Purchasers, Whether joint

tenants or tenants in common.

Purchase by part

ners.

conveyance belonged to the bankrupt at the date of the adjudication, or (as the case may be) devolved on him after it and before his discharge. The trustee "as trustee " grants, and the bankrupt, if a party, "as beneficial owner" releases (see form, 1 K. & E. 497).

A conveyance of the bankrupt's leaseholds by the trustee. is in the usual form, except that neither the bankrupt nor the trustee is entitled to any covenant from the purchaser to indemnify him against the covenants in the lease, as the bankrupt will on his discharge become free from all liability (see the Bankruptcy Act, 1883, s. 30; but see also ante, p. 122, note), and the trustee is freed from all subsequent liability (see 2 Dav. Prec. 624, note). As to the liability of the trustee for rent up to the sale, see The Swansea Bank, Limited, v. Thomas, 4 Ex. D. 94.

The copyholds of a bankrupt can be dealt with by the trustee in bankruptcy in the same manner as if they had been surrendered to such uses as the trustee should appoint (see s. 50 (4)). The trustee, therefore, need not be admitted.

Where a conveyance is made to two purchasers as joint tenants, then if they advanced the purchase money in equal shares, they are presumed to have intended to take their chance of survivorship, and accordingly they are joint tenants in Equity as well as at Law (Robinson v. Preston, 4 K. & J. 505); but, if the purchase money was advanced in unequal shares, or if the property was purchased for trading purposes, or out of moneys belonging to them as partners, they are considered as tenants in common in Equity. See the notes to Lake v. Craddock, 2 W. & T. L. C. A conveyance made to partners for the purposes of their business should contain a recital that they are partners, and of their wish that the property should be conveyed to them "in manner hereinafter appearing." The limitation will be to "the use of the said [partners] their heirs and assigns, as joint tenants, in trust for the said [partners] their heirs and assigns, as tenants in common as part of their partner

PURCHASE BY PARTNERS.

ship estate (y). Sometimes an express power is added, enabling the surviving partner to sell, mortgage, or lease without the concurrence of the representative of the partner first dying. (1 K. & E. 406.) And it seems useful to add a power to the partners for the time being to appoint a new trustee in the place of any trustee who is not at the time of appointment a member of the firm in the same manner as if he were dead. (1 K. & E. 406.) The object of this provision (which will not be understood by the student until he has studied the chapter on Appointment of New Trustees, post, Chap. XIII.) is to enable the legal estate to be got in from a person who has ceased to be a trustee, or from his representatives, without his or their concurrence, by means of a vesting declaration under the Trustee Act, 1898, s. 12.

(y) See various forms of limitations discussed, 33 Sol. J. 102.

141

CHAPTER VI.

What a mortgage is (a).

MORTGAGE DEEDS OF INTERESTS IN LAND.

THERE is considerable difficulty in framing any definition of a mortgage which would be intelligible to beginners; for under the common name of mortgage we include instruments which operate in very different manners. But the typical form of mortgage, that of a mortgage in fee, may be described as a conveyance of land to a creditor subject to a proviso (see form in Stud. Prec. 54) for reconveyance on payment of the debt and interest on a day named in the proviso. The effect of such a mortgage at law, is that, if the money is not paid on the day so appointed, the creditor (who is called the mortgagee) becomes absolute owner of the land. But, in Equity, the time named for payment is not considered as of the essence of the contract, and the estate may be "redeemed" and a reconveyance compelled afterwards; for the debtor (who is called the mortgagor) is considered to remain the owner, and the rights of the mortgagee over the land are merely those necessary for enforcing payment of the debt (b). In old times a mortgage was defined (see Co. Lit. 205 a) as a feoffment in fee, upon condition to be void if the feoffor or his heirs should on a fixed day pay the debt and interest to the feoffee or his representatives. At law, the effect of performing the condition, by payment on the day, was to defeat the feoffment and to restore the mortgagor to. his original estate, while non-payment on the day gave to the (a) M. L. R. P. 196.

(b) This equitable right of the mortgagor to redeem after the day

appointed for payment is called his "equity of redemption" (M. L. R. P. 201).

SALE WITH OPTION TO PURCHASE.

mortgagee an estate in fee discharged from the condition. As, however, at the present time mortgages are rarely if ever made by a conveyance upon condition, but are always made by a conveyance subject to a proviso for reconveyance called the proviso for redemption, we will confine our attention entirely to mortgages made in the latter manner.

The doctrines of Equity have given a very different meaning to a mortgage from that which it bore in Littleton's time, when (as has been stated) the mortgagee would acquire the estate absolutely on non-payment of the money on the appointed day. Now, on the contrary, Equity lays down the rule that a mortgage cannot by any bargain entered into between the parties at the time of making the mortgage be made irredeemable-a doctrine sometimes stated as follows: "Once a mortgage always a mortgage."

143

On the other hand, a vendor can convey land to a pur- Sale with chaser subject to a power of repurchase by the vendor at purchase. option to a given time for a fixed sum. The distinction between a conveyance of this nature and a mortgage is very clear in principle. In the one case the contract is really for a sale, subject to a locus poenitentiæ on the part of the vendor. In the case of a mortgage, the parties do not contemplate that the land shall change hands, and it does not become the absolute property of the mortgagee even on non-payment of the money on the appointed day: but only by the operation of legal proceedings taken by the creditor (the mortgagee) for the purpose of procuring repayment of his

money.

errors

about law.

A common mortgage affords a good example of the A morterroneous notions as to law entertained by most people. gage is an example of Sometimes the plot of a novel turns on the supposed vulgar impossibility of redeeming an estate in mortgage after the appointed day for payment has passed; or, again, the villain of the story determines to ruin a mortgagor by buying up all the mortgages on his property, and then selling it under the mortgagee's power of sale. Although the forced sale may probably cause the land to be sold

Mortgage effected by indenture.

Arrangement of clauses.

cheap, the result will probably be to increase the income of the mortgagor. As an example: suppose the rent-roll of an estate to be £3,000 a year, representing a selling value of £90,000, the interest of mortgages on it (amounting to £60,000 at £4 per cent.) is £2,400, leaving a net income. (subject to the expenses of managing the estate) of £600. After the sale the mortgagor has £30,000, which, invested at £4 per cent., gives an income of £1,200, or reinvested in land at thirty years' purchase, gives £1,000 as the annual income. The author has been informed of a case where the mortgages absorbed the whole rental of the property, and yet, on the property being sold, there remained, after paying off the mortgages, over £200,000 for the mortgagor.

A mortgage of an estate in fee simple may be regarded as the typical form of mortgage. It is effected by an indenture, the narrative recitals in which are framed so as to show the nature of the interest intended to be mortgaged, and are similar to those which would be inserted in a purchase deed; the introductory recitals state the agreement for the loan and security. Sometimes, when brevity is of importance, the deed is framed without any recitals at all; but this is rare.

The clauses forming the operative parts of a mortgage deed (see form in Stud. Prec. 52) are usually arranged in the following groups :

I. The covenant to pay the principal with interest

on an appointed day.

II. The covenant for payment of interest if the principal be not paid on the appointed day. III. The mortgage proper. This consists of the conveyance and the proviso for redemption, post, p. 148.

IV. Clauses altering the primary contract as regards the time and manner of payment of principal and interest, post, pp. 151 et seq.

V. The provisions for keeping up the value of the mortgaged property, post, pp. 157 et seq.