A. Judson Sayre And William M. Gilfoy (Defendants) Appellants;
and
The Security Trust Company and others (Plaintiffs) Respondents
1920: February 11, 12; 1920: June 21.
Present:—Sir Louis Davies C.J. and Idington, Duff, Anglin,
Brodeur and Mignault JJ.
ON APPEAL FROM THE APPELLATE DIVISION OF THE SUPREME COURT OF
ALBERTA.
Mortgage—Order allowing purchase by mortgagee—Execution for
balance of claim–Foreclosure–"The Land Titles Act," (Alta.) S. (1919)
c. 37, s. 62b.
[Page 109]
An order by which a mortgagee becomes the owner of the
mortgaged land as purchaser at a named price with leave to issue execution for
the balance of his claim, is not an order for foreclosure operating as
satisfaction of the debt under section 62 b. of "The Land Titles Act"
as amended by chapter 37 of the Alberta Statutes, 1919.
Per Sir Louis Davies C.J. and Idington and Brodeur JJ.
(affirming the judgment of the Appellate Division).—Though the order should
have been set aside and a proceeding de novo directed, the decision of
the Appellate Division that, notwithstanding the terms of the order, the
mortgagee may still pursue his remedy for the balance of his claim should not
be disturbed, the question involved being one of practice and procedure.
Per Duff Anglin and Mignault JJ. (reversing said
judgment) —The order should be set aside as the doctrines of equity in regard
to mortgages preclude the making of an order which purports uno flatu to
vest the mortgaged property in the mortgagee as purchaser free from all equity
of redemption and to enforce the personal liability of the mortgagor for some
part of the mortgage debt. A mortgagee cannot have both the mortgaged property
and the mortgage money.
Per Duff and Anglin JJ.—The sale sanctioned by the
order was not a sale of the land within the meaning of s.s. 2 of s. 62 of
"The Land Titles Act" and the mortgagee is therefore prohibited by
that section from issuing execution under his judgment on the covenant.—The
sale contemplated by the statute is a sale to a stranger, not to the mortgagee.
Judgment of the Appellate Division (15 Alta. L.R. 17; [1919] 3
W.W. R. 634) affirmed on equal division of the court.
[Page 110]
APPEAL from the judgment of the Appellate Division of the
Supreme Court of Alberta
reversing the judgment of Stuart J. at the trial and
dismissing an appeal by the appellants from an order of the master in chambers
at Calgary.
The material facts of the case and the questions in issue are
fully stated in the above head-note and in the judgments now reported.
A. H. Clarke K.C. for the appellants.
H. P. O. Savary K.C. for the respondents.
THE CHIEF JUSTICE.—For the reasons given by Chief Justice
Harvey, of the Appellate Division of Alberta, in delivering the judgment of
that court now in appeal in this action, and also for the reasons stated by my
brother Idington, I am of the opinion that this appeal should be dismissed.
Personally I should have preferred that the master's order in
question herein should have been set aside altogether and a proceeding de
novo directed. But, as I think the ends of justice can be fully worked out
between the parties under the order as construed by the Appellate Division and
the disposition they have made of the action, with which construction and
disposition I am quite satisfied, I will not press this view, more especially
as it relates largely to a matter of procedure and practice.
As to the limitation of time of two weeks, stated in the Chief
Justice's reasons, within which the defendants might file a demand for an offer
of the land for
[Page 111]
sale by tender, that limitation must, of
course, be construed as running from the day of the judgment of this court and,
I think, under the circumstances, might well be extended to four weeks.
As this court is equally divided in opinion as to allowing or
dismissing the appeal, there will be no costs here.
IDINGTON J.—The master's order in question herein cannot,
in my opinion, be treated as an order of foreclosure.
It is, by its terms, though very inaptly using the word
"foreclosure", clearly intended to be a vesting order carrying out
the sale to the mortgagee, in like manner as if to a stranger, and permitting
thereupon the mortgagee to proceed upon the covenant to realize the balance due
after confirmation of said sale.
