Chap. X. § 2 (xiii).

It is to be observed that this Act does not imply any covenant by the mortgagor to insure or to produce the policy and receipts for premiums. Covenants of this nature should therefore still These enactments do be inserted in mortgage deeds, otherwise the mortgagee may not import covenant by have difficulty in ascertaining whether the default in effecting mortgagor to and maintaining an insurance has occurred, which alone gives insure. rise to the mortgagee's statutory power of insuring the property.

mortgagor.

Application of In the absence of a stipulation in the mortgage deed that the policy moneys receivable by policy moneys receivable in respect of an insurance kept up by the mortgagor shall be applied in making good the loss or damage, it was held that the mortgagee could not require the moneys to be so applied, though the mortgage deed contained a covenant by the mortgagor to insure (e). Under the Act such a covenant would be sufficient to entitle the mortgagee to require the moneys to be so applied, but in absence of the covenant he would have no such right, as the insurance in respect of which the moneys would be received would not have been effected either under the mortgage deed or under the Act.

Covenant to pay premiums.

Joint insurance by mortgagor and

mortgagee.

With regard to s. 23, sub-s. (4) of the Act, it must be borne in mind that by the statute 14 Geo. III. c. 78, s. 83 (perpetuated by the statutes 7 & 8 Vict. c. 84, 18 & 19 Vict. c. 122, and 28 & 29 Vict. c. 90), directors of insurance companies are in certain cases authorized and required, upon the request of any person interested in any buildings burnt down or damaged by fire, to apply the insurance moneys in restoring the buildings (f).

It is further to be observed that by s. 19, sub-s. (1) (ii.), of the Act of 1881, premiums paid by a mortgagee in respect of an insurance effected by him under the statutory power are only made a charge upon the mortgaged property, and not a debt for which the mortgagor is personally liable. It is therefore advisable that the mortgage deed should contain an express covenant by the mortgagor for repayment of such premiums.

If the mortgagor and mortgagee effect a joint insurance on the mortgaged estate, the mortgagee paying the premiums, and, the premises being destroyed by fire, the mortgagor's assignees

(e) Lees v. Whiteley, L. R. 2 Eq. 143; Rayner v. Preston, 18 Ch. D. 1, C. A. See also Poole v. Adams, 33 L. J. Ch. 639.

(f) Exp. Goreley, 4 De G. J. & S. 477, doubted 13 App. Ca. 699; Sampson v. Scottish Union Ins. Co., 1 H. & M. 618.

procure payment from the company, they will be ordered to Chap. X. pay the insurance money into Court, though they have already § 2 (xiii). paid it to the account in bankruptcy, there being no right in one of the parties, in respect of a joint security, to apply the produce, irrespective of the claims of the other party (g).

A policy of insurance against fire, being a strictly personal contract for the indemnity of the assured, is not assignable without the consent of the insurance office, which is usually procured either by an indorsement on the policy, or an entry in the books of the office (h). The question whether such assignment vested the right of action at law in the assignee has become of no moment since the Judicature Acts. In the case of a mortgage of property insured under an existing policy, the benefit of the policy would, even without express stipulation, pass to the mortgagee with the property insured (i). A different principle applies when the policy is subsequent to the mortgage, and there is no covenant by the mortgagor that the policy moneys shall be applied in payment of the mortgage (k). The mortgagor has no equity to be repaid out of the produce of the policy money expended by him about the rebuilding of the property, the expenditure being voluntary (¿).

A fire insurance being only an indemnity, if the insured receives compensation from other sources, the insurer is entitled to recover it (1).

On the analogy of the cases which decide that a policy against fire by a vendor is, in the absence of contract, avoided after sale for want of interest (m), and that a tenant is not entitled to the landlord's insurance effected after the lease (n), it would seem that, as between mortgagor and mortgagee, neither of them would be entitled to the benefit of an insurance effected by the other subsequently to the mortgage, in the absence of stipulation to the contrary (0).

