This section is from the book "Hill's Manual Of Social And Business Forms: A Guide To Correct Writing", by Thos. E. Hill. Also available from Amazon: Hill's Manual Of Social And Business Forms: The How-To-Do-Everything Book Of Victorian America.
THE LAW defines a mortgage as a conveyance of property, personal or real, given to secure the payment of a debt, or as a guaranty for the performance of some special duty. As soon as the debt is paid, or the duty is performed, the mortgage is void and of no value.
The meaning of the word mortgage is a "dead pledge," because the property pledged becomes lost or dead to the person who executed the mortgage if he fails to fulfill the conditions neces-sary to prevent such loss.
The party who mortgages his property is called the mortgagor, and the person to whom the mortgage is given is the mortgagee.
Where real estate is mortgaged, unless otherwise provided, the mortgagor retains possession of the property, and receives its rents and other profits, paying all taxes, insurance, repairs and liens upon it.
Mortgages must be in writing, contain a redemption clause, be signed and sealed by the mortgagor, properly witnessed, and recorded in the office of the county clerk or of the register of deeds, as State laws may require.
A mortgage may contain a clause permitting the sale of the property, if forfeited, without a decree of the court, or otherwise, as the several State laws determine, or by agreement of the parties.
A mortgage may be drawn so that a single failure to pay the interest at the stated time may render due the whole sum, principal and interest, and permit the mortgagee to sell the property upon taking the necessary legal steps, long before the date of its maturity.
The foreclosure of a mortgage is a legal declaration that the property has been forfeited and must be sold.
A mortgage may be assigned by the mortgagee to some other person for a valuable consideration.
If a mortgage is given to secure the payment of a certain note, the note must be transferred to the party to whom the mortgage is assigned.
When forfeited property is sold upon a mortgage, should it bring more money than is necessary to pay the debt, interest, costs and charges, the surplus funds must be paid to the mortgagor or his representatives.
$10,000. Champaign, Ill., February 4, 1881.
For value received, on the fourth day of February, A. D. 1884, I promise to pay to Robert Fairchild, or his order, at the First National Bank, in Champaign, in the State of Illinois, the sum of Ten Thousand Dollars ($10,000), with interest at eight per cent. per annum, said interest to be paid without grace semi-annually, to wit: On the fourth day of August, 1881, the fourth day of February, 1882, the fourth day of August, 1882, the fourth day of February, 1883, the fourth day of August, 1883, and the fourth day of February, 1884, in accordance with the requirements of six coupon notes, bearing even date herewith, for Four Hundred Dollars ($400) each, payable respectively upon the days above named, at such place in the city of Champaign, in the State of Illinois, as he, his executors, administrators or assigns may appoint in writing, and in default of such appointment, then at the First National Bank, in said city of Champaign, with interest upon each coupon note after due until paid, at eight per cent. per annum.
Before Mr. Fairchild gives the money to Mr. Harrison, as specified in the above note, he should require that an abstract of title to the land be made from the records, at the recorder's office, of the property upon which it is proposed to place a mortgage. This abstract, which is made by a person duly authorized to make the same at the county seat, should show, and it will if lawfully made, whether there is an incumbrance, such as a deed, previous mortgage, or tax lien, upon the property or not.
If Harrison has borrowed money heretofore, and given a previous mortgage to any one, then the person who holds the first mortgage will have the first claim in case the property mortgaged by Harrison has to be sold.
Should the property when sold bring only enough to pay the first mortgage, then Fairchild would have no security whatever. Should it bring more than is required to pay the first claim, then the surplus will go to Fairchild, if his is the second mortgage; and should there be more than enough to pay a first and second mortgage, the surplus will go toward the payment of a third mortgage if there be such upon the property.
The person loaning an amount of money which it is desired to have absolutely secured by mortgage, should first ascertain from the county records, through an absolutely responsible person, that the property is perfectly free from incumbrance. Second, he should, as soon as he gets the mortgage, have it recorded. This applies equally to all mortgages, whether upon real estate or personal property.
The following shows the mortgage taken by Fairchild from Harrison, upon property which is found to be, upon investigation, absolutely free from incumbrance. As will be seen by examination, in case the note is not paid when due, this mortgage provides that the property shall be forfeited and sold at public auction, according to the legal forms of foreclosing a mortgage.
This Indenture, made this fourth day of February, in the year of our Lord one thousand eight hundred and eighty-one, between Benjamin Harrison, of Urbana, county of Champaign, and State of Illinois, and Helen, his wife, party of the first part, and Robert Fairchild, party of the second part: