erally construed with a view to executing the evident design of the legislature.31

Subdivision 5. Possession.

253. Possession of Mortgaged Property may be Conferred on Mortgagee.

The present or future possession of mortgaged property may be conferred upon the mortgagee by the express terms of the mortgage, or by a subsequent agreement without a new consideration, except where a third party has a paramount right to the possession.33

31 The section of the code in question should have a reasonable construction with a view of executing the evident design of the legislature in enact ing it. While the language used should not be strained to include cases clearly not embraced by it, the meaning to be given to it should not be so narrowly circumscribed as to exclude cases clearly within it. The evident intent of the legislature was to encourage certain kinds of business by allowing persons to procure certain personal property necessary to the business by giving a mortgage lien upon the property itself": Blaisdell v. MeDowell, 91 Cal. 285, 287, 25 Am. St. Rep. 178, 27 Pac. 656.

But compare the statement in Alferitz v. Borgwardt, 126 Cal. 201, 205, 58 Pac. 460, that the presumption is against the right to mortgage movable property. Does this statement have any reference to the amendment of 1895 that certain property and none other' shall be mortgaged?

32 Civil Code, section 2927: "A mortgage does not entitle the mortgagee to the possession of the property, unless authorized by the express terms of the mortgage; but after the execution of the mortgage, the mortgagor may agree to such a change of possession without a new consideration."

254. Upon Change of Possession of Movable

Property Transaction Deemed Pledge.

Upon the actual change of possession of mortgaged movable property from the mortgagor to the mortgagee, the transaction is deemed a pledge.34

Subdivision 6. Power of Sale.

255. Mortgage may Confer Power of Sale.

A power of sale may be conferred by a mortgage upon a mortgagee or any other person, to be

Possession may be conferred upon the mortgagee after the execution of the mortgage by parol agreement: Fogarty v. Sawyer, 17 Cal. 589, 592, 593; Spect v. Spect, 88 Cal. 437, 440, 22 Am. St. Rep. 314, 26 Pac. 203.

A mortgage may give the mortgagee the right of possession upon default in the payment of interest: Bank of Woodland v. Dunean, 117 Cal. 412, 416, 49 Pac. 414; Flinn v. Ferry, 127 Cal. 648, 652, 60 Pac. 434.

A provision giving a movable property mortgagee the right of possession of the mortgaged property upon the happening of a certain event is, upon the happening thereof, equally binding upon the executor of the mortgagor after the mortgagor's decease: Mathew v. Mathew, 138 Cal. 334, 71 Pac. 344.

33 Thus the mortgagee of the interest of one partner in movable partnership property has no right to take possession of such property, as the other partner is entitled thereto (See Civ. Code, sec. 2405): Sheehy v. Graves, 58 Cal. 449, 456.

34 Civil Code, section 2924: "Every transfer of an interest in property... when in the case of personal property it is accompanied by actual change of possession is deemed a pledge. Rohrbough v. Johnson, 107 Cal. 144, 148, 40 Pac. 37.

exercised after a breach of the obligation for which the mortgage is as security.35

35 Mortgage may Confer Power of Sale: Civ. Code, sec. 2932.

Cormerais v. Genella, 22 Cal. 116, 123, 124; Bateman v. Burr, 57 Cal. 480, 482; Fogarty v. Sawyer, 17 Cal. 589. See, also, Wilson v. Brannan, 27 Cal. 258,

272.

In Godfrey v. Monroe, 101 Cal. 224, 227, 35 Pac. 761, it was said that "this form of security is no longer looked upon with disfavor." But in Sacramento Bank v. Aleorn, 121 Cal. 379, 384, 53 Pac. 813, the court said that "the continuance of this power in a mortgage is as inconsistent with the general policy of requiring all forced sales to be subject to redemption as are trust deeds."

A mortgage conferring a power of sale authorizes the mortgagee to execute a conveyance to the purchaser at the sale without an express provision to that effect, as such authority is necessarily incident to the power to sell: Fogarty v. Sawyer, 17 Cal. 589, 591.

An agreement between a movable property mortgagor and his mortgagee permitting a sale of the property in satisfaction of the mortgage otherwise than as provided by law is valid: Harlan v. Ely, 68 Cal. 522, 9 Pac. 947, 949.

Agreements Held to be Mortgages with Power of Sale.— "An absolute conveyance of property by a debtor to his creditor, in trust, that he may sell the same, and out of the proceeds discharge the debt, is, in effect, only a mortgage with a power of sale, and the grantee may treat it as such, and, instead of making a sale under the power, may go into a court of equity for a foreclosure and sale under its decree; and whenever such course is pursued, his relation to the property is the same as that of the mortgagee in the foreclosure of the ordinary mortgage': Felton v. Le Breton, 92 Cal. 457, 465, 28 Pac. 490.

"Even where there is a power of sale, it has been held that, if the trustee be one of the creditors se

256. Power of Sale Deemed Part of Security.

A power to sell immovable property, given to a mortgagee or other encumbrancer in an instrument intended to secure the payment of money, is deemed a part of the security, and vests in any person who, by assignment, becomes entitled to the money so secured to be paid, and may be executed by him whenever the assignment is duly executed and recorded.36

Subdivision 7. Insurance.

257. Mortgage may Confer Power to Insure.

A mortgage may confer upon the mortgagee the power to insure the mortgaged property cured, the transaction will be held to be a mortgage": Banta v. Wise, 135 Cal. 277, 280, 67 Pac. 129.

A deed given "to secure the payment of an indebtedness" which provided that as soon as the grantees had "received their pay in full. . . . pay. able out of the receipts of the sale of the conveyed lands. the balance of the property remaining unsold" shall be reconveyed to the grantor, constitutes a mortgage with a power of sale: Godfrey v. Monroe, 101 Cal. 224, 227, 35 Pac. 761.

In Southern Pacific R. Co. v. Doyle, 11 Fed. 253, 259, 260, principally in view of Civil Code, section 2932, the circuit court held an instrument conveying property to second parties on a trust to be sold only in case of a default of the first party in the payment of a series of obligations due certain third parties to be a mortgage and not a deed of trust. But see section 414, below.

36 See Civ. Code, sec. 858.

upon default of the mortgagor so to do, the premiums paid to be secured by the mortgage.37

Subdivision 8. Interpretation.

258. Mortgage Construed in Connection with Other Related Writings.

An instrument of mortgage must be construed together with any written obligation thereby secured, and with other writings contemporaneously made.38

37 Where a mortgage gives the mortgagee such power, the premiums paid to be secured by the mortgaged property, and the mortgagee seeks to foreclose the mortgage for such sums, the complaint must

aver

(1) failure of the mortgagor to insure as agreed,

(2) insurance by the mortgagee conformable to the power,

(3) the payment of the insurance money:

Washburn v. Wilson, 59 Cal. 538.

38 Note and Mortgage Must be Construed Together: Phelps v. Mayers, 126 Cal. 549, 550, 58 Pac. 1048; Meyer v. Weber, 133 Cal. 681, 684, 65 Pac. 1110.

Historical.-In Robinson v. Smith, 14 Cal. 94, before the adoption of sections 385-388 and 390-392 below, an action was permitted on the secured note according to its terms, without reference to the terms of the instrument of mortgage, but this could not be done under the present law.

Illustrations of Interpretation. Mortgages foreclosable for the principal sum upon default in payment of interest.

Where a note provided for its payment in monthly installments, and was secured by a mortgage in movable property providing "that if the mortgagor should fail to make any payment as in the note provided, the