The defeasance should be recorded with the absolute conveyance. In some states it is provided that, if the defeasance be not recorded, the grantee shall take nothing under the conveyance, or shall derive no benefit from the record of the conveyance, while in others it is provided that, in such case, the conveyance shall pass an absolute title, except as against the maker of the instrument, his heirs and devisees, and, usually, persons having actual notice of the instrument of defeasance, which is the rule in the absence of any statute on the subject. In the first class of states, therefore, it is to the advantage of the mortgagee to see that the defeasance is recorded, while in the latter class, the mortgagor or those claiming under him can alone suffer from the absence of the defeasance from the record. JONES, MORTGAGES, § 62. A deed of trust to secure a debt is in legal effect a mortgage. It is a conveyance made to a person other than the creditor, conditioned to be void if the debt be paid at a certain time, but if not paid that the grantee may sell the land and apply the proceeds to the extinguishment of the debt, paying over the surplus to the grantor. The addition of the power of sale does not change the character of the instrument any more than it does when contained in a mortgage. Such a deed has all the essential elements of a mortgage; it is a conveyance of land as security for a debt. It passes the legal title just as a mortgage does, except in those states where the natural effect of a conveyance is controlled by statute; and in states where a mortgage is considered merely as a security, and not a conveyance, a trust deed is apt to be regarded in this respect just like a mortgage. Both instruments convey a defeasible title only; the mortgagee's or trustee's title in fee being in the nature of a base or determinable fee; and the right to redeem is the same in one case as it is in the other. The only important difference between them is, that in therefore, as passing the complete title at law, whether or not it was in equity a mortgage. Even where it is held that parol evidence is admissible at law to show that an absolute deed is a mortgage, this does not necessarily make it a legal mortgage or prevent the title from passing. German Ins. Co. v. Gibe, 162 Ill. 251; McAnnulty v. Seick, 59 Iowa 586; Haggerty v. Brower, 105 Iowa 395. 6 The minority view that a trust mortgage passes the legal title, although an ordinary mortgage does not, is maintained in Sacramento Bank v. Alcorn, 121 Cal. 379 (compare the California doctrine presented in the previous note); Stephens v. Clay, 17 Colo. 489; Soutter v. Miller, 15 Fla. 625. The trust mortgage is almost universally used when it is desired to secure a series of notes or bonds payable to, or designed to be transferred to different persons, as in the case of the common corporate bond issue. the one case the conveyance is directly to the creditor, while in the other it is to a third person for his benefit. TIFFANY, REAL PROPERTY, § 513. A mortgage is usually given to secure the payment of a sum of money, and the debt is usually evidenced by a note, bond, or other instrument, separate from the mortgage, though this is not necessary. A mortgage given to secure a debt existent at the making of the mortgage, or contemporaneous therewith, is valid, even as against subsequent purchasers and creditors, although it does not explicitly state the amount of such debt or liability, provided there are means of ascertaining such amount." And extrinsic evidence is admissible for the purpose of showing the debt which the mortgage was intended to secure. The statement in the mortgage as to the sum secured is not conclusive in that regard, and it may be shown by the mortgagor that the lien was for a less sum, or even that the mortgage was not a lien for the payment of money, as stated therein, but was given for a different purpose. A mortgage which is in terms security for a certain amount cannot, as against third persons, be extended by agreement between the mortgagor and mortgagee so as to cover sums subsequently advanced by the latter to the former. But, as between the parties to the mortgage, a written agreement, made after its execution, that it shall be security for a debt other than that which it was first intended to secure, is effective, this constituting in effect an equitable lien on the land for such additional sum. (b) EQUITABLE MORTGAGES. JONES, MORTGAGES, § 162. It has been noticed that a conveyance, accompanied by a condition contained either in the deed itself or in a separate instrument executed at the same time, constitutes a legal mortgage, or a mortgage at common law. In addition to these formal instruments which are properly entitled to the designation of mortgages, deeds and contracts which are wanting in one or both of these characteristics of a common-law mortgage are often used by parties for the purpose of pledging real property, or some 7 There is some conflict of authority as to the extent to which a mortgage, securing an existent and ascertained debt, must disclose its amount— See cases cited in Jones, §344. As to the description of the debt in a mortgage to secure future advances, see post, Chap. II, Sec. 3. interest in it, as security for a debt or obligation, and with the intention that they shall have effect as mortgages. Equity comes to the aid of the parties in such cases, and gives effect to their intentions. Mortgages of this kind are therefore called equitable mortgages. BRIDGEPORT ICE CO. v. MEADER. UNITED STATES CIRCUIT COURT OF APPEALS, 1895. [Suit in equity to foreclose an equitable mortgage. One Soulard was the promoter of the defendant, the Bridgeport Ice Co. On May 7, 1891, he contracted with plaintiff for the purchase of a machine for the manufacture of ice. It was stipulated in writing that the Ice Company should pay plaintiff the sum of $23,000, as follows: $5,750 on delivery, $5,750 when it had withstood fifteen days' test, the balance in negotiable notes, of certain terms, which, it was stipulated, should be secured by a mortgage of the machine, and of the buildings and real estate on which it was to be erected, or by personal endorsements satisfactory to plaintiff. The machine was delivered in May, 1891, and was accepted by defendant in April, 1892. In September, 1891, the defendant corporation was organized and, in October, its directors ratified the contract made by Soulard