LECTURE XXV.

MORTGAGES. (a)

§ 145. Object of a Mortgage. I have already observed that mortgages are usually treated under the head of estates upon

(a) See 2 Black. Com. 157; 4 Kent, Com. lec. 58; 2 Cruise's Dig. 82; and the treatises of Powell, Coote, Patch, and Hilliard. The last is preferred, being an

American work.

What is a mortgage, and what estate it creates. Where a deed is absolute upon its face, yet was intended merely as security for a debt, it will be treated as such; and this may be proved by parol. Stratton v. Sabin, 9 Ohio, 28; Morris v. Way, 16 id. 469; Marshall v. Stewart, 17 id. 356; Irwin v. Longworth, 20 id. 581; Emerson v. Atwater, 7 Mich. 12; Hartnett v. Ball, 22 Ill. 43. Lokerson v. Stillwell, 2 Beasley, 357; Shaw v. Woodward, 28 Ill. 277; Belote v. Morrison, 8 Minn. 87; Tillson v. Moulton, 23 Ill. 648; Crews r. Threadgills, 35 Ala. 354. When shown to have been intended for a mortgage, it continues such until the equity of redemption is released or foreclosed. Decamp v. Crane, 4 Green (N. J.), 166; Holliday v. Arthur, 21 Iowa, 19; Phoenix v. Gardner, 13 Minn. 430; Bingham v. Thompson, 4 Nev. 244. Yet the grantor's equity is not subject to be sold on execution. Baird v. Kirtland, 8 Ohio, 21. An instrument intended for a mortgage, but not under seal, is not valid against an assignee under a subsequent assignment for the benefit of creditors. Erwin v. Shuey, 8 Ohio State, 509. Such an instrument is not entitled or recorded, and if recorded it will not affect subsequent purchasers or incumbrancers with notice. So too in California. Racouillat v. Sanserain, 32 Cal. 376; Racouillat v. Rene, 32 Cal. 450. The legal title remains in the mortgagor until condition broken, and may be sold on execution. After breach, ejectment will lie. In case of sale, the appraisement must be of the entire value, without deducting encumbrances. Ely v. M'Guire, 2 Ohio, 223; Phelps v. Butler, id. 224; Farmers' Bank v. Commercial Bank, 10 id. 71. Where the certificate leaves a blank for the name of the mortgagor, it is only an equitable mortgage. Smith . Hunt, 13 Ohio, 260. So where there is only one witness. White v. Denman, 16 Ohio, 59. So where the name of the second witness is added after recording. Bank of Musk. v. Carpenter. 7 Ohio, pt. 1, 21. Where the consid eration is illegal, the mortgage is void; but this cannot be inquired into in ejectment. Raguet v. Roll, 7 Ohio, pt. 1, 76, and pt. 2, 70. See also Cowles v. Raguet, 14 Ohio, $8. Where the mortgage was to secure a note in one bank, and it was discounted in another, this does not invalidate, unless a subsequent incumbrancer was actually misled. Patterson v. Johnson, 7 Ohio, pt. 1, 225. Mere changes in the evidences of the debt do not affect the lien of the mortgage. Choteau v. Thompson, 3 Ohio State, 424. Seymour . Darrow, 31 Vt. 122; Spring Hill, 6 Cal. 17; Williams v. Starr, 5 Wis. 534. A renewal of a note is not a payment of the debt, so as to discharge the mortgage debt, unless the parties so intended. Parkhurst v. Cummings, 56 Maine, 155. When mortgage notes have been paid before maturity, and delivered to the mortgagor without cancelling the mortgage, and he reissues them to innocent third parties, he and all subsequent mortgagees will be estopped from denying their validity. Jordan v. Furlong, 19 Ohio State, 89. As to the description of the debt, see Tousley v. Tousley, 5 Ohio State, 78. A mortgage, duly executed and recorded, is not invalid as to third parties from a want of certainty in the description of the debt secured. Upon the well-known principle, extrinsic evidence may be introduced to apply it to its subject-matter. Hurd v. Robinson, 11 Ohio State, 232; Gill v. Pinney, 12 Ohio State, 38. A release by a prior to a subsequent mortgagee creates no new estate, but only extinguishes the prior mortgage. Hill v. West, 8 Ohio, 222. An assignment of the debt carries the mortgage with it as an incident. Paine v. French, 4 Ohio, 318. Swartz v. Leist, 13 Ohio State, 419; Mapps v. Sharp, 32 Ill. 13; Gower. Howe, 20 Ind. 396; Jones v. Quinnipiack Bank, 29 Conn. 25; Croft v. Bunster, 9 Wis. 503; Blake v. Williams, 36 N. H. 39; Ord r. M'Kee, 5 Cal. 515; Crow v. Vance. 4 Iowa, 434; Martin v. M'Reynolds, 6 Mich. 70. The deed of the mortgagee, without an assignment of the debt, will convey no interest to the grantee, unless the mortgagee has entered into possession of the premises. Smith v. Smith, 15

