Except in the case of payment being made strictly in accordance with the terms of a mortgage and the estate being revested by virtue of a defeasance clause in the mortgagee, a reconveyance is necessary at common law to divest the mortgagee of the estate conveyed to him by the mortgage (i).

In the simple case of a mortgagor, absolutely entitled to the equity of redemption, who pays off a mortgage, the mortgagee is bound to reconvey the estate to him (j). If, however, the mortgagor has assigned his equity of redemption either absolutely or by way of subsequent mortgage, the mortgagee is bound to reconvey not necessarily to the mortgagor but to the person best entitled to the equity of redemption, that is to say, to the first subsequent mortgagee, if any, otherwise to the owner of the equity of redemption (k).

(f) See Sec. 182, infra.

(g) Harrison v. Owen, 1738, 1 Atk. 520, 18 R.C. 564; Cowper v. Green, 1841, 7 M. & W. 633, 18 R.C. 564.

(h) See chapter 26, Limitation of Actions, Sec. 276.

(i) See Sec. 181, supra. As to the general principle that the mortgagee is not entitled to enforce payment unless he is in a position to reconvey the mortgaged property, see chapter 23, Action on the Covenant, Sec. 227.

(j) Walker v. Jones, 1866, L.R. 1 P.C. 50, at p. 61. The mortgagor is entitled to insist that the title deeds and the reconveyance be delivered to him at the time of the payment of the money. Rourke v. Robinson, [1911] 1 Ch. 480.

Where there are several mortgagors the mortgagee must reconvey so as to revest the title in all, and if he reconvey to one of several mortgagors he will be liable at the suit of the other mortgagors for any loss they may sustain thereby

If the mortgagee has lost the mortgage deed he is bound at his own expense to furnish the mortgagor or any encumbrancer who redeems with proof of the loss and with an indemnity against any demand by third persons (m).

Where a sub-mortgage has been made, both the mortgagee and the sub mortgagee must convey (n).

In the case of a mortgage by way of conveyance with a proviso for reconveyance on payment of money upon a specified date, if the mortgagor pays on the specified date equity will decree specific performance of the contract for reconveyance (o). If, on the other hand, the mortgagor fails to pay on the specified date his contractual right to a reconveyance is forfeited, but in ordinary circumstances he will nevertheless be allowed in equity to redeem (p), and on payment will be entitled to a reconveyance.

The mortgagor or other person redeeming is not entitled to any covenant from the mortgagee except the usual covenant against incumbrances (q).

(k) Teevan v. Smith, 1882, 20 Ch.D. 724, at pp. 729-730. See chapter 20, Right to Assignment of Mortgage, Sec. Sec. 191 and 192.

(1) Magnus v. Queensland National Bank, 1888, 37 Ch.D. 466. (m) McDonald v. Hime, 1868, 15 Gr. 72.

(n) Lysaght v. Westmacott, 1864, 33 Beav. 417; 21 Halsbury, Laws of England, p. 309.

(o) Kreglinger v. New Patagonia, etc., Co., [1914] A.C. 25, at p. 47.

(p) See chapter 3, Legal Mortgage in Equity, Sec. 22.

(q) Gooderham v. Traders Bank, 1888, 16 O.R. 438.

Leaseholds were mortgaged by a sub-demise for the residue of the original term except the last day. Afterwards by another mortgage they were sub-demised to a second mortgagee for the residue of the original term except the last day, subject to the first mortgage. The second mortgage was paid off during the continuance of the first mortgage and the mortgage deed was handed back to the mortgagor. A purchaser of the leaseholds from the mortgagor declined to complete without a formal surrender being obtained of the term created by the second mortgage. It was held that by the second mortgage there was vested in the mortgagee a legal term which was not determined or revested in the mortgagor by mere repayment of the principal money and interest, and that the purchaser was entitled to require a surrender or assignment of the outstanding term created by the second mortgage (r).