not be concluded from doing so by payment of rent to the CHAP. XXXVII. assignee under a mistake of facts (o).

Where the assignee of the mortgagor acquires the legal estate from the mortgagee, who was not privy to or estopped by the lease, the assignee will not be bound by it (p).

Underlease.

An underlease by the mortgagor passes no legal interest (q). Where the mortgagor lets the premises furnished, the furni- Lease of ture not forming part of the mortgage, the mortgagee can only furniture. recover an apportioned rent (r).

house and

iv.-Leases by Mortgagors under Express Powers.-As for- Powers of leasing. merly neither the mortgagor nor the mortgagee alone could make a lease which would be binding on the other (s), it was often thought advisable to enable the mortgagor to grant leases independently of the mortgagee by giving him a power of leasing (operating by way of appointment); and in the case of a lease operating under such a power, it was not material with whom the lessee's covenants were entered into, as the law annexed the benefit of the covenants to the legal reversion (f).

According to this view of the legal doctrine, it was needless to impose upon the mortgagor any stringent conditions as to the form of the lease, as if the lease operated under the power, the benefit of the covenants and condition of re-entry as well as the rent were ipso facto annexed to the reversion, and therefore available by the mortgagee, his heirs and assigns; and if the lease did not operate under the power it merely took effect by estoppel as between the lessor and lessee, and did not bind the mortgagee or those claiming under him. The lease was, according to the usual practice, framed so that it might be unmistakeably an exercise of the power (u).

v.-Leases by Mortgagors under Statutory Powers-As Leasing regards leases made by a mortgagor where the mortgage was

(0) Dve T. Barton, 11 A. & E. 307. And see the judgment in Gouldsworth v. Knights, 11 M. & W. 867, and in The Mayor and Burgess of Poole v. Whitt, 15 M. & W. 671: Pupe *. Biggs, 9 B. & Or. 246; and Waadisione v. Barnett, 2 Bing. N. C. 638.

(F) Lev. Thompson, & Q. B. 2007, Doe v. Edwards and Gülere, I B. & Ad

1065.

4. Doe v. Ongley, 20 L. J. C. P. 26. (r, Dubntofte v. Curteene, Cro, Jac. 400; Balmon v. Methowe, & M. & W. $27.

Le Supra, p. €78.

Greenaway. Hart, 14 C. B. 340 , Yellowly v. Gouer. 1. Excb 274.

powere of mortgagors

CHAP. XXXVII. made on or after the 1st January, 1882, the Conveyancing and Law of Property Act, 1881 (x), enacts as follows:

and mort

gagees in possession since 1st January, 1882.

Sect. 18.-" (1.) A mortgagor of land while in possession shall, as against every incumbrancer, have, by virtue of this Act, power to make from time to time any such lease of the mortgaged land, or any part thereof, as is in this section described and authorized.

(2.) A mortgagee of land while in possession shall, as against all prior incumbrancers, if any, and as against the mortgagor, have, by virtue of this Act, power to make from time to time any such lease as aforesaid.

"(3.) The leases which this section authorizes are—

(i.) An agricultural or occupation lease for any term not exceeding twenty-one years; and

(ii.) A building lease for any term not exceeding ninety-nine

years.

"(4.) Every person making a lease under this section may execute and do all assurances and things necessary or proper in that behalf.

"(5.) Every such lease shall be made to take effect in possession not later than twelve months after its date.

"(6.) Every such lease shall reserve the best rent that can reasonably be obtained, regard being had to the circumstances of the case, but without any fine being taken.

"(7.) Every such lease shall contain a covenant by the lessee for payment of the rent, and a condition of re-entry on the rent not being paid within a time therein specified not exceeding thirty days.

"(8.) A counterpart of every such lease shall be executed by the lessee and delivered to the lessor, of which execution and delivery the execution of the lease by the lessor shall in favour of the lessee and all persons deriving title under him, be sufficient evidence.

