Chap. VII. the property charged (y). Extrinsic evidence is not admissible § 4 (ii). to raise an inference contrary to the express language of the document stating the terms on which the deposit was made (z). Deposit for special purpose. Enlargement of purpose. Intent to give security essential to charge by deposit. But parol evidence may be admitted to explain ambiguities in a memorandum of deposit (a). Where there was an unstamped agreement between the parties, which was inadmissible as evidence, Lord Eldon allowed other parol evidence to be adduced to establish the equitable mortgage (b). The charge is restricted to the special purpose in the memorandum accompanying the deposit, and the conditions therein must be complied with (c). Where a partner in a firm deposited with a bank certain sharecertificates to secure a private debt, and the shares became the property of the firm, it was held that the bank was not entitled to retain the certificates as security for a debt due from the firm (d). When the deposit is made for a particular purpose, that purpose may be enlarged by a subsequent agreement, either in writing, or proved by parol evidence, without an actual redelivery; as when deeds are deposited to secure advances by a banking firm, the deposit may be extended by agreement to secure advances made by the bank after a change of partners (e). There is a constructive redeposit with each successive firm (ƒ). But there is no presumption of such agreement (e). iii.-Deposit must be by way of Security.-The deposit must be made with the view and intent of an immediate security and not diverso intuitu. So where a debtor, whose deeds relating to certain freehold property were in the possession of his bankers as security for a debt due to them, gave to them an unsigned order to deliver over the deeds, so soon as their lien should have been satisfied, to another creditor, and at the same time handed to the creditor two leases of other property, it was (y) Jared v. Clements, (1902) 2 Ch. (*) Exp. Coombe, 17 Ves. 369. See (a) Ede v. Knowles, 2 Y. & C. C. C. (c) Wylde v. Radford, 9 Jur. N. S. 1169; Exp. Robinson, 1 D. & C. 119; Burton v. Gray, L. R. 8 Ch. 932. (d) City Bank Case, 3 De G. F. & J. 629. (e) Exp. Kensington, 2 Ves. & B. 79; Ede v. Knowles, 2 Y. & C. C. C. 172. (f) Exp. Oakes, 2 M. D. & De G. 234; Smith v. Gye, 2 M. D. & De G. 314. held that there was one entire agreement for a deposit of all the deeds (subject, as to those relating to the freehold, to the bankers' lien) by way of security for the debt due to the other creditor, and that there had been such part performance of that agreement as to take the case out of the Statute of Frauds and create a valid equitable mortgage on the freeholds (g). But where a debtor gave a verbal promise to a bank that he would, when required, give security for a debt, and the title deeds of certain property in which he was beneficially interested subsequently came into the possession of the manager of the bank, who was also beneficially interested in the property, for purposes relating to payment of succession duty; the debtor verbally assented to the retention of the deeds by the bank as security for their claim; it was held that, the deeds having come into the possession of the bank for another purpose, there had been no such part performance of the promise to give security as to exclude the operation of the statute, and to create an equitable charge in favour of the bank (h). So, where a person applied to his bankers for a loan on the security of the deposit of a lease, which they declined, but he left it with them without stating for what purpose the lease was so left, it was held that this gave the bankers no lien in respect of an outstanding debt due by the owner of the lease to the bankers (i). Chap. VII. § 4 (iii). that deeds in a the hands of creditor are security. held as As between a debtor and his creditor, however, the mere fact Presumption of possession of deeds by the latter generally raises a presumption that they were deposited with him as security for the debt; and the burden of proof lies upon the debtor to rebut