Page images
PDF
EPUB

sarily, prevail at law over him whose right is only equitable, and not, therefore, even noticed by the Courts of law. This advantage he carries with him so far, even into a Court of equity, that, if the equitable claims of the parties are of equal force equity will leave him who has the legal right in full possession of it, and will not do anything to reduce him to an equality to the other, who has the equitable right only.’”

This decision would seem questionable. Granting that the lien of the mortgage is a legal lien, the mortgagees do not appear to have advanced their money upon the faith of this specific property, and, under these circumstances, they would not seem to satisfy the requirements of the equitable doctrine of bona fide purchase, as generally understood and as stated in this very opinion, viz., “Where equities are equal the law must prevail.” But, assuming that the decision is erroneous in respect to this point, this does not impeach it is respect to the point of the lien of the mortgage being a legal lien. There are some other cases to the same effect,” though lacking the explicit statements of principles contained in the cases above referred to. The writer has found no cases upon similar facts conflicting with the foregoing. It is worth while to notice the practical effect of a doctrine contrary to that maintained by these cases. A mortgagee who succeeded in foreclosing before he received any notice of such “unwritten o’ equities would be unaffected by them, whereas, if he happened to receive such notice before foreclosure, he would be postponed to them. This would mean that prudence required a mortgagee to foreclose at the earliest possible moment and that any indulgence to the mortgagor, in the way of extension of time, would be at the hazard of his security—a rule of diligence which we believe would be a surprise to the most cautious counsellors and a result which could hardly have been contemplated by those Courts and legislatures which interfered between mortgagor and mortgagee to modify the theory of the mortgage for the protection of the former. In conclusion, and while we have before us these problems concerning the right of the mortgagee as against third persons to subject the land to the satisfaction of his debt, which bring us face to face with the ultimate and substantial nature of the mortgage, as distinguished from those incidental and technical questions, such as the manner and means of assigning and discharging the mortgage, or the right to possession and the maintenance of legal actions before foreclosure—while these problems concerning the very substance of the mortgage are before us, let us take a broad view of the fundamental question in hand. Bearing in mind that the lien of the mortgage ripens by foreclosure into a full legal title, and that this process does not require any act upon the part of the mortgagor, further than the execution . of the mortgage and default in its payment, and bearing in mind that in this respect the foreclosure of a mortgage differs from the specific performance of a contract for the sale of land, which, in the absence of a statute conferring on the Court jurisdiction in rem to execute a conveyance by its Master or otherwise,” requires the actual execution of a conveyance by the vendor, under compulsion if necessary; and bearing in mind, also, that, unlike the title acquired upon specific performance of a contract, which dates from the conveyance and not from the execution of the contract, the title acquired by foreclosure relates back to the execution of the mortgage so as to cut off intervening incumbrances"—bearing in mind these features of mortgage fore

* See Jones, Corporate Bonds and Mortgages, sec. 117.

17 Austin v. Pulsch en.-112 ('al. 52S: Gaar v. Milliken, 68 Ind. 20s; Broward v. Hoeg. 15. Fla., 372: Watts v. Corner, S Tex. Civ. App. 5SS: Parsons v. Crocker, 12S Ia. 641.

* There is probably in all of the states more or less statutory authority for the common foreclosure and sale in equity but such authority is not essential. Lansing v. Goelet. 9 Cow. 346 : Byron V. May, 2 Chand. (Wis.) 103; and see, Benjamin v. Cavaroc, 2 Woods 16S : Carroll v. Deimel, 95 N. Y. 252: Doucming v. LeDu, 82 Cal. 471, Morrison v. Bean, 15 Tex. 267. In at least one of the lien states the Court has inherent jurisdiction to decree strict foreclosure (Judd. v. Hayward, 4 Minn. 483 : Drew v. Smith, 7 Minn. 301) by virtue of which the lien of the mortgage ripens into a legal title in the lands of the mortgagee without a sale.

* See Jones, Mortgages, sec. 1654.

NotE.-In the foregoing discussion the question has been considered as one of an alternative between legal lien and equitable lien. As noted in the writer's former article on this subject, there is some authority for a third position, viz., that the mortgage is merely a chose in action or contract and creates no interest in the land, legal or equitable. In this connection it should be observed that the foregoing authorities are inconsistent with this theory. The equitable doctrine of bona fide purchase requires not only legal rights but legal rights in rem. That doctrine is merely negative, that under certain circumstances the Court will not interfere with legal rights but leave parties holding them to their full enjoyment, unimpaired by equity. To one who had, at law, no estate or interest in rem in the land, but merely a right against certain persons in respect thereto, such non-interference would be of no avail against third persons.

closure, is it not manifest that, at the time of its execution, the mortgage raises a potentiality of legal ownership of the land, which, subject to all its limitations as a potentiality, must be a legal interest in the land. Can we, consistently with the theory of real property, conceive of a merely equitable or contractual interest in land ripening into a legal estate without the aid of a statute or a conveyance by the legal owner? It is submitted that we cannot.

