The more complex case is that of two mortgages made by one mortgagor of different parcels of land to different mortgagees, where the two mortgages subsequently become vested in the same person, whether he be one of the original mortgagees or a third person who takes a transfer of both mortgages.

(1) The holder of the two mortgages may consolidate as against the mortgagor if the latter remains the owner of the equity of redemption of both parcels when the mortgages become vested in the same person. Any subsequent dealings with either parcel are subject to the right of consolidation.

(2) The holder of the two mortgages may consolidate as against a person to whom the equity of redemption of both parcels is transferred by the same deed or as part of the same transaction, if such transferee remains the owner of the equity of redemption of both parcels when the mortgages become vested in the same person. The transferee in such case simply stands in the shoes of the mortgagor, subject to the same equitable right of consolidation in the event of the subsequent union of the two mortgages in the hands of one holder (c).

(a) Pope v. Onslow, 1692, 2 Vern. 286. This point was doubted by Lord Hardwicke. Ex parte King, 1750, 1 Atk. 300; Ashburner, Equity, 302.

(b) Ex parte Carter, 1773, Amb. 733; Watt v. Symes,' 1851, 1 DeG-. M. & G. 240, at p. 245. This was doubted by Lord Northing-ton in Willie v. Lugg, 1761, 2 Ed. 78; Ashburner, Equity, 302.

(c) It is true that in such case the result is that the assignee of the equity of redemption is held to take subject to a mere possibility of an equity, whereas the general rule, which governs the case next discussed, is that the assignee takes subject only to an equity existing at the time of the assignment. The special rule the second mortgage is created a right to get both the mortgages into his hands, and to hold both till the debt due on each is paid. The principle which allows as against a subsequent purchaser or mortgagee the right of consolidation is that the mortgagor cannot by any dealing with the equity of redemption prejudice the rights of his mortgagee. This can only apply to rights already given or arising from acts already done by the mortgagor. The same principle will prevent the mortgagor from throwing a greater burden on the purchaser of his equity of redemption by any act done subsequently to the sale or mortgage of this estate. It is true that a mortgagee of one estate may get in and consolidate the mortgage on another estate against a purchaser of the equity of redemption of one of the estates, even though at the time of the purchase the two mortgages were vested in different persons, provided both the mortgages existed previously to the sale of the equity of redemption of one of the estates. But this equity arises out of acts done by the vendor of the equity of redemption previously to the sale; and the act after the sale necessary to give effect to the right of consolidation -namely, the union of the mortgages on both estates in one person -is an act of persons who are no parties to the sale of the equity of redemption and not bound to the purchaser by any contract inconsistent with the claim to consolidate. In our opinion, the purchaser of an equity of redemption takes subject to such equities as arise from acts previously done by his vendor. He is subject to these equities, though acts of persons other than the vendor may be necessary to give rise to the equity. But in our opinion he is not subject to any equity arising from acts done by his vendor subsequently to the sale, and therefore as against a purchaser of an equity of redemption of an estate there can be no consolidation of a mortgage subsequently created on another estate."

(3) The holder of the two mortgages may consolidate as against different transferees of the equities if the union of the two mortgages in one hand takes place before the severance of the equities has been effected by the transfer of either of the equities. If either of the equities is transferred before the union of the mortages, the transferee of the equity takes free from the right of consolidation (d).

In Mills v. Jennings (e) Cotton, L.J. in delivering the judgment of the Court of Appeal said:-

"As a mortgagor cannot be allowed to prejudice the rights of his mortgagee by any dealings with the equity of redemption of the estate in mortgage, it has been held that a purchaser or mortgagee of one of two estates already in mortgage is, as regards the consolidation of the mortgages, in the same position as the original mortgagor - that is to say, the purchaser of an equity takes subject to all the equities affecting the person through whom he claims. It is in this case contended that this will apply even though one of the mortgages which it is sought to consolidate was not created till after the mortgagor had sold the equity of redemption of the estate owned by the person claiming to redeem. In our opinion, independently of authority, this contention cannot prevail. It seeks to affect in equity, and by virtue of a rule the creation of equity, the right of a purchaser by the subsequent act of his vendor. That this will be the result will appear from considering from what acts of the purchaser the right of consolidation arises. It is the circumstance of the mortgagor having created two mortgages on two different estates which gives the mortgagee of either estate as soon as applicable to the assignment of the equity of redemption of both properties has however been established since the decision in Vint v. Padget, 1858, 2 DeG. & J. 611, which was followed in Pledge v. White, [1896] A.C. 187, 18 R.C. 265. Cf. Selby v. Pomfret, 1861, 3 DeG. F. & J.' 595, in which a mortgagee of one parcel with notice of the mortgagor's bankruptcy purchased a mortgage of another parcel made by the same mortgagor and was held entitled to consolidate as against the trustee in bankruptcy.

(d) Because the right of consolidation at the time of the transfer is a mere possibility, not an existing equity, either consummate or inchoate. Harter v. Colman, 1882, 19 Ch.D. 630; Minter v. Carr. [1894] 3 Ch 498; Fraser v. Nagle, 1888, 16 O.R. 241; Hughes v. Britannia Permanent Benefit Building Society, [1906] 2 Ch. 607.

(e) 13 Ch. D. 639, at p. 646; affirmed on appeal, sub nam. Jennings v. Jordan, 1881, 6 App. Cas. 698.

In In re Walhampton Estate (f) the owner of estate A. executed a voluntary settlement of the estate, and then mortgaged it. Afterwards he mortgaged estate B., and both mortgages came into the hands of the same person who claimed to consolidate them as against the persons claiming under the settlement. Kay, J. in delivering judgment said:-

"I consider the claim for consolidation on the part of the mortgagees to be utterly unfounded. It is true that the voluntary settlement is void as against the subsequent mortgagee to the extent of the mortgage. But because that mortgagee afterwards obtains from the mortgagor another security is he to be allowed to consolidate his two securities, so as to throw on the estate, subject to the settlement, any part of the sum which may be owing to him beyond that originally charged thereon? In my opinion he clearly cannot do so. The Statute of Elizabeth gives him no such power. It makes a voluntary settlement fraudulent and void as against a subsequent purchaser, but it only makes it void to the extent of the purchaser's interest therein. No authority has been cited which bears out the contention of the mortgagees in this case, and I therefore hold that the settled estate is liable only to the extent of the sums charged thereon by the mortgages expressly affecting it."

(f) 1884, 26 Ch.D. 391, at p. 393.

Fry, J. (afterwards L.J.) in the course of his judgment in Harter v. Colman (g) said:-

"Taking the case of an assignment of an equity of redemption, must the assignee of the equity of redemption do all such equities as his assignor would have been liable to at the time when the redemption action was brought, or must he perform, and hold subject to, those equities only to which his assignor was liable at the date of the assignment? If it be the former, the assignee of the equity of redemption of one of the estates would be in no better position than the assignor, if he had remained the owner of both of the equities of redemption. If, on the other hand, the assignee takes subject to those equities only which were subsisting against his assignor at the time of the assignment of the equity of redemption, he will be in a better position than the assignor, because the union of the two mortgages in the case supposed takes place subsequently to the assignment, and the equity which arises from the union, therefore, originates subsequently to the assignment. .. I may refer by way of analogy to the case which I mentioned in the course of the discussion, Watson v. Mid-Wales Railway Company (ft), as illustrating what I understand to be the rule applicable to the assignment of choses in action, viz., that the assign of a chose in action takes it subject to all equities subsisting at the time of the assignment, and not to equities which arise subsequently, and which did not exist at that time."