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MORTGAGE DEBT SUPERSEDES EQUITABLE MORTGAGE

Dictum

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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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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EFFECT OF NOTICE ON PURCHASER OF AN EQUITABLE MORTGAGE

This brings us to the subject of the equitable doctrine of “Notice.” It is usually said that a purchaser of the legal estate in any property for value and without notice has an “absolute, unqualified and unanswerable defence” to any claim of a prior equitable owner or person having a prior equitable interest in the same property (see Pilcher Vs Rawlings (1872) 7 Ch. App. 259 at 269 per James L.J.). Where, however, the purchaser, as here, has notice of a prior equitable mortgage in the property in which he seeks to take a legal estate he has a duty, by himself or by his vendor, to get rid of that prior equitable interest otherwise he is taking unnecessary risk.

– Idigbe JSC. Ogundiani v. Araba (1978)

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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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MORTGAGEE’S RIGHT OF PROPERTY SALE

Intercity Bank Plc. v. F and F F (Nig.) Ltd. (2001) 17 NWLR (Pt.742) 347, wherein Omage, J.C.A. stated as follows on page 365 “In my respectful opinion, the complaint of the mortgagor notwithstanding, about the actual sum owing on the mortgage, the court will not interfere or restrain the mortgagee from exercising his right of sale of the mortgaged property. To intervene is to seek to vary the terms of the mortgage agreement and the court will not rewrite the mortgage agreement for the parties. The right of sale of the mortgagee is the only certain shield of recovery of the mortgagee’s investment … and he should be allowed to sell, ceteris paribus (all things being equal)”.

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DATE FOR PAYMENT IN A MORTGAGE AGREEMENT

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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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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