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THE
AMERICAN LAW REGISTER,
JUNE, 1856.
THE MORTGAGE; ITS ORIGIN AND HISTORY-PRIN-
CIPLES PRESIDING OVER ITS APPLIOATION TO REAL
AND PERSONAL PROPERTY-REMEDIES.
ORIGIN AIND HISTORY.
It may be said of mortgages, as of many pretended modern in- ventions, that^ they^ owe^ their^ origin^ more^ to^ the^ suggestive^ wants^ of men in civilized life, than^ to^ the^ creative^ genius^ of^ any^ particular individual, age or nation. They^ were^ not^ a^ subject^ for invention, but followed as a necessity in the wake of -ivilization. The^ fluctu- ations of trade,^ the^ necessity of^ credit, and the^ consequent^ sudden demand for money in a moment of great commercial embarrassment would naturally suggest the idea of a mortgage as the most facile means of raising it, at the same time affording to the lender a per- fect security, easy of transfer, which may itself in turn^ render to him the same service that it did to the original mortgagor. Among the early races of men, loans or favors on property, must have been by way of pledge rather than by means of a mortgage, 29
for having no knowledge of letters or stability (^) of abode there would of course be no (^) security without actual possession. (^) The first record of a mortgagc (^) is to be found in the (^) sacred writings. Mortgages (^) of a peculiar (^) nature are said to have (^) been used by the Jews, (^) from whom, according (^) to some writers, the notion (^) of mortgaging lands had origin. (^) From the Jews the idea (^) of a mortgage is supposed (^) to have (^) passed to the Greeks and (^) Romans, and from them engrafted upon the Common Law of England. In the Roman (^) Law there were two sorts (^) of transfer of property as security for debts, (^) namely the p)ignus and (^) the hypotheca. The pignus (^) or pledge, was where anything (^) was pledged as a security (^) for money lent, (^) and the possession thereof was (^) passed to the creditor, upon (^) the condition of returning (^) it to the owner when the debt (^) was paid. The .ypotheca, was when the thing pledged (^) was not delivered to the creditor, but remained (^) in possession of the debtor; (^) it closely corresponded (^) with our present idea of (^) a mortgage. The (^) civil law made little distinction (^) between mortgages (^) of real and mortgages (^) of personal property (^) whether pledged or hypothe- cated. The (^) debt was in all cases regarded (^) as the principal, the mortgage (^) as an incident, and until (^) sentence of foreclosure, the ownership of the (^) debtor was not displaced. (^) It is contended by some common law writers that (^) the present notion of a mortgage (^) and its redemption was strictly (^) founded on the common (^) law doctrine of conditions. The general (^) features of the present and (^) civil law of mortgages are so (^) similar that we cannot resist (^) the conclusion, that one was (^) borrowed from the other, (^) however hardy the arguments put forth by national (^) egotism or professional prejudice. The introduction (^) of the feudal system into (^) England by William of Normandy, was a memorable (^) epoch in the history of (^) the English law. That military (^) institution the nature of (^) which is such as to ex- clude any idea of a mortgage, (^) soon absorbed all the real property of the kingdom. It was not (^) until the ascension of Henry (^) the third that licenses were granted (^) for the free alienation of land (^) ; it soon became (^) a maxim of the law, "that (^) the purity of a fee-simple imported a power (^) of disposing of it as the owner (^) pleased," there were two ways of mortgaging (^) lands introduced, which (^) Littleton
which laid hold upon the earth as a security for its fulfilment, they declared the instrument to be a mortgage, no matter how covered with legal solemnities and forms. All covenants that the convey- ance is to become absolute at the^ happening^ of^ any^ contingency,^ are considered as oppressive and illegal; even a covenant that the mortgagee shall^ have^ an^ absolute conveyance upon^ paying^ a^ further sum, is void. Any^ and^ all^ covenants^ on^ the^ part^ of^ the^ mortgagor to pay anything^ beyond^ principal and^ interest,^ or for^ any collateral advantage to the mortgagor, are contrary to sound policy,^ and^ void; for equity is a part of the law and cannot be provided against. The right of redemption^ is^ not^ confined^ to^ the^ mortgagor^ or^ to his heirs and legal representatives or subsequent incumbrancers, but extends to^ all^ persons^ having^ any^ legal^ interest^ whatever^ in^ the premises as against the mortgagor, but a mere personal claim which gives no actual vested interest in, or does not create a charge upon the land, will not be a sufficient ground upon which to claim the right to redeem. While the law regards the right of redemption as sacred, ,and^ watches^ all^ infringement^ or^ restrictions^ of^ it^ with^ a jealous eye, yet it will not allow the mortgagee to be harrassed^ by every stranger who may claim a possible interest in the land. In order to redeem, the mortgagor must pay all that is equitably due as incident to the debt.