Who has ever seen a foreclosure decree so framed? I venture to
think that no one can produce such a precedent in a foreclosure proceeding.
The mortgagee has always had the right in such proceedings to
abandon his foreclosure and proceed upon the covenant if ready and able to
return to the mortgagor his property upon payment of the amount due.
Hence the legislation of the Alberta legislature of 1919, section
4 of chapter 37, must, by the express language using the word
"foreclosure" be confined to the plain ordinary meaning that is well
understood by those conversant with it as a legal term.
I am sorry if any one has been misled by reference to a
dictionary instead of the masters of the English law on whom I relied, and
cited in the case of Mutual Life Assurance Company v. Douglas.
[Page 112]
The amending statute I cite clearly obliterates that option of a
mortgagee after a final order of foreclosure and possibly effects a needed
reform in our law.
But the legislature does not touch, or pretend to touch, the
undoubted power of the court, according to long standing jurisprudence, well
expressed by that eminent judge, Lord Hatherly, in the case of Tennant v.
Trenchard, to
sanction a sale to a trustee which a mortgagee is in conducting a sale under a
mortgage. Hence the exercise of that power in question herein, cannot properly
be held to have been interfered with by the enactment above referred to. Such a
sale, as made in the due exercise of such power cannot mean a foreclosure.
The things covered by the term "foreclosure" extending
over the whole, and a sale possibly only of a part, are entirely different.
If the legislature intended to destroy the power of a court to
sell to the mortgagee for part of the debt the land mortgagee, it should have
said so.
I am not concerned in that regard as to what is done.
There may be good reasons for its doing so. Indeed conceivably
good reasons therefor might exist in one country and yet doing so be imprudent
in another.
I am unable, for the foregoing reasons, to maintain a reversal of
the judgment appealed from.
I should have preferred, partly in accord with Mr. Justice
McCarthy's opinion, to have seen the whole order set aside and a proceeding de
novo directed, within the undoubted rights of the court, to sell to a
mortgagee. But for us to interfere therewith would savour too much of dictating
in mere matters of procedure.
I think the appeal should be dismissed with costs.
[Page 113]
DUFF J.—I concur
with Mr. Justice Anglin.
ANGLIN J.—The question presented by this appeal is
whether, in proceedings instituted to enforce a mortgage of property in that
province, the law of Alberta enables its courts to order the sale of the
mortgaged land to the mortgagee as absolute and irredeemable purchaser for a
price less than the amount of his claim and at the same time that he be at
liberty to issue an execution against the mortgagor for the amount by which the
mortgage debt exceeds such purchase price. Such an order was made by the master
in chambers in this action on the 28th of May, 1919.
The circumstances out of which the question above stated arises
are fully stated in the judgment of Mr. Justice Stuart,
holding, on appeal from the master, that such an order cannot be made; that the
master's order was a foreclosure within s. 62b of the "Land Titles
Act" (enacted by c. 37 of the statutes of 1919); that the mortgage debt
was thereby extinguished; and that the provision of the order permitting the,
issue of execution must therefore be set aside and vacated—with the result that
the mortgagee would retain the property but his mortgage debt would be wholly
extinguished. This judgment was reversed in the Appellate Division (Harvey C.J.
and Simmons J.—McCarthy J. dissenting), and
the master's order was restored, but with a provision for the taking of tenders
for the purchase of the property and confirming the sale to the mortgagee if no
higher tender than the price at which he was allowed to purchase under the
master's order should be received and
[Page 114]
directing that, if a higher tender should
be received and accepted and payment made in accordance therewith, the
mortgagee should transfer the land to the person making such tender and should
give credit for the amount thereof on his mortgage claim.
