Blackwood v. Sakwinski

• Decision Date: 23 March 1923
• Citation: 191 N.W. 207,221 Mich. 464
• Parties: BLACKWOOD v. SAKWINSKI et al.*
• Court: Michigan Supreme Court

221 Mich. 464

191 N.W. 207

BLACKWOOD

v.SAKWINSKI et al.*

Supreme Court of Michigan.

FN* Rehearing denied March 23, 1923.

No. 132.

Dec. 29, 1922.

Error to Circuit Court, Wayne County; L. Burget Des Voignes, Judge.

Action by James R. Blackwood against Nicholas Sakwinski, Antoinette Sakwinski, and Edwin P. Sherman. Judgment for defendants, and plaintiff brings error. Judgment reversed as to defendants Nicholas Sakwinski and Antoinette Sakwinski, and affirmed as to defendant Edwin P. Sherman.

Argued before FELLOWS, C. J., and WIEST, McDONALD, CLARK, BIRD, SHARPE, and STEERE, JJ. Goodenough, Voorhies, Long & Ryan, of Detroit, for appellant.

William C. Manchester, of Detroit, for appellee Sherman.

Charles Bowles, of Detroit, for appellees Sakwinski.

WIEST, J.

Plaintiff owned an apartment building in the city of Detroit and sold the same to defendant Edwin P. Sherman for the sum of $55,000, and accepted property in the village of Bancroft as a payment of $15,000.

It was agreed in writing that Mr. Sherman should give plaintiff a mortgage for $30,000 on the apartment building, and also:

‘The further assignment by good and sufficient mortgage assignment of a first mortgage in the sum of five thousand ($5,000.00) dollars with collateral note in like amount therewith, executed by present title holders, covering the one hundred sixty-six (166) acre farm known as the Lewis or the Obert farm (formerly owned by R. E. Olds), said farm being situate in the township of Antrim, Shiawassee county, Michigan, term of said mortgage to be five (5) years and said mortgage and note to draw interest at 6%, payable semiannually.

‘The further assignment by proper mortgage assignment by said parties of the second part to said party of the first part of a second mortgage covering said farm premises above described, together with collateral note thereto in the sum of five thousand ($5,000.00) dollars, executed by title holders of said farm, bearing interest at 6% per annum, payable semiannually, term three (3) years; title to said farm to be good and merchantable and free and clear from all incumbrances excepting said mortgages and acceptable to said party of the first part and the said two mortgages set forth in the paragraph heretofore preceding and this paragraph to be taken collectively at a valuation of ten thousand ($10,000.00) dollars and same to apply on the purchase price hereinbefore specified to such extent.’

This agreement was dated September 20, 1916.

October 2, 1916, the first mortgage was assigned by Mr. Sherman to plaintiff and the mortgage note indorsed, and on August 11, 1917, the second mortgage was duly assigned and the mortgage note indorsed.

Plaintiff foreclosed the first mortgage by advertisement, bid the property in at the sale for the amount due, and, after the period of redemption had expired, he brought this suit in assumpsit against the makers of the second mortgage note and its payee as indorser thereof.

At the close of plaintiff's case, and on motion of the defendants, the trial judge directed a verdict in favor of the defendants.

The trial judge was of the opinion that plaintiff, having a right to foreclose both mortgages, could not, under the law, foreclose on the first mortgage without such foreclosure resulting in the second one merging in the title, inasmuch as plaintiff, as purchaser at the foreclosure sale, became the owner of the equity of redemption, and held that plaintiff was estopped, after taking his remedy on the first mortgage, from foreclosing on the second one and from taking a personal judgment against the makers and the indorser of the note the second mortgage was given to secure.

The trial judge also held that:

‘The taking of these two mortgages under the conditions as named here was upon the same basis as the taking of the property in Bancroft; it was taken in exchange for these two mortgages of $5,000 each, the same as the property there, and it was a liquidation of the amount of $25,000 on this indebtedness, in view of their contract.’

Two questions are presented:

‘(1) Did the purchase of the mortgaged premises by the plaintiff, while he was the holder of a second mortgage thereon, discharge said second mortgage and note?

‘(2) Did the plaintiff and defendant Sherman by the terms of the agreement extinguish the second mortgage debt by crediting the full amount thereof as a payment on the property being sold by plaintiff to defendant Sherman?’

The first question relates to the doctrine of merger and can readily be answered in the negative so far as the note is concerned. The foreclosure of the first mortgage did not extinguish the liability of the makers of the second mortgage note. Later on in the opinion we will point out the effect of the agreement upon the question of liability of the defendant Sherman.

Defendants claim:

‘It is well-settled law that, when a parcel of land is sold subject to a mortgage, the land becomes a primary fund in the hands of the purchaser for the payment of such mortgage’-citing Lilly v. Palmer, 51 Ill. 331;Drury v. Holden, 121 Ill. 130, 13 N. E. 547;Cock v. Bailey, 146 Pa. 328, 23 Atl. 370;Dickason v. Williams, 129 Mass. 182, 37 Am. Rep. 316;Russell v. Pistor, 7 N. Y. 171, 57 Am. Dec. 509;National Inv. Co. v. Nordin, 50 Minn. 336, 52 N. W. 899.

This is true if the purchaser has assumed the mortgage, but such is not this case. An examination of the cases cited readily discloses their inapplicability to the instant case.

In Lilly v. Palmer it was held that a deed made the land the primary fund for the payment of the mortgage note sued upon, and when the plaintiff acquired title to the land he became owner of that fund and stood in the position of a mortgagee who had effected a strict foreclosure.

In Drury v. Holden the purchaser assumed the mortgage as a part of the purchase price.

In Cock v. Bailey the holder of bonds, secured by mortgage, purchased the mortgaged premises, subject to the lien of the mortgage.

In Dickason v. Williams the mortgagee took a deed subject to his mortgage.

In Russell v. Pistor the grantee of the mortgagor...