*1
When a receiver’s lien to foreclosure advertisement, the receiver’s lien be to the must subordinated purchaser interests of the and lienholders whose interests preexisted mortgage; of the execution rule common-law unpaid compensation may paid that a receiver’s fees and be receivership or funds held in before are those funds prior apply statutory made available to creditors does (MCL 600.3236). by foreclosures advertisement Mortgages — — — Priority Foreclosure Advertisement Waiver Priority. mortgagee may statutoiy right A first-priority waive satisfaction following statutory lien of its if foreclosure advertisement explicitly unequivocally given, waiver is mortgagee’s hut a failure object acquiescence of a receiver or in the (MCL 600.3236). appointment generally does not waiver constitute — — Receiverships Liability 4. Costs for Costs. application
Upon when there are insufficient funds to satisfy the upon costs and fees termination of a receiv- ership, the circuit compensation court set the receiver’s require party requesting to hear the costs (MCR 2.622[D]). associated with the Falk, Allan Falk), PC. Allan (by and Cummins Woods Woods) (by Thomas E. for Thomas E. Woods. Firm,
The Hubbard Law PC. Peter A. Teholiz (by Woodworth), Michael G. for Dart Bank.
Amici Curiae:
Kus, Associates, Ryan & Kus, PLLC Michael A. (by J. Greco, Marsha and Jeffrey Horowitz), S. Community of Michigan. Bankers 492 208
212 MICH Opinion of the Court O. (by & LLP Jeffrey Judd Warner Norcross Mazzocco) for L. Breay, H. and Nicole Birkhold, James Michigan Bankers Association Michigan League. Credit Union Anderson, L. McClel- (by Gregory LLP
McClelland & Hagen), Michigan A. for the Associa- land Melissa tion of Realtors.
Mary J. involves the issue of This case Kelly, Beth between a court- priority competing liens of a receiver and the holder first-recorded appointed DeWitt, Michigan. real located on Woods, Thomas seeks to recover receiver ship expenses holder of first-recorded before In Bank, mortgage interest. mortgage, Dart satisfies its circuit order a first- affirming placing court’s on the in the amount of priority lien relied, in Appeals part, the Court of expenses, v Bailey1 decisions in v and Fisk Bailey on Court’s 2 Hydraulic Exchange Fisk and own decision in Attica Seslar,3 did not to and object v to hold that because Dart “may it be receivership, benefited from the therefore receivership expenses.”4 held for the We responsible deter granted application appeal Dart’s for leave that receivership mine rule whether common-law controlling, entitled to is priority are first prior of a recorded notwithstanding holder statutorily entitled to under MCL 600.3236, mortgagee explicitly whether a must 1 (1933). Bailey Bailey, 215; v 160 247 NW 2 (1952). Fisk, 513; v Fisk 53 356 NW2d 3 Seslar, 577; Hydraulic Attica Exch v App Mich (2004). (Price Kosmalski), Receivership re Road South Francis v (2011). App Mich NW2d 750 *5 In re Opinion of the Court consent to the before the mortgagee may be required pay those sums associated therewith. Michigan state,
Before became a English de- courts veloped general rule that a receiver is entitled to be paid his or her services on a first-priority basis. 1846, Michigan revised and consolidated its statutes. Included within the revised RS, statutes was 1846 ch 130, § 10, provided which the purchaser of a sheriffs deed following foreclosure by advertisement holds same title that mortgagor had at the time the mortgage was executed only and that prior subsist- ing liens affected the purchaser’s interest. In all mate- rial respects, the statute has remained unchanged since 1846 and currently exists as MCL 600.3236. Following of the adoption pertinent foreclosure-by-advertisement statute this Court applied English common-law rule in situations not involving foreclosure by advertisement. So far discern, as we can rule common-law has never been applied Michigan to divest the purchaser of a sheriffs deed purchas- of the statutory er’s right priority. requires
This case us to determine whether general common-law rule permitting the court to give priority to a receiver should be extended to the foreclosure-by-advertisement context even though ap- plication of that rule would priorities contradict established a statute that has been in existence since We decline to extend the common-law rule to the situation Rather, before us. we hold that MCL 600.3236 and, controls by its plain language, requires liens preexisting mortgage that the subject foreclosure remain in the same order of priority they as existed at the time of the mortgage’s execution. Assum- ing a postdates receiver’s lien the mortgage subject to Mich 208
Opinion of the Court lien 600.3236, as the receiver’s under MCL foreclosure under here, the receiver’s interest does it is clear that interests of the lien be will subordinated Further, clear lienholders. it is purchaser any prior may waive its mortgagee from our caselaw that a Thus, lien. we also of its first-priority satisfaction consistently that forecloses with mortgagee hold that a statutory right MCL waive its 600.3236 *6 occurs, to and, if that the receiver be entitled if the mortgagee, only before the but compensation and mortgagee’s explicitly unequivocally waiver given. in case failed to Appeals
