McCurdy v. Van Os

287 N.W. 890, 290 Mich. 492, 125 A.L.R. 966, 1939 Mich. LEXIS 743

• Court: Michigan Supreme Court
• Decided: October 20, 1939
• Docket: Docket No. 12, Calendar No. 40,109.
• Status: Published

Opinions

North, J.

The receiver of the Grand Rapids National Bank instituted this proceeding in chancery to foreclose a land contract and to obtain a. decree for deficiency, if any. Such a decree was entered in the circuit court in chancery for Kent county. Certain of the defendants, claiming there was error in entering a decretal provision for deficiency, have appealed.

In December, 1927, the Grand Rapids National Bank executed this land contract as vendor of described improved real estate in the city of Grand Rapids, the purchase price being $23,000. Jacob Baart and wife were the original vendees. There were five subsequent assignments of the vendees’ interest: (1) In February, 1928, by Baart and wife to Richard Van Os and wife; (2) In August, 1928, by Van Os and wife to James Ruel; (3) in June, 1929, by Ruel and wife to Arthur A. Northquist; (4) In June, 1931, by Northquist and wife to Frederick Wiersum and Florence Wiersum, husband and wife; (5) And a fifth assignment in May, 1932, by Mr. and Mrs. Wiersum. When offered in evidence, the name of James Ruel was typewritten in the spaces provided in the printed form for the name of the assignee; but one of the controverted questions is whether at the time these last assignors executed this assignment it ran to Ruel as assignee or whether the assignment was in blank. But it is clear, this assignment was executed and delivered by the Wiersums under an agreement with the bank that they were surrendering any interest they had in the contract in consideration of the bank as vendor releas ing the Wiersums from any and all further liability on this contract. In each of the assignments down to and including that of the Wiersums, the respective assignees assumed and agreed to perform the terms of the contract.

As between the parties to this appeal, their rights are determined by the character and effect of the transaction consummated at the time the Wiersums executed and delivered to the bank their assignment of the vendees ’ interest in May, 1932, at which time the contract was badly in default. No payments had been made after April 11, 1931; and a large amount of taxes was in default.

Plaintiff claims that among those who had held the vendees’ interest in this contract defendant James Buel was the one person who, as the bank’s representatives understood, was financially responsible. As early as April, 1932, the bank was urging Buel to care for this obligation, it having been assumed by him when he took an assignment of the contract in 1928. The testimony discloses that throughout 1932 Mr. Crimmins, cashier and vice-president of the bank, was carrying on negotiations with Buel relative to his satisfying the bank’s demands on this contract. Bepeated interviews were had and correspondence passed. There was talk of having the contract re-transferred to Buel. The negotiations led to an oral agreement that Buel would make payments sufficient to reduce the unpaid contract obligation to $13,000, and thereupon the bank would deed the property to Buel and take back a mortgage for $13,000. A deed bearing date June 27, 1932, and a mortgage of like date were prepared by the bank and submitted to Buel, but neither instrument was ever executed. Later there were negotiations relative to reducing the unpaid balance of the contract obligation. In September a reduction of $500 was seem ingly agreed upon. Still later the bank agreed to accept a proposition from Euel that he would pay the bank $5,000 and be released from further obligation on the contract; but this settlement was not consummated. During the course of negotiations Euel offered to convey his interest in the contract property to the bank. On October 21,1932, the deed and mortgage prepared by the bank were returned to it by mail. Negotiations continued between these parties, including consideration of Mr. Euel’s conveying certain properties to the bank in settlement of the contract. Nothing in the way of a consummated settlement resulted from these negotiations which continued at least until late in 1932 and possibly as late as the spring of 1934. In February, 1933, the bank closed for the banking holiday. It did not reopen, and nothing further of a definite character was done by Euel relative to taking over the contract property or satisfying the obligation held by the bank, although there were numerous interviews between Euel’s representative, Mr, ^onsden, and representatives of the bank. The bank’s receiver filed this bill to foreclose the land contract July 21, 1934.

The facts above outlined are material as constituting a background which must be considered in determining the legal consequences of the assignment of their vendees’ interest in this contract made by Mr. and Mrs. Wiersum in May, 1932. Admittedly this assignment was prepared by and was obtained at the instance of the bank. After execution by the Wiersums, it was delivered to a representative of the bank. And, together with both copies of 'the original contract, it was held by the bank until the trial of this case four years later. The Wiersum assignment was never accepted by Mr. Euel. In behalf of the bank Mr. Crimmins testified:

“At that time (April 7, 1932) there was some talk (with Ruel) about getting Mr. Wiersum to transfer this contract over to Ruel. * * *

“Q. (By Court) There was not any agreement to release the contract as far as the bank is concerned?

