carrying on a similar business." In the case of a limited company the scope of the company's business must not be gauged by their declared objects as stated in the memorandum of association if there is evidence that they do not in fact do the particular class of business or work in question either for themselves or for others. (Waites v. Franco-British Exhibition, 2 B. W. C. C. 199; Hockley v. West London Timber and Joinery Co., supra.) Another point that sometimes arises is as to what are premises" within the meaning of sub-section 4 of section 4. In Andrews v. Andrews and Mears ([1908] 2 K. B. 567; 77 L. J. K. B. 974) the claim arose under the following circumstances: A builder and contractor undertook to execute certain work in connection with a paving job near the Albert Hall, Knightsbridge, which consisted of carting sand to the place near the Albert Hall and carting rubbish away to a shoot which he had at Stamford Green. He sub-contracted for the removal of the rubbish, the sub-contractor being free to tip it wherever he pleased. A carter in the employ of the subcontractor, while conveying the rubbish to a shoot at St. Quintin's Avenue, went to sleep and fell off the cart on to the road, at a point about two miles from the Albert Hall and was killed. The Court of Appeal held (reversing the decision of the County Court Judge) that a public road is not within the meaning of the word "premises," and that the dependants of the workman had, therefore, a claim only against the sub-contractor. A vessel may, however, be "premises" within sub-section 4. See Beacon Life and Fire Assurance Co. v. Gibb (1 Moore, P. C. (N.s.)73; 9 Jur. (N.S.) 185) and Dittmar v. Wilson, Sons & Co. (supra). The Equitable Right of . . The notion of the equity of redemption was derived from the Roman law, and . . . is purely the creature of Courts of Equity." Story Eq. Jur. (4th ed.) vol. ii. p. 341. The modern effect of the equitable right has been much canvassed. The original purpose of the rule seems quite plain, but, owing to the operation of a law in no way connected with it, a sort of intermixture has occurred, with the result that interpretations have been laid on the equitable right of redemption which are not consistent with or correlative to the real reason of the rule at all. Looking at the case law, the impression is formed that the rule has from time to time gone through a process of change and degrees of application. Nothing is more erroneous. The rule is the same to-day as in its earliest character. What in fact has happened is that other, and quite independent, laws have interposed to still further cut down the scope of the mortgage contract. This confusion has been a fertile source of a great deal of the dispute and doubt which has since the repeal of the Usury laws surrounded the subject. Indeed, the way some equity lawyers have proposed to apply the equitable rule in modern cases puts one in mind of the saying of an eminent law writer about making Equity too much a science for good conscience. For the sake of clearness and arrangement, we shall direct our consideration of the subject to four matters: 1. The contractual right of redemption; 2. The equitable right of redemption; 3. The Usury laws; and 4. The result of the cases since 1854. : When we talk of the contractual right of redemption, we mean simply the express right which the contract gives the mortgagor to redeem in certain events. It stood thus at common law a mortgage was notoriously an estate upon condition, the condition being that on payment by the mortgagor of the mortgage moneys and the interest at a certain time and place he took back his property, but if he failed so to pay he lost it. As Littleton (s. 332) says: .. it was taken away from him for ever and so dead to him upon condition. That was the contractual right of redemption. Equity resented this state of things; and whether from "piety "piety or love of fees (see per Lord Bramwell in Salt v. Marquis of Northampton, [1892] A. C. 1; 61 L. J. Ch. 49) does not now very much matter. What does matter, Equity struck at the condition and, by evolving a simple and effective rule, destroyed it. She simply added to every contract of mortgage the universal clause or provision that if and when the con tractual right to redeem was gone there should arise automatically and unavoidably an equit. able right to redeem (see Williams v. Morgan, [1906] 1 Ch. 804; 75 L. J. Ch. 480; and Kreglinger v. New Patagonia &c. Co., Ltd., [1914] A. C. 25; 83 L. J. Ch. 79), which is expressed by the maxim "Once a mortgage always a mortgage." That was the equitable right of redemption. But observe, this in no way excludes the conception of once a contract always a contract; it merely afforded a rule of construction on a certain ingredient or provision of the mortgage contract; but be it clearly understood, this is all it did. The contract, therefore, still remained the contract of the parties, and no less so because they were apprised by Equity that an additional clause was to be equitably inserted into their deed, which clause was to prevail in any conflict between it and any other clause in the agreement. So that mutatis mutandis there was no reason why, after that, the contract should be governed by any other than the rules which usually govern all contracts. It is instructive here to hearken to what Lord Eldon has said in Craythorne v. Swinburn (4 Ves. 160), that, "After a principle of Equity has been universally acknowledged, then persons acting under similar circumstances to which it applies may properly be said to act under the head of contract implied