the party in possession from doing any act to the injury of real property during the foreclosure of a mortgage thereon; or after a sale on execution, before a conveyance.'

In an action for the foreclosure or satisfaction of a mortgage of real property, or the satisfaction of a lien or incumbrance upon property, real or personal, the court shall have power by its judgment to direct a sale of the property, or any part of it, the application of the proceeds to the payment of the amount due on the mortgage, lien or incumbrance, with costs, and execution for the balance."

If there be surplus money remaining after the payment of the amount due on the mortgage, lien or incumbrance, with costs, the court may cause the same to be paid to the person entitled to it, and in the mean time may direct it to be deposited in court."

If the debt for which the mortgage, lien or incumbrance is held be not all due, so soon as sufficient of the property has been sold to pay the amount due, with costs, the sale shall cease: and afterward, as often as more becomes due, for principal or interest, the court may, on motion, order more to be sold. But if the property cannot be sold in portions without injury to the parties, the whole may be ordered to be sold in the first instance, and the entire debt and costs paid, there being a rebate of interest where such rebate is proper."

A mortgage is a mere incident to the debt which it secures, and follows the transfer of the note, or other evidence of debt, with the full effect of a regular assignment. And if the mortgage be given to secure two notes, the endorsement and delivery of one of the notes carries with it a pro rata portion of the security.'

A conveyance and an attendant agreement for a reconveyance upon the payment of the amount of the consideration and interest, do not of themselves in the absence of other circumstances, create a mortgage, but only a defeasible purchase, which should be narrowly watched lest it may be made the means of converting what was in fact intended as a security, into an absolute purchase. Slight circumstances will determine the transac

15 Wood's Dig. art. 994, 995.

2 id 98-982.

$ 6 Cal. 478; 9 id. 865, 426.

tion to be one of mortgage, when that can be done without violence to the understanding of the parties.'

It has been held by the Supreme Court of California, that a deed absolute on its face cannot be shown by parol testimony to be intended as a mortgage, except in cases of fraud, accident or mistake in the creation of the instrument itself. This doctrine has been recently overruled and the old doctrine restored, in the case of Pierce vs. Robinson, administrator, in which case Judge Field decides as follows:

"I consider parol evidence admissible in equity, to show that a deed absolute upon its face was intended as a mortgage, and that the restriction of the evidence to cases of fraud, accident or mistake, in the creation of the instrument, is unsound in principle, and unsupported by authority.

"The entire doctrine of equity, in respect to mortgages, has its origin in considerations independent of the terms in which the instruments are drawn. In form, a mortgage in fee is a conveyance of a conditional estate, which, by the strict rules of the common law, became absolute upon breach of its conditions. But, from an early period in the history of English jurisprudence, courts of equity interposed to prevent a forfeiture of the estate, and gave to the mortgagor a right to redeem, upon payment within a reasonable time, of the principal sum secured, interest and cost. As the right to thus recover the estate forfeited arose, not from the terms of the instrument, but from a consideration of the real character of the transaction, as one of security and not of purchase, it could be enforced only in equity, and was hence termed an equity of redemption. And when the right to redeem had been once established, to prevent its evasion the rule was laid down, and has ever since been inflexibly adhered to, that the right is inseparably connected with the mortgage, and cannot be abandoned or waived by any stipulations entered into between the parties at the time, whether inserted in the instrument or not."

The original character of mortgages has undergone a change. They have ceased to be conveyances except in form. They are no longer understood as contracts of purchase and sale between

10 Cal. 684.

the parties, but as transactions by which a loan is made on the one side, and security for its repayment furnished on the other. They pass no estate in the lands, but are mere securities; and default in the payment of the money secured does not change their character.'

Proceedings for the foreclosure of mortgages, in the sense in which the terms are used in England and in several of the states, by which the mortgagor, after default, is called upon to repay the loan by a specified day, or be forever barred of his equity of redemption, are unknown to our law. The owner of the mortgage in this state can in no case become the owner of the mortgaged premises, except by purchase upon sale under judicial decree, consummated by conveyance.'

A foreclosure suit, by our law, results only in a legal ascertainment of the amount due, and a decree directing the sale of the premises for its satisfaction, the surplus, if any, going to subsequent incumbrancers, or the owner of the premises, and execution following for any deficiency.'

The statutory right of redemption is equally applicable to sales under decrees in mortgage cases as to sales under ordinary judgments at law.'