condition. But their practical importance makes it proper to devote to them a distinct lecture. They are pledges to secure

N. H. 55; Hobson v. Roles, 20 id. 41; Johnson v. Cornett, 29 Ind. 59; Dearborn v. Taylor, 18 N. H. 153; Hobson v. Roles, 20 N. H. 41; Peters v. Jamestown Bridge Co., 5 Cal. 334. When the debt is also assigned, it is of course good. Dixfield v. Newton, 41 Maine, 221; Collamer v. Langdon, 29 Vt. 32. A person in possession of land under a parol contract to purchase, can mortgage it; and the legal title, when he acquires it, will enure to the benefit of such mortgagee as against any subsequent mortgage or conveyance by him. Philley v. Saunders, 11 Ohio State, 490. The effect of mortgages of franchises by railroad companies is treated of in Redfield on Railways, § 235; Pierce on American Railroad Law, ch. xx. Bonds of a corporation, which pledge the real and personal property of a corporation for the payment of a debt, will be treated and enforced by a court of equity as a mortgage. Canal Co. v. Vallette, 21 How. 414.

White Water

Priorities, &c. Since the act of 1838, all mortgages, whether executed before or since, take effect from the time of their delivery to the recorder. Magee v. Beatty, 8 Ohio, 396; Fosdick v. Barr, 3 Ohio State, 471; Paine v. Mason, 7 id. 198. A mortgage handed in for record on the first day of the term, but before the opening of court, has priority over a judgment recovered at that term. Follett v. Hall, 16 Ohio, 111; Holliday v. Franklin Bank, id. 533. An unrecorded mortgage or equitable assignment is valid as between the parties, but as to third persons only from the time it is recorded. White v. Denman, 16 Ohio, 59; 1 Ohio State, 110; Fosdick v. Barr, 3 id. 471; Bloom v. Noggle, id. 45; Erwin v. Shuey, 8 id. 509; Tousley v. Tousley, 5 id. 78; Sidle v. Maxwell, 4 id. 236. An elder mortgage to secure a specific debt and future advances, will be postponed as to advances made after the recording of the junior mortgage. Spader v. Lawler, 17 Ohio, 371. But see Kramer v. F. & M. Bank, 15 Ohio, 253; Griffith v. N. J., &c. Co., 3 Stockton, 39. In Connecticut, it is held good also as to advances agreed to be made on the faith of it before the recording of the junior mortgage. Boswell v. Goodwin, 31 Conn. 74. It is good against a judgment for all advances made before the judgment, although the debt on which the judgment was founded was incurred before the mortgage was made. Robinson v. Williams, 22 N. Y. 380. In New Jersey it is good as to all advances made on the faith of it before actual notice of the subsequent incumbrance. Ward v. Cooke, 2 Green (N. J.), 93. A mortgage to secure future advances to a specified amount is good to that amount. Lawrence v. Tucker, 23 How. 14. See also Soule v. Albee, 31 Vt. 142; Gookins v. Gilmore, 47 Maine, 9. In New Hampshire, by statute, it is void as to future advances. Johnson v. Richardson, 38 N. H. 353. In England now a second mortgage will be preferred to advances under a first mortgage made with notice of the second, and subsequent to it. Rolt v. Hopkinson, 4 Jurist (N. s.), 919. Overruling Gordon v. Graham, 2 Eq. Abr. 598. The doctrine of tacking never existed in this State. Towner v. Wells, 8 Ohio, 136. Nor in Vermont. Chandler v. Dyer, 37 Vt. 345. It has now disappeared in most if not all the States, if it ever existed. A junior mortgage recorded has priority over a senior mortgage unrecorded, though given for purchase-money, and the junior had notice of it. Stansell v. Roberts, 13 Ohio, 148; Mayham v. Coombs, 14 id. 428. A judgment confessed during the term, has priority over a mortgage executed before the first