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Decisions of the Superior Courts of New South Wales, 1788-1899

Salmon v Leary (1835) NSW Sel Cas (Dowling) 695; [1835] NSWSupC 29

mortgage, covenant to pay - laches

Supreme Court of New South Wales

Forbes C.J., in banco, 8 March 1835

Source: Dowling, Select Cases, Vol. 4, Archives Office of New South Wales, 2/3463



28th March]

[Plf declared  in debt upon a mortgage deed, upon an alleged implied covenant to repay the money lent, & on producing the deed it recited that the Deft had entered a bond (not produced) for the payment of the same moneys at the time therein:-  Held that the action was not maintainable on an implied covenant to repay the money  An agreement not to take any objection to the form of the pleadings but not to brg [sic] the case on the merits, will not cure an objection which goes to the foundation of the action.]

Thomas Salmon v John Leary

Debt on a mortgage deed.  Plea non assumpsit.  Upon this informal plea, the parties went to trial, under a written agreement between the attornies, that no advantage should be taken of any formal objection to the pleadings but that the case be tried on its merits.  At the trial beforeForbes CJ. during this term, upon the production of the mortgage deed it appeared not to contain any covenant for the repayment of the money secured upon the land, but that a right of entry was reserved for nonpayment.  The deed further recited that there had been a bondbearing even date there with entered by the Deft, by which the deft bound himself to repay the money at a certain future time therein mentioned.  [p.68]  Thereupon the defts counsel went for a nonsuit on the ground that the action should have been upon the bond, & not upon the deed, which contained no covenant to repay the money lent.  In reply it was contended that the agreement under which the parties went to trial precluded the Deft from taking advantage of this point even if it were valid; but if this were not so, it was not a tenable objection, for the covenant to repay the money might be implied from the terms of the deed.  The learned Judge was of opinion that the objection did not come within the terms of the agreement, and thinking fatal directed a nonsuit.

Wentworth on a former day moved to set aside the nonsuit & to obtain a new trial, contending first, that as this was no more than a formal objection it fell within the spirit of the agreement to try the case on the merits.  But secondly he contended that even supposing the bond recited in the deed had existence (of which [p.69] there was no proof) still there was an implied covenant arising out of the deed to pay the money upon which the action might be maintained without reference to the bond.  The deed covenanted that if the Deft did not repay the money, the Plf should have a right to enter upon and take possession of the land.  What was this but an implied covenant to pay the money?  An express covenant was not necessary, & as the time of payment had long since elapsed, the action of debt or even assumpsit arises upon that covenant.  There had been a second mortgage of the same premises, but in consequence of the Plf not having his mortgage (which was first) registered in time, he was prevented from entering & taking possession of the land.  If this objection therefore prevailed the Plf would be without remedy, for he was instructed that the bond recited had never been enacted.

He cited [p.70] 1 P. Williams 290. 2 ibid. 445. 3. Ibid. 358. 5 Ves.J. 156.  Seddon v Tenate. 13 East 83. Tilson.  The Warwick Gas Company 4 B & C. 962.

S. Stephen in reply.  First, the objection does not come within the terms of the agreement not to take advantage of informalities, for at the time of the agreement, this objection could not have been contemplated.  But however it is not a technical objection; it goes to the whole foundation of the action.  The declaration is silent as to the existence of the bond recited in the deed, & therefore that circumstance could not have been in the contemplation of the parties.  Secondly, the authorities cited are not applicable, for it may be admitted that a covenant may be implied if nothing is said about the payment of the money, but here the deed contains an express covenant & recites the bond given for the payment of the money; and expressis unius est exclusio alterius.  Equity may [p.71] go into the intention of the parties but at law they must be bound by the terms of the covenant.  The declaration here sets out only a single covenant, namely for re-entry for not paying the money, whereas the deed recites the bond and mode of payment.  The plf has therefore mistaken his remedy.

Cur. Adv. Vult.[ 1]

