The Rise and Fall of the Doctine of Equity of Redemption Mirrors the Importance of Mortgages and Land To the English Ruling Classes - Discuss.

        A possible explanation for the rise and fall of the equity of redemption is the importance of the feudal structure in which all echelons of society operated. Sugermann suggests that there was a fear that to remove the landed classes would be similar to that of the French revolution. To prevent such chaos and anarchy the courts were anxious to preserve the stable structure of society. Because land was an expression of more than economic wealth but also social status,  the courts could not allow  the upper echelons of society to lose their property because of strict adhesion to the contractual terms. This would be tantamount to abandoning the current social structure.  Blackstone firmly believed that the landed gentry were needed as a player within a hierarchical structure. Burke in his celebrated Reflection on the revolution of France was convinced that to remove one chain out of the structure of society  would import the chaos and anarchy that was witnessed in the revolution. Therefore the Courts adopted a wide interpretation of the doctrine of equity that refused a mortgagee the right to any interest in the property used as security. Even if the contractual term expressly allowed the mortgagee to retain some property interest, in the even of default, the court would ensure that the property was fully re-conveyed to the "rightful" owner. As Lord Nottingham said in Thornborogh v Bake the mortgagee had a right to the money not the land.

        However, to completely ignore the importance of the landed classes would give an incomplete explanation as to why the equity of redemption rose and fell. The judges that formed the doctrine of equity redemption where themselves members of the landed classes. These judges shared the narrative that was common to the rest of their class. They believed that land was a sacred and that it was more than wealth but a partnership between those "who are living, those who were dead, and those about to be born" Edmund -Burke. It was felt that the land rightfully belonged to the upper class and should be preserved as such. The judges saw the disgrace of a member of the nobility losing their inherited status. This rationale is witnessed in other parts of the law, for example the Courts were only initially willing to accept the property interest of a married woman in the form of a strict settlement, a device almost exclusive to the gentry and more to do with protecting the fathers desire for the property. As the economy became less concerned with sedentary agriculture and the industrial revolution took over, the new middle classes and noveaux riches  began to take judicial positions. This new rising classes unsurprisingly refused to protect the unearned privileged position of the landed classes. Hence, in the case of Kreglinger  Viscount Haldale LC was un willing to offer a blanket protection of property but would only do so when the substance of the contractual provision, in this case a supposed collerative advantage, was actually intended to be part of a mortgage rather than a separate contractual agreement. This is was a new period when the middle class, a more commercial class, wanted to protect their own interests and thus were less willing to allow equity to infringe the sanctity of a contract. Neither the judiciary of the 17th Century nor the Judiciary of the late 19th Century offered arguments that were intrinsically superior to the other, instead they responded to a change of circumstances as the upper classes became less important.    

        Yet it can be more convincingly argued that the rise and fall of equity redemption is less to do with the law responding to the interest of certain classes and more its reaction to changing economic circumstances. Cannadine shows that the  economy before the end of the 19th Century was based and reliant upon land. The reliability and stability of land was an ideal asset to be used as a security. Money lenders were more willing to loan large sums because of the reliability of land as a security. This can be seen by the grand indebtness that many members of the aristocracy incurred by the end of 19th Century, for example spectacular bankruptcy of the Duke of Buckingham who had incurred debts of £1.5 million. Although this was an exceptional case Bagehot commented that the largest land titles were all mortgaged. The economy was fuelled by what the Economist calls an "implicit faith" on the stability and reliability of land. Such loans would fuel the economy by increased investment or consumption by the landed classes. Duke of Durham invested in coal mines by heavily mortgaging his land and Cannadine claims that many members of the aristocracy increased consumption by improving their land or rebuilding their houses. However, the late 19th Century witnessed an agricultural depression that led to the what Cannadine estimates to be  a 30% plummet in the value of land across the whole country. Under such conditions it made little economic sense for the law to protect an unstable and unreliable security especially since the landed classes were themselves beginning to sell their property. The "implicit faith" that rested in land reached a dramatic end and instead the economy required the court to enforce a Hobbesian reliance on the sanctity of contract. The importance is that money will not be lent in a time of instability and uncertainty and when land lost its economic value the economy began to rely on the certainty of contracts being enforced. Hence in Kightsbridge the equitable doctrine of redemption is only allowed to infringe “freedom of contract” in consideration of the commercial context of the transaction, for example where the  parties dealing on equal bargaining power. Therefore, it was the changing importance of land as a security rather than the importance of the ruling class as a class that is a more convincing explanation of the rise and fall of the equity of redemption. This view is reinforced by the fact that the two competing authorities of E Spring and Thompson, whereas disagreeing to the extent of crisis and restructuring in the landed classes, both conclude that by the end of the 19th Century the landed classes were not in any less an entrenched social position.  

        In addition to the wider economic change, changing economic practices were also of paramount importance. As Cannadine observes, In the times of Lord Nottingham and Lord Mannesfield, mortgages were carried out through family and neighbours. Such loans were seen as a short term expedient to help a neighbour rather than a commercial transaction and therefore it was seen as unconscionable that a neighbour  should take the property because of contractual breach, neither party had intended this in the case of an eventuality. Furthermore, the Courts often looked unfavorably at a predatory mortgagee if the landed gentry had little knowledge, experience and therefore bargaining power. For example Lord Guilford claimed, with success, that he had been unaware what 60% interest meant and that assumed it was a normal rate.  By the late 19th Century mortgages had become more commercialized through the route professional groups such as Solicitors, West End banks and Insurance Companies. The importance of Insurance companies forced Bagehot to comment that that a large part of the richest land title were mortgaged to Insurances Companies. The landed Gentry became more aware of contractual obligations, especially individuals that were using borrowed money to themselves invest in enterprises such as Coal mining (Duke of Durham). By the late 19th Century E Spring argues that the landed classes were revaluating their expenditure and financial obligation in order to balance their income with their debts. It was clear that the increased the commercialization of mortgages that touched every echelon of society, not just the entrepreneurial middle class, would make the Courts less willing to protect a fully aware party from a bad bargain. Sir Wilfred Greene MR in Knightsbridge was not willing to interfere with freedom of contract where the parties had been on equal bargaining power. Therefore the judicial change in its approach towards the equity of redemption mirrored a society that was less naïve and more responsible for their own decisions.

        The rise and fall of the equity of redemption can be explained by referring to the courts fear of abandoning a coherent and stable feudal structure rather than protecting an important landed class. Yet this thesis on its own provides an insufficient explanation, as it does not explain why the equity of redemption fell nor why it rapidly rose in 17th Century a hundred years before the French Revolution. Therefore,  a better explanation may be seen in the courts responding to the new and rising middle class. Yet whereas this is argument is to an extent undeniably true the rapid demise of the equity of redemption does not correspond with the upper class losing influence, as this  a much slower rate. Instead, the most powerful explanation is that as the economy became more sophisticated and all levels of society responded relied less on the concept of land and became more commercially aware. The combination of these two factors allowed the courts in Fairclough to begin the restriction of the doctrine of equity.