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Equitable Mortgage

lien, security, rep, st, ala and am

EQUITABLE MORTGAGE. A lien upon real estate of such a character that it is rec ognized in equity as a security for the pay ment of money and is treated as a mortgage. A mortgage of a merely equitable estate or interest is also so called.

Such a mortgage may exist by a deposit with the lender of money of the title-deeds to an estate; Story, Eq. Jur. § 1020; Bisph. Eq. 161; 1 Bro. Ch. C. 269 ; 17 Yes. 230 ; Man deville v. Welch, 5 Wheat. (U. S.) 277, 5 L. Ed. 87 ; 20 Beay. 607. They must have been deposited as a present, bona fide security ; 1 Washb. R. P. 503 ; and the mortgagee must show notice to affect a subsequent mortgagee of record-;. Hall v. McDuff, 24 Me. 311; 3 Hare 416 ; Story, Eq. Jur. § 1020. Such mort gages are recognized in some states ; Hall v. McDuff, 24 Me. 311; Williams v. Stratton, 10 Smedes & M. (Miss.) 418 ; Hackett v. Reynolds, 4 R. I. 512 ; but under the usual system of the registration of deeds are of in frequent occurrence.

The doctrine is repudiated in many juris dictions ; Lehman, Durr & Co. v. Collins, 69 Ala. 127 ; Pierce v. Parrish, 111 Ga. 725, 37 S. E. 79; Gothard v. Flynn, 25 Miss. 58 ; Bloomfield State Bank v. Miller, 55 Neb. 243, 75 N. W. 569, 44 L. R. A. 387,70 Am. St. Rep. 381; Harper v. Spainhout, 64 N. C. 629; Hackett v. Watts, 138 Mo. 502, 40 S. W. 113; on the ground that it would tend to embar rass lands with secret trusts ; Lehman, Durr & Co. v. Collins, 69 Ala. 127; as coming in conflict with the statute of frauds, which provides that all agreements for the sale of land, etc., should be in writing, etc.; Wil liams v. Stratton, 10 • Smedes & M. (Miss.) 418; and as being contrary to acts for the recording of mortgages, and for recording liens for public information ; Shitz v. Dief fenbach, 3 Pa. 233. In Georgia the code de clares that the delivery of title deeds creates no pledge ; Davis v. Davis, 88 Ga. 191, 14 S. E. 194. When, however, a written agree ment accompanies the deposit of the title deeds, such agreement may become the, basis for an equitable lien ; Woodruff v. Adair, 131 Ala. 530, 32 South. 515.

• No particular formality is necessary in or der to make a valid mortgage between the parties thereto ; Frick v. Fritz, 115 Ia. 438, 88 N. W. 961, 91 Am. St. Rep. 165. If the trans action resolves itself into a security, whatever may be its form, in equity it is a mortgage; Flagg v. Mann, 2 Sum. 533, Fed. Cas. No. 4,847. A lien created by contract and not sufficient as a legal mortgage, will generally be regarded as partaking of the nature of an equitable mortgage ; Kyle v. Bellenger, 79 Ala. 516. Though a lien may not be express ed in terms, equity will imply a security from the nature of the transaction, and give effect to it, as such, in furtherance of the agree ment of the parties, if there appears an in tention to create a security ; Wood v. Holly Mfg. Co., 100 Ala. 326, 13 South. 948, 46 Am. St. Rep. 56. The form of the writing is not important provided it sufficiently appears that it was thereby intended to create a se curity ; Howard v. Iron & Land Co., 62 Minn. 298, 64 N. W. 896 ; and to the same ef fect, Higgins v. Manson, 126 Cal. 467, 58 Pac. 907, 77 Am. St. Rep. 192 ; Martin v. Bowen, 51 N. J. Eq. 452, 26 Atl. 823 ; Dulaney v. Willis, 95 Va. 606, 29 S. E. 324, 64 Am. St. Rep. 815 ; Hackett v. Watts, 138 Mo. 502, 40 S. W. 113.

To place in the hands of another a deed to real estate, together with a written memo randum stating that the property is pledged to secure the other against loss from becom ing a surety for the owner, will create an equitable lien enforceable against the own er's assignee for creditors ; In re Snyder, 138 Ia. 553, 114 N. W. 615, 19 L. R. A. (N. S.) 206.

Such a mortgage has been said to exist in favor of the vendor of real estate as security for purchase-money due from the purchaser ; in which case a lien is recognized in some jurisdictions ; 15 Ves. 339 ; 1. Bro. Ch. C. 420, 424, n. It is occasionally spoken of as an equitable mortgage; Moreton v. Harrison, 1 Bland' (Md.) 491, though it is doubtful if it is to be so considered. It is properly termed vendor's lien, which see. See also LIEN.