to an assignment unless he can present sufficient legal or equitable grounds for such relief. But according to some decisions a devisee of mortgaged property is entitled on payment of the indebtedness secured by mortgages given by the testator to an assignment of such mortgages, although the contrary view also finds support.

XVIII. MERGER

In General

276. Rule Stated.-Ordinarily when one having a mortgage on real estate becomes the owner of the fee, the former estate is merged in the latter, but if it was the intention to keep the mortgage alive, or if it is to the interest of the mortgagee, and it can be done without prejudice to the rights of the mortgagor or third persons, the doctrine of merger, as between them, will not apply. It has frequently been

held that if there is no expression or intention on the part of the mortgagee at the time he acquires the fee,, it must be presumed that he intended to do that which was most advantageous to himself, and if this is that the two estates should not merge, no merger will take place. If the mortgagor conveys the premises by a quitclaim deed to the mortgagee in satisfaction of the mortgage debt, the lien of the mortgage is not merged in the fee simple title. And if the mortgagee takes a conveyance from the mortgagor, and retains the note and mortgage, there is no merger of the mortgage unless a contrary intent is shown. The legal estate will never absorb the equitable one unless the two estates are coextensive or commensurate. Hence, if a person having a mortgage lien upon an entire tract of land acquires a title to such land, less extensive and comprehensive than his mortgage title, there can be no merger. Likewise, where a mortgagor of land conveys a portion of it, a conveyance of such portion by the grantee to the mortgagee does not merge the mortgage in the fee as to the portion still remaining in the mortgagor, although the mortgagor's grantee assumes payment of the mortgage, and though his deed to the mortgagee purports to convey the entire mortgaged premises. And a conveyance by the mortgagor to the mortgagee and a reconveyance back, no money or other consideration being paid on account of such conveyance, does not merge the mortgage. When the grantor in a deed of trust conveys the property afterwards to the party secured by the deed of trust, the conveyance does not extinguish the deed of trust, but passes only his equitable title; in such a case the legal title remains in the trustee, and until it is united with the equitable title, an ejectment cannot be sustained. 10 An administrator, by taking a mortgage on land of his intestate, admits some kind of title in the mortgagor; but if such administrator afterwards sells the mortgagor's title to satisfy the mortgage, he does not thereby merge the legal or equitable title of the heirs in that of the mortgagor.11

277. Purchase of Equity of Redemption.-When the equity of redemption is purchased by the mortgagee, the general rule is that the mortgage still subsists, if it is to his interest that it should to protect him against any other charge or incumbrance on the estate. If,

7. Knowles V. Lawton, 18 Ga. 8. Coburn v. Stephens, 137 Ind. 476, 63 Am. Dec. 290, overruled on 683, 36 N. E. 132, 45 A. S. R. 218; another point by Osborn v. Rice, 107 Quimby v. Williams, 67 N. H. 489, Ga. 281, 33 S. E. 54; Freeman v. 41 Atl. 862, 68 A. S. R. 685. Paul, 3 Greenl. (Me.) 260, 14 Am. Dec. 237; James v. Morey, 2 Cow. (N. Y.) 246, 14 Am. Dec. 475; Duncan v. Drury, 9 Pa. St. 332, 49 Am. Dec. 565 and note.

Notes: 99 A. S. R. 162 et seq.; 39 L.R.A.(N.S.) 837 et seq.; 18 Eng. Rul. Cas. 563.

9. Note: 99 A. S. R. 161. And see ESTATES, vol. 10, p. 667. 10. Wolfe v. Doe, 13 Smedes & M. (Miss.) 103, 51 Am. Dec. 147.

