid as to an illegal note.*" In equity a mortgage securing a debt usurious in part, but valid in part, may be upheld for the latter, although in terms the statute of usury makes the obligation void altogether. Thus, where the maker of such a mortgage comes into equity, and asks that such a mortgage be surrendered, as a cloud on the title to his lands, and that the court will so direct, although it can not require him to pay the usurious debt, or any part of it, it may require him to pay the other part of it which at law and in equity he owes. The court will require him to do equity before it will administer the relief asked for.*^ A mortgage fraudulently made to include a sum not due or which had been paid, the consideration being entire, and the purpose of the transaction be- ing to defraud creditors, is absolutely void.*^ If the sum secured be made up in part of a sum inadvertently included and without fraudu- lent intent, then the mortgage may be valid for the actual debt se- cured, and void as to the rest.*^ But in case the legal and the illegal parts of the consideration are inseparable, the illegal part taints the whole.** So, where the note secured by the mortgage is based partly on a legal and partly on an illegal consideration, it would seem to be void as a whole.*^ =°Corbett v. ■Woodward, 5 Sawyer 2 Cush. (Mass.) 160, 48 Am. Dec. (TJ. S.) 403; Warren v. Chapman, 655. 105 Mass. 87; Carradine v. Wilson, "Morris v. Way, 16 Ohio 469. 61 Miss. 573; Carleton v. Woods, 28 "Williams v. Fitzhugh, 37 N. Y. N. H. 290; Feldman v. Gamble, 26 444. N. J. Eq. 494; Williams v. Fitz- "McQuade v. Rosecrans, 36 Ohio hugh, 37 N. Y. 444 (applied to St. 442. usury) ; Cook v. Barnes, 36 N. Y. '^ Weeden v. Hawes, 10 Conn. 50. 520; McCraney v. Alden, 46 Barb. ■"> Reagan v. First Nat. Bank, 157 (N. Y.) 272; Yundt v. Roberts, 5 Ind. 623, 61 N. E. 575, 62 N. E. 701; Serg. & R. (Pa.) 139; Shaw v. Car- Crowder v. Reed, 80 Ind. 1. penter, 54 Vt. 155, 41 Am. Rep. 837; «Brigham v. Potter, 14 Gray Robinson v. Bland, 2 Burr. 1077. (Mass.) 522; Bick v. Seal, 45 Mo. See also In re Stowe, 6 Nat. Bankr. App. 475; McQuade v. Rosecrans, Reg. 431 Fed. Cas. No. 13513; Loud 36 Ohio St. 442. But see Shaw v. v. Hamilton (Tenn. Ch.), 51 S. W. Carpenter, 54 Vt. 155, 41 Am. Rep. 140, 48 L. R. A. 400; Pierson v. 837, holding that the mortgage is Green, 69 S. Car. 559, 48 S. E. 624; valid to the extent to which the con- Lepper v. Conradt, 15 Wyo. 394, 89 sideration for the note was legal. Pac. 575.' Contra, Denny v. Dana, § 621 VOID AND USURIOUS MORTGAGES lOlS When part of the consideration of a note and mortgage is the sup- pression of a criminal prosecution against the mortgagor, he can avail himself of this fact as a defense to a suit to enforce either of them; although the prosecution is for an embezzlement of funds, by which the mortgagor not only committed a crime but incurred a debt. The effect upon the mortgage in such case is the same as if the whole con- sideration had been illegal. The illegal part can not be separated from the legal.*" § 621. Mortgage valid in part and void in part. — A mortgage may be valid in part and void in part.*'' A mortgage of land and slaves, executed while slavery was recog- nized, was vitiated by the abolition of slavery only as to the lien upon the slaves.** Where a bond of defeasance was assigned by a debtor to a creditor, who paid the debt to secure which the conveyance was made, where- upon the land was conveyed to him, and he gave the debtor a new bond conditioned for the reconveyance of the land upon the payment of the amount of both debts, the transaction, so far as the debt of the second creditor was secured, was void under the insolvent laws; but the conveyance being a valid security for the first debt, the land was a valid security in the hands of the second creditor for the amount paid by him to the first creditor.*^ A mortgage given by a third person at the solicitation of another to secure his debts for a specific purpose, as, for instance, the purchase- price of certain goods about to be sold him, if fraudulently made to cover in part an existing indebtedness, is void as to such part of it, though valid as to the part used for the purpose intended. Although the mortgagee has taken such mortgage in good faith, if he has not put himself in any worse position in regard to the old indebtedness, and if he had not done anything or parted with anything in reliance upon the mortgage, he can not claim that the surety should suffer for the fraud by reason of negligence in executing the mortgage which rendered the fraud possible.^" A mortgage made without fraudulent intent for a larger amount "Atwood V. Fisk, 101 Mass. 363, (Mich.) 340; Johnson v. Richard- 100 Am. Dec. 124, per Ames, J. son, 38 N. H. 353. ■"Leeds v. Cameron, 3 Sum. (U. " Lavillebeuvre v. Frederic, 20 S.) 488; McMurray v. Connor, 2 La. Ann. 374. Allen (Mass.) 205; Rood v. Wins- "Judd v. Flint, 4 Gray (Mass.) low, 2 Dougl. (Mich.) 68, Walk. 557. '"' Smith V. Osborn, 33 Mich. 410. 1019 VOID MORTGAGES § 633 than the mortgagor's actual indebtedness is not fraudulent, but may- be enforced to the extent of such actual debt.°^ § 622. Evidence — ^Burden of proof. — The burden of proof is upon the party who sets up the defense of want of consideration or illegality of it, to make it out by clear and strong proof.^^ A mortgage in due form and duly executed implies a valid consideration. But when the consideration of a mortgage is questioned by a creditor of the mort- gagor having an interest, as voluntary and fraudulent as to him, the burden of proving a valuable consideration rests upon the mortgagee. When the consideration is admitted or established by proof, the bur- den of proving that the mortgage is fraudulent in fact is upon the creditor who assails it.^' Evidence of the payment of interest upon a mortgage is admissible to show its validity when this is disputed.^* The burden of proof as to the consideration may be cast upon the complainant by the answer."^ Thus where the mortgagor alleges in a verified answer that there was a total want of consideration for the note secured, the burden of proving consideration is on the plaintiff. ^^ But the burden is shifted where the mortgage notes import a consid- eration on their face.''' § 622a. Construction of statute declaring a mortgage void. — Under a statute which declares a mortgage void if executed upon land situ- ated in more than one county, its invalidity can not be cured by subse- quent legislation repealing this provision, or consolidating the coun- ties in such a way as to bring the mortgaged lands within one county. The word void used in the statute does not mean voidable.'^^ § 623. Mortgage for debt contracted on Sunday. — The statutes forbidding the transaction of business on Sunday have the effect to render void all contracts executed upon that day.^ But a mortgage ^' Adams v. Niemann, 46 Mich. "Floyd v. Morrison, 40 Iowa 188. 135, 8 N. W. 719. =»Otis v. McCaskill, 51 Fla. 516, =^ Stuart V. Phelps, 39 Iowa 14; 41 So. 458; Mayo v. Hughes, 51 Fla. Brigham v. Potter, 14 Gray (Mass.) 495, 40 So. 499. 522; Feldman v. Gamble, 26 N. J. ^Chesser v. Chesser (Fla.), 64 Eq. 494. See also Langley v. Fitz- So. 357. gerald, 43 Colo. 301, 95 Pac. 923; ""Chambers v. Powell (Ala.), 39 Waymire v. Shipley, 52 Ore. 464, So. 919. 97 Pac. 807. ^ Denny v. McCown, 34 Ore. 47, ^ First Nat. Bank v. Bennett, 215 54 Pac. 952. III. 398, 74 N. E. 405, revg. Bennett ^ Under the Massachusetts stat- v. First Nat. Bank, 117 111. App. ute of 1791, prohibiting the doing 382; Cohn v. Ward, 32 W. Va. 34, of any manner of labor, business, 9 S. E. 41. or work between the midnight pre- § 623 VOID AND USUEIOUS MORTGAGES 1020 executed on Sunday is not void either at common law or under a statu- tory prohibition of the exercise on that day of acts in the "ordinary calling" of citizens.- And under a statute simply prohibiting the per- formance of work and labor on Sunday, a deed of trust or mortgage executed on that day is not void.^ It has sometimes been said that such contracts, being immoral and illegal only as to the time they are entered iato, may be affirmed upon a subsequent day, and thus made valid.* But it seems incorrect to say that a mere ratification can impart legal efi&cacy to a contract vrhich has no legal existence.' So it has been held that payment on a secular day of interest on a note, void because made on Sunday, does not in itself amount to a new promise to pay the money due.'' The logical theory would seem to be, that nothing but an express promise subsequently made, founded upon the consideration emanat- ing from the illegal contract, will avail to support an action having that consideration for its basis. Upon this theory it was held that, al- though a promissory note made and delivered on Sunday for a loan of money made at the time is illegal and can not be enforced, yet the obligation to return the money is a sufficient consideration to support a mortgage subsequently given to secure it. The mortgage constitutes a new promise founded on such obligation, and having no taint of il- legality, such as the note had, it may be enforced.'' But a mortgage executed on Sunday without the knowledge of the ceding and the sunset of the Lord's Hellams v. Abercromble, 15 S. Car. day, and declaring void the execu- 110, 40 Am. Rep. 684. tion of any civil process from the * Adams v. Gay, 19 Vt. S58, per midnight preceding to the midnight Redfield, J. See Tucker v. West, following that day, it was held that 29 Ark. 386, for a review of the a mortgage executed, acknowledged Sunday laws of many of the states, and. recorded after sunset on Sun- " "The parties can not legalize day evening was not void. Header v. that which the law has declared il- White, 66 Maine 90, 22 Am. Rep. legal. It is competent to them to 551; Tracy v. Jenks, 15 Pick, impart new efficacy to a Voidable (IVIass.) 465. A parol agreement act, but they have no power to give entered into on Sunday, extending life to an act which, from reasons the time of payment of a mortgage, of public policy, has been ordained is void. Rush v. Rush (N. J. Eq.), by the legislative authority to be 18 Atl. 221. absolutely void." Per Chief Justice ^Hellams v. Abercrombie, 15 S. Beasley, in Reeves v. Butcher, 31 Car. 110, 40 Am. Rep. 684. N. J. L. 224. "Moore v. Murdock, 26 Cal. 514; "Reeves v. Butcher, 31 N. J. L. Johnson v. Brown, 13 Kans. 529; 224. Roberts v. Barnes, 127 Mo. 405, 30 ' Gwinn v. Simes, 61 Mo. 335. In S. W. 113, 48 Am. St. 640; Hora- Harrison v. Colton, 31 Iowa 16, it cek V. Keibler, 5 Nebr. 355; Boyn- is held that a contract made on ton V. Page, 13 Wend. (N. Y.) 425; Sunday may be afterward ratified. Bloom V. Richards, 2 Ohio St. 387; See also Heller v. Crawford, 37 Ind. 279. 1021 VOID MOETGAGES § 634 mortgagee, and dated, acknowledged, and delivered on the following day, is not void. The mortgagor is estopped from showing that the instrument was executed on a day other than that of which it bears date.^ Where a deed of land was executed and delivered on Sunday, to in- demnify the mortgagee, and under an oral agreement that he should hold the land in trust for the mortgagor after satisfying his claim, in accordance with which agreement a declaration of trust was after- ward executed, it was held that the fact that the deed was executed and delivered on Sunday did not entitle the grantee to hold the land discharged of the trust." The rule, that no action based on a contract made on Sunday can be maintained to enforce its obligations in favor of either party, can not be so applied as to enlarge the interest con- veyed by the grantor, or to defeat his equitable title. i§ 624. Cancelation of mortgage on ground of fraud. — A mortgage obtained by fraud is void, and a discharge of it may be decreed in equity.^ A court of equity will not cancel a mortgage simply because it is made without consideration; nor because the mortgagee fails or re- fuses to perform or discharge some promise or agreement made at the time of its execution. But it would seem that where the execution of the mortgage has been procured by the false and fraudulent repre- sentation that the mortgagee will discharge the obligation assumed, there is no good reason why a court of equity should not grant relief." ° 'Wilson T. Winter, 6 Fed. 16. ties have done, by setting aside « Faxon v. Folvey, 110 Mass. 392. their deeds. Neitlier party can now "The apparent title conveyed," says assert rights inconsistent with the Mr. Justice Colt, "was qualified by conveyances." See Hall v. Cor- the trust imposed upon it, as ef- coran, 107 Mass. 251, 9 Am. Rep. 30, fectually as if the terms of the trust and cases cited; Myers v. Meinrath, were contained in the deed itself. 101 Mass. 366, 3 Am. Rep. 368. Neither party to the transaction, ^ Shirk v. Williamson, 50 Ark. nor those claiming under them, can 562, 9 S. W. 307; Mason v. Daly, 117 be permitted to take advantage of Mass. 403; Wartemberg v. Spiegel, the alleged illegal act. The title, 31 Mich. 400. See also Richardson such as it was, passed to the v. Barrick, 16 Iowa 407; Terry v. grantee, and was held, as we have Tuttle, 24 Mich. 206; Hill v. Gettys, found, in trust. The purpose of the 135 N. Car. 373, 47 S. E. 449; Silver trust declared was neither im- Val. Min. Co. v. Baltimore, G. &c. moral, contrary to the statutes, nor Co., 99 N. Car. 445, 6 S. E. 735; Gar- contrary to public policy; the only retson v. Witherspoon, 15 Okla. 473, illegality charged is in the time 83 Pac. 415; Wright v. Morgan, 4 •when, by the conveyance and agree- Bax. (Tenn.) 385. ment, the trust was created. Under ''Hill v. Gettys, 135 N. Car. 373, such ' circumstances the law does 47 S. E. 449. not interfere to undo what the par- § 624 VOID AND USURIOUS MORTGAGES 1023 When a deed of land has been procured by fraud, and the grantee has conveyed it to a purchaser in good faith, so that the land itself is beyond the reach of the grantor,^ yet if such purchaser has given a mortgage for a portion of the purchase-money to the party who fraud- ulently obtained the deed, he may in equity be compelled to trans- fer the mortgage to the party defrauded. It is an established doctrine, that when the legal estate has been acquired by fraud, the taker may in equity be regarded as trustee of the party defrauded, who may re- cover the estate or its avails when these can be distinctly identified.'' A bill to set aside a mortgage procured by fraud may be filed by one of several mortgagors who have secured the several notes of each by a joint mortgage of one tract of land;' or several mortgagors may Join as plaintiffs in a bill to obtain a cancelation of a note and mortgage, though the note secured was executed by only one of them.° It has been held to be fraud in a creditor to induce his debtor to secure an old debt by mortgage upon the condition of advancing a further sum, and when he has obtained the security to refuse to make the advance, and a court of equity will annul the conveyance. In such case the mortgagee can not claim that there is no loss, and that there- fore the mortgage is damnum absque injuria. The mere existence of the mortgage is itself an injury, and an action to enforce it a greater.'' But the better view is that such a transaction does not afford ground for canceling the mortgage in equity, though it might support -an action at law for the injury sustained by reason of the breach of agree- ment.* However, the question whether a mortgage obtained by a creditor as security for a pre-existing debt, under a promise to make further advances, when the creditor had no intention of keeping his promise, is fraudulent, is a question upon which the cases are in con- flict ;" but if the creditor intended to make the advances, and refused to do so on some reasonable ground, the mortgage can not be avoided on the ground of fraud.^" A mortgage is void when made by one who has obtained title to the property by fraud or undue influence, the mortgagee having full knowledge of the acts leading up to the execution of the deed to the = Jordan v. McNeil, 25 Kans. 459. ' Johnson v. Murpby, 60 Ala. 288. ■•Cheney v. Gleason, 117 Mass. 'Gross v. McKee, 53 Miss. 536; 557. Johnson v. Murphy, 60 Ala. 288, the 'Moulton V. Lowe, 32 Maine 466. latter case holding that such breach 'Bowman v. Gormy, 23 Kans. 306. of promise is no ground for declar- ' Watts V. Bonner, 66 Miss. 629, 6 ing the mortgage void. So. 187; Gross v. McKee, 53 Miss. "Petty v. Grisard, 45 Ark. 117. 536. 1023 VOID MORTGAGES § 621 mortgagor and of the fraudulent means by which the mortgagor ob- tained title. "^^ An administrator who brings an action for the benefit of creditors of the estate to set aside a conveyance made by the decedent in fraud of his creditors, one parcel of which had been previously mortgaged by the decedent to a third person, is only entitled to subject to the claims of such creditors the land fraudulently conveyed in the con- dition in which it was at the date of the fraudulent deed, and is not entitled to the benefit of the mortgage. The fraudulent grantee, who had raised money and paid off the mortgage made by the decedent is entitled to be subrogated to the rights of the original mortgagee.'^ The fact that the mortgagor is in possession, and can maintain his possession against the mortgagee at law, does not prevent his main- taining a bill to set aside a fraudulent mortgage.^' A party seeking to avoid his contract upon the ground of fraud can do so only by making prompt complaint.^* A mortgage given to secure a forged note is void. Thus a mortgage given by a wife upon her separate property for the accommodation of her husband's firm is rendered void by the forgery of her name, as a joint maker with her husband of the note intended to be secured, even in the hands of an innocent assignee.^^ Where the mortgagee conveys land to the mortgagor, taking a mort- gage back for part of the purchase-price, and has falsely represented that the tract contained sixty acres more than it actually did, the mortgagor is entitled to abatement for the shortage upon foreclosure of the mortgage.^^ A mortgagor seeking cancelation of the mortgage must restore to the mortgagee the amount due under the mortgage, with lawful in- terest." But this rule does not apply where the mortgage was given to secure a pre-existing indebtedness." " Brummond v. Krause, 8 N. Dak. terer v. Freeman, 88 Ga. 479, 14 S. 573 80 N W 686. E. 863; Hormann v. Hartmetz, 128 "'Ackerinan v. Merle, 137 Cal. 169, Ind. 353, 27 N. E. 731; Burlington 69 Pac 983 '^- Cross, 15 Kans. 74; Brill v. Rack, "Marston v. Brackett, 9 N. H. 15 Ky. L. 383, 23 S. W. 511; Pugh v. ggg Cantey, 33 La. Ann. 786; Hanold "Wright V Peet, 36 Mich. 213. v. Bacon, 36 Mich. 1; Pounds v. '=Morsman v "Werges, 3 Fed. 378. Clarke, 70 Miss. 263, 14 So. 22; Mil- "Harsev V Busby, 69 S. Car. 261, ler v. Gunderson, 48 Nebr. 715, 67 48 S E 50 ■ N. W. 769; Bissell v. Kellogg, 65 "fiporse'v New England Mtg. N. Y. 432; Foltz v. Ferguson, 77 Security Co ' 109 Ala. 548, 20 So. Tex. 301, 13 S. W. 1037; Kelly v. 331- More v Calkins, 85 Cal. 177, Kershaw, 5 Utah 295, 14 Pac. 804. 94 Pac 729- Pershing v. Wolfe, 6 "Shook v. Southern Bldg. &c. Colo. App 410, 40 Pac. 856; Dot- Assn., 140 Ala. 575, 37 So. 409; Jen- § 625 VOID AND USURIOUS MOETGAGES 1034 § 625. Fraudulent intent — How shown. — A fraudulent intent on the part of the mortgagee in obtaining the mortgage must be shown to render it void.^^ To have this effect, it is necessary that there should be something more than mere folly on the part of the mort- gagor. A mortgagee may meet an allegation, that a mortgage was ob- tained through his false and fraudulent representations, by evidence that the mortgagor executed the mortgage without his solicitation. The weight to be given to the evidence is a question for the jury.^° Fraud must be proved as an aflSrmative fact, but it may be discov- ered and established through circumstances.^^ Mortgages and deeds of trust duly executed will not be canceled for fraud except on the most clear and convincing proof of their fraud- ulent character.^^ If the proof is doubtful and unsatisfactory, the writing will be held to correctly express the intention of the parties.^' The admitted fact that the books containing the account to secure which deeds of trust were executed had been tampered with, furnishes no reason for holding that the deeds of trust were procured by fraud or misrepresentation.^* A fraudulent misrepresentation as to the value of property sold by the mortgagee, in payment of which he has taken a mortgage, does not avoid the mortgage if there was any value at all in the property sold. The property which was the subject of the sale and mortgage must first be restored to the vendor, or a reconveyance tendered, before the mortgage can be rescinded.^'' A defense of fraud as to the value of the property can not be sustained where the mortgagor acted upon his own investigation and judgment in buying the property.^' kins V. Jonas ScUwab Co., 138 Ala. Bank of Pine Island, 116 Minn. 261, 664, 35 So. 649. 133 N. W. 611; Christian v. Green "Mills V. Keep, 197 Fed. 360; (Miss.), 45 So. 425; Fitzgibbon v. Molir V. Griffin, 137 Ala. 456, 34 So. Parker, 143 App. Dlv. 463, 128 N. 378; Clarke v. Forbes, 9 Nebr. 476, Y. S. 539; Crowe v. Melba Land Co., 4 N. W. 58; Murphy v. Moore, 23 76 Misc. 676, 135 N. Y. S. 454; Eng- Hun (N. Y.) 95; Johnston v. Derr, lert v. Dale, 25 N. Dak. 587, 142 110 N. Car. 1, 14 S. E. 641. See post N. W. 169. §§ 1299, 1492. =° Insurance Co. v. Nelson, 103 U. ^Blackwell v. Cummings, 68 N. S. 544, 26 L. ed. 436; Rowland v. Car. 121. See also Juzan v. Toul- Blake, 97 U. S. 624, 24 L. ed. 1027; min, 9 Ala. 662, 44 Am. Dec. 448; Skajewski v. Skaya, 103 Minn. 27, Vaill V. McPhail, 35 R. I. 412, 87 114 N. W. 247; Goulet v. Dubreuille. Atl. 188. 84 Minn. 72, 86 N. W. 779. "1 Black V. Epstein, 221 Mo. 286, "Christian v. Green (Miss.), 45 120 S. W. 754; Merchants' Nat. So. 425. Bank v. Greenhood, 16 Mont. 395, " Sanborn v. Osgood, 16 N. H. 112. 41 Pac. 250. =" San Jose Ranch Co. v. San Jose ''"Langley v. Fitzgerald, 43 Colo. L. &c. Co., 132 Cal. 582, 64 Pac. 301, 95 Pac. 923; Ferber v. State 1097. 1035 VOID MORTGAGES § 636 Fraudulent intent on the part of one of two mortgagees will invali- date the mortgage, although the mortgage secured separate debts, and the other mortgagee did not share in or know of such fraudulent in- tent." A mortgage obtained by the fraud or forgery of the mortgagee's agent is void. The mortgagee in such case can not be a purchaser for value.^^ The representation of a mortgagee that he would not enforce the mortgage is no defense to it, because such a parol promise can not be offered in evidence.^" The mere fact that a mortgagor was unable to read, and that the mortgage was not read to him, does not enable him, in the absence of proof of fraud on the part of the mortgagee, to object that the instru- ment contains an unauthorized stipulation, especially when it was drawn by his own agent.^" The question of the sufficiency of a mortgagee's misrepresentations as a ground for cancelation as to the mortgagor may be determined in a suit by his assignee to foreclose, on an application for the surplus money, if any be raised by a sale of the land or by other appropriate action. ^^ § 626. Mortgage obtained by duress or undue influence. — A mort- gage obtained by duress is voidable or void according to the nature of the duress."^ But a bill to set such mortgage aside must be filed before the maturity thereof .^^ The duress must be something more than the exercise of undue' influence.^* The insistence upon one's legal rights does not constitute undue in- fluence.^^ 2' Adams v. Niemann, 46 Mich. ^Kingsley v. Kingsley, 130 III. 135, 8 N. W. 719. App. 53. ^Laprad v. Sherwood, 79 Mich. =* Walker v. Nicrosi, 135 Ala. 353, 520, 44 N. W. 943. 33 So. 161; Moog v. Strang, 69 Ala. ^'catlin v. Fletcher, 9 Minn. 85. 98; Gabbey v. Forgeus, 32 Kans. 62, "Wilson V. Winter, 6 Fed. 16; 15 Pac. 866. As to evidence, see Stewart v Whitlock, 58 Cal. 2; Les- Edwards v. Bowden, 103 N. Car. 50, lie V Merrick 99 Ind. 180; McAlar- 9 S. E. 194, 6 Am. St. 487; Post v. ney v Paine (Pa.), 10 Atl. 20; First Nat. Bank, 138 111. 559, 28 N. Montgomery v. Scott, 9 S. Car. 20, B. 978; Winfleld Nat. Bank v. Croco, 30 Am Rep. 1. 46 Kans. 620, 26 Pac. 939; Benedict " Nixon V Haslett, 74 N. J. Eq. v. Roome, 106 Mich. 378, 64 N. W. 789 70 Atl. 987, affd. 75 N. J. Eq. 193; Weber v. Barrett, 125 N. Y. 18, 302' 78 Atl 1134. 25 N. E. 1068; Loud v. Hamilton =2' Van Valkenburgh v. Oldham, 12 (Tenn.), 51 S. W. 140, 45 L. R. A. Cal App 572, 108 Pac. 42; Bogue 400; Galusha v. Sherman, 105 Wis. V. Franks, 199 111. 411, 65 N. B. 346; 263, 81 N. W. 495. 1 Jones on Real Property, § 93. ^''Van Valkenburgh v. Oldham, 12 Cal. App. 572, 108 Pac. 42. 65— Jones Mtg.— Vol. I. § 626 VOID AND USURIOUS MORTGAGES 1036 Under a statute providing that the consent of the parties to a con- tract must be free, mutual, and communicated by each to the other, if the consent of a party to a note and mortgage are not freely or volun- tarily given, they may be held void even though signed by the party .^'' A mortgage obtained through threats of prosecution, whether groundless or not, is voidable,*'' and a court of chancery will restrain its collection,** or will order it to be canceled, as a cloud on the title.*' But a mortgage obtained by threat of a lawful arrest for a crime actually committed can not be avoided on the ground of duress.*" Eelief may be granted against a mortgage extorted by a son from his parents by oppressive means, and for an inadequate consideration, while he practically occupied the position of guardian over them, and their property.*^ A mortgage executed by a wife on her separate prop- erty, to secure a debt of her husband, under his threat to abandon her if she refused, may be avoided by her if the mortgagee was aware of 3uch threat at the time the mortgage was executed.*^ But where a father procures his adult daughter to make a mortgage to a third party for the father's benefit, the mortgagee, though without actual knowledge of undue influence or duress, is chargeable with the duty of investigating the daughter's freedom of will ia making the mort- gage.** It is even held that a mortgage obtained from a married woman by duress on the part of the husband is void, although the mort- ^ Van Valkenburgh v. Oldham, secure a debt of the husband, under 12 Cal. App. 572, 108 Pac. 42. the inducement of false and fraudu- " Johnson v. Graham Bros. Co., 98 lent charges of embezzlement against Ark. 274, 135 S. "W. 853; Smith v. the husband, and threats to insti- Steely, 80 Iowa 738, 45 N. W. 912; tute criminal proceedings against Smith V. Bank of Hamlin, 90 Kans. him, is void. Singer Mfg. Co. v. 299, 133 Pac. 428; Williamson-Hal- Rawson, 50 Iowa 634. It is im- sell, Frazier Co. v. Ackerman, 77 material that the property was pur- Kans. 502, 94 Pac. 807, 20 L. R. A. chased by the husband with money (N. S.) 484; Lee v. Ryder, 1 Kans. of the party making the threats, App. 293; Hoellworth v. McCarthy, and fraudulently conveyed to the 93 Nebr. 246, 140 N. W. 141, 43 L. R. wife. A. (N. &.) 1005; Nebraska Central -"Englert v. Dale, 25 N. Dak. 587, Building &c. Assn. v. McCandless, 142 N. "W. 169; Hunt v. Hunt (Ore ) 83 Nebr. 536, 120 N. W. 134; Har- 134 Pac. 1180. greaves v. Korcek, 44 Nebr. 660, 62 "Bowe v. Bowe, 42 Mich 195 3 N. W. 1086. N. E. 843. "^ Eyster v. Hatheway, 50 111. 521, " Line v. Blizzard, 70 Ind. 23 ; 99 Am. Dec. .537; James v. Rob- Wallach v. Hoexter, 17 Abb. N. Cas. erts, 18 Ohio 548. See also Light- (N. Y.) 267. As to what threats foot V. Wallis, 12 Bush (Ky.) 498. and commands on the part of the ™ Small V. Williams, 87 Ga. 681, husband amount to duress, see Gab- 13 S. E. 589 ; Meech v. Lee, 82 Mich, bey v. Forgeus, 32 Kans. 62, 15 Pac 274, 46 N. W. 383; Schooner v. Les- 866. sauer, 107 N. Y. Ill, 13 N. E. 741, 'Lane v. Reserve Trust Co., 30 revg. 36 Hun 100. A mortgage exe- Ohio Cir. Ct. 367. cuted by a wife upon her property to 1037 VOID MORTGAGES § 626 gagee took no part in procuring it, on the ground that he allowed the husband to act as his agent, and is bound by his acts.^* But a married woman can not set up the invalidity of her signature to a mortgage of her homestead on the ground that, not being able to read, she relied on the representations of her husband that the instrument was a note and was of no consequence;*^ for it was gross negligence in her not to require the instrument to be read to her.