Because the Court of this 600.3236 and erro- recognize applicability MCL in and Fisk to neously holdings Bailey extended that even in the absence of support its conclusion consent, Dart could nevertheless be re- affirmative fees, to the receiver’s costs and we reverse quired pay and remand judgment Appeals of the Court of entry releasing case to the circuit court for of an order in of Dart. the escrow funds favor I. FACTS AND PROCEDURAL HISTORY property previ- The real involved this action was Jr., ously Sterrett, by owned Rudaford and secured Dart, held recorded single mortgage duly which was 8, 2007, August Upon April on Sterrett’s death the real to Lori Jean Kosmal- property bequeathed was time, $350,000, property ski. At that was valued at $170,000. than and the balance was less 2007, Erin September Duffy- In Nastassia Price and an to collect a against Price instituted action Kosmalski they in an unrelated lawsuit. When learned judgment had inherited the real property that Kosmalski Sterrett, they appointment moved for the of a receiver In re Opinion of the Court satisfy and the real in order to all or property seize sell of the Dart was not part judgment against Kosmalski. Duffy-Price’s of Price and motion for provided notice receivership. April granted the circuit court Price and
Duffy-Price’s request appointed and later, Thomas Woods as receiver.5 One week the circuit stipulated appoint- court entered an amended order of ment, which authorized the receiver to take immediate keep, operate, of the and possession property manage, and it until further order of the circuit court. preserve and powers duties conferred on the receiver inci- authority dent to his included the expend property’s equity or borrow funds for the maintenance, operation repair, necessary preserve and make it saleable. uninhabitable, the property Because the receiver $20,000 borrowed to finance substantial approximately repairs. repairs cleaning These included the home and grounds, repairing heating conditioning and air systems, installing system, repairing an alarm the wa- system area, ter pool installing fence. *7 Approximately one month before the receiver’s ap- pointment, Kosmalski had defaulted on the mortgage, proceedings by and Dart initiated foreclosure advertise- 5, 2008, ment in At the June mid-April 2008.6 sheriffs sale, Dart —the sole purchased property bidder — $169,312.50, which was the balance due on mort- 5 April 18, 2008, counsel, Jenkins, acknowledged On Dart’s former Jon 10, 2008, receipt April facsimile his of the circuit court’s However, 2009, May 20, order. in an affidavit dated Jenkins asserted that process it was not until after initiation of the foreclosure that Dart learned of the order. 2008, May 27, acknowledged In a letter dated the receiver that he was aware of Dart’s foreclosure action and indicated that he did not intend to process. interfere with the 492 MICH Court and obtained a sheriffs deed to the
gage, property subject one-year 18, to a On redemption period.7 May 2009, sale, arguing the receiver to void the moved order, Dart had the court’s receivership violated which posses- interference with the receiver’s prohibited management sion and of the Dart property. subse- motion, intervened in quently opposition assert- ing that Dart had initiated validly foreclosure that, and re- proceedings during pendency it had not interfered demption period, with the receiv- er’s of the The circuit possession property. court denied the receiver’s motion but extended the redemption 25, period August 2009, until allow receiver additional time to sell the property. When receiver was unable to sell the within the property extended redemption period, Dart received title to property August 26, effective 2009,
In October the receiver filed a motion seeking to hold Dart for payment liable of the and costs fees incurred in the administration of the The receivership. $41,874.57 receiver claimed in total expenses, which reflected the costs incurred in repairing, maintaining, and to sell the attempting property, profes- fees for his services, sional attorney costs for fees incurred aas result of the receiver’s motions to enforce the receiver- order. At the ship hearing, motion argued that because Dart had acquiesced the receivership expenditures, the receiver’s he was entitled to reimbursement of his costs and fees from Dart. Dart responded that it could not be charged with the receiv- er’s costs fees when it had not consented to those surcharges. reappraised time, on June 2009. At that the value $245,000. had fallen to *8 In re the Court
The circuit court accepted argument receiver’s 5, 2009, entered an order on November approving report receiver’s final and granting the receiver a lien on the proceeds net from the sale of the $41,874.57, amount of given which was priority over preexisting Dart’s mortgage. The lien order further required that the relinquish possession of the property to Dart and discharged the receiver and can- celed his bond.8
Dart appealed as of right the circuit court’s order granting receiver a first-priority lien over the prop erty, arguing that a receiver is not entitled to any greater rights than original owner would have had and, therefore, the receiver took title to the property subject to Dart’s preexisting mortgage. The Court of Appeals and, affirmed citing Fisk,10 Bailey,9 Attica, held that Dart could be held responsible for the receiv ership expenses.12 Under its interpretation of these cases, the Court of Appeals concluded that even without explicitly consenting to the appointment, Dart could required nevertheless be pay the receiv er’s costs and fees it because benefited from the receive rship.13
We granted leave to appeal
consider,
in relevant
part, “whether
the statutory right of first priority
8 Dart raised
application
for the first time in
appeal
for leave to
applicability
2.622(D),
this Court the
of MCR
which confers on the circuit
court
party
sought
discretion to
direct
who
pay
Thus,
receiver to
expenses.
the circuit court did
not consider the
granted
relevance of the court rule when it
relief in favor
of the receiver.
