282 N.W. 431 | Mich. | 1938
Lead Opinion
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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *473 June 12, 1928, plaintiffs Henry Lutz and Mary A. Lutz, his wife, sold part of their farm in Washtenaw county on land contract to defendants William E. Dutmer and Frances K. Dutmer, husband and wife, for $30,000. $4,700 was to be paid in cash on the execution of the contract. It was provided there should be paid the sum of $300 when the abstract of the seller was corrected by proper decree in chancery making the title in the seller merchantable and marketable in accordance with objections raised to the title thereto by attorneys for the purchasers, "it being understood that said abstract will be corrected by said seller within a period of four months from the date of this contract, and that such title-clearing proceedings will be commenced in the proper court by said seller within two weeks from the date of this contract. It is understood and agreed that if such title-clearing proceedings are not commenced by said seller within such time as stated, then and in that event, the said purchaser shall have the right to commence such title-clearing proceedings in the proper court for and on behalf of the seller and pay therefor on account of expenses of such proceedings and attorney's fees to an amount not exceeding the sum of $300 hereby retained by said purchaser for the expense of such title-clearing *475 proceedings." The balance of the purchase price was to be paid over a period of years. Interest on the unpaid balance was to be paid annually. Payments on principal of $2,000 per year were to begin June 12, 1931, and to be paid yearly thereafter. The full amount of the contract was to be paid within 10 years from the date it was entered into. A supplementary agreement dated May 5, 1932, extended the time of payment in full and provided all of the balance was to be paid on or before June 12, 1941. It also altered the provisions of the original contract in relation to interest for a period of two years. $250 was paid by the Dutmers to plaintiffs on the date of the supplemental agreement and they promised to pay $100 in one month, and $175 three months from June 12, 1932, and $175 each three months thereafter for a period of two years. Principal payments of $2,000 were to start at the end of the year following the two-year period, on June 12, 1935. The land contract provided the sellers were to pay any special assessments, including all road assessments, assessed against the property during the life of the contract. Plaintiffs agreed that upon request they would join in the execution of any proper platting and also release to the purchasers any lot or lots from the contract and any conveyance therefor on payment of one and one-half times the acreage value of each lot or lots, the acreage value being $1,100 per acre.
The Dutmers platted and subdivided the property together with adjacent land into a number of lots known as the Bonnie Brae Country Club subdivision. The plat was recorded in Washtenaw county and according to it certain portions of the subdivision were dedicated to the public and certain portions were dedicated to the property owners in the *476 subdivision. Whether the Lutzes signed the recorded plat is in dispute. The Dutmers spent large sums of money in making improvements for the purpose of selling lots.
The Home Land Lake Company, an alleged copartnership, was formed by the Dutmers and Mr. and Mrs. Kendall, Mrs. Dutmer's parents. It is urged by defendants that neither the copartnership nor the Kendalls had any interest in the property covered by the land contract, that their only interest was to earn commissions as a selling organization. The Dutmers and Kendalls filed under the assumed name statute* showing they would do business under the style "Home Land Lake Company." In a suit in chancery in the circuit court for Wayne county, brought in the copartnership's name, it was stated in the bill of complaint the land contract here involved was assigned to the Home Land Lake Company. The bill of complaint was signed by the Home Land Lake Company, by Wm. E. Dutmer and Frances K. Dutmer. The names of the Kendalls were signed by their daughter, Mrs. Dutmer. June 4, 1932, the copartnership executed a contract to sell a certain lot to Ernest R. and Gertrude Hartzog. Below the copartnership name appeared the signature of Douglass A. Kendall who signed as its president.
Defendants Dutmer made all their payments under the original contract and supplemental agreement up to and including September 12, 1932, but refused on and after September 12, 1932, to make further payments. They claim that at about the time of their refusal they learned that plaintiffs falsely and in conspiracy with certain lot contract purchasers were endeavoring to freeze out the Dutmers. *477 They say that Lutz told the Dutmer contract purchasers to refuse to pay on their contracts which would cause the Dutmers to fall behind in their payments which would enable Lutz to foreclose on the contract. In return for the cooperation on the part of the lot purchasers in the freezeout, Lutz was to give the Dutmer vendees more advantageous terms of purchase and larger parcels of land. Lutz emphatically denied every portion of the claimed chicanery, stating on the trial he had assisted the Dutmers.
The vendors did not institute title-clearing proceedings within two weeks from the date of the contract. Such proceedings have never been instituted by either party. The Lutzes failed to pay a special assessment for drainage of $138.60, which the Dutmers paid and which they claim was a failure to comply with the terms of the contract on the part of plaintiffs. Another claimed failure on the part of the sellers urged by the Dutmers is that a lot was not released in response to a demand and in accordance with the contract and subsequent agreement.
