be a lease at a rent, and then the lessor should mortgage his reversion with a re-demise to himself, then it would seem that during the right of a mortgagor to the pernancy of the profits, any distress for rent due from the tenant during such subsistence, should be by the mortgagor and in his name only. He would appear then to be the reversioner, not indeed of the whole reversion, but of part, and so entitled to the rent and to distrain. If A seised in fee demise for a thousand years at a rent, and, pending the lease, demise to B for five years, B becomes reversioner and entitled to the rent as to the first lease during the term granted to him, and instead of enjoying the possession of the land, he takes the rent (a). The position of B the second lessee, and of the mortgagor, in the case above put, appear in principle identical.' Assignment of To every assignment of a mortgage, the mortgagor, if mortgage, possible, should be a party; if not a party, he should at should join in, least recognize the existence of the mortgage debt, and if the mortgagor mortgagee be in possession, assent to the transfer (b). The object of making the mortgagor recognize the mortgage debt as subsisting, arises from the fact that the assignee assignee takes takes subject to all the equities and settlement of accounts subject to equities be- between the mortgagor and mortgagee. Thus, if nothing gee and mort- were ever due on the mortgage, or it were obtained by tween mortga gagor. fraud and without consideration, an assignee, though for value and without notice, would stand in no better position than the mortgagee (c). All just claims as a deduction from the mortgage debt, by reason of payment or set-off, will be allowed as against the assignee, who can stand in no better position than the mortgagee. This rule will continue (a) Preston on Conv., vol. 2, 145; Co. Litt. 215 a.; Harmer v. Bean, 3 Car. & Kir. 307. (b) See ante 210. (c) McPherson v. Dougan, 9 Grant, 258; Elliot v. McConnell, 21 Grant, 376. As to defence of purchase in good faith of a mortgage, except as against the mortgagor, see R. S. O., c. 95, ss. 8, 9. See Smart v. McEwen, 18 Grant, 623. Totten v. Douglas, 15 Grant, 126; 16 Grant, 353, S. C. of notice of to apply even after transfer until the mortgagor have notice Assignee takes subject to equof the assignment; and any payments made to the mortga- ities up to time gee (a), or, it would seem, even set-off accrued against him assignment. (b), though after transfer, without notice thereof, and under the impression that he still held the mortgage, would be allowed against the assignee. Nor would it make any difference that payments were made, and were unindorsed as such on the mortgage, and that the mortgage moneys were not then payable. Hence the necessity of enquiry at least, prior to assignment, and of notice to the mortgagor of any transfer, in case he does not become a party to the assignment. It would seem that under section 78 of the Registry Act re- Notice by registry. gistry of the assignment would not be notice to the mortgagor, as that section only constitutes registry of instruments notice to those claiming an interest subsequent to such registry.' assent by mort gagor to as signment. 'The assent to the transfer where the mortgagee is in pos- Importance of session may be of importance in some cases; for, as before explained, a mortgagee in possession is liable to account for rents and profits and chargeable also for loss to the mortgagor's estate through his wilful neglect or default, and as he occupies somewhat the position of a trustee for the mortgagor, if he assign, without assent of the latter, and deliver possession, he will continue responsible on default by the assignee (c).' title on assignment. On an assignment of a mortgage, or on sale under a power Covenant for of sale, the only covenant for title to the land that the morgagee can be required to give is that against his incumbrances, and acts preventing valid conveyance (d).' 'The character of a mortgage of leasehold property must Mortgages of depend much on the nature of the lease. If the rent be of less amount than the annual value of the property, and the (a) McDonough v. Dougherty, 10 Grant, 42; Engerson v. Smith, 9 Grant, 16. (b) Galbraith v. Morrison, 8 Grant, 289. (c) Ante, p. 210; 1 Eq. Ca. Ab. 323, pl. 8. (d) See Form Davidson Convey. 3rd ed., vol. 2, p. 1295. leaseholds, when they assignment or should be by under lease. covenants binding on the assignees (a) be not too onerous, then it is better to have the mortgage by way of assignment than underlease. This is advisable, because if the mortgage be by way of underlease, which leaves a reversion in the mortgagor, he may perhaps, by non-observance of some covenant in the original lease giving right of re-entry to the lessor, forfeit the lease; whereas if the mortgage be by way of assignment of the whole estate of the lessee, no such danger is incurred. It is manifest also that this danger considerably depreciates the value of the security to the mortgagee, as being among other things likely to affect the price on any sale under the power of sale in the mortgage. If, the rent were too large and the covenants binding