day of the term, but not recorded until after. Jackson v. Luce, 14 Ohio, 514. Where mortgaged premises have been sold in parcels to different persons, either by judicial or voluntary sale, the mortgagee, in foreclosing, must proceed first against that which was last sold. Cary v. Folsom, 14 Ohio, 365; Root v. Collins, 34 Vt. 173; Gaskill v. Line, 2 Beasley, 400; Day v. Patterson, 18 Ind. 114; Ogden v. Gliddon, 9 Wis. 46; Mobile, &c. Co. v. Huder, 35 Ala. 713; McCullum v. Turpie, 29 Ind. 146; Lock v. Fulford, 52 Ill. 166; Payne v. Avery, 21 Mich. 524. Contra, Barney v. Myers, 28 Iowa, 472. As to the effect of a special agreement to release the parcels on payment of definite amounts, see Iglehart v. Crane, 42 Ill. 261. Where the different conveyancers of parcels are all expressly made subject to the mortgage, the rule does not apply; they must then share pro rata. Briscoe v. Power, 47 Ill. 447. When the portion primarily liable is released by the mortgagor in a proceeding against the rest, he must be charged with the whole value of the parcel released. Hoy v. Bramhall, 4 Green (N. J.), 74, 563; Iglehart v. Crane, 42 Ill. 261. And see Stillman v. Stillman, 21 N. J. Eq. 126. Where the recorded chain of title would not lead a searcher for incumbrances to the finding of a mortgage, such mortgage will be postponed to subsequent liens. Leiby v. Wolf, 10 Ohio, 83. Though a mortgage deed is recorded in the record of deeds (instead of the record of mortgages), if it be indexed in both the volume index and the general index with the letters mtg annexed, it will be operative against a subsequent pur

the payment of money; and in the present wide extension of credit, they form one of the most frequent subjects of judicial

chaser for value without actual knowledge of it. Smith v. Smith, 13 Ohio State, 532. An index to the record of a conveyance is not necessary to make the record constructive notice. If the purchaser is misled, his remedy is against the recorder. Green v. Garrington, 16 Ohio State, 548. A mortgage, recorded after a contract for the sale of the land is made, but before the execution of the deed, will bind the land. Kyle v. Thompson, 11 Ohio State, 616. An elder equitable mortgage has priority over a younger judgment lien. Bank v. Carpenter, 7 Ohio, pt. 1, 21. Where the indorser of a note executes a mortgage to secure his indorsement, it will not be discharged by the failure of the mortgagee to make the demand, and give the notice necessary to charge the indorser personally. Hilton v. Catherwood, 10 Ohio State, 109. The failure of the husband to disclose to the wife the contents of a mortgage she executes at his request, the grantee being ignorant of the fact, is not such a fraud that she can impeach the acknowledgment by parol. Baldwin v. Snowdon, 11 Ohio State, 203. Although the debt secured is barred by the statute of limitations, the mortgagee may have his remedy in equity upon the mortgage. Fisher e. Mossman, 11 Ohio State, 42; Pratt v. Huggins, 29 Barb. 277; Wilkinson v. Flowers, 37 Miss. 579. Contra, Ross's Heirs v. Mitchell, 28 Texas, 150. A mortgage, though given to secure a negotiable note, is not negotiable, and the assignee will be defeated in enforcing it by anything which would be a defence between the original parties. Bailey v. Smith, 14 Ohio State, 396; Olds v. Cummings, 31 Ill. 188; Johnson . Carpenter, 7 Minn. 176; Bouligny v. Foster, 17 La. An. 121; Hartley v. Tatham, 10 Bosworth, 273. Where a mortgage is expressly made subject to a prior mortgage, it will be postponed to it, however defective the first mortgage may be. Coe v. Columbus, &c. R. R. Co., 10 Ohio State, 372.

