deeds is vi.-What Property is charged by a Deposit of Deeds.-A CHAPTER VII. deposit of title deeds creates an equitable mortgage on all the All property property comprised in them, and all the interest of the mort- comprised in gagor therein, unless the contrary intention be clearly shown (7). charged by deposit. An inference of intention may be drawn that part only of the property comprised in the deposited deeds should be subject to contrary the security (m), as where the memorandum specified that part only; but other written evidence may be looked at to show the measure of the security (n). Property not included in the documents deposited will not be included against strangers, merely from a false statement of the mortgagor that it was included (o). Evidence of intention. The deposit will affect only the beneficial interest of the Accretions. debtor, but will include accretions to, or substitutions for, the property affected (p). If the title deeds of the house engaged in trade are deposited Goodwill. to secure a debt, and the premises are sold together with the goodwill of the business, the equitable mortgagee will be entitled to the whole of the purchase-money (q). lease. A renewed lease is subject to the same equitable mortgage Renewed that affected the former lease (r), exactly as in the case of a legal mortgage. When an agreement for a lease is deposited by way of Lease granted security, and a lease is afterwards granted to the depositor upon pursuant to different terms, it seems that the deposit will not be affected so far as regards the particulars to which the deposit extends (s). agreement. An owner of a limited estate has, of course, no right to charge Deposit by the lands, by deposit of deeds or otherwise, beyond the extent of limited owner. his estate. And accordingly, if the deeds deposited show him to be a limited owner, or if the depositee has notice of the fact aliunde, it is clear that the limited estate only is charged. But it seems that parol evidence of the assent of the remainderman to a deposit of deeds by a tenant for life would be admissible to charge the inheritance (t). (1) Ashton v. Dalton, 2 Coll. 565; Exp. Bisdee, 1 M. D. & De G. 333. (m) Wylde v. Radford, 9 Jur. N. S. 1169; Exp. Robinson, 1 D. & C. 119; Exp. Leathes, 3 D. & C. 112; Exp. Heathcoate, 2 M. D. & De G. 711. (n) Exp. Glyn, Re Medley, 1 M. D. & De G. 29; Exp. Hunt, 1 M. D. & De G. 139. (0) Jones v. Williams, 24 Beav. 47. (1) Chissum v. Dewes, 5 Russ. 29; (r) And see post, p. 165. CHAPTER VII. Tenant for life. Husband and wife. Heir or devisee. Executor. Person having no interest. Trustee. Fraudulent deposit of deeds. A legal tenant for life of freeholds is entitled to the custody of the title deeds, and the Court will not interfere as between him and the remainderman, except where there is danger to the safety of the deeds if left in the hands of the tenant for life, or where the Court requires the deeds for the purpose of carrying out trusts relating to the property (u). In consequence of this custody, the tenant for life is enabled to mortgage the land or deposit the title deeds as apparent owner of the fee, and the bona fide mortgagee has such defence as a plea of purchase for value without notice is capable of affording (r). A deposit by husband and wife of the title deeds of the wife was held not to operate as an appointment by the wife under a settlement (y). But where a man deposited his wife's mortgage (over which he had, jure mariti, a power of disposition) to secure a debt of his own, the security was upheld, as against the wife surviving, as an alienation pro tanto (z). A deposit with memorandum of charge by an heir or devisee is an alienation pro tanto, which will, to the extent of the moneys secured, defeat the rights of the creditors of the ancestor or testator against the mortgaged property, as assets under the statute 3 & 4 Will. IV. c. 104 (a). An executor may deposit without his co-executor joining to raise money for the purpose of administration (b). If a person has no interest in deeds deposited with him, he cannot, of course, confer any interest in the property comprised therein by delivering them to a third party by way of security or otherwise (c). Where a trustee deposits the trust deeds, upon which the trust is apparent, with his bankers, the trust is prior to the lien (d) : but the cestuis que trust are preferred, even if there is no notice (e). If the deeds of one client are by the act of a solicitor deposited with another client fraudulently, the onus falls on the mortgagee (u) Leathes v. Leathes, 5 Ch. D. 221. And see Taylor v. Sparrow, 4 Giff. 706, in which Warren v. Rudall, 1 J. & H. 1, and Pyncent v. Pyncent, 3 Atk. 571, are commented upon. (x) Wallwyn v. Lee, 9 Ves. 24. See post, pp. 1303 et seq. (y) Lewthwaite v. Clarkson, 2 Y. & C. 372. (z) Bates v. Dandy, 2 Atk. 207. (a) British Mutual Investment Co. v. Smart, L. R. 10 Ch. A. 567. (b) Exp. Sheffield Union Banking Co., Re Carter, 13 L. T. N. S. 477. (c) Jackson v. Butler, 2 Atk. 306. See Bell v. Taylor, 8 Sim. 216. (d) Welchman v. Coventry Union Bk., 8 W. R. 729. (e) Stackhouse v. Countess of Jersey, 1 J. & H. 721. CHAPTER VII. Limitations. to prove that the solicitor was the agent of the mortgagor (ƒ); and when a solicitor permits his client to deposit deeds, he cannot set up a first mortgage of which he was assignee (g). A son fraudulently, and without the father's knowledge, Statute of deposited in 1859 title deeds belonging to the father to secure an advance, the depositee having no notice of the fraud. In 1882 the father claimed delivery up of the deeds. The depositee refused and pleaded the Statute of Limitations; but it was held that the statute did not begin to run until the refusal (h). vii. To whom the Deposit should be made.