Meux and Co. entered up judgment and levied execution for 1560l. 6s. 5d. Morgan applied to Combe and Co. to lend him money to satisfy Meux and Co., and to supply him with beer, which they agreed to do; and Morgan, on the 20th of January, 1810, executed to them a warrant of attorney, with a defeasance stating that Combe and Co. had that day lent him 12507., and that he had deposited with them the lease of the house as a collateral security for the 12507., and further advances not exceeding 15007. On the same day Combe and Co. paid off Meux's debt, and satisfied the law charges and sheriffs' poundage, amounting in the whole to 12527., and thereupon Meux and Co. delivered to them the lease. On the 14th of August following, Combe and Co. entered up judgment against Morgan, and levied execution for 14207. 14s. But a commission of bankrupt issuing against him on that day, they withdrew their execution, and proved part of their debt for beer delivered as a debt under the commission, and presented a petition praying a sale of the leasehold premises for payment of the residue of their debt; and they contended, that having paid off Meux and Co. they were entitled to stand in their place. An important fact is omitted in the report, viz., the time when the act of bankruptcy took place; but it must be presumed to have occurred previously to the 20th of January, 1810, for otherwise there seems no good reason why Combe and Co. might not have rested on the strength of the deposit made to themselves. The Lord Chancellor, however, dismissed the petition, on the ground that the petitioners were bound by the recital in the defeasance, viz., that Morgan had deposited the deeds. If the creditor by his bill, or in case of his debtor's bankruptcy, by his petition and affidavit, insist that the deposit was made as a security for future advances, as well as for the debt then due, and the debtor by his answer to the bill, or by affidavit in bankruptcy, deny the fact, the Court will direct an inquiry to be made by the Master or the Commissioners, in respect of what debt the deposit was made (c). If the title deeds of the house engaged in trade are deposited to secure a debt, and the premises are sold together with the good-will of the business, the equitable mortgagee will be entitled to the whole of the purchase-money (d). The deposit of title deeds being an imperfect mortgage, which the mortgagee is entitled to have perfected, or rather being a contract for a mortgage, which, according to the rule of equity, gives to the party claiming the benefit of the contract the same rights that he would be entitled to if the contract had been completed, the proper decree would seem to be for a foreclosure and conveyance (e); at all events, the equitable mortgagee seems entitled to such a decree. His right to a sale does not appear to be so clear, though in some cases a sale has been decreed (ƒ). And he is entitled clearly to a sale where the memo (c) Ex parte Mountfort, supra. (d) Chissum v. Dewes, 5 Russ. 29. (e) Vide Parker v. Housefield, 2 M. & K. 419, and cases there cited in judgment. Iliern v. Mill, 13 Ves. jun. 114. Monkhouse v. Corporation of Bedford, 17 Ves. 380. Brocklehurst v. Jessop, 7 Sim. 438. Price v. Carver, 3 M. & C. 157. Meaden v. Sealey, 6 Hare, 620. (f) Pain v. Smith, 2 M. & K. 417. Mellor v. Woods, 1 Keen, 16. Meux v. Ferne; Spring v. Allen, cited 2 M. & K. 422. randum accompanying the deposit provides that a formal mortgage shall be executed with a power of sale (g), or where the bill is filed against the representatives of the deceased mortgagor (h), in which case the mortgagee, as to any balance remaining due after the sale, will be entitled to stand in the place of a general creditor (i), and to have his costs of suit against the representatives (k). So a sale would seem to be the proper decree when the defendants are infants (7). The equitable depositor will, as in the common case of mortgage security, have six months given to him to redeem (m), although from the nature of the transaction no interest is payable on the principal sum (n). In bankruptcy, if there is written evidence attending the deposit of the title deeds, the mortgagee will be entitled to the costs of his petition for a sale; but otherwise not (o); and if there is a deposit of freeholds and leaseholds with written evidence only quoad one set of deeds, an order for sale will be obtained subject to the payment of costs by the mortgagee (p). But in cases out of bankruptcy it is not material that there is no written memorandum (q). A renewed lease is subject to the same equitable mortgage that affected the former lease (r). Where an equitable mortgagee parts with the deeds in order to let in an annuity, and merely takes a personal undertaking by a third