The Lien Theory of the Mortgage--Two Crucial Problems

In a recent article in this review1 the writer discussed in a general way the nature of a mortgage of real property in the states which adopt the lien or equitable theory of the mortgage. The conclusion therein arrived at was that, while the mortgage does not convey the legal title to the land until foreclosure, it does convey to the mortgagee, at the time of its execution, a present interest in the land, the general ownership of which remains in the mortgagor-an interest which is limited and special, more analogous to an easement than to general ownership; which is contingent or inchoate, in that default and foreclosure are essential to its ultimate enjoyment; and which is merely collateral to a principal right to receive something of value: but which is a legal interest as distinguished from an equitable interest; a right in rem as distinguished from a right in personam; a right which, in the terminology of jurisprudence, would be called an "hypothecation."2 This conclusion was arrived at by a course of deductive reasoning. The premises were found in our case law but the conclusion was so remote from the premises that it lacked a convincing foundation of authority. In the present article we will examine two specific problems in mortgage law which offer a test of this conclusion.

The discussion will be chiefly confined to the specific problems in hand but the primary purpose will be to get at the underlying theory of the mortgage.