9 Bailey,
10 Fisk,
11 Attica, App 577. Receivership, In re App 13 Id. at 299. 492 MICH Opinion of the Court *9 MCL mortgage, to the holder of the recorded
belonging that a receiv- the common-law rule 600.3236, overrides priority” to first and fees are entitled er’s costs to affirmatively consent mortgagee a must “whether required pay be of a receiver to .. . .”14 costs and fees receiver’s REVIEW II. STANDARD OF authority to order the circuit court had the Whether for the pay of a first-recorded the holder explicitly it did not of a to which expenses this Court reviews de is a of law that question consent are also Questions statutory interpretation novo.15 are findings de A circuit court’s factual reviewed novo.16 error, are legal for clear and its conclusions reviewed de novo.17 reviewed
III. ANALYSIS
to first
statutory right
Dart
that
it has
asserts
under MCL 600.3236 and
priority
subsequently
cannot be made subordinate to
interest
on the
receivership expenses.
incurred
hand,
grants
rule
argues
other
common-law
despite the existence
priority,
first
Resolution of
any preexisting
property.
liens on
understanding
an
dispute
requires
first
developed
that have
on
principles
common-law
payment
issue of the
of receivers’ liens.
14
(Price Kosmalski),
THEA. COMMONLAW It is well established that our common law is de- England,18 and, scended from consequently, the law of receiverships Michigan generally adopted from English common As law far back as the English Chancery Court of recognized that the “master is to [a allow receiver] a reasonable salary for his care and
pains therein.”19 In the event that a competing property existed, interest case, as the present the English Chancery Court of and the Court of Common Pleas consistently held that a receiver was entitled to this “reasonable salary” for the receiver’s services and ex- penditures on a first-priority regardless basis of which *10 party ultimately prevailed or was held liable to pay for the receiver’s and services expenditures.20
We noted this common-law rule in In re Dissolution
Smith
Henry
Floral Co21when we held that “the
of
compensation of the receiver and his counsel are part of
court administrative costs and entitled to priority over
18
(1886).
Lamphere,
105,
108;
re
profits available dividend become before (“In added), determining the amount of the dividends to be and id. at 52 paid, fair sum should he estimated and deducted for fees of added). charges.”) (emphasis attorneys, other and for all lawful (1952). Co, Rite-Way Mfg NW2d 373 & In re Tool In re Opinion of the Court [T]he apply receiver should received from first funds liquidation (including assets the chattel mortgaged property) payment in the costs administra receivership, including tion involved, taxes herein and the fees of the attorney by receiver and his as fixed court; following and thereafter in the apply order receiver (2) ship in payment funds his hands in the chattel (3) (4) mortgages; general creditors; claims of funds, any, balance of such if partners.[27] Henry Smith, Co, Detroit Trust and Rite-Way Tool, therefore, applied the common-law rule that the re ceiver invokes here: that a unpaid fees compensation, which are the nature of “administra costs,” tive may be paid from the property or funds held in receivership before those funds are made available to prior creditors. None of cases, however, those involved foreclosure advertisement. And while the pertinence of the common-law rule seems apparent, the Court of Appeals erred failing recognize that provision foreclosure-by-advertisement statute, MCL 600.3236, is directly applicable to this matter and that no Michigan case applied has common-law rule this context.28
B. STATUTORYRIGHT OF PRIORITY Notwithstanding the receiver’s contrary assertion, the plain language of MCL 600.3236 creates a statutory added). (emphasis Id. at 558-559 28 The issue whether apply rule from these cases continues to presented us, outside of the context in this case is not before and we leave question day. Further, resolution of that speculate for another we do not whether, statute, absent the the receiver in this case would have been superior priority entitled to mortgagee because, over Dart as the assum ing general applied common-law rule would have in those circumstances, it is not ascertainable from what source the receiver’s compensation payable given would have been the function of MCR 2.622(D). opinion. See note 8 of this *12 492 Mich 208
222 the Court of statute, our a interpreting of When right priority.29 give and effect is to ascertain goal primary indicator of that intent intent.30 The best Legislature’s statutory lan- construing language used.31 When is and in its as a whole we must read statute guage, context, every each and word its giving grammatical defined.32 meaning unless otherwise ordinary and plain unambiguous, clear and then statutory language If is permitted, neither nor required judicial construction written.33 applied must be as statute a legal effect of sheriffs MCL 600.3236 describes expiration sale upon deed obtained at a foreclosure period.34 provides The statute redemption the applicable in full: deed be premises
Unless the
described
such
shall
redemption as
the time limited for such
redeemed within
29
enacted in 1844 and subse
The first version of this statute was
statutes,
quently
included in the 1846 revision and consolidation
RS,
130,
nearly
Michigan
§
years
ch
10
10
after
became a state. See 1846
(establishing
purchaser
§
deed
PA
that the
of a sheriffs
and 1844
6
by mortgagor
acquires
at the time the
the interest held
executed).