the presumption (k). This presumption, however, will not apply to a case where a legal mortgagee is found to be in possession of title deeds relating to property of the debtor other than that expressly comprised in the mortgage deed (1). But as against third persons, a mere deposit of deeds without a memorandum in writing will create an equitable mortgage only where the possession of the title deeds can be accounted for in no other manner; as where the holder of the deeds was a (g) Daw v. Terrall, 33 Beav. 218. See Re McMahon, 55 L. T. 763. (h) Exp. Broderick, Re Beetham, 18 Q. B. D. 766, C. A. (i) Lucas v. Dorrien, 7 Taunt. 278. (k) Russell v. Russell, 1 Bro. C. C. 269; Burgess v. Moxon, 2 Jur. N. S. 1059. See Exp. Wright, 19 Ves. 258. (1) Wardle v. Oakley, 36 Beav. 27. Chap. VII. stranger to the title and the lands (m). Where the origin of the § 4 (iii). possession of title deeds by a bond creditor was not explained, it was held that there was no such deposit as to create an equitable charge on the lands as against persons interested therein under the will of the testator (n). Where the deposit is made for securing a sum to the trustees of a voluntary settlement, the intention must be clearly shown (0). Evidence. Deposit with creditor's solicitor. Deposit with debtor's solicitor. Whether deposit covers further advances. The proof of the relation of the debt to the deposit must be supported by proper evidence at the hearing (p); for if the evidence is not sufficient, there will be no inquiry (q). In case of loss of the deeds verbal evidence is sufficient (r). Where there is an agreement to give a mortgage, accompanied by the delivery of the deeds to the creditor's solicitor for the purpose of preparing a legal mortgage, the intent to create an immediate security will be presumed, and the delivery will constitute a present equitable mortgage by deposit of deeds though the agreement is not in writing (s). It has been held that such a delivery must be clearly shown to be made with the intention of immediately securing an existing debt or a present advance, and not merely for the purpose of having a legal mortgage prepared to secure such debt or advance; but the decisions referred to (f) are contrary to the current of authority, and may apparently be regarded as obsolete. A deposit of deeds with the debtor's own solicitor, to be held by him until a mortgage is executed, and then to be handed over to the creditor, creates an equitable charge, and constitutes the solicitor a trustee for the creditor (u). iv. Whether a Deposit covers further Advances.-If it appears that a deposit of deeds is made for the purpose of gaining credit, it will not cover moneys previously advanced and then due (x), unless an intention to cover them appears from the circumstances (y). (m) Bozon v. Williams, 3 Y. & J. 152. (n) Chapman v. Chapman, 13 Beav. 308. See Dixon v. Muckleston, L. R. 8 Ch. 155, 162. (0) James v. Bydder, 4 Beav. 600. (9) Kebell v. Philpot, 7 L. J. N. S. (r) Baskett v. Skeel, 11 W. R. 1019. (s) Exp. Bruce, 1 Rose, 374; Exp. Wright, 19 Ves. 258; Keys v. Williams, 3 Y. & C. Ex. 55. See Hockley v. Bantock, 1 Russ. 141. (t) Norris v. Wilkinson, 12 Ves. 192; Exp Bulteel, 2 Cox, 243. (u) Lloyd v. Attwood, 3 De G. & J. 614. (x) Mountford v. Scott, T. & R. 274. (y) Exp. Farley, 1 M. D. & De G. 683; Exp. Smith, 2 M. D. & De G. 314. But the deposit may be a security as well for debts actually due as also for future advances, if such intention is made out by oath uncontradicted, or other sufficient evidence (); and generally, a verbal agreement for a subsequent advance on a deposit of deeds already made for the purpose of securing an existing debt, is sufficient to constitute an equitable mortgage as to the subsequent advance (a). Where a mortgage by deposit was made to secure the debtor's account until such account should not exceed 1007., and the debtor died indebted to the mortgagee beyond that sum, it was held that the deposit was a security for the whole sum, and not merely for the excess above the 1007. (b). The deposit of deeds with the creditor's solicitor for the purpose of preparing a legal mortgage to secure an antecedent debt and future advances, though unaccompanied by any written agreement, will cover future advances (c). v.-What Deeds, &c. must be deposited.-In order to constitute the equitable mortgage by deposit, there need not be a delivery of all the title deeds (d). In Exp. Wetherell (e), the question was, what was the effect of the delivery of the title deeds to one moiety only of the estate, the title deeds of the other moiety being retained by the debtor and passing into the possession of his assignees, the mortgagees having understood that the deeds delivered to them related to the entirety. Lord Eldon, C., thought that, under the circumstances of that case, there was sufficient evidence in writing (and on this he grounded his decision) that there should be a mortgage of the entirety, and, consequently, he did not determine, to use his own words, "whether that would not be taken to be a sufficient deposit, which could be taken, upon looking at the instruments, to amount to evidence that the estate was meant to be a security." The equitable mortgagee by deposit of part of the deeds was held entitled to a charge on the property where the rest of the (z) Exp. Mountfort, 14 Ves. 606; Exp. Langston, 17 Ves. 230. And see Exp. Hooper, 19 Ves. 477; Shepherd v. Titley, 2 Atk. 348. (a) Exp. Kensington, 2 V. & B. 97; Exp. Whitbread, 19 Ves. 209; Exp. Lloyd, 1 Gl. & J. 389; Exp. Nettleship, 2 M. D. & De G. 124; Ede v. Knowles, 2 Y. & C. C. C. 178; Exp. Sanders, 3 L. J. N. S. Bky. 92; Exp. Marsh, 2 Rose, 289; Exp. Smith, 2 M. D. & (b) Ashton v. Dalton, 2 Coll. 565. 198. (d) Exp. Pearse, 1 Buck. 525; Erp. (e) 11 Ves. 398. Chap. VII. § 4 (iv). Deposit may be of part of deeds. Chap. VII. deeds remained in the possession of depositor's solicitors (ƒ); § 4 (v). and the deposit was supported, though the absent deed was the conveyance (g), and where evidence in writing existed that the security was intended upon the whole (h). The deposit by a landlord of a lease to a creditor as a security, was held equivalent to an equitable mortgage of the fee (i); and if part of the title deeds be deposited with one creditor and part with another, each depositee may have a good security (k), unless there be evidence of a contrary intention (7). Deposit of receipt for purchasemoney. Deposit of copies. Removal of deposited deeds. Memorandum incorrectly referring to deeds. Deposit of land certificate under Land Regis An equitable mortgage may be created by the deposit of a receipt for purchase-money, containing the terms of the agreement for sale, if there be no title deeds or conveyance in the depositor's possession (m). But a deposit of an attested copy of a deed is not sufficient to create a valid equitable charge (n). Where a debtor deposited title deeds as security, but afterwards fraudulently removed some of them, and the deeds removed could not be identified, it was held that the creditor had a lien on all title deeds belonging to the debtor (0). If the memorandum accompanying a deposit of deeds refers to deeds not deposited, and other deeds are deposited, the security will attach to the deeds actually deposited (p). If the memorandum specifies only some of the deeds which are actually deposited, the security will attach to all the deeds deposited (9). An equitable mortgage of land, the title to which is registered under the Land Registry Act, 1862 (r), cannot be created by a deposit of title deeds; but a deposit of the land certificate has try Act, 1862; the same effect, for the purpose of creating a lien upon the estate and interest of the depositor, as a deposit of the title deeds would have had before the passing of the Act. -under Land Under the Land Transfer Act, 1897 (s), the registered proTransfer Act, prietor of any freehold or leasehold land or of a charge may, 1897. (m) Goodwin v. Waghorn, 4 L. J. Ch. 172. (n) Exp. Broadbent, 1 M. & A. 635. (0) Mason v. Morley, 34 Beav. 475. (p) Exp. Powell, 6 Jur. 490. (a) Ferris v. Mullins, 2 Sm. & G. 378. (r) 25 & 26 Vict. c. 53, ss. 63, 73. See 38 & 39 Vict. c. 87, s. 126. (s) 60 & 61 Vict. c. 65, s. 8 (6). |