LEGITIMACY.-NATURAL BORN SUBJECT.

*

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a valid marriage, or for either of these matters, or for a decree that his marriage was a valid marriage,-may make a decree declaratory of the legitimacy or illegitimacy of such person, or of the validity or invalidity of such marriage. 2. The Court may, in like manner, make a decree upon the claim of any such person to be deemed a natural born subject; and this latter provision is extended, as to Scotland, to the Court of Session. By another modern Act, every person born out of the Queen's dominions of a mother being a natural born subject, is made capable of taking any estate, real or personal, by devise or purchase or inheritance of succession; and a woman married to a natural born subject or person naturalised is herself naturalised. See 7 & 8 Vict., c. 66.

* 21 & 22 Vict., c. 93.

+ Ibdi., s. 9.

172

CAUTIONS ON LOAN ON MORTGAGE.

LETTER XVIII.

I MUST no longer postpone calling your attention to Mortgages.

A mortgage is a security for money lent. The borrower is styled the Mortgagor, the lender the Mortgagee. If you lend money on mortgage, you should take care to have a good title, and property in pledge of sufficient value, and a borrower of character, for, however good the security, if he be a bad paymaster you will find it difficult to obtain your interest regularly. The title will, of course, be investigated by counsel, and you must depend on the judgment of others as to value. In several instances, solicitors have had to indemnify their clients for having lent their money on insufficient security. But this can hardly happen except in small loans on houses, or so-called ground-rents, or the like. A solicitor is, of course, not answerable for the value of the estate pledged, unless he render himself liable by his conduct, for it does not fall within his province to value estates. You are not likely to advance money on mortgage to speculative builders, or the holders of house property. It is not usual, I must inform you, to lend more than two-thirds of the value of the property. Never advance money upon a second mortgage, that is, subject to a prior mortgage in another person. It is not a satisfactory security; inasmuch as you may be compelled to redeem or pay off the first mortgage, or actually lose your own security. If you do advance money on mortgage of buildings, take care to have them insured in your name. If, however, they are

FORGERY OF MORTGAGE DEEDS.

173

leasehold, you should ascertain that such an assurance, if the only one, would not be a forfeiture of the lease under which they are held. You should take care to have all the title-deeds delivered to you, including the instrument under which the borrower immediately claims. Admit of no excuse or delay. Keep your money until the deeds are all forthcoming. If you deposit your deeds at a banker's, be careful to whom you intrust the key of your box.

Pay the money yourself to the mortgagor, and see the deed executed. Do not pay the money to the person bringing the deed, although executed and the receipt signed, unless by the written authority of the borrower; for the mere possession of the deed by the solicitor or agent will give him no authority to receive the money.* It is not safe in all cases to rely on mortgages apparently duly executed, and brought to you by the regular man of business of the borrower, to whom it has been delivered by your solicitor to get it executed by his client the borrower. Unhappily, I have known more instances than one of forged mortgages having been delivered to an unsuspecting lender. In one case, the lender and his solicitors were assembled, waiting for the mortgage deed, which was to be brought duly executed by the solicitor of the supposed borrower, who was confined to his bed by illness; and at length tired with waiting, a messenger was just being despatched to the supposed borrower's house, when the solicitor, who had evidently been delayed in concocting the forged deed and its attestations, arrived with the deed executed and attested, and received the money. He escaped detection at the moment, but ultimately

* In a late case in the court of appeal in Chancery, in which this passage was quoted as applicable to a purchase which was denied by the other side, one of the Lords Justices held that it was applicable, and that the distinction insisted upon was unfounded.

174

CAUTIONS ON MORTGAGES.

left the country. The lender, of course, lost his money. These instances will make you cautious, but will not lead you to suspect men of character and reputation. If you do not yourself pay the money to the mortgagor, you should ascertain that it has reached his hands, and that he is actually the owner in possession of the property. In one recent instance the money, being in possession of the solicitor, was not paid by him, and the client was the loser; and in another, the supposed borrower was a maid-servant of the solicitor, and there also the lender lost his money. It is advisable to keep your own securities in your own deed-box at home, for the same persons who forged mortgages forged also transfers of mortgages, and delivered up the deeds to the new lender; an act which was facilitated by the possession of the mortgage deed. The forger, of course, continued to pay interest regularly to the first lender. In one remarkable case the agent acted for two persons, and he actually mortgaged the property of one to the other by a forged instrument, and although he and these two persons frequently dined together, the forgery was not discovered till the guilty party was wholly ruined. The lender did not like to talk about the mortgage, and was not called upon to do so, as the interest was regularly paid by the agent, and the supposed borrower was, of course, silent on the subject.

No false delicacy should deter a man from watching carefully a pending transaction, or inquiring minutely into a past one. It should be treated as a matter of business. Caution on the part of principals would deter or prevent many an agent from acting fraudulently; and after the instances which have occurred of the misconduct of a few of their body, the general body of solicitors would rejoice if persons whose money

CAUTIONS ON SALES OF STOCK.

175

is placed out on mortgage were to satisfy themselves by inquiry or inspection that it was really and properly secured. After Paul's house failed, the London bankers invited their customers to attend and inspect their various securities—wise men accepted the invitation.

A case has just occurred in which leases from public companies were forged, and money raised upon mortgage of them. In advancing money, therefore, on ground leases, you should ascertain that the persons in possession do really hold under your intended mortgagor.

It has been well said, that high interest means bad security. Many persons-generally women-have been induced to sell their stock, and to give the produce to an agent or attorney who has promised to place it on mortgage at a higher rate of interest: the interest has been accordingly paid, but painful instances have occurred in which the agents have spent the money, and the confiding parties have been left destitute. If a holder of stock cannot attend to sell and receive the money, he should not give a power of attorney to sell his stock with a view to another investment, until the money can be actually paid to the proposed borrower. It should, in effect, be one transaction. In giving a power to receive dividends, it should be seen that the power does not extend to a sale of the stock. The Bank has thrown around the holders of stock all the protection in their power against fraud. In some instances a holder of stock has been induced to attend at the Bank and sign what has turned out to be a transfer upon a sale, without being aware of the nature of the act. It would seem to be an unnecessary caution never to sign your name to any paper without first ascertaining the real nature of the document; but experience