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upon breach of the condition. The definition of the text is new. It is designed to make a clear distinction between a pledge and a mortgage, and at the same time to avoid the idea of a mortgage being in any sense a transfer. “Hypothecation” is the proper word for this purpose, as it has a well recognized meaning in the civil and admiralty law, corresponding precisely to the design of the Code.-See Stainbank vs. Sheppard, 13 C. B., p. 441. Under the present law, three classes of cases are to be considered. 1. Where the debtor retains the general title to the property and gives possession only to the creditor. This is a pledge. 2. Where the debtor retains the possession and use, giving the creditor only some right to be satisfied out of the property. This is a mortgage. The distinction is not that one relates to personal property and the other to real, but that one involves change of possession, while the other relates to or affects the change of title. See Cortelyou vs. Lansing, 2 Caines Cas., p. 199; Barrow vs. Paxton, 5 Johns., p. 658; McLean vs. Walker, 10 id., p. 471; Brownell vs. Hawkins, 4 Barb., p. 491; Bank of Rochester vs. Jones, 4 N. Y., p. 497, and 4 Denio, p. 489; Stevens vs. March, 4 Denio, p. 227; Power vs. Lester, 23 N. Y., pp. 528, 531. 3. A class of cases presenting greater difficulty arises where the property is of a kind not capable of actual manual delivery, unaccompanied by the transfer of some muniments of title, as in the case of shares of stock in an incorporated company. Here a pledge may be created by a written transfer, or authority to require a transfer on the books of the company; and the transaction may be a pledge, and not a mortgage, notwithstanding that the legal title passes to the pledgee. Thus, where there was a transfer of stock, absolute in its terms, but a note for borrowed money, given by the plaintiff to the defendant at the time, stated that the stock was posited as collateral security," it was held that the transaction was a pledge and not a mortgage.- Wilson vs. Little, 2 N. Y., p. 443; aff'ing S. C., 1 Sandf., p. 351; Vaupell vs. Woodward, 2 Sandf. Ch., p. 143; compare Huntington vs. Mather, 2 Barb., p. 538; S. C., 6 N. Y. Leg. Obs., p. 206; Hasbrouck vs. Vandervoort, 4 Sandf., p. 74; McLean vs. Walker, 10 Johns., p. 471; Garlick vs. James, 12 id., p. 146; White vs. Platt, 5 Den., p. 269; Tompkins vs. Tysen, 16 Barb., p. 456; Wheeler vs. Newbould, 16 N. Y., p. 392; Lewis vs. Graham, 4 Abb. Pr., p. 106; Lewis vs. Varnum, 12 Abb. Pr., p. 305.

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Property adversely held may be mortgaged. To be in writing.

2921. A mortgage may be created upon property held adversely to the mortgagor.

2922. A mortgage can be created, renewed, or extended, only by writing, executed with the formalities required in the case of a grant of real property.

NOTE.-Stoddard vs. Hart, 23 N. Y., p. 556. This section does not recognize a mere deposit of title deeds, as constituting a mortgage. In England the rule is well established and familiar that an advance of money upon a deposit of title deeds operates as an equitable mortgage. Strictly, it is evidence of an agreement to give a mortgage, which is treated in a Court of Equity as a mortgage, and enforced as such. In this State there has never been any such general practice of depositing title deeds as renders it desirable to recognize the fact of deposit as one method of mortgaging the land; indeed, it is difficult to see how, under our system of recording title deeds and treating the record as evidence of the title, such a practice can obtain, to any extent. If it could, it ought not to be encouraged; since it contravenes the policy of the Statute of Frauds, and of the recording Acts. For these reasons no mention is made in the text of a deposit of deeds as a method of making a mortgage. Cases in which such deposit is made under circumstances which evince an agreement to give a mortgage, or create a lien upon the deed, are left to the application of the general rules relative to the specific performance of contracts, and to liens. As to the present law in New York upon this question, see Rockwell vs. Hobby, 2 Sandf. Ch., p. 9; Stoddard vs. Hart, 23 N. Y., p. 561; Mandeville vs. Welsh, 5 Wheat., p. 277. And in support of the views here expressed, see Ex Parte Whitbread, 19 Ves., p. 209. No particular words are necessary.-Leon vs. Higuera, 15 Cal., p. 483; Woodworth vs. Guzman, 1 Cal., p. 203; Barroilhet vs. Bartelle, 7 Cal., p. 450; Polhemus vs. Trainer, 30 Cal., p. 685.