*'' Nor can a person who is able to read, but through inexcusable neglect signs a mortgage with- out reading it, complain of false statements made as to its contents.*' But where one having the confidence of an illiterate person by fraud- ulent representations procured the latter to sign a note and mortgage other than the one he supposed he was signing, the fact that he did not require the instrument to be read to him does not preclude him from controverting their execution.*^ A mortgage duly executed by husband and wife, releasing her homestead right can not be avoided, though she did not wish to sign the mortgage, but was induced by her Jiusband to do so, where she understood the transaction.*^ A married woman as well as any one else may be estopped by her deliberate con- duct. =» ' The fraud or duress of a husband in procuring his wife's release of homestead does not invalidate the mortgage unless the mortgagee had knowledge of oj- shared in the wrongful acts of the husband.^^ But where her separate acknowledgment is made essential to a conveyance of her separate estate, if she executes a mortgage during her minority she can not ratify it by paying interest or doing any like act after coming of age. She can only ratify it in the way she could originally execute it, that is, by making a separate acknowledgment of the deed as required by statute. Doubtless she would be estopped in case she « Central Bank v. Copeland, 18 "Tackitt v. Tackitt (Ky.), 127 S. Md. 305, 81 Am. Dec. 597. W. 987. "^jEtna Life Ins. Co. v. Franks, ™Van Sickles v. Town, 53 Iowa 53 Iowa 618, 6 N. W. 9; Butner v. 259, 5 N. W. 148; Edgell v. Hagens, Blevins, 125 N. Car. 585, 34 S. E. 53 Iowa 223, 5 N. W. 136; Norton 629- Shell V. Holston Nat. Bldg. &c. v, Nichols, 35 Mich. 148; Lefebvre Assn. (Tenn.), 52 S. W. 909. See v. Dutruit, 51 Wis. 326, 8 N. W. 149, also Knowlson v. Bruist, 86 Mich. 37 Am. Rep. 833. 588 49 N W. 585. =' Walker v. Nicrosi, 135 Ala. 353, "Roach V. Karr, 18 Kans. 529, 26 33 So. 161; Moog v. Strang, 69 Ala. Am Rep. 788; Frickee v. Donner, 98; . Longfellow v. Barnard, 58 Nebr ™Keagy v. Trout, 85 Va. 390, 7 612, 79 N. W. 255. See post § 827a, S. E. 329. 1033 VOID JiorsTG.VGES § 627 erty, and allows the mortgagor to remain upon the premises and re- ceive the income, is not such evidence of fraud as will postpone the mortgage to debts subsequently incurred by the mortgagor. The ex- tent of the mortgagee's liability to creditors is to account for the pro- ceeds of the property as a credit upon the mortgage debt.*^ The circumstance that a mortgage is made in the form of an abso- lute conveyance by a debtor in failing circumstances to a creditor is no evidence of an intention to defraud other creditors."" But inasmuch as a mortgage in tliis form lends to cover up and keep concealed the real nature of the transaction between the parties, it will be closely scrutinized.^* But in Alabama such a conveyance is fraudulent and void as against existing creditors, although there may have been no actual intent to defraud. An equity of redemption is property which is capable of be- ing subjected to the payment of debts, in courts of law and of equity ; and a transaction, whereby an embarrassed debtor conceals its exist- ence from his creditors, must hinder and delay them.'*^ ISTeither is a mortgage fraudulent as to creditors because it is given for a greater sum than is due, but in fact to cover in part future ad- vances, although it does not express upon its face that the excess is for future advances.^" It would be fraudulent, however, if not given in good faith, and the securing of future advances be only a pretense," or if given for a very large sum upon a large amount of property, when in fact the debt was very small.*'* A mortgage executed by a debtor in failing circumstances, setting out a present indebtedness, may be set aside for fraud upon proof that the recited indebtedness is a pretense,*" and that the real debt was wages for services largely to be performed in the future."" If given to secure existing liabilities, a mortgage is not void as to creditors because it does not specify the amount secured;" nor be- '2 Decker v. Wilson, 45 N. J. Eq. Am. Dec. 102; Goff v. Rogers, 71 772 18 Atl 843. Ind. 459; Hughes v. Sliull, 33 Kans. ''Dosweli V. Adler, 28 Ark. 82, 127, 5 Pac. 414. See Jones on Chat- and cases cited. But the mortgagee tel Mortgages, § 339. must use good faith and disclose "Farguson v. Johnston, 36 Fed. the facts to other creditors making 134; Tully v. Harloe, 35 Cal. 302, inquiry Geary v. Porter, 17 Ore. 95 Am. Dec. 102. 465 21 Pac 442. *^ Hubbard v. Turner, 2 McLean "'aeavv V Porter, 17 Ore. 465, 21 (U. S.) 519; Liver v. Thielke, 115 Pac 442 ' Wis. 389. *'• Campbell v Davis, 85 Ala. 56, =" Stephens v. Stephens, 66 Ark. 4 So 14^- Sims v. Gaines, 64 Ala. 356, 50 S. W. 874. ^q? See also Moog v. Barrow, 101 " Perry v. Hardison, 99 N. Car. Ala 209 13 So. 665. 21, 5 S. E. 230. «» Tully V. Harloe, 35 Cal. 302, 95 »' Youngs v. Wilson, 27 N. Y. 351, § 628 VOID AND USURIOUS MORTGAGES 1034: cause the sum secured was made up in part by an allowance of interest not recoverable at law upon the debt,"^ or that it includes debts due to other persons which the mortgagee has verbally promised to pay."^ A mortgage given for the amount of an existing mortgage and an additional sum is not rendered fraudulent because the first mortgage is left uncanceled of record for further security, in the absence of fraudulent intent shown.'* The fact that a mortgage given to secure certain creditors of a firm is withheld from record for two years does not of itself make it fraud- ulent as to other creditors of the firm, but is merely a circumstance to be considered as bearing upon the question of fraud.®^ § 628. Mortgage fraudulent with reference to particular persons. — A mortgage may be fraudulent with reference to a particular creditor of the mortgagor, as, for instance, a mechanic who was induced to delay the signing of a contract for the building of certain houses until the landowner had executed and recorded a mortgage without consid- eration to a third person, with the intention that the mortgagee should enter under it and defeat the mechanic's lien. The mechanic, in such case, is entitled to maintain a bill to restrain an assignment of the mortgage, and to compel its cancelation, even before the houses are completed and the money under the contract has become due. The revg. 24 Barb. (N. Y.) 510; Norris the absence of any fraudulent pur- V. Lake, 89 Va. 513, 16 S. E. 663. pose, by our statutes of fraudulent "^ Spencer v. Ayrault, 10 N. Y. conveyances, either directly or by 202. clear implication, and therefore, °' Carpenter v. Muren, 42 Barb, while we are not disposed to ap- (N. Y.) 300. prove the transaction, we are never- " Westerly Sav. Bank v. Stlllman theless not prepared to declare it Mfg. Co., 16 R. I. 497, 17 Atl. 918. void on the ground that It was In this case a mortgage was given against public policy. It is deslr- and recorded, and was partly paid able that the records should at all when a further loan was made, and times disclose the true state of the a new mortgage for the new loan titles there registered, but it is no- and the balance of the old loan, con- torlous that they do not do so. Mort- veying the same property, was given gages which have been paid are and recorded. The first mortgage left uncanceled. Mortgages which was left uncanceled for further se- have been partly paid do not show curity, and the record did not show that they have been partly paid, and that it included the debt secured by have never been supposed to be the first. Durfree, C. J., said: "The vitiated thereby. Mortgages on objection is, not that the second several pieces of property, each mortgage was given for more than given for the same debt, without the mortgagor owed, but that it was making reference to the other, have given in part for indebtedness al- been enforced against junior mort- ready secured by the prior mort- gages and attaching creditors." gage left uncanceled without dis- "'Day v. Goodbar, 69 Miss. 687, 12 closing the fact. This is not pro- So. 30. hibited by our registry laws, or, in 1035 VOID MORTGAGES § 629 priority of lien to which the mechanic is entitled may be secured to him beforehand, for his security is impaired by the fraudulent mort- gage, and he is exposed to the chance that the mortgage may pass into the hands of a bona fide assignee for value."' A conveyance by a married woman of her entire property to her husband's assignee for the benefit of his creditors was adjudged fraud- ulent as to an equitable mortgagee of her property. She was not liable for her husband's debts, but was liable for a debt of her own, and had no right to divert her property from her own creditor for the benefit of her husband's creditors."' A trust deed made by a husband without consideration, for the purpose of defrauding the maker's wife of her claim for alimony, is fraudulent as against the wife, and the want of consideration is a suffi- cient defense to a suit to foreclose the trust deed."' When an existing mortgage is exchanged under a false pretense that the title is to be cleared, and before giving the new mortgage in ex- change the mortgagor makes another mortgage with the purpose of giving it priority, even if this be an honest mortgage, but given to secure an old debt, the mortgagee in this is in no position to object to the restoration of the old mortgage in behalf of the original mort- § 629. Fraudulent preferences. — A mortgage given to secure a debt to a creditor who has, with others, executed a composition with a debtor to accept a portion of their claims in satisfaction, under a secret arrangement whereby the debt of such creditor is to be paid in full, is a fraud upon the other creditors, and is void.^ But a mortgage "•■■Hulsman v. Whitman, 109 Mass. fer one creditor over another, shall 411. Mortgage by husband to de- operate as a transfer of the prop- feat collection of judgment for all- erty for the benefit of creditors gen- mony. Dugan v. Trlsler, 69 Ind. 553. erally. Gen. Stat. ch. 44, art. 2, § 1. °' Washburn v. Hammond, 151 This statute does not prohibit the Mass. 132, 24 N. E. 33. executing of a mortgage to secure »' Scott v. Magloughlin, 133 111. a debt created simultaneously by 33, 24 N. B. 1030; Westphal v. one in failing circumstances. But Westphal.'si Minn. 242, 83 N. W. a mortgage given by one knowing ggg ' that he is insolvent, in order to °°Eggeman v. Harrow, 37 Mich, prefer a creditor, to secure an ex- 436 See post § 967. isting debt, together with a debt in- ^Feldman v. Gamble, 26 N. J. Eq. curred simultaneously to a creditor 494 and cases cited; Lawrence v. who knows the debtor's condition Clark, 36 N. Y. 128. See Jones on and aids in carrying out the ar- Chattel Mortgages, §§ 356-366. In rangement, is a conveyance for the Kentucky it is provided by statute benefit of creditors generally under that every mortgage made by a the statute. McCann v. Hill, 85 Ky. debtor in contemplation of insolv- 574, 4 S. W. 337. ency, and with the design to pre- § C29 VOID AND USDEIODS MORTGAGES 1036 made with the intent to give the mortgagee an unlawful preference is not affected by that fact if such intent was not carried out.^ A mortgage made with the intent to prefer contrary to law has been held void against the assignee in bankruptcy of the mortgagor, al- though the property was a homestead and exempt from execution." This proposition may well be doubted, however, because the creditors have nothing to do with their debtor's homestead, if it is wholly ex- empt, and, if the debtor chooses to waive his right of homestead in favor of a mortgagee, the waiver is in his favor only ; and consequently it could not be subjected for the benefit of other creditors, nor even to pay the debt of the mortgagor, if there was enough of the mortgaged property to satisfy his debt without resorting to the homestead.* To re^ider a mortgage made by an insolvent debtor void as a prefer- ence under the bankrupt law,^ it was necessary for the assignee to show affirmatively that the mortgagee had reasonable cause to believe that the mortgagor was insolvent at the time he executed the mort- gage," and that it was made with intent to defeat the bankrupt law.' A similar rule generally prevails under the state insolvent laws.*' Such intent is always a question of fact, and must be proved to have actually existed." A mortgage made by an insolvent debtor upon his property has been held to constitute an unlawful preference, though made pur- suant to an agreement to do so entered into before the insolvency as consideration for a loan; as the mortgage must be contemporaneous with the loan to escape condemnation as a preference.^" A creditor may lawfully accept security from an insolvent debtor, but he can not do so for the purpose and with the intention of de- frauding other creditors.^^ The giving of a new mortgage and note to the assignee of a mort- 'Corbett v. Woodward, 5 Sawyer La. Ann. 350, 12 So. 495; Whipple (U. S.) 403. V. Bond, 164 Mass. 182, 41 N. E. 'Beals T. Clark, 13 Gray (Mass.) 203. 18. "Union Nat. Bank v. State Nat. ^ Levis V. Zinn, 93 Ky. 628, 14 Ky. Bank, 168 111. 256, 48 N. B. 169, L. 867, 20 S. W. 1099. affg. 68 111. App. 43; Whipple v. = Bankrupt Act of March 2, 1867, Bond, 164 Mass. 182, 41 N. E. 203; § 35; 14 Stat, at Large 534. See Bridges v. Miles, 152 Mass. 249, 25 Jones on Chattel Mortgages, § 360. N. E. 461; Cook v. Holbrook, 146 "As to "reasonable cause," see Mass. 66, 14 N. E. 943; Sartwell v. Wager V. Hall, 16 Wall. (U. S.) 584, North, 144 Mass. 188, 10 N. E. 824; 21 L. ed. 504; Bridges v. Miles, 152 Ogden State Bank v. Barker, 12 Mass. 249, 25 N. E. 463. Utah 27, 40 Pac. 769. ' Barbour v. Priest, 103 U. S. 293, " Feely v. Bryan, 55 W. Va. ES6, 26 L. ed. 478. 47 S. E. 307. sRoden v. Ellis, 113 Ala. 652, 21 "Ellis v. Musselman, 61 Nebr. So. 71; Chapoton v. Creditors, . 44 262, 85 K. W. 75. 1037 VOID MORTGAGES § G29 gage, in consideration of the release of the old mortgage, is valid when given in good faith and without any purpose of preference, though the proceedings in insolvency are begun against the mortgagor shortly afterward. ^^ Under a statute forbidding an insolvent corporation to prefer cred- itors, a mortgage executed by a corporation will not be held- invalid where it does not appear that the corporation was insolvent. A cor- poration, like an individual, can appropriate its means to the pay- ment of debts in such order and in such amounts and proportions as the directors please. ^^ But a mortgage by a debtor corporation to certain creditors, exe- cuted pending a suit to wind up the corporation as an insolvent debtor, or pending a voluntary assignment for the benefit of creditors,^* is clearly void as being an unlawful attempt to prefer certain creditors. That is was executed in violation of a temporary injunction, in a suit wherein a receiver was asked for, is a further reason why the mortgage is a nullity. ^'^ Though a corporation be insolvent but is in possession of its prop- erty and in the active prosecution of its business, and intends to con- tinue therein, unless prevented by other creditors, its mortgage to secure a pre-existing debt is not necessarily invalid if the object of the mortgage is, on its part, not to give a preference to one creditor over another, but simply to obtain an extension of credit.^^ A mortgage executed by an insolvent debtor to secure one of his creditors, delivered only a few moments before the execution of a deed of assignment by such debtor for the benefit of all his creditors, is void ; for both instruments in such case should be construed together, and so construed, the mortgage gives a preference in a voluntary as- signment to a creditor.^^ A mortgage executed in good faith by a person about to file a vol- untary petition in bankruptcy or insolvency to secure his attorney for "Porter v Welton (Conn.), 23 701. See also Swift v. Dyes-Veatch Atl 868 Co., 28 Ind. App. 1. "'Atlas Tack Co. v. Exchange "=Bissell v. Besson, 47 N. J. Eq. Bank 111 Ga. 703, 36 S. E. 939; 580, 22 Atl. 1077. Lowrv Banking Co. v. Empire Lum- '" Damarin v. Huron Iron Co., 47 bar Co 91 Ga. 623, 17 S. E. 968; Ohio St. 581. 26 N. E. 37. Brouwer v Harbeck, 9 N. Y. 589; " Goldthwaite v. Ellison, 99 Ala. BveZn V Eddy, 12 N. Y. S. 872. 497, 12 So. 812; Peed t. Elliott, 134 "Reagan v First Nat. Bank, 157 Ind. 536, 34 N. B. 319; John Shil- Tnd fill 61 N E. 575, 62 N. E. lito Co. v. McConnell, 130 Ind. 41, § 630 VOID AND CSUKIOUS MORTGAGES 1038 advances to be made and services to be rendered in instituting the pro- ceedings and procuring the debtor's discharge is valid.^' § 630. Who may take advantage of the fraud. — Though a mort- gage be fraudulent and void as to a creditor, the mortgagor can not avoid it.^° Such a mortgage conveys the property, and is binding be- tween the parties.^" Although the mortgagee has participated in the fraudulent intent, it is voidable only at the election of the creditors. If they do not intervene, the conveyance stands.^^ The mortgagor will not be heard to allege his own fraud.^^ A mortgagor who has made a mortgage in fraud of his creditors may redeem without showing that the transaction has been purged of the fraud, because the mortgage is voidable only by the creditors, and is valid as between the parties.^* A creditor of the mortgagor, after levying execution on the equity of redemption and purchasing it at the sheriff's sale, may prove that a second mortgage, or a release of the equity to the second mortgagee by the mortgagor, is fraudulent and void by reason of fraud practiced on the mortgagor, although the mortgagor himself has made no. at- tempt to avoid it.^* So may a purchaser of the equity of redemption, upon execution sale, maintain an action to set aside a deed on account of fraud.^° A subsequent judgment creditor may show that a prior mortgage was executed fraudulently and without consideration, in an action by the mortgagee against the owner and such judgment creditor to foreclose the mortgage ; and the mortgage may in such suit be sub- jected to the priority of the judgment.^^ The right to impeach a mortgage as fraudulent and void as to creditors of the mortgagor does not pass to his assignee by a voluntary general assignment in trust for the benefit of his creditors subse- "In re Parsons, 150 Mass. 343, 23 » Upton v. Craig, 57 111. 257; Har- N. E. 50; Citizens' Sav. Bank &c. vey v. Varney, 98 Mass. 118, and Co. V. Graham, 68 Vt. 306, 35 Atl. cases cited; Colt v. Sears Commer- 318. cial Co., 20' R. I. 64, 37 Atl. 311. ^"Stores V. Snow, 1 Root (Conn.) ^Per Shaw, C. J., in Dyer v. 181. See also Abbe v. Newton, 19 Homer, 22 Pick. (Mass.) 253. Conn. 20; Salmon v. Bennett, 1 ^ Stratton v. Edwards, 174 Mass. Conn. 525, 7 Am. Dec. 237; Rlsley 374, 378, 54 N. E. 886; Pierce v. Le V. Parker (N. J. Eq.), 23 Atl. 424; Monier, 172 Mass. 508, 53 N. E. 125; Bonesteel v. Sullivan, 104 Pa. St. Stillings v. Turner, 153 Mass. 534, 9; Gill V. Henry, 95 Pa. St. 388; 27 N. E. 671; Harvey v. Varney, 98 Barwlck v. Moyse, 74 Miss. 415, 21 Mass. 118. So. 238. See ante § 626. =» Ashby v. Ashby, 39 La. Ann. ™Parkhurst v. McGraw, 24 Miss. 105, 1 So. 282; Van Deusen v. Frink, 134. See also Kingman Plow Co. v. 15 Pick. (Mass.) 449. Knowlton, 143 Iowa 25. 119 N. W. =^Matson v. Capelle, 62 Mo. 235. 754. ="■ Kelly v. Lenihan, 50 Ind. 448. 1039 VOID MORTGAGES § 630 quently executed, and unaffected by any statute in force at the time, for the assignee's relations to the creditors are solely those created by the instrument of assignment.^'' A subsequent incumbrancer can not set up in defense to a fore- closure suit that the mortgage was intended to hinder, delay, and de- fraud the mortgagor's creditors. It is only his creditors who have a right to claim that the mortgage is fraudulent for this reason.^* ISTeither can such subsequent incumbrancer set up the defense that the mortgage is void as against public policy, on the ground that it was made in an attempt to escape taxation. Even if the mortgagor could avail himself of these defenses, a subsequent incumbrancer has no right to insist upon them for his own benefit.^' An assignee in insolvency or bankruptcy who, with full knowledge of the transaction, treats a mortgage as valid by selling the property subject to the mortgage, can not afterward proceed to set the mortgage aside as an unlawful preference.^" Eegarding the right of a judgment creditor to sell the land of his debtor upon which there is a mortgage, and after getting a deed, sup- posing he is purchaser, to set aside the mortgage as fraudulent, whether there are other creditors or not, there is a conflict in the cases.^^ But it would seem that where the debtor holds the title, and that title is sold under execution, neither the creditor under whose judgment the property is sold, nor the purchaser at the sale, can, after deed is obtained, bring action to cancel a prior mortgage on the ground of fraud, without showing that the mortgage was such that, had he brought a creditor's bill before selling to, subject the property, he would have been entitled to the relief demanded.^^ '^Flower v. Cornish, 25 Minn. Colt v. Sears Commercial Co., 20 R. 473; otherwise in Colorado, Laws I. 64, 37 Atl. 311. 1885 pp. 27, 318; Mills' Ann. Stat. 'iTeague v. Martin, 87 Ala. 500, 1912 § 247; Bailey v. American 6 So. 362, 13 Am. St. 63; Kingman Nat 'Bank, 12 Colo. App. 66, 54 Pac. Plow Co. v. Knowlton, 143 Iowa 25, 912 119 N. W. 754; Wagner v. Law, 3 "^Hendon r. Morris, 110 Ala. 106, Wash. 500, 28 Pac. 1109, 29 Pac. 20 So 27; Over v. Carolus, 171 111. 927, 15 L. R. A. 784, 28 Am. St. 56. 552 49 N E. 514; Nichols v. Weed '^ Epperson v. Burgett, 33 Ark. Sewing Machine Co., 27 Hun (N. 328; Kingman Plow Co. v. Knowl- Y ) 200 affd. 97 N. Y. 650; Colt v. ton, 143 Iowa 25, 119 N. W. 754; Sears Commercial Co., 20 R. I. 64, Payne v. Burks, 4 B. Mon. (Ky.) 37 Atl 311" Perkins v. Hutchinson, 492; White v. Gates, 7 Dana (Ky.) 17 R i 450 22 Atl. 1111. 357; Marshall v. Blass, 82 Mich. 518, »> Nichols 'v. Weed Sewing Ma- 46 N. W. 947, 47 N. W. 516; Mess- chine Co 27 Hun (N. Y.) 200, affd. more v. Huggard, 46 Mich. 558, 9 97 N Y 650. N. W. 853; Cleveland v. Taylor, 3 ™ Freeland v. Freeland, 102 Mass. Mich. 203 ; Knoop v. Kelsey, 121 Mo. 475- Tuite V Stevens, 98 Mass. 305; 642, 26 S. W. 683; Woodward v. Snow V Lang, 2 Allen (Mass.) 18; Mastin, 106 Mo. 324, 17 S. W. 308; § 630a VOID AND USURIOUS MORTGAGES lOiO § 630a, Effect of conveyance to a trustee to pay debts. — A convey- ance by a debtor to a trustee to sell the property and pay his debts to his creditors named, or to all his creditors, with a reservation of the surplus to himself, is in effect a mortgage.^^ The debtor's reservation of the surplus does not make the mortgage fraudulent ; but if the as- signment is an absolute transfer of all the property of the debtor, the transaction amounts to an assignment for the benefit of creditors, and its validity then depends upon the conformity of the conveyance with the statutes regulating such assignments.'* But where a mortgagor, being unable to pay his debt, executes an absolute deed of the property to the mortgagee, who received the deed in payment of the debt and agreed that, in case the property should sell for more than enough to satisfy the mortgage debt, he would account to the mortgagor for the surplus, such conveyance can not be treated as a mortgage in equity.'^ The chief distinction between an assignment for the benefit of cred- itors and an assignment in trust in the nature of a mortgage is, that in the former case the assignment is an absolute transfer of all the debtor's property for the benefit of all his creditors; while, in the latter case, the assignment is for the security of the creditors, the debtor retaining an equitable title or equity of redemption.^" Where the instrument is in form a mortgage, and not an assignment for the benefit of creditors, the presumption, until overcome by proof, is that the parties intended it to have effect as a mortgage. The fact that it provides that the mortgagor should surrender immediate possession to the mortgage trustee does not convert it into an assignment. To ac- complish that result it must be shown that it was the intention that the debtor should be divested, not only of his control over his prop- erty, but also of his title.'' A mortgage is not rendered fraudulent by a provision, added to a power of sale conferred upon the mortgagee, that he is to hold the residue of the proceeds subject to the order of the mortgagor.'^ De Grauw v. Median, 48 N. J. Eq. ** Jones on Chattel Mortga.ges, 219, 21 Atl. 193; Thigpen v. Pitt, 54 § 352a. X Car. 49. . == Weltner v. Thurmond, 17 Wyo. " Stafford Nat. Bank v. Sprague, 268, 98 Pac. 590, 99 Pac. 1128. 17 Fed. 784; De Wolf v. Sprague "Hargadine v. Henderson, 97 Mo. Mfg. Co., 49 Conn. 282; Chafee v. 375, 11 S. W. 218. Fourth Nat. Bank, 71 Maine 514, 36 " Smith v. Empire Lumber Co., Am. Rep. 345; Austin v. Sprague 57 Ark. 222, 21 S. W. 225; Robson Mfg. Co., 14 R. I. 464; Union Co. v. v. Tomlinson, 54 Ark. 229, 15 S. W. Sprague, 14 R. I. 452; Monaghan 456. substantially in the language Bay Co. v. Dickson, 39 S. Car. 146, of the court. 17 S. E. 696; Verner v. McGhee, 26 ™ Coulter v. Lumpkin, 88 Ga. 277, S. Car. 248, 2 S, E. 113; Jones on 14 S. E. 614; Calloway v. People's Chattel Mortgages, §§ 352-355. Bank, 54 Ga. 441; Lay v. Seago, 47 1041 VOID MOBTGAGES § 631 § 631. Estoppel to deny validity. — A mortgagor is not estopped from setting up the invalidity of his mortgage, unless there has been some fraud, misrepresentation, or concealment on his part.^" But he is estopped from setting up any defense which is inconsistent with rep- resentations made by him in obtaining the loan which the mortgage was given to secure, when the lender has relied upon these representa- tions in making the loan and taking the mortgage." Thus, if a mort- gagor induce a person to purchase the mortgage by a statement or certificate that a certain sum is due upon it, and that there is no off- set or defense to it, the borrower is precluded from claiming that this sum is not the true amount due, or that the mortgage is void, either wholly or in part, for usury.* ^ But if the purchaser of the security did not believe the existence of the facts in reference to which the estoppel is sought to be interposed, and did not act upon any such be- lief, the mortgagor is not estopped to show the real facts of the case.*^ To create a valid estoppel, the holder of the mortgage must have purchased in reliance upon the truth of the representations. There- fore, where a mortgage and a certificate accompanying it that the mortgage was given "for a good and valid consideration to the full amount thereof, and that the same is subject to no ofEset or defense whatever," were both procured by fraud, and the purchaser did not rely upon the truth of the certificate, but upon the effect of it, as a matter of law, to protect him, it was held that the mortgagor could still set up the fraud in defense to the mortgage.*^ A mortgage made to aid an officer in the settlement of his official accounts by making up a deficiency, and used for that purpose, can not Ga. 82; Rowland v. Coleman, 45 vantage of it as against an innocent Ga. 204; Banks v. Clapp, 12 Ga. purchaser. The law adjudges him 514; Carey v. Giles, 10 Ga. 9. to be estopped from profiting by his ™ Brewster v. Madden, 15 Kans. own fraud." Per Curtis, J. 249. See also Wilson v. Watts, 9 "Wilcox v. Howell, 44 N. Y. 398; Md. 356; Radican v. Radican, 22 R. Eitel v. Bracken, 6 J. & S. (N. Y.) I. 405, 48 Atl. 143; Tucker v. Tuck- 7; Van Sickle v. Palmer, 2 Thomp. er, 72 S. Car. 295, 51 S. E. 876. & C. (N. Y.) 612. "Rogers v. Union Cent. L. Ins. "'Eitel v. Bracken, 6 J. & S. (N. Co., Ill Ind. 343, 12 N. E. 495; Kel- Y.) 7, per Curtis, J. "It is con- ley V. Fisk, 110 Ind. 552, 11 N. E. trary to good morals that a certifi- 453. cate containing an unadulterated "'Smyth V. Munroe, 84. N. Y. 354; falsehood, and known to both the Lesley v. Johnson, 41 Barb. (N. Y.) maker and recipient to be simply 359; Eitel v. Bracken, 6 J. & S. (N. such, should be sustained as suifi- Y.) 7. "It is a wise and just re- cient to protect the latter in the striction that, if a mortgagor makes purchase of a mortgage, because he a false statement, orally or in writ- believed it would so protect him as ing, to influence the purchase of a matter of law, and would not have the' security, he can not take ad- bought the mortgage without it." 66— Jones Mtg.