The right to foreclosure is very powerful remedy in the hands of the equitable mortgagee and the vendor who takes a legal estate with notice of an equitable mortgage and therefore subject to this class of equitable interest should bear this in mind since, in certain circumstances, he may find in the end that he has bought a worthless legal estate.
– Idigbe JSC. Ogundiani v. Araba (1978)
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It is settled that the deposit of title deeds with a bank as security for a loan, creates an equitable mortgage as against legal mortgage which is created by deed transferring the legal estate to the mortgagee. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)
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)
B.O.N Ltd. v. Akintoye (1999) 12 NWLR (Pt. 631) 392: “Where an original mortgage is a continuing security for raising a second mortgage, what is needed is to upstamp it. There is no need to obtain a fresh consent of the Governor for the second mortgage. In the instant case, where the wordings of the mortgage deeds relating to the security are clear and unambiguous and where the original deed was a continuing security, there was no need to obtain a fresh consent of the Governor for the second mortgage”.
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)
I have earlier set out the peculiar factors and circumstances not least being that the appellant has paid part of the purchase price of ₦2.3m to the tune of ₦1.8m leaving a balance of ₦500,000.00 and has been put in possession of the disputed property. There is a binding agreement of sale of the 1st respondent’s interest in the said property between the appellant and the 1st respondent. The appellant has thereby acquired an equitable interest to the extent of the 1st respondent’s interest in the equity of redemption and this is the interest which the mortgagor, the 1st respondent has had at all material times. The 1st respondent cannot give what it hasn’t got. And as I intimated earlier any attempt to pass the legal estate in the disputed property to the appellant will be of no effect and void not voidable because the 1st respondent as the mortgagor has bound itself to convey the legal estate to the mortgagee whenever it is called upon to do so until the principal, interest and costs are duly paid on the mortgage. See: Barclays Bank of Nigeria Ltd v. Ashiru and Anor. (supra) per ldigbe JSC, and Jared v. Clements (1903) 1 Ch. 428. Besides, the appellant is acquainted with notice of the mortgage and so cannot take priority to the 2nd respondent’s equitable mortgage which is first in time. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)
Fixing a date for repayment in a mortgage transaction does not generally indicate the parties intention that the actual payment is to be made on the named date, but only that the mortgagee may call for payment on or after that date, if so minded, but not before. See Ogioro v. Igbinovia (supra), and B.O.N Ltd. v.Akintoye (supra), where it was also held that if the mortgage debt is not paid at any time fixed for payment, the mortgagee is entitled to exercise his power of sale, the debt having been deemed to have become due and payable on that day.
– Augie JSC. Bank v. TEE (2003)
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