provision
and was
underwent several minor amendments
compilations
subsequent
it was reenacted in 1961 as
included in
before
(effective January 1, 1963),
Act
in the Revised Judicature
MCL 600.3236
however,
(RJA),
seq.
respects,
material
the statute
MCL 600.101 et
In all
unchanged
remained
since 1846.
has
30
53, 60;
Sys, Mich
purchaser which becomes effective sheriffs redemption mortgagor or her within the does not exercise his 600.3232; 600.3228; applicable statutory MCL window. See MCL MCL 600.3240(1). re Opinion of the Court provided, hereinafter thereupon such deed shall become named, grantee shall vest in the therein his operative, title, assigns, right, heirs or all the and interest which the mortgagor had at the time mortgage, the execution thereafter, except any parcel or at time parcels as to or *13 canceled, which have been redeemed and as hereinaf provided; thereafter, ter and the record thereof shall for all purposes be deemed a valid record of said deed without person having any but no re-recorded, valid subsist being ing upon mortgaged premises, lien any or part thereof, created the lien mortgage effect, such took shall be before prejudiced sale, by any rights such nor shall his or interests any way be in thereby.[35] affected The first clause under this provision describes the legal effect and operation of a deed upon the mortgag- or’s failure to statutory exercise its right of redemption following foreclosure. The first clause of MCL 600.3236 plain makes that if property is not redeemed within the applicable window, statutory then the deed becomes “operative,” vesting grantee “all right, title, and interest which the mortgagor had at the time of the execution of the mortgage . . . .” This clause refers to rights those that existed at the time that the mortgage subject to foreclosure was executed. grantee The thus succeeds to the rights same greater and no —no fewer —as those held the mortgagor when the mort- gage was By executed. logical implication, this first clause renders absolute the mortgagee’s title to the property it purchased in a foreclosure proceeding, ex- tinguishing any title, “right, and interest” created sub- sequent to the creation of the mortgage being foreclosed upon, which includes liens created the execution after the mortgage.36
35 Emphasis added.
argument,
argued
At oral
pertinent
the receiver
statutory-
that the
language in
phrase
any
this first
thereafter,”
clause is the
at
“or
time
The last however, case, plain, in this makes legal question the execution of the any preexisting interests be a foreclosure subject mortgage prejudiced will not of this clause pertinent language Specifically, sale. subsisting having any valid person that “no provides ... created before mortgaged upon premises lien effect, prejudiced took shall be mortgage the lien of such sale, rights his or interests be by any such nor shall the statute does any way thereby.” Although affected lien,” subsisting phrase the next not define “valid . .. term to mean a lien “created before qualifies that .”37 then provision such took effect. . . receiver, which, according a court to subordinate a senior allows junior Specifically, that because to a lien. the receiver asserts liability by Sterrett “has incurred a virtue of the and that affected his immediate title and therefore that’s the same title interpretation the bank has inherited.” That cannot be reconciled with clearly plain phrase text of 600.3236. The “or at time thereafter” MCL *14 Thus, phrase mortgagor’s positive property. in the the “or refers to the title any interpreted subsequently to mean that a at time thereafter” cannot be mortgagee’s imposed priority that lien takes over the interest because would accurate, nullify Indeed, interpretation if were MCL 600.3236. the receiver’s 600.3236, principle phrase that then the last of MCL which establishes the only imposed mortgage before execution of the at issue are not liens Further, foreclosure, contradictory. prejudiced by would be interpretation poses practical dilemma to the extent that Sterrett’s subject given Ken that he interest could never have been to imposition. years died before its 2V2 necessarily According plain language, to its MCL 600.3236 limits mortgage subsisting took “valid Ken” to one that was created before the Webster’s Third existence!.]” effect “subsist” means “to have because (1965). Dictionary, Unabridged New Edition a lien International To allow mortgage prejudice the that did not exist at the time the was executed to judicial party purchaser’s subrogation, would result in wherein the title statutory displaced by party priority favored with the is priority, Legislature prescribed the court. When the has the order of our Co, Roofing Cf. Stokes v Millen vary equity. it resort to courts (2002) 660, 673; (holding that an unlicensed any equitable such relief builder could not “have relief because would In re Court or “prejudiced” “shall” not be that such liens mandates The clear by the foreclosure sale. way “in affected” any is that those lienholders whose language of this import have execution will mortgage’s preexisted interests as those rights following foreclosure the exact same was executed. mortgage held at the time previously at the time of the priority that the order of It follows after a fore- execution must be maintained mortgage’s closure sale.38 whole, then, requires MCL 600.3236
When read as a
created after the mort-
any
that
interests
extin-
was executed will be
subject to foreclosure
gage
after
redemption period
expiration
guished upon
sale; however, any
preexisting
interests
a sheriffs
such
by “any
not be affected
mortgage’s execution will
sale,”
under a sheriffs deed will take
grantee
and the
to those
interests.