— Vol. I. § 633 VOID AXD USURIOUS MORTGAGES 104"2 afterward be repudiated by the maker as invalid. He can not com- plain that, after having accomplished its purpose by being used as evidence of a loan with his consent, it is held to be a valid obliga- tion.** He is estopped, too, from denying the ofBcial character of the grantee, as a commissioner of the school fund, although the office had been abolished. The mortgage being intended as a security for the school fund, it will be given the effect intended by the parties, and the maker will not be allowed to deny its recitals.*' Payment by a landowner of interest on a mortgage to which his signature was forged, estops him from contesting the validity of the instrument.*" § 632. When mortgage in fraud of creditors may not be invali- dated. — A mortgagor is not allowed to invalidate his own deed by showing that it was executed by him for the purpose of defrauding his creditors. A court of equity will not lend its aid to relieve the mortgagor from the consequences of his own fraudulent act, nor will it aid the mortgagee in securing him in the enjoyment of the property, where its interposition is necessary for that purpose. The mortgagee is left to his legal remedies, which will enable him, when invested with the legal title, to recover the possession of the mortgaged property. So far as the contract is executory, he is without remedy, either legal or equitable.*' Where the mortgagee can show a prima facie right to recover on the face of the instrument without revealing any fraud in the transaction, the mortgagor will not be permitted to plead as a defense that the mortgage was executed for the purpose of defrauding his creditors of which purpose the mortgagee was aware.*' A defense to the enforcement of a mortgage for the want of con- sideration can not be met by evidence that the mortgage was given with a view to defraud the creditors of the mortgagor.*" "The general rule of policy is. In pari delicto potior est conditio defendentis. If there was an intent to defraud creditors, it was an intent common to both parties, affecting as well the plaintiff's intestate as the defendant. ** Floyd V. Morrison, 40 Iowa 188. N. E. 392; Harvey v. Varney, 98 « Floyd V. Morrison, 40 Iowa 188. Mass. 118; Barwick v. Moyse, 74 ■""Rothschild v. Title Guarantee Miss. 415, 21 So. 238 60 Am' St &c. Co., 204 N. Y. 458, 97 N. B. 879, 512; Walker v. Brungard, 13 Smedes 41 L. R. A. (N. S.) 740; Vohmann & M. (Miss.) 723; Bonesteel v. Sul- V. Michel, 185 N. Y. 420, 78 N. E. livan, 104 Pa. St. 9; Williams \ 156, 113 Am. St. 921. Williams, 34 Pa. St. 312. "Brookover v. Hurst, 1 Mete. •"'Williams v. Clink, 90 Mich 297 (Ky.) 665; United States Mtg. Co. 51 N. W. 453; Judge v. Vogel 38 V. Marquam, 41 Ore. 391, 69 Pac. 37. Mich. 569. «Pltzele V. Cohn, 217 111. 30, 75 1043 VOID MORTGAGES G32 It is the plaintiff who is the actor, and is seeking to enforce the pay- ment of these notes. It may be held that the defendant would not be permitted to show that the notes were made to delay and defeat cred- itors as a substantive ground of defense, on the well-known maxim, ISTemo allegans suam turpitudinem audiendus sit; and therefore, if a legal consideration were shown, such a defense could not avail. But independently of this ground, he shows want of consideration, and it is the demandant who seeks to rebut that defense by showing that the notes were given as well to defeat creditors as without considera- tion."=<> II. Usury Section 633. Usury laws in general. 634. Intent to take usury. 635. Effect of provision for attor- ney's fees and damages. 636. Effect of agreement to pay taxes or insurance. 637. Exchange and premiums. 638. Mortgage to building and loan association. 639. Validity of contract to resell at an advance property pur- chased. 640. No forfeiture though transac- tion usurious. 641. Sale of mortgage. 642. Bonus or commission of broker or agent. 642a. Where agent is general agent of lender. 642b. Where broker not the agent of lender. 643. Evidence — Burden of proof — Pleading defense. 644. Who may interpose defense of usury. 645. Estoppel to set up usury. 646. Usury set up after a foreclosure and sale. 647. Effect of usurious transactions subsequent to execution of mortgage. 648. When bonus for extension a proper credit on mortgage debt. 649. When agreement for extension void under usury laws. 650. Validity of agreement to pay compound interest, made be- fore interest due. Section 651. Validity of agreement to pay interest on interest, made after interest has become due. 652. Accrued interest forming prin-' cipal of further mortgage — Tacking to iirst mortgage. 652a. Taking interest upon a loan in advance. 653. Interest coupons. 654. When mortgagee may enforce payment of interest. 655. Computation of interest. 656. General rule and exception as to construction and validity of contract. 657. What law governs. 658. Mortgage debt payable in state other than where land situ- ated. 659. Contract valid where made but invalid in place of perform- ance. 659a. Validity of contract made in one state and payable in an- other bearing highest rate payable in either. 660. The lex rei sitae does not con- trol. 661. What law governs as to title and enforcement of lien. 662. What laws govern as to form and validity of mortgage deed — As to parties. 663. Pleading and proof of usury laws of foreign state. "Wearse v. Pierce, 24 Pick. (Mass.) 141, per Shaw, C. J.; Briggs V. Langford, 107 N. Y. 680, 14 N. E. 502. 633 VOID AND USURIOUS MORTGAGES 1044 § 633. Usury laws in general. — Usury laws apply to mortgages in the same manner that they apply to contracts in general, and the same principles of law are applicable to the inquiry whether they are usurious or not. The subject of usury is of less importance now than it was formerly, for the reason that within a few years usury laws have been repealed in several states, and in others they have been greatly modified, so that only in a few states does usury now invali- date a contract. A brief statement of the laws of the several states with reference to interest and usury is given in a note ; but it is to be borne in mind that these laws are at present subject to frequent changes.^ * Alabama: Eight per cent. Usury forfeits interest, but not principal. Tbe defendant recovers full costs. Code 1907, §§ 4619-4625. Alaska: Eight per cent, but par- ties may contract for any rate not exceeding twelve per cent. Ann. Codes 1900, pt. v, §§ 255-258. For- feiture for usury double the inter- est collected. Arizona: Six per cent, when there is no express agreement, but the parties may contract in writing for any rate not in excess of ten per cent. Rev. Stat. 1913, p. 1219. Arkansas: Six per cent, but par- ties may contract for any rate not exceeding ten per cent. Usury renders the contract void, both as to principal and interest. Kirb. Dig. 1911, ch. 113. California: Seven per cent, but the parties may contract for any rate, simple or compound. Civ. Code 1903, §§ 1917-1920. Colorado: Eight per cent, but parties may stipulate in writing for a higher rate. Mills' Ann, Stats., Revised Edition, 1912, ch. 85. Connecticut: Six per cent. Pay- ments in excess of that rate can not be set off or recovered back. Gen. Stat. 1888, §§ 2941-2943; Gen. Stat. 1902, §§ 4598, 4599. Delaware; Six per cent. Usury forfeits a sum of money equal to the whole loan. Rev. Code 1874, ch. 63, § 1. District of Columbia; Six per cent. Any interest contracted for in excess of six per cent, shall be forfeited. Code 1911, §§ 1178-1186. Plofida: Eight per cent., but any rate may be agreed upon. Con- tracts for more than ten per cent, interest are void. Double the amount paid over that rate may be recovered. Rev. Stat. 1892, § 2320, Appendix, ch. 4022. Georgia: Seven per cent., but parties may contract in writing for any rate not exceeding eight per cent. Interest in excess is for- feited. Code 1882, §§ 2050, 2051, 2057; Code 1895, §§ 2876, 2888. Titles made as part of a usurious contract are void; Code 1882, § 2057f. But a mortgage passes no title, and is not void for usury; Holliday v. Lowry Banking Co., 92 Ga. 675, 19 S. E. 28; Hodge v. Brown, 81 Ga. 276, 7 S. E. 282; Frost V. Allen, 57 Ga. 326. Hawaiian Islands: Legal rate eight per cent.; by written contract, twelve per cent. Idaho: Seven per cent. Parties may by writing agree to pay a higher rate, not to exceed twelve per cent, per annum. Revised Codes 1908, Vol. I, p. 683. Illinois: Five per cent., but par- ties may contract in writing for any rate not exceeding seven per cent. Usury forfeits the entire Interest. Corporations can not interpose this defense. Kurd's Rev. Stat. 1912, ch. 74, § 2. See also Fowler v. Equi- table Trust Co., 141 U. S. 384, 35 L. ed. 786, 12 Sup. Ct. 1. Indiana: Six per cent, but par- ties may contract in writing for any rate not exceeding eight. Usury forfeits the excess. Rev. Stat. 1888. 1045 USUEIOTJS MORTGAGES § 633 §§ 5198, 5201. Revision 1901, §§ 7043, 7046; Burns' Rev. 1914, § 7950. Iowa: Six per cent., but parties may agree in writing for a rate not exceeding eight. Usury for- feits eight per cent, on the con- tract to the school fund, and only the principal can he recovered. Code 1873, and Rev. Code 1880. §§ 2077, 2080; Code 1897, §§ 3038, 3041; Code, Title 15, ch. 2. Kansas: Six per cent., but par- ties may contract in writing for not exceeding ten per cent. Pay- ments in excess are accounted as payments on the principal, and a sum equal to twice the excess over ten per cent, is forfeited. Gen. Stat. 1899, §§ 3482, 3483; Gen. Stat. 1909, §§ 4344-4346. Kentucky: Six per cent. Usury forfeits the excess above that rate. Stat. 1909, § 2218; Gen. Laws 1899, §§ 2218, 2219. Louisiana: Five per cent. Eight per cent, may be stipulated. Usury forfeits the entire interest. Civ. Code 1912, art. 2924. Maine: Six per cent, but the parties may agree in writing for any other rate, but not in excess of fifteen per cent, on loans of less than $200 on personal property. Rev. Stat. ch. 45. See also Lind- say V. Hill, 66 Maine 212. Maryland: Six per cent. Usury forfeits the interest. Code 1910, art. 49. Acts 1912, ch. 835. Massachusetts: Six per cent., but parties may contract in writing for any rate. Pub. Stat. 1882, ch. 77, § 3; Rev. Laws 1902, ch. 73, § 3. Michigan: Five per cent., but parties may contract in writing for not exceeding seven per cent. Usury forfeits the interest, but it can not be recovered after a volun- tary payment. A purchaser in good faith of negotiable paper is not affected by the usury. Howell's Ann. Stats., Sec. Ed., 1913, Vol. II, §§ 2869, 2870. Minnesota: Six per cent. Par- ties may agree in writing upon any rate not exceeding ten per cent. A contract for more is usurious, and makes void all instruments except negotiable paper in the hands of bona fide purchasers. Interest in excess may be recovered. Laws 1899. ch. 122; Gen. Stat. 1894, §§ 2212, 2213; Gen. Stat. 1913, §§ 5805-5809; Scott V. Austin, 36 Minn. 4G0, 32 N. W. 89, 864; Jordan v. Humphrey, 31 Minn. 495, 18 N. W. 450; Beal v. White, 28 Minn. 6, 8 N. "W. 829. This exception is not applicable to mortgages securing such paper. Mississippi: Six per cent, is le- gal rate, but eight per cent, may be provided for in writing. More than eight per cent, is usurious and for- feits all interest. Code 1906, § 2678. Purvis V. Woodward, 78 Miss. 922, 29 So. 917. Missouri: Six per cent., but par- ties may contract in writing for any rate not exceeding eight. Usurious interest is credited on the debt. Rev. Stat. 1889, ch. 90; Rev. Stat. 1899, §§ 3705, 3709; Rev. Stat. 1909, § 3782. Montana: Eight per cent., but parties may stipulate for any rate. Comp. Stats. 1887, ch. 73. Nebraska: Seven per cent., but parties may contract for a rate not exceeding ten, and this may be taken in advance. Usury forfeits all interest. Comp. Stats. 1885, and 1899, ch. 44; Rev. Stat. 1913, §§ 3346-3351. Nevada: Seven per cent., but parties may contract in writing for any other rate not exceeding twelve per cent. Rev. Laws 1912, §§ 2499, 2500. New Hampshire: Six per cent. Usury forfeits three times the ex- cess. Principal and legal interest may be recovered. Gen. Stat. 1867, ch. 213; Acts 1872, ch. 12, § 3; Gen. Laws 1878, ch. 232, §§ 3, 4; Pub. Stat. 1901, ch. 203, § 2. New Jersey: Six per cent. Usury forfeits all interest. Comp. Stat. 1909-1910, p. 5704; Supp. to Rev. 1886, p. 398. New Mexico: Six per cent., but by written agreement a rate not ex- ceeding twelve may be agreed for. Taking more than twelve per cent. is a misdemeanor. Usury forfeits double the interest collected. Comp. Laws 1897, §§ 2552, 2553. New York: Six per cent. Usury makes void the contract, but no cor- poration can plead the defense. It is' also a misdemeanor. Banks are exempt from these penalties. Usury forfeits principal and interest. 3 633 VOID AXD USURIOUS ilOETGAGES 1046 The National Banking Act^ provides that banks organized under it may take interest at the rate allowed by the laws of the state where Rev. Stat. (7th ed.), pp. 2253-2256, 1419; Gen. Bus. Law, §§ 370, 371, 373. North Carolina: Six per cent. Usury forfeits the entire interest, and twice the amount of interest paid may be recovered. Pell's Re- visal of 1908, §§ 1950, 1951; Moore V. Seaman, 111 N. Car. 328, 16 S. E. 177; Gore v. Lewis, 109 N. Car. 539, 13 S. E. 909; Kidder v. Mcll- henny, 81 N. Car. 123. North Dakota: Seven per cent., but parties may contract for a higher rate not exceeding twelve per cent. Usury forfeits all inter- est. Comp. Laws 1913, §§ 6072, 6076. Ohio: Six per cent. Parties may contract in writing for not more than eight per cent. Usury forfeits excess of interest. Judgments bear interest at rate of the contract. Gen. Code 1910, §§ 8303, 8305. Oklahoma: Six per cent., but parties may contract for ten per cent, per annum. Persons contract- ing for, receiving or retaining a greater rate forfeit all such inter- est so received, retained or taken. Ind. T. Ann. Stat. 1899, § 3073. Oregon: Six per cent., but par- ties may contract for ten per cent. Usury forfeits the interest absolute- ly. Ann. Laws 1887, §§ 3587-3594. Pennsylvania: Six per cent. Usurious interest can not be col- lected, and, if paid, may be recov- ered by suit brought within six months. Negotiable paper, taken in good faith, is not affected by the discount. Obligations of railroad and canal companies not within the law. Brightly's Purdon's Dig. 1883, pp. 926-928. Rhode Island: Six per cent., but parties may agree on rate up to thirty per cent, per annum on amounts exceeding fifty dollars, and on rate up to five per cent, per month for not more than three months on amounts not exceeding fifty dollars. Pub. Laws 1909, oh. 434. South Carolina: Seven per cenjt., or eight by express contract. Usury forfeits all interest, and makes the lender liable for double the amount received. Gen. Stat. 1882, § 1288; Code 1902, §§ 1662, 1663. South Dakota: Seven per cent., but parties may contract for not exceeding twelve per cent. Usury forfeits all interest. Rev. Codes 1903, §§ 1417, 1419. Tennessee: Six per cent. Inter- est above six per cent, can not be recovered, or, if paid, may be re- covered back. Code 1884, §§ 2699- 2712. Texas: Six per cent. By con- tract ten per cent, may be reserved. The excess is void. Double the amount of usurious interest may be recovered. Act of April 11, 1892; Rev. Stat. 1895, §§ 3097, 3106. Utah: Eight per cent, is legal rate. Contract agreement or loans for more than twelve per cent, in- terest is void. Comp. Laws 1907, §§ 124, 1241x. Vermont: Six per cent. Excess can not be recovered, or, if paid, may be recovered back. Rev. Laws 1880, §§ 1996-2000; Rev. Stat. 1894, § 2301; Pub. Stat. 1906, Title 15, ch. 125. Virginia: Six per cent. Usury forfeits all interest, corporations excepted. Code 1887, ch. 130; Code 1904, § 2817. Washington: Six per cent., but twelve per cent, may be agreed upon. Usury forfeits double the in- terest. Rem. & Bal. Code, § 6251; Reed v. Miller, 4 Wash. St 426, 25 Pac. 334. West Virginia: Six per cent. The excess can not be recovered. Corporations can not plead usury. Code 1887, ch. 96; Code 1899, ch. 96. Wisconsin: Six per cent., but parties may contract for payment and receipt of a rate not exceeding ten per cent per annum. Stat. 1898, § 1691. Wyoming: Eight per cent., but any rate not exceeding twelve per cent, may be agreed upon. Rev. Stat. 1887, §§ 1310-1316; Comp. Stat. 1910, §§ 3355, 3356. 'See ante U. S. Rev. Stats. § 5198. 1047 TJSUKIOUS MORTGAGES § 634 the banks are located, and no more, except that where by such laws a different rate is limited for banks of issue organized under state laws, the same rate shall be allowed the national banks. When no rate is fixed by state or territorial laws national banks may take not exceed- ing seven per cent. The penalty for taking a greater rate of interest is a forfeiture of the entire interest reserved; and in case a greater in- terest has been paid, the debtor may recover twice the amount of the interest thus paid. This statute is exclusive of state legislation for taking usury.^ A debt can not be avoided by reason of usury charged by a national bank;* nor can a bank, by offering to remit the excess, evade the statute as to forfeiture of the entire interest." § 634. Intent to take usury. — There is some conflict as to whether an unlawful intent is essential to constitute usury, it being held in some states that an intent to take unlawful interest is an essential ele- ment of usury," while in other states a more or less contrary doctrine obtains,'^ but it is settled that the court will look to the real character of the transaction regardless of its form.^ To constitute usury there must either be an agreement between the parties by which the borrower promises to pay, and the lender know- ingly receives, a higher rate of interest than the statute allows for the loan or forbearance of money, or such greater rate of interest must = Oates V. National Bank, 100 U. v. Brown, 72 Pa. St. 209; Purdon's S. 239, 25 L. ed. 580; Barnet v. Na- Dig., vol. 2, p. 1987; Hill v. Bank, tional Bank, 98 U. S. 555, 25 L. ed. 56 Vt. 582. 212; Farmers' &c. Nat. Bank v. •'Stephens v. Monongahela Bank, Bearing, 91 U. S. 29, 23 L. ed. 196; 111 U. S. 197, 28 L. ed. 399, 4 Sup. De Wolf V. Johnson, 10 Wheat. (U. Ct. 337; Cox v. Beck, 83 Fed. 269; S.) 367, 6 L. ed. 343; Slaughter v. Chase Nat. Bank v. Faurot, 149 N. First Nat. Bank, 109 Ala. 157, 19 Y. 532, 44 N. E. 164, 35 L. R. A. So. 430; Florence R. &c. Co. v. 605. Chase Nat. Bank, 106 Ala. 364, 17 = Citizens' Nat. Bank t. Donnell, So. 720; Rockwell v. Farmers' Nat. 195 U. S. 369, 49 L. ed. 238, 25 Sup. Bank, 4 Colo. App. 562, 36 Pac. 905; Ct. 49. First Nat. Bank v. McEntire, 112 "Furr v. Keesler, 3 Ga. App. 188, Ga 232 37 S. E. 381; Wiley v. Star- 59 S. E. 596; Clemens v. Crane, 234 buck, 44 Ind. 298; First Nat. Bank 111. 215, 84 N. E. 884; .^tna Bldg. V Childs, 133 Mass. 248; Davis v. &c. Assn. v. Randall, 23 Okla. 45, Randall, 115 Mass. 547; Central 99 Pac. 655; Covington v. Fisher, Nat. Bank v. Pratt, 115 Mass. 539; 22 Okla. 207, 97 Pac. 615. Norfolk Nat. Bank v. Schwenk, 46 ' State v. Haney, 130 Mo. App. 95, Nebr. 381, 64 N. W. 1073; Barker 108 S. W. 1080. v Bank, 59 N. H. 310; Importers' = Klein v. Title Guaranty &c. Co., &c Nat. Bank v. Littell, 46 N. J. 166 Fed. 365; Widell v. Citizens' L. 506; Oldham v. First Nat. Bank, Nat. Bank, 104 Minn. 510, 116 N. W. SB N Car. 240; Merchants' &c. Nat. 919; Knoup v. Carver, 74 N. J. Eq. Bank V. Myers, 74 N. Car. 514; Hig- 449, 70 Atl. 660; Dale v. Duryea, 49 ley V Bank, 26 Ohio St. 75; Bank Wash. 644, 96 Pac. 223. § 634: VOID AND USUEIOUS MORTGAGES 1048 be knowingly and intentionally reserved, taken, or secured for such loan or forbearance." A mortgage given to secure a just debt is neither invalid as against the mortgagor, nor fraudulent as against his creditors, because interest has been calculated upon the debt and included in the mortgage in excess of the strict legal right, or because interest was charged when no interest at all was collectible at law, if the allowance was just and equitable;^" or because an item which was subject to objection for usury was inadvertently included in the mortgage loan when the parties had agreed that all the items which might render the loan usu- rious should be eliminated. ^^ But if a mortgage be given to secure a pre-existing debt, which was tainted with usury, the mortgage will be vitiated by usury of the orig- inal indebtedness.^^ A mortgage given in renewal of one that is tainted with usury is itself affected with the same taint.^^ And the consequences of the usury will attend the new security, even when this is given by a third person, if there be no other consideration than the original usurious debt.^* But if the usurious mortgage be transferred to an innocent holder, and he receives directly from the mortgagor a new one in its stead, the latter can not be impeached on account of the usury in the original mortgage. ^^ There is no rule of law which makes it unlawful or usurious in one to loan money, to be used by the borrower in paying a usurious debt to another, if this loan be itself free from usury.^^ Where one owing a debt induced his creditor to procure a loan upon a mortgage of the debtor's land to a third person, which though exe- cuted to the creditor was with the mortgagor's knowledge taken for the benefit of the person who loaned the money, and was immediately transferred to him, usury in the original debt of which the mortgagor is not shown to have had any knowledge, does not afEect him.^^ » Briggs V. Steele, 91 Ark. 458, 121 water Copper Mining Co., 6 N. J. S. W. 754. Eq. 253, 625. 1° Spencer v. Ayrault, 10 N. Y. >^ Exiey v. Berryhill, 37 Minn. 182, 202. 33 N. W. 567. "Jarvis v. Southern Grocery Co., ""Kilner v. O'Brien, 14 Hun (N. 63 Ark. 225, 38 S. W. 148. Y.) 414; Sherwood v. Archer, 10 " Vickery v. Dickson, 35 Barb. (N. Hun (N. Y.) 73; Sweeney v. Peas- Y.) 96; Thompson v. Berry, 3 lee, 17 N. Y. S. 225. See also Jen- Johns. Ch. (N. Y.) 395, 17 Johns, kins v. Levis, 25 Kans. 479. 436; Bell V. Lent, 24 Wend. (N. Y.) '"Wilson v. Harvey, 4 Lans. (N. 230. Y.) 507. ^ McCraney v. Alden, 46 Barb. " May v. Folsom, 113 Ala. 198, 20 (N. Y.) 272; Cope v. Wheeler, 41 So. 984. N. Y. 303. See also Hoyt v. Bridge- 104:9 USUEIOUS MOETGAGES § 634 Usury to affect a mortgage imist relate directly to the mortgage debt. A valid mortgage is not affected by a subsequent usurious agree- ment, such,^« for instance, as an agreement by the mortgagor to pay usurious interest to the assignee of the mortgage,^' or the payment of usurious interest for a renewal.^" If a mortgage not affected by usury be assigned as collateral security for a debt of the mortgagee, usury taken by the assignee on the latter debt can not be set up as a defense to the mortgage. ^^ But a provision in a mortgage for the payment of a higher rate of interest after maturity of the mortgage debt is by some courts re- garded as a penalty which will not be enforced, but the contract rate before maturity will continue afterward.^^ There must be an intention knowingly to contract for and to take usurious interest, for, if neither party intends it, the law will not infer a corrupt agreement.^^ Inasmuch as usury depends upon the intent with which it is taken, the court will look into the whole transaction to determine what the intent was, not only into the acts of the parties at the time of the transaction, but subsequently.^* A stipulation for the payment of interest at the highest rate allowed by law, at periods shorter than a year, whether semiannually or quar- terly, does not make the loan usurious. ^° Nor does an agreement to pay compound interest render the contract usurious.^' Neither is the "Richardson v. Campbell, 34 Guggenhelmer v. Geiszler, 81 N. Y. Nebr. 181, 51 N. W. 753; Allison v. 293; Knickerbocker L. Ins. Co. v. Schmitz, 31 Hun (N. Y.) 106. Nelson, 78 N. Y. 137; Fox v. Lipe, ^Hann v. Dekater (N. J. Bq.), 20 24 Wend. (N. Y.) 164; Dozier v. Atl. 657; Conover v. Hobart, 24 N. Mitchell, 65 Ala. 511. Where loan J. Eq. 120; Smith v. Hollister, 14 was made through an agent. Rob- N J Eq 153; Donnington v. Meek- inson v. Blaker, 85 Minn. 242, 88 er, 11 N. J. Eq. 362. N. W. 845. ""Dotterer V. Freeman, 88 Ga. 479, ^Fowler v. Equitable Trust Co., 14 S. E. 863. 141 U. S. 384, 35 L. ed. 786, 12 Sup. '^Stevens v Reeves, 33 N. J. Bq. Ct. 1; Meyer v. Muscatine, 1 Wall. 427 (U. S.) 384, 17 L. ed. 564; Telford 22'conrad v. Gibbon, 29 Iowa 120; v. Garrels, 132 111. 550, 24 N. E. 573; Richardson v. Campbell, 34 Nebr. Brown v. Mortgage Co., 110 111. 235; 181 51 N. W. 753; Weyrich v. Ho- Goodrich v. Reynolds, 31 111. 490; bleman, 14 Nebt. 432, 16 N. W. 436. Mowry v. Bishop, 5 Paige (N. Y.) ^ Bank of United States v. Wag- 98. See also Willett v. Maxwell, 169 gener 34 U. S. 378, 9 L. ed. 163; 111. 540, 48 N. E. 473; Swanson v. Jordan v Mitchell, 25 Ark. 258; Realization &c. Corp., 70 Minn. 380, Moody V. Hawkins, 25 Ark. 197. 73 N. W. 165. "Lurton v. Jacksonville Loan &c. =''' Graham v. Fitts, 53 Fla. 1046, Assn 187 111 141, 58 N. E. 218, 43 So. 512; Abbott v. Stone, 172 111. affg '87 111. App. 395; Stelle v. An- 634, 50 N. E. 328, 64 Am. St. 60; drews 19 N. J. Eq. 409; Bardwell Otis v. Lindsey, 10 Maine 315; San- V Howe Clarke (N. Y.) 281. See ford v. Lundquist, 80 Nebr. 414, 118 also White v. Lucas, 46 Iowa 319; IT. W. 129, IS L. R. A. (N. S.) 633; 634 VOID AND USURIOUS MORTGAGES 1050 taking of interest at the highest rate allowed by law, in advance for a whole year, usurious.^' Nor is the taking of a portion of such interest in advance for the whole term of the mortgage usurious.^* xl loan upon a second mortgage at the highest interest allowed by law is not made usurious by a contract made by the mortgagee with the mortgagor that he will pay off a first mortgage, a smaller amount, upon the same property, having several years to run, and bearing a much lower rate of interest.^' A verbal agreement for an additional advantage or compensation to the lender, in addition to interest reserved at the highest legal rate, renders the mortgage usurious.^" Equity will interfere, upon a proper application, to prevent the collection of usurious interest by the enforcement of a mortgage, when the debtor has paid or tendered all that either law or equity can re- quire him to pay.^^ A mortgage loan may be usurious in part and valid in part ; as, for instance, when the mortgage covers several distinct loans, one of which was usurious in consequence of the payment of a bonus, but Steen v. Stretch, 50 Nebr. 572, 70 N. W. 48; Rose v. Munford, 36 Nebr. 148, 54 N. W. 129; Kellogg v. Hickok, 1 Wend. (N. Y.) 521; Fobes V. Cantfield, 3 Ohio 17; Good- ale v. Wallace, 19 S. Dak. 405, 103 N. W. 651, 117 Am. St. 962; Hale V. Hale, 1 Coldw. (Tenn.) 233, 78 Am. Dec. 490. ^Tholen v. Duffy, 7 Kans. 405, and cases cited. See also National Life Ins. Co. v. Donovan, 238 111. 283, 87 N. E. 356; Steen v. Stretch, 50 Nebr. 572, 70 N. W. 48. '"Fowler v. Equitable Trust Co., 141 U. S. 384, 35 L. ed. 786, 12 Sup. Ct. 1. In this case the term of the mortgage was five years, and three per cent, of the ten per cent, inter- est was taken out in advance, seven per cent, of the interest being evi- denced by coupons attached to the bonds. Mr. Justice Harlan, deliver- ing judgment, said: "Whether that doctrine would apply where the loan was for such period that the exaction by the lender of interest in advance would, at the outset, ab- sorb so much of the principal as to leave the borrower very little of the amount agreed to be loaned to him. we need not say. The present case does not require any expression of opinion upon such a point, for the interest reserved in advance on the loan to Fowler was only three per cent, out of ten per cent.; and a reservation to that extent, it would seem, is protected by the decisions of the state court. The defense of usury, so far as it rests upon the fact that three pef cent, of the stip- ulated interest was taken in ad- vance by the lender, must, there- fore, be overruled." It is to be ob- served that the decision had refer- ence to the law of the state of Illi- nois. =* Hodgdon v. Davis, 6 Dak. 21, 50 N. W. 478. =° Vilas T. McBride, 17 N. Y. S. 171. In this case, as a condition of loaning money on a mortgage on hotel property at the highest legal rate, it was agreed to give the lend- er the manure made on the prop- erty, estimated as worth $100 per year, and the manure was for sev- eral years claimed and taken by the lender. Such agreement rendered the mortgage usurious. " Waite V. Ballou, 19 Kans. 601. 1051 USURIOUS MORTGAGES § C3u the other loans were not usurious. The forfeiture or penalty in such case will be confined to the usurious part only.