In Samuel v. Jarrah Timber and Wood Paving Corporation (o) certain debenture stock was transferred as security for an advance. The loan was repayable on thirty days' notice on either part and the mortgagor agreed that the mortgagee at any time within twelve months of the date of the advance should have the privilege of purchasing the stock at 40% of the face value. The option being inconsistent with both the contractual and the equitable right of redemption was held to be invalid (p).

The decision in DeBeers Consolidated Mines v. British South Africa Co. (q) really turned on the facts. It was held that the stipulation for the mining license there in question was not part of the mortgage transaction and therefore was not a clog on the equity of redemption. The further question was raised, but not decided, whether the general principles of equity with regard to the right to redeem apply in their integrity to mortgages by way of floating charge. A similar question was raised, but not decided, in the important case of Kreglinger v. New Patagonia Meat and Cold Storage Co. (r). In this case the paramount doctrine that a mortgagor cannot at the time of the mortgage and as part of the mortgage transaction contract away his right to redeem and the subsidiary rules in which that doctrine has been expressed were subjected to a fresh and illuminating discussion by Lord

(o) [1904] A.C. 323.

(p) See Kreglinger v. New Patagonia, etc., Co., [1914] A.C. 25, at p. 60. Although the case was a clearer one than either Noakes & Co. v. Rice or Bradley v. Carritt, it was an extreme one in that a company with a board of directors composed of experienced men of business, advised by a competent solicitor, after it had invited a loan and settled considered terms, was permitted to repudiate its own bargain deliberately entered into in its own interests. See Pollock in 19 L.Q.R. 359 (Oct. 1903).

(q) [1912] A.C. 52.

(r) [1914] A.C. 25.

Haldane and Lord Parker of Waddington (s). By an agreement dated the 24th of August, 1910, a firm of wool brokers agreed to lend to a company carrying on the business of meat preservers a sum of £10,000 at 6%. If the interest was punctually paid the loan was not to be called in until the 30th of September, 1915, but the company might pay off at any time on giving one calendar month's notice. The loan was secured by a floating charge on the undertaking of the company. The agreement provided that for a period of five years from the date thereof the company should not sell sheepskins to any person other than the lenders so long as the latter were willing to buy at the best price offered by any other person and that the company should pay to the lenders a commission on all sheepskins sold by the company to any other person. The loan having been paid off by the company in January, 1913, in accordance with the agreement, the lenders claimed the right to exercise their option of pre-emption notwithstanding the payment of the loan. The House of Lords, reversing the Court of Appeal, held that the stipulation for the option of pre-emption formed no part of the mortgage transaction, but was a collateral contract entered into as a condition of the obtaining of the loan by the company; that it was not a clog on the' equity of redemption or repugnant to the right to redeem; and that the lenders were entitled to an injunction restraining the company from selling sheepskins, in breach of the agreement, to any person other than the lenders. Where a loan is obtained from an insurance company on the security of a mortgage, and at the same time the mortgagor takes from the same company a policy of insurance on his life, and by the mortgage the borrower assigns the policy as collateral security for the payment of the loan, covenants to pay the premiums and the mortgage and agrees that the premiums shall be a charge upon the lands, it has been held that the charging of the premiums on the land does not constitute a clog on the equity of redemption, but that the covenant to pay premiums is void after the redemption of the mortgage or after payment of all debts secured by it (t).

(s) As the judgments in this case have been made the chief basis for the discussion of the doctrine contained in the foregoing pages, it is sufficient here simply to state the decision.

Where money is advanced on a mortgage of a reversionary interest, and is collaterally secured by a policy of life insurance effected by the creditor in the name of the debtor, the question has frequently arisen whether the policy belongs to the creditor absolutely or is redeemable by the representatives of the debtor (u). The result of the decisions seems to be that if it appears that the insurance was effected as part of the contract for the loan, or if it is to be inferred from the circumstances that the insurance was in fact effected for the purpose of securing the loan, the policy will be redeemable upon payment to the mortgagee of what is due to him for principal, interest, premiums and costs, though the mortgage contains no proviso to that effect or even contains a proviso to the contrary (v). If, however, there is no evidence of a contract to effect the insurance by way of security, and it appears that the mortgagee effected the insurance at his own expense and for his own protection, he will be entitled to the insurance money absolutely for his own benefit (w).

(t) Wiltse v. Excelsior Life Insurance Co., 1916, 10 A.L.R. 67, 29 D.L.R. 32.

(u) This paragraph is quoted in substance from the notes in 18 R.C. at p. 366, to the case of Jennings v. Ward (as to which see Sec. 25, supra).

(v) Holland v. Smith, 1806, 6 Esp. 11; Drysdale v. Piggott, 1856, 8 DeG. M. & G. 546; Morland v. Isaac, 1855, 20 Beav. 389; Bruce v. Garden, 1869, L.R. 5 Ch. 32; Salt v Marquess of Northampton, [1892] A.C. 1.

(w) Freme v. Brade, 1858, 2 DeG. & J. 582; Brown v. Freeman, 1851, 4 DeG. & S. 444; Bashford v. Cann, 1863, 33 Beav. 109; Bruce v. Garden, supra; Preston v. Neele, 1879, 12 Ch.D. 760.