repurchase in accordance with the condition, and not as imposing such a right of redemption as in the case of a mortgage (7). Chap. II. (vii.) default of So, where a certain sum had been lent without security, and Agreement an agreement was entered into that if the money so lent, together for lease on with certain further advances, were not repaid by a specified repayment of day, the lease of a farm should be assigned to the lender with- loan. out any further consideration; it was held that the relation of vendor and purchaser, and not that of mortgagor and mortgagee, was constituted by the agreement (»). with subse repurchase. So, also, where an equity of redemption was absolutely con- Absolute veyed, and subsequently it was agreed between the parties that, conveyance if the vendor should desire it, he might have the estate back on quent agreepayment of the purchase-money with interest and costs, the ment for transaction was held to be a sale and not a mortgage (s). Where the purchase-money of an estate was paid by a third Agreement person on behalf of the purchaser, and a further advanced, and it was agreed that the estate should be conveyed person deto such third person, and that, if the purchaser repaid the sums with interest by a future day, then the agreement was to be purchaser. void, and if not, then the sale was thereby confirmed absolutely sum also to the other party; it was held that the agreement constituted a conditional purchase (†). for conveyance to third feasible on payment by The right of repurchase is a privilege, and is only to be exer- Conditions cised upon a strict performance of the terms (u), unless the terms strictly are waived (x); otherwise the grantee's estate will become abso enforced. essence of lute (y). Where the mortgagor released to the mortgagee his equity of Time for reredemption, and the mortgagee granted him a lease for ninety- purchase of nine years determinable on lives at a rent, with a proviso that, contract. if he paid the rent regularly, he might redeem within five years, and in default the agreement was to be void; it was held that the privilege of redemption was lost on non-payment of the rent at the periods fixed for that purpose (z). 56. (q) Bunning v. Bunning, 1 L. J. Ch. (r) Tapply v. Sheather, 8 Jur. N. S. 1163. (s) Cotterell v. Purchase, Cas. t. Talb. (Williams) 61. See Neal v. Morris, Best, 597; Brook: v. Garrod, 2 De G. & J. 62; Ward v. Wolverhampton Waterworks Co., L. R. 13 Eq. 243. (t) Perry v. Meddowcroft, 4 Beav. 197, affirmed, 10 Beav. 141. (u) Gossip v. Wright, 9 Jur. N. S. (x) Pegg v. Wisden, 16 Beav. 239. (z) Davis v. Thomas, 1 R. & My. Chap. II. (vii.) Exception where amount not settled. Transaction chase or mort gage as parties. But, where a time is fixed for the repurchase, and the terms depend on the result of an account which has not been rendered by the other party, a reconveyance will be decreed (a). It is not always easy to discriminate between a mortgage and a purchase qualified by a power to repurchase (b). In determust be pur- mining questions of this nature, it must be borne in mind that a mortgage cannot be a mortgage on one side only; it must be regards both mutual (c); that is, if it be a mortgage with one party, it must be a mortgage with both. But the rule only requires that it shall not be competent to one party alone to consider it a mortgage. In other respects the rights of the parties may be different, for it happens not unfrequently, that one party may not be able to foreclose at a time when the other may redeem (d). Agreement So, in Williams v. Owen (e), it was held that if the parties for repurchase intended an absolute sale, a contemporaneous agreement for a repurchase not acted upon will not of itself entitle the vendor to redeem. The Lord Chancellor seemed to attach some weight to Goodman v. Grierson (f), in which Lord Manners held, that the fair criterion to ascertain whether a transaction be a mortgage or not is, whether the remedies are mutual and reciprocal (g). not acted on. The rule is that primâ facie an absolute conveyance, containing nothing to show the relation of debtor and creditor, does not cease to be an absolute conveyance and become a mortgage merely because the vendor stipulates that he shall have a