^^ The fact that there was included in the loan a commission to the lender for storing, weighing and selling cotton belonging to the bor- rower, which he had agreed to pay, does not render the loan usurious if the commission is reasonable.^ ^ Where a borrower executes a mortgage negotiated by his broker in which, in compliance with the conditions imposed by the lender, the broker's commissions are included, and the lender accepts the security and makes the loan, the broker does not thereby become the agent of the lender, and the loan is not rendered usurious by the commissions included in the mortgage.^* Nor is a loan rendered usurious by the fact that the agent of the lender, without the knowledge or consent of the latter, exacts from the borrower a bonus for his service in addition to the highest legal rate of interest, which the contract reserves for the benefit of the lender.^^ But a charge of twenty per cent, of the loan as commission made against the borrower by the lender's agent, knowledge of which is imputed to the lender, makes the transaction usurious, where such commission and the interest added exceed the lawful rate of interest.'^ Where the total amount of interest charged and the commissions received for making a loan do not exceed the legal rate of interest for the length of time for which the loan was made, the loan is not usu- rious. ^^ § 635. Effect of provision for attorney's fees and damages.^^ — A stipulation in a mortgage to secure a loan, to pay a reasonable attor- ney's fee in case of foreclosure, does not render the contract usurious.^' '^ Mahn v. Hussey, 28 N. J. Eq. ^ Vahlberg v. Keaton, 51 Ark. 534, 546 11 S. "W. 878, 4 L. R. A. 462, 14 Am. =° Jarvis v. Southern Grocery Co., St. 73; Cox v. Massachusetts Mut. 63 Ark 225, 38 S. W. 148. See also L. Ins. Co., 113 111. 382; Ammer- Harmon v Lehman, 85 Ala. 379, 5 man v. Ross, 84 Iowa 359, 51 N. "W. go 197 6; Van Wyck v. Watters, 81 N. Y. =* George v. New England Mtg. 352; Barger v. Taylor, 30 Ore. 228, Sec Co 109 Ala. 548, 20 So. 331; 47 Pac. 618; Franzen v. Hammond, Land Mortgage Inv. &c. Co. v. Vin- 136 Wis. 239, 116 N. W. 169, 19 L. son 105 All 389, 17 So. 23; Ameri- R. A. (N. S.) 399, 128 Am. St. 1079. can' Mtg. Co. v. King, 105 Ala. 358, »° American Mortgage Co. v. 16 So 889; Edinburg Am. Land Woodward, 83 S. Car. 521, 65 S. E. Mtg Co. v. Peoples, 102 Ala. 241, 14 739. 9n 656- American Freehold Land " National Life Ins. Co. v. Dono- Mtg Co V. Sewell, 92 Ala. 163, 9 van, 238 111. 283, 87 N. E. 356. So 143- Ginn v. New England Mtg. =' See post § 1606. qpc Co' 92 Ala. 135, 8 So. 388. See ''Fowler v. Equitable Trust Co., also Secor v. Patterson, 114 Mich. 141 U. S. 411, 35 L. ed. 794, 12 Sup. 37 72 N. W. 9. Ct. 8; Barton v. Farmers' &c. Nat. § 635 VOID AND USURIOUS MORTGAGES 1052 If the contract is lawful in other respects, the conditional stipula- tion to pay the usual attorney's fee, in the event suit has to be insti- tuted to enforce it, will be legal and founded upon a valuable consid- eration. Such fee, though not an element of damages, in an ordinary suit for the collection of money, can be made such by an express con- tract.*" The fact that the borrower, in addition to the maximum legal rate of interest reserved on the loan, also paid the attorney of the lender a fee for examining the title to the land mortgaged to secure the debt, did not render the transaction usurious as to the lender, especially when the latter neither authorized the charge nor shared in the fee.*^ Where a loan is made at the full legal rate of interest, a deduction from the amount loaned, of attorney's fees for examining the title to the land mortgaged, is held not to be usurious.*^ But there are a num- ber of cases which hold that a stipulation to pay a reasonable attorney's fee for instituting and prosecuting a suit to collect the debt is for a penalty or forfeiture, and tends to the oppression of the debtor, is a cover for usury, is without consideration, and contrary to public policy.*' A provision for the payment of damages to the amount of five or ten per cent, of the loan, in case of a sale for a breach of the condition, may not be usurious,** although on a mortgage for a large amount such a percentage would be unreasonable,*^ and the court would allow only Bank, 122 111. 352, 13 N. E. 503. 11 Ohio 417; State v. Taylor, 10 ■"■Miner v. Paris Exchange Bank, Ohio 378; Rixey v. Pearre, 89 Va. 53 Tex. 559; Roberts v. Palmore, 41 113, 15 S. E. 498; Toole v. Stephen, Tex. 617. 4 Leigh (Va.) 581. ■"Gannon v. Scottish-American ■"Fowler v. Equitable Trust Co., Mtg. Co., 106 Ga. 510, 32 S. E. 591. 141 U. S. 384, 35 L. ed. 786, 12 Sup. «Cobe V. Guyer, 237 111. 516, 86 Ct. 1; Hunter v. Linn, 61 Ala. 492; N. E. 1071. Billingsley v. Dean, 11 Ind. 331; *= Dodge V. Tulleys, 144 U. S. 451, Gambril v. Doe, 8 Blackf. (Ind.) 36 L. ed. 501, 12 Sup. Ct. 728; Ben- 140, 44 Am. Dec. 760; Siegel v. dey V. Townsend, 109 U. S. 665, 27 Drumm, 21 La. Ann. 8; Huling v. L. ed. 1065, 3 Sup. Ct. 482; Gray v. Drexell, 7 Watts (Pa.) 126. See Havemeyer, 53 Fed. 174, 3 C. C. A. ante § 359. 497; Merchants' Nat. Bank v. Sev- ■'^Daly v. Maitland, 88 Pa. St. 384, ier, 14 Fed. 662; Boozer v. Ander- 32 Am. Rep. 457. In Fowler v. son, 42 Ark. 167; Security Co. v. Equitable Trust Co., 141 U. S. 411, Eyer, 36 Nebr. 507, 54 N. W. 838, 38 35 L. ed. 794, 12 Sup. Ct. 8, where Am. St. 735; Dow v. Updike, 11 the stipulation in a trust deed to Nebr. 95, 7 N. W. 857; Tinsley v. secure a loan of $10,000 was for a Hoskins, 111 N. Car. 340, 16 S. E. reasonable attorney's fee not ex- 325, 32 Am. St. 801; Shelton v. Gill, 1053 TJSUKIOUS MOBTGAGES § 636 a reasonable sum to be eollected.^^ It is in effect only a stipulation to allow compensation for extra and incidental trouble and expense in consequence of the sale; and a provision for the payment of the ex- penses of foreclosure, and a reasonable attorney's fee, is generally held valid and not obnoxious to the usury laws.*'' Whenever the stipulation is for the payment of something which the court can see is a valid and legitimate charge or expense, it will be upheld ; but if the stipulation be so indefinite that the court can not tell whether the payment was intended to be for something legal or illegal, it will not be upheld. Ac- cordingly it has been held that a stipulation for the payment, in case of foreclosure, of the costs "and fifty dollars as liquidated damages for the foreclosure of the mortgage," is invalid.*^ If this phrase was designed to cover attorney fees, if it was only designed to cover a le- gitimate charge or expense, why did the parties not say so? If the damages were for usurious interest, of course they could not be al- lowed.*" An agreement, by the borrower of money on the security of a mort- gage, to pay a reasonable and proper charge for service to be rendered in examining his title and drafting his securities, would not probably be regarded by any court as constituting usury.'*" § 636. Effect of agreement to pay taxes or insurance. — ^An agree- ment to pay the taxes on the mortgaged property,^ ^ or on the mortgage ceeding five per cent, in case of 497. In Kentucky, however, it is foreclosure, Mr. Justice Harlan held that a provision for the pay- said: "The only question of any ment of an attorney's fee upon fore- difficulty is whether the fee stipu- closure is against public policy, and lated was not excessive. But as the also usurious in its nature, and can character and extent of the serv- not be enforced. Thomasson v. ices performed by the plaintiff's at- Townsend, 10 Bush (Ky.) 114; Rill- torney were best known to the ing v. Thompson, 12 Bush (Ky.) court below, and in the absence of 310. any evidence as to whether the fee '"Foote v. Sprague, 13' Kans. 155; was reasonable, considering the Tholan v. Duffy, 7 Kans. 405. amount involved and the nature of ^"Foote v. Sprague, 13 Kans. 155, the services rendered, we are not per Valentine, J. See also Tholan prepared to reverse the decree be- v. Duffy, 7 Kans. 405; Kurtz v. cause of the allowance to the plain- Sponable, 6 Kans. 395. tiff of an attorney's fee which does " See Ellenbogen v. Griffey, 55 not exceed the highest sum fixed Ark. 268, 18 S. W. 126. in the deed of trust." "" Dutton v. Aurora, 114 111. 138. '"'Munter v Linn, 61 Ala. 492. See also Kidder v. Vandersloot, 114 "Shelton v. Aultman &c. Co., 82 111. 133, 28 N. E. 460; First Nat. Ala 315, 8 So. 232 ; Clawson v. Mun- Bank v. Glenn, 10 Idaho 224, 77 son 55 111. 394; Weatherby V. Smith, Pac. 623, 109 Am. St. 204; Sloane 30 Iowa 131, 6 Am. Rep. 663; Par- v. Lucas, 37 Wash. 348, 79 Pac. 949. ham T. Pul'liam, 5 Cold. (Tenn.) § 637 VOID AND USURIOUS MORTGAGES 1054 debt,°^ or the insurance premiums on the mortgaged property/^ in addition to interest, is held not to be usurious. But where the maxi- mum lawful rate of interest has been charged, an agreement by the mortgagor to pay a "personal property" tax assessed against the mort- gagee on account of the debt has been held usurious.^* The fact that a mortgage provides for the payment of usurious in- terest upon money advanced by the mortgagee to pay taxes or insur- ance does not prevent a recovery upon the principal obligation.^^ It is not usurious to contract for or to require payment by the mort- gagor of a mortgage registry tax upon the mortgage given to secure the loan in addition to the payment of interest at the maximum law- ful rate.°° §■637. Exchange and premiums. — ^When no place of payment is named in the mortgage, the debt is generally payable to the mortgagee wherever he may be found. If made payable at the place of residence of the mortgagor, for his accommodation, it is not usurious for him to allow the mortgagee the difference of exchange between the two places ; unless it appear that this allowance was a mere device on the part of the mortgagee to evade the usury laws, and to obtain more than legal interest for the use of his money. °' A mortgage given in the United States at a time when gold was "Banks v. McClellan, 24 Md. 62, "Union Trust Co. v. Radford, 176 87 Am. Dec. 594; Rauch v. Seip, 112 Mich. 50, 141 N. W. 1091; Stack v. Mich. 612, 71 N. W. 144; Detroit v. Detour Lumber &c. Co., 151 Mich. Board of Assessors, 91 Mich. 78, 51 21, 114 N. W. 876, 16 L. R. A. (N. N. W. 787. In California such an S.) 616; Green v. Grant, 134 Mich, agreement is by the Constitution, 462, 96 N. W. 583; Meem v. Du- art. 13, § 5, made null and void, laney, 88 Va. 674, 14 S. E. 363. But a contract on the part of the '"' Hughes Bros. Mfg. Co. v. Con- mortgagee to credit the mortgagor yers, 97 Tenn. 274, 36 S. W. 1093. with a certain per cent, of the in- ""Lassman v. Jacobson, 125 Minn, terest if he should produce each 218, 146 N. W. 350, 51 L. R. A. (N. year "the proper oflaclal receipts S.) 465; Moore v. Lindsay, 61 Misc. showing the payment of all taxes 176, 114 N. Y. S. 684; Gault v. Thur- against the property," is not within mond, 39 Okla. 673, 136 Pac. 742; this provision. The California Pol. American Mtg. Co. v. Woodward, 83 Code, § 3627, which gives the owner S. Car. 521, 65 S. E. 739. But see of the property the privilege of de- Vandervelde v. Wilson, 176 Mich, ducting the amount of the taxes 185, 142 N. W. 553; Green v. Grant, paid by him from the mortgage 134 Mich. 462, 96 N. W. 583; Norris debt, is permissive, and not man- v. W. C. Belcher Land Mtg. Co., 98 datory, and does not prohibit an Tex. 176, 82 S. W. 500, 83 S. W. action to recover the same from the 799. mortgage. San Gabriel Valley Land "' Riley v. Olin, 82 Ga. 312, 9 S. E. Water Co. v. Witmer Bros. Co., 96 1095; Hughes v. Griswold, 82 Ga. Cal. 623, 29 Pac. 500. 299, 9 S. E. 1092; Williajns v. Hance, ''New England Mtg. Sec. Co. v. 7 Paige (N. Y.) 581. Gay, 33 Fed. 636. 1055 USURIOUS MORTGAGES § 638 at a premium, in settlement of a debt due and payable in a foreign country where gold was the basis of the currency, is not usurious by reason of including the current premium on gold.^^ A mortgage calling for payment in gold coin of the United States of the then standard weight and fineness is valid, and may be enforced in the courts without violating any principle of law or public policy, although legal tender notes and silver may be in circulation."" A state can not by statute prohibit a stipulation for the payment of the mort- gage debt in gold coin of the IJnited States, and provide that any debt may be paid in any kind of lawful money."" § 638. Mortgage to building and loan association. — A mortgage to a building and loan association is not usurious when, under the articles of association, in addition to monthly payments of interest, the mortgagor is bound, both by the mortgage and as a member of the association, to pay certain fines and impositions.*^ A number of cases have adopted the view that the relation between the association and the borrowing member consists in two separate contracts, — the contract of membership and the contract of loan, and in applying this view they hold that stock dues are not to be consid- ered as paid on account of the loan, and are not to be added in de- termining whether a usurious rate of interest has been charged."^ ^ Oliver v. Shoemaker, 35 Mich. Borrowers' &c. Bldg. Assn. v. Ek- 464. lund, 190 111. 257, 60 N. E. 521; Sil- ™ Gregory v. Morris, 96 TJ. S. 619, ver v. Barnes, 6 Bing. N. Cas. 180. 24 L. ed. 740; Bronson v. Rodes, 7 Contra Citizens' Security &c. Co. v. Wall. (IT. S.) 229, 19 L. ed. 141; Uhler, 48 Md. 455; Hensel v. Inter- Dorr V. Hunter, 183 111. 432, 56 N. national &c. Loan Assn., 85 Tex. 215, E. 159; Belford v. Woodward, 158 20 S. W. 116. In Pennsylvania a 111. 122; McGoon v. Shirk, 54 111. building association can recover- on 408. its mortgage only the money ac- »" Dennis v. Moses, 18 Wash. 537, tually advanced to its stockholder, 52 Pac. 333, 40 L. R. A. 302. with legal interest. Link v. Ger- " Ocmulgee Building &c. Assn. v. mantown Building Assn., 89 Pa. St. Thomson, 52 Ga. 427; Hekeln- 15. As to statement of account be- kaemper v. German Building Assn., tween the association and mort- 22 Kans. 549; Massey v. Citizens' gagor, see Peter's Bldg. Assn. v. Building Assn., 22 Kans. 624; Shan- Jaecksch, 51 Md. 198; McCahan v. non V. Dunn, 43 N. H. 194; Red Columbian Bldg. Assn., 40 Md. 226. Bank Mut. Bldg. &c. Assn. v. Pat- ""Bell v. Southern Home Bldg. terson, 27 N. J. Eq. 223; Building &c. Assn., 140 Ala. 371, 37 So. 237, Loan &c. Assn. v. Vandervere, 11 N. 103 Am. St. 41; Farmers' Sav. &c. J. Eq. 382 (where reasons are Assn. v. Kent, 131 Ala. 246, 30 So. stated)- Citizens' Mut. Loan Assn. 874; Interstate Bldg. &c. Assn. v. V. Webster, 25 Barb. (N. Y.) 263; Brown, 128 Ala. 462, 29 So. 656; Hagerman v. Ohio Building Assn., Farmers' Sav. &c. Assn. v. Fergu- 25 Ohio St. 186; Reeve v. Ladies' son, 69 Ark. 352, 63 S. W. 797; Bldg Assn., 56 Ark. 335, 19 S. W. Reeve v. Ladies' Bldg. Assn., 56 917- Taylor v. Van Buren Building Ark. 335, 19 S. W. 917, 18 L. R. A. &c Assn., 56 Ark. 340, 19 S. W. 918; 129; Bank of Loudon v. Armor, 90 § 638 VOID AND USUEIOUS MOETGAGBS 1056 There are cases which hold that the loan contract is in the nature of a sale of the member's stock to the association, or, more strictly, an advancement by the association in anticipation of the maturity of the stock."^ The rate of interest to be paid under such mortgages is neces- sarily uncertain, and the usury laws are not applicable to such loans. Whenever special privileges as regards the taking of usury are con- ferred upon such an association, a loan will not be held to be within its operation unless it strictly conforms with the terms of the law."* A member of the association, who has given to it a mortgage to secure a loan made to a fellow member, is liable to the same extent as he would be if the loan had been made to himself, and can not plead usury to an action upon the mortgage.*^ In some jurisdictions, how- ever, the courts hold that the contract of a building and loan associa- tion is purely one of loan, and that if the premiums and other charges, in connection with the interest charged, exceed the legal rate, the con- tract is usurious f^ and a loan by such an association to a person not a member of the association is not exempt from the provisions of the interest laws of the state where the contract is to be performed. If the borrower from such an association has signed no written articles of membership, and there are no recitals of membership in the note or mortgage, he is not estopped to deny such membership, and whether ha is a member or not is a question to be determined like any other issue of fact.*^ A purchaser of land subject to a building association mortgage who Miss. 709, 44 So. 66; People's Bldg. L. 735, 70 S. "W. 41; Watts v. Na- &c. Assn. v. McPhilamy, 81 Miss. 61, tional Bldg. &c. Assn., 102 Ky. 29, 32 So. 1001, 59 L. R. A. 743, 95 Am. 19 Ky. L. 1007, 42 S. W. 839; Hen- St. 454; Fidelity Sav. Assn. v. Bank derson Bldg. &c. Assn. v. Johnson, of Commerce, 12 Wyo. 315, 75 Pac. 88 Ky. 191, 10 Ky. L. 830, 10 S. W. 448. 787, 3 L. R. A. 289; Rowland v. °=Winget V. Quincy Bldg. &c. Old Dominion Bldg. &c. Assn., 116 Assn., 128 111. 67, 21 N. E. 12; Free- N. Car. 877, 22 S. E. 8; Hanner v. man v. Ottawa Bldg. &c. Assn.', 114 Greensboro Bldg. &c. Assn., 78 N. 111. 182, 28 N. E. 611; Holmes v. Car. 188; Buist v. Bryan, 44 S. Car. Smythe, 100 111. 413. 121, 21 S. B. 537, 29 L. R. A. 127, 51 "Williar v. Bait. Butchers' Loan Am. St. 787; Crabtree v. Old Do- &c. Assn., 45 Md. 546; Birmingham minion Bldg. &c. Assn., 95 Va. 670, V. Maryland Land &c. Permanent 29 S. E. 741, 64 Am. St. 818. Homestead Assn., 45 Md. 541. "" Building Association v. Thomp- "^ Johnston v. Elizabeth &c. Assn., son, 19 Kans. 321. See also Lincoln 104 Pa. St. 394. Building &c. Assn. v. Graham, 7 "■ Stevens V. Home Sav. &c. Assn., Nebr. 173; Juniata Building &c. 5 Idaho 741, 51 Pac. 779, 986; Assn. v. Mixell, 84 Pa. St. 313; Kleimelr v. Covington Perpetual Wolbach v. Lehigh Building Assn., Bldg. &c. Assn., 119 Ky. 724, 24 Ky. 84 Pa. St. 211. 1057 usuEiors moetgages § 639 has not specifically assumed the mortgage may set up the defense of usury against the association.''^ The appointment of a receiver of such an association being equiva- lent to a dissolution of the corporation, the weekly dues or instalments which a mortgagor has contracted to pay should be computed only down to the time of the appointment.*" § 639. Validity of contract to resell at an advance property pur- chased. — ^When there has been an absolute conveyance of land, with an agreement to repurchase within a fixed time, at a price exceeding that paid for it, and interest, the transaction may be a conditional sale, in which case it is not affected with usury.'" If, however, the trans- action be a mortgage, it is usurious. If the agreement be that the grantee will reconvey upon the payment of a sum named, which is in fact the debt secured, together with a certain additional sum annually as rent, it may be shown that this annual payment is for interest and taxes, and that, deducting the estimated amount of taxes, the annual payment does not exceed the lawful interest.'^ It is legally possible for one person to buy property from another and agree to resell it to the vendor at a higher price payable in the future. If such be the actual transaction the law will enforce it. The difficulty frequently arising is to determine whether in a given instance the parties intended a sale or a mortgage.'^ But if the transaction is in fact a loan of a sum of money by the grantee to the grantor at a usurious rate of interest, it is illegal, and the title so obtained is tainted with usury. The transaction, being on its face apparently lawful, might, nevertheless, be shown to be a device for concealing usury.'^ As already noticed, such a transaction is closely scrutinized by the courts in order to prevent the creditor from depriving the debtor of the right of redemption, which should attach to it as a mortgage. The transaction is, moreover, suspicious, for the reason that it easily affords a ready cloak for usury. It will not be sustained as a conditional sale, «s Washington Nat. Building &c. 501, 52 S. E. 617, 3 L. R. A. (N. S.) Assn V. Andrews, 95 Md. 696, 53 213; Felton v. Grier, 109 Ga. 320, 35 ^tl. 573. S. E. 175; Monroe v. Foster, 49 Ga. '^Peter's Bldg. Assn. v. Jaecksch, 514; Spence v. Steadman, 49 Ga. 51 Md. 198; Low Street Building 133. Assn V Zucker, 48 Md. 449. '" Rogers v. Bluensteln, 124 Ga. ™McElmurray v. Blodgett, 120 501, 52 S. E. 617, 3 L. R. A. (N. S.) Ga 90 47 S E. 531. 213; Wilkins v. Gibson, 113 Ga. 31, "Kidder v. Vandersloop, 114 111. 38 S. E. 374, 84 Am. St. 204; Mor- 133 28 N. E. 460. rison v. Markham, 78 Ga. 161, 1 S. "Rogers v. Bluenstein, 124 Ga. B. 425. 67 — Jones Mtg. — Vol. I. § 639 VOID AND USDEIOUS MORTGAGES 1058 unless it clearly appears that it was in good faith intended as such, and not as a contrivance to cover usury.''* But if the deed was made, not as a security but as a sale in payment of a debt, and the grantee subsequently by virtue of a new agreement reeonveyed the land to the grantor for the amount originally paid for it with usurious interest thereon, it is held that the usury in such case does not avoid the deed because it was not a part of the original trans- action.'^ In a mortgage any agreement to pay more than the sum loaned and lawful interest is usury ; and usury is constituted not only by the pay- ment of money, but by any arrangement whereby the lender derives a profit or advantage beyond the interest allowed by law.'^ Where the laws make usurious contracts void, any transaction which is in effect a mortgage, though called a sale by the parties, and is usurious in effect, is rendered invalid.''^ The intent is deduced from the fact. If the mortgagee knowingly and voluntarily takes or reserves a greater interest than is allowed by law, his security is thereby rendered void, though it is not if taken by mistake or accident. But aside from mis- take or accident, evidence will not be allowed to show that the mort- gagee did not intend to violate the statute.'* If a sale of land or of goods be made as a mere device to cover a loan and exact excessive interest, the false cover given the transaction will not be allowed to defeat the statute.^' But a transaction whereby a purchaser of personal pro'perty gives a mortgage on land to secure the price, payable in one year, with the maximum rate of interest, and agrees to pay fees for examining the title and for preparing and re- cording the mortgage, will be adjudged a bona fide sale, and not a cloak for a usurious loan, when it does not appear that the parties considered it a loan, or that the purchaser ever applied for a loan.*" " McLaren v. Clark, 80 Ga. 423, 7 weak guise of a purchase and resale, S. B. 230; Pope v. Marshall, 78 Ga. and could well have sworn that he 635, 4 S. E. 116; Morrison v. Mark- did not intend to bring himself ham, 78 Ga. 161, 1 S. E. 425; Glea- within the condeinnation of the law. son V. Burke, 20 N. J. Eq. 300. But he did in fact loan his money " Barfield v. Jefferson, 78 Ga. 220, at an illegal interest, and has failed 2 S. E. 554. in his attempt to evade the conse- "Gleason v. Burke, 20 N. J. Eq. quences." Per Allen, J. 300. ™Struthers v. Drexel, 122 U. S. " Pope V. Marshall, 78 Ga. 635, 4 487, 30 L. ed. 1216, 7 Sup. Gt. 1293; S. E. 116. Tillar v. Cleveland, 47 Ark. 287, 1 "Fiedler v. Darrin, 50 N. Y. 437. S. W. 516; Grider v. Driver, 46 Ark. "The plaintiff doubtless hoped and 50; Ford v. Hancock, 36 Ark. 248. intended to cover up his tracks, to ™ Ellenbogen v. Griffey, 55 Ark. conceal his loan and the reserva- 268, 18 S. W. 126. This was not in tion of usurious interest, under the form a loan of money, and there 1059 usuEiotrs mortgages § 6-11 In whatever way the transaction may be disguised, if it be in fact a loan at a usurious rate of interest, the security taken will be declared illegal.*^ The attempt is sometimes made to conceal usury under the guise of rent ; as where a mortgage was given to secure a loan of three thousand dollars, without any agreement about interest, but the mort- gagee leased the mortgaged premises to the mortgagor at an annual rent of two hundred and seventy dollars, which was held to be an agreement for usurious interest.^^ § 640. No forfeiture though transaction usurious. — The grantor is not entitled to any of the penalties or forfeitures given by the stat- ute for usury, even when it is shown that this form of the transaction was used for the purpose of covering up a usurious rate of interest agreed upon between the parties, although a court of equity will allow a debtor to redeem, when, to secure a loan of money, he has made an absolute conveyance of land, and taken an agreement to repur- chase. The debtor is entitled to a conveyance upon the payment of the original loan with legal interest ; but, having put the transaction into such a form that he is obliged to ask a court of equity for relief from the letter of the contract, which he could not obtain at law, the court will impose terms upon him to do equity.*' Where a deed was made, not as security, but as an absolute sale in payment of a debt, and the grantee subsequently agreed that he would reconvey the land to the grantor upon payment of a certain amount equal to the consideration for the deed, together with usurious inter- est thereon, such transaction does not avoid the deed.'* § 641. Sale of mortgage. — Although a valid mortgage once issued may be sold at a discount without involving the purchaser in any of the consequences of taking usurious interest,*^ yet, if the mortgage is nothing to show that it was in- also Tillar v. Cleveland, 47 Ark. 287, tended as a loan, or that it was 1 S. W. 516; Phelps v. Bellows, 53 such in fact. It was therefore, in Vt. 539. substance and in law, a sale. As ''Heacock T. Swartwout, 28 111. there was no loan, there could be 291. no agreement to pay excessive in- "Barfield v. Jefferson, 78 Ga. 220, terest for a loan. 2 S. E. 554. =1 Andrews v. Poe, 30 Md. 486; *= Mix v. Madison Ins. Co., 11 Ind. Birdsall v. Patterson, 51 N. Y. 43; 117; Dunham v. Cudlipp, 94 N. Y. Fitzsimons v. Baum, 44 Pa. St. 32. 129; Smith v. Cross, 90 N. Y. 549; «2 Gordon v. Hobart, 2 Story (U. Sickles v. Flanagan, 79 N. Y. 224; S ) 243; Morrison v. Markham, 78 Dowe v. Schutt, 2 Denio (N. Y.) Ga 161 1 S. E. 425. See also Gaith- 621; Lovett v. Dimond, 4 Edw. (N. er V Clark, 67 Md. 18, 8 Atl. 740; Y.) 22; Wyeth v. Branif, 14 Hun Grand Order of O. F. Assn. V. Merk- (N. Y.) 537, revd. 84 N. Y. 627; lin 65 Md. 579, 5 Atl. 544. See. White v. Turner, 1 Hun (N. Y.) § 641 VOID AND LSUEIOUS MORTGAGES 1060 be made without consideration and for the purpose of being sold, inas- much as the subsequent sale gives it vitality, and is really the issuing of it, a sale at a discount has the same effect in rendering it void as has the taking of a bonus by the mortgagee.*" It would seem, however, that one purchasing a mortgage at a discount from the mortgagor's agent, in whose name the mortgage stood, without knowledge of the agency, would not incur any liability for usury. A purchase of an existing mortgage by a third person at the request of the mortgagor, at a discount from the face of the mortgage, and an agreement by the mortgagor to pay the full amount of the mortgage, the purchaser agreeing to extend the time of payment of the mort- gage, do not make the mortgage usurious. A new bond and mortgage for the amount of the original mortgage are not rendered usurious by such purchase at a discount.^'' Where the mortgagee's agent withheld payment of the money loaned for three or four months, and then paid only a part, but afterward collected interest on the full amount of the mortgage, and it appeared that the acts of the agent were the acts of the mortgagee, it was held that the penalty of usury had been incurred.** Where a vendor of land agreed to take a mortgage for a part of the purchase-money, and in anticipation of the trade arranged to sell the mortgage at a discount, and merely to save the trouble of a transfer had the mortgage made directly to the purchaser of the mortgage, it was held the transaction was not usurious, the evidence showing that it was not a contrivance to evade the usury laws.*'' A sale of mortgage bonds, issued by a corporation authorized to borrow money on such terms as its directors may determine, for less than their face value, does not render the bonds or mortgage void for usury."" On the other hand, a sale of mortgage securities at a premium by the mortgagee does not subject him to an action for the recovery of the premium on the ground of usury.