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    NAOKES & Co. Vs RICE

    Uploaded by

    Saaksshi Singh
    - Rice mortgaged his property, including a premises and goodwill, to Noakes with the agreement that if he paid back the full amount, ownership would transfer back to him. However, the agreement also included a covenant that Rice could only sell Noakes' malt liquor on the premises, even after paying off the mortgage. - The court held that the covenant was unenforceable after redemption of the mortgage, as redemption is essential to a mortgage and equity will not allow restrictions on redemption. Redemption requires that the property be returned to the owner freely and without encumbrances, as if it had never been mortgaged.

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    NAOKES & Co. Vs RICE

    Uploaded by

    Saaksshi Singh
    259 views4 pages
    - Rice mortgaged his property, including a premises and goodwill, to Noakes with the agreement that if he paid back the full amount, ownership would transfer back to him. However, the agreement also included a covenant that Rice could only sell Noakes' malt liquor on the premises, even after paying off the mortgage. - The court held that the covenant was unenforceable after redemption of the mortgage, as redemption is essential to a mortgage and equity will not allow restrictions on redemption. Redemption requires that the property be returned to the owner freely and without encumbrances, as if it had never been mortgaged.

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    NAOKES & Co. Vs RICE

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    - Rice mortgaged his property, including a premises and goodwill, to Noakes with the agreement that if he paid back the full amount, ownership would transfer back to him. However, the agreement also included a covenant that Rice could only sell Noakes' malt liquor on the premises, even after paying off the mortgage. - The court held that the covenant was unenforceable after redemption of the mortgage, as redemption is essential to a mortgage and equity will not allow restrictions on redemption. Redemption requires that the property be returned to the owner freely and without encumbrances, as if it had never been mortgaged.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    259 views4 pages

    NAOKES & Co. Vs RICE

    Uploaded by

    Saaksshi Singh
    - Rice mortgaged his property, including a premises and goodwill, to Noakes with the agreement that if he paid back the full amount, ownership would transfer back to him. However, the agreement also included a covenant that Rice could only sell Noakes' malt liquor on the premises, even after paying off the mortgage. - The court held that the covenant was unenforceable after redemption of the mortgage, as redemption is essential to a mortgage and equity will not allow restrictions on redemption. Redemption requires that the property be returned to the owner freely and without encumbrances, as if it had never been mortgaged.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 4

    NAOKES & Co.

    Vs
    RICE
    FACTS
    • The defendant, Rice was a dealer who mortgaged his property, premise
    and goodwill to Noakes subject to the provision that if he paid back the
    whole amount, the property would be transferred back to his name or any
    other person’s name. A covenant was attached that stated whether or not
    the amount is due, Rice would only sell malt liquor by Noakes in his
    premises. Because of this covenant, Rice had difficulty in redemption and
    it didn’t give him absolute right over his property.
    HELD
    • The covenant was not enforceable after redemption of the charge.

    Lord MacNaghten said of the rule preventing a clog on the equity of redemption
    of a mortgage: ‘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. It follows as a necessary consequence that, when the money
    secured by a mortgage of land is paid off, the land itself and the owner of the
    land in the use and enjoyment of it must be as free and unfettered to all intents
    and purposes as if the land had never been made the subject of the security.’
    • Lord Lindley said: ‘My Lords, I agree in thinking that 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.’

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