CHAPTER IV.

OF FORECLOSURE.

EQUITY having determined that the mortgaged debt shall be considered the principal, and the land a pledge, and, as a consequence, that the mortgagor, notwithstanding his breach of condition and the consequent forfeiture at law of his estate, shall be relievable in equity, on payment of principal, interest, and costs, and the mortgagee in possession accountable for the rents and profits, it became on the other hand just that the mortgagee should not be subject to a perpetual account, nor converted into a perpetual bailiff, but that, after a fair and reasonable time given to the mortgagor to discharge the debt, he should lose his equity, or, in other words, be foreclosed his right of redemption. On this principle rests the doctrine of foreclosure, which we are about to consider, and in the application of which the forbearance of equity, on behalf of the mortgagor, seems to be carried to its utmost limits, even so far as, in some instances, to work a serious detriment to the mortgagee; for equity is ready to receive the excuses of the mortgagor, not only for the purpose of giving him time to procure the money previously to the foreclosure (a), but also for the purpose of opening the foreclosure, even after many years' quiet possession by the mortgagee, under an absolute decree of foreclosure confirmed, signed, and inrolled.

A mortgagee may by agreement debar himself of the right to foreclose for a given period, and during that time he is precluded from filing his bill to redeem a prior mortgagee, because he has no right to redeem a prior mortgagee without praying a foreclosure against the mortgagor (b).

The usual course pursued on foreclosure is, for the mortgagee to file his bill, praying that an account may be taken of principal and interest, and that the defendant may be decreed to pay the same with costs by a short day, to be appointed by the Court, and in default thereof, he may be foreclosed his equity of redemption. On the answer coming in, the matter is referred to one of the Masters to take the account, and a decree is made for payment of principal, interest, and costs, within six calendar months (c) after the Master's report of what is due on that

(a) See the case of Edwards v. Cunliffe, 1 Madd. 287, in which the period for payment was enlarged the fourth time.

(b) Ramsbottom v. Wallis, Appendix, infra, p. 502.

(c) Vide 2 Eq. Ca. Ab. 605.

After the

account, or in default, the mortgagor shall stand foreclosed. account has been taken, the Master makes his report, and appoints a day for payment; the report is confirmed, and, on default made, the mortgagee may obtain an absolute order for foreclosing (d): the order is afterwards signed and inrolled, and the foreclosure is complete.

Whether, in an ordinary foreclosure suit, it is according to the practice of the Court to order such deeds as remain in the hands of the mortgagor to be delivered up to the mortgagee, or to leave him to his action at law, does not seem quite clear, though it is the universal practice to allege in a foreclosure bill that the mortgagor has some of the title deeds in his possession, and to pray that they may be delivered up. It seems, however, that the registrar would not insert such a direction in the decree without a special order (e). In an earlier case it is laid down that the usual foreclosure decree does not direct the delivery of the title deeds to the mortgagee, though such an order may be made, when there is a covenant for the delivery of the title deeds on default in payment (f). Of course the mortgagee for a term of years cannot claim the title deeds of the freehold without an express agreement (g).

In Ireland it is the practice, instead of a foreclosure, to pray that the estate may be sold, and the monies applied in satisfaction of the incumbrances, and the surplus paid to the mortgagor (h). If there is a deficiency, the mortgagee has his remedy for the difference.

In certain instances also in England a decree for a sale instead of foreclosure may be obtained (i), as, if the mortgage be of a dry reversion (k), or if the heir of the mortgagor be an infant (); in which latter case, a foreclosure or sale in the alternative should be prayed, and if a foreclosure alone is prayed, the Court will, with the mortgagee's consent, refer it to the Master, to inquire whether it will not be for the infant's benefit that a sale should be made (m). And where it appears to be clear, from the circumstances of the case, that a sale would be for the benefit of the infant, the Court will direct a sale without the usual reference (n). Where the infant attains his majority previous to the date of the decree directing a reference to the Master, and he makes no application to the Court, the mortgagee may obtain an immediate sale (o). And in a late case, where the mortgage was for a long term of years, the Court directed a reference to the Master, to ascertain whether a sale of the whole fee would be beneficial to infants who were interested in the equity of redemption and the reversion, and

(d) Senhouse v. Earl, 2 Ves. 450. (e) Frazer v. Jones, 17 L. J., Ch. 353. N. S.

(ƒ) Wiseman v. Westland, 1 Y. & J. 117.

