317. Foreclosure of Mortgages. A mortgagor has the right to redeem the property at any time within the statute of limitations, after the mortgage debt becomes due. The mortgagee does not have to wait the pleasure of the mortgagor to redeem or abandon the right. Equity gives the mortgagee the right to cut off the mortgagor's equity of redemption by foreclosure. By foreclosure is meant the mortgagee's right to file a petition in a court of equity asking that the property be sold, and that from the proceeds, the amount of the mortgage debt and costs first be paid, and that the balance be paid the mortgagor. The court orders the property advertised and sold, and the proceeds distributed as above described.
Some mortgages contain a stipulation concerning foreclosure. These mortgages are called power of sale mortgages. It is stipulated that when the mortgagor is in default of payment, the mortgagee may advertise and sell the property, deducting from the proceeds the mortgage debt, interest, and expenses, and paying the balance to the mortgagor. These power of sale mortgages are enforceable. The sale must be free from fraud, public, and the mortgagee cannot become a purchaser unless so stipulated in the mortgage, or so provided by statute. The states usually provide by statute a method of foreclosure. These statutes frequently provide that a mortgagee may enforce his mortgage, and obtain a judgment against the mortgagee on the mortgage debt in the same action. If the mortgaged premises do not bring enough to satisfy the judgment, the balance may be enforced against the mortgagor by seizing any property subject to execution that he possesses.
TRUSTS
318. Defined and Classified. In a popular sense, the term, trust, is often used to designate combinations of capital or combinations among business men for the purpose of destroying competition, or for the purpose of regulating prices. This is not the meaning of the term as used in this chapter. It is here used to mean an estate of some kind held for the benefit of another. A trust has been defined to be "An obligation upon a person, arising out of a confidence reposed in him, to apply property faithfully according to such confidence." A, by will, appoints B trustee of his farm, for the benefit of C. Upon A's death, if B accepts the duty imposed upon him by the will, a trust is thereby created in which B holds the legal title to the farm, for the benefit of C.
Trusts are sometimes classified as general and special. If the property is conveyed by deed or will to another to be held in trust for a third person, without specifying any of the duties of the second person, it is said to be a general or simple trust. If, however, the duties of the second person or trustee are defined, the trust is called a special trust. A trust for the benefit of an individual or individuals is called a private trust, while one for the benefit of a public institution, or for the public, is a public trust. If A gives his property to B to care for the poor of the city of Chicago, the trust is public. As to their method of creation, trusts are usually divided into express, implied, resulting and constructive trusts.
319. Parties to Trusts. The party creating a trust is called the grantor or settlor. The party to whom the title to the property is given to hold for the benefit of another is called the trustee. The party for whose benefit the trust is created is called the cestui que trust. If the beneficiaries are more than one in number, they are termed cestui que trust. If A deeds his land to B for the benefit of C, A is the settlor, B is the trustee, and C is the cestui que trust.
320. Who May be Parties to a Trust. Persons of lawful age, and competent to make contracts, including corporations, may create trusts. Any person competent to make contracts, including corporations, may act as trustee. Even infants (persons under legal age) may act as trustees if the duties require the exercise of no discretion. An infant may hold the legal title as trustee, and if the duties require the exercise of discretion, the court will remove him or appoint a guardian to perform his duties. Anyone capable of holding the legal title to property may be a cestui que trust. This includes corporations, aliens, and, in case of charitable trusts, infants. Any kind of property, whether real or personal, may be given in trust. This includes lands, chattel property, promissory notes, accounts, and kindred property rights, regardless of where the property is located.
321. Express Trusts. An express trust is one created by the express written or oral declaration of the grantor. If A gives a deed of his farm to B, by the terms of which B is to hold the farm in trust for C, A, the grantor, has created an express trust in favor of C, B as trustee holds the legal title to the farm, and C, as cestui que trust or beneficiary, holds the beneficial or equitable interest. A, before giving the deed of trust, was the absolute owner of the farm. That is, A held the legal title and the equitable interest in the farm. By creating the trust, he placed the legal title in one person and the equitable or beneficial interest in another.
Originally, in England, at common law, trusts could be created by oral declaration as well as by written instruments. At that time, land could be transferred without written instruments. The seller took the buyer on to the land to be conveyed, and in the presence of witnesses delivered to him a symbol of the land, such as a piece of turf or a twig. About 1676, the Statute of Frauds was passed by the English Parliament, requiring among other things, that conveyances of lands, including the creation of trusts therein, must be by written instruments. This provision of the Statute of Frauds has been re-enacted by most of the states of this country. At the present time, trusts in real estate must generally be created by written instrument. Trusts may be created by will to take effect at the grantor's death. Trusts may be created in personal property. Except when created by will, trusts in personal property may be created by oral declaration of the grantor. A grantor may create a trust voluntarily. If actually carried out, or if the grantor's intention to create the trust is expressed as final, it requires no consideration to support it. If the declaration of trust amounts to a mere agreement to create a trust, and is not carried out, it requires a consideration to enable the beneficiary to compel its execution. After an express trust is completed, it cannot be revoked by mutual agreement between the grantor and trustee without the consent of the cestui que trust.
