Front Page Titles (by Subject) CHAPTER 9: THE MORTGAGE - A Concise History of the Common Law
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CHAPTER 9: THE MORTGAGE - Theodore Frank Thomas Plucknett, A Concise History of the Common Law 
A Concise History of the Common Law (Indianapolis: Liberty Fund, 2010).
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EARLY FORMS OF GAGE
The development of the mortgage is an interesting example of the interplay between legal doctrine and conveyancing custom. The gage, which is the root idea of the transaction, is really a relic of the days when credit was not yet in existence.1 It has been conjectured that in its oldest form the gage (in Latin vadium, and in modern English pledge2 ) was payment, subject only to the option of the purchaser to substitute at a later time payment in a different kind. Under this arrangement the handing over of the gage settled the debt; the creditor could not demand the substitution of a different kind of payment, and the debtor had no way of recovering any excess value in the gage over the price which he could substitute later. According to this hypothesis, the primitive gage was capable of development in two directions: first, the gage may become a slight object whose transfer is treated as a binding form in a contract for future payment; or, the transaction may take its modern aspect of security only for the future payment of the principal debt. Procedure, judicial and extra-judicial, probably assisted this transformation. The royal courts soon make a practice of taking gages of litigants and security for their obedience, and the long history of the law of distress is really concerned with the compulsory taking of gages.3
Here we are particularly concerned with the gage of land, which appears in England as early as Domesday Book. A century later Glanvill describes it,4 first of all stating that if the king’s court is to take notice of a gage it is essential that the gagee be in possession; otherwise, he says, the same land might be engaged to successive creditors, creating a situation much too complicated for royal justice to unravel.1 The gagee may hold in several different ways. For example, the land may be given for a term of years with a covenant that at the end of the term the debt must be paid; on default the gagee will be entitled to hold the property henceforth as his own. Or, on the other hand, the gift may be for a term of years without containing a covenant releasing the title to the creditor on default; in such a case it will apparently be necessary to obtain the judgment of the court before the creditor’s title becomes complete. Another possibility was a charter accompanied by an indenture which imposed conditions upon its effectiveness.2 As we have seen, the gagee is always in possession and receiving the profits of the land. If those profits are applied to the reduction of the debt, Glanvill tells us the transaction is just and lawful; if, however, the profits do not reduce the debt but are taken by the gagee, then the proceeding is usurious, dishonest and sinful, and is therefore called mortuum vadium, a mortgage.3 The mortgage is, nevertheless, legal as far as the king’s court is concerned, but if the mortgagee dies, his property will be forfeit, like that of other usurers.
This type of gage as described by Glanvill finally fell into disuse. Its obvious disadvantages were that the debtor was always out of possession; that although the gagee was in possession yet he was not protected by the petty assizes, and so if he were ejected he had no means of recovering his security; and worse still, the debtor himself might eject the gagee and thereby reduce him to the position of an unsecured creditor.4
THE GAGE IN BRACTON’S DAY
When we come to Bracton we see attempts to fit the gage into the scheme of estates. Gages may therefore be effected by selling a term of years for a sum down; the advantage of this is that there is no debt at all, and, therefore, no usury, and no gage, while the termor is now protected against the lessor.5 An alternative arrangement was a true gage for a term of years with the condition that if the debt is not paid at the end the lessee shall hold over in fee. This shifting fee for a time raised no technical difficulties.6 It is obvious that several forms were used, and sometimes in combination. Thus the Year Book of 1314 tells of a lease for five years “by way of mortgage” whereof indentures were made, but accompanied by a deed of feoffment in fee simple with warranty in common form. Bereford, C.J., compelled the tenant (who relied on the feoffment) to answer to the indenture.1 The very next case was one of a mortgage by feoffment, with a covenant in a separate deed for the defeasance of the feoffment and the “reversion” of the land.2 One early case even allowed a charter of feoffment to be governed by a parol condition.3
Britton makes the significant remark that there is no equity of redemption although some people think there ought to be.4 Furthermore, a common law judge in 1314 used these remarkable words: “When a man pledges tenements his intention is not to grant an estate of inheritance, but to secure the payment of the money which he borrowed promptly, and to get back the tenements when he had paid the money.”5 If the common law had kept to this doctrine it would have anticipated by several centuries the achievements of Chancery; very soon, however, the common law courts lost the equitable spirit which distinguished them in the reign of Edward II, and construed the terms of a mortgage strictly according to the letter.
