If a tenancy is validly created by attornment the mortgagee will have the ordinary rights of a landlord, including the right of distress (e), not only as between the mortgagee and the mortgagor but in respect of third parties. To the extent permitted by statute (f) the mortgagee may distrain on the goods of a stranger found upon the demised premises and his rights will be good against execution creditors of the mortgagor (g).

In order that the mortgagee may have the right to distrain as against creditors of the mortgagor or upon goods of a stranger it must appear that it was the intention of the parties, acting in good faith, to create a real tenancy at the rent reserved and not merely, under colour or pretence of a lease, to give to the mortgagee an additional security, incidental to his character of mortgagee, in case of the insolvency of the mortgagor (h).

(b) Stanley v. Grundy, 1883, 22 Ch.D. 478, 3 R.C. 569.

(c) In re Stockton Iron Furnace Co., supra; Ex parte Punnett, supra; Ex parte Harrison, In re Betts, 1881, 18 Ch.D. 127.

(d) As in the form of attornment clause suggested above. As to the liabilities of a mortgagee in possession, see chapter 28.

(e) Ex parte Jackson, In re Bowes, 1880, 14 Ch.D. 725 at p. 743; Pegg v. Independent Order of Foresters, 1901, 1 O.L.R. 97.

(f) See the statutes referred to below and those referred to in Sec. 364, infra.

(g) Hobbs v. Ontario Loan and Debenture Co., 1890, 18 Can. S.C.R. 483, at p. 493; Kearsley v. Philips, 1883, 11 Q.B.D. 621.

It is material in determining the bona fides of the tenancy to consider the amount of rent reserved by the mortgage. Where the rent is out of all proportion to the annual value of the lands the inference is that it was not the intention of the parties in good faith to create a tenancy.

"So far as any inference can be drawn from the practice of inserting attornment clauses, it appears to me that the benefit to be derived from the attornment clause was intended to be an equivalent for that which the mortgagee would derive from the rent if the tenant had been a stranger. What would that equivalent be? Would it not be a right to the payment of a fair and reasonable rent such as the ordinary tenant would be willing to give for the property under ordinary circumstances? That, as it seems to me, is the rent for which a properly prepared attornment clause should make provision, not necessarily the exact amount which a tenant would pay for the property but such an amount as a willing tenant would probably pay as a bona fide rent. If the rent so reserved is clearly in excess of what would be a fair and reasonable rent, it appears to me that although you may call it rent it is no longer a real rent but a fictitious payment under the name of rent." (i)

So, where a mortgage of real estate provided that the moneys secured thereby amounting to $20,000 should be payable with interest at seven per cent. per annum as follows: $500 on December 1st, 1883; $500 on the first days of June and December in each of the four following years; $15,500 on June 1st, 1888; and contained an attornment clause reserving rent equal in amount to the amounts so payable; it was held that the rent reserved was so unreal and excessive as to show conclusively that the parties could not have intended to create a tenancy and that the arrangement was unreal and fictitious (j). The stipulation, however, will be supported if the rent although a large rent, is one which a tenant honestly might agree to pay and the landlord honestly might expect to receive (k),

(h) Ex parte Jackson, In re Bowes, 1880, 14 Ch.D. 725; Hobbs v. Ontario Loan and Debenture Co., 1890, 18 Can. S.C.R. 483; Thomas v. Cameron, 1885, 8 O.R. 441.

(i) Ex parte Jackson, In re Bowes, 1880, 14 Ch.D. 725, at pp. 733, 734; Waterous Engine Works v. Wells and Bank of Montreal, 1911, 4 S.L.R. 48; Independent Lumber Co. v. David and Hurlburt, 1911, 5 S.L.R. 1, 316.

A mortgagee may apply the proceeds of a distress for rent in payment of whatever is due to him whether for principal or interest. A contrary intention is not shown by the fact that the amount fixed for rent is equal to the sum due for interest and is payable on the same days (l).

A rent that is certain is essential to the creation of a valid tenancy. The rent must be fixed and certain but it may fluctuate. It is sufficient if by calculation it may be rendered certain. Id cerium est quod certum reddi potest. Thus where the rent reserved was a monthly instalment of a fixed amount together with a fine of five per cent, per month on the whole amount unpaid, the rent was held to be sufficiently ascertained (m). Where, however, a mortgage contained a special provision by which the mortgagors became lessees of the mortgaged lands until the maturity of the mortgage at a rental of the same amount as the interest, and the mortgagee distrained for arrears of interest which accrued after the maturity of the mortgage, it was held that there was no definite tenancy after the maturity of the mortgage and that, the interest thereafter being recoverable not by the terms of the contract but as damages, the rent became uncertain and therefore there was no right of distress (n).

(j) Hobbs v. Ontario Loan and Debenture Co., 1890, 18 Can. S.C.R. 483; Imperial Loan & Investment Company v. Clement, 1896, 11 M.R. 428, 445; Stikeman v. Fummerton, 1911, 21 M.R. 754.

