CHAPTER 2.

EQUITABLE LIEN IN NATURE OF MORT

GAGE.

408. Equitable lien in nature of mortgage created by informal writing.

409. Validity of equitable lien.

410. Recordation of equitable lien as constructive notice.

411. Equitable lien assignable.

412.

Enforcement of equitable lien.

413. Waived by suing on principal obligation.

408. Equitable Lien in Nature of Mortgage Created by Informal Writing.1

Every agreement in writing, whereby the in1 Higgins v. Manson, 126 Cal. 467, 469, 77 Am. St. Rep. 192, 58 Pac. 907.

Rationale. "The maxim of equity upon which this doctrine rests is, that equity looks upon things agreed to be done as actually performed; the meaning of which is, that equity will treat the subject matter as to collateral consequences and incidents in the same manner as if the final acts contemplated by the parties had been executed exactly as they ought to have been': Daggett v. Rankin, 31 Cal. 321, 327; Racouillat v. Sansevain, 32 Cal. 376, 389; Love v. Sierra Nevada etc. Min. Co., 32 Cal. 639, 653, 91 Am. Dec. 602.

Civil Code, section 2922, providing: "A mortgage can be created, renewed, or extended only by writing, executed with the formalities required in the case of a grant of real property," cannot be held to deprive a court of equity of the power, in a proper case, of declaring an instrument which is not a mortgage in form one in effect: Dingley v. Bank of Ventura, 57 Cal. 467, 471.

of

Illustrations.-An assignment of a certificate purchase of land issued by the state, by way of security for a debt due, operates as an equitable mortgage on the interest in the land which the assignor acquired by virtue of the certificate: Hill v. Eldred, 49 Cal. 398. Compare San Jose etc. Bank of Savings v. Bank of Madera, 121 Cal. 539, 542, 54 Pac. 83, where an assignment of a sheriff's certificate of purchase at foreclosure sale was held to create an equitable mortgage.

A promissory note executed with an instrument attached providing that the United States patent of certain lands should be deposited with the payee, the intention being that the land should stand as security for the debt, creates an equitable mortgage: Higgins v. Manson, 126 Cal. 467, 77 Am. St. Rep. 192, 58 Pac. 907.

An agreement to convey property containing a provision that "the said property, so to be conveyed, as is hereinabove set forth, is to be chargeable only with the debts of [certain parties]. excepting

an indebtedness due the Anglo-Californian Bank," creates an equitable lien in the nature of a mortgage upon the property to secure the debt due the bank: Kreling v. Kreling, 118 Cal. 413, 419, 50 Pac. 546.

An agreement between an irrigation company and a land owner, by which the water was to be furnished to the owner during a series of years at a stated annual price, and containing a provision that "the water furnished under this agreement is intended to form a part of the appurtenances to said sections or quarter sections of land, and the right thereto shall be transferable only with, and run with, said

tention is clearly indicated to make some particular immovable property therein described a security for the performance of an obligation, creates a specific equitable lien or inchoate mortgage against such property.

land, and that the party of the first part is bound by this instrument to all subsequent owners of said land, but to no other person"; also, that "this agreement, and the covenants therein contained on the part of the party of the second part [the land owner], shall run with and bind the land," creates a lien against the land which also binds any successor in interest in the land with notice of it, but does not create any personal liability on the part of suca successors in interest: Fresno Canal etc. Co. v. Rowell, 80 Cal. 114, 116, 118, 13 Am. St. Rep. 112, 22 Pac. 53; Fresno Canal etc. Co. v. Dunbar, 80 Cal. 530, 535, 22 Pac. 275.

2 Intention to Hypothecate Property must Appear. The form of the writing is not important, provided it sufficiently appears that it was intended thereby to create a security. If that intention appears, it will create a mortgage in equity, or a specific lien on the property so intended to be mortgaged: Higgins v. Manson, 126 Cal. 467, 469, 77 Am. St. Rep. 192, 58 Pac. 907.

So an agreement in writing to give a mortgage, or a mortgage defectively executed, or an imperfect attempt to create a mortgage, or to appropriate specific property to the discharge of a particular debt, will create a mortgage in equity, or a specific equitable lien on the property intended to be mortgaged: Daggett v. Rankin, 31 Cal. 321, 326, 327; Racouillat v. Sansevain, 32 Cal. 376, 389; Love v. Sierra Nevada etc. Min. Co., 32 Cal: 639, 653, 91 Am. Dec. 602; Hig gins v. Manson, 126 Cal. 467, 470, 77 Am. St. Rep. 192, 58 Pac. 907; Peers v. McLaughlin, 88 Cal. 294, 297, 22 Am. St. Rep. 306, 26 Pac. 119. Compare Thurber v. Meves, 119 Cal. 35, 39, 50 Pac. 1063.

409. Validity of Equitable Lien.

An equitable lien in the nature of a mortgage is valid between the parties thereto, and as against all third parties with notice thereof.

410. Recordation of Equitable Lien as Constructive Notice.

The recordation of an equitable lien in the nature of a mortgage, which lien is contained in an informal writing, does not impart constructive notice, but when contained in an instrument of conveyance which is duly acknowledged and recorded becomes notice to all third parties.

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Although the defective execution of a mortgage is caused by a mistake of law, the defective execution can be aided; for where there is a defective execution of a power, it is a matter of no equitable moment whether the error came from a mistake of law or a mistake of fact. It is enough that the power existed, and that there was an attempt to act under it: Love v. Sierra Nevada etc. Min. Co., 32 Cal. 639, 653, 654, 91 Am. Dec. 602; Remington v. Higgins, 54 Cal. 620.

3 But a mere deposit of a deed without an intention to fix a lien upon the land, but merely upon the deed, is not sufficient: Higgins v. Manson, 126 Cal. 467, 470, 77 Am. St. Rep. 192, 58 Pac. 907.

4 Between the parties thereto: Racouillat v. Sansevain, 32 Cal. 376, 389, 390; Daggett v. Rankin, 31 Cal. 321, 326, 327.

5 Against third parties with notice: Racouillat v. Sansevain, 32 Cal. 376, 389, 390.

6 Racouillat v. Rene, 32 Cal. 450, 457.

7 Dingley v. Bank of Ventura, 57 Cal. 467, 471, 472. Where in a contract of an irrigation company to furnish water to a certain tract of land a

411. Equitable Lien Assignable.

The assignment of an obligation secured by an equitable lien in the nature of a mortgage carries with it the security.8

412. Enforcement of Equitable Lien.

An equitable lien is enforceable by a foreclosure action, and the sale thereunder is subject to redemption where redemption is allowable."

413. Waived by Suing on Principal Obligation.

An equitable lien is waived by the commencement of an action upon the principal obligation.10

lien was created against the land to secure the payment of the stated annual price of the water furnished, the acknowledgment of the contract by the owner of the land alone without the acknowledgment of the irrigation company is sufficient to entitle the contract to a recordation valid as against the successors in interest of the land owner: Fresno Canal etc. Co. v. Rowell, 80 Cal. 114, 117, 13 Am. St. Rep. 112, 22 Pac. 53.

8 Dingley v. Bank of Ventura, 57 Cal. 467, 472. 9 Dingley v. Bank of Ventura, 57 Cal. 467, 471. 10 Campan v. Molle, 124 Cal. 415, 417, 57 Pac. 208. (Is not the truth, rather, that the security must be first exhausted (sections 385 and 424)?)