A mortgagee, in exercising his power of sale, does not stand in a fiduciary relation to his mortgagor (s). His only obligations are to observe the terms of the power and to act in good faith (t). He is bound to sell fairly, and to take reasonable steps to obtain a proper price; and for this reason and because his authority is to sell and not to make himself full owner of the mortgaged property, he cannot sell to himself or to a trustee or an agent for himself, or rightly pursue any scheme for getting the property into his own hands under the guise of sale (u); but he may proceed to a forced sale for the purpose of paying the mortgage debt (x). He need not sell by auction, unless of course he should have been specially restricted to this mode of sale by the terms of his power (y). For example, the Court has upheld a sale by a mortgagee to one of two mortgagors, who were tenants in common, for the exact amount owing for principal, interest and costs, the bulk of the purchase money being allowed to remain on mortgage, when it appeared that the mortgagee had acted in perfect good faith, having refrained from putting the property up to auction on a surveyor's advice that it would be unlikely to realise the amount owing, and having advertised in vain for another purchaser by private contract (z). On the other hand, a sale by the transferee of a mortgage, immediately after the transfer, for the exact sum paid for principal and interest on taking the transfer, was set aside, as between the parties to this sale and the persons entitled to the equity of redemption, when it was shown that the transferee of the mortgage had been a mere nominee of the purchaser and there had been no bona fide exercise of the power of sale. The purchaser, however, having mortgaged the property and resold the equity of redemption prior to the commencement of the proceedings to set aside the sale to her, and the purchaser of the equity of redemption having taken a transfer of this mortgage after he had notice of such proceedings, and having proved that he had no notice at the time of his purchase of the equity of redemption of the circumstances attending the prior sale, it was held that he was not affected with constructive notice of these circumstances or of any imperfection in the prior sale, owing to the facts apparent on the face of the title or by reason of his omission to make inquiry as to the validity of the prior sale; and it was decided that he was entitled to tack the equity of redemption which he had purchased to the legal estate acquired by him under the transfer of the mortgage, and so exclude the equity of the persons originally entitled to redeem to set aside the prior sale (a). A mortgagee may well exercise his power of sale, notwithstanding that he has been in possession of the mortgaged property for a length of time sufficient to bar the mortgagor's equity of redemption under the Statutes of Limitation; and this is also the case where the mortgage has been made, not in the form now usual of a conveyance with power of sale, but in the form of a conveyance on trust for sale (b). It appears too that a mortgagee may well exercise his power of sale after he has obtained an order for foreclosure absolute (c); and his right to exercise this power is not affected by the mere commencement of proceedings either by himself to obtain foreclosure, or by the mortgagor for redemption (d). But when the mortgagee has obtained an order for foreclosure nisi, giving the mortgagor the usual time within which to redeem, or the mortgagor has obtained the common order for redemption (e), the mortgagee may not exercise his power of sale without leave of the Court, so long as the right of redemption so reserved to the mortgagor remains open. The power is, however, not destroyed hut merely suspended during this period, and if the mortgagee do exercise it within that time in favour of a purchaser taking without notice of the order, it appears that the latter will get a good title (f). But if the purchaser have express notice of any foreclosure or redemption proceedings or any such proceedings be registered as a lis pendens, the purchaser will be bound by them and must see that no order suspending in effect the exercise of the mortgagee's power of sale has been made or is still subsisting (g).

Mortgagee selling under power of sale bound only to act in good faith.

S. 71; Re Solomon and Meagher's Contract, 40 Ch. D. 608; Re Boueherett, 1908, 1 Ch. 180, 184; and see Williams' Conveyancing Statutes, 251 - 253.

(m) Stat. 23 & 24 Vict. c. 145, s. 13.

(n) Above, p. 337, and n. (p). Note the difference in the language.

(o) Sect. 15.

(p) Hiatt v. Hittman, 19 W. R. 694.

(q) Re So/omon and Meagher's Contract, 40 Ch. D. 508.

(n) Above, p. 340.

(s) Warner v. Jacob, 20 Ch. D. 220.

(l) Kennedy v. De Trafford, 896, 1 Ch.762; 1897, A.C. 180; Nutt v. Easton, 1899, l Ch. 873; 1900, 1 Ch. 29.

Kennedy v. Be Trafford.

Bailey v. Barnes.

(u) Downes v. Grazebrook, 3 Mer. 200; Robertson v. Norris, 1 Giff. 421; 4 Jur. N. S. 155, 443; National Bank of Australasia v. United, etc. Co., 4 App. Cas. 391; Martinson v. Clowes, 21 Ch. D. 857, aff. 1885, W. N. 41; Hudson v. Deans, 1903, 2 Ch. 647; see below, Chap. XVII.

(x) Farrar v, Farrars, Ltd., 40 Ch. D. 395, 398; Bailey v. Barnes, 1894, 1 Ch. 25, 32.

(y) Kenned?/ v. Be Trafford, 1896, 1 Ch. 762, 767; 1897, A. C. 180, 185.

(z) Kennedy v. De Trafford, ubi sup.

Sale by mortgagee in possession after mortgagor's title barred.

Sale after foreclosure absolute.

Sale pending foreclosure or redemption proceedings.

(a) Bailey v. Barnes, 1894, 1 Ch.

(b) See Looking v. Parker. L. R. 8 Ch. 30; Be Alison, 11 Ch. D. 284. 290, 295.

(c) See Stevens v. Theatres, Ltd., 1903, 1 Ch. 857, 862, 863.

(d) Adams v. Scott, 7 W. R. 213: Stevens v. Theatres, Ltd.. 1903, 1 Ch. 857, 861.

(c) See on on Judgments 1896, 1926., 6th ed.