person pay the annuity if default should be made by the grantor; if such default is made, the mortgagee cannot sue in equity for an indemnity (s). An equitable mortgagee may himself create an equitable mortgage, by depositing the deeds with a third person, although he does not deliver over the memorandum (t). The depositary of a lease is not answerable for the rent and covenants of the lease, nor can the landlord by bill in equity compel him to take, or the mortgagor to execute, an assignment, even if the depositary has been in possession and paid rent (u); it was held, indeed, that it might be otherwise under special circumstances, as where the depositary has been in possession and receipt of the profits, and has paid rent to the landlord (v). But it must be observed, that in the case of Lucas v. (g) Listler v. Turner, 5 Hare, 281. (h) Brocklehurst v. Jessop, supra. Connell v. Hardie, 3 Y. & C. 582. (i) Brocklehurst v. Jessop, supra. (k) Connell v. Hardie, supra. () Vide Scholefield v. Heafield, 7 Sim. 669. Price v. Carver, supra. (m) Parker v. Housefield, supra. Thorpe v. Gartside, 2 Y. & Coll. 730. (n) Mellor v. Woods, supra. (0) Ex parte Brightens, 1 Swanst. 3. Er parte Trew, 3 Madd. 372; et vide Anon. 2 Madd. 281. Ex parte Sykes, 1 Buck. 349. An equitable mortgagee must pay the costs of the order on a separate petition for leave to bid unless the assignees consent to their being paid out of the estate. But on the usual petition for a sale and leave to bid, where there is a memorandum, the costs are out of the estate. Mont. & Ayr. Bank. by Miller & Koe, 254. (p) Ex parte Robinson, 1 Dea. & Ch. 119. (q) Connell v. Hardie, supra. Queen v. Chambers, 4 Y. & C. 54; et vide Lewis v. John, 9 Sim. 366. (r) Fector v. Philpot, 12 Price, 197. (8) Brough v. Oddy, Taml. 215. (t) Ex parte Smith v. Hildyard, 11 L. J. Bankr. 16, N. S. (u) Moores v. Choat, 8 Sim. 508, overruling Flight v. Bentley, 7 Sim. 149. Moore v. Greg, 2 Phill. 717, confirming Moores v. Choat. (v) Lucas v. Comerford, 1 Ves. jun. 235. Comerford, the defendant admitted his liability on the covenants, except on one to rebuild, although Lord Thurlow certainly grounded his judgment on the general principle, that the depositary should not take the profits and keep the landlord out, without taking upon himself the obligations of the lease (w). That doctrine, however, confused the boundaries of the jurisdiction of law and equity, and the case was so far overruled by the Lord Chancellor, in the late case of Moore v. Greg (x), where his lordship held, there would be great difficulty in maintaining that such a depositary, though in the enjoyment of the property in possession, was answerable for rent actually due, or covenants broken, at the time of the bill filed (y). When an agreement for a lease is deposited by way of security, and a lease is afterwards granted to the depositor upon different terms, it seems that the deposit will not be affected so far as regards the particulars to which the deposit extends (y). On a review of the decided cases establishing this mode of mortgage security, it is perhaps to be regretted, that the old law was not adhered to, and the principle on which the Statute of Frauds was founded more respected. For although equity, by declaring the deposit itself to be evidence of an agreement executed, has contrived to evade the strict and literal wording of the statute, yet it is manifest that the door has been in some degree open to fraud and perjury; nor does a creditor seem to deserve much favour who will not be at the trouble of a few lines in writing (z) if he is desirous to have a charge on his debtor's estate. If the debtor denies that the deposit was intended to cover future advances, as in Ex parte Mountfort (a), or if he insist that the deeds were not delivered by way of deposit, but with a different intent, resort must, in many cases, be had to parol evidence; and, as remarked by Lord Eldon (b)," the mischief of all these cases is, that the Court is deciding upon parol evidence with regard to an interest in land within the Statute of Frauds." (w) Vide Close v. Wilberforce, 1 Beav. 112. Willson v. Leonard, 3 Beav. 373. Sanders v. Benson, 4 Beav. 350; et vide supra. (x) 2 Phill. 