Erb v. Moore's Estate

• Court: Michigan Supreme Court
• Writing for the Court: BUTZEL
• Citation: Erb v. Moore's Estate, 292 Mich. 198, 290 N.W. 379 (Mich. 1940)
• Decision Date: 14 February 1940
• Docket Number: No. 37.,37.
• Parties: ERB et al. v. MOORE'S ESTATE.

292 Mich. 198

290 N.W. 379

ERB et al.

v.MOORE'S ESTATE.

No. 37.

Supreme Court of Michigan.

Feb. 14, 1940.

Proceeding in the matter of the appeal of Charles F. Erb and Minnie A. Erb from order of the commissioners on claims denying claim for damages for breach of contract against the estate of Andrew L. Moore, deceased. From judgment of circuit court for plaintiffs, the defendant appeals.

Judgment reversed, and new trial ordered.

Appeal from Circuit Court, Oakland County; George B. hartrick, judge.

Argued before the Entire Bench.

William H. Wilmot, of Pontiac (Robert D. Heitsch, of Pontiac, of counsel), for defendant and appellant.

Walter M. Nelson, of Detroit, for plaintiffs and appellees.

BUTZEL, Justice.

Plaintiffs, Charles F. Erb and Minnie A. Erb, of Pontiac, Michigan, presented a claim for damages against the estate of Andrew L. Moore. In substance, they allege that they retained Mr. Moore, an attorney of Pontiac, to represent them as co-counsel in a pending mortgage moratorium suit; that the plaintiffs, who were mortgagors of an apartment building in Pontiac on which the mortgage had been foreclosed, made a settlement with the New York Life Insurance Company, mortgagee, whereby the latter was to receive a surrender of the equity of redemption and a bill of sale of furnishings used on the premises for the sum of $1,500 and a release of all obligations; that Moore undertook and agreed to draft the proper documents of settlement and release of plaintiffs as mortgagors from any deficiency due the mortgagee; that Moore was neligent in performing the duties and services he was retained to perform and breached his contract to protect the claimants, and as a result thereof the liability for the deficiency was not discharged. They further claim that by reason of the neglect and breach of contract of Mr. Moore, a deficiency judgment for $4,573.98 and costs was rendered against plaintiffs (New York Life Insurance Co. v. Erb, 276 Mich. 610, 268 N.W. 754), and that they were damaged in the amount of $5,292.30. Plaintiffs' claim was denied by the commissioners on claims, and an appeal was taken to the circuit court where they filed a claim in the form of a declaration. In the circuit court the common counts were added to the declaration. As plaintiffs base their claim on an express contract and not on the common counts, we need not discuss the alleged impropriety of enlarging the claim on appeal from that filed in the probate court.

At the trial in the circuit court, Mr. Erb testified that he and his wife had been the owners of lot No. 29 of a subdivision fronting on State Street in the city of Pontiac, Michigan, on which they built a thirty-two family apartment building. They mortgaged it to the New York Life Insurance Company for $55,000, and executed a second mortgage to another mortgagee for sixty-six or sixty-seven thousand dollars. The mortgage to the New York Life Insurance Company, which was introduced as an exhibit, shows that it included all the fixtures and articles of personalty attached to or used on the premises. It also contained a warranty of title and a provision that the mortgagors would execute any further assurance of the title to the property requested by the mortgagee. On April 18, 1934, when plaintiffs' equity of redemption was about to expire, they retained a Mr. Hampton, a local attorney, to file a bill for a moratorium in the Oakland County Circuit Court. A motion was made for the determination by the court of the fair rental value of the property to be paid during the period of moratorium. In preparing the case for hearing, Mr. Erb and his attorney decided to employ the late Andrew L. Moore as additional counsel, and the latter did appear as counsel at the hearing. The court fixed the fair rental value at $500 per month, conditioning the moratorium on payment of that sum on the 18th of June, 1934, and on the same date of each succeeding month for the period of the moratorium.

