This section is from the book "The Law Of Real Property and Other Interests In Land", by Herbert Thorn Dike Tiffany. Also available from Amazon: A Treatise on the Modern Law of Real Property and Other Interests in Land .
Owing to the delays and expense incident to foreclosure by bill in equity, and the difficulty of making proper parties thereto, the device has been largely resorted to of inserting in the mortgage instrument a "power of sale," as it is called, this being a provision authorizing the mortgagee to sell the property, without resort to a judicial proceeding, in case of default. In this country, such powers were in general use earlier than in England, and they have been recognized as valid, even in the absence of any statute authorizing them.91 There are, however, in many states, statutes expressly authorizing or recognizing such powers.92 In a few states, on the other hand, it is provided by statute that a power of sale in a mortgage shall not authorize a sale otherwise than by decree of court, or there is an implication to that effect from a requirement that foreclosure shall be by judicial proceedings,93 while in a number of states there are statutory provisions as to the mode of exercising such a power, as regards notice, time or place of sale, and the like. In a number of states, in order to avoid any question as to the validity of such a power when vested in the mortgage creditor himself, the practice is to name a trustee to exercise the power, the instrument ordinarily being, for this purpose, framed in the form of a deed of trust rather than a mortgage.
732; Strobe v. Downer, 13 Wis. 10, 80 Am. Dec. 709, note.
90. See 9 Encyclopedia Plead. & Prac. 357. Note to Provident Loan Trust Co. v. Marks, G8 Am. St. Rep. 357.
91. Walthall's Ex'rs v. Rives. 34 Ala. 91; Calloway v. Bank, 54 Ga. 441; Bloom v. Van Rensselaer, 15 III. 503; Eaton v. Whiting, 3 Pick. (Mass.) 484; First Nat. Bank of Butte v. Bell Silver & Copper Min. Co.. 8 Mont. 32, 19 Pac. 403; Very v. Russell, 65 N. H. 646, 23 Atl. 522; Clark v. Condit, 18 N. J. Eq. 358; Hyman v. Devereux, 63 N. C. 624; Bradley v. Chester Valley R. Co., 36 Pa. St. 141.
92. See 1 Stimson's Am. St. Law, Sec. 1924; Wiltsie, Mortgage Foreclosure, c. 34.
93. 1 Stimson's Am. St. Law, Sec. 1924 (D).
In view of the very general utilization of powers of sale of this character, it is surprising that the courts have not more closely investigated their fundamental character. As originally introduced in connection with mortgages involving a conveyance of the legal title to the mortgagee, they would appear to be similar to the case of a power of sale given to a trustee,93a as enabling the mortgagee to convey his legal title clear of the equitable claim of the mortgagor.93b But in some decisions in states in which the legal title is vested in the mortgagee, without any express repudiation of the above view, it is assumed that the mortgagee's power to sell is a legal power of appointment, taking effect under the Statute of Uses.93c Adopting such a view, a mere sale by the mortgagee, at least if evidenced by writing, would operate as an appointment of the use and vest the legal title in the purchaser, without any conveyance by the mortgagee,93d an effect which appears never to have been given to the sale, apart from statute.93e Furthermore, a mortgage in the ordinary form would seem to be inadequate for the creation of a power of appointment, it not raising any seisin to serve uses, and not containing any declaration of uses.93f The former view as to the nature of such a power would appear to be much more satisfactory, but it is obviously inapplicable in any state in which the mortgagee does not have the legal title, or in any case in which, the mortgagor not having such title, he cannot transfer it to the mortgagee. In such states, and in such cases, it is somewhat difficult to regard the mortgagee's power as other than a power of agency conferred on him by the mortgagor as principal, but the courts have usually refused to adopt such a view or, when adopting it, to push it to its logical conclusion.93g
93a. Ante, Sec. 314.
93b. Edwards, Prop. Land, (4th Ed.) 172. "When the legal fee is vested in the mortgagee, a power of sale given to him operates in equity only, and is in effect a trust." 2 Hayes, Conveyancing (5th Ed.) 141, note. So in Re Hodson & Howe's Contract, 35 Ch. Div. 668, it is said by Cotton, L. J., that a power of sale in a mortgage "is an equitable authority which enables the mortgagee to sell so as to give the purchaser the estate discharged from the equity of redemption." A like view appears to be taken in Varnum v. Meserve, 8 Allen (Mass.) 158.
93c. Hall v. Bliss, 118 Mass. 554, 19 Am. Rep. 476, per Gray, C. J., Woonsocket Sav. Inst. v. American Worsted Co., 13 R. I. 255.
93d. Ante, Sec. 315.
93e. See 2 Jones, Mortgages, Sec. 1889 et seq.
The right to sell under a power in a mortgage or deed of trust will ordinarily, by the express terms of its creation, not accrue until a default occurs in the performance of the obligation, and a sale made before such a default will usually be invalid.94
When the mortgage authorizes the mortgagee to declare the principal due upon a default in the payment of interest, his advertisement of the intended sale as for a default in the payment of the whole sum has been regarded as a sufficient declaration in this regard.95
A deed of trust to secure a debt ordinarily provides that the sale shall be made by the trustee on the request of the creditor, and a sale made without such request has been regarded as invalid.96 But it has
93f. Compare 2 Sugden, Powers, 149; Farwell, Powers, 3.
93g. Post, this section, notes 3, 38-42.
94. Chicago, R. I. & P. R. Co. v. Kennedy, 70 III. 350; Rogers v. Barnes, 169 Mass. 179, 38 L. R. A. 145, 47 N. E. 602; Pratt v. Tinkcom, 21 Minn. 142; Eitel-george v. Mutual House Bldg. Ass'n, 69 Mo. 52; Potomac Mfg.
Co. v. Evans, 84 Va. 717, 6 S. E. 2.
95. Hodgdon v. Davis, 6 Dak. 21, 50 N. W. 478; Hoodless v. Reid, 112 III. 105, 1 N. E. 118; Fowler v. Woodward, 26 Minn. 347, 4 N. W. 231; Dunton v. Sharpe, 70 Miss. 850. 12 So. 800.