PRINCIPLES PRESIDING OVER ITS APPLICATION TO REAL AND PERSONAL PROPERTY-REAL E8TATE.
The history of the law of mortgages is confined mostly to tracing the introduction, continuance, and^ peculiarities^ of^ the^ equity^ of redemption. The rights of the mortgagee and mortgagor are de- pendent upon its controlling influence. All persons capable of contracting,^ may^ execute^ a^ valid^ mortgage, and it is liable to be defeated by^ anything^ that^ would^ avoid^ a^ con- tract. All property, real or personal, corporeal or incorporeal, mova- ble or immovable, may be the subject of a mortgage; even property which cannot be sold may^ be^ the^ subject^ of^ a^ mortgage,^ as^ in^ the^ case of lands held adversely. The^ principles presiding^ over^ its^ application to real and personal property, are few and of direct application; yet
in the actual administration of the law, there arise many refined distinctions, other principles interfering, when both are modified to prevent injustice. A mortgage of real estate is inform, a grant of an estate in fee as security (^) for money lent or contracted to be paid at a certain time, on condition that if the debt shall (^) be discharged according to the contract, the grant shall be void, otherwise to remain in full force. A mortgage may also be collateral to, and as security for the, per- formance of any legal engagement other (^) than the payment of money. In England, the mortgage conveys (^) the legal estate or title to the land, the estate of the mortgagor (^) according to authority amounts to nothing more than a tenancy-the mortgagee may maintain eject- ment against him; but in this country, at least in this State,' ihe mortgagor is regarded with far more favor : the mortgage is treated as a conveyance (^) in fee so far as it is necessary for the security of the (^) mortgagor-as to all othei purposes it is an estate in the mort- gagor, and may be purchased, conveyed, and levied upon, and re- garded in all respects as his legal estate. The mortgage is a mere burden or charge upon the estate, and when satisfied, leaves the es- tate in the hands of the mortgagor the same as before the execution of the mortgage. It is said the estate of a mortgagor consists sim- ply of an equity of redemption; it is an equity of redemption and more,-that name rather indicates the proceeding that he has to pur- sue to remove the incumbrance than as a definition of his estate. The mortgage is in (^) effect a power of attorney to the mortgagee, authorizing him upon non-performance of the conditions mentioned, to sell and (^) convey the premises. The interest of the mortgagee, is therefore, a mere chattel interest ; though the mortgage purports to convey an estate in fee-simple, the interest conveyed is so intan- gible that it cannot be reached upon execution, and upon his de- cease, it passed with the rest of his personal estate to his executors. If there be absolute danger that the security may be impaired, the court will interfere to protect (^) the mortgagee against loss, by granting an injunction to stay waste, or other remedy to preserve his security. The mortgage is, throughout, regarded as a mere secu-
I New York.
A conditional sale with a right to re-purchase very nearly resem- bles a mortgage. If the^ debt remains,^ the^ transaction^ is^ a^ mortgage; but if the debt^ is^ extinguished^ by^ mutual^ agreement,^ and^ the grantors have a right to a rcconveyance on refunding within a given time, it is held to be a conditional sale. In all cases of doubt the courts incline towards a mortgage. A formal conveyance may by extrinsic evidence be shown to be a mortgage, yet a formal mortgage may not by the same^ means^ be shown to have been intended for a^ conditional^ sale.^ In^ one^ case, the proof raises an equity consistent with the writing, which in the other would contradict it.
EQUITABLE MORTGAGES. A deposit of title deeds by^ way^ of^ security^ is^ held^ to^ be^ evidence of a valid agreement for a mortgage, and^ amounts^ to^ an^ equitable mortgage. These mortgages had their origin in an age^ when writing was seldom used, and when title deeds were considered the great muniments of title; after the passage of the statute of frauds, the courts were very reluctant to uphold them, as they were sup- posed to conflict with the statute of frauds. The courts have always been disinclined to hold them valid, and have upon all occasions regretted their validity.^ Most^ writers^ upon^ the^ law^ agree^ with^ the courts in this respect. Coote, an able writer upon the law of mort- gage, introduces arguments to show, that they never were valid, but that the^ creditor^ extorted payment by^ a^ sort^ of^ legal^ duress^ or^ clog upon the alienation of the land by the depositor. In some states these mortgages are held to be within the^ statute^ of^ frauds^ and void. There is another sort^ of equitable^ mortgage,^ or^ rather^ resulting trust, which occurs in favor of^ the^ vendor^ of^ land,^ who^ retains^ in equity a lien upon the land for the amount of the purchase money unpaid. This lien is wholly independent of any possession on the vendor's part, it attaches to the estate as a trust, whethei it be actually conveyed, or only contracted to be conveyed. The same objection has been taken to this, as to mortgages by deposit of title deeds, but whatever may have been the original force of such an objection, the doctrine is now too firmly established to be shaken by
a mere theoretical doubt. Courts^ of^ equity^ proceed^ upon^ the ground, that the trust^ being^ raised^ by^ implication^ is^ not^ within^ the purview of the statute, but is excepted from it.
