If the mortgagor of a lease with right of renewal renews the lease or acquires the reversion, either before or after the expiration of the original lease, he will, as a general rule, hold the renewal lease or the reversion subject to the mortgage, and this will be so whether or not he is under obligation to the mortgagee to renew the lease or acquire the reversion. The renewed lease will be considered a graft on the old lease and subject in equity to the mortgage in the same manner as the former lease (t). Where the assignee of a lease, subject to a mortgage thereof, and of the rights of renewal and of purchase given by the lease, exercises the right of purchase, the mortgage becomes a charge upon the fee, and the purchaser has no lien upon the fee for the amount of the purchase money in priority to the mortgage. The mortgagor and those claiming under him cannot assert title to the reversion as against the mortgagee (u).

If a mortgagee renew a lease, the renewal will, as a general rule, be for the benefit of the mortgagor, subject to the mortgage. As Lord Chancellor Nottingham said:-

(s) 21 Halsbury, Laws of England, p. 127; London and County Banking Co. v. Goddard, [1897] 1 Ch. 642. The declaration of trust in favour of the mortgagee does not render him liable to the lessor for the rent and on the covenants of the lease. Walters v. Northern Coal Mining Co., '1855, 5 DeG. M. & G. 629. See also Armour, Real Property, 2nd ed., pp. 218-9.

(t) Moody v. Matthews, 1801, 7 Ves. 174; Yem v. Edwards, 1857. 1 DeG. & J. 598; Jones v. Kearney, 1842, 1 D. & War. 134; Leigh v. Burnett, 1885, 29 Ch.D. 231; Hughes v. Howard, 1858, 25 Beav. 575; Smith v. Chichester, 1842, 1 Conn.& Law. 486.

(u) Building and Loan Association v. McKenzie, 1897, 28 O.R. 316, affirmed 24 O.A.R 599, 28 Can. S.C.R. 407.

"The mortgagee doth here but graft upon his stock, and it shall be for the mortgagor's benefit." (v).

And this will be so if the renewal is after the expiration of the lease (w). If, however, the mortgagee obtain a new lease bona fide, after giving notice and an opportunity to renew to all parties interested, the renewal lease will not be in trust for the mortgagor (x).

As between mortgagor and mortgagee, each of them owes a duty to the other in respect of the mortgaged property, and in case of one being able, by virtue of his position, to obtain a renewal of a mortgaged lease, there are obvious reasons why it should be held against him, at any rate as a rule, that the renewed lease should be treated as engrafted on the old and forming part of the mortgage security. There is, however, merely a rebuttable presumption of fact that the renewed lease is subject to the mortgage (y).-

(v) Rushworth's Case, 1676, Freem. Ch. 13; Luckin v. Rush-worth, 1678, Rep. t. Finch. 392; S.C. 2 Ch. Rep. 113; Darrell v. Whitchot, 1669, 2 Ch. Rep. 59.

(w) Rakestraw v. Brewer, 1728, 2 P. Wms. 510.

(x) Nesbitt v. Tredennick, 1808, 1 Ball & B. 29.

(y) See In re Biss, Biss v. Biss, [1903) 2 Ch. 40, especially at pp. 56, 62. In the case of a trustee of a lease who obtains a renewal in his own name there is an irrebuttable presumption of law that the renewed lease is subject to the trust. Keech v. Sandford. 1726, Sel. Cas. in Chy. 61. 2 W. & T.L.C. Eq. 706.