subject
preexisting
the property
600.3236, by
plain
that MCL
Accordingly, we hold
expi-
that after a sheriffs sale and
language, requires
any
preexisting
lien
redemption period,
ration of the
the foreclosure
subject
that was the
as at the time
priority
in the same order of
sale remains
mortgage’s
execution.
by advertise-
Dart foreclosed on the
Because
makes
ment,
application
600.3236
and its
applies,
MCL
statutory
equity
ban on an unlicensed
be used to defeat
allow
construction”).
seeking compensation
is
for residential
This
contractor
here,
provided
particularly
given
a means to ensure
so
that this Court has
paid by
party seeking
to establish a
that a receiver’s
are
2.622(D).
receivership. See MCR
and,
thus,
recording-priority jurisdiction
Michigan
a recorded
is a
rule,
superior
subsequently
This
lien
recorded.
lien is held
time,
right,”
subject
generally
several
first in
referred to as “first
grant
their
statutory exceptions
certain
first
no matter
hens
*15
324.20138(2) (environmental
costs),
remediation
time of creation. See MCL
hens).
570.1119(3) (construction
(real
taxes),
211.40
estate
and MCL
MCL
receivership expenses.
However,
statutory exception for
there is no
226
492 MICH208
op
the Court
clear that Dart’s
mortgage
first-recorded
pri-
has first
ority, given that no other liens existed when the mort-
gage
By
was executed.
operation
600.3236,
of MCL
liens created after the execution of Dart’s
2003, which includes the receiver’s lien created by order
of the circuit
in 2009,
court
could
prejudice
not
Dart’s
priority interest.39 The receiver argues, however, that
the common-law rule
and grants
controls
his lien first
39
statutory priority
actually
This
Michigan
rule is
in accord with
priority
common-law
rules
involving
established in related areas of law
judicially
receiverships.
Gray
Housing Trust,
created
Cf.
v Lincoln
(1924),
Mich
appointed
parties.
greater
His title and
can be no
than the one for
whose assets he is
[Gray,
receiver and in whose shoes he stands.
446.]
Mich at
Gray
The rule articulated in
has been relied on in other cases. See Uhl v
Co,
(1936)
712, 715;
(holding
275 Mich
validly
NW 775
that a
Wexford
appointed
property subject
receiver takes the assets of the
to those interests
parties
that existed
appointment);
between the
at the time of his or her
Co,
(1933)
531, 535;
Franklin Co v Buhl Land
264 Mich
C. CONSENT
Fisk,42
receiver, like the
Relying
Bailey41
on
Court of
nevertheless insists that he is entitled
Appeals,
including
only
rights
who takes
of the firm and is affected
firm).
claims, liens,
equities
prevail against the
all
which would
Co,
See Pulver v Dundee Cement
Mich
75 n
(1994) (holding that
if there “if there is a conflict between the common
statutory
yield”).
provision,
law and a
the common law must
41 Bailey,
42 Fisk,
Dart’s
on the basis that Dart acqui
However,
esced in
receivership.
the receiver’s asser
tion is wholly unsupported by our jurisprudence.
Bailey, this Court held that
a mortgagee
when
consents
to the appointment of a receiver as well as to the
reordering of the priorities,
the mortgagee may be
charged
payment
with
of the receiver’s costs and fees.