-The deposit may To whom be made either to the creditor himself or to some third person be made. deposit may over whom the depositor has no control (¿). But it will not be effectual if made to the wife of the depositor, Retainer of deeds by nor, à fortiori, if permitted to be retained by the debtor (k), debtor. unless he gives a memorandum in writing to the creditor that he holds the deeds for the creditor as security for the debt (7). And a written memorandum enclosing the bonds kept by the debtor, and not communicated to the creditor, is not sufficient, at all events against the trustee in bankruptcy (m), although it may amount to a declaration of trust (n). But where the memorandum and documents were in the possession of the debtor, a secretary to a company being the creditor, the deposit was established (o). third person. The equitable deposit in the hands of one person will not be Advance by extended to an advance made by another person, unless the person holding the deeds is a mere trustee and has made no advance (p). viii.-General Remarks.-The question as to the necessity of Registration. registering a memorandum of charge accompanying a deposit of title deeds relating to land in Middlesex or Yorkshire will be considered later (q). VOL. I.-R. (m) Wilson v. Balfour, 2 Camp. 579. And see Exp. Combe, 9 Ves. 117; Adams v. Claxton, 6 Ves. 226. (n) Re Bankhead's Trusts, 2 K. & J. 560. (0) Ferris v. Mullins, 2 Sm. & G. 278. (p) Exp. Whitbread, 19 Ves. 212; 1 Rose, 299; Re Henry, Exp. Crossfield, 3 Ir. Eq. R. 67. (q) See post, pp. 1246 et seq. F CHAPTER VII. Priority. The question of the possession of deeds as affecting the priorities inter se of incumbrancers will also be more fully considered in a subsequent chapter (»). On a review of the decided cases establishing this mode of mortgage security, it is perhaps to be regretted that the old law was not adhered to, and the principle on which the Statute of Frauds was founded more respected. For although equity, by declaring the deposit itself to be evidence of an agreement executed, has contrived to evade the strict and literal wording of the statute, yet it is manifest that the door has been in some degree open to fraud and perjury; nor does a creditor seem to deserve much favour who will not be at the trouble of a few lines in writing (s) if he is desirous to have a charge on his debtor's estate. If the debtor denies that the deposit was intended to cover future advances, as in Exp. Mountfort (t), or if he insist that the deeds were not delivered by way of deposit, but with a different intent, resort must, in many cases, be had to parol evidence; and, as remarked by Lord Eldon (t), “the mischief of all these cases is, that the Court is deciding upon parol evidence with regard to an interest in land within the Statute of Frauds." The preceding remarks strongly demonstrate the inexpediency of taking a security by deposit, unless accompanied by a memorandum stating the nature and terms of the mortgage contract, as likely to lead to dispute and litigation. This species of security ought never to be accepted, except, perhaps, in the case of small temporary loans. One advantage attending the taking of a memorandum in writing is that in case the mortgagor becomes bankrupt, and the depositee applies to the Court for an order for sale, he is allowed his costs out of the estate, but not if he has a deposit of deeds without any writing signed by the mortgagor (u). (r) See Chap. LVIII., post, pp. 1340 (8) Exp. Whitbread, 19 Ves. 209. 119; Exp. Thorpe, 3 M. & A. 441; Exp. Barclay, 5 De G. M. & G. 403; Exp. Dingwall, 6 L. T. N. S. 915. See Exp. Pigeon, 2 D. & C. 118; Exp. Emmerton, 3 D. & C. 654; Exp. Reynolds, 4 D. & C. 278. See also Exp. Reid, 1 M. & McA. 14. 67 CHAPTER VIII. OF INSTRUMENTS COLLATERAL OR ANCILLARY TO MORTGAGES. mortgages i.-Of Bonds collateral to Mortgages.-It was formerly a Bonds colusual practice to require borrowers to give bonds as collateral lateral to securities for the payment of the principal and interest contem- now unusual. poraneously secured by mortgage. But since the passing of the statute 1 Will. IV. c. 47, whereby actions on covenants may be maintained against devisees of the covenantor, collateral bonds add little or nothing to the security derived from the covenants for payment usually inserted in the mortgage. For this reason such bonds have very generally fallen into disuse as merely causing unnecessary expense. Inasmuch, however, as bonds given by way of collateral security for the payment of mortgage-moneys are still occasionally met with in practice, it may be useful to state briefly some of the points which have been decided in regard to such instru ments. Although it is a general rule, both at law and in equity, that Interest bea bond debt shall not carry interest beyond the penalty (a), Find penalty. yet the rule will not apply where the repayment of a principal sum, with all interest that may accrue due thereon, is secured by a mortgage and also by a bond for the same sum, as the mortgagee's right to recover all interest due is not to be prejudiced by the bond ; and this principle will apply even although the mortgage is given by a surety and subsequent to the bond, unless the mortgage is made a security only for the bond debt and the interest to become due on the bond c The rule that interest on a bond debt is not allowed beyond the penalty of the bond prevails in the administration of assets, except under special circumstances (d. Ja Bromley T. Guodere, 1 Atk. 80; Waste v. Der v. Doug. 42: Tew v. Lord Winterton, 3 Bro. C. C. 489: Knight w. Maricon, 3 Bro. C. C. 49, 495: Mackworth v. Thomer, 5 Yes, 329; (Mariex. Seton. 6 Ves. 411: Wide T. Carlson, 6 T. R. 303. 106. Clarke v. Lord Abingdon, 17 Ves. e. See Hughes v. Wynne, 1 My. & K. 20. And see Lloyd v. Hatchett, 2 ALst. 625. And Bee Canoes T. Waters, 16 Jur. 632. d. Atkinson v. Atåinson, 1 Ba. & Be. |