This section is from the book "A Treatise On The Construction Of The Statute Of Frauds", by Causten Browne. Also available from Amazon: A treatise on the construction of the Statute of frauds.
1 Coming, ex parte, 9 Ves. 115; Lloyd v. Attwood, 3 De G. & J. 614.
2 Ex parte Broderick, 18 Q. B. D. 766. 3 Wetherell, ex parte, 11 Ves. 401.
4 Pearse, ex parte, Buck, 525.
5 Arkwrignt. ex parte, 3 M. D. & De G. 129. 5 Chippendale, ex parte, 1 Deac. 67.
7 Lacon v. Allen, 3 Drew. 582. And see Roberts v. Croft, 2 De G. & J. 1. Dixon v. Mncklestone, L. R. 8 Ch. 155.
§ 62 b. The case of Burton v. Gray 3 is an important one in connection with the subject of equitable mortgages. The plaintiff put certain title-deeds in the hands of his brother, to enable him to borrow money upon them from a friend. The brother, however, took the deeds to the defendant, a banker, and produced a letter, purporting to be a direction to the banker from the plaintiff, to advance to his brother £1,000 for a week, upon the security of the deeds. The defendant took the deeds, and lent the depositor money upon them at different times, but not as directed in the letter. The plaintiff's brother being afterwards convicted of forgery, and transported, the defendant threatened to foreclose his alleged equitable mortgage, to reimburse himself for the sums advanced. Plaintiff thereupon brought this bill that defendant might be decreed to give back the title-deeds, and the decree was granted. In the course of the hearing, it appeared that the letter of direction was probably a forgery, but the Master of the Rolls held that, whether it was so, or not, the decree must issue; deciding that, even if the letter were genuine, the defendants had not complied with the conditions it prescribed, and that if a forgery, the mere deposit of deeds, by one not authorized, could not, of itself, create an equitable mortgage on the property against the rights of the true owner. Sir John Romilly's decision was affirmed, on appeal, by Giffard, V. C. The case is valuable in showing the effect of the mere deposit of title-deeds, and of the conditions necessary to create the presumption of such an agreement that equity will enforce it as an equitable mortgage.
1 Jones v. Williams, 24 Beav. 55.
2 Parry, ex parte, 3 M. D. & De G. 252.
3 Burton v. Gray, L. R. 8 Ch. 932.
§ 63. The whole doctrine of the creation, by the deposit of title-deeds, of an equitable lien which is preferred to a subsequent purchaser or mortgagee of the legal estate with notice, has been condemned by the most eminent English judges, and the disposition of the courts is to restrict rather than to enlarge its operation. It is not therefore ordinarily applied to enforce parol agreements to make a mortgage or to make a deposit of title-deeds for that purpose.1
§ 64. The doctrine of equitable mortgages arising upon the deposit of title-deeds does not prevail generally in this country. It is, however, accepted in New York,2 in Rhode Island,3 in Wisconsin,4 apparently in South Carolina,5 and perhaps in Maine.6 In North Carolina,7 in Pennsylvania,8 in Tennessee,9 in Ohio,10 in Alabama,11 and apparently in Kentucky,12 it is rejected. In Vermont13 it has been treated as an open question. In Mississippi14 it appears that the deposit of title-deeds may effect an equitable mortgage for a term of time not longer than that for which, by the statute as there re-enacted, an estate in land may be created verbally.
§ 65. Upon the question whether a mortgage of land is a conveyance within the Statute of Frauds, so as to be not assignable without writing, very eminent authorities are divided. In the case of Martin v. Mowlin, decided as early as 1760, the question before the court seems to have been, whether, under a general bequest of a testator's personal property, including his debts, his interest as mortgagee of land would pass. Lord Mansfield said: "A mortgage is a charge upon the land: and whatever would give the money will carry the estate in the land along with it, to every purpose. The estate in the land is the same thing as the money due upon it. It will be liable to debts; it will go to executors; it will pass by a will not made and executed with the solemnities required by the Statute of Frauds. The assignment of the debt, or forgiving it, will draw the land after it as a consequence: nay, it would do it, though the debt were forgiven only by parol; for the right to the land would follow, notwithstanding the Statute of Frauds."1 The view here taken by Lord Mansfield is adopted by Powell in the Treatise on Mortgages, but vigorously opposed by Mr. Roberts in his work upon the construction of the statute.2 Considering a mortgage according to its strict legal effect, we should say with the latter author that "it should seem extraordinary indeed that, with respect to that part of the complex transaction called a mortgage, which consists in the conveyance of the land itself, the Statute of Frauds should be restrained from applying to it." The doctrine in Martin v. Mowlin, however, is that of courts of equity both in this country and in England, and the tendency of the courts of law has been constantly towards conformity with it.3 In the different States of the Union, opposite views upon this question are strongly asserted, although upon the whole the preponderance of judicial opinion may be fairly said to be, that a mortgagee's interest will pass, at law as well as in equity, with the debt to which it is collateral, and consequently without the formalities imposed by the statute upon the alienation of lands.1
1 2 Story Eq. Jur. § 1020; 4 Kent Com. 151.
2 Rockwell v. Hobby, 2 Sand. Ch. 9. See Jackson v. Parkhurst, 4 Wend. 376; Hammond v. Bush, 8 Abb. Pr. 166; Chase v. Peck, 21 N. Y. 584.
3 Hackett v. Reynolds, 4 R. I. 512.
4 Jarvis v. Dutcher, 16 Wise. 307.
5 Welsh v. Usher, 2 Hill Ch. 166.
6 Hall v. McDuff, 24 Me. 311.
7 Harper v. Spainhour, 64 N. C 629.
8 Bowers v. Oyster, 3 Penn. Rep. 239; Shitz v. Dieffenbach, 3 Pa. St. 233; Rickett v. Madeira, 1 Rawle, 325.