Chap. VII. ment (h), unless the borrower is prepared to pay off the money. § 3 (i). Such an agreement, however, if it relates to land, is within the Statute of Frauds, and, except in the case of a deposit of deeds (), must be evidenced by a sufficient memorandum in writing to satisfy the Act (k). But if the agreement is to give security on personalty, it is not within the statute (k); and an oral agreement on such security would, apparently, be capable of being enforced, if for an antecedent debt, or if followed by an actual advance on the faith of the agreement by the mortgagee. Extension of charge to future advances. Tacking. Covenant to appoint to creditor. Damages for breach of So, specific performance was decreed of an agreement to give a mortgage to secure money to be lent, where part had been already advanced (7). Where an equitable charge has been created by agreement in writing for a mortgage, or by deposit of deeds or otherwise, to secure an existing debt, the charge may, by verbal agreement, be held by the mortgagee as a security for further advances (m). But a verbal agreement that a simple contract debt shall be tacked to a subsisting legal mortgage of land is void under the Statute of Frauds (n). Where the donee of a general testamentary power covenants, in consideration of money lent, to exercise the power giving the lender a first charge on the fund, and does so, the lender does not thereby obtain a charge on the fund, but only a right to damages (o). Damages may be recovered for a breach of an agreement to agreement for lend on mortgage in respect of the expenses actually incurred of the abortive loan, but not, apparently, extending to consequential injury (p). loan. In equity, damages could not have been recovered for the breach of such an agreement, under 21 & 22 Vict. c. 27, inasmuch as the plaintiff would have had no case for specific performance at the time of issuing his writ (q); but under the (h) Exp. Jones, 4 D. & C. 750; (i) See post, pp. 64 et seq. (k) 29 Car. II. c. 3, s. 4. See Exp. Broderick, Re Beetham, 18 Q. B. D. 766, C. A.; and per Romilly, M.R., in Rogers v. Challis, 27 Beav. at p. 178. (1) Hunter v. Lord Langford, 2 Moll. 272; and see Pegge v. Neath District Tramways, (1898) 1 Ch. 183. (m) Exp. Heathcoat, 1 Fonb. Bky. 42; Baynard v. Woolley, 20 Beav. 583, 586. (n) Exp. Hooper, 1 Mer. 7. (0) Re Lawley, Zaiser v. L., (1902) 2 Ch. 799, C. A.; aff. sub nom. Beyfus v. Lawley, (1903) A. C. 411. (p) Duckworth v. Ewart, 10 Jur. N. S. 214; South African Territories v. Wallington, (1898) A. C. 309. (2) Rogers v. Challis, 27 Beav. 175. Judicature Act, 1873 (r), an action can now be brought in the alternative, either for specific performance or damages (s); and the plaintiff will be entitled to damages, even though there may have been no such performance as to render the agreement enforceable (t). Chap. VII. § 3 (i). abortive An agreement is often made by the borrower to pay the Costs of lenders, if the loan goes off, reasonable costs, which will not transaction. include banker's commission or costs of remittance; nor, apparently, the costs of realizing securities for the purpose of making the advance, unless such matters are expressly provided for (u). Nor will such an agreement entitle the intending mortgagee to interest or compensation for money lying idle pending the completion of the mortgage (x). In the absence of contract, the proposed lender has no claim Preliminary against the borrower for the preliminary expenses (y). It is expenses. clear that the solicitor of the lender has no such claim against the borrower (≈). But where the mortgage of an infant's estate in Chancery goes off, without any default of the mortgagee, the Court allows his expenses of investigating the title (a). An agreement for a mortgage should always provide for the payment of the preliminary expenses by the mortgagor, and should expressly include any special expenses which may be incurred in connection with the advance. immediate ii. As to Agreements operating as Equitable Mortgages. Informal Any agreement in writing and properly signed, however in- agreement for mortgage formal, by which any property, real or personal, is to be a may create security for a