We are informed by Mr. Justice Stuart that the practice followed
by the master has grown up and "been in vogue for some time" as the
result of an amendment to s. 62 of "The Land Titles Act," made in
1916 (c. 3, s. 15 (4) ), adding thereto the following as s.s. 2:—
(2) Where any action or proceeding has before the date of
the passing of this subsection been taken or shall thereafter be taken in any
court either under the provisions of this section or to enforce the observance
of the covenants, agreements, stipulations or conditions contained in any
agreement for the sale of any land, and personal judgment has been or shall be
obtained therein, no execution shall issue thereon until sale of the land
mortgaged or encumbered or agreed to be sold has been had or foreclosure
ordered and levy shall then be made only for the amount of the judgment or
mortgage debt remaining unsatisfied with costs.
It is not surprising that such a statutory provision should have
led to some anomalies in practice. Just what is meant by
the amount of the judgment or
mortgage debt remaining unsatisfied.
after foreclosure has been ordered it is
a little difficult for the legal mind to appreciate. Sec. 62 was repealed in
1919 (c. 37, s. 1) and the following substituted:—
62. Proceedings for recovery of money secured by a mortgage
or encumbrance, or to enforce any provision thereof, or sale, redemption or
foreclosure proceedings with respect to mortgaged or encumbered land may be
taken in any court of competent jurisdiction in accordance with the existing
practice and procedure thereof.
(2) No execution to enforce a judgment upon the personal
covenant contained in a mortgage encumbrance or agreement of sale on or of land
or on any security therefor shall issue or be proceeded with until sale of
land, and levy shall then only be made for the amount of the said moneys
remaining unpaid after the due application of the purchase moneys received at
the said sale. * * *
[Page 115]
The following section was also added (by sec. 4) as s. 62b:—
62b. The effect of an order for foreclosure of a mortgage or
encumbrance heretofore or hereafter made by any court or judge or by any
registrar shall be to vest the title of the land affected thereby in the
mortgagee or encumbrancee free from all right and equity of redemption on the
part of the owner, mortgagor or encumbrancer or any person claiming through or
under him subsequently to the mortgage or encumbrance, and shall from and after
the date of the passing of this section operate as full satisfaction of the
debt secured by such mortgage or encumbrance.
Such mortgagee or encumbrancee shall be deemed a transferee
of the land and become the owner thereof and be entitled to receive a
certificate of title for the same.
obviously, as Harvey G. J. points out, to
meet the decision of this court in Mutual Life Assur. Co. v. Douglas.
These amendments became effective on the 17th of May, 1919,
eleven days before the order of the master in chambers, which is attacked, was
made.
It is of the essence of a completed foreclosure that the
mortgagee cannot thereafter proceed to enforce the mortgagor's personal
liability for the mortgage debt without opening the foreclosure, but that, so
long as he is in a position to reconvey the mortgaged property on payment of his
claim he may so proceed, thereby, however, automatically opening the
foreclosure and affording the mortgagee an opportunity to redeem as of right;
and courts of equity have maintained jurisdiction to grant the mortgagor a
corresponding right, where special circumstances warrant such a course, on
terms which would protect the mortgagee. "Foreclosure" under the
Alberta "Land Titles Act" was subject to these incidents prior to
1919. Mutual Life Assur. Co. v. Douglas. Under
[Page 116]
the amendment of that year, however, they
are done away with and "foreclosure" in Alberta now completely
extinguishes the mortgage debt and all rights of the mortgagor in the pledge.
The order of the master in chambers in this case, on the contrary; purports in
express terms to keep alive and enforce recovery of the greater part of the
mortgage debt and at the same time to vest the mortgaged property in the
mortgagee as absolute owner in satisfaction not of his entire claim but of less
than one-third of it. I agree with the learned Chief Justice of Alberta and Mr.