Forbes CJ. now on this day delivered the Judgment of the Court:-  We are of opinion that the nonsuit was right.  It was contended that although this was a mortgage of the premises in question for the repayment of a certain sum of money, and though the deed contained no covenant in express terms to repay the money, yet an implied covenant grew out of the mortgage, and that an action of debt could be sustained thereon, & therefore that the nonsuit was wrong.  In support of this argument the case of Seddon v Tenate (13 East 63) was cited to shew that a party could sue in debt or covenant [p.72] on an implied covenant.  The authority of that case is not disputable.  There the proprietor of a patent medicine having sold his interest in it to one person by words competent to convey the whole property in it, afterwards entered into a bargain with other persons in the making and vending on his own account of the same medicine.  That being a manifest breach of his contract for the sale of the whole, no doubt an action would arise for the breach of it, as the Court there held.  It may be taken as an unquestionable principle of law that wherever there is an undertaking on the part of a person to do or abstain from doing a particular act, the law will apply a covenant to do or abstain from doing that act, & if he does not perform his covenant that will lay the foundation of an action.  That was the principle on which Seddon v Tenate [p.73] was decided.  No one case reasonably dispute the proposition there laid down; but the question put more than once to the Bar was, - could there be shewn any case in the books, in which an implied covenant could be raised out of a mortgage deed to pay the borrowed money, where there is an express covenant existing between the parties, appearing by the terms of the instrument itself?  That was the point on which the Court desired to be satisfied, & no case was, I believe, none could be cited to that effect.  A mortgage is no more than the conveyance of an estate upon a condition, a species of security well known, & its boundaries & land marks well defined. (See Co. Litt s.333. & HarzButs notes 96.)  It is because of the nature of a mortgage - an estate upon condition, that conveyancers always introduce one express covenant into the deed in order to get rid of the very difficulty which this case presents.  The zeal and [p.74] confidence with which the argument at the bar was enforced induces the Court to resort to first principles in order to shew that the point contended for, will hardly admit of discussion.  The rules of law applicable to mortgages are too well settled to be disputed at the present day.  In Co. Litt sec.333 it is said "If a feoffment be made upon such condition, that if the feoffor pay to the feoffee at a certain day 40 pounds of money, that then the feoffor may re-enter, in this case the feoffee is called tenant in mortgage which is as much as to say in French as Mortgage & in Latin Mortuem vadium.  And it seemeth that the cause why it is called mortgage is for that it is doubtful whether the feoffor will pay at the day Incited such sum or net; & if he doth not pay, then the law which is put in pledge upon condition for the payment, is to taken from him for ever, & so dead to him upon condition:  And if he doth pay the money then the pledge is dead as to the [p.75] tenant."  In this mode of pledging land, the modern practice has been to get rid of all difficulty by introducing an express covenant to pay the money lent.  But the doctrine of implied covenants is utterly unfounded & inapplicable to the ordinary case of a Mortgage.  A conveyance by mortgage is simply an estate on condition.  The grantor of the estate conveys it to the grantee in consideration of the money borrowed for a certain period with the option of redeeming it, by repaying the money, which if due, at the time stipulated, the conveyance becomes void, - and by a mere act in pais, becomes extinguished.  If the mortgagor does not pay at the time stipulated the estate becomes vested in the mortgagee freed altogether from the condition.  This was a very eminent species of contract. "I will pledge you my land for the loan of this money to be redeemed if I repay you at [p.76] a certain time, & if it is not then paid, then you shall have the land freed from that condition."  But even in such cases Equity will step in & may relive the party, for it may be that the and is mortgaged for less than the value, or there may be other grounds for relief which a Court of Law could afford.  This renders it necessary to introduce a covenant appointing a particular day for the repayment of the money, so that if the money is paid by that day, the estate shall be freed from the condition & the [?] may [?].  What is the effect of an implied covenant to repay the money back again independently of this contract, and an implied right in the money lender to sue for it in debt, then as all these contracts must be mutual, there must be an implied contract in the lender to receive back the money.  The consequence of [p.77] that would be that the contract would not be a mortuem vadium, but avivium vadium.  If there is an implied obligation to pay, there is also one to receive, which destroys the notion of a mortgage, or mortuem vadium, & converts it into a vivium vadium.  This would destroy all legal foundation to redeem the party could be relieved by no Equity.  If this doctrine of implied covenant to repay were to prevail, it would render the principle of Bills of Exchange unnecessary, which require a day certain for payment.  There is no necessity, however, to go further than the statute 7 Geo 2.C.20. to shew that such an argument is not law.  By that statute, after payment or tender by the Mortgagor of principal interest, & costs the mortgagee can maintain no ejectment; but may be compelled to reassign his [p.78] securities by going into a court of Equity.  This statute grew out of the absence of the implied covenant contended for, & therefore the point is too clear for argument.  But if any authority were wanting to shew that such a covenant cannot be implied Briscoe v King (Cro. Iac. 281.) is in point.  That was debt upon an obligation, conditioned for the performance of all covenants, payments, articles & agreements comprised in such a deed, dated &c.  The deft shews that the deed was a deed of feoffment wherein was contained that he for 110£ had enfeoffed the plf in such land, with a proviso, that if he the deft paid such sums at such a day, the feoffment should be void & he might re-enter; with covenants to save harmless from encumbrances & to make further assurance;  And that he performed all the covenants, articles and agreements on his part to be performed.  The plf assigned as breach, that the deft did not pay such sums at such days, according to the proviso; & upon demurrer [p.79] it was resolved by the Court "that for as much as there is not any Covenant to pay that sum it is a proviso in advantage of the feoffor that if he paid the money he should have again his land; & it is in his election to pay the money or to lose the land, which is a sufficient loss unto him; therefore the condition of the bond doth not entered thereon, but extends to perform the other covenants, as the covenant to save harmless from encumbrances, rents & arrearage of rents, which are the payments intended; wherefore it was resolved against the Plf on this point."  In that case the necessity of an express covenant is shewn in these instruments.  An express covenant varies the contract between the parties, & distinguishes it from an implied covenant.  The latter is mutual.  The Covenant introduced in all modern mortgages to pay the money with interest, is a personal covenant.  All the authorities are in keeping to shew that it is the express covenant that creates the personal contract, & that without [p.80] that the contract is incomplete.  It is because transactions of this kind only create estates on condition, that has given rise to the interposition of Courts of Equity.  It cannot now be disputed that a court of Equity will re-open the whole contract, "if there be any equity in the case, but, we, sitting here in a Court of law, dealing with it as if it were a case of Ejectment, must be governed by the rules of the common law.  It appears to us, therefore, that there is not in this case sufficient to raise an implied covenant.  Then as to the other part of the case, that this was an objection which the Deft was precluded from making under the mutual agreement that no objection should be taken to the form of the pleading, we think that as this objection goes to the whole foundation of the action, it cannot be considered as having reference to the mere form of the pleading.  As to the other parts of the case, in which fraud is alleged; of course of that could be made out it would vitiate a transaction of this nature whether under seal or not.  If this instrument, which [p.81] appears not to have been drawn by a professional man, was not duly recorded, it was not the fault of the mortgagor.  It is the duty of the Mortgagee to see that his mortgage deed is recorded, & if he has sustained any prejudice by not doing so, it is his own fault.  He must suffer for his own laches.  It appears to us therefore that the nonsuit was right, & that this action cannot be maintained.

Judgment for the Deft.



[1 ] Curia advisari vult: the court wishes to be advised, or wishes to consider its decision.  This means that the judgment was not delivered immediately.


Published by the Division of Law, Macquarie University