11. Waldridge v. Day, 31 Ill. 379, 83 Am. Dec. 227,

however, this would be inequitable, contrary to the clear intention of the parties, or conducive to fraud the mortgage is regarded as merged. 19 Even if the release of the equity of redemption is by warranty deed, the mortgage is not merged, if it is not to the interest of the mortgagee to have it merged,18 and there is no merger when the mortgagee takes a deed of the equity of redemption from the mortgagor, although that is intended by the mortgagee, if he is fraudulently led by the mortgagor to believe that the premises are free from incumbrance, and he accepts such deed under such mistaken belief.14 Nor does such purchase create a merger so as to release a surety for the mortgage debt, when it is not the intention of the mortgagee to create a merger by his purchase.15 If an assignment of a mortgage in process of foreclosure is taken by the holder of the equity of redemption, and he goes on and forecloses and sells the premises, purchasing them himself, it is presumed from such act that he does not intend to have the equity of redemption merge in the legal estate, and, therefore, such merger will not take place.16 Where the mortgage is conveyed by quitclaim deed to an owner of a moiety of the equity of redemption, such conveyance is merely an assignment of the mortgage, and not a merger discharging it. A merger is not caused by the holder of a part of a mortgage buying the equity of redemption. And if the mortgagee of an entire tract receives a deed to the equity of redemption in an undivided one half interest in the land, his mortgage will not merge in the title so acquired. However, if a person holding both the mortgage and the equity of redemption makes a conveyance in fee, it has been held that this is an election to treat the mortgage as merged.18

278. Purchase at Judicial Sale.-There is authority to the effect that a purchase of the mortgaged land by the mortgagee at a judicial sale thereof extinguishes and merges the mortgage. But whether a merger takes place in such case would seem, as a general rule, to be a question of the intention and interests of the mortgagee, as in other cases, and merger does not take place against such intention or interest. Thus, it has been held that a mortgage is not merged in the estate by the purchase of the property by the mortgagee at a sale under a junior mortgage, against his intention to that effect.19 So it has been

12. Vannice v. Bergen, 16 Ia. 555, 85 Am. Dec. 531 and note; James v. Morey, 2 Cow. (N. Y.) 246, 14 Am. Dec. 475 and note.

Notes: 99 A. S. R. 163 et seq.; L.R.A.(N.S.) 837 et seq.

39

See supra, par. 268, and infra, par. 282, 283.

13. Note: 99 A. S. R. 163.

15. Cullum v. Emanuel, 1 Ala. 23, 34 Am. Dec. 757.

16. Knowles v. Lawton, 18 Ga. 476, 63 Am. Dec. 290, overruled on another point by Osborn v. Rice, 107 Ga. 281, 33 S. E. 54.

Note: 99 A. S. R. 164.

17. Note: 99 A. S. R. 165.
18. James v. Morey, 2 Cow. (N. Y.)

14. Howard v. Clark, 71 Vt. 424, 246, 14 Am. Dec. 475 and note.

45 Atl. 1042, 76 A. S. R. 782.

19. Note: 99 A. S. R. 166.

486

decided that if a mortgagee purchases at his own foreclosure sale, and before deed issues, pays a prior mortgage, and takes an assignment thereof, with the intention that the prior mortgage shall not merge in his title acquired at foreclosure, there will be no merger 20 However, where a mortgagee purchases the mortgaged premises upon execution against the mortgagor in favor of a third person, he purchases subject to the mortgage, and merges the debt if such is his intention. And according to some authorities if a sheriff on selling land on execution announces that the sale is made subject to a prior lien, and bidders so understand it, the holder of such lien, by purchasing and forfeiting his title in default of redemption, rot only extinguishes his lien upon the land, but also loses his remedy on the mortgage note if such lien consists of a mortgage.1

279. Assignment of Mortgage.-The acquisition of the absolute title to real estate by a mortgagee thereof, after an assignment and transfer of the mortgage to a third person, does not operate to merge the mortgage, nor can there be a merger of a mortgage with the legal estate upon a conveyance by the mortgagee to the mortgagor if the former has previously assigned his mortgage, although such assignment is not of record. Thus, a mortgage remains an equitable lien on lands in favor of the assignee thereof, to whom it was assigned as collateral security for a loan made by him to the mortgagee, although the latter afterward receives a conveyance of the premises from the mortgagor, and gives him in consideration therefor an acquittance of the mortgage. So, a conveyance of real estate by a mortgagor to a mortgagee, or vice versa, after the assignment of the notes secured, and the mortgage to another, taking them in good faith and for value, without the knowledge or assent of the assignee, does not, as to him, operate as a merger of the mortgage or affect his rights, and after the recording of the assignment of the mortgage, a purchaser from the mortgagee, after the mortgagor's release of the equity of redemption, will take subject to the equitable rights of such assignee. If first, second and third mortgages exist against the same property, and the third mortgage is by deed absolute on its face, an assignment of the first mortgage to the third mortgagee will not merge the first and third

20. Mott v. Clark, 9 Pa. St. 399, 46 N. E. 168, 57 A. S. R. 506; Pratt 49 Am. Dec. 566. v. Bennington Bank, 10 Vt. 293, 33 Am. Dec. 201.

