Equity of redemption the result of a mortgage.

Former law of redemption.

CHAPTER XIII.

OF AN EQUITY OF REDEMPTION.

HITHERTO We have been occupied solely with the consideration of legal estates in land, and it is to them that our attention will be principally confined all through this work. But there is one variety of equitable estates, a notice of which comes fairly within the scope of our reading. This arises when land is pledged, or “mortgaged," to a lender or "mortgagee," as a security for money advanced by him. Here the borrower or "mortgagor" has still an estate or interest left in the land, and it is of this that we now propose to treat.

The word "mortgage" (a dead pledge) is significant of a state of the law which has long passed away. A mortgage, in olden times, was effected by the use of two contemporaneous deeds, of which one set forth that the estate in question had been conveyed absolutely to the mortgagee, whilst the other, known as "the deed of defeasance," provided that it should be re-conveyed to the mortgagor if he, on a specified day, repaid all sums for which the estate was a security. Failing this payment on the precise day, the estate became the absolute property of the mortgagee. Thus, Littleton, writing in the reign of Edward the Fourth, says (a): "If a feoffment be made upon such condition, that if the feoffor pay to the feoffee at a certain day £40 of money, then the feoffor may re-enter: if he doth not pay, then the land which

(a) Litt. Ten. s. 332.

is in pledge upon condition for the payment of the money is taken away from him for ever, and so dead. to him upon condition."

In time, however, the Court of Chancery began to Origin of an consider this condition merely as a penalty imposed demption. Equity of Rein order to secure punctual payment of the debt due from the mortgagor, and gave him, therefore, a right (subject to conditions to be presently noticed) to recover his estate, long after the time when a court of law looked upon it as the absolute property of the mortgagee. This right, from the fact of its being enforcible only in equity, came to be known as the mortgagor's Equity of Redemption, and is now inseparable from every mortgage. And since the time when the Judicature Acts came into operation a mortgagor's equity of redemption has been recognised by every branch of the Supreme Court; but by the Judicature Act, 1873 (b), actions for the redemption and foreclosure of mortgages (which we shall consider hereafter) are assigned to the Chancery Division. It may be here mentioned that one result of the abovementioned doctrine of equity is that (the former reasons for having two deeds no longer existing) the absolute conveyance of the estate to the mortgagee and a clause corresponding to the old deed of defeasance are now contained in the same instrument.

demption.

It follows, from what has been said above, that an Creation of an equity of redemption arises by operation of equity, Equity of Rewithout any act of parties. We will proceed to notice the principal points relating to it, premising that we shall treat only of that equity which arises in consequence of the pledge of one, or other, of those estates. in land which have been considered in previous chapters of this work. At first, also, we will deal only with a mortgage of the legal interest in such property.

(b) 36 & 37 Vict. c. 66, s. 33.

Equity of re- An equity of redemption is more than a mere right. demption is an estate in land. Lord Hale defined it as an estate in equity, recognised by the law as an equitable right inherent in the land, and of such consideration in the eye of the law, that the law takes notice of it, and makes it assignable and devisable (c). This statement has been confirmed by other judges. Thus, in an early case (d), A., an unmarried woman, being seised in fee simple of a freehold estate, mortgaged it, and afterwards married B., by whom she had issue; A. died, leaving the mortgage unredeemed, and the question arose whether B. was entitled, subject to the mortgage, to an estate by curtesy in the land. On behalf of the heir of A., it was argued that the equity of redemption was not an actual estate or interest in A., but only a power to reduce the estate into possession again on paying off the mortgage, and that a man cannot have an estate by curtesy in a bare right. This view was acquiesced in by the Master of the Rolls (Sir J. Jekyll), but his decision was reversed, on appeal, by Lord Chancellor Hardwicke. The latter judge said that an equity of redemption had always been considered as an estate in land, and, therefore, the person entitled to the equity of redemption as the owner of the land, and a mortgage in fee as personal assets (e). He added that, with regard to that seisin in fact which is essential to entitlé a husband to curtesy, there was, here, such a seisin in possession of the equitable estate of the wife as, in a court of equity, is considered equivalent to an actual seisin of a freehold estate at common law.

