Chap. XXXVI. (v.) Fluctuating rent. Power of distress. In the ordinary attornment clause, either the rent reserved. is as of the same amount as the interest, or, if in excess, the surplus is applicable towards discharge of the principal (m). The rent reserved must be fair and reasonable (n). The rent is sometimes made up partly of interest and partly of the principal, and if not unreasonable in regard to the value of the premises the tenancy will be valid (0). The attornment creates a tenancy by estoppel (p); but the mortgagee is none the less a mortgagee because he is also landlord. The tenancy is created for better securing the interest. But if the rent is exorbitant, or if there is an arrangement that the attornment clause is only to come into operation upon bankruptcy, it will be a device to give a fraudulent preference and be void (9). It was held no objection to an attornment clause that the monthly rent was fluctuating in amount (r). vi. Power of Distress.-Formerly a mortgagor in occupation of the property was sometimes required, instead of attorning, to give to the mortgagee a power of distress, which did not of itself create any tenancy (s). The insertion of powers of distress in mortgage deeds is, however, now useless, and has fallen into disuse. Although the insertion of such a power may not render the mortgage a bill of sale within the meaning of the Bills of Sale Acts by virtue of sect. 6 of the Act of 1878 (t), unless a rent is reserved by such instrument, yet it has been held that the power falls within the definition of bills of sale contained in sect. 4 of that Act, as being a licence" to take possession of chattels as security for a debt," and is void accordingly, as not being in conformity with the requirements of the Act of 1882 (u); but the insertion of (m) Dav. Conv. vol. ii. pt. ii. p. 96. (n) Exp. Williams, 7 Ch. D. 138; (0) Re Stockton Iron Furnace Co., 10 sup. (p) Exp. Punnett, 16 Ch. D. 226, C. A. See Exp. Voisey, Re Knight, sup., at p. 452. (a) Exp. Williams, 7 Ch. D. 138; Exp. Jackson, Re Bowes, 14 Ch. D. 725, C. A.; Re Knight, 46 L. T. 539. See Exp. Barter, 26 Ch. D. 510. (r) Exp. Voisey, Re Knight, 21 Ch. D. 442. (s) Chapman v. Beecham, 3 Q. B. 723. the power will not of itself vitiate the instrument as regards the other stipulations contained in it (x). A mortgagee who has taken possession and re-let the premises to the mortgagor is entitled to distrain; this right is expressly saved by sect. 6 of the Act of 1878 (y). vii.-Mortgagor in Possession entitled to Rents and Profits. A mortgagor is not bound to account for the rents and profits while in possession, even although the security prove insufficient (z). In a case (a) where a mortgage was made for 1,0007., and the property was in lease, the mortgagor became bankrupt. The mortgagee gave the tenant notice to pay the rent to him. The assignees nevertheless received the rent. A petition by the mortgagee that the assignees might be ordered to pay to the petitioner the rent received was dismissed. The mortgagor does not receive the rent for the mortgagee. Chap. XXXVI. (vi.) Mortgagee in possession may distrain. Mortgagor not account able for rents. Where the mortgagor in possession had consigned the crops Appointment of a West India estate to the consignee in England, and the of receiver. bills of lading had been signed prior to an order of the Court for the appointment of a receiver, it was held that the receiver was not entitled to the produce of the sale of such part of the crops as was unconverted at the date of the order. And the above principle applies to the heir or devisee of an estate charged with portions, &c., unless in an administration suit, and the estate be a deficient security (b). So, where a receiver had been appointed over a settled estate Surplus rents which was subject to a mortgage in fee, a mortgagee of the paid into Court by interest of the tenant for life, who had taken no steps to recover receiver. his debt and interest during the lifetime of the tenant for life, was held not to be entitled to an account of surplus moneys paid into Court by the receiver, but such moneys were held to form part of the personal estate of the deceased mortgagor (c). Where under certain proceedings in Chancery not relating to the mortgage a receiver had been appointed, and the surplus Chap. rents paid into Court, and part of the money being due when XXXVI. the mortgage term expired by effluxion of time, the mortgagee (vii.) applied to the Court to be paid the remaining debt out of the fund in Court, but without success (d). And in a similar case the same result followed, although the mortgagee had given notice to the tenants to pay him the rents, which, by reason of the appointment of the receiver, was disregarded. The mortgagee should have applied to the Court to divest the possession of the receiver (e). But where there was a sequestration in another suit, an equitable mortgagee was held entitled to back rents in the hands of the sequestrator (f). Effect of bankruptcy of mortgagor., Waste by mortgagor. Felling timber. After decree for sale of a bankrupt's legal mortgage, the trustee is entitled to the rents till the time of sale (g), unless the mortgagee makes actual entry or gives notice to the tenants to pay the rents to him (g). Secus, as to an equitable mortgagee, who is entitled from the date of the order (h), or from time of entry (i), if the trustee has acquiesced; nor can the mortgagor be viewed in the light of a receiver; and, in fact, a receivership without liability to account appears a contradiction in terms, it being in truth an ownership. viii.