Note: 99 A. S. R. 166.

1. Note: 99 A. S. R. 166.

Notes: 14 Am. Dec. 513; 99 A. S. R. 167; 5 L.R.A. 292; 15 L.R.A. (N.S.) 1033 et seq.; L.R.A. 1915F 555; 5 Ann. Cas. 341, 342.

2. Lime Rock Nat. Bank v. Mowry, 66 N. H. 598, 22 Atl. 555, 13 L.R.A. 294; Leonard v. Leonia Heights Land Co., 81 N. J. Eq. 489, 87 Atl. 645, And see supra, par. 128 et seq. Ann. Cas. 1914C 749; Purdy v. Hun- 3. Brown v. Blydenburgh, 7 N. Y. tington, 42 N. Y. 334, 1 Am. Rep. 141, 57 Am. Dec. 506. 532; Curtis v. Moore, 152 N. Y. 159, 4. Note: 99 A. S. R. 167.

mortgages. Where the assignee of a senior mortgage receives from the mortgagor a conveyance of the mortgaged premises, such conveyance does not, in equity, merge or extinguish the mortgage as between such assignee and a junior incumbrancer. And if the assignee of a first mortgage takes a conveyance of the mortgagor's equity of redemption there is no merger of the mortgage in the estate thus conveyed. Obviously, a deed executed by a mortgagor to the assignee of the mortgagee does not create a merger of the mortgage, when the assignee refuses to accept the deed, and retains the mortgage.

280. Payment of Mortgage by Owner of Fee.-Where the owner of an equity of redemption pays off a mortgagee and takes an assignment of the mortgage, and the documents or circumstances show an intention to keep alive the security, it is not extinguished but inures for the benefit of the owner of the equity of redemption. Whether

or not the acquisition of a note and trust deed by the owner of the fee of the encumbered property operates in equity as a merger depends upon the intention of the parties and the surrounding circumstances, and any act by the owner of the fee showing that he regards the incumbrance as still existing is strong evidence that there is no merger.& Stating the rule in another form, it has been said that where the owner of an equity of redemption pays off the mortgage, and takes an assignment of it to himself, it becomes merged in the legal title and is extinguished, unless it appears that there is some beneficial interest in keeping it distinct. And it has been held that where a grantee who has assumed a mortgage on the property pays the mortgage debt in full, taking, instead of a discharge, an assignment of the mortgage, running to his daughter, he recording the assignment and retaining possession thereof, and she paying nothing therefor, the note and mortgage are extinguished.10 In the absence of an intent to the contrary, if the owner of a one third interest in land takes up an incumbrance thereon such incumbrance as to his third is destroyed and merged in his legal estate. And if a partnership holds a fee simple title to certain mortgaged lands, and the mortgage thereon is assigned to a member of the firm, and the amount thereof is paid by the firm, the mortgage becomes merged in the legal title, the payment of the mortgage being a part of the consideration for the land, and it cannot be enforced by the assignee thereof.11

5. Buzzell v. Still, 63 Vt. 490, 22 852, 18 Eng. Rul. Cas. 552.

Atl. 619, 25 A. S. R. 777.

6. Note: 99 A. S. R. 168.

7. Capitol Nat. Bank v. Holmes, 43 Colo. 154, 95 Pac. 314, 127 A. S. R. 108, 16 L.R.A.(N.S.) 470 and note; Thorne v. Cann [1895] A. C. 11, 64 L. J. Ch. 1; 71 L. T. N. S.

And see supra, par. 270.

8. Note: 99 A. S. R. 170. 9. Gardner v. Astor, 3 Johns. Ch. (N. Y.) 53, 8 Am. Dec. 465.

10. Lydon v. Campbell, 204 Mass. 580, 91 N. E. 151, 134 A. S. R. 702. 11. Note: 99 A. S. R. 171.