sum of money owing or advanced, is a charge, equitable and amounts to an equitable mortgage. Thus an agreement charge. that a creditor shall hold land at a fair rent, to be retained in satisfaction of the debt, is in the nature of a mortgage, and will be supported (b). So an informal document, signed by a trustee, admitting a breach of trust, with these words, "holding the deeds of my house and policies of assurance as a collateral security" (c). Chap. VII. So an option to call at any time for a specific amount of debentures of a given issue in satisfaction of a debt is a good equitable security while the issue remains unexhausted (d). § 3 (ii). Covenant to charge land. An express covenant or agreement in writing to make a mortgage, in consideration of an actual advance made at the time of the agreement, is sufficient, on the principle of equity that what has been agreed to be performed shall be performed in specie, and creates a specific charge as against simple contract creditors (e). A covenant for good consideration to charge or convey particular lands, or all the present estates of the covenantor, or estates over which he has a power (ƒ); or such as he may hereafter acquire of a specified kind, or as may be derived from a specified source (g); or lands which he may acquire at any time, will create a charge on that property (h); and lands which the covenantor had then purchased and paid for, but the conveyance of which was afterwards obtained, were held to fall within the covenant (i); so also, if he, in a subsequent instrument, point out particular lands (k), or has acquired lands for the purpose of the charge (1). A covenant that land settled under a marriage contract was of a certain yearly value, was held to be a charge on the real estate of the covenantor (m); so an agreement by a mortgagee, a solicitor, to charge a mortgage which he afterwards sold, was held to be a charge on the purchase-money of the mortgage which he had invested to secure a part of the mortgage (n); so a covenant to settle or charge lands of a certain value by a certain time will bind even after-purchased lands which belong to the (d) Pegge v. Neath District Tramways, (1898) 1 Ch. 183. (e) Hankey v. Vernon, 2 Cox, 12, 14; Burn v. Burn, 3 Ves. 582; Matthews v. Cartwright, 2 Atk. 347. See also Meux v. Smith, 11 Sim. 410; Tebb v. Hodge, L. R. 5 C. P. 73. (f) Smith v. Smith, 1 Y. & C. Ex. 338; Priddy v. Rose, 3 Mer. 86; Woodyatt v. Gresley, 8 Sim. 180. And see Burridge v. Rowe, 1 Y. & C. C. C. 583; Williams v. Lucas, 2 Cox, 160. See Kennedy v. Daly, 1 Sch. & L. 355; Carpenter v. Carpenter, 1 Vern. 440; Eustace v. Keightley, 4 Bro. P. C. 588; Fothergill v. Fothergill, 2 Freem. Ch. 256; Freemoult v. Dedire, 1 P. Wms. 429; Ravenshaw v. Hollier, 7 Sim. 3; Legard v. Hodges, 1 Ves. Jun. 477; Eyre v. McDowell, 9 H. L. C. 619. (h) Lyster v. Burroughs, 1 Dr. & Wal. 149; Stack v. Royse, 12 Ir. Ch. 246. (i) Warde v. Warde, 16 Beav. 103. But see Gardner v. Marq. Townshend, Geo. Coop. 301. (k) Watson v. Sadleir, 1 Moll. 585. (1) Wellesley v. Wellesley, 4 My. & Cr. 561. See Mornington v. Keane, 2 De G. & J. 311. (m) Probert v. Morgan, 1 Atk. 440. See Parker v. Harvey, 4 Bro. P. C. 604; Glegg v. Glegg, 4 Bro. P. C. 614. (n) Exp. Rogers, 8 De G. M. & G. 271. covenantor at that time (o); and the parties entitled to the benefit of the covenant will take vested interests, though they die before the time fixed for the execution of the covenant (p). So a covenant to settle or charge all lands to be acquired during a certain time (q). Chap. VII. § 3 (ii). ments and A written instrument, promising to pay a sum of money with What agreeinterest"out of the estate of the deceased W. H.," and signed instruments by all the persons interested in his estate, has been held to will create an equitable constitute (the personalty being exhausted) an equitable mort- mortgage. gage on the real estate (). Similarly a letter to the executor by a debtor to an estate, saying that he might retain the debtor's title deeds till the latter got the whole of his affairs settled with the executors (s). So a memorandum by a husband to charge all his interest in the future property of his wife (t). So a letter undertaking to deposit