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 making of the mortgage, the mortgagor and the mortgagee may deal with each other as any other individuals, and a conveyance by the mortgagor to the mortgagee of his interest in the land is ordinarily valid. The transaction will, however, be carefully scrutinized by a court of equity, and will not be upheld in case the mortgagee appears to have been guilty of fraud, undue influence, or oppression, in connection therewith.98 Such a conveyance by a mortgagor to the mortgagee is to be carefully distinguished from an attempted release or waiver of the right to redeem from the mortgage. The statement quite frequently made, that the mortgagor may release his equity of redemption by agreement, subsequently to the mortgage, but not contemporaneously therewith, involves a considerable degree of ambiguity, arising from the double use of the expression equity of redemption. The mortgagor may convey the land which is subject to the mortgage, inappropriately referred to as the equity of redemption,99 and this he can do merely because he is the owner of the land with the right to dispose of it as he will, but he cannot release or waive the right to redeem, retaining the land, for the reason that a mortgage without a right to redeem is not recognized.
Occasionally it is stated that a transfer by the mortgagor to the mortgagee must be supported by an
N. H. 67; Ballard v. Williams, 95 N. C. 126.
98. Peugh v. Davis, 96 U. S. 332, 24 L. Ed. 775; Shaw v. Lacy,
- Ala. -, 74 So. 933; Green v. Butler, 26 Cal. 595; Boal v. Gassen,
- Cal. -, 172 Pac. 588; Seymour v. Mackay, 126 111. 341, 18 N. E. 552; Port v. Colby, 165 Iowa, 95, 144 N. W. 393; Greenlaw v. Eastport Sav. Bank, 106 Me. 205, 76 Atl. 485; Baugher v. Merryman, 32 Md. 185; Trull v.
Skinner, 17 Pick. (Mass.) 213; Wilson v. Vanstone, 112 Mo. 315, 20 S. W. 612; Gassert v. Strong, 38 Mont. 18, 98 Pac. 497; Odell v. Montross, 68 N. Y. 499; Shaw v. Walbridge, 33 Ohio St. 1; Wagg v. Herbert, 19 Okla. 525, 92 Pac. 250; Caro v. Wollenberg, 68 Ore. 420, 136 Pac. 866; Hall v. Hall, 41 S. C. 163, 44 Am. St. Rep. 696, 19 S. E. 305; Coates v. Mars-den, 142 Wis. 106, 124 N. W. 1057. 99. Ante, Sec. 609.
"adequate" or "reasonable" consideration,1 bu1 it would seem that this requirement, so far as it exists, merely means that the faet that the mortgagor could have obtained a substantially higher price from another purchaser is strong, if not conclusive, evidence of fraud, undue influence, or oppression.2 The transfer is not invalid merely because the estimated value of the property over and above the mortgage is not paid by the mortgagee.3 It is not indeed necessary that any pecuniary consideration pass at the time of the making of the conveyance, provided the value of the property is not very substantially greater than the amount of the mortgage debt.4
1. Villa v. Rodiguez, 12 Wall. (U. S.) 323, 20 L. Ed. 406; Linnell v. Lyford, 72 Me. 280; Hutchings v. Terrace City Realty & Securities Co. - Mo. -, 175 S. W. 905; McBride v. Campredon, 24 N. M. 323, L. R. A. 1918D. 407,171 Pac. 140, ("what property worth"); Odell v. Montross, 68 N. Y. 499; Cole v. Boyd, 175 N. C. 555, 95 S. E. 778, ("full value"); Moeller v. Moore, 80 Wis. 434, '50 N. W. 396; Lynch v. Ryan, 132 Wis. 271, 111 N. W. 707, 112 N. W. 427.
2. The transfer "must be for a consideration which would be deemed reasonable if the transaction were between other parties dealing in similar property in its vicinity." Peugh v. Davis, 9G U. S. 332, 24 L. Ed. 775.
3. DeMartin v. Phelan, 115 Cal. 538, 56 Am. St. Rep. 115, 47 Par.
356; West v. Reed, 55 111. 242. See, also, Hicks v. Hicks, 5 Gill. & J. (Md.) 75; Stoutz v. Rouse, 84 Ala. 309, 4 So. 170; Goree v. Clements. 94 Ala. 337, 10 So. 906; Perry v. Ward, 82 Vt. 1, 71 Atl. 721.
4. Watson v. Edwards, 105 Cal. 70, 38 Pac. 527; Walker y. Farmers' Bank, 8 Houst. (Del.) 258; Rue v. Dole, 107 111. 275; Shaner v. Rathdrum State Bank, 29 Idaho, 576, 161 Pac. 90; Fort v. Colby, 165 Iowa, 95, 144 N. W. 393; Amos v. Livingston, 26 Kan. 106; Hutchings v. Terrace City Realty & Securities Co. - Mo. -, 175 S. W. 905; Shelton v. Hampton, 28 N. C. 216; Perry v. Ward, 82 Vt. 1, 71 Atl. 721; Neeson v. Smith, 47 Wash. 386, 92 Pac. 131. See Trull v. Skinner, 17 Pick. (Mass.) 213.
5. Threlkeld v. Walker, 141 Ky. 737, 133 S. W. 772; Francis v. Sheates. 153 Ala. 468, 127 Am. St strument of transfer expressly so states. And that the transfer is subject to the mortgage is involved in an assumption of the debt by the transferee, since this necessarily precludes him from asserting in his own behalf that the transferor should pay the debt rather than that it be paid from the land. If there is no contract of assumption and there is no express statement in the conveyance that it is subject to the mortgage, the question whether it was intended to be so subject must be determined by reference to the circumstances attending the transaction. A circumstance which is usually of controlling importance in this regard is whether the mortgage was considered in adjusting the purchase price. If the price was reduced by reason of the mortgage, it is a reasonable conclusion that it was intended that the debt, either in whole or in part, should be imposed on the land in the hands of the transferee rather than on the transferor, while if the full agreed value of the land was paid, it may be concluded that the parties intended the grantor to pay the mortgage debt out of the proceeds of the sale.19
-----Mode of conveyance. The mortgagee, taking a conveyance of the interest of the mortgagor, acquires it subject to any burdens or obligations to which it was previously subject in the hands of the mortgagor,6 including junior mortgages.7