(k) Ex parte Williams, In re Thompson, 1877, 7 Ch.D. 138; In re Stockton Iron Furnace Co., 1879, 10 Ch.D. 335.

(I) Ex parte Harrison, In re Betts, 1881, 18 Ch.D. 127, overruling Hampson v. Fellows, 1868, L. R. 6 Eq. 575; cf. McDonell v. Building and Loan Association, 1886, 10 O.R. 580.

(m) Ex parte Voisey, In re Knight, 1882, 21 Ch.D. 442; Trust and Loan Company v. Lawrason, 1882, 10 Can. S.C.R. 679.

Where a mortgage deed contains a stipulation that the mortgagor shall become tenant to the mortgagee upon default in any of the payments the mortgagee has no right to distrain unless he shall have given notice previously to the mortgagor that he intends to treat him as a tenant (o).

It is provided in Ontario by the Landlord and Tenant Act, R.S.O. 1914, c. 155, s. 40, as follows:

40. A person having any rent due and in arrear, upon any lease for life or lives or for years, or at will, ended or determined, may distrain for such arrears, after the determination of the lease, in the same manner as he might have done if the lease had not been ended or determined, if such distress is made within six months after the determination of the lease, and during the continuance of the landlord's title or interest, and during the possession of the tenant from whom the arrears became due.

This provision is derived from the English statute 8 Anne, c. 18 (c. 14 in Ruff head's edition), ss. 6 and 7. It is applicable to a tenancy created by an attornment clause in a mortgage (p).

It is further provided by the Landlord and Tenant Act, s. 55, as follows:

55.- (1) Goods or chattels lying or being in or upon any land leased for life or lives, or term of years, at will or otherwise shall not be liable to be taken by virtue of any execution issued out of the Supreme Court or out of a County or District Court on any pretence whatsoever, unless the party at whose suit the execution is sued out before the removal of such goods or chattels from the premises by virtue of such execution pays to the landlord or his bailiff all money due for rent of the premises at the time of the taking of such goods or chattels by virtue of such execution if the arrears of rent do not amount to more than one year's rent.

(n) Klinck v. The Ontario Industrial Loan and Investment Company, 1888, 16 O.R. 562.

(o) Clowes v. Hughes', 1870, L.R. 5 Ex. 160.

(p) Klinck v. Ontario Industrial Loan and Investment Co.,supra.

(2) If such arrears exceed one year's rent the party at whose suit such execution is sued out, on paying the landlord or his bailiff one year's rent, may proceed to execute his judgment.

(3) The sheriff or other officer shall levy and pay to the execution creditor as well the money so paid for rent as the execution money.

This provision is derived from the English statute 8 Anne, . c. 18 (e. 14 in Ruffhead's edition), s. 1.

In England an attornment clause, unless registered under the Bills of Sale Acts of 1878 and 1882, is void so far as the right to distrain is concerned (q), but in Ontario such a clause does not come within the Bills of Sale and Chattel Mortgages Act (r).

Pending the distress the goods taken by the mortgagee are in the custody of the law and not liable to seizure by chattel mortgagees or execution creditors so long as no fraud is on foot and no intention or contrivance exists to prejudice chattel mortgagees (s).

If the mortgagee obtains a judgment for the interest or for the principal and interest, the remedy of distress is not thereby merged. A judgment is but a security for the debt until it be satisfied, and does not operate to change any other concurrent remedy which the mortgagee may have (t).

The power to distrain under a tenancy from year to year or for a term of years may be exercised by the devisees of the mortgagee (u). Where the tenancy is a tenancy at will it comes to an end with the death of the mortgagor, and the mortgagee cannot distrain upon the heirs (v).

(q) Mumford v. Collier, 1890, 25 Q.B.D. 279; Green v. Marsh, [1892] 2 Q.B. 330.

(r) Trust and Loan Co. v. Lawrason, 1881, 6 O.A.R. 286, at p. 290, S.C. 10 Can. S.C.R. 679; cf. McDermott v. Fraser, 1915, 25 M.R. 298, 23 D.L.R. 430.

(s) Anderson v. Henry, 1898, 29 O.R. 719.

(t) Drake v. Mitchell, 1803, 3 East 251; Westmoreland etc. Slate Co. v. Fielden, [1891] 3 Ch. 15; Wegg Prosser v. Evans, [1894] 2 Q.B. 101, [1895] 1 Q.B. 108.

(u) West v. Fritche, 1848, 3 Exch. 216

It is provided in Ontario by the Landlord and Tenant Act, R.S.O. 1914, c. 155, s. 59, as follows:

59. The executors or administrators of a landlord may distrain for the arrears of rent due to such landlord in his lifetime, and may sue for the same in like manner as such landlord might have done if living, and the powers and provisions contained in this Act relating to distresses for rent shall be applicable to the distresses so made.