Likewise,
Fisk,
the Court held that
party
when a
*17
agreed by stipulation to
appointment
of certain
receivers,
that party
precluded
was
from challenging
of
payment
Thus,
a receiver’s compensation.
both
and
Bailey
Fisk are distinguishable from the
of
facts
case, given
this
that it
undisputed
is
that Dart did not
explicitly consent
to either the appointment of a re
ceiver or to
reordering
of the priorities.43 Certainly,
party
can
statutory rights.44
waive its
legal
No
author
ity, however, justifies the extension of the rule articu
in
lated
and
Bailey
Fisk to circumstances
like the
present,
in which the mortgagee failed
object to,
or
43
Cavanagh
Though
disagree
Justice
does not
with our conclusion that
Bailey and
jurisprudence
Fisk are more akin to our waiver
and do not
permits
mortgagee’s
create a
common-law rule that
to be
mortgagee’s explicit
subordinated without
consent to the receiver
ship,
curiously
holdings
he
extends the
in those cases to conclude that
acquiescence
However,
is sufficient to effect a waiver.
the resolution
Bailey
appears
prompted by
reached in
and Fisk
to have been
the Court’s
preventing
mortgagee
actually
interest
in
agreeing
from
that
only
subsequently deny
incur
responsibility
payment
receiver
costs
Again,
opinion,
of those costs.
as we note later in this
all the confusion
about who
entirely
should bear the cost of the receiver’s
is
by
2.622(D),
avoided
use of
using
MCR
and we advise courts to consider
this court rule in the future when the
is
receivers
contemplated.
44
by
Court,
“As defined
this
‘waiver’ connotes an intentional abandon
right.”
ment of
Hosp,
57,
a known
v
Roberts Mecosta Co Gen
466 Mich
n 4;
(2002), citing
Carines,
People
7;
47 The receiver also relies on this Court’s decision in In re Petition of
Chaffee,
(1933),
proposition
IV APPLICATION of this case of the statute to the facts Application Dart, of a first-recorded mandates that as the holder mortgage be entitled to satisfaction of its mortgage, from the of the foreclosure sale on proceeds interest mortgage basis. Dart’s first-recorded took first-priority 8, on its August validly effect on 2003. Dart foreclosed the mortgage, was not redeemed within property redemption period, legal extended and Dart became real under the titleholder of the equitable 26, deed on lien August receivership sheriffs 5, 2009, by created subsequently on November order of the circuit court. Because a of a purchaser only sheriffs deed takes the with those liens effect, mortgage that existed at the time the took there was no lien when Dart’s took effect Dart’s first-recorded has statutory under MCL 600.3236 over all priority Moreover, Dart did not subsequent other liens. because explicitly statutory right priority, waive its the rule in Bailey inapplicable articulated and Fisk is and the precluded recovering receiver is expenses from Dart.
Further,
the receiver’s lien in this
although
case
interest,
prejudice
could not
Dart’s
we acknowl-
Further,
preexisting mortgage.
attempts
extent
receiver
validity
proceedings,
attack the
of the foreclosure
note that
we
Chaffee
case,
plainly distinguishable.
In that
we affirmed a circuit court’s decision
mortgagee proceeded
to void a foreclosure sale when the
with foreclosure
case,
proceedings
permission.
without
court’s
indicated before the foreclosure sale that he did not intend to interfere
Moreover,
move
with Dart’s foreclosure.
when
receiver did
to void
sale, nearly
year
place,
after the sale had
the circuit
foreclosure
taken
merely
redemption period.
court
extended the
The receiver has not
and,
therefore,
appealed
validity
the foreclosure
decision
proceeding is not before this Court.
fees, proper proceeds following order of distribution of the the sale of the required prior DeWitt would have first satisfaction of Dart’s by payment recorded followed of the receiver’s costs fees. Thus, seeking payment, when a receiver looks first to the itself. re In Dissenting Opinion by Cavanagh, J.
v CONCLUSION operates preserve Because MCL 600.3236 priority following expiration applicable order of it redemption period, necessarily follows that the order preexisting liens subject of the foreclosure will remain did as it at the time of the execution. mortgage’s Because this statu- tory provision cannot be reconciled with common- law rule and because the rule common-law has never applied been to a foreclosure advertisement under 600.3236, MCL we decline to extend the common-law and, rule in this case the statute consequently, controls. We therefore judgment reverse the of the Court of *21 on Appeals imposing Dart the costs the receivership and remand this case to the circuit court for entry of an order in Dart’s favor with opinion. consistent
YOUNG,C.J., and ZAHRA,JJ., Markman and concurred Mary Kelly, with Beth J.
CAVANAGH,J. I (dissenting). respectfully dissent from majority’s conclusion that a mortgagee only waives its rights superior priority under MCL if 600.3236 the mortgagee expressly consents to a or reordering Rather, of priorities. I would hold that a mortgagee may superior also waive its if priority rights the mortgagee to and acquiesces benefits from the receivership.
