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Henry St. George Tucker.

Commentaries on the laws of Virginia, comprising the substance of a course of lectures delivered to the Winchester law school: (Volume 1) online

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be decreed.



CilAP



S.J MORTGAGES. Ill



Where no particular time is appointed for payment of the money, (as in
the case of Welsh mortgages,) it is said (2 Cruise, 110) redemption will be
decreed at any time. I do not perceive how the equity of redemption
could arise, since there could be no forfeiture. ^Vhcre, indeed, lands are
conveyed to A, until by perception of the rents and profits he has satisfied
his debt, no length of time will bar the right of the party, unless, indeed,
the mortgagee, after an account has been taken shewing his debt paid off,
has been permitted to retain possession more than twenty years. See 1
Atk. 360. Cases of this description have never occurred, I imagine, in
Virginia.

Lastly, we may observe, that where a fraud has been practised by the
mortgagee at the time of the mortgage, (or subsequently, so as to delay the
redemption,) relief will be given notwithstanding twenty years possession.

5. Who may redeem ? It is a general principle that whoever hath an es-
tate or interest in the mortgaged nremises has a right to redeem : for as the
equity of redemption will descend and may be aliened, devised, or encum-
bered, it follows of course that those who, by any of these means, derive an
interest from the mortgagor, may enforce that interest by an exercise of the
right of redemption. Thus not only the person mortgaging, but also hi?
heir, or doweress, or tenant by curtesy, or devisee in case of a mortgage of
an estate in fee simple, or the executor or administrator in case of the mort-t
gage of a lease for years, and assignees, and subsequent mortgagees or
judgment creditors, and even volunteers, are entitled to redeem.

The right of a judgment creditor to redeem exists, however, only where
his judgment binds the estate mortgaged. Thus, if the mortgage be of a'
term for years the judgment does not bind it until an execution against the
debtor's goods and chattels has come into the hands of the sheriff, or a casa
(since a late statute) has been levied on his body. For judgments do not
(before execution) bind the goods and chattels, of which character a lease
is. But a judgment binds a freehold estate from the first day of the term
in which it is rendered ; and therefore if the mortgagor was a tenant in fee
simple and mortgaged either in fee or for years, the estate is bound and
the creditor may redeem even before execution sued out. 5 John. C. C.
93. And such redemption may even be after a decree of foreclosure where
the judgment creditor or other subsequent incumbrancer was not a party
to that decree and so not bound by it. 2 Cruise, 98.

6. On what terms the party is permitted to redeem. And here, first, it is
obvious that redemption can only be ])ermitted upon payment of the full
amount due of principal, interest, and costs ; for as the redemption is a favor
to the party, he must (except under particular circumstances that will be
hereafter mentioned) pay the costs of his bill to redeem, though he sux;-
ceeds in obtaining the relief he solicits. 3 Mun. 68.

But this is not all : for it is a principle of the court of chancery, that he
who asks equity must himself do equity ; so that if there be any other lien
on the mortgaged premises besides the mortgage, the mortgagor must pay
both, or he shall not have his land again. This is one species of \vhat is
familiarly termed " tacking " in the chancery books. Thus in the early ca-
ses it was decided, that if a man borrowed money upon mortgage and also
a further sum upon bond, and the mortgage was forfeited, the mortgagee
might tack the bond to the mortgage, and the mortgagor should not redeem
without paying both. But this was obviously erroneous : for it was in effect
to charge his land with a bond, by which it never was the parties' intention
that it should be bound. The doctrine, therefore, was soon abandoned in
this case, though the principle was fully recognized in its application to
others: such, for instance, is the case of the heir of a mortgagor who had,
as in the last casC; borrowed upon mortgage and also upon bond. The



112 MORTGAGES. [hook 2.

bond was allowed to be tacked to the mortgage, and the heir was not per-
mitted to redeem without jiaying botli ; lor on his ancestor's death, the
land, while it remained in his hands, became, in elFect, chargeable with the
dcht. 1 Vern. 'l\o. So if the mortgage was of a term of years, tlie exec-
utor would not be permitted to redeem either, without ])aying both ; 2
Vern. 177. 1 P. Wms. 770; lor tiie lease was liable to pay the bond as
part of the assetts of the estate, though it had not been so made liable by the
mortgage. Upon the same ])rincii)le, since the statute of fraudulent devi-
ses, which j)laccs the devisee on the same footing with the heir as to liabili-
ty for bond debts, the devisee of mortgaged premises mu^;t pay olf the bond
as well as the mortgage, before he can redeem. And in like manner, if I
hold a good mortgage upon A's land, and have also lent him a further
sum on the credit of that land, but from some informality, the security
(i. c. conveyance) is defective, A shall not redeem without paying oil"
both ; for here the intention was that the land should be bound for both,
and justice demands that A should not get his land till he pays olf all that
is due upon it. And this is the case also in England, even as against the
assignee of the equity of redemption or other subsequent incumbrancers.
2 Vern. 2S6. '2 Vez. jr. 372. 2 Cox. 4-25. 2 Black. R. 726.

The principle upon which these cases turn is by some judges said to be
that before stated, that "he who asks equity must do equity." By others
it is said the doctrine turns rather upon the principle of preventing a multi-
plicity of suits. 3 Atk. G30. 3 Bro. c. c. 162. Thus, in the case of the
heir, il he were permitted to redeem upon paying the mortgage without the
bond, he would eo instanti have assetts by descent in his hands liable to the
bond, and the creditor would only be turned round to his suit against the
heir, to render the land liable in his hands by extent, if he still held it, or to
charge him personally in respect of the land, if he had aliened it. And
the application of this principle will explain, very clearly, some other cases
which may at first view appear inconsistent with the foregoing. For it is
well settled, that a subsequent incumbrancer or purchaser, or assignee of
the equity of redemption, whether from the ancestor or the heir, may re-
deem without discharging the bond debt: because although the heir is
bound for his ancestor's debt in respect of the land descended, and although
the land itself, while it is yet in his hands, is liable for the payment of the
debt by extent, yet the bond itself is no lien upon the land. The lands in
the hands of the assignee cannot, therefore, be reached at law by the credi-
tor, nor is the assignee liable at law in respect of his possession of them. So
that the creditor has no right to go against him for the bond at all, and equi-
ty will not make him liable when he was not liable at law, the money due
by the bond having been advanced, not upon the credit of the land, but
solely upon the personal credit of the mortgagor. See 3 Bro. c. c. 162. 2
Fonb. 277. See also, on this subject, 1 Vez. 87. 2 Vez. jr. 376. 3 Atk.
360. 1 Vern. 29. 2 Vern. 207. 6 Mun. 550.

I have said that the redemption will only be permitted upon payment of
the principal, interest, and costs due by the mortgage. The mortgagor,
however, is entitled to demand of the mortgagee an account of the rents
and profits of the land while in his possession, which will go to the credit
of the mortgage, and thus reduce the amount to be paid upon redemption.
For if the mortgagee takes possession, he is considered as the bailiff of the
mortgagor; 2 Atk. 534; accountable for everything he makes or receives,
which is chargeable to him against the mortgage debt. But he is account-
able no farther, except for such gross negligence as amounts to wilful de-
fault. 2 Call, 430. 12 Vez. 493. If he speculates, it is at his own ha-
zard, for he is still chargeable for the fair rents. Id. If the profits exceed
the interest, the excess shall go to reduce the principal, notwithstanding an



CHAP. 8.] MORTGAGES. 118

express agreement to the contrary, and although the contract may be in the
form of an absolute bill of sale. 1 Wash. 14—19. 2 Call, 430. He is
moreover not only chargeable with what he has actually received, but also
for such profits as but for his wilful default he might have received, and also
for waste and dilapidations committed by or through him, or suffered by
his neglect. 5 Mun. 4-20, 423. Yet he is not obliged to lay out money
any farther than to keep the estate in necessary repair ; 3 Atk. 518 ; nor is
he bound, it is said, to leave the premises in a^ good repair as he fouijd
them. 1 Mad. 425. 1 Ans. 96. If he expends money in supporting the
mortgagor's right to the estate where his title has been impeached, or in
paying renewal fines, (as they arc called,) where the mortgage is of a lease-
hold, with covenant to renew, he shall be reimbursed out of the estate with
interest. 2 Vern. 84. 1 Ball & B. 202. 3 Atk. 518. And so if he pay
the taxes upon the lands ; though he is not, I conceive, chargeable with
the loss of back lands for non-payment of taxes, where he was not in actu-.
al possession. In such case, notwithstanding the marginal quaere annexed
to the case of Coutts vs. Greenhow, (2 Mun. 363,) I cannot doubt that the
liability of the mortgagor and of all his property, (even in the hands of vo-
lunteers,) for the mortgage debt, would be unimpaired.

