Chap. VII. § 3 (ii). Effect will be given to an intention to create a security, notwithstanding any mistake in the manner of making it (i); and securities will take effect according to the intention of the parties, Effect given both as to the quantity of the property charged, and the extent to agreement of the mortgagor's interest in it (k). notwithstanding mistake, &c. The intention of the parties as regards the terms and extent Parol of the security may be established by parol evidence (7). evidence. Where in an equitable agreement a charge was stated to be on three houses in a certain lease, which only, in fact, comprised one house, evidence was admitted to explain the mistake (m). A memorandum of charge by a solicitor on a mortgage debt, Misrepresenmisrepresented as existing, was held an equitable mortgage upon an indemnity fund set apart when the mortgage was paid off (n). tation. assurances, An ineffectual attempt to make a legal mortgage which fails Effect given for want of some formality, as inrolment, or (formerly) present- to defective ment of a surrender of copyholds, is valid as an equitable charge, &c. and gives the mortgagee a right to a perfected assurance (o). So a power or warrant of attorney to confess judgment in ejectment, which proved defective as such, was held to create a valid equitable charge (p). An acknowledgment of a debt with an undertaking to hold Undertaking the deeds of a house as security, was held an equitable charge on the house (q). to hold deeds as security. An agreement for a legal mortgage means a first mortgage Agreement for legal not only in the case of land, but, by analogy, in the case of a mortgage. ship (r). An agreement to give a mortgage with an immediate power Power of of sale will be enforced (s). sale. powers of An agreement under seal to give a legal and proper mortgage Statutory with a power of sale, will import into the security the statutory sale, &c. powers of sale for the time being in force, and such powers (i) Re Strand Music Hall Co., 3 De G. J. & S. 147; Exp. Rogers, Re Selby, 8 De G. M. & G. 271. (k) Wainwright v. Hardisty, 2 Beav. 363; Grieveson v. Kirsopp, 5 Beav. 283; Woodburn v. Grant, 22 Beav. 483. (1) Banks v. Whittall, 1 De G. & S. 536; see Beckett v. Cordley, 1 Bro. C. C. 353; Exp. Atkins, 2 Y. & C. Ex. 536. (m) Re Boulter, Exp. Nat. Prov. Bank of England, 4 Ch. D. 241. (n) Exp. Rogers, Re Selby, 8 De G. M. & G. 271. (0) Mestaer v. Gillespie, 11 Ves. 626; Taylor v. Wheeler, 2 Salk. 449. (p) Dale v. Southwick, 2 Vern. 151. (q) Baynard v. Woolley, 20 Beav. 583. (r) Thompson v. Clark, 1 N. R. 19. (s) Ashton v. Corrigan, L. R. 13 Eq. 76; Hermann v. Hodges, L. R. 16 Eq. 18. Chap. VII. will be exerciseable though no legal mortgage has been exe§ 3 (ii). cuted (t). Where an agreement for a mortgage contains a stipulation that the principal shall not be called in for a certain time, a condition will be implied that the forbearance to call in the money shall depend upon punctual payment of the interest, and, if the property be leasehold, on performance and observance by the mortgagor of the covenants of the lease, and the Court will compel the mortgagor to execute a legal mortgage on those terms (u). An agreement to give a mortgage simpliciter will authorize the insertion of a power of sale in the mortgage deed, so as to prevail against a mesne assignee of the equity of redemption taking the legal estate, who will be a trustee thereof for the purchaser from the mortgagee under the power (x). An agreement to give a legal mortgage in such form and containing such stipulations as the mortgagee shall require, will not enlarge the subject-matter of the charge, but will only impose on the mortgagor the obligation to perfect the charge (y). Thus it will not entitle the mortgagee to a legal mortgage excluding the operation of sect. 17 of the Conveyancing Act, so as to give him the right of consolidation (≈). The mortgagor must bear the costs of perfecting an equitable security by conveyance, or, in the case of copyholds, by procuring himself to be admitted, if necessary, and by surrendering to the mortgagee, including fines and fees (a). Statute of SECTION IV. OF A MORTGAGE BY DEPOSIT OF TITLE DEEDS. i.