from the universality of that principle." And this is surely the plainest common sense. Hence it is deducible that the ordinary rules applicable to contract generally would be still applicable to mortgage contracts, provided always that the equitable right was maintained. And it was surely natural, if law is not to stultify itself, that that engrafted right should not be allowed to be cut down or overridden by the parties themselves. That apart, however, the contract remained unaffected. Much doubt, it is felt, would be swept away if this efficacy of the terms of the mortgage contract were properly borne in mind. And it would indeed be a strange accident if Equity were to find herself the barrier to the performance and force of a perfectly fair and reasonable bargain, openly and legitimately entered into between contracting parties. Wherefore we find Lord Justice Romer (then Justice) in Biggs v. Hoddinott ([1898] 2 Ch. 307; 67 L. J. Ch. 540) asserting that, "There is a great principle which I think ought to be adhered to by this Court (Chancery), and by every Court where it can do so; that is to say, that a man shall abide by his contracts and that a man's contracts shall be enforced as against him." Yet, it is remarkable to find that the doctrine under review, which was obviously invented to destroy the predatory rule of the common law; to enforce intention and to secure justice as between the parties, has been again. and again appealed to as an authority to defeat the intended and just terms of the mortgage contract. But clearly, before you can say that Equity intended to remove an injustice to the mortgagor only to set up in its place an injustice to the mortgagee, the strongest, plainest evidence of it must be given. And plainly, unless the terms of the mortgage contract, saving the equitable right harmless, are to be allowed validity so long as they comply with the rules of law applicable to contract, the remedy is likely to prove much worse than the disease it cured; and the unnatural situation of equity, to which we have adverted above, must ensue. And this notwithstanding, it has been strenuously insisted, and highly accepted, that the infusion of the equitable right originally was intended so far to invalidate the express agreement of the parties as to render every stipulation in the mortgage deed void which was made to continue after the repayment of the moneys lent. Which is as much as saying that any stipulation which carries the contract of the mortgage beyond the repayment and actual restoration of the mortgaged property to the mortgagor is to be regarded as subverting that inviolable equity, and so is null and void. Observe this fanciful notion of the equitable rule-the smallest intimacy with the reason of the rule surely proves it to be the highest sophistry. The case of Kreglinger (supra) has finally dissipated these erroneous notions. We will take a brief survey of the effect of the Usury laws, in order to introduce the way in which usury and redemption became confused until the original reason and operation of the equitable rule became, if not forgotten, most certainly perverted. Then we shall shortly notice the cases, to enable the reader to thoroughly grasp the scope and meaning, the effect and operation, of the rule at the present day. Long ago, when usury was in bad odour and the Legislature forebade the lending of " any sums of money for any manner of usury, increase, lucre, gain, or interest to be had, secured, or hoped for over and above the sum so lent," (Act of Edward VI.) it was illegal to reserve any collateral advantage to the mortgagee. The folly of this becoming manifest-doubtless the market in money becoming practically deadthe law relaxed. Restricted interest was allowed; but-and this is important to our subject-beyond that interest any advantage reserved to the mortgagee was usurious and open to fine and imprisonment. Not only invalid but criminal. Small wonder then that a body of cases arose which are clear authorities for the proposition that no collateral advantage, and indeed no advantage whatsoever beyond the allowed rate of interest and costs (if any), could in a mortgage contract be reserved validly to a mortgagee. And these are the cases which have erroneously been admitted into the scope of the original conception and operation of the equitable right of redemption. Consequently, when Trevor, M.R., in Jennings v. Ward (2 Vern. 520), said: 'A man shall not have interest for his money and a collateral advantage besides for the loan of it, or clog the redemption with any by-agreement," he meant two entirely distinct things. But it is easy to see how such a proposition can be converted so as to throw the whole effect on to the single subject of redemption. The two things in Trevor, M.R.'s propositions are: 1. interest and usury under the Usury Acts; and 2. the interference with the equitable right. Clearly two distinct restrictions on the mortgage contract, and in no way having the same source or the same objective. There is also another case where two such distinct rules may meet, of which Chambers v. Goldwin (9 Ves. 254, 271) is an example. There, both usury and oppression united to vitiate the contract-not any invasion of the equitable right of redemption but another kind of invasion, that of the wider principle of oppression. This latter is of course within the general principles of Equity. The Usury laws, however despite Dr. Johnson's pronouncement of them as protecting both creditor and debtor-did not work, and so we are told that, "The Public mind, having advanced in the direction of the