Lien of a mortgage, when special.

2923. The lien of a mortgage is special, unless otherwise expressly agreed, and is independent of possession.

Note.-Kidd vs. Teeple, 22 Cal., p. 255; Fogarty vs. Sawyer, 17 Cal., p. 589; Dutton vs. Warschauer, 21 Cal., p. 609; Nagle vs. Macy, 9 Cal., p. 426. For definition of " special lien” see Sec. 2875.



2924. Every transfer of an interest in property Transfor of

interest, made only as a security for the performance of another when

deemed a
act is to be deemed a mortgage, except when in the mortgage.
case of personal property it is accompanied by an
actual change of possession, in which case it is to be
deemed a pledge.

NOTE.-"To be deemed a mortgage."-Chase vs.
Peck, 21 N. Y., p. 581; Clark vs. Henry,

Cow., p.
324; affirming S. C., 7 Johns. Ch., p. 40; Elliott vs.
Pell, 1 Paige, p. 263; Stewart vs. Hutchins, 13 Wend.,
p. 485; affirmed, 6 Hill, p. 143; Lawrence vs. Farmers'
Trust Co., 13 N. Y., pp. 200, 612; Furgeson vs. Miller,
4 Cal.. p. 97; Smith vs. '49 and '56 Quartz Mining
Co., 14 Cal., p. 242; Koch vs. Briggs, 14 Cal., p. 256;
Hickox vs. Lowe, 10 Cal., p. 197. See note to Sec.
2925. It is intended by the exception made, which, in
some respects involves a material alteration of the law,
to relieve chattel mortgages, accompanied with a
genuine change of possession, from the necessity of
recordation, and to prevent the frauds against which
the statute requiring the recordation of mortgages was
aimed, by subjecting such mortgages to the law of
pledge, by which it is clear that they ought to be

governed. 2925. The fact that a transfer was made subject Transfer to defeasance on a condition, may, for the purpose of subject to

defearance showing such transfer to be a mortgage, be proved may be

(except as against a subsequent purchaser or incum-
brancer for value and without notice), though the fact
does not appear by the terms of the instrument.

NOTE.-It was settled in this State that parol evi-
dence was admissible to show that a deed absolute on
its face was intended as a mortgage, and that the rule
admitting such evidence was not confined to cases that
were formerly cognizable in equity, but applied to
every class of cases.- -Cunningham vs. Hawkins, 27
Cal., p. 605; Bloodworth vs. Lake, 33 Cal.,
Jackson vs. Lodge, 36 Cal., p. 39; Vance vs. Lincoln,
38 Cal., p. 727; Raynor vs. Lyons, 37 Cal., p. 452.
These cases are limited by the dissenting opinion of
Justice Rhodes in Jackson vs. Lodge, 36 Cal., p. 39,
which we understand became the law by the decision


p. 264;


in Hughes vs. Davis, 40 Cal., p. 120, but the text adopts the rule of Cunningham vs. Hawkins, 27 Cal., p. 605, which rule is sustained by the following New York authorities.--See Clark vs. Henry, 2 Cow., p. 324; affirring Henry vs. Davis, 7 Johns. Ch., p. 40; James vs. Johnson, 6 Johns. Ch., p. 417; Jackson vs. Green, 4 Johns., p. 186; Peterson vs. Clarke, 15 Johns., p. 205; Brown vs. Dean, 3 Wend., p. 208; Palmer vs. Gurnsey, 7 Wend., p. 248; Parsons vs. Mumford, 3 Barb. Ch., p. 152; -Brown vs. Dewey, 1 Sandf. Ch., p. 56; Barton vs. May, 3 id., p. 450; Hall vs. Van Cleve, 11 N. Y. Leg. Obs., p. 281; Slee vs. Manhattan Co., 1 Paige, p. 48; Whittick vs. Kane, id., p. 202; Van Buren vs. Olmstead, 5 id., p. 9; Lane vs. Shears, 1 Wend., p. 433; Grimstone vs. Carter, 3 Paige, p. 421; White vs. Moore, 1 id., p. 551; Williams vs. Thorn, 11 id., p. 459; Despard vs. Walbridge, 15 N. Y., p. 374; Tyler vs. Strang, 21 Barb., p. 198; Hodges vs. Tennessee Marine and Fire Ins. Co., 8 N. Y., p. 418; Sturtevant vs. Sturtevant, 20 N. Y.,

p. 39.

Mortgage, on what a lien.