In the settlement of accounts, the mortgagee, if he has been in posses-
sion, is allowed all just expenses and disbursements ; and in the case of
slaves while he is charged with hires, he is allowed for their improvement
and bringing up. 1 Wash. 19. He may also employ, if necessary, and
pay a bailiff for receiving rents, — or a manager of the estate for his duties
and services ; but if he perforin those duties himself, he cannot charge for
them ; for the law will not permit even an agreement to make him aii al-
lowance to stand as good, since it might lead to abuse, and be a Cover for
extortion by the creditor from the debtor. 3 Atk. 518. 1 Vern. 316. 2
Atk. 120. 10 Vez. 405. 5 Vez. 834. 9 Vez. 271.

Interest upon interest is not allowed in the case of a mortgage, (3 Br.
Ch. Ca.'440,) though, in England, it seems that where the Master in Chan-
cery has reported principal, interest, and costs due, interest will by a subse-
quent order be allowed on the whole amount of what is due, except, per-
haps, in the case of an infant. 1 Mad. 427. Such is not the practice
with us.

If the mortgagee assigns his mortgage, the assignee must allow, in ac-
count with the mortgagor, all discounts and payments made to the mortga-
gee before notice of the assignment ; and he takes the mortgage subject to
all equities ; for dealings with a mortgagee before notice of an assignment
of it are valid. 6 John C. 427, citing 4 Vez. 389.

Where the profits exceed the interest, the practice with us is uniformly to
apply the excess immediately to sink the principal, though in Englg^nd it
does not seem to be an invariable rule. See 2 Atk. 410, 534.

It may, and indeed it does, often happen, that the mortgaged subject is
inadequate to the discharge of the whole sum found due by the mortgagor.
In such cases it has been made a question whether the mortgagee would be
entitled to be considered as a creditor for the excess.*

The principle that a mortgagee who has not satisfied his debt by foreclo-
sure, shall be considered a creditor beyond his security, (2 Fon. 282,) is
considered, I think, as incontrovertibly established, and rests certainly upon

* On an application for an appeal at Levvisburg the judges of appeals concuned in the opinion that
the excess was to be considered a specialty debt. Tlie case, however, was that of a deed of trust ,
though I am not aware that the difference is material. Any writing acknowledging under the seal of
the party, that a certain sum is due, will maintain an action of debt. 2 Call 530. 4 H. & M.^200.
Could noji est factum be pleaded to such an action on the deed of trust? I should think not. The
action lies on the hidebtedness, and does not depend upon an express promise to pay. In Powell on
mortgages it is laid down explicitly that the surplus is a spcchilty debt. Scd, qu. and see Williams
on Exn,

15*



114 MORTGAGES. [ book 2.

principles of reciprocity and equal justice. For if, by the adoption of the
principle of redemption, and of the rules wiiich regulate it, a court of equi-
ty has effectually guarded the inort(ra<ror against loss, and prevented the
mortgagee from inakinggaiii, he surely ought not on the other hand to lose.
Il could not have been conteinplated, because he took a security lor his
money, that he should not recover any balance which it might fail to satisfy.
The courts will not consider the transaction as a transfer of the estate, but
merely as a security for money : and considering it in this light, if the es-
tate is insullicient, the mortgagor ought to be held responsible for the ba-
lance. Nor have I met with any case in whi-ch this principle seems to have
been brought into question ; for though in Perry vs. Barker, (8 Vez. 527.
13 Vez. 198,) after foreclosure an injunction was granted to restrain the
mortgagee from recovering the supposed deficiency at law, yet that was
because the balance was very inconsiderable, and the moTtf^ui(ee had more-
over put it out of the power of the court to open the foreclosure,* which in
England, (where a sale by decree of the court is not the usual course,)
is always required of a mortgagee who brings an action for the balance.
Eq. Cases, Abr. 317. 1 Mad. 421. For where the security is defective,
(^i. e. not sufficient to satisfy the debt,) it is often referred to the master to
set a valuation on the estate, and the plaintifi" is then to take it pro tanto.
Or if the mortgagor contends that it is worth much more than the money,
the foreclosure is in England extended liom time to time, so as to give the
mortgagor time to soil and redeem. Where, then, the mortgagee after fore-
closure has sold, so as to put it out of the power of the mortgagor to redeem,
or to have the property disposed of to most advantage, it does not seem in-
consistent with general principles that he should be prohibited from pro-
ceeding for an inconsiderable balance, as in the case of Perry vs. Barker
above quoted.