[ocr errors][merged small][merged small]

The important dictum of Jessel, M.R., in 1875, “You have this paramount public policy to consider, that you are not lightly to interfere with this freedom of contract,” may be taken as embodying the most general principle of the whole law of contract. It represents what has always been the general policy of the law with regard to freedom of contract, viz.: that the validity of a contract is the rule; its invalidity is the exception. For as neither the right of free speech, nor the right of public meeting is expressly established by any positive enactment, still less is the right of freedom to contract. And yet the latter is of more importance than the two former; because this freedom of contract means nothing less than to establish legal rights and liabilities enforceable at law, and the power to invoke the aid of the law for the actual enforcement of these rights and liabilities which the parties to the contract have created. For a contract is “an agreement enforceable at law, made between two or more persons, by which rights are acquired by one or more to acts or forbearances on the part of the other or others.” Sir Henry Maine says that in primitive systems of law there were no crimes, but only torts.” It would be as true to say that the law of tort was antecedent to the law of contract, and that the latter was to some extent formed from the law of tort. By the end of the reign of Edward I, the legal recognition of the principle of contract was still imperfect. Even then there were only two kinds of contracts, viz.: (1) the solemn contract under seal; and (2) the executed contract; of which one had already performed his part, and which resembled the contracts re of the Roman law. But the English writs of debt, detinue, and account, provided no remedy for the breach of an executory contract (in which neither party had as yet performed his part), nor even for breach of on executed contract where only an unliquidated sum was due for services actually performed. In some cases, according to Maine, the legal remedy is antecedent to the legal right,” and it would seem to be so in those cases of executory contract not yet provided for by the existing law of contract in the time of Edward I. In one important particular the law of contract has been evolved from the law of tort. The old common law writ of trespass, vi et armis, was necessarily confined to cases of some positive wrongful act; for even though the scope of the action at law were extended and the vi et arm is to become a mere technicality, it would still be impossible to enable the remedy to cover anything but actual malfeasance. Moreover, it was forbidden by the Provisions of Oxford (1259), that any new writs, other than the writs of course then on the register, should be issued by the chancellor without the consent of the King and his council; consequently, the development of the law of tort was for a time checked. But by a statute of Edward I, viz., the Statute of Westminster II, ch. 24, it was provided that whenever new cases arose, analogous to those already provided for by the writs of course, then new writs should be drawn up in Chancery similar to the old forms, so that justice might be done. Hence this Act has been called the statute In consimili casu. In an action based on this statute, the writ was called the writ of trespass on the case. It was essential that this writ of trespass on the case should state a primä facie case: (1) that the defendant owed a duty to the plaintiff, and (2) that the defendant in breach of this duty did Something causing detriment to the plaintiff. This duty might be one imposed by law (e.g., to abstain from violence), in which case the action was for tort pure and simple, and the old writs of trespass generally sufficed; in other words, the action was for malfeasance. But since the statute In consimili casu (1285), the recognized duty, instead of being one simply imposed by law, might also be one which the defendant had taken on himself (super. se assumpsisset): in which case the action of assumpsit and the writ of trespass on the case were avail: able. But at first, even the Court of Chancery was wary of extending the scope of these actions and writs; and they were confined to cases in which the defendant had actually commenced what he had undertaken, and had done it so badly as to do more harm than good, thereby causing detriment to the plaintiff; in such case the action was for misfeasance. The process of development of the law of contract out of the law of tort, by means of an action for misfeasance, may be divided under two heads:— (1) Persons professing to follow certain vocations and holding themselves out to perform certain services, e.g., innkeepers, common carriers, smiths, and surgeons, were held liable to an action of trespass on the case for negligence in omitting to shew such care and skill as one might reasonably expect of them in the performance of their work; and this was on the ground of public policy. (2) Whether the defendant had or not openly professed and held himself out to perform services of a certain kind, he might be held liable for negligence in an action of tres. pass on the case, if it was the gist of the action that the defendant had specially undertaken to be liable for damage that might arise from his negligent or insufficient performance of the work. The first class of cases calls for little comment: it is difficult to draw any hard and fast distinction between the two, and it would seem that in both classes of cases there was considered to be some element of deceit or fraud on the defendant’s part amounting to tort. The first case in which this principle was recognised was in the reign of Edward III; in this case the defendant, having undertaken to con vey plaintiff's cattle across the Humber, had so over-loaded

* Anson, Law of Contract, 13th edition (1912), p. 10. * Ancient Law, edition of 1906, p. 370.

* Ancient Law, ch. II.

« PreviousContinue »