Justice Simmons that such an order was not, and was not intended to operate as,
a "foreclosure" as that term must now be understood in Alberta and
that it therefore did not operate to extinguish the personal liability of the
mortgagor. Neither was it meant to have effect as a foreclosure as understood
in English equity jurisprudence. Moreover; if the provision of the order
directing a sale to the mortgagee as an irredeemable purchaser ait $6,500, and
that directing the issue of execution for the balance of the mortgage debt are
so incompatible one with the other that both cannot stand, the proper course to
rectify the error committed in making such an order is, with respect, not to
strike out one of its provisions and allow the other to stand. Inasmuch as the
order approving of the sale to the mortgagee at the price fixed was sought and
accepted only on the footing that it should contain the additional provision
far the recovery of the balance of the mortgage debt and the master never
intended to make an order in any other terms or on any other condition—never
intended that the mortgagee's claim should be extinguished except as to the
$6,500 for which he had offered to take the land in satisfaction—the order
should be
[Page 117]
vacated as a whole unless it can be
sustained as a whole. The mortgagor cannot insist on that part of it standing
which suits his purposes minus the accompanying provision without which it was
neither sought nor granted and would not have been taken. Grand Trunk
Pacific Ely. v. Fort William Property Owners.
If not entitled to maintain the order as it stands the respondent asks that it
should be set aside in toto and to that relief it is entitled.
But is the order as made sustainable? There are ho doubt
authorities for the proposition that the court will under special
circumstances sanction the mortgagee becoming the purchaser of the mortgaged
premises at a court sale. In addition to Tennant v. Trenchard,
and Hutton v. Justin, cited
by the respondent, reference may be had to The Wilsons,
and Ex parte Marsh, cited
in Fisher on Mortgages (Can. ed. 1910) par No, 2020. When the mortgagee is
allowed to bid the conduct of the sale is usually transferred to some other
interested party. Domville v. Berrington.
Gowland v. Garbutt, cited
by Mr. Clark, is also an instance where this was done. But in Ireland a
contrary course has sometimes been taken and the mortgagee allowed to bid,
though retaining the conduct of the sale, where the property was clearly insufficient
to pay the debt. Steele v. Devonport;
Spaight v. Patterson. These
cases may be readily understood when it is borne in mind that foreclosure is
the primary remedy which the law gives to the mortgagee, the right to a sale
being statutory and the conduct of the sale discretionary.
[Page 118]
Hewitt v. Nanson.
Where a sale is ordered and the mortgagor is not financially good for any
possible deficiency it is only reasonable to permit the mortgagee to protect
himself as far as possible by giving him leave to bid at the sale, and, if
necessary, to become a purchaser. But no case is reported, so far as I have
been able to discover, where a mortgagee has been allowed to acquire an
absolute title to the land as a purchaser and thereafter to maintain an action
on the personal covenant of his mortgagor for the amount by which his mortgage
claim exceeded the price at which he purchased. A passage in the judgment of
Moss J. A., in Hutton v. Justin, may,
however, be referred to.
While the mortgagor's covenant for payment of the mortgage debt
may be absolute at law, in equity the right to enforce it is subject to the
condition that the mortgagee shall not be disabled through any act of his own
(Ashburner on Mortgages (2 ed.) 683) not authorized by the mortgagor from
restoring the estate. Palmer v. Hendrie;
Kinnaird v. Trollops. A
mortgagee asserting absolute ownership of the mortgaged property cannot sue on
the mortgagor's covenant. In equity, speaking generally, the rights of payment
and redemption are reciprocal.
Even where the mortgagee claims to have acquired, in his
character as such, absolute ownership of the property under a title paramount,
he cannot enforce the mortgagor's covenant except on the terms that he should
submit to redemption. An excellent illustration of this proposition is afforded
by Parkinson v.
[Page 119]
Higgins,
where it was held on demurrer that a mortgagee, who had purchased at a court
sale, which would have conferred on a stranger so purchasing a paramount and
absolute title,
could not sue for the mortgage money
while asserting his right to the property mortgaged wholly independent of any
title derived from the mortgagor and without any right to redeem,
and Parkinson v. Higgins,
where the same mortgagee on pleading by way of equitable replication that he
had acquired title to the property solely to protect his interests and that he
had offered and was always willing to submit to redemption on payment of the
mortgage moneys and the sum he had been obliged to expend to save the property
from sale to a stranger, who would acquire paramount title, was held entitled
to maintain his action on the mortgagor's covenant.