Incidents and alienation of

The result of the owner of the equity of redemption equity of re- being considered as the owner of the land is that, demption similar to those subject to the rights of the mortgagee, he may deal with it as if it were a legal estate. Thus, an equity

of a legal

estate.

(c) Pawlett v. Atty.-Genl., Hardres, 465, 469.

(d) Casborne v. Scarfe, 1 Atk. 603, and, with notes, 2 L. C. 1051. (e) See Thornborough v. Baker, 3 Swan. 628, and, with notes, 2 L. C. 1046.

:

of redemption may, according to the quality of the legal estate, be devised, granted, mortgaged, or entailed and an entail in it may be barred in the usual way. Moreover, an equity of redemption in an estate lasting beyond the lifetime of the tenant. will go in the same way as its corresponding legal estate (ƒ).

We have already referred to the fact that an equity Equity of redemption canof redemption is inseparable from every mortgage, not be exand, besides this, any bargain entered into, at the cluded. time of executing the mortgage deed, with a view to making the subject of it irredeemable, will, generally speaking, be set aside. This doctrine flows naturally from that which confers a right to redeem upon the mortgagor, and has been established from an early period. Thus, in a case (g) decided in the year 1683, a covenant in a mortgage deed, by which the right to redeem the mortgaged estate was confined to certain persons, viz., the mortgagor and the heirs male of his body, was held to be void. On the same principle an attempt, in another case (h), to limit the time for redemption, by cutting it down to the joint lives of the mortgagor and the mortgagee, was not allowed to succeed (i). Any attempt, also, to prevent the equity of redemption from being exercised within a reasonable time will be set aside, and redemption allowed at an earlier period than that fixed by the mortage deed (j).

the above rule.

An exception to the rule that an equity of redemp- Exception to tion cannot be restricted occurs, however, in cases where the mortgage is intended to be of the nature

of a family settlement.

Where, for instance, a mort

(f) Fawcet v. Lowther, 2 Ves. 300, 303.

(9) Howard v. Harris, 1 Ver. 190, and, with notes, 2 L. C. 1058.

(h) Spurgeon v. Collier, 1 Eden, 55.

(i) And see Manlove v. Bale, 2 Ver. 83.

(j) Talbot v. Braddill, 1 Ver. 183.

Distinction between a mortgage and a purchase with proviso for repurchase.

gaged estate was made redeemable during the life of the mortgagor only, but it was proved that the mortgagee (who was a near relation of the mortgagor) had been intended by the latter to succeed to his estate if he died without issue, and that the clause of redemption was put in merely in order to provide for the case of the mortgagor's leaving issue: it was held that the clause could be sustained, and that the estate became, on the death of the mortgagor without issue, the absolute property of the mortgagee (k).

A distinction must also be made in this respect between a mortgage deed and a purchase deed conveying the property absolutely, but giving the vendor a right to re-purchase it: for, under such a deed, the vendor can only recover his property by complying precisely with the terms of the deed (1). Thus, in one case (m), A. had conveyed a life estate to B. in consideration of £4739, and by a deed of even date it was agreed between them that if A. should, at any time, desire to re-purchase the life estate for £4739, B. would convey it to him for that sum. B. took possession of the estate and died, leaving a will in which he spoke of the life estate as "redeemable" on payment of £4739 and "interest," and referred to this interest as his "security." But it was held, on A.'s failing to prove any intention of the parties to make a mortgage, that the instruments in question did not amount to a mortgage deed. The Lord Chancellor (Lord Cranworth) in giving judgment remarked: "These deeds do not, on the face of them, constitute a mortgage. The rule of law is, that prima facie an absolute conveyance, containing nothing to show that the relation of debtor and creditor is to exist between the parties, does not cease to become an absolute conveyance, and become a mortgage, merely because the

(k) Newcomb v. Bonham, 1 Ver. 7, 214, 231.

(1) Barrell v. Sabine, 1 Ver. 268.

(m) Alderson v. White, 2 De G. & J. 97.