"(9.) Every such building lease shall be made in consideration of the lessee, or some person by whose direction the lease is granted, having erected, or agreeing to erect, within not more than five years from the date of the lease, buildings, new or additional, or having improved or repaired buildings, or agreeing to improve or repair buildings within that time, or having executed, or agreeing to execute within that time, on the land leased, an improvement for or in connexion with building purposes.

"(10.) In any such building lease a peppercorn rent, or a nominal or other rent less than the rent ultimately payable, may be made payable for the first five years, or any less part of the

term.

"(11.) In case of a lease by the mortgagor, he shall, within one month after making the lease, deliver to the mortgagee, or, where there are more than one, to the mortgagee first in priority, a counterpart of the lease duly executed by the lessee; but the lessee shall not be concerned to see that this provision is complied with.

"(12.) A contract to make or accept a lease under this section may be enforced by or against every person on whom the lease if granted would be binding.

(x) 44 & 45 Vict. c. 41.

"(13.) This section applies only if and as far as a contrary CHAP. XXXVII. intention is not expressed by the mortgagor and mortgagee in the mortgage deed, or otherwise in writing, and shall have effect subject to the terms of the mortgage deed or of any such writing and to the provisions therein contained.

"(14.) Nothing in this Act shall prevent the mortgage deed from reserving to or conferring on the mortgagor or the mortgagee, or both, any further or other powers of leasing or having reference to leasing; and any further or other powers so reserved or conferred shall be exerciseable, as far as may be, as if they were conferred by this Act, and with all the like incidents, effects, and consequences, unless a contrary intention is expressed in the mortgage deed.

"(15.) Nothing in this Act shall be construed to enable a mortgagor or mortgagee to make a lease for any longer term or on any other conditions than such as could have been granted or imposed by the mortgagor, with the concurrence of all the incumbrancers, if this Act had not been passed.

"(16.) This section applies only in case of a mortgage made after the commencement of this Act; but the provisions thereof, or any of them, may, by agreement in writing made after the commencement of this Act, between mortgagor and mortgagee, be applied to a mortgage made before the commencement of this Act, so, nevertheless, that any such agreement shall not prejudicially affect any right or interest of any mortgagee not joining in or adopting the agreement.

"(17.) The provisions of this section referring to a lease shall be construed to extend and apply, as far as circumstances admit, to any letting, and to an agreement, whether in writing or not, for leasing or letting."

sect. 18.

This section removes, in cases to which it applies, the dis- Effect of ability which formerly prevented mortgagors in possession from granting leases and entering into and enforcing contracts for leases without the consent of their mortgagees.

The conditions annexed to an exercise of this statutory power must be strictly observed, as otherwise the lease will be void, as under the old law, as against the mortgagee (y), and will only operate as between the mortgagor and the lessee by estoppel (z).

Definition of

Land, as defined for the purposes of this Act, unless a Sub-sect. (1). contrary intention appears, includes land of any tenure and land. hereditaments, corporeal or incorporeal, and houses and other buildings, also an undivided share of land (a).

A lease by a mortgagor under this section may apparently Demise of confer, so as to bind the mortgagees, rights of light or other easements. easements over adjoining land (6).

(y) See Yellowly v. Gower, 24 L. J. N. S. 289; 11 Exch. 274.

(2) See ante, p. 682.

(a) Ibid. s. 2 (ii.).

(b) Wilson v. Queen's Club, (1891) 3 Ch. 522.

CHAP. XXXVII.

Although the above definition of land does not extend to Leases by "any estate or interest in land," it is conceived that tenants for limited owner life and other limited owners who have mortgaged their interests of mortgaged lands. may, without the consent of their mortgagees, grant leases of the settled lands under this section which will be valid, at all events, until the determination of the limited interest if such should happen before the expiration of the term.

Powers of leasing under S. L. Act, 1882, s. 50.

Sub-sect. (2).
Leases by

And by sect. 50 (3) of the Settled Land Act, 1882 (c), it is enacted that

"Unless the assignee is actually in possession of the settled land or part thereof, his consent shall not be requisite for the making of leases thereof by the tenant for life, provided the leases are made at the best rent that can reasonably be obtained, without fine, and in other respects are in conformity with this Act."

