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Judgment
De Villiers, J. 1. This is an appeal against a judgment of the Court of Appeal of British Columbia reversing a judgment of Morrison, J., in the Supreme Court, which dismissed the plaintiff''s action with costs. The plaintiffs were the mortgagors and personal representatives of mortgagors of a certain quarry known as Haddington Island, and the defendants were the assignees of the mortgage and purchasers of the quarry, the sale to the latter having been effected by virtue of a power of sale conferred on the mortgagees by the indenture of mortgage. The statement of claim contained several claims, but the claims to which the arguments before their Lordships were mainly directed were for a cancellation of the conveyance to the purchasers, and for a declaration that the plaintiffs were entitled to redeem the mortgage. The grounds upon which these claims were based were that the assignment of the mortgage did not vest in the defendant Company any interest or title to the mortgage; that there had not been a due registration either of the assignment or of the conveyance; that the defendant Company had no right to exercise the power of sale; that no demand had been made on the mortgagors for payment and no notice given to them of the intended sale, and that the defendant Company did not use its best exertions, or indeed any exertions to obtain the best price for the said Haddington Island alleged to have been sold by it as aforesaid, and that the purchase price alleged to have been paid by the defendant Walker or the defendants MacDonald, Wilson, and Snider, was a very inadequate price for the said property. At the close of the trial the learned Judge made the following observations: "The whole transactions seem to me to have been quite valid and regular, and you cannot disturb the defendant; but I have some misgivings as to the assignment to Fulton. Outside of that, I would not hesitate to give judgment. I think the same was valid and the other points I am satisfied on, but I have some misgivings on that point. There is an obvious misprint as the assignment, the validity of which is denied, was made by and not to Fulton who was Commissioner of Lands. The mortgagee was one Macaulay, who had assigned the mortgage to a previous Commissioner of Lands and the point now made by the plaintiffs was that the title to the mortgage did not vest in the defendant Company as assignee inasmuch as the Commissioner had not obtained the authority of the Lieutenant-Governor in Council to assign the bond. The Judge, after considering the question, decided that it could not be raised without making the Attorney-General a party. He accordingly dismissed the action with costs. On appeal to the Court of Appeal the Chief Justice and Mortin, J., confined themselves entirely to the question whether the sale had been made by the defendant Company with due regard to the interest of the mortgagors. Galliher, J., also discussed that question but he made a few observations upon another question raised in the Court of Appeal, namely, whether an arrangement made before the date of assignment by the Government with the mortgagors under which the Government was to receive the royalty due to the mortgagors on stone taken from the quarry and apply the same in reduction of debt would have debarred the Government from exercising the power of sale. If the Government had no right to sell the property the assigness would equally be debarred from selling it. Upon this point the learned Judga said: "Taking all arrangements which finally culminated in the agreement of July 12th, 1894, and reading that agreement, it appears to me it goes no further than to provide for an application of the royalty on such stone as should be supplied thereunder on the mortgage. This was done, and although we find credit for stone supplied for the Empress Hotel, I treat that merely as a sum received and applied in due course on the mortgage. This was the last credit given and some two years before, the mortgage was assigned to the defendant Company so that even if that is treated as a payment under a special agreement the mortgagors were for a long time subsequent thereto in default and the government could deal with the mortgage as they saw fit due regard being had to the interest of the mortgagors. Their assigns could, of course, do likewise." He agreed, however, with the other members of the Court of Appeal that the sale had not been made with the due regard to the interests of the mortgagors and the sale was accordingly ordered to be set aside and the plaintiffs were allowed to redeem. 2. Their Lordships entirely agree with the view that what took place between the Government and the mortgagors before the assignment was not sufficient to deprive the assignees of the right to exercise the power of the sale contained in the indenture. The real question, therefore, to be decided in this appeal is whether, in view of the findings and of the evidence given at the trial, the Court of Appeal rightly decided that there was such a reckless disregard of the interests of the mortgagors as would justify the setting aside of the sale. 3. The parties against whom the action was brought were not only the assignees of the mortgage, but also the purchasers of the property. 