Remedies. If the debt secured by the mortgage is not paid at maturity, the mortgagee has three remedies: an action at law for the debt, an action of ejectment to recover possession of the land, and a suit in equity to foreclose the mortgage. Any or all of these remedies may be prosecuted at the same time. The code of civil procedure does not affect this right of the mortgagee, but only the name given to the three proceedings. Williams v. Engelbrecht, 37 Ohio St. 383. A power of attorney, in a mortgage, to sell on default, is valid; and will extinguish the equity of redemption, if exercised fairly, and upon notice, though a bill of foreclosure was pending at the time. Brisbane v. Stoughton, 17 Ohio, 482; Mitchell v. Bogan, 11 Rich. 686. In Texas, it cannot be executed after the death of the mortgagor, it being inconsistent with the laws for the settlement of estates. Robertson v. Paul, 16 Texas, 472. But in other States, it is held to be a power coupled with an interest, and therefore irrevocable by death or in any other way. Bancroft v. Ashurst, 2 Grant's Cases, 513; Bradley v. Chester, &c. R. R. Co., 36 Penn. State, 141; Brewer v. Winchester, 2 Allen, 389. The conditions of the power must be complied with, in order to make the title good. Roarty v. Mitchell, 7 Gray, 243. Smith v. Provin, 4 Allen, 516; Bancroft v. Ashurst, supra; Bradley v. Chester, &c. R. R. Co., supra. Where a misapprehension prevented competition, and the mortgagee purchased at a great bargain, if he be secured in any event, a resale will be ordered. Hey v. Schooley, 7 Ohio, pt. 2, 48. But it is held in Illinois, that where the mortgagee purchases at a sale under a power, the sale will be set aside at the application of any party, without proof that the price was too small, or that any injury has resulted. Unless the right to purchase is expressly given him by the mortgage. Hail v. Towne, 45 Ill. 493. See also Elliott v. Wood, 53 Barb. 285; Montague v. Dawes, 14 Allen, 369. A mortgagee may maintain an action on the case against one who unjustly lessens his security. Allison v. M'Cune, 15 Ohio, 726. Where the mortgagee makes the mortgagor his executor, the mortgage is not extinguished. Collard v. Donaldson, 17 Ohio, 264. Different debts secured by the same mortgage are to be paid in the order they fall due, whether assigned or not. Bank U. S. v. Covert, 13 Ohio, 240: Bushfield v. Meyer, 10 Ohio State, 334; Kyle v. Thompson, 11 Ohio State, 616; Wood v. Trask, 7 Wis. 566; Murdock v. Ford, 17 Ind. 52; Sangster v. Love, 11 Iowa, 580. In Swartz v. Leist, 13 Ohio State, 419, the syllabus is, that several promissory notes, jointly secured by mortgage share pro rata, but this is qualified in the opinion by the language, "if the notes all stand upon the same footing," and this is probably as far as the case was meant to go, as the previous cases are not alluded to, and it could not, therefore, have been intended to overrule them. But where several mortgages are all executed and recorded at the same time, it is for the jury to find which was delivered first, and the dates fixed for the performance of their conditions are not even competent evidence to go to the jury for