717. (y) Ex parte Reid, in re Buckland, 17 L. J., Bank. 19, N. S. (2) Ex parte Whitbread, supra. (b) Ex parte Mountfort, supra. CHAPTER X. OF WELCH MORTGAGES. WELCH mortgages, as already remarked (a), closely resemble the ancient mortuum vadium described by Glanville, viz., a conveyance of an estate redeemable at any time on payment of the principal, with an understanding that the profits in the mean time shall be received by the mortgagee without account in satisfaction of interest (b). And this was also formerly a common mode of mortgage in Ireland (c). No covenant for payment of the debt on the part of the mortgagor is inserted in the mortgage deed (d), and the mortgagee has no remedy to compel redemption or foreclosure in equity, though the mortgagor may redeem at any time (e)*. If the amount of rents and profits be excessive, the Court will on bill filed by the mortgagor decree an account, notwithstanding the agreement that the profits shall be retained in lieu of interest (f); and probably in the present day the Court would in every instance decree an account against the mortgagee of the rents and profits, whether the value was excessive or not. In some instances the estate is conveyed to the mortgagee and his heirs, until out of the rents and profits he shall have received principal and interest, which is in the nature of a Welch mortgage, and was compared by Lord Hardwicke (g) to a tenancy by elegit, so that as soon as the principal and interest were satisfied the estate ceased, and the mortgagor might maintain ejectment, unless the mortgagee had remained in possession twenty years after the debt was satisfied, at which time the Statute of Limitations would have begun to run; and which circumstance would also bar the mortgagor of any equity of redemption (h). And his Lordship said the mortgagor had the same right as the conusor under the elegit had, to come into a Court of equity for an account of the rents and profits; nor would the Court relieve the mortgagee from his own contract and agreement of being subject to a perpetual account (i). In a similar case, time was held no bar to redemption, although by the mortgagor's own shewing upwards of sixty years had elapsed (k) since the mortgagee took possession. In Hartpool v. Walsh (1), a bill to redeem a mortgage in the nature of a Welch mortgage was dismissed in the Irish Chancery, and on appeal to the English House of Lords the judgment was affirmed; but in that particular case a second mortgage had been made to the same party, by which the mortgagor had agreed to repay the whole debt at any time after eighteen months' notice; and it was admitted the notice had long since been given, which reduced it to the case of a common mortgage. But in a later case, Lord Lyndhurst considered the decision in the last mentioned case to have been made on the ground of the impossibility of taking the long and complicated accounts after the lapse of ninety years, and that the redemption suit had not been prosecuted with reasonable dispatch (m). In that case a reversion in fee, expectant on a life estate, had been demised for a term of 500 years, with a proviso for redemption on payment of the mortgage debt, but without any definite time fixed for payment, and the mortgagor covenanted to pay the mortgage debt on demand, and that until payment the mortgagee might enter and enjoy the premises; Lord Lyndhurst held this to be in the nature of a Welch mortgage, and dismissed a bill filed for foreclosure (m). In a case (n) heard before Lord Eldon, the doctrine of a mortgage in the nature of a Welch mortgage was fully recognised by the Court. The question came on incidentally on a motion, that one of the defendants, who was the executor of the executor of the attorney of the original mortgagee, should leave with his clerk in Court certain drafts or copies of deeds, letters, and papers, which he had by his answer admitted to be in his possession. The circumstances of the case, it appeared, were these: Edward Charlton (under whom the plaintiffs claimed) being indebted by judgment to one Rooke in several sums of money, did, by agreement dated the 18th April, 1747, agree to deliver up possession of the lands to the attorney of Rooke to hold to Rooke as his freehold, until he should have levied and received the amount of his debt. In 1752, Rooke assigned all the premises and the remainder of his debt to Reed (under whom the defendant Reed claimed, and who was also a judgment creditor of Charlton), and appointed Reed his attorney. Reed entered, and was possessed until his death in 1754, when Christopher Reed (who was residuary devisee, executor, and residuary legatee of Reed) entered, and was possessed until his death in 1778, on which the trustees and executors of his will entered, and were possessed until 1783, when the defendant Reed entered, and had been ever since in possession. Charlton died in 1767 intestate, leaving William Charlton his heir at law, who died in 1797, having devised his real estates to the plaintiff Fenwick in trust to sell. In the year 1800, Fenwick filed his bill for an account and to be let into possession, and alleged at the time Reed first took possession (k) Orde v. Heming, 1 Vern. 418. (1) Hartpool v. Walsh, supra. (m) Teulon v. Curtis, 1 Younge, 619. (n) Fenwick v. Reed, 1 Mer. 114. |