Under the terms of the extended form of power of sale which is the equivalent of the short form provided by the Short Forms of the Mortgages Act, the mortgagee holds the moneys arising from the sale upon trust (i): (1) to pay all costs and charges in connection with the sale, or incurred for taxes, rent, insurance and repairs, and all other costs and charges incurred in and about the execution of the trust; (2) to pay the principal and interest thereon to day of payment; and (3) to pay the surplus, if any, to the mortgagor, his heirs, executors, administrators or assigns, or as he or they shall direct and appoint.

(e) Chatfield v. Cunningham, 1892, 23 O.R. 153; Latch v. Furlong, 1866, 12 Gr. 303; Warner v. Jacob, 1882, 20 Ch.D. 220. (f) Bartlett v. Jull, 1880, 28 Gr. 140. (g) Chatfleld v. Cunningham, supra, (h) Re Martin and Merritt, 1901, 3 O.L.R. 284.

In the case of a sale under the implied power of sale provided by the Mortgages Act (j) the money arising from the sale is to be applied as follows: (1) in payment of the expenses incident to the sale or incurred in any attempted sale; (2) in discharge of interest and costs then due in respect of the mortgage under which the sale was made; (3) in discharge of the principal money then due in respect of such mortgage; and (4) in payment of the amounts due to the subsequent encumbrancers according to their priorities; and the residue is to be paid to the mortgagor (k).

A sale under power of sale is a proceeding which is barred after the lapse of ten years without payment or acknowledgment (l), but if the right to exercise the power of sale is not barred, the mortgagee is not limited to six years arrears of interest (m). If by the terms of the mortgage the mortgagee is declared to be a trustee of the surplus for the mortgagor lapse of time is not a bar to an action by the mortgagor for an account, but in other cases the mortgagor's action to compel the mortgagee to account for the surplus will be barred in six years (n). Even where there is no provision in the mortgage declaring the mortgagee to be a trustee of the surplus, he has sometimes in the eases been called a trustee (o)r but it seems to be more accurate not to describe him as a trustee but to say that he is liable to account for moneys received by him to the use of the mortgagor or other person entitled to the equity (p).

(i) For the exact wording of the provision as to the application of the proceeds, see Sec. 334, supra.

(j) See Sec. 332, supra.

(k) By s. 2 "mortgagor" includes any person deriving title under the original mortgagor or entitled to redeem a mortgage, according to his estate, interest or right in the mortgaged property.

(I) See chapter 26, Limitation of Actions, Sec. 264.

(m) See Sec. 266 in chapter 26.

It has been held that the mortgagee is entitled to pay the surplus to the apparent owner of the equity of reedmption unless he has actual notice of other claims (q). If there are conflicting claims or it is doubtful who is entitled to the money, it would seem that the mortgagee may pay it into court (r). In England it has been held that where the mortgagee is in doubt as. to the persons entitled to receive the surplus proceeds of the sale he may take out an originating summons to have the question determined (s).

In Ontario a mortgagee holding any money out of which a married woman shall be dowable may pay the same into court to the credit of the married woman and the other persons interested therein, and the court may make such order as may be just for securing the married woman's right of dower in the money (t).

(n) See Sec. 261 in chapter 26. As to the general liability of a mortgagee to account, see chapter 27.

(o) Tanner v. Heard, 1857, 23 Beav. 555, 18 R.C. 458; Charles v. Jones, 1887, 35 Ch.D. 544, at p. 549.

(p) Reddick v. Traders Bank of Canada, 1892, 22 O.R. 449, at pp. 450, 452, following Beatty v. O'Connor, 1884, 5 O.R. 747, and referring to In re Gregson, Christison v. Bolam, 1887, 36 Ch.D. 223.

(q) Harper v. Culbert, 1883, 5 O.R. 152.

(r) English Trustee Relief Act, of 1847, 10 & 11 V. c. 96; R.S.O. 1914, c. 121, s. 38; Re Kingsland, 1879, 8 O.P.R. 77; Western Canada Loan and Savings Co. v. Court, 1877, 25 Gr. 151, contra; Charles v. Jones, 1887, 35 Ch.D. 544, at p. 550; Boyne v. Robinson, 1904, 3 N.B. Eq. 57; In re Fisher Mortgage Sale, 1911, 4 S.L.R. 374. Under the Ontario statute an order for payment into court is necessary.

(s) In re Cook's Mortgage, Lawledge v. Tyndall, [1896] 1 Ch.. 923.

If the mortgagee continues to hold the surplus money it is his duty to set it apart and invest it for the benefit of the persons who may establish their claims thereto; and if he neglects to do so he will be chargeable with interest from the completion of the sale (u).

Unless the terms of the power of sale authorize the mortgagee to sell on credit, the mortgagee must account for the purchase price as it has been received by him in cash, but if the mortgagee stands ready so to account, a sale on credit, if a real one, is a valid exercise of the power of sale notwithstanding that the power does not authorize a sale on credit (v).

If the proceeds of the sale are insufficient to pay the amount owing on the mortgage, the mortgagee may sue the mortgagor on his covenant in order to obtain payment of the deficiency (w).