RECONVEYANCE. the legal personal representatives for the reasons mentioned above, p. 213. As to copyholds.-Where copyholds are mortgaged by Copyholds. covenant to surrender, and no surrender has been made, a discharge of the debt by the legal personal representatives of the mortgagee is sufficient. If a surrender has been made, and the mortgagee has not been admitted, the legal personal representatives can give a warrant to enter up satisfaction. In either of these cases a legatee of the mortgage debt and security whose legacy has been assented to can give the release or warrant in the place of the legal personal representatives, though it is the practice to obtain their concurrence. 66 Where the mortgagee has been admitted, then, if he died before the 7th August, 1874, his heir or devisee must be admitted and surrender to the use of the mortgagor. If he died on or after the 7th August, 1874, and before 1882, his heir or devisee may be admitted and surrender, or on payment of all sums due on the mortgage" his legal personal representative can surrender. V. & P. A. 1874, s. 4. If the mortgagee died after 1881, the right to be admitted is in his customary heir (y), who must be admitted and surrender to the mortgagor or his successor in title. 225 PART V.-SUB-MORTGAGES. Occasionally a mortgagee wishes to receive only part of Sub-morthis money, and is unwilling to disturb his original invest- gage (). ment. Suppose, for instance, that he has advanced £20,000 on mortgage of land, and wants £500; it might be disadvantageous to him to call in the £20,000; and, if he were to ask the mortgagor to pay him £500, the latter, not having £500 and being unable to find a person willing to advance him £500 on a second mortgage, might be compelled to (y) Copyhold Act, 1894, s. 88, replacing Copyhold Act, 1887, E.I.C. s. 45, ante, pp. 213, 214. borrow the whole £20,000 from another person, and thus discharge the whole debt. In such a case, a sub-mortgage, or mortgage of the mortgage debt and securities, is resorted to. The subject-matter of the sub-mortgage being the mortgage debt and the mortgaged property, they have to be transferred to the sub-mortgagee, subject to redemption (in our example on payment of £500), with liberty to him to sell them. The transfer of the debt will be made by an assignment, habendum "to the said [sub-mortgagee], [his executors, administrators, and assigns (a),] subject to the proviso for redemption hereinafter contained," i.e., to redemption on payment of £500 and interest; and there is added a power of attorney enabling the sub-mortgagee to sue in the name of the original mortgagee for the whole £20,000 (ante, p. 190). The property comprised in the original mortgage will be transferred to the sub-mortgagee in the appropriate method, "subject to such right or equity of redemption as the said premises are now subject to by virtue of" the original mortgage, "and subject also to the proviso for redemption hereinafter contained." The proviso for redemption in our example would be on payment of £500 and interest by the original mortgagee to the sub-mortgagee. The effect of the two provisoes for redemption, in the original mortgage and the sub-mortgage respectively, appears to be the following: Under the proviso contained in the original mortgage, the mortgagor can redeem that which he mortgaged, viz., his land (or other property) on payment of £20,000; that is, £19,500 to the original mortgagee, and £500 to the submortgagee; and on doing so, he becomes entitled to a reconveyance of the land from both of them. Under the proviso contained in the sub-mortgage, the original mortgagee can redeem that which he mortgaged to the submortgagee, viz., the debt of £20,000 and the securities for it; and on doing so, be becomes entitled to a reassignment (a) The words in this bracket may be omitted. SUB-MORTGAGES. of the £20,000 and a reconveyance of the land, subject as to the latter to the proviso for redemption contained in the original mortgage. In case the original mortgagor should pay off the £20,000, trusts are declared concerning it in the submortgage similar to those contained in a mortgage of a chose in action (ante, p. 195); and power is given to the sub-mortgagee to give a receipt for the whole £20,000. These two clauses may probably be omitted in reliance on the C. A. 1881, s. 22, but it appears safer to insert them. The power of sale conferred by the sub-mortgage authorises the sub-mortgagee to sell the subject of his security, i.e., the mortgage debt of £20,000, and the land subject to redemption on payment of £20,000. The sub-mortgagee can exercise the statutory power of sale conferred by the original mortgage; and, if the original mortgage is properly drawn, he can also, as assign of the mortgagee, exercise any express power of sale contained in it. Let us consider the method in which the two powers of sale work. The power contained