(g) Rogers v. Grazebrook, 12 Sim. 557. (h) Dav. Conv. Vol. II. pt. ii. p. 54; Porter on Ins. 3rd ed. 322.

(i) Garden v. Ingram, 23 L. J. Ch. 478.

(k) Lees v. Whiteley, L. R. 2 Eq. 143. See also Rayner v. Preston, 18 Ch. D. 1, C. A. (case of vendor and purchaser).

(1) Darrell v. Tibbits, 5 Q. B. D. 560, following North British, &c. Insurance Co. v. London, &c. Insurance Co., 5 Ch. D. 569.

(m) Poole v. Adams, 33 L. J. Ch. 639. (n) Leeds v. Cheetham, 1 Sim. 146; Llofft v. Dennis, 1 E. & E. 474.

(0) Dav. Conv. Vol. II. pt. ii. p. 56.

Chap. X. § 2 (xiv). Covenants for title implied by virtue of statute.

On mortgage by beneficial

owner.

xiv.-Covenants for Title.-Mortgage deeds formerly, according to the usual practice, contained express covenants for title by the mortgagor. Such covenants were in their general character similar to those inserted in purchase deeds, differing only in their greater comprehensiveness. The insertion of such covenants is now rendered generally unnecessary by virtue of the provisions of sect. 7 of the Conveyancing Act, 1881 (p), which enacts that there shall be implied

"(1.) (C.) In a conveyance by way of mortgage, the following covenant by a person who conveys and is expressed to convey as beneficial owner (namely) :—

That the person who so conveys has, with the concurrence of every other person, if any, conveying by his direction, full power to convey the subject-matter expressed to be conveyed by him, subject as, if so expressed, and in the manner in which it is expressed to be conveyed; and also that, if default is made in payment of the money intended to be secured by the conveyance, or any interest thereon, or any part of that money or interest, contrary to any provision in the conveyance, it shall be lawful for the person to whom the conveyance is expressed to be made, and the persons deriving title under him, to enter into and upon, or receive, and thenceforth quietly hold, occupy, and enjoy or take and have, the subject-matter expressed to be conveyed, or any part thereof, without any lawful interruption or disturbance by the person who so conveys, or any person conveying by his direction, or any other person not being a person claiming in respect of an estate or interest subject whereto the conveyance is expressly made; and that, freed and discharged from, or otherwise by the person who so conveys sufficiently indemnified against, all estates, incumbrances, claims, and demands whatever, other than those subject whereto the conveyance is expressly made; and further, that the person who so conveys, and every person conveying by his direction, and every person deriving title under any of them, and every other person having or rightfully claiming any estate or interest in the subject-matter of conveyance, or any part thereof, other than an estate or interest subject whereto the conveyance is expressly made, will from time to time and at all times, on the request of any person to whom the conveyance is expressed to be made, or of any person deriving title under him, but, as long as any right of redemption exists under the conveyance, at the cost of the person so conveying, or of those deriving title under him, and afterwards at the cost of the person making the request, execute and do all such lawful assurances and things for further or more perfectly assuring the subjectmatter of conveyance, and every part thereof, to the person to whom the conveyance is made, and to those deriving title under

(p) 44 & 45 Vict. c. 41. As to covenants for title implied by virtue of the statute in mortgages of leaseholds, see post, p. 176.

him, subject as is so expressed and in the manner in which the Chap. X. conveyance is expressed to be made, as by him or them, or any of them, shall be reasonably required. § 2 (xiv). (F.) In any conveyance, a covenant against incumbrances, in the On conveyterms set forth in the section, is deemed to be included by every ance by person who conveys and is expressed to convey as trustee or mort- trustee or mortgagee. gagee, or as personal representative of a deceased person, or as committee of a lunatic so found by inquisition, or under an order of the Court, which covenant shall be deemed to extend to every such person's own acts only (namely):