-Waste by Mortgagor.—Although in equity the mortgagor remains the actual owner of the land until foreclosure, and is entitled, while in possession, to the receipt of the rents and profits without account, yet equity, regarding the land with all its produce as a security for the mortgage debt, will restrict the right of ownership within those bounds which may not operate to the detriment or injury of the mortgagee (k). On this principle equity will interfere to prevent waste by the mortgagor, and for that purpose grant an injunction on action brought by the mortgagee (1). If, after a decree for foreclosure, the mortgagor in possession begins to commit waste, he will be restrained by injunction, though no injunction be prayed by the action (m). But the mortgagee is not, as a matter of course, (d) Gresley v. Adderley, 1 Swanst. 573. (e) Thomas v. Brigstocke, 4 Russ. 64; Preston v. Tunbridge Wells Opera House, (1903) 2 Ch. 323. (f) Tatham v. Parker, 1 Jur. N. S. 992. (g) Exp. Living, Re Tombs, 2 M. & A. 223. (h) Exp. Bignold, 2 M. & A. 16. (i) Ibid. 214. (k) Kekewich v. Marker, 3 Mac. & G. 329. (1) Farrant v. Lovel, 3 Atk. 723. And see Robinson v. Litton, 3 Atk. 210; Harper v. Applin, 54 L. T. 383. (m) Goodman v. Kine, 8 Beav. 379. entitled to an injunction to prevent the felling of timber by the mortgagor; the Court must first be satisfied that the security is insufficient (n); but it was refused to a judgment creditor under the old law, suing the debtor's heir-at-law, by whom a satisfied mortgage term and an alleged fraudulent conveyance by the debtor was set up, on the ground that the plaintiff might have no interest in the property (0). Chap. XXXVI. (viii.) trade name. An equitable mortgagee can obtain ex parte an injunction Parting with restraining the mortgagor from parting with the legal estate (p). legal estate. A mortgagee of a business, goodwill, and right to use the User of name, but who has never used it, can have an injunction against a person claiming under the mortgagor to prevent his using the name (q). Where a mortgagor of leaseholds remains in possession, and Fixtures. becomes bankrupt, the mortgagee may recover against his assignees for the removal of fixtures, whether landlord's or tenant's, from the premises, though at the end of the term they are required to be all delivered to the lessor (r). in course of Where a bill of sale of a farm and stock contains an implied Sale of goods licence to the grantor to carry on the farm and sell the stock, business. a sale to a bona fide purchaser is binding on the grantee (s), but not if the sale is out of the ordinary way of business (†). A mortgagee who had taken possession after the bankruptcy Growing of the mortgagor, was held to be entitled to an injunction to crops. restrain the bankruptcy trustee from cutting and removing growing crops from the mortgaged lands (u). (n) King v. Smith, 2 Ha. 239; Usborne v. Usborne, 1 Dick. 75. See Hampton v. Hodges, 8 Ves. 105; Hippesley v. Spencer, 5 Madd. 422; Humphreys v. Harrison, 1 J. & W. 581. (0) Leake v. Beckett, 1 Y. & J. 339. (p) London and County Bank v. Lewis, 21 Ch. D. 490, C. A. (q) Beazley v. Soares, 22 Ch. D. 660. (r) Hitchman v. Walton, 4 M. & W. 409. See further as to fixtures, ante, (8) National Mercantile Bank (t) Taylor v. McKeand, 5 C. P. D. 358. (u) Bagnall v. Villar, 12 Ch. D. 812; Re Gordon, 61 L. T. 299. CHAPTER XXXVII. Mortgagee takes subject OF THE RELATIVE RIGHTS OF MORTGAGORS AND MORTGAGEES i.-As to Leases, &c. subsisting at the Date of the Mortgage.to subsisting The mortgagor can give to the mortgagee no better title than leases, &c. he has himself, and consequently the latter, by the mortgage conveyance, takes the property subject to all leases and tenancies subsisting at the date thereof (a). Mortgagee's right to rents. Payment of rent to mortgagor. Effect of notice to pay By the conveyance the reversion passes to the mortgagee, and with it the right to future rents and other rights incident to the reversion (b); but arrears of rent do not pass without express words (c). The tenant may, however, continue to pay the rent to the mortgagor so long as he is allowed by the mortgagee to receive it; for though the conveyance is effectual as to the mortgagee's rights against the tenant without any attornment (d) by the latter, the tenant is not prejudiced by payment of the rent to the mortgagor, or by breach of any condition for non-payment of rent before notice of the mortgage (e). But if the tenant pay the rent to the mortgagor after notice to pay the mortgagee, and is afterwards compelled to pay the latter, the payment, being voluntary, cannot be recovered from the mortgagor (ƒ). Where the demise is either prior to the mortgage, or is made rents to mort- under a power in the mortgage deed, and therefore contemporaneous with it in point of effect (g), the notice of the mortgagee to the tenant in possession operates as an attornment at common gagee. (a) See Cumberland Union Banking Co. v. Maryport Hematite Iron Co. (No. 2), (1892) 1 Ch. 415. (b) Trent v. Hunt, 9 Exch. 14; Rogers v. Humphreys, 4 A. & E. 299. (c) Salmon v. Dean, 3 Mac. & G. 344. (d) 4 Anne, c. 16, s. 9. (e) Ibid. s. 10. (f) Higgs v. Scott, 7 C. B. 63. (g) Rogers v. Humphreys, 4 A. & E. 299. |