Plaintiffs filed a bill for specific performance, and to foreclose the land contract and for deficiency. The defendants Dutmer filed answers denying plaintiffs were entitled to the relief prayed. Defendants Kendall filed answers denying any contractual relations with plaintiffs or any liability on the contract. Defendants Dutmer filed a cross-bill and asked affirmative relief because of the alleged subterfuge and conspiracy and that their damages be assessed and set off against any claim of default on their part for moneys due plaintiffs under the contract. A decree was entered granting plaintiffs the relief prayed for in their bill of complaint, whereupon the *478 Dutmers filed a petition for relief under the moratorium act, Act No. 122, Pub. Acts 1933, as amended by Act No. 4, Pub. Acts 1935 (Comp. Laws Supp. 1935, § 14988-1 et seq., Stat. Ann. § 27.2000 et seq.). The decree entered by the trial court ordered a sale of the premises to satisfy the sum remaining unpaid on the contract and provided for a personal decree against all of the defendants for deficiency. Defendants appeal.
1. Defendants claim the trial court erred in granting plaintiffs the relief asked because plaintiffs breached the contract in several material ways before defendants Dutmer refused to make further payments, which breaches on the part of plaintiffs justified them in refusing to go on with the contract; that the action of plaintiffs caused the default of defendants about which plaintiffs now complain. The trial judge held otherwise, and in this we think he was correct.
2. Defendants contend there was a breach on plaintiffs' part in not commencing title-clearing proceedings within two weeks and correcting the abstract within four months from the date of the contract. The abstract is in the same condition it was June 12, 1928. Defendants had a right to commence proceedings if the plaintiffs failed to do so within the specified period and $300 was retained by the defendants from the purchase price for the expense of such title-clearing proceedings. Defendants are in no position to complain. Chappus v. Lucke,
3. Defendants claim plaintiffs violated the contract when they were asked by defendants' attorney at the request of defendants to release a lot in the subdivision in neglecting and refusing to comply with the request. The letter of defendants' attorney asked plaintiffs when they would furnish a deed covering the lot and stated "we are prepared to pay, and herewith tender you the correct amount of $99.31 (1 1/2 times the acreage cost). You may forward deed and we will forward check for payment." The land contract provided that plaintiffs would "when so requested, release from under this contract and any conveyance therefor, on payment to seller, their heirs or assigns, one and one-half the acreage value of each lot or lots released or deeded." The letter above quoted was the only written communication between the parties in relation to this release. Plaintiffs did not answer the letter. Both the land contract and the supplemental agreement stated that any lot would be released if certain things were done. Payment was a condition of release. It cannot be contended the communication of the Dutmers' attorney to plaintiffs was more than an offer to comply with the conditions of the land contract. The claimed verbal demand of defendants for its release was not accompanied by payment, offer to pay, or tender. Under some circumstances, a check has been held to be sufficient tender. Murphy
v. Frank P. Miller Corp.,
4. It is plaintiffs' claim that prior to this letter defendants had breached their contract in not making payments, and, if so, they could not be heard, to complain. The plaintiffs at that time had by reason of defendants' default instituted foreclosure proceedings.
5. The letter of defendants' attorney of April 3, 1933, states the lots were assessed in 1930. Plaintiff Lutz testified otherwise. He said these drain taxes were not due until November of 1932 or 1933. The trial court found in accordance with plaintiffs' contention. We see no reason to modify that finding.
6. Whether or not there was a conspiracy to freeze out defendants is a question of fact. The trial court found for plaintiffs upon this disputed question. We are inclined to agree with the trial court. There was ample testimony to support the findings of the trial court in relation to the above matters. The trial court in entering its decree for plaintiffs for foreclosure of the land contract found against defendants Dutmer on their cross-bill and thus disposed of it.
7. Defendants claim the trial court erred in entering a decree for deficiency against all of the defendants. There is a wide difference between a land contract and a mortgage.Cady v. Taggart,
"The vendee gets the equitable title, but the legal title still remains in the vendor, and is held as security for the payment of the purchase price." Hooper v. VanHusan, supra.
"The rights of mortgagor and mortgagee differ from those of vendor and vendee. The mortgagor holds the fee; the mortgagee has a lien. The vendor holds the fee; the vendee had an equitable interest." Cady v. Taggart, supra.
"The foreclosure of mortgages is one of the ancient equitable remedies. Its object is simply to enforce a lien upon lands by making it absolute unless redeemed." Michigan Ins. Co.
v. Brown,
"Under the original equitable jurisdiction there never was any power to make a personal decree against even the mortgagor himself." Johnson v. Shepard,
The power to render a deficiency decree in mortgage foreclosure cases is purely statutory. It is a substitution for a legal action and must be governed by the rules which would apply at law. Michigan Ins. Co. v. Brown, supra;McCrickett v. Wilson,
"A suit on a mortgage in England is not a suit to collect money, but one to get land, whereas a bill by a vendor is always to get his money, and the lien on the land is only a means of collecting it in whole or in part." Fitzhugh v. Maxwell, supra.
