This section is from the book "Dart's Treatise On The Law And Practice Relating To Vendors And Purchasers Of Real Estate", by J. Henry Dart . Also available from Amazon: A treatise on the law and practice relating to vendors and purchasers of real estate.
It was formerly the duty of assignees of a bankrupt, as it now is of trustees in bankruptcy, to sell without any unnecessary delay especially where the estate comprises stock-in-trade and a going concern (b); and any single creditor might insist on a sale; and, if he so insisted, it was doubtful whether the Court could refuse its assent (c); but it would seem that it now can (d).
Assignees, bankrupts, and trustees in bankruptcy.
The L. P. Act, 1925, repeals the Conv. Act, 1881, and by s. 101 provides that a mortgagee, where the mortgage is by deed, is to have the powers in that section mentioned to the like extent as if they had been in terms conferred by the mortgage deed. Such powers include a power when the mortgage money has become due, to sell, or to concur with any other person in selling, the mortgaged property, or any part thereof, either subject to prior charges or not, and either together or in lots, by public auction op by private contract, subject to such conditions respecting title, or evidence of title or other matters, as the mortgagee thinks fit, with power to vary any contract for sale, and to buy in at an auction, or to rescind any contract for sale, or tore-sell, without being answerable for any loss occasioned thereby.
(a) Under the legislation of 1925, a power of sale in relation to land (unless given to a mortgagee) has no operation, except that it may constitute the donees trustees for the purposes of the S. L. Act, 1925, or it may enlarge the statutory powers of a tenant for life: see Wolst. & Cherry, vol. i. p. 177. (b) Ex p. Goring, (1790) 1 Ves. 168.
(c) S. C; and see Ex p. Hughes, (1802) 6 Ves. 617; Ex p. Miller, (1840) 1 M. D. & D. at p. 44.
(d) See Wms. on Bkcy. 13th ed. p. 353.
By s. 103, however, the power of sale conferred by the Act is not to be exercised unless and until - (1) notice-requiring payment of the mortgage money has been served on the mortgagor or two or more mortgagors, and default has been made in payment of the mortgage money, or of part thereof, for three months after such service, or (2) some interest under the mortgage is in arrear and unpaid for two months after becoming due, or (3) there has been a breach of some provision contained in the mortgage deed or in the Act, or in an enactment replaced by the Act, and on the part of the mortgagor, or of some person concurring in making the mortgage, to be observed or performed, other than and besides a covenant for payment of the mortgage money or interest thereon. And by s. 104 where a conveyance is made in exercise of the power of sale conferred by the Act, or any enactment replaced by the Act, the title of the purchaser is not to be impeachable on the ground that no case had arisen to authorise the sale, or that due notice was not given, or (where the mortgage-was made after the commencement of the Act) that leave of the Court, when so required, was not obtained, or that the power was otherwise improperly exercised; and a purohaser is not, either before (e) or on conveyance, concerned to inquire whether the sale is authorised or due notice has been given; but any person damnified by an improper exercise of the power is to have his remedy in damages against the person exercising the power. Where the mortgage deed has been executed after the 31st December, 1911, the mortgagee's power of sale includes (inter alia) a power to impose restrictive provisions on the land sold or on the land retained; and a power to sell the minerals without the surface land, or the surface land without the minerals (f).
(e) In the Life Interest, etc. Corp. v. Hand-in-hand, etc. Society 1898, 2 Ch. 230, it was held by Stirling, J., that the protection given by a. 21 (2) of the Conv. Act, 1881, to a purchaser from a mortgageechap. II. Sect 1.
Reitrictive covenants: minerals:
The L. P. Act, 1925, s. 106 (1) (re-enacting s. 21 (4) of the Conv. Act, 1881), provides that the power of sale conferred by the Act may be exercised by any person for the time being entitled to receive and give a discharge for the mortgage money. The power, accordingly, can be exercised by a transferee or a sub-mortgagee.
Who may exercise a mortgagee's power of sale.
It has been a rule of law that a mortgagee, when selling, cannot convey to a purchaser a larger estate than is vested in him (g); but the position is altered by the L. P. Act, 1925. Under that Act, a mortgage whether of an estate in fee simple or of a term of years is only capable of being effected at law either by a demise (or sub-demise), or by a charge by deed expressed to be by way of legal mortgage (ss. 85 and 86). Where an estate in fee simple has been thus mortgaged - whether by demise or by deed of charge - and the mortgagee sells, the conveyance will operate to vest in the purchaser the fee simple (subject to any legal mortgage having priority thereto), and the term or charge will merge and be extinguished as respects the land conveyed (s. 88). And where a term of years has been mortgaged by sub-demise or by a charge by way of legal mortgage and the mortgagee sells, the conveyance will operate to convey to the purchaser not only the mortgage term, if any, but also the leasehold reversion (subject to any prior mortgage and the mortgage term or the charge will merge in such leasehold reversion and be extinguished (s. 89).
Extent of the power.
Only applied after conveyance, and that it did not preclude a purchaser making a requisition whether the power of sale had, in fact, become exercisable. This decision would not be applicable to the different wording of the new Act.
(f) S. 101 (2).
(g) Re Hodson and Howe's Contract, 35 Ch. D. 668; and see Re Solomon and Meagher's Contract, 40 Ch. D. 508; Hiatt v. Hillman, 19 W. R. 694.