with plaintiff and issued promissory notes to plaintiff for the amount remaining unpaid thereon, but the mortgage stipulated for was never executed, nor was personal security satisfactory to plaintiff given. The defendant is insolvent.] SPEER, J. On the hearing, the circuit court of the Northern District of Alabama (the Honorable Alex. Boarman, judge presiding), decreed that the plaintiff was entitled to a lien for the balance due him; that the lien should relate back to and commence from the date of the original contract, to wit, May 17, 1891; that the amount due of the purchase-price on the ice machine was $11,385.87, with interest from the 26th day of April, 1893. And upon the failure of the defendant to pay this debt, with interest and costs, within thirty days from the enrollment of the decree, it was ordered that a special master, appointed in the decree, should sell the property on which the lien was established at public outcry, for cash, and for the satisfaction of the debt. From this decree the appeal is taken. It is well settled that an agreement to give a mortgage, for a valuable consideration, upon property which is sufficiently specified, is in a court of equity regarded as the creation of the mortgage itself. This is held, for the reason that equity will treat that as done which ought to be done. 1 Jones, Mortg., § 163; Ketchum v. St. Louis, 101 U. S. 306; Gest v. Packwood, 39 Fed. 525; Will. Eq. Jur. pp 48, 298; O'Neil v. Seixas, 85 Ala. 80, 4 So. 745; 2 Story, Eq. Jur., § 1231. It is insisted, however, that the contract of the parties in this case was in the alternative,—that the purchaser had the right either to execute the mortgage in pursuance of the terms of the original contract of May 17, or that he might secure the debt by personal indorsement satisfactory to the vendor. It seems a sufficient reply to this to point out the fact that the defendant company made no offer of personal indorsement, satisfactory to the plaintiff, or otherwise, and the plaintiff was therefore remitted to such remedy for the total noncompliance with the contract as the doctrine above stated will afford him. With this view, he brings his bill, not, strictly to enforce the specific performance of the contract, but, rather, to have the court declare its legal effect, considered in connection with the further fact that the plaintiff has performed all that he agreed to do, and defendant, while receiving and accepting the ice machine, has not only not paid the debt, but even refused to give the evidence of the debt which it had promised. Nor is it a sufficient reply to this proceeding to say that, by suing at law, complainant waived his right to foreclose the equitable mortgage which the conduct of the parties had created. The owner of a note and a mortgage to secure the same can sue on the note, and thereafter foreclose the mortgage. The remedies of law and equity are concurrent for the enforcement of the demand. Nor did the plaintiff, after seeking this jurisdiction, while retaining his bill here, forfeit any of his powers by attempting, in the state courts of Alabama, to secure payment of the judgment which the circuit court of the United States at law had granted. It is true that he went through the forms of a purchase of the property in question by permission of the state court, but since the Supreme Court of Alabama afterward annulled and vacated this sale, it is now as if there had been no sale. Nor does it matter that the contract of the promoter of this corporation with the ice company preceded the creation of the company itself. After the ice company was organized, it was fully informed as to the terms of the contract. It received, tested, and accepted the machine, and paid a portion of the purchase money. It must, therefore, be held to have ratified the agreement of its promoter. "It is well settled that a party may, by express agreement, create a charge or claim in the nature of a lien on real as well as on personal property of which he is the owner or in possession, and that equity will establish and enforce such charge or claim, not only against the party who stipulated to give it, but also against third persons, who are either volunteers, or who take the estate on which the lien is agreed to be given with notice of the stipulation. Such agreement raises a trust which binds the estate to which it relates, and all who take title thereto with notice of such trust can be compelled in equity to fulfill it." Pinch v. Anthony, 8 Allen 536. * Affirmed.8 LOVE v. SIERRA NEVADA MINING CO. SUPREME COURT OF CALIFORNIA, 1867. SHAFTER, J.: In the opinion delivered in this case on the former hearing, we considered "that it was unnecessary to determine whether the entire transaction was sufficient to constitute an equitable mortgage, for if such should be found to be the case it could not be enforced in the present state of the pleadings, because the decree must be based upon the allegations of the complaint; and it is alleged that the mortgage was executed by the corporationthat is to say, that it is a legal mortgage." Though there is an averment in the complaint that the mortgage, the foreclosure of which is sought in this action, was executed by the company, still the document is set forth in haec verba, and if it is not the mortgage of the defendant by legal as distinguished from equitable conclusion, the averment may be rejected as surplusage. We held in Stoddard v. Treadwell, 26 Cal. 303, that a contract may be declared on according to its legal effect or in haec verba. If the former mode should be adopted, then the defendant may, by the rule of the common law, in a proper case, crave oyer of the instrument; and if it appear that its provisions have been misstated, he may set out the contract in haec verba and demur on the ground of variance. But where a plaintiff himself sets forth the contract in the terms in which it is written, and then proceeds to put a false construction upon its terms, the allegation, as repugnant to the terms, should be regarded as surplusage, to be struck out on motion. Utile per inutile non vitiatur. From this it follows that if the complaint in this case discloses all the facts essential to an equitable mortgage binding upon the defendant, then, if the averments are true in fact, the plaintiff is entitled to the benefit of them. 8 Accord: In re Howe, 1 Paige (N. Y.) 125; Carter v. Holman, 60 Mo. 498; Remington v. Higgins, 54 Cal. 620. |