“A. None whatever. * * * When I made my oral contract with Mr. Ruel I was satisfied with that at that moment and was not looking to any of the other parties for pay. . * * * The whole purpose of getting this assignment from Wiersum was so that we could go on and complete our deal directly with Ruel. * * *

‘ ‘ Q. Did Mr. Ruel ever instruct you to obtain the assignment for him, of this contract?

“A. I really don’t know how to answer that. I know that was a part of the transaction with Mr. Ruel to' put us in a position to deal with Ruel.”

In regard to an interview with the bank’s representatives had in the spring of 1934, two years after the Wiersum assignment, Ruel’s representative, Mr. Amsden, testified:

“Mr. Uhl (then receiver of the bank) turned to Mr. De Graff (former vice-president of the bank and then employed by the receiver) and told him to take thé papers to the bank’s attorney and have whatever done as would be necessary to put the title to the property in the bank, to get the building fixed up, to rent it and some income coming in from it. That was in the spring of 1934. ’ ’

Plaintiff’s position was stated by its attorney to the trial court as follows:

“Ruel was in there going to make this deal and he made this proposition (to take over the property or adjust the contract obligation) because he was liable. They (the bank) were willing to take him, let the others out and in order to do that the transfer was made to Ruel with intent that the transfer from Wiersum to Buel, that was no cancellation of the contract by anybody.”

But defendants contend that the bank in May, 1932, took the Wiersum assignment incident to the bank’s desire and effort to settle the whole matter in the contemplated adjustment with Buel which was then pending and as to which negotiations continued thereafter over a period of months; that whether the assignment was taken in blank or whether the bank, which prepared the assignment, made it run to Buel as assignee, it was obtained by the bank in consideration of its agreement with Mr. and Mrs. Wiersum that by giving the assignment and surrendering their copy of the contract they would be released from all further liability upon the contract; and further that such release by the bank released, as a matter of law, all of the prior assignees (including Mr. Buel) who had respectively agreed as assignees to perform the terms of the contract.

Decision turns upon the facts attending the Wiersum assignment. On this phase of the case we quote the following testimony. Mr. Henry Stone, employed by plaintiff bank as a manager of a branch it operated in Grand Bapids, and at which bank Wiersum did his banking business,.testified:

“In 1932 I was called to the main office in connection with this property. * * * Mr. Woodhouse was credit manager. He asked me if Fred Wiersum had been in default on this contract for several months and he asked me at that time if I could get an assignment from Mr. Wiersum and his wife, to get an assignment on the contract and turn it back. I went and called on Fred Wiersum, * * * and asked him if he would assign this property back. * * *

“After I talked with Mr. Woodhouse I went to Mr. Wiersum and asked him if he would sign this contract and give it np, and at first lie said that he did not feel as though he wanted to because he had money into it. Well, after I talked to him and told him he could get out from under, in a way, * * * he would be through with it, he agreed to sign it, and he and his wife both signed the contract. * * * Mr. Woodhouse gave me the assignment to take to Mr. Wiersum. * * *

“I asked Mr. Wiersum at that time for his copy of the contract. I picked up, and took to the bank, his copy of the contract. I told Mr. Wiersum to have Paul Swanson, his bookkeeper, take the keys to the premises to the main office. Mr. Woodhouse told me to have him deliver the keys to the main office of the Grand Rapids National Bank.

“Q. Mr. Woodhouse did not tell you anything about having the keys delivered to Mr. Ruel, did he ? * # *

“A. No, sir._ * * *

“Q. What did Mr. Woodhouse tell you that you were to tell Mr. Wiersum as to his being released from liability?

“A. He told me if Mrs. Wiersum and Mr. Wiersum would sign this assignment, they would be out from under this contract. * * * Then I told bim (Mr. Wiersum) he would be relieved of any further liability if he would surrender the contract. * * * I asked him (Mr. Wiersum) if Mr. Swanson would take the keys down to the bank. Mr. Wiersum said that would be done. * * * I am now an employee of the reorganized bank but not in the same position. # # *

“I am not sure that the top and blank spaces (in the assignment) were filled out when I took it to Mr. Wiersum. * * * I do not recall who the assignment was payable to. # * * When I took that up to Wiersum to sign I did not know that it was a transfer to Ruel, or who it was made payable to, because I do not recall whether it was filled in or not. * * * It might have been blank.”

Mr. Woodhouse, the hank’s credit manager, was not called as a witness; and therefore the above testimony as to his part in this transaction is not disputed.