Mr. Erb testified that he did not immediately leave the court house after the case was heard, but went into one of the rooms outside the courtroom with his attorney and the attorney for the life insurance company to discuss the possibility of a settlement of the moratorium suit. Mr. Moore was not present, nor was he present that afternoon when Mr. Erb and Mr. Carey, attorney for the life insurance company, went to the apartment building. On cross-examination Mr. Erb stated: ‘Following the suggestion that we might get together, Mr. Carey and I went up to the apartment. While we were there we discussed terms and conditions that might be met in the way of settlement and I think it is true that while he was up there he went over the books to determine how much rent we had collected since the date on which the bill of complaint had been filed. He also looked over the furniture, more or less casually, and the inventory. Mr. Carey and I arrived at an agreement. That agreement was subject to Mr. Carey securing authority to carry that agreement out from his client, the New York Life Insurance Company. At no time during all that process was Mr. Moore or Mr. Hampton anywhere around. The agreement that Mr. Carey and I arrived at was the beginning of our negotiations. I don't recall that I saw Mr. Hampton and Mr. Moore together at any time from the 28th day of May, 1934, until the agreement was signed on the 31st, but I seen them both. I believe Mr. Hampton called me and told me Mr. Carey was coming out to close the deal on the 31st. When I got to Mr. Hampton's office on the 31st, Mr. Hampton and Mr. Carey were there and Mr. Moore was called in later on.’

The agreement arrived at on the day of the moratorium hearing was subject to confirmation by the life insurance company. Mr. Carey testified that the next day he was authorized to conclude the settlement as arrived at with Mr. Erb.

Without objection Mr. Erb was permitted to testify on direct examination that after the settlement was approved by the life insurance company, he and the attorney for the life insurance company, met at the office of Mr. Hampton; that Mr. Moore also attended the meeting; that Mr. Hampton stated to Mr. Moore that they had come to complete the negotiations for the deal between Erb and the insurance company, and that:

‘The Erbs was surrendering their moratorium on the building, selling to the New York Life Insurance Company all of their furniture in the apartments, that the New York Life Insurance Company was surrendering to Erb, bona fide surrender of all obligations and Erbs was surrendering all of their holdings and rights to the moratorium, in substance--

‘The New York Life Insurance Company was to pay the Erbs $1,500 for the furniture in their apartment building. Out of that they were to retain $500 for the current month's rent or thereabouts as fixed by the court for a fair rental value. In substance, that was the talk. When that statement was made the papers laid there on Mr. Hampton's desk. Mr. Moore looked over the papers, of course, and said to me, ‘Well, here is what we sign up.’ He and Mr. Hampton, I believe, he did anyway, signed the stipulation of discontinuance and told me where I was to sign and what I was to sign.'

At this meeting they executed a bill of sale for the personalty in the building or used in connection therewith, except such as belonged to the tenants or the apartment of the Erbs, a quitclaim deed of the premises, and a stipulation discontinuing the moratorium suit. The sum of $1,500 was paid to the Erbs for the furniture, but before the insurance company would conclude negotiations, Erb was forced to credit $500 he had collected as rentals. Although all the terms of the deal were not reduced to writing, Mr. Erb's testimony indicates that the negotiations resulted in an oral accord and satisfaction which included a release of the obligations of the Erbs. He claims that Mr. Moore's failure to secure a written release or surrender of the mortgage note was a breach of his contract.

It appears that the mortgage in the first instance covered the furniture and fixtures attached to or used in connection with the premises, but they were sold through a delinquent tax sale to a third party, from whom the C. F. Erb Construction Company acquired title. Mr. and Mrs. Erbs signed the bill of sale as president and secretary, respectively, of the company, and as individuals.

At the time construction of the apartment building was begun, Erb had Lot 29, the site of the proposed building, surveyed. He testified that he did not know whether the insurance company had it surveyed or he had it surveyed for it at the time the mortgage was negotiated, but the company had taken Erb's survey. It is not clear just when he found out from another survey that the apartment house protruded some eight feet over on Lot 28, adjoining property belonging to the Erbs and not covered by the mortgage description. Erb's application for the mortgage stated the dimensions of the ground as 60 x 157 feet and 50 x 157 as the dimensions of the building. The question of the overlapping of the building was not raised at the time of the settlement of the moratorium suit.

The attorney for the mortgagee testified that when the mistake was claimed by Erb, he considered the possibility of two remedies, either to file a bill in equity to reform the description or to sue the Erbs for a deficiency on foreclosure of the mortgage and levy upon the property. The mortgagee chose the latter and brought suit to recover a deficiency judgment on the ground that while the bid for the property at foreclosure sale satisfied the principal and interest of the mortgage, it did not cover the taxes which the company paid after the beginning of the foreclosure advertisement but before the sale. The defense there asserted was that a suit at law would not lie for a deficiency after foreclosure by advertisement, but that a deficiency decree could be obtained only in a chancery...