4. The sale was effected by virtue of a power which is in the following terms: "if the mortgagors make default as to any of the covenants or provisos herein contained, the principal hereby secured shall at the option of the mortgagee, his heirs or assigns, forthwith become due and payable, and in default of payment the powers of sale hereby given may be exercised, provided that the said mortgagee, on default of payment for one month may on one month''s notice, enter on and lease or sell the lands. And provided also that, in case default be made in payment of either principal or interest for two months after any payment of either falls due, the said powers of leasing or selling of any of them may be acted upon without any notice.... Provided that, in default of the payment of the interests hereby secured, the principal hereby secured shall become payable." Ostensibly, therefore, the mortgagees acted within their powers in selling the property, and the purchasers are entitled to the full benefit of their purchase unless it be alleged and proved that they acted in collusion with the vendors, or that the price was so low as in itself to be evidence of fraud or collusion. Unfortunately, from first to last there is no allegation in the statement of claim charging the purchasers with fraud or collusion or bad faith or knowledge of the existence of facts which would invalidate the sale. The allegations that the defendant Company, that is (to say, the vendors, did not use any exertions to obtain the best price for the land, and that they Sold it to the purchasers at a very inadequate price, are quite consistent with perfect good faith on the part of the purchasers, and yet these are the only allegations from which it could possibly have been inferred that at the trial attempts would be made to charge them with collusion or want of good faith. At the trial the evidence was mainly directed towards establising those grounds of claim which have since been practically abandoned. Incidentally, Alden House, one of the plaintiffs, was asked what the value of the property was and his answer was: "Well it is worth at least $20,000 at the very least. We were offered $30,000 for it once." As this amount is far in excess of the price for which the property was sold, namely, $3,250, it is contended that the sale should not be allowed to stand, but, in the absence of any notice to the defendants that the alleged inadequacy of price would be relied upon as proof of fraud or collusion on their part, they should not be prejudiced by their failure to produce counter-evidence as to value. The evidence as to the value given on behalf of the plaintiffs was of the most flimsy nature. Huson said that they had been offered $ 30,000 for the quarry, but did not produce the person who had made the offer. Nor did the plaintiffs produce any expert or, indeed, any other evidence in sup-port of Huson''s casual statement as to value. If the property was so valuable early in 1908, there is no satisfactory explanation why it was not sold and the proceeds of the sale applied towards redemption of the mortgage. It is clear from the correspondence that, as far back as January 1908, Huson knew that there was a prospect of the property being immediately sold for the amount of the original mortgage-debt, but, although he protested against such a sale, he made no attempt to find the means of paying the Government the sum of $1,150, which was all that was then still owing for principal and interest. Under the indenture of mortgage, the mortgagors were at liberty to pay the debt after three months'' notice in writing to the mortgagee or his assigns, or upon the payment of three months'' interest in lieu of notice. No such notice appears to have been given, nor interest tendered either to the Government or to the defendant Company after it had, in March 1908, obtained from the Government an assignment of the mortgage. The defendant Company accordingly sold the property for $3,250 and it now holds the balance after payment of capital and interest, at the disposal of those entitled thereto. The trial Judge was perfectly satisfied as to the validity of the transaction. In the notice of appeal to the Court of Appeal, although other grounds of alleged invalidity are fully stated, not a word is said as to fraud or collusion. Bat the Court held, in effect, that the sale was fraudulent. Among the cases cited by Galliher, J., was that of Warner v. Jacob (1882) 51 L.J. Ch. 642 : 20 Ch. D. 220 : 46 L.T. 656 : 30 W.R. 721 where Kay, J., summing up the authorities is reported to have said: "The result seems to be that a mortgagee is, strictly speaking, not a trustee of the power of sale. It is a power given to him for his own benefit, to enable him the better to realize his mortgage-debt, if he exercises it bona fide for that purpose, without corruption or collusion with the purchaser the Court will not interfere, even though the sale be very disadvantageous, unless indeed the price is so low as in itself to be evidence of fraud." In the present case the statement of claim alleged in effect, that the sale was very disadvantageous, but it gave no hint to the defendant that they would be called upon at the trial to meet a charge of either corruption or collusion or to meet the case that the price was so low as in itself to be evidence of fraud. Under these circumstances, their Lordships are unable to attach the same importance as was attached by the. Court of Appeal to the circumstance that the defendants produced no evidence as to the value of the property, nor are they prepared to dissent from the finding on the facts by the learned Judge at the trial. They will, therefore, humbly advise His Majesty that the judgment of the Court of Appeal should be reversed and the judgment of Morrison, J., restored. The respondents will bear the costs of this appeal and the costs incurred in the Court of Appeal and the Supreme Court.