The estate of a mortgagor and of a judgment debtor after sale, stand upon the same footing, and the insertion in the decree of a clause foreclosing the equity of redemption, is a useless formula, which cannot enlarge the effect of the decree, or any rights of the mortgagee under it.'

The decisions as to the estate of the judgment debtor after sale, become, therefore, authorities for determining the estate of the mortgagor after sale under the decree; and from them it will be found that the estate must remain in the mortgagor until .a consummation of the sale by conveyance, as it does in the judgment debtor, and that the conveyance when executed will take effect, in the one case, from the date of the mortgage, as it does in the other, from the time the lien of the judgment at tached.'

It follows that a creditor of the mortgagor obtaining a judgment after sale under the decree of foreclosure, but before the

McMillan v. Richards, 9 Cal. 365.

execution of the conveyance thereunder, acquires a lien on the estate entitling him to redeem.'

Possession by the mortgagee cannot abridge, enlarge, or otherwise affect his interest, nor convert that which was previously a security into a seizin of the freehold."

If the mortgage confers no right of possession, entry under it can give none. It does not change the relation of debtor and creditor, or impair the estate of the mortgagor, but leaves the parties exactly as they stood previous to such possession.'

The title of a purchaser under a sale on a decree of foreclosure cannot be impeached, in a collateral action, for irregularity in the proceedings on the sale.'

A mortgagee who is also a trustee is as strictly bound to execute his trust faithfully as he would be were he not a creditor, but acting for the benefit of another cestui que trust.'

FORMS.

Mortgage-Short Form.

Know all men that I, Horace Joke, being indebted to Milo Bluff in the sum of five hundred dollars, to be paid in three months from this date, with interest at two per cent. per month, for which he holds my promissory note, in consideration of one dollar paid to me by said Milo Bluff, and as security for the payment of said note, do hereby grant, bargain, and sell to said Milo Bluff, his heirs and assigns forever, the following lot of land in the city and county of San Francisco: [here insert description,] on condition that if the said debt be paid according to the terms of said promissory note, then these presents shall be void. Witness my hand and seal this tenth day of June, one thousand eight hundred and fifty-nine. HORACE JOKE. [L. S.]

Sealed and delivered

in presence of

}

Mortgage, without Bond, Note, or other Accompanying Instru

ment.

This indenture, made this first day of May, in the year of our Lord one thousand eight hundred and fifty-eight, between A. B. and C. D., of parties of the first part, and E. F., party of the second part, witnesseth, that the said parties of the first

part, for and in consideration of the sum of two thousand dollars to them in hand paid by the said party of the second part, do hereby grant, bargain, sell and confirm, unto the said party of the second part, and to his heirs and assigns forever, all [here insert description], together with all and singular the tenements, hereditaments and appurtenances thereunto belonging, or in anywise appertaining.

To have and to hold, unto the said party of the second part, his heirs and assigns forever, by way of mortgage, to secure the payment of the sum of two thousand dollars, payable by said parties of the first part to said party of the second part in three months from this date, with interest thereon at two per cent. per month, and these presents shall be void if such payment be made. But in case default be made in the payment of either the principal or any instalment of interest, as provided, then the whole sum of principal and interest shall be due at the option of the party of the second part, and suit may be immediately brought and a decree be had to sell the premises, above described, with all and every of the appurtenances, or any part thereof, in the manner prescribed by law, and out of the money arising from such sale to retain the said principal and interest, although the time for payment of said principal sum may not have expired, together with the costs and charges of making such sale, and of suit for foreclosure, including counsel fees at the rate of ten per cent. upon the amount which may be found to be due for principal and interest by the said decree, and the overplus, if any there be, shall be paid by the party making such sale, on demand, to the parties of the first part, their heirs and assigns.

In witness whereof, the said parties of the first part have here unto set their hands and seals the day and year first above written.

A. B.

C. D.

Signed, sealed and delivered
in the presence of M. N.

Mortgage on Note, with full Conditions.

This indenture, made the 3d day of June, one thousand eight hundred and fifty-nine, between George Happ, of the county of Alameda, party of the first part, and Loren Burke, of San Francisco, party of the second part. Whereas the said George Happ is justly indebted to the said party of the second part, in the sum of twenty thousand dollars, lawful money of the United States, secured to be paid by his certain promissory note, bearing even date with these presents, and which said note is in the words and figures following: