Godwin v. Lindbert
300 N.W.2d 514
Mich. Ct. App.
1980
Check Treatment
Per Curiam.

This case is an appeal from the circuit court’s judgment of specific performance and damages against the sellers of certain real estate in Oakland County.

The case primarily concerns the propriety of the trial judge’s September 25, 1979, order that plaintiffs were entitled to supplemental damages of the difference between the mortgage rate of 8-3/4% in effect at the time plaintiffs procured a commitment to buy the property and defendants refused to convey and the 11-1/2% interest rate in effect when the trial court awarded specific performance. We affirm.

Seeking to purchase the home of the defendants, Thomas and Mary Lindbert, plaintiffs, Paul and Carol Godwin, executed and submitted an offer to purchase which contemplated a cash sale with a conventional mortgage in the amount of $59,000. Defendants accepted the offer on March 13, 1977, and the closing was scheduled at the offices of the mortgagee bank for April 12, 1977. Plaintiff Paul Godwin attended the closing, bringing with him a power of attorney signed by his wife. Thomas Lindbert did not attend the closing because his wife had obtained an injunctive order in connection with their pending divorce restraining and enjoining him from contacting plaintiffs. Mrs. Lindbert did not attend, but was represented by her attorney, who advised Mr. Godwin that there would be no closing as Mrs. Lindbert had moved back into the house and was not going to sell the house.

At the time of the scheduled closing, plaintiffs *757 were ready and able to pay the agreed upon purchase price of $74,000. Fifteen thousand dollars was to be paid in cash, and the $59,000 balance was to be mortgaged. At that point, plaintiffs had received a home mortgage bearing an interest rate of 8-3/4%. Because of the inability to close on the scheduled date, this mortgage commitment subsequently lapsed. Plaintiffs filed this action seeking specific performance of the contract and damages sustained by virtue of defendants’ failure to sell pursuant to the contract. At the conclusion of the nonjury trial, the judge entered a judgment of specific performance in favor of the plaintiffs. 1 On September 5, 1979, the trial court issued an opinion which granted damages to plaintiffs in an amount equal to the difference between the payments on the original mortgage at 8-3/4% and the payments based on the interest rate of 11-1/2%. The trial court discounted this 30-year mortgage by five percent per year to obtain the present value thereof.

Defendant appeals, raising an issue of first impression. Did the trial judge abuse his discretion in granting plaintiffs supplemental damages equalling the difference between the original mortgage interest rate and the mortgage interest rate prevailing at the date of judgment? We answer the question in the negative, and affirm.

Michigan courts have long recognized that a trial court in equity has the power to protect all of the equities of the parties. Lutz v Dutmer, 286 *758 Mich 467; 282 NW 431 (1938). The court, in equity, may grant complete relief to a party in the form of specific performance, including an award of damages. Reinink v Van Loozenoord, 370 Mich 121; 121 NW2d 689 (1963), Frank Coyle, 310 Mich 14; 16 NW2d 649 (1944), Fleischer v Buccilli, 13 Mich App 135; 163 NW2d 637 (1968). In granting specific performance, a trial court may award in its decree such additional or incidental relief as is necessary to adequately sort out the equities of the parties. Brotman v Roelofs, 70 Mich App 719; 246 NW2d 368 (1976). A trial court should enforce the equities of the parties in such a manner as to put them as nearly as possible in the position that they would have occupied had the conveyance of the real property occurred when required by the contract. Meyering v Russell, 53 Mich App 695; 220 NW2d 121 (1974), rev’d on other grounds 393 Mich 770; 224 NW2d 280 (1974).

In the instant case, the trial court clearly had within its discretion the authority to grant such additional or incidental relief as it thought necessary. In awarding plaintiffs the difference in the increase of the mortgage interest rates, we find no abuse of that discretion.

The trial court relied heavily on Reis v Sparks, 547 F2d 236 (CA 4, 1976), as support for its award of the difference in mortgage interest rates. Reis allowed the increase in mortgage interest rates as a proper item for compensating the injured parties for the delay in conveying property. In explaining its rationale, the Reis opinion cited Bernardini v The Stefanowicz Corp, 29 Md App 508; 349 A2d 287 (1975),

" 'The result [of awarding specific performance with incidental damages] is more like an accounting between the parties than like an assessment of damages.’ ” 349 *759 A2d 287, 291, quoting Ellis v Mihelis, 60 Cal 2d 206, 219; 32 Cal Rptr 415; 384 P2d 7 (1963).

In Regan v Lanze, 47 AD2d 378; 366 NYS2d 512 (1975), rev’d on other grounds 40 NY2d 475; 387 NYS2d 79; 354 NE2d 818 (1976), the court discussed a list of five items of claimed direct and consequential losses due to failure to convey marketable title on the original date of closing.

"The second item is for increased mortgage interest costs of [l/2%] over 25 years. This additional cost is a predictable consequence arising out of delay in conveying title.” Id., 516.

Defendant’s reliance upon Dohrman v Tomlinson, 88 Idaho 313; 399 P2d 255 (1965), to support her claim that the trial court should have denied as a matter of law the award of the increase in mortgage rates, is misplaced. In Dohrman, the purchaser of real estate was awarded damages for loss of rents and profits on the land, the loss on a purported resale of the land, and the amount of interest being paid by the purchaser on the amount of money borrowed to purchase the land. On appeal, the loss of profits on the purported resale of the land was denied as being too speculative and not supported by the evidence. Id., 261. The award of the amount of interest that the purchaser was paying on the loan obtained to buy the land was also denied. The reasoning behind this denial was that the purchaser could not be awarded both the loss of profits and rents caused by the delay in the conveyance of the land and the interest paid on the loan obtained to buy the land since the purchaser would have had to make those interest payments even if the contract had been performed as agreed. The trial court stated that if *760 the purchasers were permitted to recover both for the loss of the premises and the interest on the purchase loan they would be in a better position than if the contract had been timely performed. Thus, Dohrman is distinguishable from the present case.

In the instant case, the purchasers obtained a mortgage commitment which subsequently lapsed when the sellers did not timely perform the contract. The purchasers were not required to pay any interest on this mortgage commitment. Rather, the purchasers have asked and have been awarded the difference in the mortgage interest rates which have been directly occasioned by appellant’s failure timely to perform the contract. There is no double recovery here as was found objectionable in Dohrman.

Affirmed.

Costs to be paid by defendant-appellant.

Notes

1

The trial court rendered its judgment of no cause of action as to Mr. Lindbert. The court found that Mr. Lindbert was at all times willing to convey the property; that Mr. Lindbert had no part in preventing the agreed upon sale; that he had even attempted to rescind the restraining order obtained by Mrs. Lindbert; and that as part of the divorce proceeding he had transferred his interest in the property to Mrs. Lindbert and, therefore, retained no interest in the property at the time of trial.