That the person so conveying has not executed or done, or knowingly suffered, or been party or privy to, any deed or thing, whereby or by means whereof the subject-matter of the conveyance, or any part thereof, is or may be impeached, charged, affected, or incumbered in title, estate or otherwise, or whereby or by means whereof the person who so conveys is in anywise hindered from conveying the subject-matter of the conveyance, or any part thereof, in the manner in which it is expressed to be conveyed.

tion of bene

(2.) Where in a conveyance it is expressed that by direction of On conveya person expressed to direct as beneficial owner another person ance by direcconveys, then, within this section, the person giving the direction, ficial owner. whether he conveys and is expressed to convey as beneficial owner or not, shall be deemed to convey and to be expressed to convey as beneficial owner the subject-matter so conveyed by his direction; and a covenant on his part shall be implied accordingly.

wife.

(3.) Where a wife conveys and is expressed to convey as bene- On conveyficial owner, and the husband also conveys and is expressed to ance by convey as beneficial owner, then, within this section, the wife shall husband and be deemed to convey and to be expressed to convey by direction of the husband as beneficial owner; and, in addition to the covenant implied on the part of the wife, there shall also be implied, first, a covenant on the part of the husband as the person giving that direction, and secondly, a covenant on the part of the husband in the same terms as the covenant implied on the part of the wife.

(4.) Where in a conveyance a person conveying is not expressed to convey as beneficial owner, or as settlor, or as trustee, or as mortgagee, or as personal representative of a deceased person, or as committee of a lunatic so found by inquisition, or under an order of the Court, or by direction of a person as beneficial owner, no covenant on the part of the person conveying shall be, by virtue of this section, implied in the conveyance.

(5.) In this section a conveyance includes a deed conferring the right to admittance to copyhold or customary land, but does not include a demise by way of lease at a rent, or any customary assurance, other than a deed, conferring the right to admittance to copyhold or customary land.

(6.) The benefit of a covenant implied as aforesaid shall be annexed and incident to, and shall go with, the estate or interest of the implied covenantee, and shall be capable of being enforced by every person in whom that estate or interest is, for the whole or any part thereof, from time to time vested.

(7.) A covenant implied as aforesaid may be varied or extended Variation of by deed, and, as so varied or extended, shall, as far as may be, statutory

covenants.

Chap. X.

§ 2 (xiv).

Effect of this enactment.

Covenants for title run with the land.

Covenant for quiet enjoyment.

Covenant for further assurance.

operate in the like manner, and with all the like incidents, effects, and consequences, as if such variations or extensions were directed in this section to be implied (g).

(8.) This section applies only to conveyances made after the commencement of this Act."

The statutory covenants are, by the appropriate words, imported into and implied in any "conveyance" by way of mortgage(); the term "mortgage" includes "any charge on any property for securing money or money's worth," but the covenants will not be implied unless the charge is by way of conveyance or assurance.

These covenants are entered into with the mortgagee, his heirs and assigns, and run with the land (s). The covenant for right to convey is obviously of very little use during the continuance of the mortgage; as the mortgagee, by bringing an action on it, could only recover his mortgage money, and that he could more easily obtain by suing on the covenant for the payment of the money. But this covenant, as also the other covenants for title, become valuable after a foreclosure or sale, as they then stand in lieu of the common covenants for title contained in purchase deeds, and are, indeed, the more valuable on account of their being absolute, instead of qualified (†).

The covenant for quiet enjoyment is made to commence, in point of operation, after default in payment of the mortgage money on the day appointed in the proviso for redemption; but this form of covenant does not (in the absence of a proviso for quiet enjoyment until default amounting to a demise) postpone the mortgagee's right of entry, or disable him from bringing ejectment at once (u).

It scarcely need be noticed that the mortgagor cannot, under his covenant for further assurance, on default in payment, be called upon to release his equity of redemption, and that he can, under such covenant, be required to confirm the mortgage only (x).