Sec. 351. Receiver for equitable mortgagee, p. 686.

Sec. 352. Appointment under the Judicature Act, p. 688.

Sec. 353. Mortgagee's statutory or express power to appoint, p. 690. Sec. 354. Liability for acts or defaults of receiver, p. 692. Sec. 355. Powers and liability of receiver, p. 692.

Sec. 351. Receiver for equitable mortgagee

As an equitable mortgage does not convey the legal estate (a), the general rule is that an equitable mortgagee is not entitled to bring an action for possession against the mortgagor in occupation of the mortgaged lands (b) or, apart from express contract between the mortgagor and the equitable mortgagee, to require payment of rent by tenants in occupation (c). The equitable equivalent to the taking of possession is the appointment by the court of a receiver of the rents and profits (d).

As the equitable mortgagee has no legal right to take possession or to demand payment to himself of the rents, if he serves notice on a tenant requiring the tenant to pay the rent to him, the tenant may refuse payment, for he will get no discharge (e). If, however, the tenant pays rent to the equit-

(a) See chapter 5, Equitable Mortgages, Sec. 41.

(b) See chapter 22, Action for Possession, Sec. 212, where the exception in the case of a mortgage which conveys the equity of redemption is mentioned.

(c) See chapter 15, Lessee of Mortgaged Land, Sec. 142.

(d) By contract or, in England, by statute, an equitable mortgagee may himself have power to appoint a receiver. See Sec. 353, infra.

(e) Vacuum Oil Co. v. Ellis, [1914] 1 K.B. 693 (a case in which able mortgagee after notice that the rent is claimed by the latter as equitable mortgagee, the mortgagee cannot be compelled to refund the rent to the tenant, and if the payment is made with the knowledge of the landlord (the mortgagor) the payment will afford a good equitable defence to an action by the landlord against the tenant in respect of the same rent (f).

Payment of rents to a receiver appointed on behalf of an equitable mortgagee discharges the persons paying them (g), and the equitable mortgagee is entitled to retain them as against the mortgagor, and even as against a prior mortgagee, legal or equitable, so far as they are collected before the prior mortgagee intervenes. The prior mortgagee may, however, put an end to the right of the subsequent mortgagee to receive the rents by himself taking possession or, if a receiver appointed by the court at the instance of the subsequent mortgagee is in possession, the prior mortgagee may himself apply to the court to be let into possession or for the discharge of the receiver (h), and in such case the prior mortgagee will be entitled to the rents and profits as from the date of the service of his notice of motion (i).

Where the mortgagor is in possession, a debenture holder, a puisne mortgagee or other equitable mortgagee is prima fade entitled to the appointment of a receiver if the interest is in arrear (j), whether the security is scanty or not (k), or if a receiver for the second mortgagee had been appointed, but the second mortgagee attempted to collect the rent himself).

(f) Finck v. Tranter, [1905] 1 K.B. 427.

(g) Vacuum Oil Co. v. Ellis, supra.

(h) In re Metropolitan Amalgamated Estates, Fairweather v. The Company, [1912] 2 Ch. 497.

(i) Preston v. Tunbridge Wells Opera House, [1903] 2 Ch. 323.

(j) Strong v. Carlyle Press, [1893] 1 Ch. 268; In re Prytherch, Prytherch v. Williams, 1889, 42 Ch.D. 590, at p. 600; Union Bank v. Engen, 1917, 10 S.L.R. 185, 33 D.L.R. 435.

(k) Aikins v. Blain, 1867, 13 Gr. 646.

the security is in jeopardy by reason of the insolvency of the mortgagor, although default has not been made under the mortgage (l).

A prior mortgagee need not be made a party to the proceedings (m), but the appointment should be made subject to the right of the legal mortgagee to take possession (n). If the appointment is made without any reservation as to the right of the legal mortgagee, the latter cannot take possession without the leave of the court (o).

The court will not, as a general rule, appoint a receiver on the application of a subsequent mortgagee if the prior mortgagee is in possession (p), but where a prior mortgagee in possession acquired the equity of redemption and it was shown that he had received more than sufficient to pay off his mortgage, a receiver was appointed (q).