Page:The American Cyclopædia (1879) Volume XI.djvu/869

 MORTGAGE 851 >us and was prohibited by the law, this Dnditional alienation was devised, not at all rith the design of depriving the mortgageor f his property if he failed to repay the money, )ut that the mortgagee might in the mean me/ receive the rents to his own use in lieu of rhat he would otherwise have received as in- t. A mortgage was generally created by conveyance of lands from a debtor to his litor, with a condition that if a sum of loney were paid on a certain day the convey- nce should be void, and the debtor might have lis former estate. But a mortgage might also >e made by an absolute deed of conveyance id a defeasance back to the grantor. This lefeasance was a separate instrument defeat- ig the principal deed by making it void if the ondition was performed. The former mode was by far the more usual. The maxims of common law were strictly applied to this ind of conveyance; and if the money were )t paid at the very day specified in the deed, lands were absolutely forfeited, nor would subsequent tender of the money avail the lebtor. But the mortgaged lands were plainly )nly intended as security for the payment of the money borrowed ; and large estates were sometimes pledged for the payment of small debts. A strict forfeiture in such cases was not only inconsistent with the plain principles of justice, but was contrary to the spirit of the contract. For these reasons the court of chancery interposed, and by an equitable con- struction mitigated the severity of the common law, by holding the condition to be in the na- ture of a penalty, against which a just relief should be given. This just relief consisted in allowing the debtor, if within a reasonable time he paid the debt with interest, to call on his creditor for a reconveyance of the lands. But on the other hand, chancery gave to the mortgagee, after reasonable indulgence to the mortgageor, the right to call upon the latter for the payment of the debt, or in default thereof to be for ever foreclosed or excluded from any further right of redemption. The right of redemption is considered in equity to be an inseparable incident of every mortgage, and no executory agreement that it shall be forfeited, lost, or abridged on failure to per- form the condition of the mortgage will be sanctioned. From mortgages, however, in re- spect to restrictions of the equity of redemp- tion, must be distinguished sales with agree- ments to repurchase, or, as they are usually termed, conditional sales. In their forms the two transactions are often very similar, and it is difficult to distinguish them. The difference is, that one is only security for a debt, while the other is a regular purchase, for a price paid or to be paid, to become absolute on a particu- lar event. Since this complete recognition of the equity of redemption by the courts, the mortgage has gradually ceased to be looked up- on as a conveyance of an estate; and though it still is so in form, the mortgageor is regarded as owner subject to a lien on the land for the amount of the mortgage debt, and he may sell or mortgage again subject to such lien; the land may be taken on execution against him ; it is subject to dower and curtesy, and on his death passes to his heirs. On the other hand, the interest of the mortgagee is personalty, and may be sold as such, and the mortgage lien passes on a sale of the debt whether formally assigned or not. One important incident usu- ally pertaining to ownership, however, still attaches to the mortgagee's right; namely, that he may demand and obtain possession even before his debt is due. This right, how- ever, is taken away by statute in some of the United States. The lien of the mortgagee is terminated by payment, without any formal discharge, though an instrument to go upon the record of the mortgage as evidence of the fact is usually required and given. A tender of the amount due will also discharge the lien, even though not accepted. The equity of re- demption can only be cut off by some species of foreclosure. Possession of the mortgagee may ripen into foreclosure, if he occupies the land for a period after the debt is due equal to the time required at law to bar a right to lands under the statute of limitations, and in some states for a much shorter period after formal entry as provided. If the mortgage, as is usu- ally the case, contains an authority to the mort- gagee to sell the land to satisfy the debt, he may foreclose by the exercise of this power at public auction, without resort to suit. Stat- utes regulate the process, and usually require a previous published notice for several weeks or months. The most usual process of fore- closure is by suit in equity, or analogous pro- ceedings, in which decree or judgment wiU be entered that unless payment be made by a short day named, the land shall be sold by the proper officer of the court for its satisfaction. Sometimes, though only under peculiar circum- stances, a decree for strict foreclosure is made ; that is, it is decreed that unless payment is made by the day fixed the equity of redemp- tion shall be barred, and the title of the mort- gagee be established. Usually the mortgage secures the personal obligation of the mort- gageor, evidenced by bond, note, or other form of promise ; but sometimes it is given without, the mortgageor simply conveying the land with a condition that the conveyance shall be void if a certain sum shall be paid at a time named. Such a mortgage leaves it to his option to pay or not, and the mortgagee's remedy is confined to the land if he fails to pay. But when a mortgage is given to secure a personal obliga- tion, the mortgagee will pursue his remedy by suit on such obligation or by foreclosure, as he may prefer ; and if he elects the latter process and fails to realize sufficient to satisfy the debt, he may then resort to the personal responsibil- ity of the mortgageor for the deficiency. It should be added that mortgages may be condi- tioned for the performance of any other legal