profits becomes indispensable to the mortgagee's indemnity.a (1)

(2.) Accountable for the profits.

If the mortgagee obtains possession of the mortgaged premises before foreclosure, he will be accountable for the actual receipts of the net rents and profits, and nothing more, unless they were reduced, or lost by his wilful default, or gross negligence. (2) By taking possession, he imposes upon himself the duty of a provident owner, and he is bound to recover what such an owner would, with reasonable diligence, have received. The net rents and profits are to be ascertained after payment of taxes and ordinary repairs, and other expenses of that character, and the mortgagee is not to be charged with the increased rents and profits arising from the use of any permanent improvements made by himself. He may charge for the expenses of a bailiff or receiver, when it becomes proper to employ one; but he is not entitled to make any charge, by way of commission, for his own trouble in managing the property and collecting and receiving the rents. This is the English rule, and the evident policy of it is to guard against abuse, in cases where there might be a

The interest of the mortgagee before foreclosure is not the subject of sale on execution at law, notwithstanding the debt is due and the estate has become absolute at law. Jackson v. Willard, 4 Johns. Rep. 41, and see 4 Days' R. N. S. 235. 16 Mass. Rep. 345. 3 Pick. Rep. 489. 1 Walker's Miss. Rep. 194. S. P. b Anon. 1 Vern. 44. 1 Eq. Cas. Abr. 328. pl. 1. Robertson v. Campbell, 2 Call, 428. Ballinger v. Worsley, 1 Bibb, 195. Van Buren v. Olmstead, 5 Paige, 1. Felch v. Felch, in Vermont, cited in The Law Reporter for September, 1846. • Williams v. Price, 1 Sim. & Stu. 581. 3 Powell on Mortgages, 949. a. note. Hughes v. Williams, 12 Ves. 493.

d Bell v. Mayor of New-York, 10 Paige, 49.

• Bonethon v. Hockmore, 1 Vern. 316. French v. Baron, 2 Atk. 120. Godfrey v. Watson, 3 ibid. 517. Langstaffe v. Fenwick, 10 Ves. 405. Davis v. Dendey, 3 Madd. Ch. Rep. 95. Clark v. Robbins, 6 Dana's Ken. Rep. 350.

(1) It has been decided in Kentucky, that a mortgage to a surety to secure him, is in effect a security for the debt, and that the creditor is entitled to the benefit of it. Arnold v. Foot, 7 B. Mon. R. 66.

(2) After the mortgage has become due, if the mortgagor, or the person liable for the debt, be insolvent, and the mortgaged premises are insufficient to pay the debt, the mortgagee will in equity be entitled to the rents and profits. Astor v. Turner, 11 Paige R. 436. A mortgagee in possession is chargeable with a reasonable rent as against a subsequent mortgagee, in ascertaining the amount due on his mortgage. Moore v. De Graw, 1 Halst. Ch. R. 346.

strong temptation to it; and the rule has been followed in New-York and Kentucky, while in Massachusetts a commission of five per cent. has been allowed to the assignee of a mortgagee for managing the estate. The mortgagee *167 in possession is likewise allowed for necessary expenditures, in keeping the estate in repair, and in defending the title; but there has been considerable diversity of opinion on the question, whether he was entitled to a charge for beneficial and permanent improvements. The clearing of uncultivated land, though an improvement, was not allowed in Moore v. Cable, on account of the increasing difficulties it would throw in the way of the ability of the debtor to redeem. But lasting improvements in building have been allowed, in England, under peculiar circumstances; and they have been sometimes allowed, and sometimes disallowed in this country. The mortgagee in possession holds the estate

Moore v. Cable, 1 Johns. Ch. Rep. 385. Breckenridge v. Brooks, 2 Marshall, 339. Gibson v. Crehore, 5 Pick, Rep. 146. The Massachusetts Revised Statutes, in 1835, part 3. tit. 3. c. 107, provide, that after the breach of the condition of the mortgage of real estate, the mortgagee or his assignee, may take possession peaceably, or he may recover it by suit; and that, in either case, possession for three years forecloses the right of redemption. He may also enter or recover possession by suit before a breach of the condition, and the three years will not run except from the time of the breach. Upon redemption within the three years, the mortgagee must account for the rents and profits, and will be allowed for the expense of reasonable repairs and improvements, and all other necessary expenses in the care and management of the estate. This would seem to put an end to the allowance of any commission.