policy advocated by Bacon above two centuries ago, at length became prepared for a still wider ,, 66 measure, and the statute 17 & 18 Vict. c. 90, after laconically reciting in the preamble that it is expedient to repeal the laws at present in force relating to usury,' repealed all the Usury Acts." "Thereupon, adds Mr. Kerr, from whose edition (vol. ii. p. 475) of Blackstone's Commentaries we are quoting, 'the natural laws which regulate the terms on which money can be borrowed are, therefore, now left to operate freely, and borrowers and lenders are amenable to no other rules than those which govern contracts in general "-[the italics are ours]. With humility we regard this as a most accurate exposition of the effect of repealing the law as to Usury. It follows that from 1854 -the date of the repeal-a mortgagor and mortgagee were enabled to bind each other in any contract of mortgage stipulating for an advantage to the mortgagee over and above the mere reservation of the interest, because cessante causâ cessat effectus. There still of course remained as they were not parcel of the Usury principles at all-two predominating features of the mortgage contract, namely the equitable right to redeem, and the principle of the contract not being oppressive or objectionable on any ground of public policy, to which latter rule all contracts give way. But beyond this the freedom of contract between a mortgagor and mortgagee was now unrestricted. Therefore, at the present day-since 17 & 18 Vict. c. 90-it is clear that, so long as the equity of redemption is not disannexed, any stipulations in the mortgage deed legitimately and fairly entered into by both parties create a good and binding contract enforceable in law and equity. The cases since 1854 are worthy of the closest inquiry, and, to thoroughly detect the confusion of the two ideas of the usury ban and the equitable ban, some knowledge of the case law is essential. The release of the mortgage from the Usury laws is very clearly seen in the case of Potter v. Edwards (26 L. J. Ch. 468), decided in 1857. A. lent B. £700, and B. gave A. a mortgage to secure £1,000 at 5 per cent. interest. Held valid and enforceable. Kinders ley, V.C., said: "The intention of the parties seems to have been that £700 only was to be advanced, although the mortgage was to be a security for £1,000. The security appeared, and with justice, to be of a questionable character, and the defendant in fact agreed to lend no more than £700 upon having a mortgage of £1,000, in consideration of the risk and hazard attending the transaction." But, observe, if the transaction had really been oppressive, it would have been invalid on the ground of oppression, as stated above. But it could not be said to affect the equitable right to redeem, nor flow from it. So much so that it is now quite clear that, in such a case as this, the mortgage deed may provide for a certain sum to be paid on redemption and the balance (being capital or interest) to be paid thereafter in manner prescribed. (See hereon per Lord Parker in Kreglinger's Case (supra), differing from the view hereon held by Lord Davey in Noakes v. Rice, [1902] A. C. 24; 71 L. J. Ch. 139.) We now come to a more comprehensive example of the rule proposed, namely, that any bargain or stipulation now entered into between a mortgagor and a mortgagee, so long as it saves harmless the equitable right, is binding and enforceable. We refer to Biggs v. Hoddinott (supra). A mortgage of an hotel to a brewer contained a covenant by the mortgagors that during the continuance thereof they would deal exclusively with the mortgagee for all beer and malt liquor sold on the mortgaged premises There was also a proviso excluding redemption for five years. Held, five year period valid; and that covenant did not clog the equity of redemption. In 1882, Jessel, M.R., held that a mortgagor may be precluded from redeeming for a fixed period such as 5 or 7 years." (Tecvan v. Smith, 20 Ch. D. 729; 51 L. J. Ch. 621.) And with good reason, for that is not a taking away from him for ever and so dead to him upon condition of his equitable right to redeem his property, which is the fons et origo of the rule. As to Salt v. Northampton (supra, q.v.), that is a case merely of fact. A certain policy was there. held to be part of the property mortgaged and so redeemable on payment of the mortgage moneys. Santley v. Wilde ([1899] 2 Ch. 474; 68 L. J. Ch. 681), despite the doubt thrown upon it by Rice v. Noakes (supra) and Browne v. Ryan ([1901] 2 Ir. Rep. 653), must now be regarded as a very high and correct authority, and Halsbury, L.C.'s comment in Noakes v. Rice (supra) that Lindley, L.J., had there given "the most authoritative exposition of the true effect of the Rule" is particularly apposite since the case of Kreglinger (supra). In the case of Santley, there remained after redemption an obligation on the mortgagor to pay one third of the profits derived from the business of a theatre, the lease of which had been mortgaged. The obligation was held not to be a clog on the equity to redeem, but an independent contractual obligation, and so valid. Noakes v. Rice (supra) was a case in which the provision in dispute left a "free" house a "tied" house after redemption, and it was held that in consequence the mortgagor did not get back his property in the same condition as he mortgaged it-in other words, the equity of redeeming that which was mortgaged was said to have been taken away from the mortgagor. Also in Browne v. Ryan (supra)— which Lord Shand said came very near the line -where the "mortgagee sought damages for breach of a contract depriving the mortgagor of his property after its redemption by him," the stipulation was held bad. Then we come to Bradley v. Carritt ([1903] A. C. 253; 72 L. J. K. B. 471). Here there are obiter dicta,-but merely dicta "and not,' as Lord Parker says in Kreglinger's Case (supra), necessary to the decision and so not binding,"-which assert" that all stipulations for collateral advantages, and not only those which were repugnant to the contractual or equitable right, must come to an end upon redemption. But where is anything in the original object of the rule to warrant this sweeping proposition? In Bradley's Case, A. mortgaged shares of a tea company to B. and contracted always thereafter to procure the sale of all the company's tea through B. on commission. repaid the loan and redeemed the shares, and, the proviso being broken by A., B. sued A. for damages. Held, that the proviso was invalid as a clog on the equity of redemption. It is quite clear from Lord Davey's speech that it was so decided on the apprehension that, the mortgage moneys being paid, "the burden imposed on him (the mortgagor) by the contract came to an end. But this is clearly, on the origin and history of the rule, quite unsupportable. It makes the rule destructive of the entire contract of the parties after redemption, whereas it is only intended to achieve redemption and nothing more. Tosafeguard the redemption of the property was indeed good conscience, but to scout the obligations undertaken in contractu between the parties which saved harmless, and were A. Το 66 independent of the right to freedom, was surely making equity too much a science for good conscience. A. repossessed himself of his shares on repayment. Clearly his property was not "taken away from him for ever and so dead to him upon condition." He could deal with them freely, sell them, mortgage them again, and what not. All that survived the redemption was a legitimate contractual obligation independent of, and disannexed from, the mortgaged property, as if B. had said: 'I will lend you £1,000 on two considerations: 1, property which you shall mortgage; and 2, a personal obligation undertaken by you, but in no way affecting or obstructing your right to redeem or to deal with the property." Surely, on the plainest principles of law and equity, since the repeal of the Usury Acts, such a transaction was legitimate and binding? Lord Shand dissented from the decision given in a very lucid and unanswerable speech, and we venture to cite from it. ' . . . In agreements and obligations which cannot be represented to be unconscionable, or to have been procured by fraud or undue influence, and expressed in clear language quite understood by the parties, effect should be given to the terms used. Once a mortgage always a mortgage,' however, had, and I think still has down to the present day, application only where the power of redemption by repayment of the loan is itself fettered or clogged by conditions which prevent full redemption even where such payment is made or offered, and I agree with Lord Lindley in holding that where, as here, redemption can be fully obtained by repayment of the loan and interest, a separate obligation for a different or collateral advantage is valid and enforceable." Then he adds forcibly: "Here, the merely personal obligation to continue to pay the commission on . . . the teas in no way affects the subject of the security. . . . It appears to me, on any construction of the agreement, that, if the appellants are to succeed in their argument, the rule of law said to be founded on equity must henceforth be not merely Once a mortgage always a mortgage,' but Once a mortgage and a separate personal agreement or obligation by the mortgagor, always a mortgage only, and no such binding obligation or agreement.' What baffles one is how two such enlightened lawyers as Lords MacNaughten and Davey could subscribe to any 4 other view on this than their brother Shand. One, therefore, naturally hesitates and wonders, but nothing, save the hammering of the two distinct and different subjects of Usury and redemption into one entire doctrine, can yield any conclusion different from that reached and expounded by Lord Shand. With the retrograde track on to which the rule had been thrown opening up more and more, Kreglinger's Case (supra) came as a timely guide to once more put the rule on to its right course; that case may be said now, in Swift's words, to have "fixed its mercury" within limits wherein people will no longer be relieved improperly from obligations solemnly and legitimately incurred, and the original design of the equitable right to redeem will be secure. Kreglinger's Case was this: A. lent B. money, and in consideration B. gave him: 1, a floating charge; and 2, an option to purchase exclusively certain goods for five years. A. sought to bring the option to an end on repayment of the loan. Held, that the option was a collateral agreement independent of the mortgage, and did not cease when the re-loan was paid, nor was it a clog on the equity of redemption. The speeches delivered by Haldane, C., and Lord Parker will amply repay perusal, especially the pregnant examples offered by the latter to demonstrate his views. The case has clarified the notions of the equitable doctrine and finally established this clear and comprehensive rule: that a mortgage may stipulate for any collateral advantage in the mortgage contract, so long as it is not either, 1. In the nature of a penalty clogging the 2. Unfair and unconscionable; or So that the office of equity and the force of con- |