Grant v. Van Reken, Docket No. 24238

• Decision Date: 07 September 1976
• Docket Number: Docket No. 24238
• Citation: 246 N.W.2d 348,71 Mich.App. 121
• Parties: William U. GRANT and Betty Katherine Grant, his wife, Plaintiffs-Appellants, v. Stanley R. VAN REKEN and Harriet E. Van Reken, his wife, Defendants-Appellees. 71 Mich.App. 121, 246 N.W.2d 348
• Court: Court of Appeal of Michigan — District of US

Page 348

246 N.W.2d 348

William U. GRANT and Betty Katherine Grant, his wife, Plaintiffs-Appellants, v. Stanley R. VAN REKEN and Harriet E. Van Reken, his wife,

Defendants-Appellees.

Docket No. 24238.

71 Mich.App. 121, 246 N.W.2d 348

Court of Appeals of Michigan.

Sept. 7, 1976.

Released for Publication Nov. 1, 1976.

Rehearing Denied Oct. 14, 1976.

[71 MICHAPP 122] Devine, Kent & Devine, by Alan R. DeVine, Jr., Detroit, for plaintiffs-appellants.

William A. O'Brien, Jr., Drayton Plains, for defendants-appellees.

Before MAHER, P.J., and KELLY and RILEY, JJ.

KELLY, Judge.

Plaintiffs brought an action in Wayne County Circuit Court to have a warranty deed from plaintiffs to defendants declared a mortgage. Following a non-jury trial, held on March 20 and 24, 1975, judgment was entered for defendants. Plaintiffs appeal as of right.

At trial, defendants agreed that plaintiffs purchased a residence at 179 South Venoy Circle, Garden City, Michigan, for $14,755 on April 18, 1956, and financed this purchase by a loan from Citizens Mortgage Company. Later, a second mortgage was placed against the property with Griswold Mortgage Company. Thereafter, both mortgages were foreclosed. A sale had been had in the Griswold Mortgage foreclosure proceedings and was imminent in the Citizens' Mortgage foreclosure proceedings. The balance owing to Citizens was $10,665.93, and the balance owing to Griswold Mortgage was $706.42. It was agreed below that [71 MICHAPP 123] the market value of the premises on or about September 25, 1970 was $25,000.

It is not clear whether the plaintiffs contacted the defendants or the defendants contacted the plaintiffs to arrange for some refinancing agreement that would save the home for the plaintiffs. In any event, the defendant, Stanley R. Van Reken, did meet with the plaintiffs on or about September 25, 1970 and discussed a refinancing arrangement. A few days later, plaintiffs executed three documents, a warranty deed, a lease with option to repurchase and an agreement. The import of these documents is that the plaintiffs conveyed to the defendants their home for $12,000 and received in return a two-year lease requiring rentals at the rate of $169 per month, giving them an option to repurchase at any time during the term of the lease for a price of $14,846.57.

Defendants' investment consisted solely of paying the delinquency on the Citizens mortgage, in the amount of $1,627.03, and paying off the Griswold mortgage, in the amount of $706.42, constituting a total payment by defendants of $2,333.45. The plaintiffs received no cash directly from the defendants.

Plaintiff William Grant testified that at the time of the foreclosure he sought to obtain a loan but was unable to do so. He had tried to sell the home and had contacted a realtor. However, due to pressure from his wife he sought an alternative to selling it. Grant stated that he met with the defendant, who told him, 'You don't have to lose your house, I save a lot of houses. Let me help you.' When asked why he signed the various documents he replied, 'I would have signed anything to save my house.' Furthermore, when asked what papers he had signed to facilitate this [71 MICHAPP 124] transaction he stated, 'What I thought I signed was something that I thought he'd take care of my bills and in two years I'd get my house back. The only difference would be a land contract.'

Plaintiff admitted that he was never able to come up with the $2,000 down payment required by the option to repurchase, in order to exercise it. He also stated that he made the monthly rental payment to defendant and over the two-year period there had been a few occasions when the payment was not made on time. He stated that when the payment was late he received a notice from Citizens Mortgage Company that the payment had not been made.

Defendant Stanley Van Reken testified that plaintiffs had called him in response to a letter he had sent them because their home was in foreclosure and, 'They wanted to find some way of staying in the home and continuing to live there.' Defendant stated that at no time did he intend to make a loan to plaintiffs and that he was not in the business of loaning money. He stated that he was in the business of buying and renting out property. He stated that he entered into this transaction with the plaintiffs because they 'appealed for help'. On cross-examination, defendant stated that at the time of this transaction he employed a regular letter which he sent out to people whose homes were in foreclosure. He stated that in the past ten years he had acquired at least 100 homes in this fashion.

At the close of evidence, the court reviewed the testimony and stated:

'The Plaintiff, William Grant, testified completely without any detail in his description of events and the nature of the transaction which he entered into with the Defendant. He said that he would have done anything[71 MICHAPP 125] to save the house * * *. This is hardly testimony establishing a loan between the parties and compared with Defendant's evidence as to the details of the transaction, it certainly does not sustain the test of preponderance of evidence which is the Plaintiff's burden.'

The court therefore concluded that it could not declare the deed an equitable mortgage.

It is well settled that a court of equity can declare a deed absolute on its face to be a mortgage. Taines v. Munson, 19 Mich.App. 29, 172 N.W.2d 217 (1969); Ferd L. Alpert Industries, Inc. v. Oakland Metal Stamping Co., 379 Mich. 272, 150 N.W.2d 765 (1967); Emerson v. Atwater, 7 Mich. 12 (1859). Review in matters of equity is made De novo. Consideration is given to the findings of the trial judge who is generally not reversed or modified unless this Court is convinced that it would have reached another result had it occupied the position of the trial court, I.e., if the trial court findings are clearly erroneous. Wells v. Wells, 330 Mich. 448, 47 N.W.2d 687 (1951); Opal Lake Association v. Michaywe Limited Partnership, 63 Mich.App. 161, 234 N.W.2d 437 (1975); Rhoades v. Barcal, 65 Mich.App. 315, 237 N.W.2d 306 (1975).

The trial court held that plaintiffs had not sustained the test of preponderance of evidence, which was their burden. Although it has been said that a preponderance of the evidence is sufficient, Ferris v. McQueen, 94 Mich. 367, 54 N.W. 164 (1892), other tests have been set forth by the appellate courts, indicating that a higher degree of proof than this may be required in such an issue.

In its most recent statement on the burden of proof on this issue, the Supreme Court, in Ferd L. Alpert Industries, Inc. v. Oakland Metal Stamping Co., supra, 379 Mich. at 276, 150 N.W.2d at 767, said merely: 'For [71 MICHAPP 126] citation and discussion of authority imposing a heavy burden of proof upon one who invokes this equitable doctrine, see Schmidt v. Barclay * * * (161 Mich. 1, 125 N.W. 729 (1910)).' In that case the court reviewed the several different standards enunciated in the cases to that date and rejected the defendant's statement that the burden was 'beyond a reasonable doubt' and concluded the case before it by stating that it was 'very clear' that the parties did not contemplate an absolute sale. Thus the one who asserts that an absolute conveyance is a mortgage bears a heavy burden of proof and he who invokes this equitable doctrine must furnish a preponderance of evidence whereby it is made 'very clear' to the fact finder that the parties did not...