While the Jews were in England matters were in a much more satisfactory state. They had their own law and customs and the Crown maintained a special court (a division of the Exchequer) for their enforcement. Among these customs was the possibility of a gage in which the gagee was not bound to take possession; gages to Jews were, however, subject to a system of registration established by Richard I.
“Very early in the thirteenth century we may see an abbot searching the register, or rather the chest, of Jewish mortgages at York in quite modern fashion. A little later an abbot of the same house, when buying land, has to buy up many encumbrances that had been given to Jews, but has difficulty in doing so because some of them have been transferred. The debts due to Israelites were by the King’s licence freely bought and sold when as yet there was no other traffic in obligations. We may guess that, if the Jews had not been expelled from England, the clumsy mortgage by way of conditional conveyance would have given way before a simpler method of securing debts, and would not still be encumbering our modern law.”1
From the fourteenth century onwards we therefore find the common law courts construing mortgages strictly—so strictly, that for practical purposes other and more convenient devices had to be invented under statutory authority, such as the elegit and obligations under the statutes of merchants and staples.2 The great advantage of these forms was that they were statutory, enacted with a careful explanation of their real nature as securities, and with an express repeal of such common law principles as would have impeded their operation. The old common law mortgages, on the other hand, suffered from the incurable defect that they employed formulas which contradicted the true nature of the operation—they spoke of feoffments in fee, and leases for years, when the transaction was really neither—and such forms inevitably attracted several doctrines of seisin and the derivation of estates, which tended to defeat their purpose.
LITTLETON ON MORTGAGES
The fifteenth-century type of mortgage is described by Littleton, who incidentally gives a novel reason for the word:
“If a feoffment be made upon such a condition that if the feoffor pay to the feoffee at a certain day forty pounds of money, that then the feoffor may re-enter; then the feoffee is called tenant in mortgage, which is as much as to say in French mort gage and in Latin mortuum vadium. And it seemeth that the reason why it is called mortgage is that it is doubtful whether the feoffor will pay at the day limited such sum; and if he doth not pay, then the land which is put in pledge upon condition for the payment of the money is taken from him for ever, and so dead to him on condition. And if he doth pay the money, then the pledge is dead as to the tenant.”3
He goes on to state that the feoffee may take for years, for life or in tail, instead of in fee; that if no date is limited, that then the redemption can only be made by the feoffor, and that his heir cannot redeem; if a date is fixed, however, and the feoffor die before it, then his heir can redeem on the day. He states in rather less confident tones his view that if the feoffee die within the term, tender should be made to his executors although his heir will have the land; if the feoffor die, his executors should render.4
The general scheme is therefore a feoffment in fee, with a provision for re-entry upon a condition subsequent. Such an arrangement in the early fourteenth century was certainly invalid;1 attempts to express the situation in terms of reversions or remainders after a fee simple, or in defeasance of a fee simple, were no more satisfactory,2 and so Littleton had no alternative but to classify it as an “estate upon condition”. The courts certainly had a long-standing distrust of such devices. Littleton assumes that in his day the forms he gives were valid, but the scanty annotations suggest that there was little authority for his statement, and it may be conjectured that the common law mortgage was not much used; it is clear, on the other hand, that the statutory forms of security were popular, and very widely employed.
