Cl. 10 should ed. Clause 10, that the mortgagor will produce title deeds, is a not be adopt- clause which, without some explanation, might strengthen a practice unfortunately still too prevalent, viz., that the title deeds may be left in the hands of the mortgagor. This should never be permitted, if only (apart from other reasons) on the ground of the frequent impossibility of ever afterwards obtaining any production of the title deeds, and the consequent depreciation in the value of the property, and difficulty in carrying out a sale. When the mortgagor makes default, and the mortgagee proceeds to enforce his claim by foreclosure or sale, an hostility frequently springs up, and the mortgagor, so far from producing the title deeds, does all in his power to thwart the mortgagee. The remedy on the covenant will frequently be found useless, and when a foreclosure or sale has to be resorted to, the mortgagor is generally in such circumstances that, on a sale, any proceedings on the covenant to produce, only entail expense on the mortgagee, and on a foreclosure any order for delivery up of the title deeds might be of no avail. The Legislature never intended, by inserting this form of covenant, to sanction the practice of leaving the title deeds in the hands of the mortgagor. The form may be of service where the title deeds cover other property to be retained by the mortgagor and not included in the mortgage; or where the mortgagor has sold part of the property covered by the title deeds, and himself given his vendee a covenant to produce. Even in these cases a prudent mortgagee will obtain possession of the title deeds to himself, or at least to some trustee for both parties when the mortgagor objects on the ground that the deeds cover other property, the mortgagee may himself offer to covenant to produce; and when the objection is that the mortgagor has covenanted to produce to a former purchaser, the mortgagee may urge that that covenant would also be binding on him during the continuance of his estate as running with the lands (a). (a) Sugden Vendors, 14 ed. 453. It must not be supposed that the fact of a vendor having given a covenant to produce on sale of part of the Clause 12. The nature of the covenant to insure has been Cl. 12 as to already considered (a). It will be observed that the statu- insurance. tory form is framed rather to meet the case of a future than of an existing insurance. If at the time of the mortgage there be a policy of insurance, and the same be not actually assigned to the mortgagee, it may be questionable how far this clause will be of any avail to him as regards that specific policy, as the mortgagor only covenants to insure "unless already insured;" and so far as regards that part of the covenant which is to keep insured and assign the policy. it may be contended it does not apply to the case of a policy existing at the time of the covenant, as the covenant contemplates a future policy in such proportions and in such office as the mortgagor thereafter may require (b). Nothing is said in this form as to how the insurance moneys that may be paid on any loss are to be applied (c); clause 14, it is true, does provide to a certain extent for application of the moneys, but it would not reach the case of insurance moneys received before default by the mortgagor, but is apparently confined to the position of the mortgagee after sale under the power. power of sale Clause 14 conferring the power of sale and providing for Cl. 14, the application of moneys is one which varies much from the badly framed. modern approved forms. The objections will be understood from what has been before explained in treating of the power of sale (d). It conflicts apparently as regards right to possession with clauses 17 & 7 (e). It does not extend to breach of covenants as do clauses 17 & 7. The power property, entitles him, on sale of the residue, to retain the title deeds to answer his covenant; in the absence of any contract on the subject, it would seem he will have to deliver them over to the purchaser of the residue, he can neither retain them or deliver them to the first purchaser. The vendor would however, in such a case be entitled to have the covenant recited in the conveyance of the residue, or endorsed on it, so as to create notice, and might fairly require a covenant from the purchaser to perform it: Sugden Vendors, 14 ed. 434. (a) Ante p. 363. (b) See 29 Vic. ch. 28, s. 7, ante p. 11. (c) As to necessity for this see ante p. 366. Austin v. Story, 10 Grant 306. The sale. power of re-sell without being Clause 14. should be given to the personal, not to the real representatives (a). It should especially not be dependant on notice, but