Mortgage at Common Law

January 24, 2007

At common law the mortgagee was at first treated as being the legal owner. His estate was devisable and descended to his heirs. After breach of the condition he could oust the mortgagor by an action in ejectment, or by any other means that did not involve a breach of the peace. In equity, however, the rights of the mortgagee passed to his personal representatives, and the mortgagor was regarded as the real owner of the land. These conflicting views were carried so far that even after the courts of law had recognized the title of the mortgagee as absolute, and had put him in possession, the courts of equity enforced what they called ‘the mortgagor’s equitable right of redemption.’ These contradictory decisions gave rise to much confusion. The judges who had been trained in the rigorous school of the common law regarded the equitable rule as an offensive innovation. But the common-law rule was so harsh, and, in many cases, so extremely unjust, that the equitable rule grew in favor, and was vigorously invoked. In course of time even the courts of law came to recognize the right of the mortgagor to redeem after forfeiture. Despite this gradual and partial evolution, the mortgagee was still regarded as in some respects the legal owner of the mortgaged premises. He could maintain ejectment, and assert other legal remedies, subject only to the mortgagor’s right of redemption. It was finally appreciated, however, that the so-called ownership of the mortgagee was the merest fiction, because the only strict legal right he had left was to collect the debt secured by the mortgage. The mortgagee’s estate had been whittled down until it disappeared altogether, and there was left him nothing more than a lien under his mortgage. Under these circumstances it was, of course, absurd and unjust to permit such a creditor, for that is all that the mortgagee was, to take possession of his debtor’s property without the latter’s consent, or without first enforcing his rights under his lien. When the estate in fee was regarded as belonging to the mortgagee, the right of possession naturally followed ownership; but, when title was held to remain in the mortgagor until divested by sale under foreclosure, the possessory right of the mortgagee became a legal anomaly that could not survive.

Barson v. Mulligan, 84 N.E. 75, 78 (N.Y. 1908).

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