-Nature and Incidents generally of a Mortgage by Deposit. -The Statute of Frauds enacts (b) that no "action shall be (t) Re Solomon and Meagher's Contract, 40 Ch. D. 508. (u) Seaton v. Twyford, L. R. 11 Eq. 591. (x) Leigh v. Lloyd, 2 De G. J. & S. 330. (y) Whitley v. Challis, (1892) 1 Ch. 64, C. A. (z) Farmer v. Pitt, (1902) 1 Ch. 954. (a) Pryce v. Bury, 2 Drew. 41, affirmed 18 Jur. 967. See L. R. 16 Eq. 153, n. (b) 29 Car. II. c. 3, s. 4. brought upon any contract or sale of lands, tenements, or hereditaments, or any interest in or concerning them, unless the agreement upon which such action shall be brought, or some memorandum or note thereof, be in writing, and sigued by the party to be charged therewith, or some other person thereunto by him lawfully authorized." Chap. VII. § 4 (i). As a general rule, therefore, an agreement to give a mortgage Agreement on lands, tenements, or hereditaments of any tenure, or on any of land must for mortgage interest in or concerning them, to secure a debt or advance, must be in writing. be in writing and signed by the intending mortgagor or his agent. But to this rule there is an important exception. A deposit Exception as of title deeds by the owner of freeholds or leaseholds with his to mortgages by deposit of creditor for the purpose of securing either a debt antecedently deeds. due, or a sum of money advanced at the time of the deposit, operates as an equitable mortgage or charge, by virtue of which the depositee acquires, not merely the right of holding the deeds until the debt is paid, but also an equitable interest in the land itself. A mere delivery of the deeds will have this operation without any express agreement, whether in writing or oral, as to the conditions or purpose of the delivery, as the Court would infer the intent and agreement to create a security from the relation of debtor and creditor subsisting between the parties, unless the contrary were shown; and the delivery would be sufficient part performance of such agreement to take the case out of the statute (c). A deposit of copies of court rolls will have the same effect in As to copythe case of copyholds (d). Where, therefore, a sale or mortgage of copyholds is contemplated, the intending purchaser or mortgagee should not be satisfied with searching the court rolls for incumbrances; he ought to require the vendor or mortgagor to produce an abstract of his title, and the copy of his admission to the copyhold tenement (e). holds. ment of the Previously to the establishment of the doctrine of equitable Establishmortgage by deposit of title deeds, it was held that the mere exception. possession of the title deeds of an estate gave the holder no (c) Burgess v. Moxon, 2 Jur. N. 8. 1059; and other cases cited inf. (d) Exp. Warner, 19 Ves. 202; Lewis v. John, 9 Sim. 366; Winter v. Lord VOL. I.-C. Anson, 3 Russ. 488, 493; Whitbread v. (e) Whitbread v. Jordan, supra. F Chap. VII. interest in the estate itself, except collaterally, as in the instance § 4 (i). put by Lord Eldon (f); that is, if the owner of the lands could not part with the estate without the deeds, he should not have them without paying the debt due from him to the holder, so that the possession of the deeds gave no direct interest in the estate, but gave to the creditor an interest arising out of the power of embarrassing the property in the sale (g). And it was considered that to give the creditor a charge on the land without an agreement in writing would be in direct contravention to the Statute of Frauds. Verbal agreement without deposit. The first decision in favour of the doctrine of equitable mortgage by deposit of title deeds was made by Lord Thurlow, C., in Russell v. Russell (h), and was followed by him in other cases (i). These decisions are the foundation of the doctrine, which, however much it has excited the disapprobation of succeeding judges (k), has now become firmly established. A verbal agreement for a deposit, not accompanied by an actual deposit, is void under the Statute of Frauds (1). But the deposit will create an equitable mortgage for the debt then due, although there be not one word spoken at the time (m). If there is a parol agreement to give security for a debt, and title deeds are subsequently delivered to the creditor, this will be a sufficient part performance of the agreement to take the case out of the Statute of Frauds, and the security will relate back to the time of the agreement (»). (f) Exp. Whitbread, 19 Ves. 211. 279. As a general rule the title deeds the land or debt, the mortgagee or (i) Featherstone v. Fenwick; Hurford v. Carpenter, 1 Bro. C. C. 270, note. (k) Exp. Haigh, 11 Ves. 403; Norris v. Wilkinson, 12 Ves. 192; Exp. Whitbread, 19 Ves. 211; Exp. Hooper, 1 Mer. 7. (1) Exp. Hooper, sup. ; Exp. Coombe, 4 Madd. 249. See Meux v. Smith, 11 Sim. 410; Tebb v. Hodge, L. R. 5 C. P. 73; Exp. Perry, 3 M. D. & De G. 252; Exp. Hallifax, 2 M. D. & De G. 544. A party intending to rely on the Statute of Frauds must plead the same. See Ord. XIX. r. 15. (m) Exp. Mountfort, 14 Ves. 606; Exp. Langston, 17 Ves. 230; Exp Kensington, 2 V. & B. 79, 83; Bozon v. Williams, 3 Y. & J. 152. (n) Edge v. Worthington, 1 Cox, 211. Where a deposit had been made to secure an usurious loan before 17 & 18 Vict. c. 90, a verbal agreement, subsequent to the statute, for a legal mortgage for the same loan, was held valid without a return and fresh deposit (o). Chap. VII. § 4 (i). without Where there is a memorandum of agreement for a security Written by deposit of deeds, the security will be upheld so as to as to agreement charge the property, though no deeds have actually been deposit. deposited (p), or even though some of them may not have been executed (q). Where a deposit of deeds by way of security is accompanied Deposit enby an agreement in writing to execute a legal mortgage, it is titles lender to legal clear that such agreement will be specifically enforced (). But mortgage, where there is no such agreement, and even where no memorandum of charge whatever accompanies the deposit, it has been held that the mere deposit entitled the holder to have a legal mortgage, such being presumed to have been the intention of the parties (s). But where a deposit is made as an indemnity to a surety, he except in case of surety. is not entitled to a legal mortgage, only to a memorandum stating the purpose of the deposit (t). A mortgagor by deposit of deeds may declare himself trustee Vesting of the legal estate for the mortgagee, and the mortgagee may in declaration. such case appoint new trustees in the place of the mortgagor, and vest the legal estate in them by a declaration under sect. 12 of the Trustee Act, 1893 (u). to control ii. Memorandum accompanying Deposit of Deeds.-Where a Parol evidence deposit of title deeds is accompanied by a memorandum in not-admissible writing, the nature and amount of charge, and the conditions of terms of methe contract intended to be created by the deposit, must be ascertained solely by reference to the written document (x). But the memorandum need not necessarily contain a description of (0) James v. Rice, 5 De G. M. & G. 461. (p) Exp. Sheffield Union Bk. Co., Re Carter, 13 L. T. 477; Exp. Leathes, 3 D. & C. 112; Exp. Heathcoate, 2 M. D. & De G. 711. (q) Exp. Orrett, 3 M. & A. 153; Exp. Smith, 2 M. D. & De G. 587. (r) Ste ante, p. 57. (s) Birch v. Ellames, 2 Anst. 428; Featherstone v. Fenwick, 1 Bro. C. C. 270, n.; Hankey v. Vernon, 2 Cox, 10; Exp. Coming, 9 Ves. 115; Monkhouse (t) Sporle v. Whayman, 20 Beav. (u) London and County Banking Co. v. Goddard, (1897) 1 Ch. 642. (x) Shaw v. Foster, L. R. 5 H. L. 321, 341. See Sporle v. Whayman, 20 Beav. 607; Burton v. Gray, L. R. 8 Ch. 932. morandum of deposit. |