The Myth of Strict Foreclosure

Abstract

M YTHS in the field of mortgages are many and striking. One of the most striking is the assumption of American students that the English chancellor left the mortgagor virtually unprotected from his mortgagee. It is not difficult to find the reasons for this assumption. In the colonial period of the country the Court of Chancery was in great disrepute.' Time has removed much of the prejudice against doctrines of the chancellor, but in the field of mortgages the prejudice has continued. First, the English system of mortgages seems very primitive to American students. The struggle of junior mortgages to obtain the status of legal charges has confirmed the tradition that the English system of mortgages was very slow in developing, and the hocus-pocus of the long-term lease by which, under the I925 legislation,2 the second mortgage emerged as a legal charge tended to confirm the prejudice. Surely under a system so primitive mortgagors could not have been adequately protected! The second reason for the prejudice is based upon the history of the American law of mortgages. For more than a century the trend of the American law has been toward greater protection for the debtor. Judges and legislators have joined in the effort to improve the position of the mortgagor and yet, as the debacle of the last decade shows, the present American system leaves the mortgagor without adequate protection. The position of mortgagors who did not have the benefit of the century's improvements must have been miserable indeed. But plausible though the argument is, it is unsound. As Professor Maitland told his students at Cambridge, it is not safe to rely upon the form of the English mortgage for it is long suppressio veri and suggestio falsi.3 The unsoundness of the argument is apparent if one considers the developments in the English mortgage law during the past century and