A mortgagee with power of sale, except where in a judicial sale he obtains the leave of the court to bid, cannot sell to himself either alone or with others; nor can he sell to a trustee for himself.

"A sale by a person to himself is not a sale at all, and a power of sale does not authorize the donee of the power to take the property subject to it at a price fixed by himself, even although such price be the full value of the property. Such a transaction is not an exercise of the power, and the interposition of a trustee, although it gets over the difficulty so far as form is concerned, does not affect the substance of the transaction." (d)

A mortgagee sold the mortgaged premises under his power of sale ostensibly to a third person but in reality to himself. Shortly afterwards he sold a portion of the lands for a sum exceeding the amount due on the mortgage, and he also received rents for the remaining portion. It was held that the sale by the mortgagee to himself was abortive, and that he was a mortgagee in possession, and should account to the mortgagor for the surplus received from the second sale and for the rents, together with interest on both amounts; and the mortgagee was ordered to pay the costs of the action (e).

Where the first mortgagee after making preliminary arrangements to ensure an advantageous sale of the mortgaged property bought the second mortgagee's security at a discount without informing him of such arrangements, the court refused to set aside the sale (f).

(c) Henderson v Astwood, [1894] A.C. 150.

(d) Farrar v. Farrars, 1888, 40 Ch.D. 395, at p. 409. See Downes v. Grazebrook, 1817, 3 Mer. 200; Robertson v. Norris, 1858, 1 Giff. 421; National Bank of Australasia v. United Hand-in-Hand, etc., Co., 1879, 4 App. Cas. 391; In re Bloye's Trust, 1849, 1 Mac. & G. 488; Henderson v. Astwood, [1894] A.C. 150; Hodson v. Deans, [1903] 2 Ch. 647.

(e) Mitchell v. Kinnear, 1897, 1 N.B. Eq. 427; Ellis v. Delia-bough, 1869, 15 Gr. 583.

Where a person has acted as agent for the mortgagee, for example, in negotiating the loan, receiving the interest for the mortgagee, or conducting the sale, he cannot purchase from the mortgagee under the power of sale (g). The solicitor for a mortgagee cannot purchase even although the proceedings for sale were not taken in his name, and it was not shown that any loss had occurred by reason of his being the purchaser (h).

A receiver appointed by the court cannot purchase the property of which he is receiver without the leave of the court even where the sale is made, not in the action in which he was appointed, but by a mortgagee selling with leave outside the action (i).

Where, under the power of sale in a mortgage, a mortgagee went through the form of making a sale of the mortgaged premises to a person who on the same day reconveyed to the mortgagee, it was held that the sale was invalid and did not extinguish the right to redeem (j).

A sale by a mortgagee in good faith to a corporation of which he is a shareholder is not voidable by the mortgagor, but where the mortgagee sold under the power of sale to a company of which he was a promoter and also solicitor, the onus was thrown upon those supporting the sale of proving that the sale was bona fide and not at an undervalue (k).

(f) Dolman v. Nokes, 1855, 22 Beav. 402.

(g) Orme v. Wright, 1839, 3 Jur. 19; Whitcomb v. Minchin, 1820, 5 Madd. 91; In re Bloye's Trust, 1849, 1 Mac. & G. 488; Law-rance v. Galsworthy, 1857, 3 Jur. N.S. 1049; Martinson v. Clowes, 1882, 21 Ch.D. 857.

(h) Howard v. Harding, 1871, 18 Gr. 181; cf. Nutt v. Easton, [1900] 1 Ch. 29.

(i) Nugent v. Nugent, [1908] 1 Ch. 546.

(j) Carter v. Bell, 1915, 21 B.C.R. 55, 21 D.L.R. 243.

A subsequent encumbrancer, whether his mortgage is in the ordinary form or by way of trust for sale, may in the absence of fraud purchase from the first mortgagee, and the subsequent encumbrancer so purchasing will acquire as absolute a title to the lands as a stranger would (l), and where a second mortgagee purchases under the power of sale contained in the first mortgage, he is notwithstanding such purchase entitled to collect, by virtue of the covenant contained in the second mortgage, the principal and interest due under the second mortgage (m).

If the mortgagor purchases from the mortgagee selling under the power of sale, this operates only as a redemption of the first mortgage and the mortgagor cannot set up the purchase against a second mortgage made by himself before the purchase. The purchase in such case inures to the benefit of the second mortgagee (n).

There is no fiduciary relation between co-mortgagors, tenants in common of the mortgaged lands, and one of the several co-mortgagors may purchase the lands from the mortgagee, if the exercise of the power of sale is bona fide, even although the price paid by the purchaser does not exceed the exact amount due for principal, interest and costs (o). If, however, a purchaser from the mortgagee is in a fiduciary relation as regards the mortgagor, he will hold the property as a trustee for the mortgagor and be liable to account (p).

(k) Farrar v. Farrars, 1888, 40 Ch.D. 395.

(l) Parkinson v. Hanbury, 1867, L.R. 2 H.L. 1; 2 DeG. J. & S. 450; cf. Shaw v. Bunny, 1865, 2 DeG. J. & S. 468; Kirkwood v. Thompson, 1865, 2 Hem. & M. 392; 2 DeG. J. & S. 613; Watkins v. McKellar, 1859, 7 Gr. 584.

(m) Harron v. Yemen, 1883, 3 O.R. 126; Union Bank of Canada v. Bates, 1914, 24 M.R. 619, 18 D.L.R. 269.

(n) Otter v. Lord Vaux, 1856, 2 K. & J. 650; 6 DeG. M. & G. 638; Box v. Bridgman, 1875, 6 O.P.R. 234.

(o) Kennedy v. De Trafford, [1896] 1 Ch. 762, affirmed, [1897] AC. 180.