^^ 623; Sweny v. Peaslee, 17 N. T. S. Crane v. Price, 35 N. Y. 494; Sweny 225. See post § 832. v. Peaslee, 17 N. Y. S. 225. ™Vickery v. Dickson, 62 Barb. (N. =»Barr v. African &c. Church (N. Y.) 272. See also Walter v. Lind, J.), 10 Atl. 287. 16 N. J. Eq. 445; Sickles v. Flana- *° Armstrong v. Freeman, 9 Nebr. gan, 79 N. Y. 224; Brooks v. Avery, 11, 2 N. W. 353. 4 N. Y. 225; Culver v. Bigelow, 43 ""Traders' Nat. Bank v. Lawrence Vt. 249. Mfg. Co., 100 N. Car. 345, 3 S. E. " Sullivan Savings Inst. v. Cope- 363. land, 71 Iowa 67, 32 N. W. 95; "Culver v. Bigelow, 43 Vt. 249. 1061 USURIOUS MORTGAGES § 642 § 642. Bonus or commission of broker or agent. — If the agent of the mortgagee, in making the loan, exacts a payment to himself by way of commission for making the loan, the agent having special and limited authority, and having no regular and established connection with the lender, the loan is not necessarily nor usually rendered usu- rious.*^ Thus if a person intrusts another with money to loan and such other loans the same, charging and receiving from the borrower a sum of money in addition to legal interest as compensation for his services, but without, any direction by or knowledge of the lender, the transaction is not usurious.^^ The brokerage in excess of legal interest can not affect the principal, when it is paid without his knowledge and he derives no benefit from it.°* It has been attempted, however, to es- tablish the rule that such brokerage makes the mortgage usurious, unless it be taken by virtue of an independent agreement between the borrower and the broker. If, for instance, the borrower pays to the broker a premium in excess of legal interest, though the latter had been instructed by his principal to loan at lawful interest, and no part of the premium was received by the lender, but the borrower has no knowledge that it is all retained by the agent, the loan is considered usurious."^ But the later and better considered decisions aflBrm the rule as first stated."" These decisions are based upon the principle == Fowler v. Equitable Trust Co., 163, 9 So. 143; Ginn v. New Eng- 141 U. S. 384, 35 L. ed. 786, 12 Sup. land Sec. Co., 92 Ala. 135, 8 So. 388; Ct. 1, per Harlan, J.; Eslava v. May v. Flint, 54 Ark. 573, 16 S. W. Crampton, 61 Ala. 507; Rogers v. 575; Hughes v. Griswold, 82 Ga. 299, Buckingham, 33 Conn. 81; Phillips 9 S. E. 1092; Merck v. American &c. V. Roberts, 90 111. 952; Jennings v. Mortgage Co., 79 Ga. 213, 7 S. E. Hunt 6 Bradw. (111.) 523; Landis 265; Ryan v. Sanford, 133 111. 291, V Sa'xton, 89 Mo. 375, 1 S. "W. 359; 24 N. B. 428; Sanford v. Kane, 133 Van Wyck v. Watters, 81 N. Y. 352, 111. 199, 205, 24 N. B. 414, 23 Am. 16 Hun 209; Guggenheimer v. Grisz- St. 603; Telford v. Garrels, 132 111. ler 81 N. Y. 293; Mutual L. Ins. 550, 24 N. E. 573; Hoyt v. Institu- Co' v Kashaw, 66 N. Y. 544; Bell v. tion, 110 111. 390; Pass v. New Bng- Day 32 N. Y. 165; Condit v. Bald- land Mtg. Sec. Co., 66 Miss. 365, 6 win '21 N. Y. 219, 78 Am. Dec. 137; So. 239; Gray v. Van Blarcom, 29 Wyeth V. Branif, 14 Hun (N. Y.) N. J. Eq. 454; Manning v. Young, 537 reversed 84 N. Y. 627. See 28 N. J. Eq.' 568; Spring v. Reed, also Sherwood v. Swift, 64 Ark. 662, . 28 N. J. Bq. 345; Conover v. Van 43 S. W. 507. Meter, 18 N. J. Bq. 481; Muir v. «= Condit V. Baldwin, 21 N. Y. 219, Newark Savings Inst., 16 N. J. Bq. 78 Am. Dec. 137; Franzen v. Ham- 537. mond 136 Wis. 239, 116 N. W. 169, »= Tiedemann v. Ackerman, 16 Hun 19 L.'r. a. (N. S.) 399, 128 Am. St. (N. Y.) 307; Estevez v. Purdy, 6 2079 Hun (N. Y.) 46. See also Algur v. »» Fowler v. Equitable Trust Co., Gardner, 54 N. Y. 360. The doc- 141 U S. 384, 35 L. ed. 786, 12 Sup. trine of these cases is criticized in Ct 1; New England Mtg. Security Gray v. Van Blarcom, 29 N. J. Eq. Co V.' Gay, 33 Fed. 636; American 454. Freehold Mtg. Co. v. Sewall, 92 Ala. ■» Jordan v. Humphrey, 31 Minn. § 642a VOID AND USURIOUS MORTGAGES 1063 that the lender did not, either expressly or impliedly, authorize the agent to do an illegal act ; and therefore the wrongful act of the agent in extorting a bonus for himself does not affect the lender so long as he does not participate in the extortion or in the results of it, but seeks to enforce the securitj^ for the precise amount he loaned with lawful interest. Upon the same principle a bonus received by one trustee in making a loan upon a mortgage for a trust estate does not avoid the mortgage if it appears that the bonus was taken without the authority or knowl- edge of the other trustees."' If an attorney take a mortgage in his own name for a client, and receive from the mortgagor a sum of money as compensation for ex- amining the title to the premises, the transaction is not thereby made usurious."' The declarations of an agent of the mortgagor, to whom a mortgage has been made for the purpose of enabling him to borrow money for the mortgagor, that he owned the mortgage, and that it was given upon a previously existing indebtedness to him, if false and unauthor- ized, are not binding upon the mortgagor, and do not estop him to deny them and set up the defense of usury."" i§ 642a. Where agent is general agent of lender. — ^When the agent is the lender's general agent, having authority to loan his money in such sums and at such times as he pleases, and is only restricted to obtain not less than a stipulated rate of interest, if the agent exacts usury upon his loansj the principal is presumed to have knowledge of such exaction and to have authorized it ; and in such case, unless this presumption is rebutted, the transaction will be held usurious.^ And where the lender thus places his business under the exclusive and un- limited control of a general agent, if the agent exacts usury, the case stands precisely as if it had been done by the principal personally, and such an agent has no right to exact from the borrower, either for al- leged services or otherwise, anything which the principal might not 495, 18 N. W. 450; Estevez v. Purdy, Beebe, 7 N. Y. 364. But see Ahern 66 N. Y. 446. v. Goodspeed, 72 N. Y. 108; Piatt v. "Van Wyck v. Wg.tters, 16 Hun Newcomb, 27 Hun (N. Y.) 186. (N. Y.) 209; Stout v. Rider, 12 Hun 'Stevens v. Meers, 11 111. App. (N. Y.) 574. 138. See also American Mtg. Co. "» Dayton v. Moore, 30 N. J. Eq. v. Woodward, 83 S. Car. 521, 65 S. 543. E. 739; Austin v. Harrington, 28 Vt, "New York Life Ins. &c. Co. v. 130. 1063 USURIOUS IIOKTGAGES § 642a have lawfully exacted had he transacted the business in person.^ But there are cases holding that the making of usurious loans is not with- in the apparent scope of a general agency to loan money.^ The fact that a loan agent, who is in the habit of sending applica- tions to an insurance company, is the agent of such company for the purpose of procuring insurance, does not constitute him the general agent of the company, so as to render it liable for usury by reason of commissions exacted by him.* Even if the agent has not full authority to make loans for his prin- cipal, but only to examine applications and securities and to recom- mend loans, if his agency is regularly established and continuous, he is in some states regarded so far the agent of the lender that com- missions exacted from the borrower, beyond the highest rate of inter- est allowed by law, render his loans usurious. Thus, where a trust company appointed an agent to procure and forward applications for loans, with the understanding that he should receive no compensation from the company, but is to obtain his remuneration from borrowers, and he thereafter, in communications to the company and others, styles himself as its agent, he must be so considered; and under the law in Illinois a payment to him of a commission by the borrower, for secur- ing a loan from the company at the highest legal rate, makes the transaction usurious.^ "Fowler v. Equitable Trust Co., Doying, 114 N. Y. 452, 21 N. E. 141 U. S. 384, 35 L. ed. 786, 12 Sup. 1007; Stillman v. Northrup, 109 N. Ct. 1; Banks v. Flint, 54 Ark. 40, Y. 473, 17 N. E. 379; Estevez v. 14 S. W. 769, 16 S. W. 477, 10 L. Purdy, 66 N. Y. 446; Condit v. Bald- R. A. 459; Rogers v. Buckingham, win, 21 N. Y. 219, 78 Am. Dec. 137. 33 Conn. 81; Payne v. Newcomb, 100 ■'Massachusetts Mut. L. Ins. Co. 111. 611, 39 Am. Rep. 69; France v. v. Boggs, 121 111. 119, 13 N. E. 550; Munro, 138 Iowa 1, 115 N. W. 577, Cox v. Massachusetts Mut. L. Ins. 19 L. R. A. (N. S.) 391; Gokey v. Co., 113 111. 382. Knapp, 44 Iowa 32; Horkan v. Nes- "Fowler v. Equitable Trust Co., bitt, 58 Minn. 487, 60 N. W. 132; 141 U. S. 384, 35 L. ed. 786, 12 Sup. Hall V. Maudlin, 58 Minn. 137, 59 Ct. 1, following Payne v. Newcomb, N W 985, 49 Am. St. 492; Stein 100 111. 611. See also Insurance Co. V.' Swensen, 46 Minn. 360, 49 N. W. v. Boggs, 121 111. 119, 13 N. E. 550; 55 24 Am. St. 234; Kemmitt v. Ad- Ammondson v. Ryan, 111 111. 506; amson, 44 Minn. 121, 46 N. W. 327; Hoyt v. Institution, 110 111. 390; Olmsted v. New England Mtg. Se- Meers v. Stevens, 106 111. 549; Kihl- cur Co., 11 Nebr. 487, 9 S. W. 650; holz v. "Wolf, 103 111. 362, 366; Phil- Cheney V. White, 5 Nebr. 261, 25 lips v. Roberts, 90 111. 492; Boyl- Am Rep. 487; Pfenning v. Scholer, ston v. Bain, 90 111. 283; Ballinger 43 N. J. Eq. 15, 10 Atl. 833; Day- v. Bourland, 87 111. 513. Mr. Justice ton V. Dearholt, 85 Wis. 151, 55 N. Harlan, delivering the opinion in W 147 Fowler v. Equitable Trust Co., 141 = Manning v. Young, 28 N. J. Bq. U. S. 384, 35 L. ed. 786, 12 Sup. Ct. 568 ; Conover v. Van Mater, 18 N. 1, after examining the Illinois cases J. Eq. 481; Muir v. Newark Sav. just cited, said: "In view of the de- Inst, 16 N. J. Eq. 537; Baldwin v. cisions of the Supreme Court of 642b VOID AND USURIOUS MORTGAGES 1064 But if the interest reserved, together with the commission paid to the lender's agent, does not exceed the highest rate of interest allowed by law, the transaction is not usurious.^ § 642b. Where broker not the agent of lender. — If the broker or intermediary between the borrower and lender is not the agent of the lender, the latter is not affected by payments made by the borrower to the broker. The rule is well stated by Chief Justice Bleckley in a comparatively recent case in Georgia \' "Where the lender of money neither takes nor contracts to take anything beyond lawful interest, the loan is not rendered usurious by what the borrower does in pro- curing the loan and using its proceeds. Thus, that the borrower con- tracts with one engaged in the intermediary business of procuring loans, to pay him out of the loan for his services, and does so pay him, such payment will not infect the loan, the lender having no interest in such intermediary business or its proceeds."^ So it has been held that where the lender, at the request of the borrower, disburses out of the money loaned certain commissions and other expenses of third per- niinois, and the manifest policy of tte law of that state relating to usury,' we can not adjudge that a loan, under a fixed arrangement be- tween the lender and an individual that the latter will act as the agent of the former at a particular place, and obtain compensation for his services by way of commissions ex- acted from the borrower, is to be governed by the same principles that apply in the case of one hold- ing no relations of agency with the lender, but is a mere broker, who gets his commission from the bor- rower, without the knowledge, au- thority, or assent of the lender. It is not consistent with the law of Illinois, as declared by its highest court, that the lender, when taking the highest rate of interest, shall impose upon borrowers the expense of maintaining agencies in different parts of the state through which loans may be obtained. We there- fore hold that the exaction by the trust company's agent, pursuant to his general arrangement with it, of commissions over and above the 10 ]ier cent, interest stipulated to be paid by the borrower, rendered this lean usurious." "Fowler V. Equitable Trust Co., 141 U. S. 411, 35 L. ed. 786, 12 Sup. Ct. 1; Barton v. Farmers' &c. Nat. Bank, 122 111. 352, 13 N. B. 503; McGovern v. Union Mut L. Ins. Co., 109 111. 151. ' Merck v. American Mortgage Co., 79 Ga. 213, 7 S. E. 265. See also Brown v. Brown, 38 S. Car. 173, 17 S. E. 452, where Mclver, C. J., in a dissenting opinion, says: "The fact that the borrower has paid or con- tracted to pay some one else an amount — however exorbitant — not for the 'hiring, lending, or use of money,' but for the services of such person in negotiating the loan, can not possibly affect the question, for that does not come within the terpis of the statute." » Brown v. Brown, 38 S. Car. 173, 17 S. E. 452, Mclver, C. X, dissent- ing; Call V. Palmer, 116 U. S. 98, 29 L. ed. 559, 6 Sup. Ct. 301; Sherwood V. Roundtree, 32 Fed. 113; Payne v. Newcomb, 100 111. 611; Brigham v. Myers, 51 Iowa 397, 1 N. W. 613; Nichols V. Osborn, 41 N. J. Eq. 92, 3 Atl. 155; Demarest v. Van Denberg, 41 N. J. Eq. 63, 3 Atl. 69, and cases cited; Bonus v. Trefz, 40 N. J. Eq. 502, 2 Atl. 369; Boyd v. Engelbrecht, 36 N. J. Eq. 612. 1065 USUEIOUS ilOKTGAGES § 643 sons, as the agent of the borrower in procuring the loan, the transac- tion is not usurious, since the payment is of no benefit to the lender." There are, however, numerous decisions to the effect that, if the mortgagee knew when he accepted the loan that the broker was exact- ing payment bej'ond a reasonable sum for commissions and expenses, the loan will be held to be usurious, though the broker was not acting as the special agent of the mortgagee, even if the latter did not share in the usurious exaction. § 643. Evidence — Burden of proof — Pleading defense. — The burden " of proof that the mortgage is usurious is usually upon the mortgagor. He is impeaching his own obligation formally executed under seal, and must establish the facts to constitute usury beyond a reasonable doubt. An even balance of testimony is not sufficient; there must be a clear preponderance. ^ " Usury can not be proved by suspicious circumstances, but must be established by clear and indubitable proof.^^ When the contract is upon its face for legal interest only, usury can be established only by proof of a corrupt agreement. It is a de- fense not favored in equity; and, especially when the consequence is to forfeit the whole debt, the defense is considered unconscientious." »Kihlholz V. Wolf, lOS 111. 362. "Hotel Co. v. Wade, 97 U. S. 13, 24 L. ed. 917; New England Mtg. Security Co. v. Gay, 33 Fed. 636. The defense of usury, involving a crime, can not be established by surmise and coniecture, or by infer- ence entirely uncertain. Baldwin v. Doying, 114 N. Y. 452, 21 N. E. 1007; Stillman v. Northrup, 109 N. Y. 478, 17 N. E. 379; Culver v. Pullman, 12 N. Y. S. 663; Sweny v. Peaslee, 17 N. Y. S. 225. If, upon the whole case, the evidence is as consistent with the absence as with the presence of usury, the party alleging the usury must fail. Borden v. School-Dist. No. 38 47 N. J. Eq. 8, 21 Atl. 40; Gil- lette V. Ballard, 25 N. J. Eq. 491; Insurance Co. v. Crane, 25 N. J. Eq. 422- Smith v. Marvin, 27 N. Y. 137; Booth V. Sweezy, 8 N. Y. 276; Sweny V Peaslee, 17 N. Y. S. 225; Morrison v' Verdenal, 5 N. Y. S. 606. In Bro- lasky V. Miller, 8 N. J. Eq. 790, Mr. Justice Potts said: "Usury must be strictly proved. It is not sufficient for the party who sets it up to make out a probable case. * * * It is not enough that the circumstances proved render it highly probable that there was a corrupt bargain. Such a bargain must be proved, and not left to conjecture." Citing Row- land V. Rowland, 40 N. J. Eq. 281; Morris v. Taylor, 22 N. J. Eq. 438, 22 N. J. Eq. 609; Conover v. Van Mater, 18 N. J. Eq. 481; Barcalow V. Sanderson, 17 N. J. Eq. 460; Tan- ning Co. V. Turner, 14 N. J. Eq. 32C; Brolasky v. Miller, 8 N. J. Eq. 790. See also Houghton v. Burden, 228 U. S. 161, 33 Sup. Ct. 491; In re Fishel, 192 Fed. 412; Klein v. Title Guaranty &c. Co., 166 Fed. 365; Pus- ser V. Thompson, 132 Ga. 280, 64 S. E. 75, 22 L. R. A. (N. S.) 571; Cobe V. Guyer, 237 111. 516, 86 N. E. 1071; Home Bldg. &c. Assn. v. Mc- Kay, 217 111. 551, 75 N. B. 569, 108 Am. St. 263; Widell v. National Citi- zens' Bank, 104 Minn. 510, 116 N. W. 919; Ferguson v. Blen, 47 Misc. 418, 94 N. Y. S. 459; Casner v. Hoskins, 64 Ore. 254, 130 Pac. 55, affg. 128 i?ac. 841; Curtze v. Iron Dyke Cop- per Min. Co., 46 Ore. 601, 81 Pac. 815. "Short V. Post, 58 N. J. Eq. 130, 42 Atl. 569. "Conover v. Van Mater, 18 N. J. Eq. 481. § 643 VOID AND USURIOUS MORTGAGES lOGG The wrongful act of usury will never be imputed to the parties, and it will not be inferred when the opposite conclusion can be reasonably and fairly reached.^* When the penalty is a forfeiture of the illegal interest, or of all in- terest, even although the defense is not considered unconscientious, the rule of evidence, that the defense must be clearly made out, is applied both at law and in equity.^* There is a distinction between the rights of a mortgagor when de- fending on the ground of usury and his rights when he applies to a court of equity for relief against a usurious contract ; for while in the former case he may avail himself fully of the statute, in the latter ease he must do equity before he can obtain equity, and must pay the debt with legal interest.^'^ In a mortgage for purchase-money, the fact that the sum secured is greater than that named in the consideration of the conveyance to the mortgagor, with interest, is no evidence that the difference is usury.^" "When, at the time of an agreement for a mortgage loan, nothing is said as to the rate of interest, the law implies it to be that limited by statute, and to increase or alter it a special agreement is necessary; and if the defense of usury is interposed, the burden of showing that such an agreement was made is upon the mortgagor. Therefore where a mortgagor by the terms of his agreement was to pay the attorney's fees, and one item of the attorney's bill was a commission for obtain- ing the loan, and there was no foundation for the charge, which was intended for the benefit of the mortgagee, and was in fact retained by him against the objection of the mortgagor, it was held that these facts did not sustain a defense of usury, as there was no agreement or intent on the part of the mortgagor to pay usury, and he was, in fact, entitled to recover the amount retained by the mortgagee.^' Usury must be specially and particularly pleaded, or it will not be considered as a defense.^' The pleading must set up the usurious contract, specifying its terms "Briggs V. Steele, 91 Ark. 458, 121 "Paddock v. Fish, 10 Fed. 125; S. W. 754. Kllpatrick v. Henson, 81 Ala. 464, 1 "Conover v. Van Mater, 18 N. J. So. 188; Whately v. Barker, 79 Ga. Bq. 481. 790, 4 S. E. 387. See also National >= Clark v. Finlon, 90 III. 245; Life Ins. Co. v. Donovan, 238 III. Tooke V. Newman, 75 111. 215; Gore 283, 87 N. E. 356; Garlick v. Mutual v. Lewis, 109 N. Car. 539, 13 S. E. Loan &c. Assn., 116 111. App. 311; 909. .ffitna Bldg. &c. Assn. v. Randall, 23 '""Vesey v. Ocklngton, 16 N. H. 479. Okla. 45, 99 Pac. 655; Fenby v. Hunt, " Guggenheimer v. Geiszler, 81 N. 53 Wash. 127, 101 Pac. 492. See Y. 293. post § 1300. 1067 rsunious mortgages § 644 and the particular facts relied upon to bring it within the prohibition of the usury statute.^" Where usury renders the contract void, a sale under a power con- tained in a usurious mortgage may be enjoined,^" and an injunction against foreclosure by suit may be granted and continued until a trial of the issue of usury.^^ I§ 644. Who may interpose defense of usury. — It has sometimes been held that the defense of usury is so exclusively personal that it can not be made by any one but the mortgagor or his privies in blood, estate, or contract ; and that a subsequent incumbrancer or purchaser can not set it up/^ nor a surety avail himself of usury paid by his '"King V. Curtin, 31 App. D. C. 23; Arison Realty Co. v. Bernstein, m N. Y. S. 538. ^See post § 1808. "Ehrgott V. Forgotston, 17 N. Y. S. 381. ^' Butts V. Broughton, 72 Ala. 294; McGulre v. Van Pelt, 55 Ala. 344; Baskins v. Calhoun, 45 Ala. 582; Fenno v. Sayre, 3 Ala. 458; Mason V. Pierce, 142 111. 331, 31 N. E. 503; Union Nat. Bank v. International Bank, 123 111. 510, 14 N. E. 859; Darst V. Bates, 95 111. 493; Safford V. Vail, 22 111. 327; Sellers v. Bots- ford, 11 Mich. 59; Cheney v. Dunlap, 27 Nebr. 401, 43 N. W. 178; Holla- day V. Holladay, 13 Ore. 523, 11 Pac. 260, 12 Pac. 821; Lamoille Co. Nat. Bank v. Bingham, 50 Vt. 105, 28 Am. Rep. 490; Barbour v. Tompkins, 31 W. Va. 410, 416, 7 S. E. 1; Ready v. Huebner, 46 "Wis. 692, 1 N. W. 344, 32 Am. Rep. 749; Bensley v. Homier, 42 Wis. 631; Moses v. Home Bldg. &c. Assn., 100 Ala. 465, 14 So. 412. Nor by mortgagor's wife claiming under a subsequent voluntary con- veyance. Cain v. Gimon, 36 Ala. 168. Nor by a terre-tenant of the mortgaged premises. In Hunt v. Acre, 28 Ala. 580, it was assumed that the defense of usury might be set up by the heirs of the mort- gagor. In Ready v. Huebner, 46 Wis. 692, 1 N. W. 344, 32 Am. Rep. 749, Cole, J., says: "It is true there is a class of cases which hold that the purchaser generally — not of the mere equity of redemption — of prop- erty charged with an usurious lien or claim can allege the usury and defeat the claim, when the convey- ance shows that the vendor con- veyed the property discharged of such lien. Ludington v. Harris, 21 Wis. 240; Newman v. Kershaw, 10 Wis. 333; Williams v. Tilt, 36 N. Y. S19. The reason given in some of these cases for such a ruling is, that the purchaser, under such circum- stances, succeeds to all the relations of his vendor in respect to the prop- erty, and therefore necessarily ac- quires the right to question the va- lidity of the usurious security in protection of his title." Chamberlain V. Dempsey, 36 N. Y. 144; BuUard V. Raynor, 30 N. Y. 197; Hartley v. Harrison, 24 N. Y. 170. In Union Nat. Bank v. International Bank, 123 111. 510, 14 N. E. 859, in which It was held that a junior mortgagee not in possession could not set up this defense. Judge Schofield re- viewed the earlier cases in Illinois, and showed that the question had never before been adjudicated in that state, though remarks had been made upon it which were unneces- sary to the decision of the cases in which they were made. He said: "There can be no ground for pre- tending that there is privity be- tween the mortgagor and the usuri- ous mortgage and the mortgagee of a subsequent and junior mortgage, other than by contract or in estate; and we think it quite clear that there is no privity in either of these respects. It is enough to say, on the question of privity by contract that the junior mortgagee was nei- ther directly nor indirectly a party § 644 VOID AXD USURIOUS MORTGAGES 1068 principal. ^^ Nor can a junior mortgagee, in case of insolvency of the debtor, plead usury against a prior incumbrance. But the doctrine more generally adopted is that not only the mort- gagor, but any person who is seised of his estate and vested with his rights, unless he has assumed the payment of the mortgage, may in- terpose this defense, although a mere stranger can not.^* Thus, a vol- untary assignee of the mortgagor for the pajTnent of his debts may set up usury in the mortgage.^' So may a judgment or execution creditor of the mortgagor ;^° or a purchaser of the equity of redemption,^'' un- to the usurious contract, and he de- rives and makes claim to no right through or resulting from it. * * * But it would seem to be self-evident that the same right to elect to plead usury to a mortgage, or to waive the usury and affirm the entire va- lidity of the mortgage, can not be in different and distinct parties in interest at the same time; for, if this were not so, one party might elect to do .one thing, and the other party might elect to do di- rectly the opposite, and thus one election would nullify the other. The equity of redemption of the mortgagor is the right to redeem from the first and senior mortgage, either by paying the amount of the principal debt only, or by paying that amount and the amount of in- terest usuriously contracted to be paid, as he shall elect. The junior mortgage, conveying a lien only on that right, does not cut it off, but leaves it still to be exercised by the mortgagor until he shall terminate it by grant, or it shall be terminated by foreclosure. The junior mortgagee does not, therefore, occupy the same relation toward the property that the mortgagor did before he exe- cuted that mortgage; and, since the mortgagor has not parted with his right of election to plead or to waive the defense of usury, it is impossi- ble that the junior mortgagee can have acquired it." See also Hiner V. "Whitlow, 66 Ark. 121, 49 S. W. 353, 74 Am. St. 74; Miller v. Parker, 133 Ga. 187, 65 S. E. 410; Jones v. Bryan, 53 Ind. App. 550, 102 N. E. 153; Thomas v. Kentucky Trust &c. Co., 156 Ky. 260, 160 S. W. 1037; Mar- cum V. Marcum, 154 Ky. 401, 157 S. W. 1101; Schmidt v. Gaukler, 156 Mich. 243, 120 N. W. 746; Osborne v. Fridrich, 134 Mo. App. 449, 114 S. W. 1045; Cable v. Duke, 132 Mo. App. 334, 111 S. W. 909; Building &c. Assn. V. Walker, 59 Nebr. 456, 81 N. W. 308; Terminal Bank v. Du brofC, 66 Misc. 100, 120 N. Y. S. 609; Bruck V. Lambeck, 63 Misc. 117, 118 N. Y. S. 494; Trabue v. Cook (Tex. Civ. App.), 124 S. W. 455; Dicker- son V. Bankers' Loan &c. Co., 93 Va. 498, 25 S. E. 548; Penby v. Hunt, 53 Wash. 127, 101 Pac. 492; Smith v. McMillan, 46 W. Va. 577, 33 S. E. 283. ® Lamoille Co. Nat. Bank v. Bing- ham, 50 Vt. 105, 28 Am. Rep. 490. But see Osborne v. Fridrick, 134 Mo. App. 449, 114 S. W. 1045. "Butts V. Broughton, 72 Ala. 294; Crawford v. Nimmons, 180 111. 143, 54 N. E. 209; Mason v. Pierce, 142 111. 331, 31 N. E. 503; Union Nat. Bank v. International Bank, 123 111. 510, 14 N. E. 859; Maher v. Lan- from, 86 111. 513; Westerfield v. Bried, 26 N. J. Eq. 357; Brolasky v. Miller, 9 N. J. Eq. 807; Mason v. Lord, 40 N. Y. 476; Williams v. Tilt, 36 N. Y. 319; Devlin v. Shannon, 65 How. Pr. (N. Y.) 148; Johnson v. Lasker Real Estate Assn. (Tex.), 21 S. W. 961 (quoting text). ^Pearsall v. Kingsland, 3 Edw. Ch. (N. Y.) 195. But a purchaser at a sale by an assignee in bank- ruptcy can not set up usury in a mortgage. Nance v. Gregory, 6 Lea (Tenn.) 343, 40 Am. Rep. 41. '^ Thompson v. Van Vechten, 27 N. Y. 568; Carow v. Kelly, 59 Barb. (N. Y.) 239; Dix v. Van Wyck, 2 Hill (N. Y.) 522. Contra Mason v. Pierce, 142 111. 331, 31 N. E. 503. =' Maher v. Lanfrom, 86 111. 513; Banks v. McClellan, 24 Md. 62, 87 1069 USUKIOUS MORTGAGES § 644 less he has assumed the payment of the mortgage, or bought subject to it f^ or a junior mortgagee.^" A mortgagor's grantee of mortgaged premises is not precluded from setting up a plea of usury against the mortgagee by a recital in his deed that it is "subject to a certain mortgage indebtedness of two thousand dollars, and interest thereon."^" Any one in legal privity with the mortgagor, unless he has debarred himself of the right to dispute the mortgage, may set up this defense ; otherwise the property would be practically inalienable in the hands of the mortgagor, unless he should be willing to affirm the usurious mortgage by selling the property subject to it. But the owner of the property has, of course, the right to sell the property as though such . \oid mortgage did not exist ; and the purchaser necessarily acquires all the rights of Ms vendor to question the validity of the xisurious incum- brance.^^ A mortgagor may waive the usury, and then those holding can not avail themselves of this defense. Moreover, any one claiming under the mortgagor and in privity with him may remove the taint of usury as to both himself and those deriving title from him.^- A conveyance by the mortgagor subject to an existing mortgage imports a waiver, and his grantee can not set up usury.^^ But a sherifE selling the mort- gaged land on execution, or on foreclosure, does not, by conveying subject to a prior mortgage, deprive the purchaser of the right to set up the defense, for he has no power to waive the usury. ^* A voluntary Am. Dec. 594; Doub v. Barnes, 1 Md. ™ Waterman v. Curtis, 26 Conn. Ch. 127; Bridge V. Hubbard, 15 Mass. 241; Cole v. Bansemer, 26 Ind. 94; 96, 8 Am. Dec. 86; Green v. Kemp, Greene v. Tyler, 39 Pa. St. 361; Ma- 13 Mass. 515, 7 Am. Dec. 169; CbafEe loney v. Eaheart, 81 Tex. 281, 16 S. V, Wilson, 59 Miss. 42; M'Alister W. 1030; Johnston v. Lasker Real V. Jerman, 32 Miss. 142; Gunnison v. Estate Assn., 2 Tex. Civ. App. 494, Gregg, 20 N. H. 100; Berdanv. Sedg- 21 S. W. 961. Contra Powell v. wick, 44 N. y. 626; BuUard v. Ray- Hunt, 11 Iowa 430; Gaither v. Clark, nor, 30 N. Y. 197; Brooks v. Avery, 67 Md. 18, 8 Atl. 740; Union Dime 4 N. Y. 225; Shufelt v. Sbufelt, 9 Sav. Inst. v. Clark, 59 How. Pr. (N. Paige (N. Y.) 137, 37 Am. Dec. S81; Y.) 342. A junior mortgagee may Union Bank v. Bell, 14 Ohio St. 200; contest the validity of the prior Spengler v. Snapp, 5 Leigh (Va.) mortgage without offering to redeem 478 See post § 746. and making a tender. Gaither v. ^» Valentine v. Fish, 45 111. 