cognizance. The law which governs them is the common law modified by a very few statutory provisions. Of the derivation of the word mortgage, Blackstone gives, in substance, this account: Vivum vadium, or living pledge, is when a debtor pledges land to his creditor, to hold until the debt is paid out of the rents and profits; this is likewise called a Welsh mortgage. Mortuum vadium, dead pledge, or mortgage, is where a debtor actually conveys land to his creditor, upon condition that the conveyance shall be void, if the debt be paid at a given time; but otherwise shall be absolute. In the former case, which now rarely if ever occurs, the debtor still retains a subsisting title to the land, though incumbered by the debt to be paid from the rents and profits. In the latter

this purpose. Gilman v. Moody, 43 N. H. 259. Where one of the mortgages is for the purchase-money, that has priority. Clark v. Brown, 3 Allen, 509. Where a mortgagor sells before foreclosure, and his grantee is not made a party to the bill, he cannot maintain ejectment against the purchaser, but may redeem. Frische v. Kramer, 16 Ohio, 125. Where the mortgage debt is payable by instalments, there may be a foreclosure when the first falls due. But the decree can only be for what is due; and if the property cannot be divided, and the whole must be sold, the surplus must be brought into court for equitable disposition. King v. Longworth, 7 Ohio, pt. 2, 231. Where the mortgagee recovers a judgment for any part of the debt, and the land is sold on execution, the purchaser takes it discharged from the mortgage. Freeby v. Tupper, 15 Ohio, 467. And see Fosdick v. Risk, id 84; Ireland v. Hull, 10 Johnson, 481. The Code provides (§ 374) that in the foreclosure of a mortgage, a sale of the mortgaged property shall in all cases be ordered. But it would seem there may be a personal judgment for the debt, without proceeding for a foreclosure, or both may be joined in the same action. Formerly, a conveyance might be decreed without sale under certain circumstances. Anonymous, 1 Ohio, 235; Higgins v. West, 5 Ohio, 554. As to the old proceeding by scire facias, see Reedy v. Burgert, 1 Ohio, 157; Allen v. Parish, 3 Ohio, 187; Dennison v. Allen, 4 Ohio, 495; Biggerstaff e. Loveland, 8 Ohio, 44; Hubbell v. Broadwell, id. 120.

Assignment. A mortgage is very rarely assigned by deed. It is ordinarily signed by an unsealed indorsement on the mortgage, or by a mere transfer of the debt secured by it. A mortgage may be itself the only security for the debt. The assignment of such a mortgage is a transfer also of the debt. A mortgage may be given to secure a bond or a negotiable note. The assignment of such a mortgage without a transfer of the debt is nugatory. If such assignment is by deed, the assignee takes a naked legal title, and holds it for the benefit of the owner of the debt secured by it. But if it is by unsealed writing, it can operate only to transfer an equity; but as the only equity is the debt, and that is not transferred, nothing passes. A transfer of the debt is a transfer of the beneficial interest in the mortgage, and such transferee though the mortgage be not actually assigned, is the beneficial assignee and owner of the mortgage. If the debt is evidenced by a bond, not negotiable, the assignee takes subject to equities. The assignment of mortgages securing negotiable instruments has given rise to a conflict of decision. One line of decisions treats the mortgage as a mere incident to the note, and, held like it, discharged of equities when the transfer is made without notice before maturity of the note. Carpenter v. Longan, 16 Wall. 271; Pierce v. Faunce, 47 Maine. 507; Bloomer v. Henderson, 8 Mich. 395; Cicotte v. Gagnier, 2 Mich. 381; Cornell v. Hilchens, 11 Wis. 353; Croft v. Bunster, 9 Wis. 503. In the case of Taylor v. Page, 6 Allen, 86, the transferee of the mortgage held the legal title, and holding both legal title and equity, the case rests upon a different principle. The other line of decisions treats the mortgage as a separate security, additional to the note; not negotiable, and therefore subject to equities, though the note secured by it and transferred with it is held discharged of equities. Bailey v. Smith, 14 Ohio State, 396; Olds r. Cummings, 31 Ill. 188; Johns v. Carpenter, 7 Minn. 176; Schmidt . Fry, 8 Rob. (La.) 435: Bouligny v. Fortier, 17 La. Ann. 121. The opinions pronounced in these cases are irreconcilable; but the actual decisions upon the facts, in all except the cases in Illinois and Minnesota, are consistent with the proposition that in case of the assignment of a mortgage securing a negotiable interest, where the assignment is not by deed, the assignee holds free from all equities which affect the debt, but subject to all defects and equities which affect the validity of the mortgage.

