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 .
After the court of chancery established the doctrine that the mortgagor might redeem after default, persons lending money on mortgage security naturally attempted to defeat the right of redemption in the mortgagor by obtaining from him a written waiver of the right, or contract not to assert it; but chancery, recognizing that such a contract was extorted from the necessities of the borrower, decided that the right of redemption constituted an integral part of every mortgage, and could not be waived or restricted by a provision in the mortgage or other contemporaneous agreement, and this rule, frequently, though somewhat obscurely, expressed in the phrase, "once a mortgage, always a mortgage," has invariably been strictly enforced.16 And so a provision in the
14. See 3 Pomeroy, Eq. Jur., Sec. 1186 and post Sec. 605(b).
15. Holland, Jurisprudence, (9th Ed.) 218; Digby, Hist. Real Prop. (4th Ed.) 305; 2 Pollock & Maitland, Hist. Eng. Law 124; Pollock, Land Laws (3rd Ed.) 134.
16 Howard v. Harris, 1 Vern. 190; Jason v. Eyres, 2 Ch. Cas. 33; Peugh v. Davis, 96 U. S. 332, 24 L. Ed. 775; Stoutz v. Rouse, 84
Ala. 309, 4 So. 170; Bradbury v. Davenport, 114 Cal. 593, 55 Am. St. Rep. 92, and note, 46 Pac. 1062; Jackson v. Lynch, 129 111. 72, 21 N. E. 580, 22 N. E. 246; Turpie v. Lowe, 114 Ind. 37, 15 N. E. 834; McGuire v. Halloran (Iowa), 160 N. W. 363; Bayley v. Bailey, 5 Gray (Mass.) 505; Batty v. Snook, 5 Mich. 231; Reilly v. Cul-len, 159 Mo. 322, 60 S. W. 126; mortgage instrument that the right of redemption shall be confined to a particular time17 or shall be exercisable by a particular person only, 18 has been held to be nugatory.
Not only is a contemporaneous agreement excluding the right of redemption void, but even a subsequent agreement which, without affecting the existence of the mortgage, provides that there shall be no right of redemption in case of non payment at maturity, is also void, as seeking to deprive the mortgage of one of its essential features.19 In this respect the statement, not infrequently found, that the mortgagor may relinquish his right of redemption by a subsequent agreement on a good and sufficient consideration20 is misleading. It means merely that the mortgagor may convey his interest in the land, the so called "equity of redemption," to the mortgagee. It does not mean that the parties to the mortgage can, by a subsequent agreement, divest the mortgagor of the right of redemption after default. Occasional statements to be found that the right of redemption may be waived refer to a right other than the equitable right, such as the statutory right to redeem,21 or to a right created by express contract.22
First Nat. Bank of David City v. Sargeant, 65 Neb. 594, 59 L. R. A. 296, 91 N. W. 595; Henry v. Davis, 7 Johns, Ch. (N. Y.) 40; McCauley v. Smith, 132 N. Y. 524, 30 N. E. 997; Johnston v. Gray, 16 Serg. & R. (Pa.) 361, 16 Am. Dec. 577; Hyndman v Hyndman, 19 Vt. 9, 46 Am. Dec. 171; Plummer v. Use, 41 Wash. 5, 2 L. R. A. (N. S.) 267, 111 Am. St. Rep. 997, 82 Pac. 1009. It was decided, however, that the right of redemption may be restricted in the case of a mortgage intended as a family settlement or provision. Bonham v. Newcomb, 1 Vern. 231, reversing Newcomb v.
Bonham, 1 Vern, 7. See Coote, Mortgages, 23.
17. Stover v. Bounds, 1 Ohio St. 107; Salt v. Northampton, (1892) App. Cas. 1; Youle v. Richards, 1 N. J. Eq. 534, 23 Am. Dec. 722.
18. Howard v. Harris, 1 Vern 33.
19. Tennery v. Nicholson, 87 111. 464; Batty v. Snook, 5 Mich. 231; Holden Land & Live Stock Co. v. Interstate Trading Co. 87 Kan. 221, 123 Pac. 733; See Editorial note, 13 Columbia Law Rev. at p. 170.