PERSONAL PROPERTY. The rules^ of law^ governing^ real^ and^ personal^ mortgages^ are^ much the same, varied as^ to^ the^ latter^ only^ so^ far^ as^ the^ temporary^ charac- ter of the subject mortgaged, and^ the^ necessities^ of^ commerce require. A mortgage of^ chattels,^ like^ other^ contracts,^ requires^ the^ assent of both parties to^ give^ it^ complete^ legal^ effect.^ No^ particular^ form of words is necessary, neither^ need^ it^ be^ in^ writing,^ for^ as^ between the parties^ to^ it,^ the^ ordinary^ rules^ of^ contract^ and^ construction apply; but^ when^ the^ rights^ of^ third^ persons, without^ knowledge^ of the mortgage, are to be prejudiced, there^ must^ be a^ strict^ compliance with the statute. Indeed, most of the law relating^ to^ chattel mort- gages is founded upon statute.^ All^ the^ States^ have^ statutes^ modify- ing the common law, and regulating the use of^ these^ mortgages. When a bill of sale is^ made^ with a^ condition^ that^ the^ vendor^ is^ to retain a lien for the purchase-money, if^ he^ part^ with^ his^ possession his lien^ is^ lost,^ he^ has^ no^ interest^ in^ the^ thing^ unless^ it^ is^ expressly stipulated or covenanted that he shall have a mortgage upon it. There must be some^ defeasance or condition^ so^ definitely^ expressed as to enable creditors, not parties, to^ ascertain^ the^ true^ character and meaning of the contract, with a good degree of certainty. A mortgage of chattels in some respects resembles a pledge, but is easily distinguished^ from^ it.^ The^ title^ of^ a^ pledger^ is^ merely possessory, and^ his^ right^ to^ it^ is^ destroyed^ whenever^ he^ parts^ with the possession. A mortgage may be good without delivery,^ the general property passes to the mortgagee, subject to be redeemed within the time stipulated. The^ mortgagor^ having^ no^ equity^ of redemption unless expressly stipulated for, or unless in case of fraud, the Court of Chancery might^ interfere^ to^ prevent^ injustice..^ In the case of a pledge the^ general^ property^ does^ not^ pass,^ but re- mains in the pawnor, the pawnor^ having^ only^ a special^ property^ or lien; though the pledger may not redeem at the time^ limited,^ yet it retains the character of a pledge still.
By the common law a creditor who takes a mortgage to secure a debt by bond or otherwise, has three remedies, all or either of which he is at liberty to pursue until the debt is satisfied. He may bring an action of^ debt^ upon^ the^ bond,^ er^ he^ may^ put^ himself^ in^ possession of the rents and profits by ejectment, or he may foreclose the equity of redemption and §ell the land to satisfy the debt. If there be no bond accompanying the mortgage or covenant in the mortgage (since none is^ implied),^ the^ remedy^ of^ the creditor^ is^ confined^ to the land. .If real and personal property are included in the same mortgage, the personal property must be sold first to satisfy the debt. The statutes of this State' have modified and improved the com- mon law modes of proceeding to enforce a mortgage. If the mort- gagee sue upon his bond or covenant, all other proceedings must^ be suspended, if judgment be obtained, the mortgagee cannot file a bill of foreclosure until he has exhausted his remedy against the property of the defendant in the judgment by the^ return^ of^ the^ execution^ un- satisfied, and shows that the defendant has no other than the^ mort- gaged premises whereof to satisfy the judgment. If the mortgage be foreclosed by action, it is attended with this advantage, that if the proceeds arising from the sale are^ insufficient^ to^ pay^ the mort- gaged debt, the court has the power to issue execution immediately against the mortgagor for the balance. And if the mortgage debt be secured by the obligation of any other person than the mortgagor, he may be made a party to the action, and execution issue against him in the same manner as against the mortgagor. If the mortgage contain^ a^ power^ of^ sale,^ and^ it^ appear^ that^ de- fault in some condition of such mortgage shall have occured, by which the power of sale became operative, and that no action at law (or suit in^ equity)^ has^ been^ instituted,^ or^ that^ if^ such^ action^ (or^ suit) has been commenced, that the same has been discontinued, or that if^ a judgment has been obtained, that execution has been returned un- satisfied, and that such^ power^ of^ sale^ has^ been^ duly^ registered^ or recorded, then the mortgagee may have the premises sold by adver- tisement. The statute is special and particular in its provisions, and like all statutory authority, must be^ strictly^ pursued.
' New York.
