U.S. Supreme Court
Hughes v. Edwards, 22 U.S. 489 (1824)
Hughes v. Edwards
22 U.S. 489
Where the mortgage deed contained a defeasance that the mortgagor should pay the debt according to the condition of a bond recited in the deed, by which it was payable on a day already past at the time of the execution of the deed, held that this circumstance did not avoid the mortgage deed in equity where it was to be considered as a conveyance absolute at law, but intended as a security merely, and to be treated in the same manner as an ordinary mortgage.
A court of equity looks to the substantial object of the conveyance, and will consider an absolute deed as a mortgage wherever it is shown to have been intended merely as a security for the payment of a debt.
So also the grantee in such deed may treat it as a mortgage, and acknowledging it to be such, may apply to a court of equity to foreclose the equity of redemption, which will be decreed in like manner as if an unexceptionable defeasance were attached to the deed.
In the case of a mortgagor coming to redeem, a court of equity has, by analogy to the statute of limitations, which takes away the right of entry of the plaintiff, after twenty years' adverse possession, fixed upon that as the period, after forfeiture, and possession taken by the mortgagee, no interest having been paid in the meantime, and no circumstances to account for the neglect appearing, beyond which a right of redemption shall not be favored.
In respect to the mortgagee, who is seeking to foreclose the equity of redemption, the general rule is that where the mortgagor has been permitted to retain possession, the mortgagee will, after a length of time, be presumed to have been discharged by payment of the money or by a release, unless circumstances can be shown sufficiently strong to repel the presumption, as payment of interest, a promise to pay, an acknowledgement by the mortgagor that the mortgage is still existing.
The mortgagor after forfeiture has no title at law, and none in equity, but to redeem upon the payment of the debt and interest.
His conveyance to a purchaser with notice passes nothing but an equity of redemption, and the latter can, no more than the mortgagor, assert that equity against the mortgagee without paying the debt or showing that it has been paid or released or that there are circumstances in the case sufficient to warrant the presumption of these facts or one of them.
A purchaser with notice from the mortgagor is not entitled to have the value of the improvements made by him upon the mortgaged premises deducted from the price at which the premises sold under a bill of foreclosure.
Where there are different purchasers of mortgaged premises, if either pays more than his proportion of the debt according to the relative value of his property, he may compel contribution from the others, but it would be unreasonable to force the mortgagees into the delay and expense incident to the adjustment of these differences between persons with whom he has no concern.
The want of a covenant to repay the money is not complete evidence that a conditional sale was intended, but it is a circumstance of no inconsiderable importance, if the vendee must be restrained to his principal and interest, that principal and interest should be secure. It is therefore a necessary ingredient in a mortgage that the mortgagee should have a remedy against the person of the debtor. If this remedy really exists, its not being reserved in terms will not affect the case, but it must exist in order to justify a construction which overrules the express words of the deed.
In the case either of a legal or equitable mortgage, the mortgagee may pursue his legal remedy by ejectment and at the same time file his bill to foreclose the equity of redemption.
Effect of the impossible condition contained in the mortgage deed.
Improvements made upon the mortgaged property. chanroblesvirtualawlibrary
Under the ninth article of the treaty between the United States and Great Britain of 1794, it is not necessary for the alien to show that he was in the actual possession or seizin of the land at the date of the treaty, which applies to the title, whatever that may be, and gives it the same legal validity as if the parties were citizens. The title of an alien mortgagee is protected by the treaty.
But, independent of the stipulations of the treaty, an alien mortgagee has a right to come into a court of equity and have the property which has been pledged for the payment of the debt sold for the purpose of raising the money. His demand is merely a personal one, the debt being considered as the principal and the land as an incident.
A mortgagor cannot redeem after a lapse of twenty years after forfeiture and possession by the mortgagee (which period has been adopted in equity by analogy to the statute of limitations), no interest having been paid in the meantime and no circumstances appearing to account for the neglect.
Where the mortgagee brings his bill of foreclosure, the mortgage will, after the same length of time, be presumed to have been discharged unless circumstances can be shown to repel the presumption, as payment of interest, a promise to pay, an acknowledgement by the mortgagor that the mortgage is still existing, and the like.
A bonae fidei purchaser under the mortgagor, with actual notice of the mortgage or constructive notice by means of a registry, can only protect himself by the lapse of time or other equity under the same circumstances which would afford a protection to the mortgagor.
Such a purchaser is not entitled to have the value of the improvements made by him deducted from the proceeds of the sale of the mortgaged premises.