ARRANGEMENT OF CLAUSES. VI. The clauses giving additional remedies to the VII. The mortgagee's indemnity clause, post, p. 173. It appears to the author that the arrangement here suggested should, as a general rule, be adhered to; otherwise, there is a risk that a person perusing the mortgage in haste may not observe a clause in an unusual place. Sometimes, however, other arrangements are adopted, as, for instance, Groups II. and III. are transposed by Mr. Davidson, or Group III. may precede all the other clauses. Group I. consists of a single clause, a covenant by the mortgagor with the mortgagee for the repayment of the loan on a certain day (generally six months from the date of the mortgage), with interest in the meantime at a specified rate. (See forms 2 K. & E. 9.) Where this covenant forms the first witnessing clause, we follow the usual practice of stating the consideration in it, referring back to it as "the consideration aforesaid" in the clauses by which the conveyance is made. Formerly, this covenant was sometimes omitted, and in its place a bond of even date with the mortgage deed was given for the payment of the mortgage debt and interest. If no covenant or bond for payment of the debt be given, the mortgagee becomes a simple contract creditor of the mortgagor (c); though, even where there is no formal covenant or bond, it may be held on the construction of the whole deed that a specialty debt is created by implication. In some few cases, however, the mortgagor is, by a proviso in the deed, freed from personal liability, the land forming the sole security; as, for instance, if trustees in exercise of a power raise money on mortgage, and there is no cestui que trust able and willing to enter into the usual covenants. In the case of a mortgage by trustees under a power, an adult tenant for life sometimes enters into the covenant, and a (c) M. L. R. P. 196. E.I.C. 10 145 Group I. Covenant for repay ment of loan. proviso is inserted declaring that, as between the tenant for life and the remainderman, the land shall primarily be charged with the debt, so as to render the tenant for life a surety only. Formerly, there was considerable advantage in securing the debt by a bond or covenant, because a specialty creditor had priority over simple contract creditors in the administration of the debtor's estate; but, the effect of the Administration of Estates Act, 1869 (32 & 33 Vict. c. 46), commonly known as Hinde Palmer's Act, is to place the creditors, whether by simple contract or specialty, of persons dying on or after 1st January, 1870, on the same footing in administration (d) (except that under the Debts Recovery Act, 1830 (11 Geo. 4 & 1 Will. 4, c. 47, ss. 6 and 8 (e)) a creditor under a specialty by which the heirs are bound can sue the heir or devisee and obtain judgment to the extent of the assets which have devolved on him); so that now the principal difference between the two classes of debts consists in the difference of time allowed by the Statutes of Limitation for the recovery of them (ƒ). Formerly it was the practice to make a covenantor covenant" for himself, his heirs, executors, and administrators," or, in cases where the covenant related to land, and was intended to be performed by each successive owner, "for himself, his heirs, executors, administrators, and assigns." The word "heirs" was omitted in those rare cases where the heirs were not intended to be bound; and the words executors and administrators," though invariably inserted, were superfluous, as executors and administrators were bound without being mentioned. The C. A. 1881, s. 59, makes a covenant made after 1881, though not expressed to bind the heirs, operate to bind the heirs and real estate of the covenantor (as well as his executors and administrators and personal estate), as if heirs were expressed. 66 (d) See Re Hankey, (1899) 1 Ch. 541. (e) See M. L. R. P. 116; M. L. P. P. 154; Re Hedgely, 34 Ch. D. 379. (f) See M. L. P. P. chap. xix. FORM OF COVENANT. It is now therefore the practice to omit the words "heirs, executors, or administrators," of the covenantor, so that the commencement of the covenant is, "A. hereby covenants with B." There is no necessity to mention the "executors, administrators, or assigns" of the mortgagee, or the "heirs, executors, or administrators" of the mortgagor in the covenants for payment. Group II. consists only of a covenant for payment of interest on so much of the principal as shall for the time being remain unpaid after the appointed day. In the absence of such a covenant, the mortgagee can recover interest as damages for non-payment of the principal on the appointed day (g). It should be noticed that occasionally a person is willing to covenant for the payment of the interest for a certain time only. Thus, when a