In support of its conclusion that a receiver may only
superior
obtain
priority
relation to a mortgagee
Fisk,
because,
example,
“when the 600.3236],” MCL statutory right priority [under of first 215; Bailey, v 262 Mich majority Bailey cites Fisk, (1933), and Fisk v NW 160 (1952). However, view, in my Ante at 230. NW2d 356 that a waiver also occur Bailey provide and Fisk way acquiescence.1 hotel, a receiver for a Bailey, appointed was which All subject mortgage. parties sought to a involved operate during
have the receiver the hotel the summer mortgagees but the receiver refused unless the borrowing money obtaining consented to his a first priority mortgagees. mortgagees lien with over the agreed. Subsequently, collapsed, the real estate market mortgagees but the did not seek to foreclose and instead cooperated with the receiver in his efforts to sell the received, acceptable No offers were however. property. In determining whether the receiver held costs, over the for his fo- mortgagees Bailey initially cused on the fact that the consented mortgagees superior priority: mortgagees kept matter, except
If the
had
out of this
perhaps
account,
respect
of contest of the receiver’s
by acquiescence
variety
legal
Waiver
is well known in a
situations.
’n,
See, e.g.,
Improvement
City Birming
Estates
Ass
v
Inc
Bloomfield
(2007)
ham,
206, 214;
(stating
that an unam
biguous deed restriction is enforced as written “unless the restriction ...
*22
added);
by acquiescence")
(emphasis
Sampeer
has been waived
v
(1963) (“If
Boschma,
261, 265;
However, Court also that if the this stated even mort- gagees given had not to prior, specific consent receiver’s their conduct priority, would nevertheless have them from precluded seeking to obtain over the receiver because dealt mortgagees “[t]he with the receiver and in an effort promptly to save loss to by keeping concern, themselves the hotel a going attempt was used an to effect sale of the property.” Accordingly, Id. because mortgagees “availed advantage themselves of possible they will receivership, not be heard to that say property in the hands the receiver chargeable is not with the expense costs, receiver’s and administration may even though practically it result in a corresponding added). loss to them.” Id. at (emphasis 219-220 This was so “[administration because incurred expenses are on the theory they benefit the parties ultimately entitled to at property.” Id. was also Bailey careful to limit scope holding, explaining only court allow a expenses displace prior liens when the are required preserve and allow property to become saleable. property Id. at 221.
Also, in Fisk Court considered a situation in which the had parties agreed receivers over the at issue corporation parties while the settled a dispute regarding corporation. owned who that, This Court held when the primary purpose preserve is to protect controversy, logically involved “it that he follows who ultimately establishes his *23 208 492 MICH
236 Dissenting by Opinion Cavanagh, J. the property held is one who benefits from
thus
the
Fisk, 333 Mich
and
having
protected
preserved.”
been
Mich 215.
noted that
516, citing
Fisk also
Bailey,
at
to the
of the
appointment
had
parties
agreed
both
and,
so,
in effect waived
doing
appellant
“by
receivers
regarding
make
complaint
might
he
otherwise
or
and its effect
legality of
propriety
to
question
receivership
of who was
bear the
upon
omitted).
(citation
Fisk,
Mich at 516
expenses.”
view,
my
Bailey
although
and Fisk indicate that
by
one
which a
by
mortgagee is
method
consent
by
may
superior priority, acquiescence
receiver
obtain
grant
is
to
a receiver’s ex-
mortgagee
also sufficient
preexisting mortgage. Bailey
over a
and
penses
by
that
supported
reasoning
Fisk
this conclusion
protect
preserve
is intended to
by
mortgagee
held
the receiver and because a
the receivership property
or an eventual owner of
it is
expenditures,
proper
benefits
the receiver’s
to
party
those
on the
that benefits. See
impose
219-220
that because the
Bailey,
(stating
at
mortgagees
any possible
“availed themselves of
advan-
they
of the
will not be heard to
tage
receivership,
say
hands of
receiver is
that
in the
chargeable
expense
with the receiver’s
and administra-
costs,
even
it
though
practically
tion
result
them”).
view,
Thus,
my
corresponding loss
majority
that
mort-
incorrectly
acquiescence
states
knowledge
with
is insufficient
gagee
at
superior priority.
See ante
provide
an
(claiming
interpretation
require
this
would
Fisk”),
Bailey
“extension
the rule articulated in
at
(claiming
interpretation
and ante
this
Rather,
“wholly unsupported by
jurisprudence”).
our
this conclusion.
