Historical Introduction to the Corporate Mortgage, a
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LAW REVIEW
Volume 2 FEBRUARY, 1930 Number 2
A HISTORICAL INTRODUCTION TO THE
CORPORATE MORTGAGE
BY CECIL MEAD DRAPER*
The corporate mortgage is a product of the vast development of cor-
porations initiated by the Industrial Revolution. The introduction of
machinery led to the aggregation of large amounts of capital under single
control and direction. As these units of capital enlarged, increasing
dependence was placed on borrowed funds. The development of the cor-
porate mortgage was the logical result.
All young lawyers, and many of the older ones, are thoroughly mysti-
fied by the enormous size and the myriad of covenants, provisions, and
conditions which go to make up the modern corporate trust deed; 1 and the
drafting of such an instrument is accomplished, even by the seasoned
practitioner, at the cost of countless hours of lost sleep and weeks of pains-
taking work.
An instrument of the magnitude of and as fully standardized as is the
corporate mortgage has never burst into bloom in its final form. The
development, for the most part, has been slow and graduab-a little bit
added here, a little there. In no case could this be more true than in the
subject with which we are to deal. In the physical sciences, theories
evolve, parts being added, others dropped. Not so with the corporate
mortgage; here there are many to add, but none to remove the chaff. Some
lawyers lack the leisure or the inclination; others, the ability. The coun-
sel for a corporation is asked to draw a mortgage. He uses a copy of the
last mortgage he has drafted as a model; often he secures mortgages
obtained elsewhere to check against his own. Perhaps they contain pro-
visions new to him, which, not having the time to check their validity or
desirability, and fearful that some rule of law may have escaped his atten-
*Of the Denver Bar.
'While there is a technical distinction between a mortgage and a deed of trust or
trust deed, the terms are used interchangeably when applied to corporate mortgages
and will be so used in this article.
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Historical Introduction to the Corporate Mortgage, a
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