The second rule, which prohibited a mortgagee from stipulating for a collateral advantage, was founded upon the statutes against usury. A stipulation of this kind was in equity held void as being contrary to the spirit of these statutes (6). The rule was by its nature confined to mortgages to secure the repayment of borrowed money, and the stipulation was void ab initio on the ground of supposed publie policy. The rule had nothing to do with an equity of redemption based on relief against forfeiture, because it was enforceable before as well as after default. Since the repeal of the usury laws there is no reason why mortgages to secure loans should be on any different footing from other mortgages or why the old rule against a mortgagee's stipulating for a collateral advantage should be maintained in any form or with any modification. The right (notwithstanding the stipulation) to redeem on payment merely of principal, interest and costs is a mere corollary of the rule and falls with it (c).

(y) A modern case in which it was attempted virtually to make a mortgage irredeemable is Fairclough v. Swan Brewery Co., [1912] AX. 565. A clause in a mortgage of a lease for twenty years provided that without the mortgagee's written consent the mortgage debt should not be wholly paid off till a date within six weeks of the expiration of the lease. It was held that the mortgagor was entitled to redeem. Cf. Manitoba Lumber Co. v. Emmerson, 1913, 18 B.C.R. 96, 14 D.L.R. 390.

(z) See Sec. 25.

(a) See Sec. 26.

(b) Throughout the period in which the Court of Chancery was formulating its doctrines in relation to mortgages there were in force in England statutes limiting the rate of interest which could be legally charged for money lent. The last of these usury laws was repealed in 1854 by the statute 17 & 18 V. c. 90. The leading case as to a stipulation for a collateral advantage was formerly that of Jennings v. Ward, 1705, 2 Vern. 520, 18 R.C. 365, in which Sir J. Trevor, M.R., said: "A man shall not have interest for his money and a collateral advantage besides for the loan of it, or clog the redemption with any by-agreement." Cf. the notes in 2 W. & T.L.C. Eq. 23 ff. to the case of Howard v. Harris, 1683, 1 Vern. 190.

In every case in which a stipulation by a mortgagee for a collateral advantage has, since the repeal of the usury laws, been held invalid, the stipulation has been open to objection, either (1) because it was unconscionable, or (2) because it was in the nature of a penal clause clogging the equity arising on failure to exercise a contractual right to redeem, or (3) because it was in the nature of a condition repugnant as well to the contractual as to the equitable right (d).

In other words, a provision in favour of a mortgagee is not invalid merely because he thereby stipulates for a collateral advantage. Accordingly, if there is nothing unfair or oppressive in the bargain, in a mortgage of a hotel to a brewer the mortgagee may stipulate that the mortgagor shall during the continuance of the security deal exclusively with the mortgagee for all beer and malt liquors sold on the mortgaged premises (e); in a mortgage of the lease of a theatre-a notoriously risky security-the mortgagee may stipulate for a share in the profits of the theatre (f); and when money is lent on a security of a speculative or unsatisfactory nature, the mortgagee may, as part of the mortgage transaction, stipulate for the deduction by him from the amount of the advance or for the payment by the mortgagor of a bonus or commission in addition to the interest payable under the mortgage (g).

(c) Lord Parker of Waddington in Kreglinger v. New Patag-gonia, etc., Co. [1914] A.C. 25, at pp. 54-55.

(d) S.C. [1914] A.C. at p. 56. See, e.g., James v. Kerr, 1888, 40 Ch.D. 449 (agreement for bonus voidable as an undue advantage obtained from mortgagor under the pressure of distress and in a position analogous to that of an expectant heir).

(e) Biggs v. Hoddinott, [1898] 2 Ch. 307; Noakes & Co. v Rice, [1902] A.C. 24, at p. 33; Kreglinger v. New Patagonia, etc., Co. [1914] A.C. 25, at p. 38.