on the assignees of a burdensome nature, or such as the mortgagee might not wish to assume, as, for instance, a covenant to repair from which destruction by fire is not excepted, then he may have to rest satisfied with an underlease. For if he take an assignment he would, during the continuance of his estate, be liable for the rent and the performance of such covenants; and that, even though he should never enter (b); and it would seem even though he should not be entitled to enter; as where the mortgagee should give right to the mortgagor to remain in possession till default in payment of interest or principal, and the interest should be punctually paid. Of course the head landlord could distrain on goods on the premises on non-payment of his rent; but he might lie by, allowing arrears to accumulate, and ultimately sue the assignee for all arrears due during the time he was assignee (c): hence the necessity, if the mortgagor is to remain in possession, of providing in the (a) As to what covenants are binding on assignees : Spencer's Case, 1 Smith Lg. Ca. 8 ed. 68; Western v. Macdermot L. R. 1 Eq. 499; Wilson v. Hart, L. R. 1 Cha. App. 463. (b) Jones v. Todd, 22 U. C. R. 37; Cameron v. Todd, ib. 390; 2 Err. & App. Rep. 434. (c) See a case of this nature, note b. supra. mortgage that he pay the rent to the head landlord, and of ascertaining that it be paid.' sub-lease. 'A mortgage by way of sub-lease is usually at a mere Mortgage by nominal rent and for the whole term, less a day this prevents any privity of estate between the mortgagee and the original lessor, so that the former is not liable for rent or on covenants in the original lease. The reversion though only of one day left in the mortgagor exposes the mortgagee to the danger of forfeiture, and decreases the value of the security, as above explained; but the decrease in value may be partially obviated, as it always should be, by a declaration in the mortgage that the mortgagor, his executors, administrators and assigns will on any sale by the mortgagee,. &c., under the power of sale, stand possessed of and interested in the reversion in trust for the purchaser and to assign and dispose of the same as he shall direct. After a sale and conveyance of the sub-lease term to a purchaser, he need not under such a declaration obtain an assignment of the reversion to himself; because in that case as the term and the reversion immediately expectant thereon would meet in the same person, the term though for a longer period than the reversion would still be merged in it as being a higher estate; and thus the purchaser then stands in the position of assignee of the original lessee, and so liable on covenants running with the land which it was originally intended to avoid by the mortgage being by way of sub-lease. If therefore the purchaser is unwilling to assume the responsibility of the covenants, and at the same time wishes to avoid any danger of the mortgagor committing some act which would forfeit the lease, he might obtain an assignment to a trustee for him of the mortgagor's reversion (a).' (a) The forms (see Davidson Conv. 3 ed. 974) are that the mortgagor shall convey his reversion as the purchaser shall direct, the object being that, as mentioned in the text, the purchaser may either take an assignment to himself, or avoid liability on the covenants by procuring an assignment to a trustee. It may be said, however, the purchaser does not thereby escape liability, as he The Act as to short forms of mortgages. Precautions as to varying the form.s. The forms given in the Act respecting Short Forms of Mortgages differ occasionally from the most approved forms in England, and as they are at variance with some of the suggestions heretofore made, it may be requisite to consider them. The statute may be of service to the draftsman, and save expense in registry, but it is unfortunate that the allimportant power of sale is not in better form, and attention must be paid to one or two inconsistencies, which will be presently pointed out. Considering the defective character of the power of sale, it would seem that a mortgagee will find it to his advantage to omit it, and so leave the mortgage to the operation of the power of sale given by the Act of 42 Vic. before allued to (a).' Great care is requisite if the short forms in column one are to be in any way varied from, to suit particular circumstances. The Act provides that " parties may introduce into, or annex to any of the forms in the first column any express exceptions from or other express qualifications thereof respectively, and the like exceptions or qualifications shall be taken to be made from or in the corresponding forms in the second column;" if, therefore, the alteration be made in the language of the form, and it is not an exception or qualification within the above clause, then the particular covenant or clause will, it would seem, be without the Act, and left to the ordinary meaning of the words used (b).' Still the pecuniary posi would be bound to indemnify his trustee against loss. (a) Ante p. 200. (b) See remarks on the Act as to Short Forms of Conveyances, Leith Rl. Prop. Stats. p. 103, and Lee v. Lorsch, 37 U. C. K. 262. |