Defendant Frederick Wiersum, referring to his conversation with Stone when the latter was endeavoring to obtain the assignment of Wiersum’s interest, testified:

“When he came to me in May, 1932, he asked me if I would assign my rights. * * * That is all he said, and I told him * * * I had too much of an equity in it. If the bank wanted to give me something for my equity, I will turn it over to them. He left at that time and came back again the next day. He then told me it was for my own good, that I could take and assign this building back to the bank so as to relieve me from all obligations on the building. * * * He brought in a couple of assignments and I signed them and gave him the contract. * * *

“At the time this assignment was brought to me by Mr. Stone it was in blank form. It was brought to me in blank. The way it is now filled out from me and my wife Florence to James H. Euel, * * * was not in there at the time I signed it. I signed that assignment in blank. * * * The name James H. Euel wasn’t in there when I signed it. There was nothing in there at all. * * * 1 returned the keys to the bank. This was all done in May, 1932. * * *

“At that time he (Stone) asked me to turn over this interest I had in the property to the bank. Fie said if I would do that I would be relieved of all further obligations of the contract. That was the consideration I turned this contract over to the bank. * * sc ^ that time he (Stone) said it would be to my interest to do that, and I finally said, under those conditions I would turn it over to the bank. I did sign in blank these two assignments that are here in evidence and I did deliver the two assignments to Mr. Stone. * * * Since that time I have had nothing at all to do with the building. Since that time the bank has not made any demands upon me for payment.”

Further, as bearing somewhat upon the issue as to whether the "Wiersum assignment was taken in blank or ran to Ruel, witness Paul Swanson testified:

“I am employed by Fred Wiersum. I was employed by him in May, 1932. * * * That is my signature as a witness on that assignment (Wiersum’s) of a contract. * * * I don’t believe the typewriting (Mr. Ruel’s name) was in it at the time I witnessed Wiersum’s signature.”

Unfortunately Mr. Ruel, a man 80 years of age, was so ill from diabetes and heart ailment at the time of the trial that his testimony could not be procured; nor was the testimony of Mr. Robertson, who represented Ruel in the earlier part of his negotiations with the bank, obtainable. On this account the record is none too satisfactory as to what part, if any, Ruel had in securing the Wiersum assignment, or what, if any, knowledge he had of it. There is no testimony that Ruel requested the bank to secure the Wiersum assignment; but instead it convincingly appears that the bank understood or assumed it was going to close the deal with Ruel by deeding the property to him, with a $13,000 mortgage back, and for the purpose of consummating this transaction the bank secured Wiersum’s assignment. Plaintiff’s witness Crimmins testified:

“Of course, it was with the sanction of the bank that this assignment was obtained from Wiersum to Ruel. The bank was negotiating with Mr. Ruel prior to that time and possibly after that time. It finally had gotten down to where we had made the full agreement with Ruel as evidenced by the deed and mortgage and note offered here in evidence. The only thing that was needed to consummate the deal was his signature and the payment of the —. ’ ’

But neither the negotiations for deeding the property to Ituel nor any of the other negotiations between him and the bank resulted in a consummated transaction; and the bank was left holding the 'Wiersum assignment. We are satisfied from the testimony that the bank, over a period of more than four years between its receipt of the Wiersum assignment (May, 1932) and the trial of this case (June, 1936), held possession of the assignment and also of the vendees’ duplicate of the original contract which Wiersum surrendered to the bank’s agent. Notwithstanding appellee’s contention to the contrary, we are of the opinion the testimony does not sustain its contention that the Wiersum assignment of the contract was ever delivered to Mr. Ruel or even ever tendered to him for delivery. On rebuttal Mr. Crimmins testified:

“Mr. Ruel knew all about this assignment that was made by Frederick Wiersum and Florence Wiersum to him. * * * He knew every detail of this deal. After that assignment was made to him these negotiations were pending all along there from that time on.”

But even in the light of this testimony it cannot be said that the Wiersum assignment was obtained at the instigation of Mr. Ruel or that it was ever delivered to him.

Anothér phase of this record which has a material bearing upon the position in which the bank now finds itself is whether the bank in fact repossessed the property at the time of taking the Wiersum assignment in May, 1932. The undisputed testimony is, as hereinbefore noted, that Wiersum at that time surrendered to the bank the vendees ’ duplicate of the original contract together with the keys of the building. Likewise the undisputed testimony discloses that since the Wiersum assignment no other party to this litigation except the bank had any use or control of or income from this property or paid anything on the contract obligation during the period of upwards of four years intervening between the Wiersum assignment and the hearing of this suit. During this time an agent of the bank placed a sign on this property advertising that it was for sale. The bank rented the property. While these rentals were seemingly for short periods and not of much .financial benefit, the bank placed two separate tenants in the first story of the building and at least one or two other tenants in the second story. On different occasions the bank repaired the property. Conclusively the bank’s attempts to sell this property to Ruel after it took the Wiersum assignment were wholly inconsistent with any possible claim on the part of the bank that at that time any assignee of a vendees ’ interest under this original contract had any rights thereunder with the possible exception of Ruel. It seems almost too clear for argument that at the time the bank was negotiating for the sale of the property to Ruel in 1932, at which time it had taken over the keys and full possession of the building, and even possessed the vendees ’ duplicate of the original contract, the bank was handling the property and dealing with it on the assumption that it had the right to dispose of this property in total disregard of any possible interest of the original vendees or any of the subsequent assignees of the vendees’ interest. The bank is bound by its course of conduct and can-! not now be heard to say in its suit instituted approximately two years after the Wiersum assignment that Wiersum is still hable on this contract. The bank’s continued course of conduct estops it from now as suming a different and inconsistent position relative to this transaction. It is elementary that if the bank by its dealing’s with Wiersnm released him, such release terminated the liability of prior assignees who had agreed to perform the terms of this contract. Barnard v. Huff, 252 Mich. 258 (77 A. L. R. 259); Gorman v. Butzel, 272 Mich. 525.

