it, and though registered as a deed, will be valid and effectual as a mortgage, as between the parties, if it was intended by them to be merely a security for a debt, and this would be the case though the defeasance was by an agreement resting in parol; for parol evidence is admissible in equity to show that an absolute deed was intended as a mortgage, and that the defeasance has been omitted or destroyed by fraud, surprise or mistake. When it is once ascertained that the conveyance is to be considered and treated as a mortgage, then all the consequences appertaining in equity to a mortgage are strictly observed, and the right of redemption is regarded as an inseparable incident. An agreement, at the time of the loan, to purchase for a given price, in case of default, is not permitted to interfere with the right of redemption ;

*143

Hicks v. Hicks, 5 Gill & Johns. 75. Kelly v. Thompson, 7 Watts, 401. Holmes v. Grant, 8 Paige Rep. 243.

a

Maxwell v. Mountacute, Prec. in Ch. 526. Lord Hardwicke, in Dixon v. Parker, 2 Ves. 225. Marks v. Pell, 1 Johns. Ch. Rep. 594. Washburne v. Merrills, 1 Day, 139. Strong v. Stewart, 4 Johns. Ch. Rep. 167. James v. Johnson, 6 ibid. 417. Clark v. Henry, 2 Cowen's Rep. 324. Murphy v. Tripp, 1 Monroe's Rep. 73. Slee v. Manhattan Company, 1 Paige, 48. Hunt v. Admrs. of Rousmaniere, 1 Peters' U. S. Rep. 1. Story, J., in Taylor v. Luther, 2 Sumner, 232, and in Flagg v. Mann, ibid. 538. McIntyre v. Humphreys, 1 Hoffman's Ch. Rep. 31. Brainerd v. Brainerd, 15 Conn. Rep. 575. Jenkins v. Eldredge, 3 Story's Rep. 292, 293.

It was adjudged in the court of errors in New-York, in Webb v. Rice, 6 Hill Rep. 219, that parol evidence was not admissible in a court of law, to show that a deed absolute on its face, was intended as a mortgage.

It is often a perplexed question, whether a conveyance was intended to be absolute or as a security merely: the cases were extensively reviewed by the Ass. V. Ch. of New-York, in Brown v. Dewey, 1 Sandford's Ch. Rep. 57, and it was considered that the absence of the personal liability of the grantor to repay the money was not a conclusive test.

b Jaques v. Weeks, 7 Watts, 261. Wright v. Bates, 13 Vermont Rep. 341, S. P.

Bowen v. Edwards, 1 Rep. in Ch. 117. Willett v. Winnell, 1 Vern. 488. But if the agreement be subsequent and independent, that the grantee will reconvey upon repayment of the purchase money, it does not convert the first deed into a mortgage. Kelly v. Thompson, 7 Watts, 401.

though an agreement to give the mortgagee the right ot pre-emption, in case of a sale, has been assumed to be valid. But, at our public sales, which always take place when the equity of redemption is foreclosed, either by judicial decree, or under the operation of a power to sell, no such agreement could have application; and it may be questioned whether it does not come within the equity and policy of the general principle, which does not permit agreements at the time of the loan, for a purchase, in case of default, to be valid.

The mortgagee may contract subsequently to the mortgage, for the purchase or release of the equity of redemption upon fair terms; and yet no agreement for a beneficial interest out of the mortgaged premises, while the mortgage continues, is permitted to stand, if impeached in a reasonable time. The reason is, that the mortgagee, from his situation, wields a very influential motive, and he has great advantage over the mortgagor in such a transaction. He may become the purchaser at the sale of the *mortgaged premises by *144 the master under a decree ; and, in New-York, he is permitted, by statute, to purchase at the sale under a power though he be the person who sells, provided he acts fairly, and in good faith; and in that case no deed is requisite to make his title perfect; but the affidavit of the sale, when recorded, is sufficient evidence of the foreclosure. Without such a statute provision, the purchase would be subject to the scrutiny of a court of equity, and liable to be impeached, though the purchase is defeasible only by the cestui que trust, and not ipso facto void.e

Orby c. Trigg, 3 Eq. Cas. Abr. 599, pl. 24. 9 Mod. Rep. 2, S. C. b Wrixon v. Cotter, 1 Ridgway, 295. Austin v. Bradley, 2 Day, 466. Lord Redesdale, in Hicks v. Cook, 4 Dow, 16.

• Ex parte Marsh, 1 Madd. Ch. Rep. 148.

d New-York Revised Statutes, vol. ii. 546, sec. 7, 14.

• Munroe v. Allaire, cited in 1 Caines' Cases in Error, 19. Davoue v.

(4) Of conditional sales and covenants to pay. The case of sale, with an agreement for a repurchase within a given time, is totally distinct, and not applicable to mortgages. Such conditional sales or defeasible purchases, though narrowly watched, are valid, and to be taken strictly as independent dealings between strangers; and the time limited for the repurchase must be precisely observed, or the vendor's right to reclaim his property will be lost.a

Property of every kind, real and personal, which is capable of sale, may become the subject of a mortgage; quod emptionem, venditionemque recipit, etiam pignorationem recipere potest. It will, consequently, include rights in reversion, and remainder, possibilities coupled with an interest, rents and franchises; but a mere expectancy as heir is a naked possibility, and not an interest capable of being made the subject of contract.