deeds as security for an overdrawn banking account (u). But a covenant by the donee of a testamentary power to appoint a fund in consideration of money lent does not give the lender a charge on the fund (x). Where a tenant for life of real estate covenanted on the Receivership marriage of his daughter to pay her an annuity, and in order to deed. secure the same appointed a receiver of the rents and profits of the land, it was held that the deed created a valid equitable charge upon the land (y). attorney. A power of attorney, authorizing a party to take possession Power of of lands and hold them until paid a certain sum, amounts to a contract to charge, and is not revoked by the death of the grantor (). A power of attorney may authorize the execution (0) Deacon v. Smith, 3 Atk. 323; Roundell v. Breary, 2 Vern. 483, explained and corrected in Mornington v. Keane, 2 De G. & J. 292, at p. 315; Lyde v. Mynn, 1 My. & K. 683. See Thompson v. Cohen, L. R. 7 Q. B. 527; Wellesley v. Wellesley, sup. ; Tooke v. Hastings, 2 Vern. 97; Needham v. Smith, 4 Russ. 318; Prebble v. Boghurst, 1 Swanst. 321; Tew v. Earl of Winterton, 3 Bro. C. C. 493; Pitt v. Jackson, 2 Bro. C. C. 51, cannot be relied on. (p) Nayler v. Wetherell, 4 Sim. 114. (q) Lewis v. Madocks, 17 Ves. 48; Wethered v. Wethered, 2 Sim. 183. (r) Suart v. Toulmin, 2 Pow. Mtg. 1049 b, ed. 6. (u) Fullerton v. Provincial Bank of Ireland, (1903) A. C. 309. (x) Re Lawley, Zaiser v. L., (1902) 2 Ch. 799, C. A.; aff. sub nom. Beyfus v. Lawley, (1903) A. C. 411. (y) Cradock v. Scottish Provident Institution, W. N. (1894) 88; 70 L. T. 718, C. A. (z) Spooner v. Sandilands, 1 Y. & C. C. C. 390; Abbott v. Stratten, 3 J. & L. 603; Walsh v. Whitcomb, 2 Esp. 565; Gaussen v. Morton, 10 B. & Cr. 731; Bennett v. Cooper, 9 Beav. 252; Coonan v. O'Connor (1903), 1 Ir. R. 449. Chap. VII. of a mortgage, though, as between the donor and donee of the power, the mortgage is unauthorized (a). § 3 (ii). Right of entry and sale, &c. Declaration of trust. Receipt. Conditional agreement to postpone security. Recitals. Agreement to execute mortgage on demand. A covenant that if payment be not made the creditor may, by entry, foreclosure, sale, or mortgage, levy the amount from the lands of the debtor, is an equitable mortgage (b). A letter or memorandum given by a solicitor to his client stating that a sum of money entrusted to the solicitor for investment was in his hands at interest, being part of a sum advanced to P. on security of freeholds at K., was held, no such mortgage having, in fact, ever been made, to create a valid equitable charge on the share of the solicitor in the proceeds of sale of lands at K., which he and P. had purchased for resale as a joint adventure (c). Where a relation paid off a mortgage and took a receipt from the mortgagee, he undertaking to reconvey, it was held an equitable mortgage (d). to So, a parol agreement for a mortgagee to give up his security a new mortgagee paying off a part of the mortgage, on the understanding that he was to have a second mortgage for the residue, was held to create a valid second mortgage (e). Also a recital of the obligor of a bond for 3,000/., that, on the execution of a will of real estate in his favour, he had promised to provide for the obligee, was held to have created a lien on the real estate for the 3,0007. (f). Similarly, a recital in an assignment of rent reserved by a lease to a creditor, but in which no further interest in the lease was conveyed, that a security was intended, was held to be an equitable charge on the lease, and entitled the creditor to insist on a legal mortgage (g). An agreement to execute on demand a mortgage of lands on failure to pay notes or bills when due, was held to create an immediate equitable mortgage of the lands for the amount of notes and bills unpaid at maturity, the words "on demand" having reference to the execution of a legal mortgage (h). (a) Davy v. Waller, 81 L. T. 107. (c) Re Crowdy, Burgess and Crowdy, 46 (d) Fenwick v. Potts, 8 De G. M. & G. 506. (e) Banks v. Whittall, 1 De G. & S 536; Beckett v. Cordley, 1 Bro. C. C. 353. (f) Exp. Atkins, 2 Y. & C. Ex. 536. (g) Exp. Wills, 1 Ves. Jun. 162. (h) Re Hurley's Estate (1894), 1 Ir. R. 488 |