b Godfrey v. Watson, 3 Atk. 517. Lord Alvanley, in Hardy v. Rees, 4 Ves. 480. Moore v. Cable, 1 Johns. Rep. 385. Saunders v. Frost, 5 Pick. Rep. 259. The mortgagee is bound to keep the estate in necessary repair, and if he be guilty of wilful default or gross neglect as to repairs, he is responsible for loss and damages occasioned thereby. But he is not bound to repair against the natural effects of waste and decay from time. Russell v. Smith, 1 Anst. 96. Hughes v. Williams, 12 Ves. 495. Wragg v. Denham, 2 Younge & Coll. 117. 121. Dexter v. Arnold, 2 Sumner, 103. He may maintain trespass or trover for cutting and carrying away the timber. Frothingham v. M'Kusick, 24 Maine Rep. 403.

Exton v. Greaves, 1 Vern. 138. Talbot v. Braddill, ibid. 183, note. Quarrell v. Beckford, 1 Madd. Rep. 153, Phil. edit. A tenant for life cannot make beneficial improvements and charge them on the inheritance. Coldecott v. Brown, 2 Hare's Ch. Rep. 144.

d In Conway v. Alexander, 1 Cranch, 218, the Circuit Court for the District of Columbia directed an allowance for permanent improvements; and, though the decree was reversed on appeal, that point was not questioned. So in Ford v. Phil

with duties and obligations analogous in some respects to those of a trustee; and if he takes the renewal of a lease, it is for the benefit of the estate, and not for his own benefit. He can make no gain or profit out of the estate, which he holds merely for his indemnity.a (1)

*(3.) Of registry.

*168

The mortgagee's right depends very essentially upon the registry of his mortgage, and upon the priority of that registry. The policy of this country has been in favour of the certainty and security, as well as convenience of a registry, both as to deeds and mortgages; and by the statute law of

pot, 5 Harr. & Johns. 312, a similar allowance was made in chancery, and that point was untouched in the court of appeals. In Russell v. Blake, 2 Pick. Rep. 505, it was said, that the mortgagee could not be allowed for making anything new, but only for keeping the premises in repair. So, in Quin v. Brittain, 1 Hoffman's Ch. Rep. 353, Clark v. Smith, Saxton's Ch. Rep. in New-Jersey, 121, Dougherty v. M'Colgan, 6 Gill & Johns. 275. S. C. Raymond's Digested Chancery Cases, 342, and in Bell v. Mayor of New-York, 10 Paige, 49, it was held to be a general principle in chancery, though not without exceptions, that a mortgagee in possession is not to be allowed for new improvements. All the cases agree, that the mortgagee is to be allowed the expense of necessary repairs, and beyond that the rule is not inflexible, but it is subject to the discretion of the court, regulated by the justice and equity arising out of the circumstances of each particular case. See, on this subject, Burges' Com. on Colonial and Foreign Laws, vol. ii. 205.

Holdridge v. Gillespie, 2 Johns. Ch. Rep. 30. In England, it is held, that the mortgagee of a term is liable on the covenants in the lease assigned to him, by way of mortgage, though he has never been in possession of the term, or taken the issues and profits thereof. Williams v. Bosanquet, 1 Brod. & Bing. 72. (2) But in New-York it is held, that such a mortgagee is not liable as assignee upon the covenants. Walton v. Cronly, 14 Wendell, 63. Astor v. Miller, 2 Paige, 68. This last decision is conformable to that of Eaton v. Jaques, Doug. Rep. 455. By the Massachusetts Revised Statutes of 1835, part 2. tit. 4 c. 65. sec. 10. 15, the interest of the mortgagee before foreclosure, is deemed personal assets in the hands of executors and administrators. He is chargeable with waste, but what is waste in respect to clearing the land for timber, must depend ou circumstances. Givens v. M'Calmont, 4 Watts, 460.

(1) On the subject of allowances to mortgagees in possession, see the learned and able note of Mr. Coventry, 8 Powell on Mortgages, 956, note (Q), Rand's Ed.

(2) But, it seems, an equitable mortgagee of a term is not liable on the covenants of the lease, though he has taken possession, until he has made himself legal assignee. Moore v. Gregg, 2 Phillips' Ch. R. 717.

Renewed leases from churches, and by the trustees of charities, will, in general, for the protection of equitable rights, be treated as continuations of the leases renewed. 3 Sandf. Ch. R. 130. 5 Paige R. 268.