(g) Wiseman v. Westland, supra. (h) 13 Ves. jun. 205.

(i) Quare, whether a mortgagee of a Jamaica estate is entitled on a bill of foreclosure in England to a sale, according to the laws of the colony. Beckford v. Kemble, 1 Sim. & Stu. 15.

(k) How v. Vigures, 1 Ch. Rep. 18; 15 Vin. 475.

(1) Booth v. Rich, 1 Vern. 295; 15 Vin. 475. Scholefield v. Heafield, 7 Sim. 669.

(m) Mondey v. Mondey, 1 V. & B. 223; vide contrà, Goodier v. Ashton, 18 Ves. 83, overruled by Mondey v. Mondey; as to the parol not demurring, vide Price v. Carver, infra, 3 M. & C. 157.

(n) 2 Keen, 247.

(0) Davies v. Dounding, 2 Keen, 245.

if so, to sell accordingly (p). But this seems to be an infringement of the rule that the Court cannot sell an infant's property, even for its own benefit. It also seems, that if the bill for foreclosure be taken pro confesso, the Court will order a sale (q); and if one of the executors of the mortgagee be himself the mortgagor, the bill by the co-executors should be for a sale (r). If the mortgagor die, and the heir and executor be the same person who, by his answer, admits the personal estate deficient for payment of debts, a sale may be obtained in the first instance, without a reference for an account of the personal estate (s). Lord Hardwicke seems to have thought if the security was scanty a sale might be decreed (t). If the security is by equitable deposit of title deeds, the creditor is, it seems, entitled to pray a sale (u). In the above case of Daniel v. Shipwith, Lord Thurlow is reported to have said, that if the heir and executor had been different persons, an account of the personal estate must have been first taken; from which Mr. Powell inferred, generally (v), that if a mortgagor die, and his personal estate prove deficient to discharge the mortgage, the mortgagee may, on filing a bill to enforce payment of the money due, pray a sale of the mortgaged estate in the first instance. The case certainly appears to warrant this conclusion. A modern writer (w) seems to have thought that in any case in which a mortgage security is deficient, a· sale might be prayed; and gives as a reason, that to pray a foreclosure, which the next day is liable to be opened, (that is, by the mortgagee proceeding at law on his other securities, as will be hereafter noticed,) is a mode of relief to which equity would not confine a bonâ fide mortgagee. This, however, it is submitted, is very different from the case put by Lord Thurlow, where you have both the heir and executor before the Court, and the personal estate is become the primary fund for payment of the debt, which, on an account, proves to be deficient. The order for sale in such case may be very properly made. But it is submitted, there is no authority for the general doctrine, that on an alleged deficiency of the mortgage security, a sale may, in the first instance, be prayed. How is it to be ascertained, that the security is deficient as the foundation for the decree for sale? As to the argument, that equity will not hold a mortgagee to a mode of relief liable to be the next day defeated, it may be answered, that if the mortgagee suspect his security to be deficient, he may, in the first instance, proceed against the mortgagor on his collateral securities, and file his bill for the deficiency. It is true that in Dashwood v. Bithazey (x), the Master of the Rolls said, that where the security was defective, it was often referred to the Master to set a valuation on the estate, and the plaintiff was to take it pro tanto, as in the case of Homden v. Tilby, on

a bill of foreclosure of the shops in Westminster Hall. But this observation seems to apply to a defective, and not a deficient security. Mr. Fonblanque (y), referring to the doubt hereafter stated, whether equity will restrain a mortgagee from proceeding on his bond after foreclosure and sale, observes, "the safer course is for the mortgagee to pray a sale; but note, he cannot pray a sale, without previously praying a foreclosure."

When a mortgagee of an estate in the colonies has obtained a decree for a sale in the English Courts, whether right or wrong, he must do whatever is requisite on his part to prevent the colonial Court proceeding to sale (z).

Although equity, after default by the mortgagor in payment of the debt, will give the mortgagee relief by foreclosure, and in certain instances by sale, as before mentioned, yet the Court, in accordance with its principle of considering the estate a pledge, will grant the mortgagor every fair allowance of time to enable him to discharge the debt. The time for payment may be, therefore, renewed, on proper application to the Court, even after the decree is signed and inrolled (a); nor will it make a difference that the proceedings are under the 7 Geo. 2, c. 20, s. 2; the time may be enlarged in either case (b). But on enlargement of the time, the mortgagor will be decreed to pay the amount of interest and costs then found due by the Master's report (c).