THE CLASSICAL COMMON LAW MORTGAGE
There is great obscurity over the history of mortgages in the fifteenth and sixteenth centuries. At what date it became usual to effect them by the newer device of a feoffment with a covenant for re-conveyance (instead of a condition of defeasance or of re-entry) it seems impossible to say.3 The law of conditions, defeasance and entry was certainly growing steadily more unsatisfactory, and this may account for the preference for a covenant to re-convey which would be actionable by a writ of covenant. Perhaps the greatest factor of the change was the growing strength of equity, which concurrently with common law would compel re-conveyance on payment (which many creditors were loth to do), and was already drawing the whole transaction, and not merely certain aspects of it, within its jurisdiction. The covenant, however, would be enforced by the common law courts strictly as it stood. In this respect it closely resembled the widely used bond for £10 defeasible on payment of £5 on a certain date. In both cases it was the mission of Chancery to give relief against penalties which were enforceable at law.4 In the present state of knowledge, it seems that the classical form of mortgage was actually established subsequent to equity’s entry into the field, and with a definite recognition that mortgages were to come before Chancery rather than the common law courts.5
A further obscure point is the slow change in practice by which the mortgagor was allowed to remain in possession. This is certainly postmediaeval, and, indeed, as late as the middle of the seventeenth century it seems that mortgagors generally gave up possession to the mortgagee.1 It is significant that some curious forms of mortgage, devised by the eminent conveyancer, Sir Orlando Bridgman, were effected by giving the mortgagee a long term of years (to which conditions and provisos were more easily attached than to fees), and that among the provisos was a clause permitting the mortgagor to retain possession.2
In the sixteenth century Chancery began to give relief against penalties and it may be that it was partly on this basis that Chancery also intervened in mortgage transactions at the close of the sixteenth century, and developed its doctrine of the equity of redemption. Another factor, possibly of equal importance, may well have been Chancery’s insistence that man, who ought in conscience to convey land to another, could be compelled to do so. This principle, applied to one type of situation, made possible the development of the later trust;3 applied to the mortgage, it made possible the equity of redemption. It is, however, from the close of the seventeenth century, when Sir Orlando Bridgman was Lord Keeper, and after him Lord Nottingham, that equity began to elaborate a considerable body of law,4 some of which modified the common law mortgage, while the rest applied to types of mortgages which were peculiar to equity, such as second and subsequent mortgages, and the remarkable equitable mortgage effected by merely depositing title deeds—which was clearly contrary to the words and the policy of the Statute of Frauds.5 Conveyancers themselves made the valuable addition (which the legislature subsequently developed) of the power of sale which has made the modern mortgage so effective an instrument, originally prompted, it seems, by a desire to avoid the slow and costly foreclosure proceedings in Chancery.
STATUTES MERCHANT, STATUTES STAPLE, ELEGIT
The fact that the mortgage was not a very satisfactory institution is shown by the continued use of the mediaeval statutes merchant and staple. There was much legislation6 and both merchants and landowners made much use of them. By means of a “statute” a debtor could voluntarily make his land a security for debt. If judgment was given against him, the judgment creditor could reach his land by the writ of elegit. A creditor in possession by either method had a “freehold” and (by statute) was protected by the assize of novel disseisin. Thus a great breach was made in the ancient principle that the sacred freehold was not liable to creditors—but at the expense of much complication in the law of land.
See Wigmore, The Pledge-Idea, Harvard Law Review, x. 321, 389, ibid., xi. 18; and Hazeltine, Geschichte des englischen Pfandrechts; Hazeltine, The Gage of Land, Essays in Anglo-American Legal History, iii. 636.
Remember that the mediaeval “pledge” (plegius) is almost always a person, not a thing. The Teutonic wed has come down to us by various routes as “gage”, “engagement”, “wage”, “wager”, and “wedding”.
Distress is at least as old as II Cnut, 19 (1027-1034), and the distrainor held as a gagee only; the right of selling a distress to satisfy a debt occurs in a few late local customs, but did not enter the common law until 2 Will. & Mary, sess. 1, c. 5 (1690).