While it is quite unnecessary to do so, it may be again noted in passing that the undisputed evidence shows the bank secured Wiersum’s assignment on the express agreement that in consideration of the giving of this assignment he and his wife would be released from any and all further obligation incident to the performance of this contract. This alone is sufficient to necessitate the holding that Wiersnm was released; and thereby the preceding assignees of the contract were likewise released from their respective assumptions of the contract obligation. And under such circumstances, as bearing upon the release of the Wiersums, it is of no consequence whether the assignment was taken in blank by the bank for itself or whether it ran to Euel and was obtained by the bank for Euel as his agent or representative.

The only close question in this case is whether the bank should have a decree for deficiency against defendant Euel. The testimony discloses that it was incident to the negotiations for a sale of the property by the bank to Euel that the bank obtained the Wiersnm assignment and accepted surrender of the vendees ’ copy of the original contract. There is testimony that Euel definitely agreed to consummate the deal whereby the property was to be deeded to him by the bank and he was to give back a $13,000 mortgage. As noted above, it was not possible to obtain Euel’s testimony disclosing his version of these transactions. But Euel’s agreement to take a deed of the property was only an oral agreement and therefore unenforceable. It is a fair inference from the record that the reason Ruel did not complete some of the transactions negotiated between him and the bank was that Ruel found himself financially unable to do so. There is no testimony of fraud or deceit or any attempt to mislead on the part of Ruel, or for that matter on the part of any' other of these litigants. If Ruel had been guilty of bad faith, fraud, or deceit, a logical result in this suit might be to hold Ruel estopped from now claiming to be released from the obligation to perform this contract which was embodied in the' assignment which he took in 1928. There is not only no testimony justifying such a disposition of this case, but the theory upon which the plaintiff has asserted its right to a deficiency decree is not based upon fraud, deceit, or bad faith on the part of Ruel.

We are mindful plaintiff claims that, in taking over possession, control and use of this property following Wiersum’s assignment, its action was prompted by a desire to preserve the property from acts of vandalism, deterioration, et cetera, and for the interest of all parties concerned; and not for the purpose of exercising its right of forfeiture and abrogation or cancellation of the contract. Our conclusion, after careful review of the testimony, is that instead of so acting in an effort to preserve the property, the bank at that time felt reasonably certain it was going to resell the property to Ruel. With that in mind it accepted the Wiersum assignment, took possession of the property, and at least until the time the bank placed this matter in the hands of its attorney over two years later, it was proceeding on the assumption that it owned the property and was at liberty to deal with it in total disregard of anyone’s rights in connection with the Baart contract. This being true, the bank must remain where it placed itself. The result is that none of the appellants were liable for performance of the contract at the time this suit was instituted.

From this record we conclude that plaintiff bank took an assignment of the vendee’s interest in the land contract either in blank or to defendant Ruel for whom it had no authority to act, and in consideration of such assignment from Wiersum and wife fully released the latter from all liability on the contract; that thereafter the bank took possession and full control of the contract property over a long-period of time and dealt with it in total disregard of any rights therein either by the original vendees or any of their assignees, none of whom were asserting any rights under the contract. In so doing the bank rescinded and cancelled the contract. It holds the fee title and, not being entitled to a deficiency decree against the original vendees or any of their assignees, has no need of prosecuting foreclosure proceedings.

In view of our conclusion above indicated, defendants Enel and Northquist are not entitled to the relief prayed in their respective cross bills, i. e., that in event either of them is held liable for a deficiency he be given a decree for such deficiency against those who subsequent to him became assignees of the vendee’s interest in this contract.

A decree may be taken in this court dismissing plaintiff’s bill of complaint as to appellants. Costs of both courts to appellants.

Butzel, C. J., and Wiest, Bushnell, and Sharpe, JJ., concurred with North, J.