A charge on a public house provided that even after repayment of the principal, the owner continued to be obliged to purchase his beer from the brewery, and that any non-payment would be charged on the property.
Held: The clauses operated as a clog on the equity so as to prevent effective redemption, and were invalid. Earl of Halsbury L said: ‘this was a mortgage, and that the equity of redemption is clogged and fettered here by the continuance of an obligation which would render this house less available in the hands of its owner during the whole period and beyond the whole period of the term, apart from the realization of the security. Under those circumstances, as a matter of the merest and simplest reasoning, I am wholly unable to come to any other conclusion than that there is a clog and fetter here which the law will not permit.’
Lord MacNaghten said: ‘Redemption is of the very nature and essence of a mortgage, as mortgages are regarded in equity. It is inherent in the thing itself. And it is, I think, as firmly settled now as it ever was in former times that equity will not permit any device or contrivance designed or calculated to prevent or impede redemption.’
Lord Lindley said: ‘the covenant contained in this mortgage, and by which the mortgagees have attempted to convert the house mortgaged from a free public-house into a tied public-house even after redemption, is invalid. I see no answer to the objection taken to it that upon payment off of the mortgage money the mortgagor cannot get back what he mortgaged, namely, a free public-house. The attempt to strengthen the tie by stipulating for liquidated damages and charging them on the property certainly does not mend matters, but makes them worse.’
Earl of Halsbury LC, Lord MacNaghten
[1902] AC 24, [1901] UKHL 3
Bailii
England and Wales
Citing:
Cited – Biggs v Hoddinott 1898
The owner of a freehouse had agreed to a tie in favour of a brewer who had lent him money. . .
Cited – Browne v Ryan 1901
(Ireland – Court of Appeal) A farmer mortgaged his holding to secure andpound;200 and interest; and, as part of the mortgage transaction, it was stipulated that the mortgagor should sell his holding within twelve months, employ the mortgagee as the . .
Cited – Santley v Wilde CA 1899
Classic Definition of a Mortgage
Lord Lindley considered the nature of a mortgage and said: ‘The principle is this: a mortgage is a conveyance of land or an assignment of chattels as a security for the payment of a debt, or the discharge of some other obligation for which it is . .
Cited – Salt v Marquis of Northampton 1892
The court was asked whether a life policy, the premiums on which were charged against the mortgagor, was comprised in the mortgage security. That question having been decided in the affirmative, it was declared to be redeemable, notwithstanding an . .
Cited – Tulk v Moxhay 22-Dec-1848
A, being seised of the centre garden and some houses in Leicester Square, conveyed the garden to B in fee, and B covenanted for himself and his assigns to keep the garden unbuilt upon.
Held: A purchaser from B, with notice of the covenant, was . .
Cited by:
Cited – Bradley v Carritt HL 11-May-1903
Shares in a tea company had been mortgaged to secure a loan from a broker on terms that the mortgagor would seek to ensure that the mortgagee should thereafter have sale of the company’s teas. The mortgage contained a covenant that, if the company . .
These lists may be incomplete.
Updated: 16 June 2021; Ref: scu.219911
