MORTGAGE. of equity to decree an account against the mortgagor, for profits which the mortgagee permitted him to receive for his own use'. A principle which is so strictly adhered to, that even though the mortgage security be an estate for lives only, and is become insufficient by the death of cestuis que vie, the court will not depart from the rule". But if the mortgagee enter upon and take possession of the estate, he becomes in the nature of a bailiff to the mortgagor, and will be subject to account for the profits*. So, if he be put into immediate possession, and the profits of the estate evidently exceed the amount of the interest, the mortgagor may exhibit his bill for an account, and he shall not retain the profits in lieu of the interest, but shall account for what he had received out of the estate. For even in Welsh mortgages, where the mortgagee is put into possession immediately, under a proviso to have a re-conveyance on payment of the principal money, and the profits are to go against the interest; if the annual value greatly exceed legal interest for the sum borrowed, the court will decree an account, notwithstanding there may be an agreement forretaining the profits against the interest.

The mortgagee is answerable for the rents and profits of the estate whilst in his possession: if, therefore, he assign over his mortgage, without assent of the mortgagor, to an insolvent person, he will be bound to answer the profits, both before and after the assignment, though assigned only for his own debt; for being under a trust to answer the profits of the pledge, it is a breach of trust to assign such pledge to an insolvent person 2, But he will not be obliged to account according to the utmost value of the lands, but only for what it actually produced, or would have pro

duced, had he not been guilty of fraud or wilful default; MORTGAGE. (as, if he turned out a sufficient tenant, that held it at so much rent, or refused to accept a sufficient tenant, that would have given so much for it); for it is the laches of the mortgagor that he lets the lands lapse into the hands of the mortgagee, and when it does, he is only a bailiff for what he actually receives, and is not bound to the trouble and pains of making the most of what is another's (1)".

It will be otherwise, however, in the case of his entering upon the estate, and thereby keeping out other creditors after notice; when he will, it seems, be chargeable as well with the profits he might have received after his entry as those which he actually did receive. For, where a mortgagee had obtained judgment in ejectment, and entered on the mortgaged estates, and thereby prevented other creditors who had subsequent securities from entering, and yet permitted the mortgagor to take the profits; the court decreed (on a bill filed by the other creditors to redeem) that the mortgagee should be charged with all the profits he had or might have received after his entry upon the estate. But such account is to be taken only from the time of notice of such subsequent incumbrances; for until then his negligence did no injury c.

And so, if a mortgagee permit the mortgagor to make

(1) But if the mortgagor make proof that the estate was let at such a price, whilst in the hands of the mortgagee, that will be deemed the rate at which it was let the whole time, unless the mortgagee show the contrary, which, as being let by him, it is in his power to do. Blacklock v. Barnes, Sel. Ca. Ch. 53;

MORTGAGE.

use of his incumbrance to keep out other creditors, he will be charged with the profits from the time that they would have had a remedy, had it not been for his interposition; for equity will not suffer a man to make use of his securities to protect a debtor from the just demands of his creditors. Where, therefore, a mortgagor became a bankrupt, and the assignees brought an ejectment for the recovery of the lands mortgaged, the mortgagee having refused to enter, and suffered the bankrupt to take the profits, it was decreed that he should be charged with the profits from the time of the ejectment delivered '.

So also, if a mortgagee combine with the tenant in possession, who refuses to pay his rent, and suffers him to make use of the mortgage to cover himself from legal process taken out by the mortgagor to evict him, he shall be answerable for the profits of the lands in mortgage. Thus, where G. who was a mortgagee under B. had brought an ejectment and recovered judgment against an estate, of which H. was in possession by virtue of a lease for years, but for which he paid no rent, being insolvent, and G. being in combination with H. refused to take out execution, and B. could not eject H. by reason of G's judgment; it was ordered, that unless G. took out execution before the end of the term, he should be answerable for the profits, as in case of wilful default".

