A mortgagee exercising a power of sale is not a trustee for the mortgagor except as regards the surplus of the purchase money arising from the sale after the mortgage debt is satisfied. This is so whether the mortgage is in the ordinary form or by way of trust for sale (z).

"A mortgagee having a power of sale cannot, as between himself and the mortgagor, exercise it in a manner merely arbitrary, but is as between them bound to exercise some discretion; not to throw away the property, but to act in a prudent and business-like manner, with a view to obtain as large a price as may fairly and reasonably, with due diligence and attention, be under the circumstances obtainable." (a).

"A mortgagee with a power of sale, though often called a trustee, is in a very different position from a trustee for sale. A mortgagee is under no obligations to the mortgagor, but he has rights of his own which he is entitled to exercise adversely to the mortgagor. A trustee for sale has no business to place himself in such a position as to give rise to a conflict of interest and duty. But every mortgage confers upon the mortgagee the right to realize his security and to find a purchaser if he can, and if in exercise of his power, he acts bona fide and takes reasonable precautions to obtain a proper price, the mortgagor has no redress, even although more might have been obtained for the property if the sale had been postponed." (6)

(x) Smith v. Brown, 1890, 20 O.R. 165. The original statute 47 V. c. 16, s. 1 provided that no further proceedings at law or in equity should be taken. The words in italics were omitted from R.S.O. 1887, c. 102, s. 30.

(y) Canada Permanent Building Society v. Teeter, 1889, 19 O.R. 156.

(z) Kirkwood v. Thompson, 1865, 2 H. & M. 392; Locking v. Parker, 1878, L.R. 8 Ch. 30; In re Alison, Johnson v. Mounsey, 1879, 11 Ch.D. 284.

(a) Matthie v. Edwards, 1846, 2 Coll. 465, 10 Jur. 347, S.C. on appeal sub nom. Jones v. Matthie, 11 Jur. 504.

"A mortgagee is not a trustee of a power of sale for the mortgagor at all; his right is to look after himself first. But he is not at liberty to look after his own interest alone, and it is not right, or proper, or legal for him, either fraudulently, or wilfully, or recklessly, to sacrifice the property of the mortgagor; that is all." (c)

If a mortgagee exercises the power of sale in good faith for the purpose of realizing his mortgage debt, without corruption or collusion with the purchaser, the court will not interfere, even though the sale be very disadvantageous, unless the price is so low as in itself to be evidence of fraud (d). If, however, he acts "fraudently, or wilfully, or recklessly" (d2) or if by reason of his "wilful negligence and default" the land is sold at an undervalue (d3), he will be chargeable with the full value of the land. The effect of the decisions is "to displace the test of a prudent man dealing with his own property, in favour of a somewhat lesser degree of responsibility."

(d4). Under the extended form of power of sale provided by the Short Forms of Mortgages Act (e) it is stipulated that the mortgagee shall not be responsible for any loss which may-arise by reason of any sale "unless the same shall happen by reason of his . . . wilful neglect or default."

(b) Farrar v. Farrars, 1888, 40 Ch.D. 395, at p. 410. See also Cholmondeley v. Clinton, 1820, 2 J. & W. 1 at p. 182; Davey v. Durrant, 1857, 1 De G. & J. 535.

(c) Kennedy v. De Trafford,. [1896] 1 Ch. 762, at p. 772, affirmed [1897] A.C. 180.

(d) Warner v. Jacob, 1882, 20 Ch.D. 220, 18 R.C. 452; Haddington Island Quarry Co. v. Huson, [1911],A.C. 722; Kaiserhof Hotel Co. v. Zuber, 1912, 46 Can. S.C.R. 651, 9 D.L.R. 877, affirming 25 O.L.R. 194.

(d2) Kennedy v. De Trafford, supra; British Columbia Land and Investment Agency v. Ishitaka, 1911, 45 Can. S.C.R. 302, at pp. 316, 317.

(d3) National Bank of Australasia v. United Hand-in-Hand, etc. Co., 1879, 4 App. Cas. 391, at p. 411; Wilson v. Taylor, 1912, 4 O.W.N. 253, 7 D.L.R. 317, 23 O.W.R. 359.

(d4) Wilson v. Taylor, supra.

(e) See Sec. 334, supra.

A sale under power of sale may be set aside if the conduct of the mortgagee is oppressive. This relief was granted in a case in which the mortgagee exercised the power after a tender of principal and interest (the costs not having been ascertained) and the purchaser was aware of the facts (f). A solicitor took from his client a mortgage for $200 for costs, the mortgage being a valid security for about $30 only, as not more than that amount of costs had been incurred at the time of taking the mortgage. The purchaser under the power of sale in the mortgage became aware before completing the purchase of the vexatious and oppressive user of the power. It was held under these circumstances that the purchaser could not acquire a good title to the lands and that he was entitled to recover back the deposit paid by him (g).

The extended form of power of sale above mentioned provides that the person exercising the power may sell "by public auction or private contract, or partly by public auction and partly by private contract, as to him shall seem meet," and a sale under the power of sale conferred by the Mortgages Act (h) may be "by public auction or private contract."

"To hold that the mortgage was bound in the first instance to put up the property for sale by auction would be to limit, cut down the power given by the deed, which expressly authorizes a sale by public auction or private contract; and certainly I am not prepared to hold that a mortgagee is not justified in accepting a fair offer for the purchase of the mortgaged property until he has advertised the property for sale." (i)

(f) Jenkins v. Jones, 1860, 2 Giff. 99. (g) Locking v. Halsted, 1888, 16 O.R. 32. (h) See Sec. 332, supra.

(i) Davey v. Durrant, 1857, 1 De G. & J. 535; cf. Re Shore. 1890, 6 M.R. 305.