right to repurchase. In every case the question is what, upon a fair construction, is the meaning of the instruments (h), and the absolute conveyance will be turned into a mortgage if the real intention was that the estate should be held as a security for the money (i). The deed may be absolute in form but still a mortgage (k), and the absence of a proviso for redemption will not (a) Ponsford v. Hankey, 9 W. R. 353. (b) Sevier v. Greenway, 19 Ves. 413; Fee v. Cobine, 11 Ir. Eq. Rep. 406; Waters v. Mynn, 14 Jur. 341; Murphy v. Taylor, 1 Ir. Ch. 92; Ogden v. Battams, 1 Jur. N. S. 791. (c) Howard v. Harris, 1 Vern. 192. See Coplestone v. Boxwell, 1 Ch. Ca. 1; White v. Ewer, 2 Vent. 340; Stokes v. Verrier, 3 Swanst. 634. As to Welsh mortgages, see post, p. 30. (d) See Talbot v. Braddyl, 1 Vern. 395. (e) 5 My. & Cr. 306. See Barrell v. Sabine, 1 Vern. 268; Waters v. Mynn, 14 Jur. 341. (f) 2 Ba. & Be. 274. (g) Goodman v. Grierson, 2 Ba. & Be. 274, cited in Williams v. Owen, 5 My. & Cr. 306. (h) Alderson v. White, 2 De G. & J. 97, 105; Shaw v. Jeffry, 13 Moo. P. C. 432. (i) Douglas v. Culverwell, 4 De G. F. & J. 20. (k) Barnhart v. Greenshields, 9 Moo. P. C. 18; Holmes v. Mathews, 9 Moo. P. C. 413. prevent its being a mortgage (1). The somewhat analogous Chap. II. question whether a hire-purchase agreement is a bill of sale may (vii.) be referred to as illustrating a similar principle (m). interest. The payment of interest will be evidence that the transaction Payment of was intended to be a mortgage (n). &c. The fact that the purchase-money is not near the value of the Undervalue, property may be taken into consideration as tending to show that the transaction was a mortgage (o). The payment by the grantor of the expenses of the convey- Payment of expenses by ance will raise a primâ facie, but not a conclusive, presumption grantor. upon this question (p). intention to A similar inference will be raised where the conveyance Notice of stipulates that the grantor shall give notice of any intention to repurchase. repurchase on repayment of the purchase-money and interest due, together with an additional half-year's interest, so as to allow ample time for re-investment (9). But this view was purchase. It was thought by Buckley, J., in a recent case (r) that where Option of a condition gives mortgagees an option of purchase, which must be performed, if at all, before the legal right of redemption arises, the transaction is a conditional sale. not assented to by the Court of Appeal (s). Similarly, a conditional settlement has been held to be a secu- Conditional rity for money; as a settlement that, upon payment of a sum of money in a certain event, the prior limitation should cease and the lands go to the heirs and assigns of the settlor; upon the happening of the event, it was held only to be a security for the money, and to be redeemable after the time limited, and that not merely by the heir or executor, but also by a creditor (†). settlement. conveyance An absolute conveyance, obtained under circumstances of Absolute surprise and oppression from a person intending only to borrow, fraudulently was treated as a mortgage (u). So an absolute conveyance by a obtained. client to his solicitor of a reversionary interest was reduced to a (r) Lisle v. Reeve, (1902) 1 Ch. 53. (t) Frederick v. Aynscombe, 2 Eq. Ca. (u) Douglas v. Culverwell, 4 De G. F. & J. 20. Chap. II. (vii.) Presumption of sale. No covenant mortgage, it not being proved that the nature of the transaction was fully explained to the client, or that full value was given (r). Where an absolute interest is turned into a security and the money is to be repaid, the Court in its discretion will allow 5 per cent. interest (y). Conversely, the fact that the grantee took possession immediately after the execution of the conveyance raises a presumption that the transaction was a sale (≈). In several cases (a), the absence of a covenant to pay was for payment. deemed explanatory of the intention; so a trust deed for creditors was held, by reason of its containing no such covenant, not to be a mortgage entitling the creditors to foreclosure (b). But a covenant is not essential to a mortgage (c). Length of possession by grantee. Principles on which Court acts in such