the provision as to notice should be by a covenant by by the mortgagee that notice shall be given; and the purchaser should be expressly relieved from any necessity as to seeing that notice was given (b). There is no power to the mortgagee to buy in at auction and responsible for loss or deficiency on re-sale (c); or to rescind or vary any contract of sale that may have been entered into or to sell under special conditions of sale (d), (the latter however may be permissible when the conditions are not of a depreciatory character). The application of insurance monies is not sufficiently provided for (e); nor would they be received by the heirs (as assumed by the clause), but by executors, if payable to any representatives of the mortgagee. The surplus of sale should not be made payable exclusively to the personal representatives, for on sale after death of the mortgagor, the heirs are entited to the surplus (ƒ); in this respect the form might mislead the mortgagee to his prejudice. There is no clause relieving a purchaser from seeing that default was made, or notice given, or otherwise as to the validity of the sale; the importance and benefit of which to the mortgagee, and even to the mortgagor, was before alluded to (g). The provision that the giving the power of sale shall not prejudice the right to foreclose is unnecessary (h). It is perhaps to be regretted that a better form of power of sale had not been adopted (i). (a) Ante p. 373. (b) Ante p. 375. (c) Jarman Byth. Con. by Sweet 3 ed, vol. 5, p. 567, n. b, and p. 412; see also ante p. 375 n. c. (d) As to the object of these provisions, see p. 375 n. c. (ƒ) Ante p. 377. (e) Ante p. 366. (i) The very general practice now is to adopt the forms given by the statute, and in ordinary cases to fill up a printed form of mortgage. This is found to save both time and expense, especially now that all mortgages have to be prepared in duplicate, and registered in full. Where the parties desire to adopt a printed short form under the act, the practice of the author is to add a short proviso, that in case default be made in pay conflicts 7 & 14. Clause 17. The inconsistency as to right to possession be- Cl. 17, as to tween this section and sections 7 and 14 has been before possession alluded to (a). It would seem that this section is not open to with clauses the objection of being invalid for the purpose intended; viz., to operate as a redemise to the mortgagor; or of operating further than as creating tenancy at will. The nature of this objection has been fully explained (b) it suffices here to say that the argument in favor of the objection would be, that, as the right of possession and demise to the mortgagor is till default in payment of principal, or interest, or in observing covenants, the demise is void for uncertainty as to the term of its duration. It is apprehended however, that though such objection would hold good if the right of possession were given only till default in observing covenants, and the covenants or any of them were uncertain in their nature as to the time of their performance or of breach, still, as in this section, a certain day is named for payment of principal, it will operate as a valid demise and creation of a term till that day, subject to be defeated in the meantime on non-observance of covenants or non-payment of interest (c). 29 VIC., CH. 27. AN ACT TO AMEND THE ACT RESPECTING SHORT FORMS OF [Assented to 18th September, 1865.] Her Majesty, by and with the advice and consent of the Legislative Council and Assembly of Canada, enacts as follows: 1. The form of words numbered six in column number one of Schedule 2 of the second schedule of the Act, passed at the Session of the Par- Act, 27, 28, V. months after the same is pay ment of either principal or interest for (c) Ante p. 389; and Royal Canadian Bank v. Kelly, 19 C. P. U. C. 196, ante p. 383. c. 31 amended. Further the said liament of Canada, held in the twenty-seventh and twenty-eighth years of Her Majesty's Reign, chapter thirty-one, intituled: As Act respecting Short Forms of Mortgages in Upper Canada, is hereby amended, by substituting the word "Mortgagee" for the word "Grantee" therein. 2. The form of words numbered fourteen in column number amendment of two of the second schedule of the English version of the said Act is hereby amended by striking out the word "or" after the word "assigns" in the twenty-third line of such form of words, and substituting therefor the word "of." Schedule. Further 3. The form of words numbered fifteen in column number one amendment of of the second schedule of the said Act, is hereby amended, by substituting the word "mortgagee" for the word mortgagor" therein. the said Schedule. |