New-York, every conveyance of real estate, whether absolutely, or by way of mortgage, must be recorded in the clerk's office of the county in which the real estate is situated, after being duly proved or acknowledged, and certified, as the law prescribes. If not recorded, it is void as against any subsequent purchaser or mortgagee, in good faith, and for a valuable consideration, of the same estate, or any portion thereof, whose conveyance shall be first duly recorded. It may be said, generally, that this is the substance of the statute law on the subject in every state of the Union; but in some of them the recording is still more severely enforced, and deeds are declared void, at least to all third persons, unless recorded.b If the question of right between a mortgagee, and a subsequent mortgagee or purchaser of the same estate, depended entirely upon the existence and priority of the registry, it would turn upon a simple matter of fact of the easiest solution, and it would undoubtedly remove much opportunity for litigation. The French ordinance of 1747, allowed to creditors and purchasers, having notice of a deed containing a substitution of an estate prior to their contract or *169 *purchase of the same, to object to the want of registry of the deed according to the requisition of the ordinance.

New-York Revised Statutes, vol. i. 756, sec. 1. lbid. 762, sec. 37. The term purchaser, in the statute, is declared to embrace every mortgagee and his assignee. A purchaser for a valuable consideration, within the meaning of the registry act, is one who has advanced a new consideration for the estate conveyed, or who has relinquished some security for a pre-existing debt due him. The mere receiving of a conveyance in payment of a pre-existing debt is not sufficient to give him a preference over a prior unregistered mortgage. Dickerson v. Tillinghast, 4 Paige, 215.

In Pennsylvania, no deed or mortgage is good unless recorded in six, and in Delaware, no mortgage is good unless recorded in twelve months; and in Massachusetts, Rhode Island, Connecticut, and some other states, the deed does not operate until recorded, except as between the parties and their heirs. In Ohio, deeds must be recorded in six months; and an unrecorded deed is void against a subsequent purchaser for valuable consideration, without notice of the deed, whether the subsequent deed be or be not recorded. In Georgia, mortgages of real or personal property are to be recorded within three months from their date, or they lose their preference. Prince's Dig. edit. 1836, p. 165. In Indiana, mortgages must be recorded or deposited for record, in ninety days, and in Kentucky, in sixty days, to be valid against creditors. "The Louisiana Code, art. 3317. 3333, requires all mortgages, whether conventional, legal or judicial, to be recorded, and their effect ceases unless renewed within ten years. But the rule does not apply to mortgages to which husbands, tutors and curators are subjected by operation of law.

The ordinance was framed by an illustrious magistrate, the Chancellor d'Aguesseau, and the commentators upon it laid it down as a fixed principle, that not even the most actual and direct notice would countervail the want of registration; so that if a person was a witness, or even a party to the deed of substitution, still if it was not registered, he might safely purchase the property substituted, or lend money upon a mortgage of it. The policy of so rigorous a rule was to establish a clear and certain standard of decision for the case, which would be incapable of vibration, and prevent the evils of litigation, uncertainty and fraud. But Pothier questions the wisdom of the rule, inasmuch as actual notice supplies the want, and the object of the registry. The principle of the ordinance has, however, been continued, and applied to some special cases, in the Napoleon code.b

A more reasonable doctrine prevails in the English and American law; and it is a settled rule, that if a subsequent purchaser or mortgagee, whose deed is registered, had notice, at the time of making his contract, of the prior unregistered deed, he shall not avail himself of the priority of his registry to defeat it; and the prior unregistered deed is the same to him as if it had been registered. His purchase is justly considered, in cases where the conduct of the first mortgagee has been fair, as made in bad faith; and it would ill comport with the honour of the law, and the wisdom of the *170 administration of justice, that courts should blind their eyes to such fraudulent dealing, and suffer it to remain triumphant. If the second purchaser has, in fact, notice, the intent of the registry is answered; and to permit him to hold against the first purchaser, would be to convert the statute into an engine of fraud. And, by analogy to the

■ Com. de 'lord. de Louis XV., sur les Substitutions, par M. Furgole, cited by Mr. Butler, note 249, sec. 11 to Co. Litt. lib. 3. Pothier, Traité des Substitutions, art. 4. sec. 6.

Code Civil, No. 1071. Le défaut de transcription ne pourra être supléé ni regardé comme couvert par la connaissance que les créanciers ou les tiers acquéreurs pourraient avoir eue de la disposition par d'autres voies que celle de la transcription. This regulation is almost in the very words of the ordinance respecting French entails, promulgated under the auspices of Chancellor d'Aguesseau. Œuvres d'Aguesseau, tom. xii. 476, octavo edit.