But an assignee, after several assignments, will not, it seems, be obliged to account for profits, before his own time. For, where a bill to redeem was against a mortgagee, who came in as an assignee at the third hand, the Lord Keeper said, that though there had been no stint put to the time at which a mortgage was to be redeemed, and the defendant must therefore account; yet as he came in at an

Chapman v. Tanner, 1 Vern. 267; 3 Bac. Abr. 658.

e

Duke of Buckingham. v. Sir R. Gayer, 1 Vern. 258.

old hand, the account should be taken so far only as went MORTGAGE. in discount of his money, not for the surplusage.

And a mortgagee will be allowed, in his accounts of rents and profits received, all such costs and expenses which he shall have been put to by the mortgagor in defending his mortgage, and will not be held down to a taxation at law. And in a case where the mortgagee, fearing his mortgage would have been defeated at law, obtained administration, as principal creditor, in the Spiritual Court, he was allowed the costs expended there also.

So, as has been before observed, will a mortgagee be allowed a reasonable salary for managing the mortgaged estates after he is in possession.

IV. OF INTEREST PAYABLE IN RESPECT OF A
MORTGAGE.

IN considering this head of inquiry, I shall endeavour to show, 1. What interest may be taken for money lent upon mortgage: 2.. In what cases interest shall become principal, and carry interest: 3. Who shall be chargeable with interest on a mortgage: 4. To whom interest may be paid and 5. What tender of the principal money shall cause interest to cease.

1. Of the Rate of Interest.

The interest of money, whether payable on a mortgage, lent upon mortgage, or otherwise, is by the 12 Anne, stat. 2, c. 16, sec. 1, limited to 5 per cent. per annum. Upon which statute, it has been held, that not only mortgages, where more than 5 per cent. is made payable, will be void, but also those where no more than that interest is

f Pearson v. Pulley, 1 Ch. * Ramsden v. Langley, 2 Cas. 102; and see Cloberry Vern. 536. v. Symonds, 2 Ch. Rep. 392.

MORTGAGE. made payable, if in fact more be actually taken (1). But by the 14 Geo. 3, c. 79, s. 2, interest not exceeding 6 per cent. per annum may be taken for money bonâ fide lent on mortgage of lands in Ireland, or in the colonies or plantations in the West Indies (2).

And the reservation of a larger interest by way of penalty, in case the legal interest be not paid on the day appointed, although not perhaps common, yet would be relieved against in equity 1 (3).

i

But where the increase of interest payable on default does not exceed the legal rate, and indulgence has been given, it will be allowed; it not being considered, in such case, as a penalty, but as a liquidated satisfaction, fixed and agreed upon by the parties *.

h

3 Atk. 154.

iStrode v. Parker, 2 Vern. 316; Holles v. Wyse, Ibid.

289; Nichols v. Maynard, 3 Atk. 520.

* Burton et al. v. Slattery, 3 Bro. Parl. Ca. 68.

(1) And parol evidence will be admitted to show usurious interest, under this statute, taken by the mortgagee, though legal interest only be reserved upon the face of the deed. See 3 Atk. 154.

(2) The statute 14 Geo. 3, being, however, an enabling act, must, it should seem, be strictly construed to extend to the particular cases only expressly there mentioned; and therefore mortgages and other securities not affecting land, but personalty only, as a bond or the like, might still be contended to be void as usurious if a greater rate of interest than 5 per cent. be made payable. And see Dewar v. Span, 3 Term Rep. 425.

(3) A covenant, however, for payment of an additional 1 per cent. beyond interest allowed by law, in case of failure in payment of the reserved rate of interest, has been allowed; the court considering this covenant as the express agreement of the parties, and not to be relieved against as a penalty. Marquis of Halifax v. Higgens, 2 Vern. 134; Prec. Ch. 161; but quære, as this would seem to be a mere evasion of the statute, and equally in the nature of a penalty as the case in the text.