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A MORTGAGEE IS NOT A TRUSTEE OF A POWER OF SALE FOR THE MORTGAGOR

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The purchaser ought to have been made a party to this suit in view of the reliefs of the plaintiff to declare the sale null and void and consequently to set it aside. Any order made in favour of the plaintiff will adversely affect the purchaser. It is also pertinent that where there is prayer to set aside an auction sale, the court must remember that it is settled law that a mortgagee is not a trustee of a power of sale for the mortgagor except for the balance of the purchase money. It is a power given to him for his own benefit, enabling him to protect the mortgage debt. A purchaser who bought a property sold by a legal mortgage in exercise of his power of sale under a mortgage upon a default and repayment of a loan by the mortgagor is not a trespasser. All State Trust Bank v. Nsofor (2004) All FWLR Pt. 201, Pg. 7719 Union Bank of Nigeria v. Ozigi (1991) 2 NWLR Pt. 176, Pg. 677.

— O.O. Adekeye, JSC. Agboola v UBA (2011) – SC.86/2003

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OBJECTION TO MANNER OF SALE WILL NOT STOP A MORTGAGOR FROM SELLING

It is a well established principle of law that a mortgagee will not be restrained on the exercise of his power of sale merely because the mortgagor objects to the manner in which the sale is being arranged or because the mortgagor has commenced a redemption action in court. (See Adams v. Scott (1859) 7 WR 213). But the mortgagee will be restrained if the mortgagor pays the amount claimed by the mortgagee into court. (See Hickson v. Darlow (1883) 23 Ch.D. 690).

— Udoma, JSC. Nig. Housing Dev. Society v. Mumuni (1997) – SC 440/1975

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How Equitable Mortgage is created?

Now, equitable mortgages are created inter alia, (1) by mere deposit of title deeds with a clear intention that the deed should be taken or retained as security for the loan; (2) by an agreement to create a legal mortgage and (3) by mere equitable Charge of the mortgagor’s property. In passing we think that it should be pointed out that the last of the three classes of equitable mortgage i.e. that which is created merely by a charge on the property intended as security for the loan differs considerably from the first two in respect of the remedies it confers; and the property so charged is appropriated only to the discharge of a debt or some other burden in respect of which the property stands charged.

– Idigbe JSC. Ogundiani v. Araba (1978)

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VOID FOR CONSENT OF MILITARY GOVERNOR

In the circumstances of this case, I would, as the two lower courts did, hold that the deed of mortgage dated 5th September, 1980 (marked Exhibit A in these proceedings) executed by the 1st plaintiff in favour of the 1st Defendant bank to secure money owed it by the 2nd plaintiff company (Respondents herein) is null and void, the consent of Military Governor of Lagos State having not been obtained before the execution of the Deed.

– Nnamani, JSC. Savannah v. Ajilo (1989)

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MORTGAGE DEBT SUPERSEDES EQUITABLE MORTGAGE

I have showed above that the only interest the 1st respondent in equity can deal with is the equity of redemption not the legal estate in the said property. The appellant from the very beginning of the deal with the 1st respondent over the said property has been aware i.e. acquainted with due notice of the bank loan and the mortgage of the said property to the 2nd respondent and the lodgement of the title deeds of the said property with the 2nd respondent to secure the bank loan. The appellant has had due notice that all he was negotiating was as regards the 1st respondent’s interests in the equity of redemption. And so, any purported attempt to transfer the legal estate by the mortgagor to the appellant as the 2nd relief in the claim is contending without getting rid of the mortgage debt and so, supersede the 2nd respondent’s equitable mortgage cannot be allowed in equity.

– Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)

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BAD FAITH ON THE PURCHASER OF MORTGAGE PROPERTY

The law of sale by auction or auction sale protects the purchaser and that is the basis of the principle of law that a mortgagor’s right essentially is in damages. The law has an important qualification and it is that the purchaser must have bought the mortgaged property in good faith, that is bona fide and not in bad faith, that is mala fide. The sympathies of the law on the purchaser will vanish the moment the court comes to the conclusion that the purchaser bought the property in bad faith. Bad faith on the part of the purchaser is a matter of fact to be deduced from the totality of the purchasing or buying conduct of the purchaser. Bad faith taints or better still, destroys a mortgage sale and therefore the property in the sale.

– Niki Tobi JSC. Okonkwo v. Cooperative Bank (2003)

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A MORTGAGEE HAS A POWER OF SALE AS OF RIGHT IN THIS INSTANCE

A mortgagee, unless where a contrary intention is shown, has a power of sale provided: (a) the mortgage was made by deed; and (b) the mortgage money is due, that is the legal date for redemption has passed. Where the money is payable by installments, the power of sale arises as soon as any installment is in arrears.

– L.A. Ayanlere v. Federal Mortgage Bank of Nig. Ltd. (1998) – CA/K/186/96

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