in the sub-mortgage is only to be exercised if the original mortgagee (the sub-mortgagor) makes default, i.e., if he does not keep down the interest on the £500, or neglects to pay the principal after due notice; but, on the other hand, it can be exercised without reference to the defaults of the original mortgagor; when exercised, it passes the £20,000 and the securities for it, i.e., the benefit of the covenants by the mortgagor in the original mortgage, and the land subject to his equity of redemption. The power contained in the original mortgage is only to be exercised if the original mortgagor makes default, i.e., if he does not keep down the interest on the £20,000, or neglects to pay the principal after due notice; when exercised, it passes the land to the purchaser free from all equity of redemption. Inquiry should be made before completion of a sub-mortgage from the original mortgagor as to the state of accounts between him and the mortgagee, and notice of the submortgage should be given to him (see ante, p. 192). 227 CHAPTER IX. Lessor's title. Agreement for a lease. LEASES. A LEASE for a term of years, or for a term of years determinable on a life or lives, gives a chattel interest to the lessee, but a lease for a life or lives gives him a freehold interest. Leases for lives have almost fallen into disuse. We shall therefore discuss leases for years only. See M. L. R. P. 158 et seq. It is the usual practice for a lessee at rack-rent not to investigate his lessor's title; but, if he omits to do so, and accepts a lease containing the usual covenant by the lessor for quiet enjoyment, so as to negative the covenants implied by the word " demise" (see post, p. 270), and it turns out that the lessor was unable to grant a valid lease, owing to some defect in his title that might have been discovered by the lessee if he had investigated it, the lessee has no claim for compensation (a). Prior to the V. & P. A. 1874 (37 & 38 Vict. c. 78), it was doubtful whether an agreement for a lease implied that the intending lessor would deliver an abstract, and show a good title; though it appears clear that he could not enforce specific performance of such an agreement without showing a good title (Fildes v. Hooker, 2 Mer. 424; Baskcomb v. Phillips, 29 L. J. Ch. 380); and that, if he had no title, an action for damages would lie against him by the intending tenant (Stranks v. St. John, L. R. 2 C. P. 376). The V. & P. A. 1874 provides, s. 2, that "under a contract to grant or assign a term of years, whether derived or to be derived out of a freehold or leasehold estate, the (a) Clayton v. Leech, 41 Ch. D. 103; and see Baynes & Co. v. Lloyd & Sons (1895), 1 Q. B. 820. LESSOR'S TITLE. intended lessee or assign shall not be entitled to call for the title to the freehold" (b). The C. A. 1881, s. 13, provides that, unless a contrary intention is expressed in the contract, "on a contract to grant (c) a lease for a term of years to be derived out of a leasehold interest with a leasehold reversion, the intended lessee shall not have the right to call for the title to that reversion." The result is that an intending lessee or underlessee cannot call for the title to the freehold, and that an intending underlessee can call for the production of the lease under which his intending lessor holds (d), and the subsequent title thereto, but not for the production of any superior lease. But, if the intending lessee can show that the title is bad, he will not be bound to accept the lease (e). It should always be agreed, on the treaty for the lease, whether the intending lessor is to show any and what title. Where the title is not investigated, the intending lessee should, if the property is situated in a town, or forms part of a building estate, inquire whether the lessor is restricted from using it in any particular manner; as, for instance, whether he is prohibited from using it as a shop; for, if the lessor be restrained from so using it, the lessee cannot put himself into a more favourable position than his lessor, merely by omitting to inquire into the title (f). And, even if the lessor falsely states that there is no restriction, though the lessee has a remedy against the lessor, he gains no right to use the property in the forbidden manner; and the case is not altered by the above-mentioned Acts, the lessee or underlessee being in the same position with respect to (b) This Act applies to incorporeal hereditaments; Jones v. Watts, 43 Ch. D. 574. (c) See also C. A. 1881, s. 3 (1), which provides that (unless a contrary intention is expressed in the contract; sub-s. 9) the purchaser of an existing underlease shall not have a right to call for the title to the leasehold reversion, i.e., the lease out of which the (d) Gosling v. Woolf (1893), (e) Jones v. Watts, 43 Ch. D. 574. (f) See Re Cox and Neve's Contract (1891), 2 Ch. 109, at p. 117; and Dart, V. and P. 980. 229 |