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case, which is that of the common mortgage, the debtor, by the terms of the conveyance, retains no subsisting title; and therefore the pledge is said to be dead; though in fact, as we shall see, the law still gives him a subsisting interest, not warranted by the terms of the conveyance. The object of a mortgage, as already stated, is to secure the payment of money by a pledge of real estate; but the law of mortgages has in the course of time undergone so many changes, that scarcely one of the original doctrines on the subject now remains. I shall describe the form of a mortgage, in its proper connection with other deeds. But for the purpose of being understood in my present remarks, I will here observe, that, in form, a mortgage differs in no respect from a common deed of conveyance in fee-simple, except in the condition of defeasance. And if its legal import were now to be gathered from its words, it would be the conveyance by the mortgagor to the mortgagee of an estate in fee-simple, upon condition that if the stipulated sum of money for which the mortgage is given, were paid upon a fixed day, the estate should revert to the mortgagor; but otherwise, should become absolute in the mortgagee. Accordingly the mortgagee would take immediate possession, and exercise all acts of ownership, until the pay-day arrived, and then would give it up or hold it absolutely, according to the fact of payment or non-payment. Such, I say, would be the inference drawn from the form and language of a mortgage; and such was in fact the early construction given to it by law; but such is not now the construction; and it is matter of regret that the form of the instrument has not been changed with the law, so that the words might now express the present legal nature of the transaction.

§ 146. Right of Redemption. (a) The original construction of a mortgage as just explained, was found to be productive of extreme hardship. Land is often mortgaged to secure a debt much less than its value; and if a failure to pay this debt punctually at the day, were to involve the forfeiture of the land absolutely, the mortgagee would obtain an unconscionable advantage. On this ground, the court of equity early took up the subject, and allowed

(a) The right of redemption may be barred by an adverse possession for twenty-one years, by the mortgagee claiming to hold as owner; but it will be saved, notwithstanding such possession, by any deliberate act of the mortgagee by which he recog nized the mortgage as subsisting. Robinson v. Fife, 3 Ohio State, 551. As a general rule, a party seeking to redeem must redeem the whole, and not a part; otherwise, however, where the mortgagee has become the absolute owner of a part. Id. A widow, who, in the lifetime of her husband, united with him in a mortgage of his lands, has in equity a right to redeem, and a foreclosure to which she was not a party, during her husband's life, does not divest her of this right. Mc Arthur &. Franklin, 16 Ohio State, 193. Semble, that she must pay the whole debt, unless by the consent of the mortgagee. McArthur . Franklin, supra: McCabe . Bellows, 7 Gray, 148. A widow who joined in a mortgage of her husband's property, where the mortgaged land on sale pays the debt and leaves a surplus, is entitled to dower in the surplus, but in that only, not in the entire proceeds, to be satisfied out of the surplus. State Bank v. Hinton, 21 Ohio State, 509. Not even an express agreement in the mortgage itself, can abridge the time allowed for redemption. Chase v. McClellan, 49 Maine, 375.