2926. A mortgage is a lien upon everything that would pass by a grant of the property.

NOTE.-For applications of this principle in respect to particular things claimed as incident to the mortgaged premises, see the following cases: As to buildings. – Buckout vs. Swift, 27 Cal., p. 433. As to fixtures.--King vs. Wilcomb, 7 Barb., p. 263; Robinson vs. Preswick, 3 Edw., p. 246; Day vs. Perkins, 2 Sandf., p. 359; Buckley vs. Buckley, 11 Barb., p. 43; Snedeker vs. Warring, 12 N. Y., p. 170; Fryatt vs. Sullivan Co., 5 Hill, p. 116; aff'd, 7 id., p. 529; Breese vs. Bange, 2 E. D. Smith, p. 474; Cresson vs. Stout, 17 Johns., p. 116; Gardner vs. Finley, 19 Barb., p. 317; Ford vs. Cobb, 20 N. Y., p. 344; Laflin vs. Griffiths, 35 Barb., p. 58; Sands vs. Pfieffer, 10 Cal., p. 258; Merritt vs. Judd, 14 Cal., p. 59. As to crops.-Shuart v. Taylor, 7 How. Pr., p. 251; Shepard vs. Philbrick, 2 Den., p. 174; Gillett vs. Balcom, 6 Barb., p. 370; Aldrich vs. Reynolds, 1 Barb. Ch., p. 613; Lane vs. King, 8 Wend., p. 584; Quiriaque vs. Dennis, 24 Cal., p. 154. As to growing timber.- Ensign vs. Colburn, 11 Paige, p. 503; Peterson vs. Clark, 15 Johns., p. 205; Wood vs. Lester, 29 Barb., p. 145. As to rolling stock on railroads.-Farmers' Loan and Trust Co. vs. Hendrickson, 25 Barb., p. 484; Stevens vs. Buffalo & N. Y. City R. R. Co., 31 Barb., p. 590; Murdock vs. Gifford,

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18 N. Y., p. 28; Parish vs. Wheeler, 22 N. Y., p. 473;
Beardsley vs. Ontario Bank, 31 Barb., p. 619; Seymour
vs. Canandaigua & Niagara Falls R. R. Co., 25 Barb., p.
284. As to after-acquired interest.-— Watson vs. Camp-
bell, 28 Barb., p. 421; Seymour vs. Canandaigua &
Niagara Falls Railway Co., 25 Barb., p. 284; 14 How.
Pr., p. 531; Lawrence vs. Delano, 3 Sandf., p. 333;
Holden vs. Sackett, 12 Abb. Pr., p. 473; Clark vs.
Baker, 14 Cal., p. 612; Haffley vs. Maier, 13 Cal., p.
13; Kirkaldie vs. Larrabee, 31 Cal., p. 455; Wormouth
vs. Hatch, 33 Cal., p. 121; San Francisco vs. Lawton,
18 Cal., p. 465.

does not


2927. A mortgage does not entitle the mortgagee Mortgage to the possession of the property, unless authorized by entitlo the express terms of the mortgage; but after the exe- to

possession, cution of the mortgage the mortgagor may agree to such change of possession without a new consideration.

NOTE.- Fogarty vs. Sawyer, 17 Cal., p. 589; Kidd vs. Teeple, 22 Cal., p. 255; Dutton vs. Waschauer, 21 Cal., p. 609; Nagle vs. Macy, 9 Cal., p. 426; Waring vs. Smyth, 2 Barb. Ch., p. 135.

not a

2928. A mortgage does not bind the mortgagor Mortgage personally to perform the act for the performance of personal

obligation. which it is a security, unless there is an express covenant therein to that effect.

NOTE.-Hickox vs. Low, 10 Cal., p. 197; Hone vs. Fisher, 2 Barb. Ch., p. 569; Elder vs. Rouse, 15 Wend., p. 218; Whitney vs. Buckman, 13 Cal., p. 536.

2929. No person whose interest is subject to the Waste. lien of a mortgage may do any act which will substantially impair the mortgagee's security.

NOTE.-Van Pelt vs. McGraw, 4 N. Y., p. 111; Gardner vs. Heartt, 3 Denio, p. 232; Manning vs. Monaghan, 23 N. Y., p. 539. The mortgagee of a lot on which a house is standing may enjoin the removal of the house, if such removal will render the security inadequate.-Buckout vs. Swift, 27 Cal., p. 433; Robinson vs. Russel, 24 Cal., p. 467; Perrine vs. Marsden, 34 Cal., p. 18.


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