Bankers' Trust Co. of Detroit v. Russell
| Decision Date | 21 June 1933 |
| Docket Number | No. 20.,20. |
| Citation | 249 N.W. 27,263 Mich. 677 |
| Parties | BANKERS' TRUST CO. OF DETROIT v. RUSSELL et al. SAME v. PERCHICK et al. (two cases). SAME v. GREEN et al. |
| Court | Michigan Supreme Court |
OPINION TEXT STARTS HERE
Appeal from Circuit Court, Wayne County, in Chancery; Arthur W. Kilpatrick, Judge.
On rehearing.
Decree entered in this court affirmed.
For former opinion, see 261 Mich. 579, 246 N. W. 504.
Argued before the Entire Bench, except BUTZEL, J.Butzel, Levin & Winston and James O. Murfin, all of Detroit (Edward D. Quint and Carl L. Whitchurch, both of Detroit, of counsel), for appellant.
Frank C. Cook and John P. O'Hara, both of Detroit, for appellee Bankers' Trust Co. of Detroit.
After decision in these cases, the defendant Milotte, trustee, died, and Edwin K. Reuling was appointed a successor trustee. On petition therefor, and by consent of counsel, he was substituted as a defendant in all of said cases.
Counsel for the plaintiff insist that our former holding (261 Mich. 579, 246 N. W. 504), based on the decision in Equitable Trust Co. v. Milton Realty Co., 261 Mich. 571, 246 N. W. 500, is not decisive of the questions presented in these cases, for the reason that the ‘Bankers Trust Company of Detroit is trustee under an express written designation from the moment of delivery of the mortgage.’ This claim is founded upon the provisions in other instruments executed by the parties to the mortgage at the time of its execution and delivery. The defendant Milotte was trustee under second mortgages on the property, and it is questionable whether he was chargeable with notice of any rights of the plaintiff, except those provided for in the instrument as recorded. But, in our opinion, a consideration of those instruments does not sustain the claim so made. They are so similar in effect that we but refer, as counsel do, to those in the Russell Case. In a communication, addressed to the plaintiff and signed by the mortgagors, reference is made to the application of the latter to the former ‘for a Construction Mortgage Loan,’ amounting to $38,000, ‘which you are placing and have agreed to sell for my account on property,’ a description of which follows. It is then said: This is followed by a statement that in compensation for the service to be rendered, which includes the ‘guarantee upon sale to the purchaser or purchasers,’ the plaintiff should receive the sum of $1,900 and an agreement on the part of the applicant that the plaintiff should make payment to the contractor on the written order of Mr. Russell; that proper releases of lien rights should be furnished to it; and that all of the net proceeds of the mortgage were to be used only in the construction of the building until it was fully completed. The concluding paragraph reads as follows: ‘Should the sale of such mortgage not be immediate, it is understood that you are to have all rights of hypothecation; you until such sale is consummated, we hereby agree to pay you interest at the same rate as called for in the mortgage on all sums advanced against the proceeds of sale.’
The mortgage was given to secure the payment of a promissory note for $38,000, executed by the mortgagors, payable to the order of the plaintiff in installments, with interest at 6 per cent.
The plaintiff then issued and sold what are called ‘Participating Certificates.’ One of them appears in the record. In it the plaintiff, in consideration of $1,000 paid to it by the bearer thereof, ‘does hereby sell, assign, transfer and set over to the holder * * * a proportional undivided interest’ in that part of the note executed by the mortgagors, and ‘a like proportional interest in such mortgage, retaining however the right to bring any suit or other proceeding deemed proper to enforce payment of said note or foreclosure of said mortgage in event of default in any of the terms of said mortgage.’
The assignment is then declared to be subject to conditions thereafter stated, ‘mutually agreed to by the company and the holder hereof.’ In one of these conditions, ‘The Holder Irrevocably Appoints The Company his, her or its agent and authorizes the company in its own name’ to collect and give acquittance for sums payable on the note and mortgage as they mature, and ‘to institute any legal or equitable suit or proceedings necessary or requisite to carry out the authority granted.’ The company agreed to cause the mortgagors to maintain fire insurance and pay all taxes upon the mortgaged premises and to ‘save the Holder harmless from any default of the mortgagors therein’; to pay to the holder interest according to the coupons annexed and to pay the principal thereof ‘as and when collected * * * but in any event within eighteen months' subsequent to the due date thereof.
It was further provided:
‘The Company shall bear all expenses of the agency and in the handling and collection of said note and mortgage and shall keep and retain for its services all sums received by it from said note and mortgage over and above the amounts to be paid to the holder under paragraph 3 hereof as compensation for its services.’
‘Upon sixty days' notice. ‘The Company’ reserves the option to repurchase the interest transferred by this assignment on any interest period date after one year from date of mortgage upon payment of par and accrued interest, and a premium of one (1%) per cent. if repurchased before maturity.'
(A copy of one of the coupons does not appear in the record, nor is there any statement as to the interest rate therein.)
We have set forth these instruments at some length, owing to the insistence of counsel...
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