By reference to the form in the appendix the modern form of a mortgage deed may be seen. The fee is conveyed upon a condition.
A trust deed is set out in the appendix and should be studied. It is in reality for all purposes merely a mortgage. A trustee is appointed who holds the property in trust subject to the terms of the deed. In some states this trustee is given a power of sale and he is the person who releases to the mortgagor when the deed is paid. A trust deed is for many purposes preferable. One reason is that a trust company of reliability may be appointed trustee and thus is excluded the danger of change of trustee by death; another reason is that the debt may be more easily transferred, the notes being simply indorsed in blank by the debtor and circulated among succeeding purchasers of the debt while in the case of a mortgage, an assignment thereof would be desirable.
The evidence of the debt is usually in the shape of promissory notes of a negotiable character.
When a mortgage is made there are two instruments to be executed; first, the mortgage or trust deed itself; and secondly, the notes which express the indebtedness. There may be one note or there may be a series of notes and the note may have interest coupons attached or simply bear interest. It is often preferable to make the note payable to one's self and then indorsed in blank.
Where the transaction is in reality a mortgage a court of equity will so construe it and enforce it even though its character is not apparent upon its face.
Applying the maxim that a court of equity looks beyond the form and into the substance of a transaction, a court will enforce a transaction as a mortgage where it was the intent of the parties that a mortgage would exist though the form of the transaction seems to indicate an absolute deed or other transaction. Thus if one borrows money and to secure the mortgage makes a deed to the lender upon an oral agreement that the lender will re-convey when the debt is paid, this is in reality a mortgage, though it does not so appear upon the face of the instrument, and if the grantor in the deed can show that the transaction was really a mortgage the court will give him redemption of the property.87
87. Helm v. Boyd, 124 111. 370, 16 N. E. 85.