Bailey specifically supports
In re
Dissenting
Cavanagh,
J.
case,
that,
I
Applying Bailey
Fisk
believe
minimum,
acquiesced
at a
Dart Bank
to the receiver
objected
Dart
ship. Specifically,
never
actions,
of the receiver’s efforts.
despite
knowledge
*24
long recognized
authority
This Court has
the inherent
of a
to
a
equity
appoint
court
receiver under appro
circumstances,
McDonald,
priate
see
Furthermore, although Dart was not a party to 10, 2008, order entered April on and Dart initiated foreclosure 15, advertisement on April 2008—before it was aware of the receivership —Dart admitted that it had received actual notice of the receivership only later, three days April 18, on “ Moreover, the majority’s notation that ‘[m]ere know- ” ing generally silence waiver,’ cannot constitute ante at 45, 229 n quoting & Quality Concepts Prods Co v Nagel Inc, 362, (2003), Precision is irrelevant because merely Dart did not stand mute when Rather, it learned of the receivership. in a letter acknowledging receivership, attorney Dart’s stated that it “would willing receiver] be to with . [the work .. in terms of arranging a sale of the that property so Also, this can be paid.” Dart’s subsequent Mich Dissenting Cavanagh, J. year during between interaction with the receiver and the acknowledgement sher- Dart’s to work with willingness iffs sale substantiates 2009, during October Additionally, the receiver. court, attorney Dart’s admitted that in the trial hearing fact was receiver Dart that there “acquiesced court, . . .” and Dart out there . The trial and, in condition agreed was terrible that they it were repairing high, although Furthermore, in necessary case. were documenting his related provided reports expenditures hopes in it to repairing returning condition, acted to formally saleable and Dart never any specific by the receiver related challenge expenditure Thus, in repair. my view, to the Dart’s conduct property’s had of and knowledge was sufficient establish Dart view, acquiesced receivership. Accordingly, my conduct” clearly engaged Dart “affirmative right,” sufficient to show that Dart “waived a known ante *25 45, just parties at 229 n as did the in Estates Bloomfield Ass’n, City v Mich Improvement Birmingham, Inc 479 (2007); 206, 214; Boschma, NW2d v 369 Sampeer 737 670 265; (1963); Smith 261, Mich 119 607 v First NW2d Church, 1, 11; 333 Mich 52 Presbyterian United NW2d (1952). Additionally, mortgagee, as Dart benefited from the preserve, protect the repair, receiver’s efforts to the property repairs property’s because the increased Therefore, efforts Dart’s improved value. the receiver’s the full amount of its recovering chances of The fact property. when the receiver sold the that not sell the at a property receiver was able to suitable Bailey this because price analysis does undercut though held take “even that the receiver’s costs [the in a practically corresponding it result loss Bailey, Accordingly, Mich at 219-220. mortgagee].” In re Dissenting Opinion by Cavanagh, J. as stated in Dart not “be Bailey, say should heard to property in the hands the receiver is not chargeable with the receiver’s when the expense” mort- gagee [itself] “availed possible advantage of the . . . Id. receivership at 219.2 Finally, as the ultimate owner of the property through process, the foreclosure Dart also benefited from the receiver’s efforts to repair, preserve, and protect aspect property. This the case falls under Fisk’s conclusion that when primary a purpose of preserve is to and protect property involved in a “it controversy, logically that he follows ultimately who establishes his right property held thus is the one who benefits from the property 2 Bailey’s importance discussion of the of who receives the benefit of receiver’s is efforts consistent with this Court’s discussion of issue in opinions. Holmes, 16, example, 18; other For in Holmes v 265 Mich (1933), imposing responsibility NW 360 Court stated for the appropriate receiver’s on the is when the “performed valuable services” that “were beneficial” and the parties Likewise, Fisk, appointment. had consented to in this Court stated that ordinarily right compensation “[r]eceivers have a for their expenses, right strong equity, analogous services and such is obligation upon contract, implied
to an founded an and is not dependent upon arbitrary court, the mere if discretion of regular of the receiver was and his conduct has been exception. compensation free Such of the receiver to charge [Fisk, receivership.” on the or in fund (citation omitted).] at 518 See, also, (1983) Cohen, App v Cohen (upholding a receiver’s fees because the fees were not “excessive” and light were required “reasonable the actions the receiver was to take protect property”), 2d, Receivers, 220, p order to § and Am Jur *26 (“The general compensation rule is of a where the receivership proceedings sought by mortgagee, are not subordinate mortgage, mortgagee lien at least where no receives benefit added). therefrom.”) (emphasis MICH208 Dissenting by Cavanagh, J. Fisk, and preserved.” having protected been Dart, as the eventual Accordingly, because at from the receiver’s benefited property, owner the property and preserve, protect to repair, efforts I habitable, property, sellable Dart received a of that benefit. Dart bear cost require would of the Court judgment Thus, I affirm would view, statutory because, in Dart waived its my Appeals because under MCL 600.3236 to superior receivership, acquiesced knowledge it had from the efforts to benefited receivership, preserve, protect property. repair, Kelly Marilyn JJ., Hathaway, concurred with J. Cavanagh,