The condition on which the order for enlargement of time is usually granted, is payment of the interest and costs reported due, on or before the time appointed by the Master for the payment of the whole (d); but in some cases an additional time will be given for the payment of such interest and costs, as where, at the time of the application for enlargement of the redemption time, the time fixed for payment has nearly arrived (e), or the mortgagor has been prevented by the mortgagee from receiving the rents (f).

And although the interest and costs be not paid by the mortgagor on the appointed day, yet if he can give satisfactory reasons for his default, he may obtain a fresh enlargement (g). Where the mortgagee * has received the rents between the Master's report and the time fixed for payment, the Court will, on motion, refer it back to the Master to continue the accounts, and to fix a new day (h). But an order to enlarge the time for payment in a foreclosure suit is by no means a matter of course, and may be refused where no excuse for the default is stated, and the security does not appear ample (¿).

269; et vide supra, p. 434, 435. Brewin v. Austin, 2 Keen, 211.

(d) Eyre v. Hanson; Edwards v. Cauliffe, supra.

(e) Eyre v. Hanson, 2 Beav. 478.
f) Geldard v. Hornby, 1 Hare, 251.
Jones v. Creswick, 9 Sim. 304.

Ellis v. Griffith, 7 Beav. 83. Alden v. Foster, 5 Beav. 592. Garlick v. Jackson, 4 Beav. 154.

(i) Nanny v. Edwards, 4 Russ. 124. Eyre v. Hanson, 2 Beav. 478.

Where in a foreclosure suit, exceptions are taken to the Master's report, and the time appointed for the payment of the mortgage money is likely to elapse before the exceptions are heard, the defendant should apply to the Court, upon the exceptions being filed, to have the time enlarged until the exceptions are disposed of (1).

If the mortgagor file his bill to redeem, and a day be appointed for payment, and he make default in consequence of which his bill is dismissed, this will be equivalent to a decree of foreclosure (m); and not only the mortgagor and his heirs, but a purchaser of the equity of redemption pendente lite will be bound by it (n); and equity will not, as in the case of foreclosure, enlarge the time for payment (o). But if the bill be dismissed for want of prosecution, and not for want of payment, the mortgagor will not be estopped from filing a second bill to redeem (p).

So anxious is equity to afford every reasonable relief to the mortgagor, that even after a decree of foreclosure has been signed and inrolled, and the mortgagee has been in possession for many years, nevertheless the Court will, under special circumstances, open the decree. In one case the foreclosure was opened after sixteen years (q); and in other cases the Court has granted the relief on fresh evidence adduced on the mortgagor's behalf (r). And the same indulgence will be granted even after the order for making the foreclosure absolute (which constitutes the foreclosure), has been inrolled, nor need the inrolment of such decree or order be for such purpose vacated (s).

There are also certain acts of the mortgagee which will of themselves open the decree, as if there has been unfair conduct or collusion on his part in obtaining the decree (t); or if, after foreclosure, he proceed against the mortgagor on his bond or other collateral security (u), which the mortgagee may lawfully do (v). Whether equity will grant an injunction against the proceedings at law if the mortgagee has sold the estate, and deprived himself of the means of letting the mortgagor redeem, does not seem clear (w). But in a late case the Master of the Rolls expressed an opinion in the affirmative, though he admitted that the authorities left the matter in great obscurity; and in the case before him, he refused to let the mortgagee come in under an administration suit, and prove for the deficiency (x).

Equity, however, will not open a decree of foreclosure by reason of the overvalue of the estate, and a parol agreement to permit a redemp

(s) Ford v. Wastell, 6 Hare, 229: 2 Phill. 591.

(t) Burgh v. Langton, supra. Lloyd v. Mansell, 2 P. Wms. 73. Gore v. Stockpoole, 1 Dow, 18. Harvey v. Tebbutt, 1 Jac. & Walk. 197.

(u) Dashwood v. Blithway, 1 Eq. Ca. Ab. 317; 15 Vin. 476.

(v) Tooke v. Hartley, 2 B. C. C. 126; 2 Dick. 785.

(w) Vide Tooke v. Hartley, supra. Perry v. Barker, 8 Ves. jun. 527; 13 Ves. 198; Fonbl. 277.

(x) Lockhart v. Hardy, 9 Beav. 349.