In my opinion the doctrines of equity in regard to mortgages
preclude the making of an order which purports uno flatu to vest the
mortgaged property in the mortgagee as purchaser free from all equity of
redemption and to enforce the personal liability of the mortgagor for some part
of the mortgage debt. A mortgagee cannot have both the mortgaged property and
the mortgage money.
I find nothing in the Alberta statutory law which warrants
ascribing to the legislature the intention of making such a substantial further
inroad upon the system of mortgage law which has grown up under the fostering
care of the chancery courts, as the order of the master in chambers implies.
Moreover, that order seems to involve an evasion of s.s. 2 of s. 62 and
probably also of s. 62 (b) of the Land Titles Act.
[Page 120]
For relief from whatever hardship is
entailed by the undoubted deprivation of their contractual rights effected by
the former subsection mortgagees must look to the legislature, not to the
courts.
The appeal in my opinion should also succeed on the ground that
there has not been "a sale" of the land within the meaning of s.s. 2
of s. 62 of the "Land Titles Act" and that the mortgagee is therefore
prohibited by that subsection from issuing execution under his judgment on the
covenant. Sale in English law generally imports an exchange of some article of
property for money. J. & P. Coats Ltd. v. Inland Revenue
Commissioners;
Benjamin on Sale, 5 ed., pp. 2, 3. Here the transaction is not of that
character. It is an exchange or barter of the mortgaged property for the
release or extinguishment by the mortgagee of a portion of the debt owed him by
the mortgagor That in my opinion is not a sale within the meaning of that word
as used in s.s. 2 of s. 62. It is there used in its general meaning in English
law. Moreover, I am satisfied that the sale contemplated by the statute is a
sale to a stranger not to the mortgagee.
For these reasons I would allow this appeal and set aside the
order of the master in chambers. The land titles register must be rectified so
as to restore the title to the position in which it stood before the master's
order was made, and the certificate of title issued to the respondent mortgagee
must be delivered up to the registrar and cancelled.
The respondents were obliged to appeal from the order of Mr.
Justice Stuart which cut off all remedy on the mortgagor's covenant. They may
well therefore be entitled to add all their costs down to and exclusive of the
judgment of the Appellate Division to the
[Page 121]
mortgage debt. But I think the appellant, in view of the
respondent's denial of his right to redeem (Kinnaird v. Trollope);
Hall v. Heward, is
entitled to his costs of the appeal to this court which he was obliged to bring
in order to have the order of the master in chambers, upheld by the Appellate
Division, set aside. These latter costs should be set off against and deducted
from the mortgage debt.
BRODEUR J.—The question involved in this appeal is largely
a question of practice and procedure in a mortgage action. Mr. Justice Stuart,
whose judgment the appellants seek to restore, declares himself that the
practice which was followed by the master has been in vogue for some time in
order to work out in some form the results which should follow upon the
moratorium act of 1916 and that practice seemed to have been approved tacitly,
if not formally, by judicial authority. Some questions of principle might
incidentally be raised for the solution of this question of procedure or
practice.
Although we have an appellate jurisdiction, this court does not
exercise it in matters relating to the practice and procedure of the courts below,
except under special circumstances.
There is nothing which has been disclosed in this case which
would justify us, in my mind, in interfering with the judgment appealed from. I am satisfied that under the order as
framed by the Appellate Division the rights of the mortgagor will be duly
safeguarded.
The appeal should be dismissed with costs.
[Page 122]
MIGNAULT J.—The facts of this case are fully explained in
the judgments of the courts below, and need not be repeated here. The question
chiefly discussed in these judgments was whether the master's order was such an
order for foreclosure as would, under the amendment to "The Land Titles
Act," assented to on the 17th April, 1919, and which became operative a
month later (Alberta Statutes, 1919, ch. 37, sect. 4), deprive the respondent
of its right to recover the balance of its claim, after deducting the sum for
which the mortgaged property was sold to the respondent.
