Leasehold estates also frequently form the subjects of mortgage. The term of years of which the estate consists is assigned by the mortgagor to the mortgagee, subject to a proviso for redemption or re-assignment on payment, on a given day, by the mortgagor to the mortgagee, of the sum of money advanced with interest; and with a further proviso for the quiet enjoyment of the premises by the mortgagor until default shall be made in payment. The principles of equity as to redemption apply equally to such a mortgage, as to a mortgage of freeholds; but, as the security, being a term, is always wearing out, payment will not be permitted to be so long deferred. A power of sale also is frequently inserted in a mortgage of leaseholds, and the statutory powers given by the act already referred to (a) extend also to leaseholds. From what has been said in the last chapter (b), it will appear that, as the mortgagee is an assignee of the term, he will be liable to the landlord, during the continuance of the mortgage, for the payment of the rent and the performance of the covenants of the lease; against this liability the covenant of the mortgagor is his only security. In order, therefore, to obviate this liability, when the rent or covenants are onerous, mortgages of leaseholds are frequently made by way of demise or underlease: the mortgagee by this means Incomes the tenant only of the mortgagor, and consequently a mere stranger with regard to the landlord (c). The security of the mortgagee in this case is obviously not the whole term of the mortgagor, but only the new and derivative term created by the mortgage.

Mortgage of leaseholds.

Mortgage bj underlease.

(z) 1 Scriv. Cop. 242; 1 Watk. Cop. 117, 118. (a ) Ante, p. 410.

(b) Ante, p. 379.

(c) See ante, p.390.

In some cases the exigency of the circumstances will not admit of time to prepare a regular mortgage; a deposit of the title deeds is then made with the mortgagee; and notwithstanding the stringent provision of the Statute of Frauds to the contrary (d), it has been held by the Court of Chancery that such a deposit, even without any writing, operates as an equitable mortgage of the estate of the mortgagor in the lands comprised in the deeds (e). And the same doctrine applies to copies of court roll relating to copyhold lands (f), for such copies are the title deeds of copyholders.

"When lands are sold, but the whole of the purchase-money is not paid to the vendor, he has a hen in equity on the lands for the amount unpaid, together with interest at four per cent., the usual rate allowed in equity (g). And the circumstance of the vendor having taken from the purchaser a bond or a note for the payment of the money will not destroy the lien (h). But if the vendor take a mortgage of part of the estate, or any other independent security, his lien will be gone. If the sale be made in consideration of an annuity, it appears that a lien will subsist for such annuity (i), unless a contrary intention can be inferred from the nature of the transaction (k).

Deposit of title deeds.

Vendor's lien.

Sale for annuity.

(d) 29 Car. II. c. 3, ss. 1, 3; ante, p. 147.

(e) Russell v. Russell, 1 Bro. C. C. 269. See Ex parte Haigh, 11 Ves. 403.

(f) Whitbread v. Jordan, 1 You. & Coll. 303; Lewis v. John, 1 C. P. Coop. 8. See, however, Sugd. Vend. & Pur. 630, 13th ed.; Jones v. Smith, 1 Hare, 56;

1 Phill. 244.

(g) Chapman v. Tanner, 1 Vern. 267; Pollexfen v. Moore, 3 Atk. 272; Mackrethx. Symmons, 15 Ves. 328; Sugd. Vend. & Pur. 552, 13th ed.

(h) Grant v. Mills, 2 Ves. & Bea. 306; Winter y. Lord Anson, 3 Russ. 488.

A curious illustration of the anxiety of the Court of Chancery to prevent any imposition being practised by the mortgagee upon the mortgagor occurs in the following doctrine: that, if money be lent at a given rate of interest, with a stipulation that, on failure of punctual payment, such rate shall be increased, this stipulation is held to be void as too great a hardship on the mortgagor: whereas, the very same effect may be effectually accomplished by other words. If the stipulation be, that the higher rate shall be paid, but on punctual payment a lower rate of interest shall be accepted, such a stipulation, being for the benefit of the mortgagor, is valid, and will be allowed to be enforced (l). The highest rate of interest winch could be taken upon the mortgage of any lands, tenements or hereditaments, or any estate or interest therein, was formerly 51. per cent, per annum; and all contracts and assurances, whereby a greater rate of interest was reserved or taken on any such security, were deemed to have been made or executed for an illegal consideration (m). By a modern statute (n), the previous restriction of the interest of all loans to 51. per cent, was removed, with respect to contracts for the loan or forbearance of money above the sum of 10/. sterling; but loans upon the security of any lands, tenements or hereditaments, or any estate or interest therein, were expressly excepted (o). But, by an act of parliament passed on the 10th of August, 1854 (p), all the laws against usury were repealed; so that, now, any rate of interest may be taken on a mortgage of lands, which the mortgagor is willing to pay.

A stipulation to raise the interest on failure of punctual payment is void.

But a stipulation to diminish the interest on punctual payment is good.

5l. per cent, formerly the highest rate of interest on mortgages of lands.

(i) Matthew v. Bowler, 6 Hare, 110.

(k) Buckland v. Pocknell, I3 Sim. 496; Dixon v. Gayfere, 21 Beav. 118; 1 De Gex & Jones, 655.

(l) 3 Burr. 1374; 1 Fonb. Eq. 398.

(m) Stat. 12 Anne, st. 2, c. 16; 6 & 6 Will. IV. c. 41; 2 & 3 Vict. c. 37; Thibault v. Gibson, 12 Mee. & Wels. 88; Hodgkinson v. Wyatt, 1 Q. B. 749.

(n) 2 & 3 Vict. c. 37, continued by stat. 13 & 14 Vict. c. 56.

The loan of money on mortgage is an investment frequently resorted to by trustees, when authorized by their trust to make such use of the money committed to their care: in such a case, the fact that they are trustees, and the nature of their trust, are usually omitted in the mortgage deed, in order that the title of the mortgagor or his representatives may not be affected by the trusts. It is, however, a rule of equity, that when money is advanced by more persons than one, it shall be deemed, unless the contrary be expressed, to have been lent in equal shares by each (q); if this were the case, the executor or administrator of any one of the parties would, on his decease, be entitled to receive his share (r). In order, therefore, to prevent the application of this rule, it is usual to declare, in all mortgages made to trustees, that the money is advanced by them on a joint account, and that, in case of the decease of any of them in the lifetime of the others, the receipts of the survivors or survivor shall be an effectual discharge for the whole of the money.