In Jameson v. London and Canadian Loan and Agency Co. (i) the question what constitutes an absolute assignment of a lease as distinguished from a sub-lease was much discussed. The lease in that case was for a term of twenty-one years, with a covenant on the part of the lessor to grant to the lessee, his executors, administrators or assigns, upon the expiration of that term, a renewal lease for a further term pf twenty-one years. The lessee executed in favour of the defendant company a mortgage of "all and singular the said indenture of lease and the benefit of all covenants and agreements therein contained, and all that certain parcel or tract of land and premises, "etc., with the following habendum:

(c) Armour, Real Property, 2nd ed., p. 219.

(d) These covenants are set out in chapter 35, The Short Forms of Mortgages Act, Sec. 384.

(e) R.S.O. 1914, c. 126, s. 32. (f) See Sec. 52.

(g) See Sec. Sec. 53 and 54.

(h) R.S.O. 1914, c. 109, s. 9. As to the transfer of the legal estate in a leasehold, see In re Beachey, Heaton v. Beachey, [1904] 1 Ch. 67; In re Moore and Hulm's Contract, [1912] 2 Ch. 105.

(0 1897, 27 Can. S.C.R. 435, reversing 23 O.A.R. 602. •

To have and to hold unto the said mortgagees, their successors and assigns for the residue yet to come and unexpired of the term of years created by the said lease, less one day thereof, and all renewals and substituted estates and rights of renewal and other interest of him, the said mortgagor, or which he may hereafter acquire therein. Together with all the outhouses, outbuildings, easements and appurtenances thereto belonging or now in anywise used or enjoyed in connection with the said premises by the said mortgagor.

It was held that the mortgage effected an absolute assignment of the lease, and that the mortgagee was therefore liable for the payment of the rent and the performance of the covenants of the lease, the grounds of the decision being (1) that the premises of the mortgage deed contained an express assignment of the whole term, and if the habendum reserved a reversion of one day to the mortgagor the habendum was inconsistent with the premises and therefore void for repugnancy, and (2) that the habendum did not reserve a reversion to the mortgagor.

Strong, C.J. said (j) :

"If we are to construe the words 'less one day thereof as meaning the last day of the term, as we necessarily must do if we are to give effect to the respondent's proposition that there was a reservation of a reversion, we bring these words into direct conflict with other terms of the habendum and thus introduce that repugnancy which must be fatal to it. This is apparent in two respects.

(j) 27 Can. S.C.R. 435, at pp. 441, 442.

The habendum expressly includes 'all renewals and substituted estates and rights of renewal, and other interests of him, the said mortgagor, which he may hereafter acquire therein.'

"Now, in the first place, if we turn to the renewal clause in the lease above set forth, we find that no right of renewal is to arise until the expiration of the lease, so that if we are to consider the last day of the term as reserved to the mortgagor the right of renewal, as between the lessor and the lessee and those claiming under the latter, would be in the lessee himself and not in his mortgagees. This shews conclusively, in my opinion, that it was intended by this part of the habendum that the mortgagees should have the whole term in them including the last day, an interpretation essential to qualify them to exercise the right of renewal. This is strengthened by the second and other argument drawn from the words 'and other interests of him the said mortgagor,' which are utterly inconsistent with the retention by the latter of a reversion. In order to avoid this repugnancy we must, therefore, construe the reservation of a day generally (without saying the last day of the term), as meaning the first day after the execution of the mortgage. Preston (2 Conv. 125), as high an authority as any which could be quoted on such a point, has this passage:

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"' In order that an instrument may operate as an under-lease, a reversion must be retained by the former owner, and consequently the under-lease must be for a period less in point of time than the term or estate of the lessor, or when the grant is for the residue of the term of the grantor, there must be an exception of the last day or the last hour, or of some other period of the term. This exception as well as a grant made for part only of the period during which the estate of the grantor is to continue, will leave a reversion in the grantor. It is material that the instrument shall reserve the last portion of the estate for an instrument may, it should seem, operate as an assignment notwithstanding it reserves a portion of the estate, being the first part of it, as in the case of an assignment to hold from a day to come or from an event to happen unless it is to happen after the death of a person by express limitation.'

"Thus it will be seen that even as regards an habendum which contains no terms inconsistent with a day generally reserved being construed as the last day of the term, Preston considers such a general reservation insufficient to give the character of a sub-lease. Then a fortiori must this be so if to construe such a general reserv-tion would make the habendum itself irreconcilable with the express provisions to be found (as in the present case) in the habendum clause itself.

"Again the same writer (Preston) says: -

"' After the under-lease is made by a term for years the grantor has in point of estate not merely and simply the residue of the time of his original term; he has the same-measure of time, duration of interest and estate as he had prior to the under-lease subject only to that lease. The sole effect of the under-lease is to confer a right to the possession or other beneficial enjoyment during the term granted by the under-lease; and the lessor in the under-lease retains by way of seigniory or reversion his original ownership, subject only to the right conferred by the under-lease.'

"This is undoubtedly a correct definition of the estates and relative rights in the term of a lessee and under-lessee. Then how can it possibly be said that an habendum which grants, as the present habendum does, all the interests of the lessee as well as those he may subsequently acquire, is susceptible, consistently with Preston's definition, of being construed as creating not an assignment, but a mere under-lease?"

If the mortgage is by way of assignment of all the remaining interest in the term, the mortgagee is liable to the lessor for the rent and for the performance of the covenants in the original lease, until he assigns over, even although he does not take actual possession of the demised lands (k).

A mortgagee of a lease cannot, by offering to forgo his security, escape liability for breaches of covenants occurring during the time he is assignee, but he may, in the absence of a covenant against assignment by which he is bound, relieve himself from liability for future breaches of covenant by assigning it to any other person, even to a pauper (l)r

If a lease contains a covenant not to assign or sublet without leave and the lease is absolutely assigned with the consent of the lessor, it cannot be reassigned to the original lessee without the lessor's consent (m), but the mortgagee of a lease by way of assignment may, without the lessor's consent, get rid of his future liability on the covenants contained in the lease by executing a discharge of the mortgage and thus releasing the debt and reconveying the security (n).

(k) Williams v. Bosanquet, 1819, 1 Brod. & B. 238, 3 Moore BOO, 21 R.R. 585.

(l) Jamieson v. London and Canadian Loan and Agency Co. (No. 2), 1899, 26 O.A.R. 116, at pp. 124, 132; S.C. 30 Can. S.C.R. 14.

(m) Munro v. Waller, 1896, 28 O.R. 29.

(n) Jamieson v. London and Canadian Loan and Agency Co. (No. 2), 1899, 30 Can. S.C.R. 14, affirming 26 O.A.R. 116.