CHAPTER X. payment of Usually, where the principal is made repayable by instalments, the forbearance of the right to call in the whole of the Proviso for principal is made conditional on the regular and punctual principal by payment of the instalments by means of a proviso that, in instalments. default of regular payment, the creditor should be at liberty to sue at once for his whole debt (m). Where mines form the subject of a mortgage, it would seem Mines. to be a proper arrangement that the money should be made repayable by instalments; the mortgagor will thus have the advantage of paying off the debt gradually out of the profits of the mines, while the mortgagee will be protected against the exhaustion of the security without a corresponding reduction of the debt (n). Where a creditor gave time for payment of an existing debt upon security being given for payment thereof by instalments, on the failure in payment of any one of which the whole debt was to become payable, the condition was strictly enforced (0). instalment If, after default in payment of an instalment, the mortgagee Acceptance of accepts payment thereof, this is not a waiver of the breach (p) after default. so as to disentitle the mortgagee from calling in the whole principal. bonus on A stipulation may be inserted in the mortgage deed that a Proviso for commission or bonus shall be paid in default of punctual default. payment of any instalment (9). xiii.-Covenants for Insurance against Fire.-Till recently, Former importance where the nature of the mortgaged property was such as to of such require insurance against fire to protect the security from risk covenants. of loss, it was the usual practice to insert in the mortgage deed not only covenants by the mortgagor for that purpose, but also a clause empowering the mortgagee to insure in case of default by the mortgagor, and to charge the latter and the mortgaged property with the premiums and interest. This clause was formerly important, as, if the mortgage contained no stipulation (m) Dav. Conv. (4th ed.) Vol. II. pt. ii. p. 49; Byth. & Jarm. Conv. (4th ed.) Vol. III. p. 1171. (n) Dav. Conv. (4th ed.) Vol. II. pt. ii. p. 433. (0) Sterne v. Beck, 1 De G. J. & S. 595. See Roddy v. Williams, 3 J. & L. 1; Edwards v. Martin, 25 L. J. (p) Keene v. Biscoe, 8 Ch. D. 201. (9) General Credit, &c. Co. v. Glegg, 22 Oh. D. 549. CHAPTER X. Lord Cranworth's Act. Conv. Act, 1881. Power to insure incident to estate or interest of mortgagee. Amount and application of insurance money. to that effect, the mortgagee, whether in possession or not, would not have been entitled to any allowance in respect of payments made by him for insuring the property against fire (»). And even where there was a covenant by the mortgagor to insure, but no express power for the mortgagee to insure on the mortgagor's default, it was held that the mortgagee could not be allowed to take the premiums paid by him against a second mortgagee (s). And this rule still applies to all mortgage deeds executed before the 28th of August, 1860, and to all charges whenever made, if not made by deed. Lord Cranworth's Act (t), which came into operation on that date, gave to mortgagees whose charges were secured by deed a statutory power to insure the mortgaged property, and to add any premiums paid by them to the principal moneys secured, as if such power had been in terms conferred by the person creating the charge. But this enactment is now repealed, except as to instruments executed before the 1st of January, 1882, by the Act next referred to. By the Conveyancing and Law of Property Act, 1881 (u), it is enacted that Sect. 19 (1.) A mortgagee, where the mortgage is made by deed, shall, by virtue of the Act, have the following power, to the like extent as if it had been in terms conferred by the mortgage deed, but not further, namely: (ii.) A power, at any time after the date of the mortgage deed, to insure and keep insured against loss or damage by fire any building, or any effects or property of an insurable nature, whether affixed to the freehold or not, being or forming part of the mortgaged property, and the premiums paid for any such insurance shall be a charge on the mortgaged property, in addition to the mortgage money, and with the same priority, and with interest at the same rate, as the mortgage money. And by the same Act, it is enacted as follows: Sect. 23 (1.) The amount of an insurance effected by a mortgagee against loss or damage by fire under the power in that behalf conferred by the Act shall not exceed the amount specified in the mortgage deed, or, if no amount is therein specified, then shall not exceed two third parts of the amount that would be required, in case of total destruction, to restore the property insured. (2.) An insurance shall not, under the power conferred by the (r) Dobson v. Land, 8 Hare, 216; Bellamy v. Brickenden, 2 J. & H. 137, (8) Brook v. Stone, 13 W. R. 401. (t) 23 & 24 Vict. c. 145, s. 11. Act, be effected by a mortgagee in any of the following cases (namely): (i.) Where there is a declaration in the mortgage deed that no insurance is required: (ii.) Where an insurance is kept up by or on behalf of the mortgagor in accordance with the mortgage deed: (iii.) Where the mortgage deed contains no stipulation respecting the mortgagor, to the amount in which the mortgagee is (3.) All money received on an insurance effected under the mortgage deed or under the Act shall, if the mortgagee so requires, be applied by the mortgagor in making good the loss or damage in respect of which the money is received. (4.) Without prejudice to any obligation to the contrary imposed by law, or by special contract, a mortgagee may require that all money received on an insurance be applied in or towards discharge of the money due under his mortgage. The statutory provisions above set out may be varied or altogether excluded by the mortgage deed; and they do not apply to mortgage deeds executed before the 1st of January, 1882 (x). CHAPTER X. ments do It is to be observed that this Act does not imply any covenant These enactby the mortgagor to insure or to produce the policy and receipts not import for premiums. Covenants of this nature should therefore still covenant by mortgagor be inserted in mortgage deeds, otherwise the mortgagee may to insure. have difficulty in ascertaining