mortgage is made by trustees under a power, it sometimes happens that the tenant for life objects to covenant to pay the principal, but is willing to covenant to pay the interest accruing during his life (see 2 K. & E. 10). The covenant to pay interest is inserted for the benefit of the mortgagee; but the tenant for life is, in the absence of any covenant, bound, as between himself and the remainderman, to keep down the interest during his life, unless the rents are insufficient for that purpose, and he gives notice of their insufficiency to the remainderman (h). Sometimes, where a reversioner mortgages his interest, the tenant for life covenants as surety to pay interest during his own life, and charges his life interest with such payment (2 K. & E., note 113). In this case a provision should be inserted in the deed declaring that the reversioner and his estate shall be primarily liable to pay the principal money and interest, so as to render the tenant for life a surety only (2 K. & E. 114). (g) Re Roberts, 14 Ch. D. 49. (h) Lord Kensington v. Bouverie, 7 H. L. C. 557; Caulfield v. Maguire, 2 Jo. & Lat. 141, see p. 158; Sharshaw v. Gibbs, Kay, 147 Group II. for pay Covenant ment of interest. Group III. Convey ance. Group III. comprises- First, a conveyance of the mortgaged property. This is in a form similar to that which would be adopted in the case of an absolute conveyance; but the estate of the mortProviso for gagee is made "subject to the proviso for redemption hereredemp tion. Reconveyance by personal representatives. inafter contained." Second, a proviso for redemption It was formerly the practice to direct the reconveyance to be made by "the said [mortgagee] his heirs or assigns;" but after the passing of the V. & P. A. 1874 (37 & 38 Vict. c. 78), which (s. 4) enabled the legal personal representative of a mortgagee of freeholds, or of copyholds to which the mortgagee had been admitted, to reconvey or surrender the mortgaged land on payment of all sums secured by the mortgage, many practitioners directed the reconveyance to be made by "the mortgagee, his heirs, executors, administrators, or assigns, as the case may require;" for it will be observed that the Act only applied to cases where the mortgage was entirely paid off, and that accordingly the heirs, and not the executors or administrators, of the mortgagee were the proper persons to reconvey on payment of part only of the mortgage money. This section has been repealed as to deaths after 1881 by the C. A. 1881, s. 30, which provides that an estate of inheritance vested by way MORTGAGEE COMPELLED TO TRANSFER. of mortgage in any person solely (i.e., in a sole mortgagee or the survivor of several mortgagees) shall on his death, notwithstanding any testamentary disposition, devolve to and vest in his legal personal representatives as if it were a chattel real (i). It follows that, in mortgages made after 1881, the reconveyance should be directed to be made by the "executors, administrators, or assigns," no mention being made of the heirs. 149 may be compelled to transfer. Formerly, it was the strict duty of the mortgagee on being Mortgagee paid off to reconvey to the mortgagor; and he could not be forced to convey to any other person, however ruinous to the mortgagor might be the consequences of his refusal (j). Formerly the words "or as he or they shall direct" were added at the end of the proviso for the purpose of excluding this rule. They are now omitted, as the C. A. 1881, s. 15 (as modified by the C. A. 1882, s. 12), provides that the mortgagor and any subsequent incumbrancer, on paying off the mortgagee, may require him, unless he is or has been in possession, to assign the mortgage debt and convey the mortgaged property to any third person, notwithstanding any stipulation to the contrary (k). The old practice of naming the hour and place for repayment has long since been discontinued; and the day mentioned in the proviso is not now considered as fixing a date after which the mortgagor cannot redeem, but as fixing a date before which the mortgagee cannot foreclose. Although the mortgagor has a legal right (Chesworth v. Hunt, 5 C. P. D. at p. 271) to pay off on the day appointed, he never does so in practice; and if he does not, he has, in the absence of special stipulation to the contrary, to give the mortgagee Notice to six months' notice of his intention to pay him off (l), or to pay off. (i) This enactment is repealed as to copyholds where the mortgagee who dies has been admitted; see the Copyhold Act, 1887 (50 & 51 Vict.c. 73), s. 45, repealed by the Copyhold Act, 1894, and re-enacted by s. 88. (j) See Walker v. Jones, L. R. 1 P. C. at 61; Dunstan v. Patterson, 2 Ph. 341. (k) See Teeran v. Smith, 20 Ch. D. 728, set out in M. L. R. P. 211. (1) M. L. R. P. 203, Browne v. |