"The claim of the vendor is but an ordinary money debt, secured by the contract." Walker v. Casgrain,
"It is well settled that specific performance is granted in favor of the vendor of land as freely as in favor of the vendee, though the relief actually obtained by him is the recovery of money, the purchase price." Pearson v.Gardner,
8. One of the bases of the right to specific performance is mutuality of remedies. Bame v. Bame,
"It is well established that in a case in which specific performance is otherwise a proper remedy the vendor may obtain specific performance of a contract for the sale of realty, the vendee being ordered to accept the deed and to pay the purchase price, or if he refuses to accept a conveyance and pay the purchase price, the land may be ordered sold to satisfy the vendor's so-called 'lien,' and execution issue for any unsatisfied balance of the purchase *483 money remaining after the sale of the land. In such case the right does not depend upon the inadequacy of legal remedy." 58 C. J. pp. 1029-1031.
"Where land, or any estate therein, is the subject-matter of the agreement, the inadequacy of the legal remedy is well settled, and the equitable jurisdiction is firmly established. Whenever a contract concerning real property is in its nature and incidents entirely unobjectionable, — when it possesses none of those features which, in ordinary language, influence the discretion of the court, — it is as much a matter of course for a court of equity to decree its specific performance as it is for a court of law to give damages for its breach." 4 Pomeroy's Equity Jurisprudence (3d Ed.), p. 2761, § 1402.
"A vendor, as well as a vendee, is entitled to specific performance. If the defendant had made large payments, the complainant would be entitled, upon failure to make further payments when due, to file his bill for specific performance, and in the nature of a foreclosure bill, and in such case would be entitled to a sale of the land and decree for deficiency."Loveridge v. Shurtz,
"It is well settled, with scarcely any dissent, that specific performance is granted in favor of a vendor of land as freely as in favor of a vendee, though the relief actually obtained by him is usually only a recovery of money — the purchase price." 6 Pomeroy's Equity Jurisprudence (3d Ed.), p. 1261, § 747.
Relief by specific performance is available to a vendor as well as to a vendee on the ground of mutuality.Pearson v. Gardner, supra. It is never a remedy of right but rests in the sound discretion of the court.St. Pierre v. Masson,
"A bill filed strictly for specific performance usually asks a decree for the whole consideration, and the vendor, complainant, if he would have the entire consideration awarded to him by the decree, must be able to perform the contract. Where the consideration sought is the payment of money only, this proceeding amounts substantially to a foreclosure, as it gives the vendor a decree for money due by the terms of the contract, and, by sale of the equitable title of the vendee, subjects the premises to the payment of the same. This proceeding is favored, *485
as it enforces no forfeiture." Gray v. Hill,
See, also, Cady v. Taggart, supra.
The assignee of the purchaser under a land contract is entitled to the same rights as the original purchaser, his assignor. Howell v. Medler,
The provisions of Act No. 296, Pub. Acts 1937, are applicable to contracts made prior to its enactment as well as to those made subsequent thereto, unless such construction be held to be unconstitutional." Act No. 296, § 5, Pub. Acts 1937. *486
If this provision of the statute is unconstitutional, it is because it impairs the obligation of contract, in violation of the Constitution of the United States, art. 1, § 10, and of the Constitution of Michigan, 1908, art. 2, § 9.
"It is within the power of a legislature to change the formalities of legal procedure." Brown v.Kalamazoo Circuit Judge, 75. Mich. 274 (5 L.R.A. 226, 13 Am. St. Rep. 438).
"Without impairing the obligation of the contract, the remedy may certainly be modified as the wisdom of the nation shall direct." Sturges v. Crowninshield, 4 Wheat. (17 U.S.) 122, 200.
"The rule seems to be that in modes of proceeding and of forms to enforce the contract the legislature has the control, and may enlarge, limit, or alter them, provided that it does not deny a remedy, or so embarrass it with conditions and restrictions as seriously to impair the value of the right."Tennessee v. Sneed,
"A statute is void as impairing the obligation of a contract if it takes away all remedy for the enforcement of the contract, or if it leaves no substantial remedy therefor. Within these limitations, however, the legislature may alter or abolish particular remedies, and may substitute one remedy for another." 12 C. J. pp. 1068, 1069.
Act No. 296, Pub. Acts 1937, is, so far as applicable here, constitutional, being remedial in character.
The vendor may in equity call upon the assignee of the purchaser for the payment of purchase money and have the land sold in satisfaction of the purchase *487 price, thus eliminating the equitable title of the assignee of the purchaser. Both the purchaser and his assignee are in such proceedings proper parties defendant and the court may and should, if the assignee of the purchaser has assumed and agreed to pay, adjust the equities between the parties, avoid a multiplicity of suits, and retain jurisdiction to grant complete relief.
