The condition the land with a condition subsequent. subsequent which might defeat the estate of the grantee, and re-invest the estate in the grantor, was the repayment of the money by the grantor. If such payment was not made strictly according to the terms of the deed, the estate in the mortgagee became absolute. Upon the giving of the mortgage the mortgagee acquired the present legal estate, while the mortgagor only retained a possibility of revertor. Possession passed to the grantee, unless reserved to the grantor by the terms of the deed. SECTION 29. EQUITABLE THEORY OF MORTGAGE. Equity early took a different view of mortgage. Applying the doctrine that equity will look at the intent rather than the form, equity considered the debt as the principal thing and the mortgage merely as security therefor; with the result that a failure to pay the mortgage promptly on time was held not to work a forfeiture of the mortgagor's interest, but merely to render him liable for interest on the amount of the mortgage until its payment. In other words, the damage for the delay in the payment of the mortgage was considered the interest on the sum of money withheld for the time the same was withheld. At first equity only relieved against the forfeiture of the mortgagor's interest, when the act which worked such forfeiture was the result of an accident. Such relief, however, was soon extended to other cases. SECTION 30. MODERN THEORY OF MORTGAGES. "Because of the fact that a mortgage is regarded as of a dual character-a conveyance of an estate in lands, and a security for a debt-bearing one character in a court of law and another in a court of equity, a mortgage at the present day, in the absence of statutes providing otherwise, vests the legal title to the mortgaged property in the mortgagee,' at any rate, after condition broken and possession taken." ** The debt secured, however, is considered the real property right, and the mortgage merely as security therefor, and the interest of the mortgage is therefore considered personal property. SECTION 31. FORECLOSURE OF MORTGAGES. After equity began to relieve against forfeiture in the case of mortgages, there was a period during which equity would relieve against such forfeitures after any period of time after breach. This, however, was soon seen to be going too far, as it worked a great hardship upon the mortgagee by preventing him from at any time acquiring a good title. To remedy this injustice, and to produce an equilibrium between the rights of mortgagor and mortgagee, the system of foreclosure of mortgages was introduced. "A foreclosure is any proceeding by which the mortgagor's equity of redemption in the property is cut off beyond possibility of recall." 10 "The term 'foreclosure' has undergone a marked change in signification since it was first employed in legal nomenclature. It was formerly applied only to a proceeding whose direct and immediate result was to cut off or 'foreclose' the equity of redemption allowed a mortgagor by the courts of chancery. Owing, however, to a change in the legal theory of the mortgage and in the methods employed for its enforcement, the term 'foreclosure' has acquired a broader meaning, Stelle vs. Carroll, 12 Pet. (U. S.), 205. Buck vs. Payne, 52 Miss., 271. • American & Eng. Ency. of Law, Vol. XX, 900. 10 Ansonia Nat. Bank's Appeal, 58 Conn., 260. and now includes not merely a proceeding which extinguishes ipso facto the interests of the mortgagor in the premises, but also a proceeding which results in a sale thereof. Thus, the Connecticut statute, confining actions for a deficiency to parties who were made defendants to foreclosure applies to proceedings for the sale of the property. Foreclosure also includes the exercise of a power of sale conferred by a mortgage and by which the mortgagor's rights are extinguished. But the publication of the notice of sale in pursuance of the exercise of such a power does not constitute foreclosure, and under a statute limiting the right to foreclosure by advertisement to a period of ten years after the maturity of the mortgage, the entire proceeding must have been completed within that period. The term 'foreclosure' includes the sale of the property and the execution of the sheriff's deed as well as the decree, and under a statute which permits actions to foreclose mortgages covering land in different counties to be brought in either, the sale may take place in one of such counties, though the decree was rendered in the other." 11 At least eight different methods of foreclosure are in force in different states in this country, as follows: (a) Strict foreclosure. (b) Equitable foreclosure. (c) Scire facias. (d) Rule nisi. (e) Writ of entry. (f) Ejectment. (g) Advertisement and sale under a power. (h) Entry and possession. "Ency. of Pleading and Practice, Vol. IX, pp. 95-6. Methods of foreclosure are regulated by statute, and the statutes of the different states should be consulted.12 SECTION 32. REDEMPTION OF MORTGAGES. Upon a strict foreclosure of a mortgage the property becomes absolutely vested in the mortgagee and the right of the mortgagor to redeem is gone. In the case of an equitable foreclosure, where the property is sold to satisfy the mortgage, the mortgagor is allowed to redeem the property from the purchaser, within a certain specified time. SECTION 33. MORTGAGE TRUST DEEDS. A mortgage trust deed is a conveyance, usually by deed, of either real or personal property, by a debtor to a trustee, who is to hold such property as security for the payment of creditors or the indemnifying of sureties. Such a deed generally lodges in the trustee the power to sell such property upon the breach of the conditions contained in the deed, but in some states, e. g., Illinois, the security can only be reached by foreclosure proceeding. Mortgage trust deeds are most frequently used in cases where there are a large number of creditors to be secured by the one conveyance, such as the bondholders of a railway. In some places (most notably Cook County, Illinois) a mortgage trust deed is the ordinarily used form of real estate mortgage. SECTION 34. SALE WITH RIGHT TO REDEEM. A deed, or contract of sale, absolute in form, may be construed by the courts of equity as a mortgage. 12 A synopsis of the laws of the various states on this subject Ency. of Pleading and Practice, A deed reserving the power to repurchase may be upheld or may be construed as a mortgage. The most important tests in such a case are the intentions of the parties, and the absence or presence of personal liability by the vendor to the vendee. SECTION 35. CHATTEL MORTGAGES. A chattel mortgage is a conditional transfer or conveyance of the property, and if the conditions are not duly performed the whole title vests absolutely at law in the mortgagee.13 The protections given to the mortgagor of real property are, in general, wanting to mortgagors of personal property. This difference is mainly due to the less degree of importance attached by the law to personal than to real property. It is sometimes provided by statute, however, that certain mortgages of property must be foreclosed in court. For example, the law of Illinois makes this provision in the case of mortgages of household furniture, except in the case of purchase money mortgages. A bill of sale absolute on its face may be shown by parol to have been intended as a mortgage. 18 Wright vs. Ross, 36 Cal., 414. |