462, per Clark, 67 Md. 18, 8 Atl. 740. Breese, J.; Cleaver v. Burcky, 17 111. '"Crawford v. Nimmons, 180 111. App. 92; Wright v. Bundy, 11 Ind. 143, 54 N. E. 209. 398- Stephens v. Muir, 8 Ind. 352, ='Reeder v. Martin, 58 Md. 215; 65 Am. Dec. 764; Sands v. Church, Shufelt v. Shufelt, 9 Paige (N. Y.) 6 N. Y. 347; Ferris v. Crawford, 2 137, 37 Am. Dec. 381. Denio (N. Y.) 595. But see Parker '^ Warwick v. Dawes, 26 N. J. Eq. V Sulouff, 94 Pa. St. 527. See post 548. 58 744, 745, 1494. =^ See post § 745. ^Pinnell v. Boyd, 33 N. J. Eq. 600. § 645 VOID AND USURIOUS MORTGAGES 1070 payment by the mortgagor of the entire mortgage debt destroys all claim of usury, and his conveyance of the mortgaged land to the mort- gagee, in consideration of his release from personal liability on the debt, precludes his afterward attacking the mortgage on the ground of usury.^^ A part payment of the mortgage debt under an agreement with the mortgagee, whereby part of the mortgaged land is released, is not a waiver of usury in the mortgage.^' § 645. Estoppel to set up usury. — ^A mortgagor may be estopped from setting up usury by reason of having executed, after the making of the mortgage, a covenant or certificate under seal that the mortgage was a valid and subsisting lien upon the premises described, especially if an innocent third party is thereby induced to buy the mortgage relying upon the statement. As against the mortgagee himself, or any assignee who knew the fact of usury, it is without effect. If a purchaser has notice of the usurious character of the instru- ment, he is not protected by such a certificate, although he relied upon it as a protection in law.^^ The plea of estoppel can not be invpked to defeat the plea of usury, when interposed by any person otherwise legally entitled to interpose such plea.^* The mortgagor may introduce evidence to show that the purchaser never believed, nor acted upon, the statements as true. He may show that the mortgagee shared in a very large fee paid his attorneys in the matter of the loan, and that it was really a cover for usury.^^ A mortgagor is also estopped from setting up usury in a mortgage as against one whom he has induced to purchase it.*" But the mere silence of the mortgagor, without any evidence of circumstances evidencing a fraudulent purpose on his part, does not have the effect of raising an estoppel. It is an essential element of an *= Mason v. Pierce, 142 111. 331, 31 them; and that it would be prepos- N. B. 503. terous to hold that a party is es- ^'Latrobe v. Hulbert, 6 Fed. 209. topped from claiming that the very ''■Wilcox V. Howell, 44 N. Y. 398; instrument supposed to estop him Eitel V. Bracken, 6 J. & Sp. (N. Y.) was obtained by fraud. 7. In the former case the court, per ^ Ford v. Washington Nat. Bldg. Earl, C, said that the doctrine of &c. Inv. Assn., 10 Idano 30, 76 Pac. equitable estoppel, being founded 1010, 109 Am. St. 192. upon principles of equity and jus- ""Van Sickle v. Palmer, 2 Thomp. tice, is only applied to conclude a & C. (N. Y.) 612. party by his acts and admissions, "Perdue v. Brooks, 85 Ala. 459, 5 when in good conscience he ought So. 126; Barnett v. Zacharias, 24 not to be permitted to gainsay Hun (N. Y.) 304. See ante § 642. 1071 USUEIODS MOETGAGES § 646 estoppel that the party invoking it must have been induced to act upon the representation or concealment of the party against whom it is invoked. Thus the mere presence of the mortgagor, when a mortgage was transferred by the mortgagee without informing the assignee of the usurious transactions on which the mortgage was based, does not estop the mortgagor from setting up usury against the assignee, where it is not shown that the mortgagor was informed of the character of the transfer, and where it does appear that the assignee relied ex- clusively on the mortgagee's assurances as to the validity and suffi- ciency of the mortgage.'*' Payment by a grantee of land of interest on a usurious mortgage given by the grantor will not estop him from showing the fact of usury. *^ In a suit to declare a deed to be a mortgage, the plaintifE is estopped to complain that the transaction was void for usury. ''^ § 646. Usury set up after a foreclosure and sale. — ^Under usury laws which make void securities affected with usury, the question arises. What limit is there to the effect of the statute? Does a fore- closure of the mortgage and a sale of the mortgaged property to a third person terminate the right of the mortgagor to avail himself of the usury, or do the consequences of it still attend the property so that the purchaser's title may be rendered void ? If the effect of the usury survives the original transaction, in the words of Lord Kenyon,** "it might affect the most of the securities in the kingdom; for if, in tracing a mortgage for a century past, it could be discovered that usury had been committed in any part of the transaction, though be- tween other parties, the consequence would be that the whole would be void. It would be a most alarming proposition to the holders of all securities." This question was also answered by an early case in New York, in which Chief Justice Kent, delivering the opinion of the court, said : "The principles of public policy and the security of titles are deeply concerned in the protection of such a purchaser. If the purchase was to be defeated by the usury in the original contract, it would be difficult to set bounds to the mischief of the precedent, or to say in what sequel of transactions, or through what course of succes- sive alienations, and for what time short of that in the statute of lim- " Morris v. Alston, 92 Ala. 502, 9 « Malone v. Danforth, 137 Mich. So 315. 227, 100 N. W. 445. « Vilas V. McBride, 62 Hun (N. " Cuthbert v. Haley, 8 T. R. 390. Y.) 324. § 646 VOID AND DSUEIOUS MOETGAGES 1072 itations, the antecedent defect was to be deemed cured or overlooked, so as to give quiet to the title of the bona fide purchaser. The incon- venience to title "would be alarming and enormous. The law has al- ways had a regard to derivative titles when fairly procured; and though it may be true, as an abstract principle, that a derivative title can not be better than that from which it was derived, yet there are many necessary exceptions to the operation of this principle."*^ A judgment of foreclosure, whether rendered upon confession or iTpon a regular hearing or trial, can not afterward be questioned on the ground that the debt for which it was rendered was void for usury.^" In a suit to recover land, which the plaintili alleges title to under foreclosure proceedings, the defendant can not attack the validity of such foreclosure on the ground of usury.^' After a foreclosure, a mortgage contract is regarded as executed. So long as the contract remains executory, the mortgagor can avail himself of the usury ; but when it is executed, and others have in good faith acquired interests in the property, the objection can no longer be raised.''* But if the mortgagee himself buy the property directly or through an agent at the foreclosure sale, it is held that his title may still be impeached for usury in the mortgage. Being a party to the usurious contract, his situation is no better after the foreclosure than it was before.*" *' Tyler v. Massachusetts Mut. Ins. tels who has seized the property. Co., 108 111. 58; Carter v. Moses, 39 Wetherell v. Stewart, 35 Minn. 496, 111. 539; Perkins v. Conant, 29 111. 29 N. W. 196. But in New Jersey 184, 81 Am. Dec. 305; Mumford v. it is held that a subsequent mort- Am. Life Ins. Co., 4 N. Y. 463; Elliott gagee may set up usury under his V. Wood, 53 Barb. (N. Y.) 285; Jack- petition for the surplus money re- son V. Henry, 10 Johns. (N. Y.) 185, maining in court after satisfying 6 Am. Dec. 328. prior mortgages. Hutchinson v. Ab- •"^Bell V. Fergus, 55 Ark. 536, 18 bott, 33 N. J. Eq. 379. In Minne- S. W. 931. sota the foreclosure of the usurious •" Northwestern Mortgage Trust mortgage, and sale under the power Co. V. Bradley, 9 S. Dak. 495, 70 N. to one not a bona fide purchaser, W. 648. does not prevent the granting of re- « Ferguson v. Soden, 111 Mo. 208, lief. Jordan v. Humphrey, 31 Minn 19 S. W. 727 (quoting text). 495, 18 N. W. 450; Exley v. Berry- « Welsh V. Coley, 82 Ala. 363, 2 So. hill, 37 Minn. 182, S3 N. W. 567; 733; McLaughlin v. Cosgrove, 99 Scott v. Austin, 36 Minn. 460, 32 N JIass. 4. So with any purchaser w. 864. Only a bona fide purchaser who has notice of the usury at the for value without notice is protected time of sale. Jackson v. Dominick, under such a sale. Jordan v. 14 Johns. (N. Y.) 435; Bissell v. Kel- Humphrey, 31 Minn. 495, 18 N. W. logg, 60 Barb. (N. Y.) 617, 65 N. Y. 450. 432. So with a mortgagee of chat- 1073 USURIOUS MORTGAGES § 647 Yolimtary payments of usury, made with full knowledge of all the facts, can not be recovered back, unless by force of an express statute."" § 647. Effect of usurious transactions subsequent to execution of mortgage. — A bonus paid to secure the extension of the time of pay- ment of an existing mortgage does not invalidate the mortgage as a security for the original debt."^ Where the original transaction is not usurious, a subsequent agree- ment to pay a usurious rate of interest in consideration of forbearance, does not impart to the contract the taint of usury.''^ When a mortgage is free from usury in its inception, no subsequent usurious contract in relation to it can affect the mortgage itself. It is only the subsequent contract that is affected by the usury. The mort- gage, not being usurious in its origin, is not made so retrospectively by the receipt of usurious interest under an agreement to forbear de- mand of payment, though the penalty of the statute may be incurred."^ But if the usury goes back to the original transaction, the mortgage is rendered void by the usury."* A provision of the lex loci contractus, rendering void the original contract when extra interest is taken for the forbearance of the payment of money when due, will not be en- forced in a foreign state, because the forfeiture is in the nature of a remedy. The lex fori determines the remedy, the lex loci contractus, the validity and construction."" An agreement after maturity of the mortgage debt to pay a rate of interest higher than is allowed by law, as an indemnity to the mort- gagee for interest paid by him on money borrowed in another state at such higher rate, will not for that reason be upheld."" =» Riddle V Rosenfleld, 103 111. 600; Rosenbaum v. Silverman, 22 Misc. Fessenden v. Taft, 65 N. H. 39, 17 589, 50 N. Y. S. 860. ^tl 713. "Nance v. Gray, 143 Ala. 234, 38 '^ Mahoney v. Mackubin, 54 Md. So. 916. 268- Terhune v. Taylor, 27 N. J. Eg. "^Hawhe v. Snydaker, 86 111. 197; SO-Trusdell v. Jones, 23 N. J. Eq. Lindsay v. Hill, 66 Maine 212, 22 121 554- Donnington v. Meeker, 11 Am. Rep. 564; Thompson v. Wood- N J Bq 362; Langdon v. Gray, bridge, 8 Mass. 256. See also Cain 52 How Pr (NY.) 387; Abrahams v. Bonner (Tex. Civ. App.), 149 S. V Claussen, 52 How. Pr. (N. Y.) W. 702. 241- Real Estate Trust Co. v. Keech, "Smith v. Hathorn, 88 N. Y. 211, 7 Hun fN Y.) 253, 25 Am. Rep. 181, reversing 25 Hun 159. and cases cited; Sweny v. Peaslee, »= Lindsay v. Hill, 66 Maine 212, 22 17 N Y S 225. See also McEwin v. Am. Rep. 564. Humphrey, 1 Ind. Ter. 550, 45 S. W. " Eslava v. Lepretre, 21 Ala. 504, 114- Morse v. Wellcome, 68 Minn. 56 Am. Dec. 266. 210,' 70 N. E. 978, 64 Am. St. 471; 68 — Jones Mtg.^-Vol. I. § 648 VOID AND USURIOUS MORTGAGES 1074 § 648. When bonus for extension a proper credit on mortgage debt. — If a payment made by a mortgagor as a premium for an extension of the time of payment of the principal debt is void for the purpose for which it was made, it should be credited as a payment upon the mortgage debt as of the time when it was made."'' Where the person paying a bonus for an extension of payment is not the original mortgage debtor, but one who has purchased the premises subject to the mortgage without assuming the payment of it, such pay- ment is as much usury as if the sum of money secured by the mort- gage had been loaned upon a contract to pay more than legal interest, and renders the contract for extension void, and the sum paid for such extension should be applied as a payment upon the mortgage.^* Where transactions, although made in the form of payment of one loan and the creation of another, amount in reality to the monthly re- newal of an original loan at a usurious rate of interest, all payments in excess of legal interest are to be applied on the principal.^' § 649. When agreement for extension void under usury laws. — Under some usury laws an agreement to extend the time of payment of a mortgage is void if made iu consideration of a usurious payment or contract."" But while the cases are in harmony upon this point, they are not agreed whether it is the privilege of the borrower alone to take advantage of the usurious taint of the contract; or whether, for instance, the lender may disregard the contract and proceed be- fore the expiration of such extension to enforce payment or foreclose the mortgage. On the one hand, it is held that the lender can not wilfuly violate the statute against usury, and then take advantage of his own wrong by repudiating the contract; that the borrower or his surety, or personal representative, can alone set up the usury; in other words, that the victim of the usury, and not the usurer, can take ad- vantage of the statute."^ But even if an extension made upon a usuri- ous payment be binding at the election of the mortgagor, if upon a foreclosure suit he requires that the premium paid shall be credited =' Patterson v. Clark, 28 Ga. 526; "^Mylott v. Skinner, 12 Pa. Super. Nightingale v. Meginnis, 34 N. J. L. Ct. 137. 461; Laing v. Martin, 26 N. J. Eq. ""Church v. Maloy, 70 N. Y. 63. 93; Trusdell v. Jones, 23 N. J. Eq. See also Milholen v. Meyer, 161 Mo. 121, 554. See also Church v. Maloy, App. 491, 143 S. W. 540. 70 N. Y. 63; Nunn v. Bird, 36 Ore. "^Billington v. Wagoner, 33 N. Y. 515, 59 Pac. 808. 31; La Farge v. Herter, 9 N. Y. 241. =« Ganz V. Lancaster, 169 N. Y. 357, But see Church v. Maloy, 70 N. Y. 62 N. E. 413, revg. 50 App. Dlv. 204. 63. 1075 USUEIOCS MOBTGAGES § 650 he disaffirms the contract for extension.o^ He is entitled to the credit; but, having received that, he is not entitled to the extension, so as to prevent the whole principal from being regarded as due. A distinction has been taken between a contract for extension founded upon a consideration of an actual payment of money made at the time of the contract, and one made upon an executory contract to pay usury; and it is held that, while the contract is binding upon the creditor in the former case, it is not binding in the latter, as, for in- stance, when the consideration for the extension is a promissory note of the debtor.'^ Extension of the time of payment is a sufficient consideration for an agreement to increase the rate of interest upon the debt, and when the arrangement has once been entered upon, without a definite limi- tation of its continuance being agreed upon, it will be presumed that the increased rate of interest continues as long as the forbearance is granted.'* But, on the other hand, the rule has sometimes been declared to be, that the court will not help either party to enforce a usurious contract while it remains executory.'^ A promise to extend the time of pay- ment of a mortgage made in consideration of a note for a usurious premium is void; and the mortgagee may foreclose it before the ex- piration of the extended time upon his giving up the usurious note. The usurious contract in such case remains executory. It is not the privilege of the borrower alone to take advantage of the usurious taint. The statute makes the contract void.*" Where money is owing upon a contract for the payment of a loan, and forbearance is given for such debt upon the condition of receiving more than the legal rate of interest, such forbearance is as much usury as if the sum of money had been absolutely loaned upon a contract to pay more than legal interest.*^ § 650. Validity of agreement to pay compoTuid interest, made be- fore interest due. — As to compound, interest the general rule is, that "' Kommer v. Harrington, 83 Minn. "" Jones v. Trusdell, 23 N. J. Eq. 114, 85 N. W. 939; Churcti v. Maloy, 121, 554. 70 N. Y. 63. «« Jones v. Trusdell, 23 N. J. Eq. «' Jones V. Trusdell, 23 N. J. Bq. 121. 121 per Chief Justice Beasley; Bill- "Ganz v. Lancaster, 169 N. Y. 357, ington V. Wagoner, 33 N. Y. 31. 62 N. E. 413, 58 L. R. A. 151; Per- But see Church v. Maloy, 70 N. Y. kins v. Hall, 105 N. Y. 539, 12 N. 63 B. 48; Baldwin v. Moffett, 94 N. Y. '■"Haggerty v. Allaire Works, 5 82; Wyeth v. Branife, 84 N. Y. 627. Sandf. (N. Y.) 230. § 650 VOID AND USURIOUS MORTGAGES 1076 an executory contract for it can not be enforced ; but that the payment of such interest by the debtor, understandingly and under no peculiar circumstances of oppression, does not constitute usury.^ There is a decided lack of uniformity of opinion in the decisions bearing on the question of the validity of agreements, made before in- terest becomes due, to pay interest on interest. Many courts condemn such agreements without making any distinction between agreements simply to pay interest on overdue interest, and agreements for the compounding of interest at regular intervals. An agreement made con- temporaneously with the loan contract, providing that the interest shall, if unpaid, itself bear interest, does not obligate the borrower to pay compound interest, except in the event of his failure to pay the interest at maturity. If he fulfil his contract, it is impossible for the lender to collect more than the legal contractual rate of interest. Cer- tainly no one would doubt the right of the parties, after the interest becomes due and unpaid, to include the amount of such interest as the principal of a second note, itself bearing the lawful rate of interest. Conceding this, we see no good reason why parties may not provide in the same instrument for the compounding of iaterest, when the stipulations of the contract are not such as require a compounding of the interest as a part of the contract, not leaving any option or right in the borrower to avoid paying compound interest. Such a contract is a mere matter of convenience to the parties, and places nothing in the contract they could not lawfully do as an independent transac- tion.^ It is admitted that there is no law prohibiting such a contract, but the courts have adopted the rule from notions of policy f holding that although it may be demanded and recovered as it becomes due, an agreement to pay interest on the interest after it becomes due can not be enforced.* Lord Thurlow said ■.'^ "My opinion is in favor of interest ^Culver v. Bigelow, 43 Vt. 249. terest has become due, see Force v. ' EUard v. Scottish-American Mtg. Elizabeth, 28 N. J. Eq. 403. Co., 97 Ga. 329, 22 S. E. 893; Merck * Stewart v. Petree, 55 N. Y. 621, V. American Freehold Land Mtg. Co:, 14 Am. Rep. 352; Van Benschooten 79 Ga. 213, 7 S. E. 265; Scott v. Saf- v. Lawson, 6 Johns. Ch. (N. Y.) 313, fold, 37 Ga. 384; Burke v. Trabue, 10 Am. Dec. 333; Connecticut v. 137 Ky. 580, 126 S. W. 125; Palm v. Jackson, 1 Johns. Ch. (N. Y.) 13, 7 Fancher, 93 Miss. 785, 48 So. 818, 33 Am. Dec. 471; article in 16 Alb. L. L. R. A. (N. S.) 295; Bura v. Thomp- J. 252. See also Eslava v. Lepretre, son, 2 Clark (Pa.) 143; Yaws v. 21 Ala. 504, 56 Am. Dec. 266; Hoch- Jones (Tex.), 19 S. "W. 443; Lewis mark v. Richler, 16 Colo. 263, 26 V. Paschal, 37 Tex. 315. Pac. 818; Bowman v. Neely, 137 111. = For numerous authorities in sup- 443, 27 N. E. 758; Drury v. Wolfe, port of the rule that interest shall 134 111. 294, 25 N. E. 626. not bear interest, except by virtue " Waring v. Cunlifte, 1 Ves. Jr. 99. of an agreement made after the in 1077 USUEIOUS ilOETGAGES § 6.J(. upon interest ; because I do not see any reason, if a man does not pay interest when he ought, why he should not pay interest for that also. But I have found the court in a constant habit of thinking the con- trary, and I must overturn all the proceedings of the court if I give it." Lord Eldon also said that a bargain for interest on interest was neither unfair nor illegal, but that it could not be allowed because it tended to usury, although it was not usury." In several states it is now provided by statute that interest upon in- terest may be contracted for ;'' and it would seem that inasmuch as the " Chambers v. Goldwin, 9 Ves. 254. See also Blackburn v. Warick, 2 Y. & C. 92, per Alderson, B.; Barnard V. Young, 17 Ves. 44; Leitb v. Irvine, 1 Myl. & k. 277; Thornliill v. Evans, 2 Atk. 330. ' In. Michigan- it is provided that when any instalment of Interest upon any note, bond, mortgage, or other written contract shall have become due, and the same shall re- main unpaid, interest may be com- puted and collected on any such in- stalment so due and unpaid, from the time at which it became due, at the same rate as specified in any such note, bond, mortgage, or other written contract, not exceeding ten per cent.; and if no rate of interest be specified in such instrument, then at the rate of seven per centum per annum. How. Mich. Stat. 1913, § 2875. But interest can not be computed on interest accru- ing after the principal is due. Mc- Vicar v. Denison, 81 Mich. 348, 45 N. W. 659. Minnesota: Interest can not be compounded; but a contract to pay interest not usurious upon interest overdue is not construed to be usury. G. S. 1891, & 2089. In Missouri parties may contract in writing for the payment of interest upon interest, but the interest shall not be computed oftener than once a year. Where a different rate is not expressed, interest upon interest is at the same rate as interest on the principal debt. R. S. 1889, § 5977; Waples v. Jones, 62 Mo. 440. In California the parties may con- tract in writing, and agree that if the interest is not punctually paid it shall become part of the princi- pal and bear interest at the same rate. Civil Code, §§ 1917, 1919, 1920. In view of this statute it is held that a stipulation that the deferred instalments of interest shall bear interest at a higher rate than that borne by the principal is wholly il- legal and void. Yndart v. Den, 116 Cal. 533, 58 Am. St. 200, 48 Pac. 618. In "Wisconsin it Is provided that interest shall not be compounded, or bear interest upon interest, unless there be an agreement to that effect, expressed in writing, and signed by the party to be charged therewith. R. S. 1878, § 1689. On the other hand, express provisions against compound interest have been made in a few states. Arkansas: In no case where a payment shall (fall short of paying the interest due at the time of making such payment shall the balance of such interest be added to the principal. Dig. of Stats. 1884, § 4738. At one time the law of Louisiana provided that no stipulation in the original contract to pay Interest upon interest should be valid. See Lee v. Goodrich, 21 La. Ann. 278. But a provision in the contract that notes given for in- terest after maturity has been held not usurious. Scottish-American Mtg. Co. V. Ogden, 49 La. Ann. 8, 21 So. 116. In Idaho compound inter- est is not allowed, but a debtor may agree in writing to pay interest upon interest overdue at the date of such agreement. R. S., § 1266. In view of this statute, coupon notes given for the interest of the princi- pal debt, which, by their terms, draw interest after maturity, are usurious, although the compound in- terest provided for in the coupon notes, when added to the simple in- terest, falls below the legal contrac- tual rates fixed by law. Vermont § 651 VOID AND USUEIOUS MORTGAGES 1078 objeetion to such contracts has been that they savored of usury, and inasmuch as it has always been held that the parties may, by a new agreement after the interest has accrued, turn it iuto principal, in those states where the laws against usury have been abolished there can be no reason why an agreement for turning interest into principal is not valid.* But in Nevada, although it is provided by statute that parties may agree in writing for the payment of any rate of interest, it is held in equity that a contract for compound interest can not be enforced.* The court say that, "when the Nevada Statute was passed, it was the settled rule of courts of equity to refuse to allow compound interest when their aid was invoked to collect a debt. In courts of law the rule was not so well settled, but we think a majority of the states of this Union, and the English courts of law, had refused to enforce that portion of contracts which provided for the collection of com- pound interest. None of these rulings were founded on the statutes against usury, but on the general principles of the common law as it existed, without reference to the usury law." In states where all usury laws have been abolished it would seem that a stipulation for the payment of compound interest is valid and may be enforced.^" And so, where parties may contract for interest not exceeding a certain rate, a contract may be made for compound interest, provided the interest on the principal debt, together with the interest on the interest coupons, does not exceed at the maturity of the debt the limited rate of interest.^^ It is generally held that a stipulation to pay interest above the legal rate in case of default in the payment of principal or interest in ac- cordance with the contract imposes a penalty to enforce prompt pay- ment only, and is not usurious.^^ § 651. Validity of agreement to pay interest on interest, made after interest has become due. — So long as the agreement for compound Loan &c. Co. v. Hoffman, 5 Idaho W. 451; Mathews v. Toogood, 23 376, 49 Pac. 314, 36 L. R. A. 509, 95 Nebr. 536, 37 N. W. 265, 8 Am. St. Am. St. 186. 131; Reed v. Miller, 1 Wash. St. 426, ' Bradley v. Merrill, 91 Maine 340, 25 Pac. 334. 40 Atl. 132; Farwell v. Sturdivant, "Union Mortgage Banking &c. Co. 37 Maine 308. v. Hagood, 97 Fed. 360; Green v. » Cox v. Smith, 1 Nev. 161, 90 Am. Brown, 22 Misc. 279, 49 N. Y. S. 163; Dec. 476. Questionable. Law Guarantee &c. Soc. v. Hogue, "Clarkson v. Henderson, L. R. 14 37 Ore. 544, 62 Pac. 380, 63 Pac. 690; Ch. D. 348. Parks v. Lubbock (Tex.), 50 S. W. "Richardson v. Campbell, 34 466; Sloane v. Lucas, 37 Wash. 348, Nebr. 181, 51 N. W. 753; Murtagh 79 Pac. 949. V. Thompson, 28 Nebr. S58, 44 N. 1079 USUEIOrS MORTGAGES § 651 interest is executory merely, the courts will not lend their aid to en- force it ; but when the contract has been acted upon by the parties, and such interest has been paid, the courts will not require a repayment, nor will they hold the transaction to be in any degree tainted with usury by reason of such payment. Such an agreement does not render a mortgage usurious, but the contract, so far as it provided for usuri- ous interest, is void ; but it may be enforced for the debt and interest, even where usury makes void the contract.^' An agreement to pay interest on interest, made after the interest has accrued, is valid and may be enforced." By such agreement the parties turn the interest into principal. Interest on interest is not recoverable simply on the strength of a demand.^^ Some recent decisions do away with this distinction, and hold that there is no objection to a contract for interest upon interest.^" Some courts hold that a retroactive agreement, made after interest has become due, that it shall bear interest from a time past, is un- supported by any consideration other than the moral consideration re- sulting from the fact that the interest is in arrear and unpaid.^' In Ohio and Iowa it is the settled rule that when interest is payable by the terms of a mortgage at stated periods, without any special agree- ment to that effect, it becomes principal from the time of payment, and may be recovered as such, with interest from the time it became due. Upon a note which simply provides for the payment of interest "Mowry v. Bishop, 5 Paige (N. v. Berkey, 137 Mich. 658, 100 N. W. Y.) 98. 