By a recent statute (1 Vic. c. 28), made for the purpose of explaining the statute of limitations (3 & 4 Wm. IV. c. 27), it is enacted, That any person entitled to or claiming under any mortgage of land (as defined by the last-mentioned act) may make an entry or bring an action at law or suit in equity to recover such land at any time within twenty years next after the last payment of any part of the prin cipal money or interest secured by such mortgage, although more than twenty years may have elapsed since the time at which the right to make such entry or bring such action or suit in equity shall have first accrued. This act was passed to protect the mortgagee who allows the mortgagor to continue in possession of the land or in the receipt of the rents and profits ; and it secures to him his rights for twenty years after the last payment of principal or interest by the mortgagor. By the 3 & 4 Wm. IV. e. 27, when a mortgagee has got possession of the land or receipt of the profits, the mortgagor, or the person claiming through him, can only bring a suit to redeem the lands within twenty years next after the com mencement of such possession or receipt, or within twenty years from the time when the mortgagee or the person claim ing through him last acknowledged in writing to the mortgagor, or some person claiming his estate, or to the agent of such mortgagor or person, his title of mort gagor or right to redemption. The mort gagor, or the person claiming under him, may therefore, at any time within the limits above named, tender to the mort gagee his principal money and interest, and claim a reconveyance of the lands; and if the mortgagee will not accept the tender and reconvey, the mortgagor may compel him by filing a bill in equity for the redemption of his lands.
A mortgagee can transfer his mortgage to another. The transfer or assignment, as it is generally called, consists of two parts expressed in one deed, the transfer of the debt, and the conveyance of the land, which is the security for the debt. If the mortgagor is not a party to the as signment, the assignee takes the mortgage exactly on the terms on which the assignor held it at the time of the assignment. If therefore the mortgagor should happen to have paid the whole or any part of the debt, the assignee, in coming to a settle ment with him, must submit to allow such payment in diminution of the original debt which the assignor affected to assign to him.
Though the mortgagee, after the mort gagor's default in payment of the prin cipal money and interest, has the absolute legal estate, he is still considered by courts of equity only to bold it as a security for his debt. The legal estate in the land will descend to the mortgagee's heir, or will pass by his will, if duly executed ; but the heir or devisee takes only the legal estate in the land, and the money or debt (as a general rule) belongs to the mort gagee's administrator or executor.
- If the principal money and interest are not paid at the time agreed on, the mort gagee may file a bill of foreclosure against the mortgagor. By such bill the mort
gagee calls on the mortgagor to redeem his estate forthwith, by payment of the principal money, interest, and costs ; and if the mortgagor does not do this within the time named by the decree of the court (which is generally within six months after the master in chancery has made his report of what is due for principal, in terest, and costs), he is for ever foreclosed and barred of his equity of redemption, and the mortgagee becomes the owner of the land in equity, as he was before at law. If the money is paid at the time named, the mortgagee must reconvey the land, and deliver up to the mortgagor all the deeds and writings in his possession relating to the land.
When the mortgagor has mortgaged his equity of redemptiom (which he may do as often as he pleases), every new mortgagee has his claim on the land as a security for his debt, according to the order in which his mortgage stands. This is the general rule ; but it is subject to various exceptions, which depend on par ticular circumstances. Thus a mort gagee of the equity of redemption will be postponed, as to his security, to a subse quent mortgagee who has advanced his money without notice of the prior mort gage, if such subsequent mortgagee should be able to obtain the legal estate.
If a second mortgagee obtains the title deeds of the estate, this will not give him a preference over a prior legal mortgagee, unless the prior mortgagee has parted with or failed to get possession of the title deeds for fraudulent purposes, or through gross negligence. But though the second mortgagee has no priority, when there is neither fraud nor negligence, he will not be compelled to give up the title-deeds to the first mortgagee, unless the first mortgagee pays him his debt and in terest.
A legal mortgage is effected by an in strument which transfers the legal estate. When a mortgagor makes a second mort gage, and uses the form of a legal convey ance, this also is called a legal mortgage, though there is no transfer of any legal estate, for the legal estate is already con veyed to another person. This kind of mortgage may be called a mortgage of an equity of redemption, by way of distin guishing it from the equitable mortgage next mentioned. An agreement in writing to transfer an estate as a security for the repayment of a stun of money, is called an equitable mortgage, because it gives the intended mortgagee a right to have a legal mortgage, and in a court of equity gives him in fact all the rights of a legal mort gagee. A deposit of the title-deeds of an estate, or of the copy of court roll, as a security for a debt contracted at the time of the deposit, or previously to the de posit, constitutes an equitable mortgage. An equitable mortgagee by deposit of title deeds, has a preference over a subsequent purchaser or mortgagee who obtains the legal estate with notice of the equitable mortgage.