In Virginia however, where, as we shall presently see, the decree on a
bill to foreclose is for a sale, so that the mortgagor receives a surplus if the
estate be worth more than the debt, it would be grossly unequal and unjust
if the mortgagee could not proceed for his balance. It is therefore decided
in the case of Bumgarncr vs. Allen, (6 Mun. 445,) not only that the mort-
gaged premises are liable in the hands of any person into whose hands
they may come, but that the mortgagor is responsible for any deficiency in
their value compared with the incumbrance upon them. It is true, in an-
other case, (2 Mun. 337,) an action of covenant was not entertained upon
a mere " proviso in the deed for the payment of the money;" but this de-
cision turned only on the technical effect of the proviso, which was not a
covenant, but did not deny that the surplus could be recovered by other
means. Where there is a bond, the excess may be recovered by suit upon
it; 2 Br. Ch. Ca. 126; so if there be an express covenant for payment of
the money, an action of covenant would lie for the balance ; and where
there is neither covenant or bond, an action of debt would still lie, since the
mortgage contains an acknowledgment of a debt under seal. Indeed every
loan creates a debt from (he borrower, whether there be a bond or covenant
for payment or not; and it is the same thing if the debt be also secured
by mortgage. 2 Fon. 283. 2 App. Ba. Abr. 244. 3 P. Wms. 358. In-
deed if the creditor had taken no security at all, he would have been a cre-
ditor by simple contract, (2 Fon. 283,) and the taking an inadequate security
ought not to place him in a worse condition.

In the foregoing remarks we have seen that the mortgagee is held to a
strict account of the rents and profits he has received, and the mortgagor
on the other hand is considered as personally liable lor the excess beyond

* Tliis is the principle of the case in 2 John. C. 128. Tlie bill to foreclose was dismissed as to the
niortsngor, llie creditor liaving had tlie land sold by execution under the New York law.



CHAP. 8.] MORTGAGES. 115

the value of the mortgaged subject. But neither he nor Iiis lessee are C3m-
pellable to account for the rents and profits received by them, (3 Vez. 15,)
except that his lessee is liable to the mortgagee for such rents as accrue af-
ter notice to him requiring payments to be made to the mortgagee instead
of the mortgagor. And the reasons given why the mortgagor and those
claiming under him are not held to account, are ihat the mortgagor is not
the bailiff of the mortgagee, and as the latter may at any time take posses-
sion, it is his own fault or folly that he does not receive the rents and profits
himself. A mortgagor in possession may, however, be injoined from the
commission of waste, when there is any reasonable ground of apprehension
that the security may prove deficient. 2 John. C. 148. 1 Dick. 75. 3
Atk. 210, 237.

7. Under the last head we had occasion to speak of one species of what
is familiarly known in the law by the appellation of tacking. We proceed
now to present another of much more questionable equity, though equally
well established by the British adjudications, and equally the law of our
own courts, unless the operation of our registry acts should have abolished
it. In order to understand this matter fully, a few preliminary remarks seem
proper.

It is one of the maxims of a court of equity that " where equity is equal
the law shall prevail :" or, in other words, that where two persons stand up-
on equal grounds in respect to the justice of their demand, he who has the
law in his favor, or who in a court of law would be considered as having
the best right, will prevail also in a court of equity. Thus if A and B each
lend money to C, and each takes a mortgage, they have each an equally
just right to payment. If, however, A's mortgage was first executed, he of
course has acquired the legal title, and a court of law would adjudge the
mortgaged subject to him to the exclusion of B ; for both in law and equi-
ty it is a maxim qui prior est tempore, potior est jure. A having therefore
acquired the better title at law, it would be unjust to take it from him and
give it to or share it with one who had no better claims than himself in an
equitable point of view, and whose claim was inferior in a legal point of
view. Where, therefore, there are several mortgages on the same estate,
they must be paid according to the priority of their respective dates. And
in like manner v/here incumbrances are all merely equitable, he who has
the first equity is always adjudged to have the better right. But if the first
incumbrance be merely equitable and the second is a good and effectual
assurance, the legal title thus acquired will give to the second mortgagee a
preference, not at law only, but in equity also, provided he had no notice
of the prior incumbrance : for as he had no notice, his equity is equal ;
and equity will not interfere where both are equally innocent, but will leave
him who has got the legal advantage to keep it and make the most of it.