920; Hoyle v. Page, 41 Mich. 533, 2 " Stickney v. Moore, 108 Ala. 590, N. W. 665; Mason v. Callender, 2 19 So. 76; Ginn v. New England Mtg. Minn. 350, 72 Am. Dec. 102; Perkins &c Co., 92 Ala. 135, 8 So. 388; Paul- v. Coleman, 51 Miss. 298; Young v. ling v. Creagh, 54 Ala. 646; Drury Hill, 67 N. Y. 162, 23 Am. Rep. 99; V. Wolfe, 134 111. 294, 25 N. E. 626; Hathaway v. Meads, 11 Ore. 66, 4 Gilmore v. Bissell, 124 111. 488, 16 N. Pac. 519; Stokely v. Thompson, 34 E. 925; Thayer v. Star Mining Co., Pa. St. 210; Stanshury v. Stansbury, 105 111. 541; Force v. Elizabeth, 28 24 W. Va. 634; Craig v. McCulloch, N J. Eq. 403; Tylee v. Yates, 3 Barb. 20 W. Va. 148; Genln v. Ingersoll, 11 (N. Y.) 222; Fobes v. Cantfield, 3 W. Va. 549. Ohio 17. See also Porter v. Price, "Whitcomb v. Harris, 90 Maine 80 Fed. 655, 26 C. C. A. 70; Hoch- 206, 38 Atl. 138; Bannister v. Rob- mark V. Richler, 16 Colo. 263, 26 erts, 35 Maine 75; Lewin v. Folsom, Pac. 818; Meeker v. Hill, 23 Conn. 171 Mass. 188, 50 N. E. 523. 574- Rose v. Bridgeport, 17 Conn. >" HoUingsworth v. Detroit, 3 Mc- 243- Camp v. Bates, 11 Conn. 487; Lean (U. S.) 472; Scott v. SafEold, Grimes v. Blake, 16 Ind. 160; Niles 37 Ga. 884. V. Sinking Fund Comrs., 8 Blackf. "Young v. Hill, 67 N. Y. 162, 23 (Ind.) 158; Otis v. Lindsey, 10 Am. Rep. 99; Van Benschooten v. Maine 315; Banks v. MoClellan, 24 Lawson, 6 Johns. Ch. (N. Y.) 313, Md 62, 87 Am. Dec. 594; Wilcox v. 10 Am. Dec. 333; Childers v. Deane, Rowland, 23 Pick. (Mass.) 167; Gay 4 Rand. (Va.) 406. § 653 VOID AND rsURIOUS MORTGAGES 1080 annually, the interest on the interest will be computed at the legal rate provided for cases where the parties do not agree upon a higher rate ; and although the interest upon the note he fixed at a higher rate, in the absence of any agreement as to the rate of interest upon accrued interest that rate will not govern.^' Where interest upon a mortgage note was payable annually, interest upon the delinquent interest was allowed, although the note was made in New York and was payable there, where the rule was otherwise.^' But when interest on interest is stipulated for, the rate reserved by mortgage, if within the limits al- lowed by law, will control.^" § 652. Accrued interest forming iirincipal of further mortgage — Tacking to first mortgage. — ^Accrued interest is a debt, and even where an agreement made at the time of the loan for converting interest into principal, from time to time as it shall become due, is not allowed be- cause it is regarded as offensive and usurious, yet when it has become due there is no objection to the parties converting such interest into principal, and securing it by a further mortgage. It is regarded as in the nature of a further advance, and not only may it form the consid- eration of a second or further mortgage, but as between the parties it may be tacked to the first mortgage. ^^ While parties may not prospectively agree that interest may bear interest; but, after interest has accrued and is due, it may be agreed that such interest may bear interest.'^ If interest be demanded when due, it legally bears interest from that time; or if no demand be proved, then from the commencement of suit.^^ When a mortgage is given to secure the payment of money in in- "Mann v. Cross, 9 Iowa 327; Cra- Hance, 7 Paige (N. Y.) 581; Parham mer v. Lepper, 26 Ohio St. 59, 20 v. Pulliam, 5 Coldw. (Tenn.) 497; Am. Rep. 756. Hale v. Hale, 1 Coldw. (Tenn.) 233, ^Burrows v. Stryker, 47 Iowa 78 Am. Bee. 490; Barbour v. Tomp- 477; Preston v. Walker, 26 Iowa kins, 31 W. Va. 410, 7 S. E. 1 (quot- 205, 96 Am. Dec. 140. ing text). See also Gllmore v. Bis- ^Watkinson v. Root, 4 Ohio 373; sell, 124 111. 488, 16 N. E. 925. Dunlap V. Wiseman, 2 Disney ^^^Gunn v. Head, 21 Mo. 432; San- (Ohio) 398. ford v. Lundquist, 80 Nebr. 414, 118 ^Eslava v. Lepretre, 21 Ala. 504, N. W. 129, IS L. R. A. (N. S.) 633; 56 Am. Dec. 266 ; Pinckard v. Pen- Craig v. McCulloch, 20 W. Va. 148. der, 6 Ga. 253; Banks v. McClellan, ^Stewart v. Petree, 55 N. Y. 621, 24 Md. 62, 87 Am. Dec. 594; Fitz- 14 Am. Rep. 352; Howard v. Farley, hugh V. McPherson 3 Gill (Md.) 408; 19 Abb. Pr. (N. Y.) 126; Force v. Quimby v. Cook, 10 Allen (Mass.) Elizabeth, 28 N. J. Eq. 403, where 32; Wilcox v. Rowland, 23 Pick, authorities are collected in note; (Mass.) 167; Townsend V. Corning, 1 Meyer v. Graeber, 19 Kans. 165; Barb. (N. Y.) 627; Williams v. article in 16 Alb. L. J. 252. 1081 TJSUHIOUS MORTGAGES 8 G53 stalments, to commence at a future day, "with interest semiannually," interest begins to run from the making of the contract. The holder may sue for each half year's interest as it becomes due, although the principal is not due.^* § 652a. Taking interest upon a loan in advance. — Taking interest upon a loan in advance for the ordinary term of commercial paper, oi- even for a year, or annually in advance, is not usury, though the re- sult in such case is to enable the creditor to make interest upon in terest.^° As a general rule the taking as discount on a note of interest in ad- vance is not usury vrhether it is done by a bank or by a corporation or other persons having no banking powers.^" But if a debtor gives his creditor a new note and mortgage for the amount of the debt, to which is added interest for a year, and also interest on such interest for that period, the transaction may be regarded as usurious.^^ Also a reservation of interest in advance on a loan for five years is usurious, where the amount reserved and the amount contracted to be paid aggregate a sum in excess of the highest legal rate for the term of the loan.^^ § 653. Interest coupons. — Coupon notes have always been treated as an illogical exception to the rule prohibiting the making of an agreement in a single instrument, obligating the promisor to pay in- terest after due upon interest then unmatured.^" It is the general . practice for corporations, in making mortgages ^Conners v. Holland, 113 Mass. N. W. 410; Tholen v. Duffy, 7 Kans. 50; Hastings V. Wiswall, 8 Mass. 455. 405. But see Ellis v. Terrell, 109 *> Telford v. Garrels, 132 111. 550, Ark. 69, 158 S. W. 957, holding that 24 N. E. 573; Hoyt v. Institution for the deduction of interest at the high- Savings, 110 111. 390; Mitchell v. Ly- est rate permitted by law on a loan man, 77 111. 525; Goodrich v. Reyn- for a longer period than twelve olds, 31 111. 490; McGill v. Ware, 5 months at the time the loan is made 111. 21; Rose v. Munford, 36 Nebr. renders the contract usurious. 148, 54 N. W. 122; Leonard v. Cox, =°Vahlberg v. Keaton, 51 Ark. 534, 10 Nebr. 541, 7 N. W. 289; Bloomer 11 S. W. 878, 4 L. E. A. 462, 14 Am. V. Mclnerney, 30 Hun 201; Manhat- St. 73; Cole v. Lockhart, 2 Ind. 631; tan Co. V. Osgood, 15 Johns. (N. Y.) International Bank v. Bradley, l;j 162 See also First Nat. Bank v. N. Y. 245; New York Firemen Ina. Waddell, 74 Ark. 241, 85 S. W. 417; Co. v. Sturges, 2 Cow. (N. Y.) 664. Bank of Newport v. Cook, 60 Ark. "First Nat. Bank v. Davis, lOS 288, 30 S. W. 35, 29 L. R. A. 761, 46 111. 633. Am. St. 171; Hogan v. Hensley, 22 ^McCall v. Herring, 116 Ga. 235, Ark 413; English v. Smock, 34 Ind. 42 S. E. 468; Miller v. Fergerson, 115 7 Am. Rep. 215; Cole v. Lock- 20 Ky. L. 801, 47 S. W. 1081. hart, 2 Ind. 631; Willett v. Maxwell, =» Lee v. Melby, 93 Minn. 4, 100 N, 169 111. 540, 48 N. E. 473; Brown v. W. 379. Cass County Bank, 86 Iowa 527, 53 § 653 VOID AND DSDEIOUS MOETGAGES 1083 upon their property, to attach to the mortgage bonds coupons repre- senting the interest payable at the several times when the interest falls due;^" and this practice has been adopted in several states quite exten- sively by individuals, in making ordinary mortgages or trust deeds upon their private property. ^^ Such coupons for the payment of defi- nite sums of money at specified times are in effect promissory notes, and are held to draw interest after maturity.^^ Such interest is com- puted at the legal rate when the rate, as is usual, is not expressed in the coupon itself. The rate of interest provided for in the bonds does not control.^' But if the interest coupons are not independent obliga- tions nor strictly commercial securities, upon which the mortgagor is liable, the rule that interest coupons bear interest after maturity is not applicable. Thus, if the mortgage is made by a guardian, and it is recited in the bonds and mortgage that he and his estate are exempt from all liability for the moneys borrowed, and the ward is not per- sonally liable, the bonds as well as the coupons are in effect payable out of particular funds, and are not in any sense commercial paper. In such case the coupons do not bear interest after maturity.^* As a general rule, there is no sound reason why the parties may not provide that after maturity the coupons shall bear any rate of interest allowed by law.^^ '"Gelpecke v. Dubuque, 1 Wall. (U. 111. 634, 50 N. E. 328 (quoting text). S.) 175, 17 L. ed. 520; HoUlngsworth =^ United States Mtg. Co. v. Sperry, v. Detroit, 3 McLean (U. S.) 472; 138 U. S. 313, 34 L. ed. 969, 11 Sup. Columbia v. King, 13 Pla. 451; Har- Ct. 321. per V. Ely, 70 111. 581; Dunlap v. "^ In Nebraska it is the law that Wiseman, 2 Disney (Ohio) 398. when a party loans money at the '^Whitney v. Lowe, 59 Nebr. 87, highest legal rate, and coupon notes 80 N. W. 266. are taken for the interest, which ^" Jones on Corp. Bonds and Mort- stipulate that interest shall be al- gages, § 256, and numerous cases lowed thereon after maturity at the cited; United States Mtg. Co. v. maximum rate, the contract may be Sperry, 138 U. S. 313, 34 L. ed. 969, enforced in strict accord with its 11 Sup. Ct. 321; Stickney v. Moore, terms. But a provision that upon 108 Ala. 590, 19 So. 76; Ginn v. New a default in payment of interest the Eng. Mtg. S. Co., 92 Ala. 135, 8 So. whole debt shall bear interest at a 388; Caldwell v. Dunklin, 65 Ala. higher rate than it would otherwise 461; Abbott v. Stone, 172 111. 634, 50 bear, is in the nature of a penalty N. E. 328; Benneson v. Savage, 130 and will not be enforced. Connecti- 111. 352, 22 N. E. 838; Humphreys cut Mut. L. Ins. Co. v. WesTefhofE. V. Morton, 100 111. 592; Harper v. 58 Nebr. 379, 78 N. W. 724, 79 N. W. Ely, 70 111. 581. See also Abbott v. 731; Crapo v. Hefner, 53 Nebr. 251, Stone, 172 111. 634, 50 N. B. 328, 64 7S N. W. 702; overruling Mathews Am. St. 60; Hoyle v. Page, 41 Mich. v. Toogood, 23 Nebr. 536, 37 N. W. 533, 2 N. W. 665; Martin v. Land 265, 8 Am. St. 131, and 25 Neb'r. 99, Mtg. Bank, 5 Tex. Civ. App. 167, 23 41 N. W. 130; Omaha Home F. Ins. S. W. 1032. Co. V. Fitch, 52 Nebr. 88, 71 N. W. '' Jones on Corp. Bonds and Mort- 940; Havemeyer v. Paul, 45 Nebr. gages, § 256; Abbott v. Stone, 172 373, 63 N. W. 932; Rose v. Mun- 10^3 USURIOUS MORTGAGES § 655 Interest coupons, although detached from the bond, are still covered by the lien of the mortgage given to secure the bond.^" Such coupons are usually payable to bearer, and may be transferred and presented by any holder.^^ § 654. When mortgagee may enforce payment of interest. — A pro- vision for the payment of interest annually, and that if not so paid it shall be compounded, is no waiver of the right to enforce payment when due; and if the deed further provides that, upon a failure to pay the debt or interest as it matures, the whole shall become due and payable, upon a failure to pay the interest annually the whole debt or the interest only may be enforced, at the creditor's election.'* The owner of a mortgage debt may foreclose a mortgage for the unpaid interest coupon subject to the unmatured principal of the debt.'^ § 655. Computation of interest. — ^When no payments have been made upon the mortgage, the interest should be computed from the date of the note until the rendition of the decree. It is erroneous to compute the interest to the time of maturity, and, adding it to the principal, then to compute it upon the gross amount to the time of rendering the decree.*" The rule for computing interest when a partial payment has been made is to apply the payment in the first place to the interest then due. This is sometimes called the Massachusetts or the United States rule, and was laid down by Chancellor Kent as follows : "When par- tial payments have been made, apply the payment, in the first place, to the discharging of the interest then due. If the payment exceeds the interest, the surplus goes toward discharging the principal, and the subsequent interest is to be computed on the balance of the prin- cipal remaining due. If the payment be less than the interest, the surplus of interest must not be taken to augment the principal, but the interest continues on the former principal until the period when the ford, 36 Nebr. 148, 54 N. W. 129; «^ Miller v. Rutland &c. R. Co., 40 Richardson v. Campbell, 27 Nebr. Vt. 399, 94 Am. Dec. 414. 644, 43 N. W. 405. In Idaho coupon " Sewall v. Brainerd, 38 Vt. 364. notes given for the interest ot the See also Bowman v. Neely, 137 111. principal debt, which, by their 443, 27 N. E. 758; Hoyle v. Page, terms, draw interest after maturity, 41 Mich. 533, 2 N. W. 665. are in contravention of Rev. Stat. ''Waples v. Jones, 62 Mo. 440. 1887, § 1266, Code 1908, § 1540, for- =» Omaha Loan &c. Co. v. Kitton, bidding compound interest, and are 58 Nebr. 113, 78 N. W. 374. usurious; Vermont Loan &c. Co. v. *" Barker v. International Bank, 80 HofEman, 5 Idaho 376, 49 Pac. 314, 111. 96. See also Leonard v. Villars, 37 L. R. A. 509, 95 Am. St. 186. 23 111. 377. § 656 VOID AND USURIOUS MORTGAGES 1084: payments, taken together, exceed the interest due, and then the sur- plus is to be applied toward discharging the principal, and interest is to be computed on the balance as aforesaid." This is the rule generally adopted in this country.*^ What is known as the Connecticut rule is adopted in some states. By this rule, interest is reckoned upon the principal up to the liquidation of the indebtedness, and then the in- terest on payments up to the same time, and this amount is deducted from the principal and interest. In computing interest upon a note with interest payable annually, intermediate payments made on account of the interest accruing, but not yet due, should be deducted at the end of the year, without any allowance of interest upon them ; but rests should not be made at the time of such intermediate payments, as that would result- in giviug compound interest upon the loan.*^ It is held that a mortgage should not be declared void as usurious where one method of computing in- terest showed usury and another method did not.*^ Thus the taking of interest for a portion of a year, on the principle that a year con- sists of three hundred and sixty days, or twelve months of thirty days each, is not usurious if resorted to in good faith as furnishing an easy method of computation.** § 656. General rule and exceptions as to construction and validity of contract. — The general rule undoubtedly is, that the law of the place where the contract is executed governs as to the construction and validity of it; but there is this well-recognized exception to the rule, or qualification of it, that, where the contract is to be performed in another place, then the Ikw of the place of performance will govern.^ When the mortgage debt is by its terms made payable in the state where the land is situated, though the mortgage was executed in an- other state, the contract, so far as it is personal, is to be interpreted by the laws of the place of performance.^ But the place where the mortgage is made payable may be different from the place where the land is situated; and the mortgage may have been executed in still a "McQueen v. Whetstone, 127 Ala. ^Junction R. Co. v. Bank of Ash- 417, 433, 30 So. 548; Blum v. Mitch- land, 12 Wall. (U. S.) 226, 20 L. ed. ell, 59 Ala. 535; Wallace v. Glaser, 385; Morgan v. New Orleans, Mobile 82 Mich. 190, 46 N. W. 227; Payne &c. R. Co., 2 Woods (U. S.) 244; V. Avery, 21 Mich. 524. Lindsay v. Hill, 66 Maine 212, 22 "Townsend v. Riley, 46 N. H. 300. Am. Rep. 564; Little v. Riley, 43 N. ""Culmer Paint &c. Co. v. Gleason H. 109; Parham v. Pulliam, 5 Coldw. (Utah), 130 Pac. 66. (Tenn.) 497. "* Patten V. Bank of La Fayette, ' Duncan v. Helm, 22 La. Ann. 418. 124 Ga. 965, 53 S. E. 664, 5 L. R. A. (N. S.) 592. 1085 USURIOUS MORTGAGES § GSY third place, and the question arises, By what law is the mortgage then to be governed ? "Obligations, in respect to the mode of their solemni- zation," says Mr. Wharton,'' "are subject to the rule locus regit actum; in respect to their interpretation, to the lex loci contractus ; in respect to the mode of performance, to the law of the place of performance. But the lex fori determines when and how such laws, when foreign, are to be adopted, and, in all cases not specified above, supplies the applica- tory law." Mr. Justice Hunt, in a comparatively recent case before the Supreme Court of the United States, after quoting the rule as above laid down, himself states it as follows:* "Matters bearing upon the execution, the interpretation, and the validity of a contract are de- termined by the law of the place where the contract is made." Matters connected with its performance are regulated by the law prevailing at the place of performance. Matters respecting the remedy, such as the bringing of suits, admissibility of evidence, statutes of limitation, depend upon the law of the place where the suit is brought."* § 657. What law governs. — The law of the state governing the contract itself will determine the validity of a contract, secured by a mortgage made in one state upon lands in another state, so far as the usury laws affect it. If the loan is to be repaid in the state where it is made, the contract will be governed by the laws of that state, even when secured by a mortgage of land situate in another state.^ If nothing be said about the place of payment, the contract is pre- sumably payable where the parties reside and the contract is made, although the land be situated in another state; and the validity of the contract would be determined by the laws of the place of contract." Thus where a mortgage on land in Wyoming was executed in Cali- fornia to secure a note executed there, and the parties all resided there, » Conflict of Laws, § 401. 3 Kent Com. 460; Story's Conflict * Scudder v. Union Nat. Banlt, 91 of Laws, §§ 287, 292, 293. See also U S 406 23 L. ed. 245. Banlt v. Doherty, 42 Wasti. 317, 84 '^Gault V. Equitable Trust Co., 100 Pac. 872, 4 L. R. A. (N. S.) 1191. Kv 578 38 S W. 1065. See also Bank ' Cope v. Alden, 53 Barb. 350, affd. V Doherty, 42 Wash. 317, 84 Pac. 41 N. Y. 303 (the action was for sur- 872 4 L r' A (N S ) 1191. plus money). See also Reimsdyk v. "LaSelle'v Woo'lery, 14 Wash. 70, Kane, 1 Gail. (U. S.) 371; Fitch v. 53 Am St 855, 44 Pac. 115. Remer, 1 Flipp. (U. S.) 15; Cub.- ' Commercial Bank v. Auze, 74 beage v. Napier, 62 Ala., 518; Dob- Miss 609 21 So. 754; Brown v. Free- bin v. Hewett, 19 La. Ann. 513; land" 34 Miss 181; Cope v. Wheeler, Blydenburgh v. Cotheal, 5 N. J. Eq. 41 N y 303 '53 Barb. 350, 46 Barb. 631; Williams v. Fitzhugh, 37 N. Y. 979- Mills v' Wilson, 88 Pa. St. 118; 444; Williams v. Ayrault, 31 Barb ke''i;nedy v. Knight, 21 Wis. 340; (N. Y.) 364. Xewman v. Kershaw, 10 Wis. 333; § 657 VOID AND USURIOUS MORTGAGES 1086 and no place of payment was designated either in the note or mort- gage, it was held in a suit to foreclose brought in Wyoming that the law of California governed in determining the legality of considera- tion.* If no place of payment be named, and the mortgagee reside in the state in which the land lies, and the mortgage is there delivered and the loan received by an agent of the mortgagor who resides in another state, the contract will be governed by the law of the former state. ^* But the parties may contract with reference to the law of a state other than that where the land is situated, and, if the note or mortgage be made payable in that state, the law of that state will govern in the construction and legal effect of the contraet.^^ The parties may stipu- late for interest with reference to the laws of either the place of con- tract or the place of payment, so long as the provision be made in good faith, and not as a cover for usury.^^ A corporation chartered in the state of New York was authorized to lend money on bond and mortgage of real estate situated within the United States, at a rate of interest not exceeding the legal rate. This corporation loaned money upon mortgages of land situate in the state of Illinois at nine per cent, per annum, which the law of that state permitted, although the highest rate of interest permitted by the laws of New York was seven per cent. It was held that the mortgage was not usurious, the rate of interest being governed by the law of the state of Illinois. Mr. Justice Harlan, delivering the judgment of the Supreme Court of the United States, said :^^ "The general statute of New York had for its object to regulate the rate of interest upon loans there made, and not the rate upon loans made elsewhere. That state did not assume to fix the maximum of compensation to be paid to the lender for the use of money in other states. * * * The legal rate referred to in the corporation's charter is the rate established by the law of the place where the contract of loan is made. This view is sup- "Conradt v. Lepper. 13 Wyo. 473, Ky. 578, 36 S. W. 1065; Townsend 81 Pac. 307. V. Riley, 46 N. H. 300; Peck v. "Mills V. Wilson, 88 Pa. St. 118; Mayo, 14 Vt. 33, 39 Am. Dec. 205. "Slacum V. Pbmeroy, 6 Cranch ''United States Mortgage Co. v. (U. S.) 221, 3 L. ed. 205; Fitch v. Sperry, 138 U. S. 313, 34 L. ed. 969, Remer, 1 Flipp. (U. S.) 15; Nicli- 11 Sup. Ct. 321, citing Sheldon v. ols V. Cosset, 1 Root (Conn.) 294; Haxtun, 91 N. Y. 124; "Wayne County Duncan v. Helm, 22 La. Ann. 418; Savings Bank v. Low, 81 N. Y. 56G; Robinson v. Bland, 2 Burr. 1077. Pratt v. Adams, 7 Paige (N. Y.) See also Oregon &c. Trust Co. v. 615. See also Tilden v. Blair, 21 Rathbun, 5 Sawyer (U. S.) 32; Bu- Wall (U. S.) 241, 22 L. ed. 632; chanan v. Drovers' Nat. Bank, 55 Scudder v. Union Nat. Bank, 91 U. Fed. 223. S. 406, 23 L. ed. 245. " Gault V. Equitable Trust Co., 100 1087 USURIOUS MORTGAGES § 658 ported by those decisions in Few York which hold, in respect to loans made in other states, that the rate of interest allowed by the state where the contract of loan is made will be respected by the courts of New York, although such rate is in excess of that fixed by its own laws, and although, in some of the cases, one of the parties to the contract, the lender, was a resident of that state." When a contract is made payable in another state for the purpose of evading the usury laws of the state where the contract is executed, the question is not which law shall govern in executing the contract, but which shall decide the fate of the security. Unquestionably it is the law of the place of contract.^* By statute in Michigan the interest on mortgages may be made pay- able out of the state at such place as the parties may agree upon, al- though the rate of interest in such place may be less than in this state; and the rate of interest reserved is not afEected by the laws of the place where payment is to be made.^^ § 658. Mortgage debt payable in state other than where land situ- ated. — But the laws of another state can not be imported into a contract by a mere mental operation or understanding of the parties, for the purpose of making the character of the loan different from what it is under the law of the place of contract. A mortgage was made in New York, where both of the parties to it resided, of land situate in Wisconsin, and interest was reserved at the rate of twelve per cent., which was legal in the latter, but not in the former state. The only pretext that the loan was made with reference to the law of Wisconsin was that the mortgagor had money due to her there at twelve per cent, interest, which the borrower there desired to retain, and therefore he was willing and agreed to pay that rate for money borrowed in New York to relieve temporary wants. But the loan be- ing made in New York, where it was also to be repaid, and the use of the money being unrestricted, the reason why the borrower was willing to pay more than lawful interest was immaterial. The trans- " Andrews v. Pond, 13 Pet. (U. S.) U. S. 384, 35 L. ed. 786, 12 Sup. Ct. 65, 10 L. ed. 61; Mix v. Madison Ins. 1. In South Carolina a statute pro- Co., 11 Ind. 117; Meroney v. Atlanta vides that the rate of interest upon Nat. B. &c. Assn., 112 N. Car. 842, mortgages of land within the state 17 S. E. 637. shall be governed by the laws of "Compiled Laws of Mich. 1871, that state without regard to the pp. 541, 542; Howell's Stat. 1913, ch. laws of the state in which the debt 37, §§ 2878, 2879. A similar statute is made payable. Laws 1898, p. 747, in Illinois. Act 111. Feb. 12, 1857, §1; Mutual Aid L. Ins. Co. v. Logan, and Feb. 14, 1857, § 14. See also 55 S. Car. 395, 33 S. E. 372. Fowler v. Equitable Trust Co., 141 § 659 VOID AND USURIOUS MORTGAGES 1088 action -was, therefore, governed by the laws of New York, under which the mortgage was usurious.^" The same decision was reached in a case where the facts were substantially the same, except that the mortgagor resided in Ohio, where the mortgaged lands were situated. The mort- gage was executed in New York, and was made payable there; and the contract was therefore governed by the laws of that state.^'' A like decision was made in Ohio with reference to a loan negotiated in the state of New York, where the money was advanced, and a note and mortgage payable there taken as security; although the mortgage covered lands in Ohio, it was held that the laws of the state of New York relating to usury were applicable to the transaction.'* There are numerous cases holding that the lex loci contractus gov- erns when the contract is not payable elsewhere.^' This rule governs in respect to usury, unless the parties, by the express terms of their contract, have in view a different place.^" § 659. Contract valid where made but invalid in place of perform- ance. — A contract made in a state where it is valid, to be performed in another where it would be invalid, may after all be held valid by referring it to the law of the state where it was made.-' The question which law shall govern depends upon the law applicable to the con- ^"Coe V. Wheeler, 41 N. Y. 303, 53 Bigelow v. Bumham, 83 Iowa 120, Barb. 350, 46 Barb. 272. A mort- 49 N. W. 104, 32 Am. St. 294; Hart gage was made in Tennessee, by v. Wills, 52 Iowa 56, 2 N. W. 619, 35 residents of that state, of land situ- Am. Rep. 255; Templeton v. Sharp, ate in Mississippi, to secure a loan 10 Ky. L. 499, 9 S. W. 507; New made by a corporation in New York Security &c. Co. v. Davis, 96 York, in which state the notes were Md. 81, 53 Atl. 669; Jones v. Rider, made payable. The notes were usu- 60 N. H. 452; Watson v. Lane, 52 rious, both in Tennessee and in New N. J. L. 550, 20 Atl. 894, 10 L. R. A. York. There was a recital in the 784; Curtis v. Leavitt, 15 N. Y. 9; deed of trust that it, and the notes Grand Rapids School Furniture Co. secured thereby, were made in Mis- v. Hammerstein, 45 N. Y. St. 863. 18 sissippi, where they were not usuri- N. Y. S. 766; Mills v. Wilson, 88 Pa. ous, and should be construed accord- St. 118; Clark v. Searight, 135 Pa. ing to the laws of that state. It was St. 173, 19 Atl. 941, 20 Am. St. 868. held that such recital was void, "Glover v. Equitable Mtg. Co., 87 since the laws of a state, and access Fed. 518, 31 C. C. A. 105; Ashurst to its courts, are not the subject of v. Ashurst, 119 Ala. 219, 24 So. 760; contract. American Mtg. Co. v. Jef- Lanier v. Union Mtg. Bkg. &c. Co., ferson, 69 Miss. 770, 12 So. 464. 64 Ark. 39, 40 S. W. 466; Smith v. " Williams v. Fitzhugh, 37 N. Y. Parsons, 55 Minn. 520, 57 N. W. 311. 444. "Depau v. Humphreys, 20 Mart. "Lockwood V. Mitchell, 7 Ohio St. (La.) 1; Pratt v. Adams, 7 Paige 387, 70 Am. Dec. 78. (N. Y.) 615; Chapman v. Robertson, "» United States Mtg. Co. v. Sperry, 6 Paige (N. Y.) 627; Fisher v. Otis, 138 U. S. 313, 34 L. ed. 969, 11 Sup. 3 Chand. (Pa.) 83, 3 Pinn. 78; Peck Ct. 321; Kuhn v. Morrison, 75 Fed. v. Mayo, 14 Vt. 33, 39 Am. Dec. 205. 