This section is from the book "The Law Of Real Property and Other Interests In Land", by Herbert Thorn Dike Tiffany. Also available from Amazon: A Treatise on the Modern Law of Real Property and Other Interests in Land .
37. McRee v. Means, 34 Ala.
349; Hunkypillar v. Harrison, 59 Ark. 453, 27 S. W. 1004; Hayes V. Sykes, 120 Ind. 180, 21 N. E. 1080; Funk v. Eggleston, 92 I11. 515, 534; Jackson v. Bull, 10 Johns. (N. Y.) 148, 6 Am. Dec. 321; In re Sem-ple's Estate, 189 Pa. St. 385, 42 Atl. 28; Newman v. Kent, 1 Mer. 240; Jillard v. Edge, 3 De G. & Sm. 502. Compare Dunne v. Dunne, 66 Cal. 157, 4 Pac. 441, 1152; Willis v. Roberts, 48 Me. 257; Merton v. O'Brien, 117 Wis. 437, 94 N. W. 340, in which the dev. visee was regarded as personally liable, without reference to any language indicative of an intention to that effect.
38. Clift v. Moses. 16 N. Y. 144, 22 N. E. 393.
39. Harland v. Person, 93 Ala. 273, 9 So. 379; Huston v. Huston, 29 Iowa, 347; Baylor v. DeJar-nette, 13 Gratt. (Va.) 152; Puller v. McEwen, 17 Ohio St. 288.
661. Agreements for security (equitable mortgages). In equity, any agreement in writing, however informal, made by the owner of land, upon a valid consideration, by which an intention is shown that the land shall be security for the payment of money by him, creates an equitable lien upon the land.40 Such an informal instrument or contract, by which the owner of land agrees or undertakes to secure his creditor upon the land, is ordinarily referred to as an "equitable mortgage," an expression which originated in the consideration that a transaction of this character, while absolutely ineffective at law, as not involving a transfer of the legal title, was effective in equity for the purpose for which a legal mortgage was ordinarily utilized, to secure the payment of money. And the view that an instrument of an informal character, such as is above referred to, if intended as security, is effective for this purpose, not as a mortgage properly so called, but as an "equitable mortgage," is readily comprehensible in jurisdictions in which the normal mortgage involves a transfer of the legal title. It is, however, somewhat difficult to understand what constitutes an equitable mortgage in states in which the lien theory of a mortgage prevails. In those states, an instrument, however informal in character, which indicates an intention, on the part of the person executing it, to make land belonging to him security for the payment of his debt, may well be regarded as a legal mortgage, if properly executed for that purpose. It may not be in such form, or so acknowledged, as to bo available for record, but as between the immediate parties it is as effective as would be a mortgage of the most formal character. The presence of a greater or less degree than is usual of informality in the language used cannot, one would suppose, change the character of the mortgage. In such jurisdictions it would seem that the only place for the doctrine of equitable mortgages is in connection with instruments which, while signed, are not otherwise executed as the statute requires a mortgage to be executed, a case which can but seldom occur, and also instruments which do not indicate an intention to create an immediate lien on the land, but merely involve an agreement to create a lien in the future, in which class of instruments may be included a mortgage on property subsequently to be acquired. The courts of these states, however, appear to use the expression "equitable mortgage" with considerable freedom, as applicable to all instruments intended for purposes of security, which assume an unusual form.
40. Ketchum v. St. Louis, 101 U. S. 306, 25 L. Ed. 999; Walker v. Brown, 165 U. S. 654, 41 L. Ed. 865; Donald v. Hewitt, 33 Ala. 534, 73 Am. Dec. 431; Bell v. Pelt, 51 Ark. 433, 4 L. R. A. 247, 14 Am. St. Rep. 57, 11 S. W. 684; Berard v. Fitzpatrick, 134 Ark. 190, 203 S. W. 1039; Love v. Sierra Nevada Lake Water & Min. Co., 32 Cal.
639, 91 Am. Dec. 602; Earle v. Sunyside Land Co., 150 Cal. 214. 88 Pac. 920; Pinch v. Anthony, 8 Allen (Mass.) 536; Cummings v. Jackson, 55 N. J. Eq. 805, 38 Atl. 763; Standorf v. Shockley, 16 N. D. 73, 11 L. R. A. (N. S.) 869, 14 Ann. Cas. 1099, 111 N. W. 622; Cotterell v. Long, 20 Ohio, 464; Wayt v. Carwithen, 21 W. Va. 516.
Applying the theory of equitable mortgages or liens, or at least using that nomenclature, it has been held that one may create a lien on land by an agreement in terms pledging or giving a lien on the land,41 and may, by a mere indorsement on a note to the effect that it is a charge on land, make it such in effect.42 So, a power of attorney authorizing one to collect the rents of land belonging to the donor of the power, and to apply them on a debt, or for other specific purposes, has been regarded as creating an equitable lien on the land;43 as has an agreement that a certain debt shall be paid out of the price which may be received for certain land.44 And it has even been decided that a recital, in a note given for lumber purchased for the erection of a house, that the ownership of the lumber is to remain in the seller until the note is paid, gives a lien on the house and the land on which it is built.45
41. Chase v. Peck. 21 N. Y. 581; Pinch v. Anthony, 8 Allen (Mass.) 536; Davis v. Clay, 2 Mo. 130; Cummings v. Jackson, 55 N. J. Eq. 805, 38 Atl. 763; Ward v. Stark .Bros., 91 Ark. 268, 121 S. W. 382.
42. Peckham v. Haddock, 36 I11. 38. So a note for the purchase price of land may be charged on the land by a recital in the note to that effect. Post, Sec. 665, note 21.
An assignment, for purposes of security, by a vendee of land, of his contract rights in the land, has been regarded as creating a lien on the land, or, rather, on his equitable interest in the land.46
A mortgage instrument which is lacking in some respect as regards its form or execution will usually be effective as imposing an equitable lien or charge to the extent of the obligation which it was intended to secure.47 For instance, if an instrument intended as a formal mortgage is ineffective as such by reason of the lack of a seal,48 or of witnesses,49 it may take effect by way of equitable charge. And so it has been decided that an instrument which purports to create a mortgage in favor of a copartnership, which cannot take effect as a legal mortgage by reason of the fact that the legal title to land cannot be vested in a copartnership,50 will take effect as an equitable charge.51 A like view has been adopted with reference to a mortgage instrument which omitted words of inheritance, 52 and a deed of trust made to secure a debt, which omitted to name a trustee.53 The doctrine has occasionally been applied in the case of the defective execution of a mortgage instrument by an agent in his own name instead of in that of the principal.54