The material portion of the master's order, granted by him after
hearing all the parties, and after proof by affidavit that the value of the
mortgaged property did not exceed $6,500, is as follows:
It is ordered that the sale of the lands and premises
mentioned in the Statements of Claim in the above actions to the plaintiffs for
the price or sum of $6,500.00 be and the same is hereby approved and confirmed:
It is further ordered that the payment into court by the
plaintiffs of the said sum of $6,500.00, the purchase price of the said lands,
be and the same is hereby dispensed with:
It is further ordered that the above named defendants, and
each of them, and all those claiming by, through or under the said defendants
or either of them, do hereby stand absolutely and irrevocably barred and
foreclosed of and from all right, title or equity of redemption in and to the
said mortgaged lands in the pleadings mentioned, and hereinafter more
particularly set forth:
And it is further ordered that the said lands and premises,
being: Lots Twenty-four (24) and Twenty-five (25) in Block Fifty-six (56)
according to a plan of part of the City of Calgary of record in the Land Titles
Office for the South Alberta Land Registration District as Plan "A,"
Calgary, be vested in the plaintiffs The Security Trust Company, Limited, of
the City of Calgary, in the Province of Alberta, and William Murray Connacher,
of the City of Calgary, aforesaid, for an estate in fee simple, subject to the
reservations contained in the existing Certificate of Title, and that the
Registrar of Land Titles for the South Alberta Land Registration District do
upon production of this order or a certified copy hereof cancel the existing
Certificate of Title and issue a new Certificate of Title in the name of the
said The Security Trust Company, Limited, and William Murray Connacher, free
and clear of all encumbrances subsequent to and inclusive of the plaintiff's
mortgage sued on herein;
[Page 123]
And it appearing and having been proved from said affidavits
filed that there is due and owing to the plaintiffs on account of the mortgage
which forms the subject matter of the above actions the sum of $20,564.31,
which amount exceeds the sum of $6,500, the amount for which the said lands
have been purchased by the plaintiff, by the sum of $14,064.31.
It is further ordered that the plaintiffs have leave and
liberty is hereby given to the plaintiffs to issue execution against the
defendants for the said sum of $14,064.31, being the balance of their claim,
and that judgment be entered accordingly for the said sum of $14,064.31 with
interest and costs.
The amendment of 1919 referred to in the judgments below is in
the following terms:
62. Proceedings for recovery of money secured by a mortgage
or encumbrance, or to enforce any provision thereof, or sale, redemption or
foreclosure proceedings with respect to mortgaged or encumbered land may be
taken in any court of competent jurisdiction in accordance, with the existing
practice and procedure thereof.
(2) No execution to enforce a judgment upon the personal
covenant contained in a mortgage, encumbrance or agreement of sale on or of
land or on any security therefor shall issue or be proceeded with until sale of
land, and levy shall then only be made for the amount of the said moneys
remaining unpaid after the due application of the purchase moneys received at
the said sale.
* * * * * * * *
62b. The effect of an order for foreclosure of a mortgage or
encumbrance heretofore or hereafter made by any court or judge or by any
registrar shall be to vest the title of the land affected thereby in the
mortgagee or encumbrancee free from all right and equity of redemption on the
part of the owner, mortgagor or encumbrancer or any person claiming through or
under him subsequently to the mortgage or encumbrance, and shall from and after
the date of the passing of this section operate as full satisfaction of the
debt secured by such mortgage or encumbrance. Such mortgagee or encumbrancee
shall be deemed a transferee of the land and become the owner thereof and be
entitled to receive a certificate of title for the same.
I cannot look on the master's order in this case as being purely
and simply "an order for foreclosure." It is much more than that. It
provides for the sale of the mortgaged property to the respondent for
$6,500.00, dispenses the respondent from paying the purchase price into court,
for its mortgage debt exceeded $20,000.00, forecloses the appellant of all
right, title or equity of redemption in and to the
[Page 124]
mortgaged lands, and gives leave to the
respondent to issue execution against the appellant for the balance of its
claim. The learned trial judge ordered that the part of the master's order
permitting execution to issue be struck out and replaced by an order preventing
execution. He thus applied section 62b to the order, as if this order had been
an order for foreclosure pure and simple, with the effect that the respondent,
which never intended to take the property in satisfaction of its claim, is now
held to have done so.