A mortgagee is not bound by any agreement collateral to the lease made between the mortgagor and his lessee (d).

Sub-sect. (2) of sect. 18 of the Act of 1881 empowers mortmortgagees in gagees in possession to grant leases of the mortgaged lands in accordance with the provisions contained in the following subsections. This question will be considered later (e).

possession.

Sub-sect. (3).

No power to grant mining leases.

Sub-sect. (6). Best rent to be reserved.

Mortgagors are not empowered under sect. 18 to grant mining leases of the mortgaged land, inasmuch as such leases involve the abstraction of corpus of the property so as prejudicially to affect the security. But the provisions of the section, with such modification as may be necessary, may be extended by the terms of the mortgage deed so as to enable a mortgagor to grant mining leases (f). It will be observed that mining leases are not excepted from the statutory power of leasing given by the Settled Land Act, 1882, to limited owners of settled lands which are in mortgage (g).

Sect. 18 requires the lease to reserve the best rent that can reasonably be obtained. In estimating what is the best rent in each case, the particular circumstances must be regarded as a whole; and if the lease was granted in good faith and between independent contracting parties, the Court would not interfere unless satisfied that the inadequacy was substantial ().

(c) 45 & 46 Vict. c. 38.

(d) Municipal Permanent Investment Building Soc. v. Smith, 22 Q. B. D. 70, C. A.

(e) See post, p. 800.

(f) See Conv. Act, 1881, s. 18, sub-ss. (13) and (14), sup. (g) Sup.

(h) Duchess of Sutherland v. Duke of Sutherland, (1893) 3 Ch. 169, 193.

and condition

In a lease granted under this section the lessee's covenants CHAP. XXXVII. will be made with, and the power of re-entry will be given to, Sub-sect. (7). the mortgagor, but the benefit thereof will be annexed to the Covenants actual legal reversion, thus vesting in a legal mortgagee all of re-entry. remedies for recovery of rent and enforcing the covenants and the right of re-entry as if he had joined in granting the lease (i); so also the lessee will be entitled to the benefit of all covenants in his favour entered into by the lessor-mortgagor as against the mortgagee as owner of the legal reversion (k).

The mortgagor must deliver to the mortgagee a counterpart Sub-sect. (8). within one month after making the lease (). If the mortgage counterpart. Delivery of is of an undivided share of land, and the mortgagor concurs with the other co-owners in granting a lease under this section, he must either obtain their consent to the delivery of the counterpart to the mortgagee or he must obtain a duplicate counterpart from the lessee. If a counterpart has been executed by the lessee, the non-delivery thereof to the mortgagee will not prevent the lease from being binding on the mortgagee in favour of the lessee, who is not concerned to see that the counterpart is delivered to the mortgagee (7); but the lessee and those claiming under him will be protected by production of the lease executed by the lessor. The Court would probably decree specific performance of the obligation to deliver the counterpart, and it would seem that the omission to deliver the counterpart would be such a breach of a provision of this Act as to render exerciseable the statutory power of sale conferred by this Act (m).

For the purposes of the Act, "building purposes include the Sub-sect. (9). Building erecting and the improving of, and the adding to and repairing leases. of, buildings; and a building lease is a lease for building purposes or purposes connected therewith" (n). Sect. 18, subsect. (9), of the Act, by enacting that building leases shall be made for the considerations therein mentioned (which are in effect considerations that the lessee shall carry out building purposes), seems impliedly to allow that such considerations may be regarded in fixing the best rent. If it is desired that the mortgagor shall not be able to grant under his statutory power

(i) See Conv. Act, 1881, s. 10. (k) Wilson v. Queen's Club, (1891) 3 Ch. 522.

VOL. I.-R.

(7) Conv. Act, 1881, s. 18, sub-s. (11).
(m) Ibid. s. 20.

(n) Ibid. s. 1 (x).

Y Y