20. Post, Sec. 621.
Clog on right. Not only have the courts decided that the equitable right of redemption cannot be waived or excluded by agreement, but they have also decided that any contemporaneous,23 as distinguished from a subsequent24 agreement, the effect of which may be to prevent the mortgagor, on paying the debt secured, from enjoying the land as freely as before the mortgage was created, is invalid as constituting a "clog" on the right of redemption. It has accordingly been held that a contemporaneous contract by the mortgagor to purchase a particular class of commodity exclusively from the mortgagee,25 or to employ the mortgagee in a certain way,26 is not enforceable after payment of the debt secured. And a stipulation giving to the mortgagee an option to purchase the mortgaged property has also been regarded as invalid, as putting it in the power of the mortgagee, by exercising the option, to prevent the mortgagor from recovering the property on paying the amount of the debt secured.27
21. See Commercial Real Estate & B. Ass'n v. Parker, 84 Ala. 298, 4 So. 268; Cook v. McFar-land, 78 Iowa, 528, 43 N. W. 519.
In Canada, at one time, it appears, there was no process by which foreclosure could be effected, and the mortgagor might lose his right of redemption by his course of conduct, and laches in asserting his claim. Smyth V. Simpson, 7 Moore, P. C. 205; Clute v. McCaulay, 4 Grant Ch. 410; Roach v. Lundy, 19 Grant Ch. 243.
22. See, e, g., Herald v. Jardine, (N. J. Ch.) 21 Atl. 586.
23. Noakes v. Rice, (1902) App. Cas. 24; Bradley v. Carritt.
(1903) App. Cas. 253.
24. Reeves v. Lisle, (1902) App. Cas. 461.
25. Noakes & Co. Ltd. v. Rice, (1902) App. Cas. 24.
26. Bradley v. Carritt, (1903) App. Cas. 253.
27. Samuel v. Jarrah Timber Corp., (1904) App. Cas. 323; Re Edwards' Estate, 11 Ir. Ch. 367; Wilson v. Fisher, 148 N. C. 535, 62 S. E. 622; See Kreglinger v. New Patagonia Meat & Cold Storage Company, Limited, App. Cas. (1914) 25; Wynkoop v. Cowing, 21 111. 570; Article by Bruce Wy-man, Esq. in 21 Harv. Law Rev. 459; editorial note in 12 Columbia Law Rev. at p. 628.
There are in England recent decisions to the effect that, under particular circumstances, a provision in the mortgage instrument precluding redemption by the mortgagor, that is, extinction of the mortgage by-payment of the debt secured, for a considerable period of years, may be invalid.28 In that country the debt is ordinarily made payable in terms at the end of six months, with a tacit recognition of the fact that it will probably not be paid at that time, but will be allowed to run on until the mortgagor wishes to pay the debt, or the mortgagee wishes it to be paid, and the fact that such is the custom might well influence the attitude of the courts with reference to a provision of the character referred to. In this country the universal practice is to name a date at which the mortgagee expects the debt to be paid, and at which the mortgagor expects, or at least hopes, to pay it, and the fact that the parties name a distant date has never been regarded as involving any interference with the equitable right of redemption. Indeed it is difficult to see how the right to redeem after default can be interfered with by a provision the effect of which is to postpone the possibility of default.29
Collateral advantage. There are, in decisions rendered in England and Ireland, dicta to the effect that if the making of a mortgage is accompanied by an agreement in reference either to the mortgaged premises or to another subject, by which the mortgagee obtains some "collateral advantage," such agreement is void.30 This theory has, however, been more or less exploded by more recent decisions, and the rule appears to be established that any agreement between the mortgagor and mortgagee, however advantageous to the latter, if not attended with fraud or oppression, is valid, provided it does not interfere with the right of redeeming from the mortgage.31 So in this country it has been decided, in at least one case, that any agreement made at the time of executing the mortgage, if not affecting the right of redemption, and not intended for the purpose of evading the usury laws, is valid.32
28. Morgan v. Jeffreys, (1910) 1 Ch. 620; Fairclough v. Swan Brewery Co., (1912) A. C. 565.
29. See editorial notes 12 Columbia Law Rev. 628; 21 Harv.
Law Rev. at p. 471.
30. Jennings v. Ward, 2 Vern. 520; In re Edwards' Estate, 11 Ir. Ch. 367; Broad v. Selfe, 11 Wkly. Rep. 1036.