With all possible deference, I cannot think that the learned
trial judge should have disregarded, nay more, have struck out the provisions
of the master's order which prevented it from being an order for foreclosure
pure and simple, to which section 62b would apply.
The learned Chief Justice of Alberta shews what the purpose of,
the amendment was. The Legislature was moved to adopt it by reason of the
decision of this court in Mutual Life Assurance Co. v. Douglas
The Appellate Division of Alberta had held that a mortgagee who took a final
order of foreclosure, lost his rights on the covenant and that the debt was
extinguished. This court, on the contrary, decided that the mortgagee could sue
on the covenant, notwithstanding the foreclosure, provided he was in position
to reconvey the mortgaged property. The learned Chief Justice of Alberta says:
It seems abundantly clear that it was intended to declare
the law for this Province to be henceforth what the Provincial Court had held
it to be, and what the Supreme Court of Canada declared it was not.
I certainly cannot say that the learned Chief Justice hate
wrongly stated the intention of the 1919 amendment. But, on the construction of
the amendment itself, my opinion is that it would, to say the least,
[Page 125]
be a misdescription to call the master's
order, with its provisions for a sale to the respondent and for the latter's
right to issue execution for the balance of its claim, a final order for
foreclosure within the meaning of section 62b, notwithstanding that the
appellant is in fact declared foreclosed of all right, title or equity of redemption.
Subject to what I will say, as to the point raised by my brother Anglin, the
effect of a sale of the mortgaged property under subsection 2 of section 62
would be to deprive the mortgagor of all right in the property, and he would
still be liable for the moneys remaining unpaid after due application of the
purchase price. Here the property was declared to be sold to the appellant and
leave was granted him to issue execution for the balance of his claim, and
looking at the whole order, I am of opinion that it is not the order for
foreclosure contemplated by the amendment.
I now come to the point raised by my brother Anglin, that the
mortgagee, even under the special legislation of Alberta, cannot be authorized
to purchase the property, and, while retaining it, to issue execution against
the mortgagor for the balance of the mortgage debt, after deducting the price
for which he has purchased the mortgaged property. For that reason, my learned
brother concludes that the master's order should be entirely set aside as
containing contradictory and irreconcilable provisions.
After due consideration I think the point well taken, for it is
an undoubted rule of equity that the mortgagee cannot have both the mortgaged
property and the mortgage debt., While no doubt the mortgagee, in a proper case
and with sufficient safeguards, may be allowed to bid at a court sale of the
mortgaged property (Halsbury's Laws of England, vo. Mortgage,
[Page 126]
No. 458, note (e); Fisher, Law of
Mortgages, 6th Canadian Edition, No. 2020), I can find no authority for the
proposition that after buying in the property himself, he can, while retaining
it, sue for the balance of the mortgage debt. There is authority to the
contrary, in the judgment of Hagarty, C.J., in Parkinson v. Higgins,
cited by my brother Anglin, where the learned Chief Justice says:
On the whole my conclusion is that the mortgagee cannot sue
for his mortgage money, while in the same breath he asserts that the estate is
wholly his own, and that he holds it by title paramount, and wholly independent
of any title derived from the mortgagor.
The new legislation of Alberta does not, reasonably construed,
contradict this statement of the law. On the contrary, section 62b shews that
the mortgagee cannot sue on the covenant when he has obtained an order for
foreclosure against the mortgagor, and this provision would be easily evaded if
the mortgagee who has bought the property even with the leave of the court
could retain it and sue for the balance of the mortgage debt. In the absence of
any authority I would not now say that he can do so.
I would allow the appeal and set aside the master's order, with
costs as stated in the opinion of my brother Anglin.
Appeal dismissed without costs.
Email this Content