cases stated. Where the circumstances of a case are such as not to render it certain whether the original intention of the parties was to effect a mortgage or a conditional sale, the lapse of a considerable time during which the grantee has been in possession, as ostensible owner of the estate, will lead the Court to treat the transaction as a sale (d). The principles on which the Court acts in cases of conditional purchase is thus laid down by Lord Hardwicke (e) :-" There is indeed a distinction in the nature of the transaction between a power of redeeming and of repurchasing, obtained by usage, which governs the sense of words. But it is well known that the Court leans extremely against contracts of this kind, where the liberty of repurchasing is made at the same time concomitant with the grant, as it must be considered in this case, being part of the same transaction; the Court going very unwillingly into that distinction, and endeavouring, if possible, to hold them to be cases of redemption. Although it is a different thing where the contract for liberty to repurchase is after a man has been for some time in possession of an estate and acting as owner under a purchase." (x) Denton v. Donner, 23 Beav. 285. (y) Re Unsworth's Trusts, 2 Dr. & Sm. 337; Douglas v. Culverwell, sup.; Carter v. Palmer, 8 Cl. & F. 657; Macleod v. Jones, 53 L. J. Ch. 534. (2) Williams v. Owen, 5 My. & Cr. 303. (a) Mellor v. Lees, 2 Atk. 494; Floyer v. Lavington, 1 P. Wms. 268. See Davis v. Thomas, 1 R. & My. 506. (b) Taylor v. Emerson, 4 Dr. & W. 117; Holmes v. Mathews, 9 Mo. P. C. 413. (c) Ante, p. 9. (d) Tull v. Owen, 4 Y. & C. Ex. 192; Alderson v. White, 2 De G. & J. 97. (e) In Longuet v. Scawen, 1 Ves. Sen. 401, at p. 404. See Floyer v. Sherard, Amb. 18. Chap. II. (vii.) Devolution of money on An important consequence results from this distinction between a mortgage and a purchase with a proviso for repurchase, viz., that in the latter case, if the party to whom the conveyance first made dies seised, and after his death the option is declared purchaseby the other party to take the estate, the purchase-money belongs repurchase. to the heir, and not, as it would if it had been a mortgage, to the executor. Thus, upon an election to repurchase, the money was decreed to the heir in preference to the executors, on the ground that it was not the case of a mortgage, but a mere collateral agreement to repurchase (f). This must, however, now be read subject to the provisions of the Land Transfer Act, 1897. case of de feasible pur chase. to nature It may be observed that, in cases of conditional sale or settle- No mutuality ment, there is no mutuality in point of remedy between the of remedies in parties, inasmuch as though the vendor has the option of redeeming by repaying the purchase-money and interest within the specified period, the purchaser has no right to compel such repayment, and therefore there can be no foreclosure. Equity will admit parol evidence to show that a conveyance, Parol evidence which is absolute in its terms, was intended by way of security as ten only (g). A case decided by Lord Chancellor Nottingham is action. one of frequent reference (). A man agreed to lend money on mortgage, and it was proposed, as was formerly practised, that the mortgagor should execute an absolute conveyance, and that there should at the same time be a deed of defeasance from the mortgagee. The mortgagor executed the conveyance, and then the mortgagee refused to execute the defeasance. Lord Nottingham (after the Statute of Frauds) admitted parol evidence to show the agreement, and decreed against the mortgagee. So, where () an absolute conveyance is made for a certain sum of money, and the person to whom it is made, instead of entering and receiving the profits, demands interest for his (f) Thornborough v. Baker, 3 Swanst. 628, 631. (g) England v. Codrington, 1 Ed. 169; Vernon v. Bethell, 2 Ed. 110; Reeks v. Postlethwaite, G. Coop. 161; Hodle v. Healey, 1 V. & B. 540; Barton v. Bank of New South Wales, 15 App. Ca. 379. (h) Maxwell v. Lady Montacute, Prec. Ch. 526. See also Walker v. Walker, 2 Atk. 99; Young v. Peachey, 2 Atk. 254, 257; Joynes v. Statham, 3 Atk. 388; Dixon v. Parker, 2 Ves. Sen. 225; (i) Maxwell v. Montacute, Prec. Ch. |