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 .
While it has been judicially asserted that a deed of trust to secure a debt, if made to the creditor himself, must be regarded as a mortgage,61 it does not seem that a deed of trust to secure a debt should, because not made to the creditor, be regarded otherwise than as a mortgage.62 An instrument in the ordinary form of a mortgage is perfectly valid as a mortgage, though made to a person other than the creditor,63 and so the fact that a deed of trust is made to a person other than the creditor is no reason for not regarding it as a mortgage. A deed of trust to A to secure a debt due B is essentially a mortgage to A to secure a debt due B and the fact that in the deed A is called "trustee" is immaterial.
60. In Lawrence v. Farmer's Trust Co., 13 N. Y. 200, the instrument was regarded as a mortgage, though there was no condition of defeasance, but merely a provision for reconveyance on payment.
In several cases it has been held that the fact that there was no condition of defeasance did not necessitate that the instrument ce regarded as an assignment for the benefit of creditors rather than a mortgage. Wylly-Gabbett Co. v. Williams, 53 Fla. 872, 42 So. 910; Austin v. First Nat. Bank of Kalamazoo, 100 Mich. 613, 59 N. W. 597; Hargadine v. Henderson, 97
Mo. 375, 11 S. W. 218.
61. Eaton v. Whiting, 3 Pick. (Mass.) 484; Fox v. Channing, 1 Rand. (Va.) 306. Contra, Moore v. Calkins, 95 Cal. 435, 29 Am. St. Rep. 128, 30 Pac. 583.
62. But it is so decided in Marvin v. Titsworth, 10 Wis. 320. In this case, as in Merrill v. Hurley, 6 S. D. 592, 55 Am. St. Rep. 859, 62 N. W. 958, foreclosure was to be at the option of the creditor, and in the latter case this fact was regarded as conclusive that the instrument was a mortgage, though it professes to follow the case first above cited.
63. See post, Sec. 607(b), note 90.
In so far as a distinction between a mortgage and a deed of trust maybe sought to be based upon the fact that in that jurisdiction a mortgage is a lien merely, and a deed of trust shows an intention to convey the legal title, it is to be remarked that, in most jurisdictions in which the lien theory of a mortgage prevails, the old form of a conveyance of the property with a defeasance clause is still utilized, but the courts have not regarded this indication of an intention, appearing on the face of the instrument, to convey the legal title, as giving the mortgagee the legal title. And it does not seem that such an indication of intention, appearing on the face of a deed of trust, should have any greater effect.
A conveyance made to a trustee to secure a debt or debts is to be distinguished from one made to a trustee for the purpose of effecting the payment of debts. A conveyance of the latter character, ordinarily known as an assignment for the benefit of creditors, involves a complete divestiture of the grantor's title to the property conveyed, he having no right to redeem by paying the debts, and having merely a resulting trust as to any surplus which may possibly remain after the debts are paid, while a conveyance in trust made merely for purposes of security does not, any more than does a mortgage in ordinary form, divest the grantor or mortgagor of the rights of an owner, he having still a right to redeem by paying the indebtedness. The distinction between these two classes of conveyances in trust for creditors has been frequently asserted, espe-sially in connection with the question whether a particular conveyance was to be regarded as an assignment for the benefit of creditors within a state law invalidating such assignments in certain cases.64
64. See Reagan v. Aiken, 138 U. S. 109, 34 L. Ed. 892; Turner v. Watkins, 31 Ark. 429; Heath r. Wilson, 139 Cal. 362, 73 Pac.
182; De Wolf v. Sprague Mfg. Co.. 49 Conn. 282; Wylly-Gabbett v. Williams, 53 Fla. 872, 42 So. 910; Johnson v. Brewer, contracts only, and a Legal mortgage, even when re garded as a lien merely, is not an executory contract, it not in itself involving any personal obligation. That a consideration is not necessary to the validity of a mortgage would seem to be clearly indicated by the fact that a mortgage is perfectly valid though given to secure the payment of a preexisting debt,66a or to secure advances which the mortgagee may voluntarily make in the future.67