whether the default in effecting and maintaining an insurance has occurred, which alone gives rise to the mortgagee's statutory power of insuring the property. In the absence of a stipulation in the mortgage deed that the Application of policy moneys policy moneys receivable in respect of an insurance kept up by receivable by the mortgagor shall be applied in making good the loss or mortgagor. damage, it was held that the mortgagee could not require the moneys to be so applied, though the mortgage deed contained a covenant by the mortgagor to insure (y). Under the Act such a covenant would be sufficient to entitle the mortgagee to require the moneys to be so applied, but in absence of the covenant he would have no such right, as the insurance in respect of which the moneys would be received would not have been effected either under the mortgage deed or under the Act. (x) See s. 19, sub-ss. (2), (3), and (4), set out post, p. 884. (y) Lees v. Whiteley, L. R. 2 Eq. 143; Rayner v. Preston, 18 Ch. D. 1, CHAPTER X. Covenant to pay premiums. Joint insur gagor and mortgagee. With regard to s. 23, sub-s. (4) of the Act, it must be borne in mind that by the statute 14 Geo. III. c. 78, s. 83 (perpetuated by the statutes 7 & 8 Vict. c. 84, 18 & 19 Vict. c. 122, and 28 & 29 Vict. c. 90), directors of insurance companies are in certain cases authorized and required, upon the request of any person interested in any buildings burnt down or damaged by fire, to apply the insurance moneys in restoring the buildings (3). It is further to be observed that by s. 19, sub-s. (1) (ii), of the Act of 1881, premiums paid by a mortgagee in respect of an insurance effected by him under the statutory power are only made a charge upon the mortgaged property, and not a debt for which the mortgagor is personally liable. It is therefore advisable that the mortgage deed should contain an express covenant by the mortgagor for repayment of such premiums. If the mortgagor and mortgagee effect a joint insurance on ance by mort- the mortgaged estate, the mortgagee paying the premiums, and, the premises being destroyed by fire, the mortgagor's assignees procure payment from the company, they will be ordered to pay the insurance money into Court, though they have already paid it to the account in bankruptcy, there being no right in one of the parties, in respect of a joint security, to apply the produce, irrespective of the claims of the other party (a). Where an insurance of the mortgaged premises had been effected in the joint names of the mortgagor and mortgagee, the Court, upon the receipt of the insurance money by the assignees in bankruptcy of the mortgagor, ordered payment of the money into Court until the rights of the parties thereto could be ascertained (b). A policy of insurance against fire, being a strictly personal contract for the indemnity of the assured, is not assignable without the consent of the insurance office, which is usually procured either by an indorsement on the policy, or an entry in the books of the office (c). The question whether such assignment vested the right of action at law in the assignee has become of no moment since the Judicature Acts. In the case of a mortgage of property insured under an existing policy, the benefit of the policy would, even without express stipulation, pass to the (2) Exp. Goreley, 4 De G. J. & S. 477; Sampson v. Scottish Union Ins. Co., 1 H. & M. 618. (a) Rogers v. Grazebrook, 12 Sim. 557. (b) Rogers v. Grazebrook, 12 Sim. 557. (c) Dowdw. on Ins. 408; Dav. Conv. Vol. II. pt. ii. p. 54. mortgagee with the property insured (d). A different principle applies when the policy is subsequent to the mortgage, and there is no covenant by the mortgagor that the policy moneys shall be applied in payment of the mortgage (e). The mortgagor has no equity to be repaid out of the produce of the policy money expended by him about the rebuilding of the property, the expenditure being voluntary (d). A fire insurance being only an indemnity, if the insured receives compensation from other sources, the insurer is entitled to recover it (f). On the analogy of the cases which decide that a policy against fire by a vendor is, in the absence of contract, avoided after sale for want of interest (g), and that a tenant is not entitled to the landlord's insurance effected after the lease (h), it would seem that, as between mortgagor and mortgagee, neither of them would be entitled to the benefit of an insurance effected by the other subsequently to the mortgage, in the absence of stipulation to the contrary (i). CHAPTER X. xiv.-Covenants for Title.-Mortgage deeds formerly, accord- Covenants for title implied ing to the usual practice, contained express covenants for title by by virtue of the mortgagor. Such covenants were in their general character statute. similar to those inserted in purchase deeds, differing only in their greater comprehensiveness. The insertion of such covenants is now rendered generally unnecessary by virtue of the provisions of sect. 7 of the Conveyancing and Law of Property Act, 1881 (k), which enacts that there shall be implied— (1.) (C.) In a conveyance by way of mortgage, the following On mortgage covenant by a person who conveys and is expressed to convey as by beneficial beneficial owner (namely) : That the person who so conveys has, with the concurrence of every other person, if any, conveying by his direction, full power to convey the subject-matter expressed to be conveyed by him, subject as, if so expressed, and in the manner in which it is expressed to be conveyed; and also that, if default is made in payment of the money intended to be secured by the conveyance, or any interest thereon, or any part of that money or interest, contrary to any provision in the conveyance, it shall (d) Garden v. Ingram, 23 L. J. Ch. 478. (e) Lees v. Whiteley, L. R. 2 Eq. 143. See also Rayner v. Preston, 18 Ch. D. 1, C. A. (case of vendor and purchaser). (f) Darrell v. Tibbits, 5 Q. B. D. 560, following North British, &c. Insurance Co. v. London, &c. Insurance Co., 5 Ch. D. 569. (g) Poole v. Adams, 33 L. J. Ch. 639. (h) Leeds v. Cheetham, 1 Sim. 146; Llofft v. Dennis, 1 E. & E. 474 (i) Dav. Conv. Vol. II. pt. ii. p. 56. (k) 44 & 45 Vict. c. 41. As to covenants for title implied by virtue of the statute in mortgages of leaseholds, see post, p. 167. owner. |