Now if there be three mortgagees, the last of whom lent his money to
me loithout notice of the second mortgagee's loan, they would be payable ac-
cording to the principle above laid down in the order of their dates ; that
which is prior having a preference over that which is posterior. It is, more-
over, obvious, that the first of the mortgagees alone has the legal title, for
the subsequent mortgages only conveyed the equity of redemption. In this
state of things the third mortgagee buys in the first mortgage, takes a con-
veyance from the first mortgagee, and thus becomes the holder of the legal
title. By this act, according to the decisions of the courts of equity, his
own mortgage, which was last in point of time, (andt therefore, in point of
right alsQ,) is permitted to be tacked to the first mortgage bought in by him,
so that the second mortgagee is "squeezed out ;" and the third mortgagee
will have his original mortgage, as well as that which he bought in, satisfied
before the second mortgagee can get any thing. And the reason given is,



116 MORTGAGES. [ book 2,

that having advanced his money on the credit of the land without any notice
of the second incumbrance, lie has equal equity with the second mortgagee ;
and having the legal title by purchase from the first mortgagee, the law is
in his favor and shall prevail. The legal title he has acquired will enable
him to take possesion of the estate and hold it against all claiming under
the mortwatror, unless they claim to redeem ; and when the second mort-
gagee comes into equity to redeem, in order to get at the mortgaged premises
for his own indemnification, he is told that he can only be permitted to re-
deem upon the terms of p.'uying both the first and third mortgages, be-
cause the third mortgagee having ccpial equity and the legal title, equity will
not interfere nor take away his legal advantage. In like manner, if a third
incumbrancer procures an assignment of a judgment which bound the
n^ortgaged premises, at lav/, he may protect himself from any incumbrance
subsequent to the judgment though prior to his own, provided he had no
notice of it when he lent his money ; that is, he will be entitled to tack or
unite his mortgage to such judgment, and will, by that means, be entitled to
recover not only the amount of this judgment, but also of his own mort-
gage, before the prior mortgagee shall be entitled to recover any thing: and
this because the prior lien of the judgment gives the legal title.

In these cases, it must be observed, that the loan of his money without
notice, by the last incumbrancer, is an essential term in the proposition :
but his want of notice when he buys in the preceding incumbrance is not so.
He is equally protected even though he had notice when he bought it up.*
Nay — even though it was pendente lite. 2 Cruise, 1G9. Indeed, the very
object of the purchase is the protection which it affords, and the courts
have considered it a justifiable self-protection. It has been characterized
by the very appropriate appellation of the " tabula in naufragio ;" in allu-
sion to the case put by ethical writers of two shipwrecked mariners with a
single plank between them insuflicipnt for the safety of both. Either may
seize upon the whole and save his own life, by plunging his friend and fel-
low-sufferer into the gulph of waters below.

It is not wonderful that such a doctrine should have been often strenuous-
ly resisted and warmly reprobated, yet it has long been too firmly settled to
be shaken in England. It is, indeed, carried so far, that even though the
first incumbrance be satisfied, (as if it were an old mortgage paid off, or a
satisfied judgment,) yet, as it carried the legal title, it has always been held
to protect the third incumbrancer from the intermediate incumbrance. 1
Vern. 187. 2 Vern. 30, 279. One limitation, however, has been made to
this doctrine : no person can tack to a prior judgment or incumbrance a
subsequent demand which did not arise upon the credit of the estate. Thus
an ordinary judgment creditor cannot buy in an old mortgage, and tack his
judgment to it so as to gain a preference for his judgment over a mortgage
prior to it but subsequent to the old mortgage. 2 P. Wms. 491. For not
havirkg advanced his money upon the credit of the estate, he has not equal
equity with the second mortgagee. And so note a diversity : that a third
mortgagee can protect himself by buying in a precedent judgment, but a
subsequent judgment creditor cannot protect himself by buying in a prece-
dent mortgage. Yet if the first mortgagee lends a further sum to the mort-
gagor, upon a judgment or statute, he shall retain against the mesne mort-
gagee until he is paid both his mortgage and judgment. Because in this
case it is said to be presumed tliat he lent his money upon the judgment, as
knowing he had hold of the land by the mortgage, and though the judgment
passed no present interest yet it was at law a lien upon the land. 2 P.



Online LibraryHenry St. George TuckerCommentaries on the laws of Virginia, comprising the substance of a course of lectures delivered to the Winchester law school: (Volume 1) → online text (page 51 of 117)