Glanvill, x. 6-12.
Glanvill, x. 8.
For an example of the difficulty caused by this sort of transaction, see Y.BB. Edward II Selden Society), xviii. 36, 46. Cf. below, p. 605 n. 1.
The corresponding vifgage is a term of Norman law, but does not appear in English documents; Pollock and Maitland, ii. 119 n. 2.
Glanvill, x. 11.
Above, p. 572.
Bracton, f. 268 b; it will be remembered that such springing and shifting fees were common in connection with the fee conditional, already mentioned.
Y.BB. Edward II (Selden Society), xviii. 35 (1314). The charter was delivered to the neutral custody of a friar. Bereford’s practice in his private investments seems to reflect the equitable spirit of his judgment. See Sir Christopher Hatton’s Book of Seals (ed. D. M. Stenton), no. 251.
Y.BB. Edward II (Selden Society), xviii. 36, 50 (1314).
Y.B. 30 & 31 Edw. I (Rolls Series), 210 (1302). The case has many interesting features. The mortgagee refused the money when tendered, so the mortgagor paid it into the county court, re-entered the land, and was seised for a day and a night. This slight seisin, aided by her good title, enabled her to succeed in novel disseisin against the mortgagor who had ejected her and pleaded the charter of feoffment. For lengthy arguments in a similar but more complicated case (where also the mortgagee refused a tender) see Y.BB. Edward II (Selden Society), xi. 169-181 (1318).
Britton (ed. Nichols), ii. 128; the hope came from the heirs of improvident ancestors, but Britton replies that alienation is free, and so the heirs have suffered no wrong.
Eyre of Kent (Selden Society), iii. 85; below, p. 607.
Pollock and Maitland, ii. 124. Much detail is available in Select Pleas of the Jewish Exchequer (ed. Rigg, Selden Society); Calendar of Plea Rolls in the Exchequer of Jews (ed. Rigg and Jenkinson, Jewish Historical Society); Starrs and Jewish Charters (ed. Loewe, Jewish Historical Society).
Above, pp. 390-394. Elegit may also have Jewish affiliations; Pollock and Maitland, i. 475.
Littleton, s. 332. For a charter in fee simple, with livery “to hold until payment”, see Y.B. 21 Edward III, Pasch. no. 2 (1347).
Littleton, ss. 333, 337, 339.
Eyre of Kent (Selden Society), iii. 85, 132 (1314), where the rule about livery of seisin on different terms from those in the deed is the opposite of that in Littleton, s. 359.
On this, see H. D. Hazeltine’s valuable introduction to R. W. Turner, Equity of Redemption, xxxviii.
Exceptionally, there is an early example in Bracton’s Note Book, no. 458 (1230).
Some lurid examples of the unconscionable use of these instruments by a man whom even Chancery and Star Chamber failed to reach, in consequence of his influence at the court of Elizabeth, will be found in the valuable documents appended to Leslie Hotson, Shakespeare and Shallow.
This is the conclusion of Professor Hazeltine, loc. cit. xli.
Turner, Equity of Redemption, 90.
Holdsworth, vii. 365.
Above, p. 602.
For a valuable history of this period in considerable detail, see Turner, op. cit. The Prolegomena of Chancery and Equity, by Lord Nottingham, will appear in the “Cambridge Studies in Legal History”, and his own notes of his decisions will come from the Selden Society; both works are edited by D. E. C. Yale.
Fitzjames v. Fitzjames (1673), Finch, 10, is the earliest example (and is a little earlier than the statute); Russel v. Russel (1783), 1 Bro. C.C. 269, stated the subtle reasons for taking the case out of the Statute of Frauds.
See Hubert Hall, Select Cases in Law Merchant (Selden Society) for a list of the statutes (iii. 126), and the whole of vol. iii for illustrative cases.