The right to a deficiency decree does not rest upon any analogy to the statute governing deficiency decrees in mortgage foreclosure cases, but arises from the nature of a suit for specific performance by the vendor against the vendee. The decree rendered is for the amount due and to protect the vendee the decree provides for a sale of his equitable interest in the land and an application of the proceeds of such sale to the amount due on the vendors claim.
Formerly, if the vendor was relegated to his action at law, he could maintain that action only against the vendee under the original contract, and, if he recovered judgment against such vendee the vendee might maintain suit against the assignee of the vendee under the contract by which such assignee had assumed and agreed to pay. It is precisely to bring all the parties before the court to settle all this litigation in one suit and afford the plaintiffs a complete and adequate remedy which they cannot have in a court of law that the proceeding is instituted for specific performance in a court of chancery.Powers v. Fisher,
The liability of the assignee of a land contract who has assumed and agreed to pay the balance of the purchase price cannot be extended beyond the limits of his contract of assumption. Lowrie Robinson Lumber Co. v.Rubin,
9. The land contract in question does not contain an acceleration clause. The trial court in its decree of August 26, 1935, gave defendants until September 24, 1935, to pay the amount of past due payments, $1,701.50, with interest, and in default of such payment ordered a sale of the premises to satisfy the entire purchase price, both due and to grow due, amounting to $30,175, and for a personal decree for deficiency against all of the defendants in case the property sold for less than the amount due together with the expenses of sale. The trial court had no authority to decree the entire amount due in the absence of an acceleration clause in the contract.Cady v. Taggart, supra; Brown v.Mudge,
10. The bill of complaint was filed against the Dutmers individually and against the Dutmers and Kendalls as copartners in the Home Land Lake Company. The decree treats the parties as partners. It has long been the law in this State that a wife may not be in partnership with her husband. Bassett v.Shepardson,
11. The trial court found the assignment in question was sufficient to convey the interest of the Dutmers in the property to the Kendalls. This assignment is not in the record. A person may not convey to himself alone, but if he conveys to himself and others the intention of the grantor will ordinarily prevail to prevent the grantees other than himself from taking the entire estate. Wright v. Knapp, *489
In Cameron v. Steves, 9 N. B. 141, it is said:
"In 1 Sheppard's Touchstone (a book of very high authority) at page 82, it is laid down: 'If a deed be made to one that is incapable, and to others that are capable, in this case it shall enure only to him that is capable. (And if they were to be joint-tenants, the person who is capable shall take the whole; but if they were to be tenants in common, he shall have only his particular share.)' "
Clearly, the assignors did not intend to convey the whole estate to the parties named other than themselves. Their purpose was to remain owners of some interest in the premises. To construe this assignment by, in effect, striking their names from it except as grantors, would be to enlarge its legal effect contrary to the intention of the parties. Green
v. Cannady,
12. Before the assignment, Mrs. Dutmer could not be held liable for any deficiency, because the separate estate of a married woman is not liable for payment of a note executed by her and her husband *490
for the purchase price of land deeded to them jointly because the wife has no such interest in an estate by entirety as affords a valid consideration for the note. Doane v.Feather's Estate,
13. Defendants urge that the trial court erred in refusing to decree that the sale of the property on foreclosure, if one be had, should except the streets, parks and paths dedicated to the sole and only use of the lot owners in common as private ways and private parks, pursuant to a so-called dedication contained in the plat of Bonnie Brae Country Club subdivision. The trial record is unsatisfactory on this point. The plat was not introduced in evidence. There is the conflicting testimony of Mr. Lutz who said neither he nor his wife signed the plat, and Mrs. Dutmer who testified the Lutzes did join in the dedication which is required by 3 Comp. Laws 1929, § 13210 (Stat. Ann. § 26.443). The trial court evidently believed Mr. Lutz. We are confined to the record on appeal.Karsten v. LaHuis,
14. Granting or refusing relief under the moratorium act is largely a matter of discretion with the trial judge, and such decree will be sustained unless an abuse thereof is affirmatively shown. Virginian Joint Stock Land Bank ofCharleston v. Hudson,
Decree of the trial court is set aside, with costs, and decree will be entered herein in accordance with this opinion and the cause remanded for further proceedings as suggested therein.
BUSHNELL, SHARPE, CHANDLER, and McALLISTER, JJ., concurred with POTTER, J.
Concurrence Opinion
I concur in the result.
The rule governing specific performance or foreclosure of land contracts is fully set forth in Barnard v.Huff,
NORTH, J., concurred with WIEST, C.J. BUTZEL, J., took no part in this decision. *492