81; Moore v. Davidson, 18 Ala. 209; 1089 USURIOUS MOETGAGES S 659 tract itself, and not upon the fact that the mortgage, considered alone, would be valid by the law of the state where the lands lie. "The place of payment may, in the absence of any more controlling circumstances, be sufficient to show that the parties intended to refer their contract to the law of that place. But if the loan was actually made in another state, the money to be used there, the parties residing there, the se- curity given there, and if by that law the contract would be valid, and it would be invalid by the law of the place of payment, these facts may well be held to have a stronger influence in showing the intention than the mere place of payment, and, the rule itself resting upon that intention, where the intention is rebutted the lule should cease."^^ As a general rule the law of the place of payment governs in re- spect to usury if the interest reserved is not usurious by that law, but is by the law of the place where the contract was made and there are no circumstances sufficient to rebut the presumption that the parties intended to contract with reference to the former law or to show that the place of payment was designated as a mere cover for usury.^^ Where a mortgage of land in Michigan was executed there, but made payable in New York, where the mortgagee then resided, and the rate of interest was ten per cent., which was usurious in the latter state but was valid in the former, it was held that the mortgagee might elect to proceed to enforce the mortgage in Michigan ; for it was to be presumed that the contract was made with reference to the in- =2 Newman v. Kershaw, 10 Wis. opinion, said: "For the court to 333, per Paine, J. See also Vaccaro hold, because the note was not ac- V. Asher (Miss.), 11 So. 531. A tually signed and indorsed in the debtor living in New York was in- District of Columbia, where the debted to a resident of Washington agreement it evidenced was made, for money loaned, as evidenced by or because it was made payable in a note payable in the latter city, another state, that the contract was The parties afterward met in Wash- void as contravening the usury laws ington, and arranged for a renewal of the place of signature and of pay- of the note by giving a new note, ment, would be intolerable and bearing the same rate of interest against decisions of this court, as the first note, though it was made Western Transp. Co. v. Kilderhouse, payable at a bank in New York. 87 N. Y. 430; Wayne Co. Sav. Bank The new note was signed by the v. Low, 81 N. Y. 566; Sheldon v. debtor and indorsed by a surety in Haxtun, 91 N. Y. 124. I think the the state of New York, and for- plaintiff was entitled to recover as warded to the creditor in Washing- upon a contract made under the gov- ton and the old note was there- ernment of the laws of the District upon surrendered. It was held that of Columbia, and therefore valid the question of usury was to be de- and enforcible in any state." termined by the law in Washington, ^ Junction R. Co. v. Bank of Ash- where the note was not usurious, land, 12 Wall. (U. S.) 226, 20 L. ed. and not by the law of New York. 385; Peyton v. Heinekin, 131 IT. S. Staples V Nott, 128 N. Y. 403, 28 cl, Appx., 20 L. ed. 679; Hamilton N. E. 515, Gray, J., delivering the v. Fowler, 99 Fed. 18, 40 C. C. A. .*' 69— Jones Mtg.— Vol. I. § 659a VOID AND USUEIOUS MORTGAGES 1090 terest laws of that state.^* In like manner, where an application for a loan from a foreign corporation was made to its agents in Alabama, and the corporation paid the money to bankers in New York, who sent it to the agent, who delivered it to the borrower on the execution by him of a mortgage on land in Alabama, the mortgage being made and acknowledged in Alabama, but the mortgage notes being payable in New York, it was held that the contract was governed by the laws of Alabama.^' § 659a. Validity of contract made in one state and payable in an- other bearing highest rate payable in either. — A contract made in one state to be performed in another may bear the highest rate of in- terest payable in either, provided the parties contract in good faith, and not for the purpose of evading the laws of the state where such interest is not lawful.^' If the interest allowed by the laws of the place of performance is higher than that permitted at the place of the delivery of the contract, the parties may stipulate for the higher interest without incurring the penalties of usury.^'' A note made in Wyoming to a resident of that state by a corporation of that state having most of its property and transacting the greater part of its business in Nebraska, secured by a mortgage of land in the latter state, may lawfully bear a rate of in- terest allowed by the laws of Wyoming, but usurious in Nebraska, it appearing that the loan was made in good faith, and not as a device for securing interest in excess of that allowed by the laws of Ne- braska.^^ § 660. The lex rei sitae does not control, — The authorities gen- erally do not regard the circumstance that the loan is secured by mort- gage in determining whether it be usurious.^^ Thus a loan made in 47; Wittkowski v. Harris, 64 Fed. =" Ames v. Benjamin, 74 Minn. 335, 712. 77 N. "W. 230; Long v. Long, 141 "Fitch V. Remer, 1 Flipp. (U. S.) Mo. 352, 44 S. W. 341; Central Nat. 15. See full examination of the Bank v. Cooper, 85 Mo. App. 383. question by McLean, J., in this case. ^ Coad v. Home Cattle Co., 32 ^American Mtg. Co. v. Sewell, 92 Nebr. 761, 49 N. W. 757. Ala. 163, 9 So. 143. The facts in "In Connor v. Bellamont, 2 Ark. the case of Farrior v. Security Co., 382, Lord Hardwicke allowed Irish 88 Ala. 277, 7 So. 200, were almost interest upon a debt contracted in identical. England, but secured by a bond and » Miller V. Tiffany, 1 Wall. (U. S.) mortgage executed in Ireland. In 298, 17 L. ed. 540; Brown v. Finance Stapleton v. Conway, 3 Atk. 727, the Co., 31 Fed. 516; Townsend v. Riley, same eminent judge said that, if a 46 N. H. 300; Kilgore v. Dempsey, contract is made in England for a 25 Ohio St. 413. See also Smith v. mortgage of a plantation in the Muncie Nat. Bank, 29 Ind. 158. West Indies, no more than legal in- 1091 USURIOUS MOETGAGES § 660 New Hampshire, upon land situated there, may be made payable in New York, and may provide for the payment of interest at the rate of seven per cent., being the rate allowed there, though this be a higher rate than that allowed by the laws of New Hampshire, if tliis arrange- ment be made in good faith, and not for the purpose of evading the laws of New Hampshire; and such mortgage, with interest at the rate so provided, will be enforced by foreclosure of the mortgage in New Hampshire.^" Although the mortgage be by express terms pay- able in New Hampshire, the parties may after its maturity agree that the interest shall be paid "as by law established in New York," where the mortgagor then resided; and such agreement made in good faith will be enforced in New Hampshire. "It is true," said Mr. Justice Bellows, "that in many cases interest may properly be regarded as a mere incident of the debt, and so payable only where the principal is payable ; but this is by no means always the case, for by express stipu- lation the interest may become payable by itself, and a suit maintained for it before the principal becomes due, as in the case of a contract to pay interest annually; so in the case of bonds with coupons at- tached ; and we see no objection to the parties being allowed to fix the amount of interest, and the time and place of payment of it, as they may all other particulars of the contract, provided it be done in good faith, and with no design to evade the usury laws."^^ A mortgage made in Ohio upon land in that state, but made pay- able in New York with interest at the rate of ten per cent., which is a legal rate in the former state but not in the latter, was treated as a contract made in Ohio with reference to the laws of that state, al- though the mortgagee resided in Connecticut, and the loan was made by means of a draft paid in New York.'^ A like decision was also made in Wisconsin, in a suit to foreclose a mortgage of lands situate in that state, made in New York, where the parties resided, and where the loan was made payable; therefore the laws of that state were held to govern the contract as to its validity and effect ;?= but the decision would have been otherwise in case the terest shall be paid upon such mort- llngton, 111 Fed. 578, 49 C. C. A. gage; and a covenant in it to pay 446, 55 L. R. A. 933. eight per cent, interest is within " Townsend v. Riley, 46 N. H. 300. the statute of usury, notwithstand- " In Townsend v. Riley, 46 N. H. ing that was the rate of interest 300. where the land lies. See also De '"Roelofson v. Atwater, 1 Disney Wolf v. Johnson, 10 Wheat. (U. S.) (Ohio) 346. 367. 6 L. ed. 343; Mcllwaine v. Bl- »» Newman v. Kershaw, 10 Wis. 333. § 661 VOID AND USUHIOUS MORTGAGES 1093 mortgage had been made payable in Wisconsin, or perhaps had been made there.^'* But the courts of New York refused to declare void a mortgage made in Minnesota upon land in that state, with interest at the rate of twenty-five per cent, per annum, although the mortgage debt was made payable in New York ; for the rate of interest was considered as fixed with reference to the place of contract.^° The law of the place of contract, or of the place of performance, determines the question whether the mortgage be valid or usurious, irrespective of the place where the land which is the subject of the mortgage is situated.^® The location of the land mortgaged may per- haps in some cases be considered in connection with the place of con- tract, or the place of performance, in determining whether the parties contracted with reference to the law of the one place or of the other; but on the authorities this seems to be all the consideration that can be given to this circumstance.^^ It is to be noted in this connection, however, that the fact that a note is secured by a mortgage on land is oftentimes of importance in determining the proper law governing the personal obligation, and therefore the mortgage itself. Thus in many cases involving the con- tracts of foreign building and loan associations, the fact that the loan was secured by a mortgage on land situate in the state of the forum has been held, in connection with other circumstances, sufficient to show that the parties, in making the loan payable at the domicil of the association, and in some instances in expressly stipulating that it was made with reference to the law of the domicil, acted in bad faith and for the purpose of evading the local law.^* §661. What law governs as to title and enforcement of lien. — The lex rei sitae governs as to proceedings to foreclose a mortgage, the «* Kennedy V. Knight, 21 Wis. 340, 727; Connor v. Bellamont, 2 Atk. 94 Am. Dec. 543. 382. ^ Balme v. Wombough, 38 Barb. " See Kennedy v. Knight, 21 Wis. (N. Y.) 352. 340, 94 Am. Dec. §43; Newman v. '^De Wolf V. Johnson, 10 Wheat. Kershaw, 10 Wis. 333. (U. S.) 367, 7 L. ed. 343; Andrews «■ Falls v. United States Sav. &c. V. Torrey, 14 N. J. Eq. 355; Cam- Co., 97 Ala. 417, 13 So. 25, 24 L. pion v. Kille, 14 N. J. Eq. 229; Dol- R. A. 174, 38 Am. St. 194; National man v. Cook, 14 N. J. Eq. 56; Co- Mut. Bldg. &c. Assn. v. Burch, 124 theal V. Blydenburgh, 5 N. J. Eq. Mich. 57, 82 N. W. 837, 83 Am. St. 17, 631; Varick v. Crane, 4 N. J. 311; National Mut. Bldg. &c. Assn. Eq. 128; Stapleton v. Conway, 3 Atk. v. Brahan, 80 Miss. 407, 31 So. 840, 57 L. R. A. 793. 1093 USURIOUS MORTGAGES § 661 manner and terms of sale thereunder, the terms of redemption of the land from the sale, and similar matters.^" A loan by a corporation domiciled in one state, to a citizen of an- other state, and 'secured by a mortgage on land in the latter state, has been governed in the settlement of interest on foreclosure by the law of such latter state, although the contract of loan and mortgage stipu- lates that it is solvable by the laws of the state of the domicil of the corporation, and is made with reference to its laws.*" The remedy against the mortgagor personally may be pursued wher- ever the debtor may be, and therefore suit may be brought against him in a state other than that in which the mortgaged premises are; but the lien upon the land can be enforced only in the state where the land is situated. It is a well-settled principle that title to real prop- erty must be acquired agreeably to the law of the place where it is situ- ated. This principle applies to mortgages as well as to absolute con- veyances;*^ and of course the remedy to enforce the lien must be sought where the property is. The validity of a mortgage must there- fore be determined by the law of the state where the mortgaged land is, wherever the deed may have been executed or the mortgage debt made payable.*^ '' Connecticut Mut. Ins. Co. v. Cushman, 108 U. S. 51, 27 L. ed. 648, 2 Sup. Ct. 236; Brine v. Hart- ford P. Ins. Co., 96 U. S. 627, 24 L. ed. 858; Mcllwaine v. Ellington, 111 Fed. 578, 49 C. C. A. 446, 55 L. R. A. 933. *° Binghampton Trust Co. v. Auten, 68 Ark. 299, 57 S. W. 1105, 82 Am. St. 295; National Loan &c. Assn. V. Burch, 124 Mich. 57, 82 N. W. 837, 83 Am. St. 311; Meroney V. Atlanta &c. Loan Assn., 116 N. Car. 882, 21 S. B. 924, 47 Am. St 841; Hale v. Cairnes, 8 N. Dak. 145, 77 N. W. 1010, 44 L. R. A. 261, 73 Am. St. 746; People's Bldg. &c. Assn. V. Berlin, 201 Pa. St. 1, 50 Atl. 308, 88 Am. St. 764. " Oregon & Washington T. &c. Co. V. Rathbun, 5 Sawyer (U. S.) 32; Hosford V. Nichols, 1 Paige (N. Y.) 220, per Walworth, Chancellor. See also Van Schaick v. Edwards, 2 Johns. Cas. (N. Y.) 355; Boehme V. Rail (N. J.), 26 Atl. 832, per Green, V. C; Bentley v. Whitte- more, 18 N. J. Eq. 366. In the lat- ter case an assignment for the ben- efit of creditors was made in New York, where the parties resided, of land situated in New Jersey. The assignment was good under the laws of New York, but was contrary to the law of New Jersey, which pro- hibited preferences, and, so far as it affected lands there, was held to be void. Chancellor Zabriskie says: "It is well settled in England and the states where the common law is in force that the transfer and descent of real property Is governed by the law of the state in which it lies. This rule is without exception, and I am not aware of any case or any authority in which it is ques- tioned." '" In support of this position are cited the cases in the last note and the following: Goddard v. Sawyer, 9 Allen (Mass.) 78; cited and ap- proved in Sedgwick v. Laflin, 10 Allen (Mass.) 430, per Gray, J.; Lyon V. Mcllvaine, 24 Iowa 9. In Goddard v. Sawyer, 9 Allen (Mass.) 78, a mortgage was made in New Hampshire, where both parties re- sided, of land in Massachusetts, to indemnify the mortgagee against a liability to arise subsequently. § 661 VOID AND USUKIOUS MORTGAGES 1094 In regard to these eases it is to be observed that Hosford v. Nichols was decided upon the ground that the contract was in fact executed in New York, where the land was situated, and therefore is no author- ity for the position that the law of the place where the- land is situated, rather than the law of the place of contract, governs as to usury. The later case of Chapman v. Eobertson^^ has often been criticized, and, so far as it holds that the lex rei sitae governs as to usury, it has been repeatedly overruled by the later cases in New York. That case was as follows : A person residing in New York, being in England, there negotiated a loan upon the security of a bond and mortgage upon lands in New York, at the legal rate of interest in that state. It was ar- ranged that upon the return of the borrower to New York he should execute and record the mortgage, and that upon the receipt of it in England the mortgagee should deposit the money with the mortgagor's bankers in London for his use. This was done accordingly. The mort- gage was usurious under the laws of England; but it was held, in a suit to foreclose the mortgage, that the usury laws of England could not be set up in defense. Chancellor Walworth said: "Upon a. full examination of all the cases to be found upon the subject, either in this country or in England, none of which, however, appear to have decided the precise question which arises in this cause, I have arrived at the conclusion that the mortgage executed here, and upon property in this state, being valid by the lex situs, which is also the law of the domieil of the mortgagor, it is the duty of this court to give full efieet to the security, without reference to the usury laws of England, which neither party intended to evade or violate by the execution of a mortgage upon lands here."** Such a mortgage being invalid un- which declares that a married wom- der the laws of New Hampshire, an over eighteen years of age may this Invalidity was set up to an make a valid contract, although the action in Massachusetts to foreclose married woman in this case, hy the the mortgage. The court — Metcalf, law of her domieil, was incapable J., delivering the opinion — say: of contracting. "The question as to the validity of ""6 Paige (N. Y.) 627, 31 Am. Dec. the mortgage in this case is to be 264. decided by the law of this state, " Chapman v. Robertson, 6 Paige within which the mortgaged prem- 627, 31 Am. Dec. 264. See also New ises are situate, and not by the law Eng. Mtg. Co. v. McLaughlin, 87 Ga. of New Hampshire, where it was 1, 13 S. E. 81; Dugan v. Lewis, 79 executed, and where the parties Tex. 246, 14 S. W. 1024, 23 Am. St. thereto resided." In Sell v. Miller, 332; American Mortg. Co. v. Sewell, 11 Ohio St. 331, a mortgage on land 92 Ala. 163, 9 So. 143. In the latter In Ohio, executed by a nonresident case Coleman, J., delivering the married woman over eighteen years opinion, said: "We are aware that of age, but under twenty-one, was the soundness of the reasoning in held good under a statute of Ohio the decision in 6 Paige (N. Y.) 627, 1095 USURIOUS MORTGAGES § 661 Then as to the ease of Goddard v. Sawyer, in Massachusetts, that does not relate to the contract, but rather to the form and validity of the instrument itself. The learned judge who gives the opinion refers to a case before the Supreme Court of the United States, holding that title to land by devise can be acquired only under a will duly approved and recorded according to the law of the state in which the lands lie, and in which Mr. Justice Washington says: "It is an acknowledged principle of law that the title and disposition of real property is ex- clusively subject to the laws of the country where it is situated, which can alone prescribe the mode by which a title to it can pass from one person to another." Another reference in the Massachusetts case is to an earlier case in that state, the principal bearing of which upon the case before the court is in the statement of the principle that "the title to and disposition of real estate must be exclusively regulated by the law of the place in which it is situated." The conclusion there- fore is, that, although there are some statements which would seem to support the position that the question of usury in a mortgage exe- cuted and made payable in a state other than that where the land is 31 Am. Dec. 264, has been ques- tioned, and Jones in his work on Mortgages (volume 1, §§ 660, 661), says it has been overruled. Most of the authorities which criticise the principle of law laid down generally concede the correctness of the con- clusion of the learned chancellor who rendered the decision in the case of Chapman .v. Robertson, Judge Story (Confl. Law), in his criticism (§ 293c), referring to the case of Chapman v. Robertson, says: 'The decision itself seems well supported in point of prin- ciple; for the parties intended that the whole transaction should be in fact, as it was in form, a New York contract, governed by the laws thereof, and the repay- ment of the deit there to Be made.' The italics are ours. There are no facts in the case, except those which arise from the making of the note and mortgage in New York, which authorize the assumption that the money was to be repaid in New York. The two differ as to the place of payment, Story holding it to be a New York contract, and consequently the place of payment presumptively was in New York; the former holding that, as no place of payment was fixed, the law fixed it in England, but further held that although, as a mere personal con- tract, it would be wholly inopera- tive until it was received by the lender in England, where the money was then to be deposited with the borrower's banker for his use, yet, on account of the character of the property, being real or heritable property, and the further fact that the mortgage was executed in New York upon property in that state, and being valid by the lex situs, which was also the law of the dom- icil of the mortgagor, it was the duty of the court to give full effect to the security, without- reference to the usury laws of England, which neither party Intended to evade, by the execution of the mortgage upon the lands in New York." The case of Dugan v. Lewis was very similar to the Alabama case above consid- ered. The Texas case regarded New York as the locus contractus and locus solutionis, and followed Chap- man V. Robertson, 6 Paige (N. Y.) 627, 31 Am. Dec. 264, citing other authorities sustaining it. Judge Henry says there is no reason why the making of the contract in one state instead of in the other, nor § 663 VOID AND USUEIOUS MORTGAGES 1096 situated is to be determined by the laws of the state where the land is situate, there is really no authority for this position.*^ § 662. What laws govern as to form and validity of mortgage deed — ^As to parties. — But as to the form and validity of the mortgage deed as a conveyance, the law of the place where the land is situated must always govern, though the mortgage was executed in another state.*' Thus, if the laws of the state where the lands are situate rec- ognize the validity of a mortgage by the deposit of the title deeds by a debtor with his creditor, then the laws of that state govern as to the lien, although the transaction be had in another state.*'' But if such a mortgage be not recognized in the state where the lands are, the fact that a deposit is made in a state or country where a mortgage in this form is recognized will not enable the creditor to enforce it against the lands. And so, if the laws of a state prohibit the making of a mort- gage to secure future advances or liabilities, a mortgage in this form of land in that state would not be recognized there, although made in a state where such a mortgage would be valid ; and, on the other hand, such a mortgage made in the former state, where it would not be valid, but covering lands in a state where such a mortgage is valid, would be enforced in the latter state, because it is a valid conveyance there.** The capacity of the parties to make a mortgage must be governed by the laws of the state where it is executed. A mortgage executed in the state of Indiana by a married woman domiciled in that state, on real estate situate in Ohio, to secure an obligation as surety to be why the making it payable in one removed to New Jersey and exe- instead of in the other, should have cuted a chattel and real estate mort- a controlling influence over the ques- gage on property within the latter tion. Doing either will, in the ah- state to resident creditors, to secure sence of other evidence, serve to the payment of debts contracted show their purpose and control the and payable in that state. The result. But not so when they other- mortgage was held valid in New wise distinctly provide, or when, Jersey, although it would be invalid from other facts, their intention can in New York, because the execution be more satisfactorily ascertained. of it was contrary to a general stat- ■"'The only other case referred to ute of that state prohibiting such is Hosford v. Nichols, 1 Paige (N. corporation from transferring its y.) 220. See ante § 657. property to creditors in contempla- "Post v. First Nat. Bank, 138 III. tion of insolvency. "The law of its 559, 28 N. B. 978; Dawson v. Hay- charter having given the company den, 67 111. 52; Ricks v. Goodrich, the general power of mortgage, the 3 La. Ann. 212; Holt v. Knowlton, exercise of that power is subject to 86 Maine 456, 29 Atl. 1113; Pessen- the laws and policy of the state in den V. Taft, 65 N. H. 39, 17 Atl. 713; which it lawfully holds the mort- Boehme v. Rail (N. J.), 26 Atl. 832 gaged real estate." Per Green, V. C. (quoting text) ; Nathan y. Lee, 152 " Griflln v. Griffin, 18 N. J. Eq. 104. Ind. 232, 52 N. E. 987. In this case « Goddard v. Sawyer, 9 Allen a manufacturing corporation, char- (Mass.) 78. tered under the laws of New York, 1097 USURIOUS MORTGAGES § 663 performed in the state of Indiana, where she is without capacity to make such a contract, is void in Ohio, as well as in Indiana.*' '§ 663. Pleading and proof of usury laws of foreign state. — To avail of the usury laws of another state as a ground for defense, they must be distinctly set up in the answer, and at the hearing must be proved as matters of fact.^" Under an answer setting up usury with- out any more specific allegation, and without any averment showing that the contract is governed in this respect by the laws of another state, the defense is limited to the statutes against usury of the state where the action is pending. ^^ It is held that where a defendant in a suit on notes has had no opportunity to plead a statute relative to usury, he is entitled to offer in evidence the appropriate statute without having pleaded it.^^ Until otherwise proved, the laws of another state in regard to usury will be presumed to be the same as those of the lex fori.^^ When in the course of the pleadings it is discretionary with the court to allow the defense of usury to be set up, the court may refuse to allow the statute of another state whose laws govern the contract to be pleaded, when that statute makes the mortgage wholly void, such a defense being regarded as unconscientious.^* The law in force at the time of the delivery of a mortgage governs its validity or construction, so far as these are effected by statute. '^^ A mortgage made in Alabama during the Civil War was enforced in the courts of that state, acting under the Constitution and laws of the United States, after the close of the war, although the considera- tion of it was a loan of Confederate treasury notes,^^ on the ground that it was valid under the government de facto which then existed. A stay law, making void and of no effect all mortgages and deeds of trust for the benefit of creditors thereafter executed, whether regis- " Evans v. Beaver, 50 Ohio St. ^^Casner v. Hoskins, 64 Ore. 254, 190, 33 N. E. 643, 40 Am. St. 666; 130 Pac. 55. Lockwood V. Mitchell, 7 Ohio ^t. "'Van Auken v. Dunning, 81 Pa. 388; Story Confl. Laws, §§ 65, 66, St. 464. 66a, 242, 243. " Coming v. Ludlum, 28 N. J. Eq. "Andrews v. Torrey, 14 N. J. Bq. 398. 355; Campion v. Kilie, 14 N. J. Eq. "Smith v. Green, 41 Fed. 455; 229; Dolman v. Cook, 14 N. J. Eq. Latrobe v. Hulbert, 6 Fed. 209; 01- 56; Hosford v. Nichols, 1 Paige (N. son v. Nelson, 3 Minn. 53. Y.) 220; Millard v. Truax, 73 Mich. "* Scheible v. Bacho, 41 Ala. 423, 381, 41 N. W. 328, 22 Am. St. 705; and cases cited. See to the contrary, Klinck v. Price, 4 W. Va. 4, 6 Am. however, Stillman v. Looney, 3 Rep. 268. Coldw. (Tenn.) 20. See ante, § 617. " Campion v. Kille, 14 N. J. Eq. 229. § 663 VOID AND USUEIODS MORTGAGES 1098 tered or not, does not apply to a mortgage executed prior to the passage of the act, but registered after its passage." Being valid when made, it is not competent for the legislature afterward to make it invalid.^^ A mortgage made at a time when there is no statute limit- ing the rate of interest is a valid security, although the rate of interest be extortionate ; and its validity is not affected by a subsequent statute or change in the Constitution of the state limiting the rate of inter- est.'*'' Although the law of the place of contract governs as to the question of usury, yet a law of the place of contract relating to the manner of enforcing the remedy is not binding upon the courts of another state. Thus a statute of the state of New York authorizing a borrower to obtain a cancelation of securities without payment, upon the ground of usury, will not be enforced in Massachusetts.^" " Harrison v. Styres, 74 N. Car. construed in New York that it is 290. held not to apply to an assignee in '^Harrison v. Styres, 74 N. Car. bankruptcy of the borrower: Wheel- 290. ook v. Lee, 15 Abb. Pr. (N. S.) (N. =» Newton v. "Wilson, 31 Ark. 484; Y.) 24, revg. 64 N. Y. 242; nor to a Jacoway v. Denton, 25 Ark. 625. purchaser of the equity of redemp- " Matthews v. Warner, 112 U. S. tion. Bissell v. Kellogg, 65 N. Y. 600, 28 L. ed. 851, 5 Sup. Ct. 432. 312. That statute is so strictly