Sec. 221. Personal remedy of the mortgagee, p. 366.

Sec. 222. Covenant for payment, p. 369.

Sec. 223. Who may sue on the covenant, p. 372.

Sec. 224. Who may be sued on the covenant, p. 373.

Sec. 225. When the right to sue arises, p. 375.

Sec. 226. Acceleration of payment, p. 377.

Sec. 227. When the mortgagee is disentitled to sue, p. 383.

Sec. 221. Personal remedy of the mortgagee

Prior to the Administration of Justice Act of 1873 in Ontario the remedy for enforcement of immediate payment of the mortgage money was by action at law upon the covenant for payment, and the Court of Chancery had no jurisdiction to entertain a claim upon the covenant for payment, although that court might, after a sale had taken place pursuant to a decree in a suit for foreclosure or sale, order payment of the deficiency by the mortgagor (a). The plaintiff might, however, pursue his various remedies at law and in equity concurrently (b).

By the Ontario Judicature Act, 1881 (c), jurisdiction was vested in one court to give both legal and equitable relief, and under the present rules of practice claims for immediate payment and for possession may be combined in one action with a claim for foreclosure or sale (d).

(a) Sawyer v. Robertson, 1900, 19 O.P.R. 172; cf. Acadian Loan Co. v. Legere, 1911, 45 N.S.R. 328. See chapter 24, Action for Foreclosure or Sale, Sec. Sec. 232, 245.

(b) See chapter 22, Action for Possession, Sec. 211.

(c) As to the Judicature Act generally, see chapter 4, Law and Equity in Upper Canada, Sec. 35.

A mortgagee may of course still sue on the covenant alone, and if a third party has joined in the mortgage for the purpose of guaranteeing payment, the mortgagee's only remedy against the surety is by action on the covenant or by claiming payment from him in an action for foreclosure or sale. A separate action on the covenant will, however, be regarded as vexatious if there is pending an action for foreclosure or sale in which a judgment for immediate payment might have been asked for and obtained (e).

Prima facie a mortgage, other than a Welsh mortgage (f), implies a debt and a personal obligation on the part of the mortgagor to pay it. If there is a covenant or bond for its payment it is a specialty debt, if not, it is a simple contract debt (g). The personal obligation may, however, be excluded by the terms of the mortgage (h).

(d) Rule 460. See chapter 24, Action for Foreclosure or Sale, Sec. 232, where the form of endorsement on the writ of summons is set out and the procedure in the combined action is outlined.

(e) Poulett v. Hill, [1893] 1 Ch. 277; Williams v. Hunt, [1905] 1 K.B. 512; see chapter 24, Action for Foreclosure or Sale, Sec. 232.

(f) See chapter 1, Introductory, Sec. 2.

(g) King v. King, 1735, 3 P. Wms. 358, 18 R.C. 1; Ancaster (Duke of) v. Mayer, 1785, 1 Bro. C.C. 454, at p. 464, 18 R.C. 177, at p. 187; Yates v. Aston, 1843, 4 Q.B. 182; Sutton v. Sutton, 1882, 22 Ch.D. 511, at p. 515, 16 R.C. 298, at p. 302; 21 Halsbury, Laws of England, p. 70. See, however, Hall v. Morley, 1853, 8 U.C.R. 584, to the effect that in the absence of a covenant for payment an action of debt will not lie unless there is some evidence of a debt or loan. As to the implied covenant for payment by a person who conveys, and is expressed to convey, as beneficial owner, see chapter 35, Short Forms of Mortgages Act, Sec. 384. A covenant for payment is implied in a registered charge under the Land Titles Act, R.S.O. 1914, c. 126, s. 31.

(h) McKay v. Howard, 1883, 6 O.R. 135; Mathew v. Blackmore, 1857, 1 H. & N. 762. As to words qualifying or limiting a covenantor's liability on an express covenant for payment, see Sec. 222, infra.

Where a mortgage contains an acknowledgment of the receipt of mortgage money but no covenant for repayment this does not of itself afford conclusive evidence of a debt, so as to enable a mortgagee or his assignees to maintain an action for its recovery. It was held that where no money was advanced by the mortgagee, but the mortgage was given for a debt due by the mortgagor to the mortgagee who, in consideration of getting the mortgage, agreed to release the mortgagor from all personal liability, the plaintiffs who were assignees of the mortgage were not entitled to recover (i).

The amount which the plaintiff will ordinarily be entitled to recover in an action on the covenant will be the principal and interest covenanted to be paid and the costs of the action. In special cases the amount recoverable, if any, will be ascertained upon principles discussed in other chapters (j).

In Ontario and Manitoba, in the case of a mortgage under the land titles system, as in the case of a mortgage not under that system, and in Saskatchewan and Alberta, an action on the covenant for payment may be entertained by the courts under their ordinary jurisdiction. In Manitoba, in the case of a mortgage under the land titles system, statutory provision is made for sale and foreclosure proceedings being taken in the registrar's office, while in Saskatchewan and Alberta a mortgagee may, at his option, take proceedings in the registrar's office for sale and foreclosure or have recourse to the courts for these remedies (k).

(i) London Loan Company v. Smyth, 1882, 32 U.C.C.P. 530; cf. Jackson v. Yeomans, 1876, 39 U.C.R. 280.

(j) See chapter 26, Limitation of Actions; chapter 27, Accounting between Mortgagor and Mortgagee; chapter 28, Mortgagee in Possession; chapter 29, Interest; chapter 30, Costs. See also chapter 3, Legal Mortgage in Equity, Sec. 25, as to a stipulation for a bonus or other collateral advantage.

(k) For the details of the Manitoba, Saskatchewan and Alberta statutes, see chapter 24, Action for Foreclosure or Sale, Sec. 246.