If a leasehold estate be mortgaged, it is usual to take the mortgage by way of underlease, reserving a few days of the original term; and this is done that the

Fanning, 2 Johns. Ch. Rep. 252. Downes v. Grazebrook, 3 Merivale, 200. Slee v. Manhattan Company, 1 Paige, 48.

a Barrell v. Sabine, 1 Vern. 268. Endsworth v. Griffith, 15 Viner, 468. pl. 8. Longuet v. Scawen, 1 Ves. 405. 1 Powell on Mortgages, 138, note T. If it be doubtful whether the parties intended a mortgage, or a conditional sale, courts of equity incline to consider the transaction a mortgage, as more benign in its operation. Poindexter v. M'Cannon, 1 Dev. Equity Cases, 373. The test of the distinction is this; if the relation of debtor and creditor remains, and a debt still subsists, it is a mortgage; but if the debt be extinguished by the agreement of the parties, or the money advanced is not by way of loan, and the grantor has the privilege of refunding, if he pleases, by a given time, and thereby entitle himself to a reconveyance, it is a conditional sale. Slee v. Manhattan Company, 1 Paige Ch. Rep. 56. Goodman v. Grierson, 2 Ball & B. 274. Marshall, Ch. J., in Conway v. Alexander, 7 Cranch, 237. Robinson v. Cropsey, 2 Edwards' V. C. Rep. 138. Flagg v. Mann, 14 Pick. 467. 2 Sumner, 534. Holmes v. Grant, 8 Paige Rep. 243. The court of equity never relieves the grantor who neglects to perform the condition on which the privilege of repurchasing depended. Davis v. Thomas, 1 Russ. & M. 506.

Lord Eldon, in Carleton v. Leighton, 3 Merivale, 667.

mortgagee may avoid being liable for the rents and covenants which run with the land.

*It is *145

now settled, that the mortgagee of the whole term is liable on these covenants even before entry; and the case of Eaton v. Jaques, which had declared a contrary doctrine, after being repeatedly attacked, was at last entirely destroyed as an authority. A mortgage is usually accompanied with a bond for the debt intended to be secured by it; but a covenant for the payment of the money, inserted in the mortgage, will be sufficient and equally effectual, with us; though in England, upon a very narrow construction of the statute of 3 W. & M., the remedy by an action of covenant does not lie against a devisee. The covenant must be an express one, for no action of covenant will lie on the proviso or condition in the mortgage; and the remedy of the mortgagee for non-payment of the money according to the proviso, would seem to be confined to the land, where the mortgage is without any express covenant or separate instrument. The absence of any bond or covenant to pay the money, will not make the instrument less effectual as a mortgage.d

Doug. Rep. 455.

Williams v. Bosanquet, 1 Brod. & Bing. 238. It is, however, said to be better for the mortgagee to take an assignment of the whole time, than an underlease by way of mortgage; for then the right of renewal of the lease will be in him. 1 Powell on Mort. 197, n. 1. By the New-York Revised Statutes, vol. i. 739, lands held adversely may be mortgaged, though they cannot be the subject of grant.

• Wilson Kimbley, 7 East's Rep. 128.

Floyer v. Lavington, 1 P. Wms. 268. Briscoe v. King, Cro. Jac. 281. Yelv. 206. Lord Hardwicke, in Lawley v. Hooper, 3 Atk. 278. Drummond v. Richards, 2 Munf. 337. Scott v. Fields, 7 Watts, 360. This doctrine has been made a statute provision in the New-York Revised Statutes, vol. i. 738, sec. 139, where it is declared, that no mortgage shall be construed as implying a covenant for the payment of the money; and if there be no express covenant for such payment in the mortgage, and no bond or other separate instrument to secure payment, the mortgagee's remedy is confined to the land mortgaged.. In Ancaster v. Mayes, 1 Bro. C. C. 464, Lord

(5.) Of the power to sell.*

It is usual to add to the mortgage a power of sale in case of default, which enables the mortgagee to obtain relief in a prompt and easy manner, without the expense, trouble, formality, and delay of foreclosure by a bill in equity. The vexatious delay which accrues upon foreclosure, arises, not only from the difficulty of making all proper persons parties, but chiefly from the power that chancery assumes to enlarge the time for redemption on a bill to foreclose. There are cases in which the time has been enlarged, and the sale postponed, again and again, from six months to six months, to the great annoyance of the mortgagee. These powers are found, in England, to be so convenient, that they are gaining ground very fast upon the mode of foreclo sure by process in chancery. Lord Eldon considered it to be an extraordinary power, of a dangerous nature, and one which was unknown in his early practice. He was of opinion, that the power ought, for greater safety, to be placed in a third person, as trustee for both parties; and this appears to be still a practice, though it

Thurlow, however, intimated very strongly, that though the mortgage was unaccompanied with either bond or covenant, yet that the mortgagee would have the rights of a contract creditor, for there was still a debt; but the statute in New-York has disregarded the suggestion, and it is in opposition to the current of authority and the reason of the thing.

a In Edwards v. Cunliffe, 1 Madd. Ch. Rep. 160, the usual order on foreclosure was, that the mortgagor pay in six months, or stand foreclosed. This was afterwards enlarged to six months more, then to five, then to three, and to three again.

b Roberts v. Bozon, February, 1825. The power to sell inserted in a mortgage, though unknown to Lord Eldon in his early practice, is of a more ancient date than even the life of Lord Eldon; for we find an instance of it in Croft v. Powell, Comyn's Rep. 603. It was there insisted to be a valid power; and the court without questioning its operation, decided the cause on the ground that the mortgagee had not conveyed an absolute estate under the power. Lord Eldon's aversion to innovation has grown with his growth, and breaks out on every occasion; but who does not revere, even in his errors, the justum et tenacem propositi virum?