Fisk v. Powell

• Decision Date: 04 September 1957
• Docket Number: No. 10,10
• Citation: 349 Mich. 604,84 N.W.2d 736
• Parties: Merle FISK and Leta Frances Fisk, husband and wife, Plaintiffs-Appellants, v. J. Hughes POWELL, Esther V. Powell, husband and wife, and First State Bank of Newaygo, Defendants-Appellees.
• Court: Michigan Supreme Court

Page 736

84 N.W.2d 736

349 Mich. 604

Merle FISK and Leta Frances Fisk, husband and wife Plaintiffs-Appellants, v. J. Hughes POWELL, Esther V. Powell, husband and wife, and First State Bank of Newaygo, Defendants-Appellees.

No. 10.

Supreme Court of Michigan.

Sept. 4, 1957.

Livingston & Anderson, Grand Rapids, for plaintiffs and appellants.

Reber & Reber, Fremont, for defendants and appellees.

Russell L. Shepherd, Newaygo, for defendant and appellee.

Before the Entire Bench.

SMITH, Justice.

This action relates to the purchase of a farm in Ottawa county. The plaintiffs, vendees, are daughter and son-in-law; the defendants, vendors, are mother and father. The actual sale of the property was made in 1949. In December 1948 the defendant Powell had had drawn up the papers for the consummation of the transaction. They were executed on January 6, 1949. They consisted of a warranty deed from the defendants to the plaintiffs; a mortgage from the plaintiffs to the defendants securing the sum of $11,000 and the assumption of a mortgage originally given by the defendants to the Central Bank, Grand Rapids, in the amount of $9,000; a 'side agreement' which allowed the defendants to retain possession of the premises for one year, and according to the terms of which the plaintiffs agreed to pay 'one-third of proceeds from the sale of all crops or produce from said farm, to apply on the principal balance of the $11,000 mortgage;' and finally, a promissory note in the amount of $11,000, payable in 10 years.

Following the sale, the defendants remained in possession and occupancy of the farm buildings for several weeks, at the end of which time the house was almost totally destroyed by fire. Defendants then moved in with the children. As for the insurance moneys, the house had been insured for $1,500. The insurance company paid total loss to the Central Bank, to be applied to the mortgage assumed by plaintiffs. Difficulties soon arose over the 'one-third' payments allegedly due. From four planting and harvesting seasons the plaintiffs received $22,683.90 in proceeds from the sale of wheat and oats from the farm, which they had continued to work after the fire. (Following 1952, however, plaintiffs used the land for pasturage.) From these proceeds the plaintiffs have paid to or for the defendants relatively small sums: $1,500 in one payment; a note owing by the defendants for $250; and taxes for the year 1948 of $130.50. They have, also, a receipt from the defendants for lumber sold by the defendants from the destroyed house in the amount of $250. For these sums the plaintiffs were given credit on the mortgage by the chancellor. During this same period the plaintiffs completedly paid off the Central Bank mortgage of $9,000 and have paid interest on the $11,000 indebtedness to January, 1953. Defendant Powell's answer asserts that 'plaintiffs owe to the defendants Powell, on said purchase money mortgage, a principal sum in excess of $9,000 plus interest.' In this connection we also note that in January, 1949, there was on record a mortgage given by the defendants to the First State Bank of Newaygo in the amount of $4,000. The bank is a party to this litigation. It was as a result of the claimed refusal on the part of defendants to do anything about having this mortgage discharged that the plaintiffs refused to pay any further amount due on the principal mortgage. When the plaintiffs refused so to pay, defendant Powell, on September 13, 1950, sued out a writ of attachment, which, however, was voluntarily discontinued on September 28, 1950 for reasons which are in controversy. The goods attached consist of wheat in bins on the Ottawa county farm. This outline of facts will be expanded as necessary in connection with specific questions ruled upon.

In the action before us, then, we have daughter and son-in-law arrayed against father and mother with respect to facts even now, after trial and decree, hotly contested before this Court. The plaintiffs sought a declaratory judgment, reformation of the deed and mortgage in two respects, and accounting between the parties, and, generally, 'a determination of the status of the title to the farm' and the obligation of the plaintiffs. From a decree resolving the controversy the plaintiffs take a general appeal.

As noted, the plaintiffs seek first reformation of the instruments of purchase and sale in two respects. First, that the following words in the warranty deed be struck: 'First parties reserve one-half of all oil and mineral rights.' This the chancellor resolved in favor of the plaintiffs and ordered it stricken from the deed. No question concerning it is raised on appeal. Secondly, plaintiffs alleged that the defendants Powell 'fraudulently' inserted the following paragraph in the mortgage executed by the parties before it was recorded:

'It is especially agreed that one-third of all crops raised on said premises shall be paid on the note secured by this mortgage within 30 days from harvest date. Upon failure to do so the balance of said note shall become due and payable. Mortgagors agree to farm the land every year and to use good farming practice.'

The side agreement, one of the very few incidents in this case as to which there is not a square giving of the lie, was executed the same day between the parties. It provides as follows:

'We further agree to pay to J. Hughes Powell and Esther V. Powell one-third of proceeds from the sale of all crops or produce from said farm, to apply on the principal balance of the $11,000 mortgage * * *.'

The defendant Powell testified that the papers were prepared by an attorney (now dead), who drafted all except the side agreement. (This the defendant himself had dictated to the secretary.) When the attorney saw the contents of the side agreement, we are told, he advised defendant Powell that the contested paragraph should be included in the mortgage in order to protect the defendants. The attorney, according to the defendant's testimony, then, himself, on his own typewriter, inserted the now-contested clause in two of the copies of the mortgage. However, the defendant admits that 'it (the mortgage) doesn't use the same language' as the side agreement, the principal difference being the words providing for the time for payment and acceleration in default thereof.

The plaintiffs testified that they had all copies of the mortgage in their possession for three or four days before their execution. They say they read them over but found no provision therein similar to that quoted above. They retained possession of the papers until the day arrived for closing the transaction. At this time the defendants were given the documents and the parties left together for the office in Rockford where they were executed. No additions were there made except the typewritten names of the witnesses. Plaintiffs testified that the documents were the same then as they had been at home.

Upon these facts the chancellor found that the mortgage as executed on January 6, 1949, did contain the contested clause. With this we can find no fault. In reviewing this record, as in other chancery appeals, we are bound, in the words of Mr. Justice Campbell long ago (Haines v. Haines, 35 Mich. 138) to 'render such respect to the views of the inferior tribunal as not to disturb its orders without being satisfied of their requiring correction.' We are mindful, also, that the trial chancellor had the advantage of seeing and hearing the witnesses. Regarding the allegedly fraudulent insertion in the mortgage, the essential claim of the plaintiffs is that the defendants inserted the contested clause after execution. However, in view of the admitted side agreement the only change was to make certain the date of payment to be 'within 30 days from harvest date,' and for acceleration of the balance upon failure to so pay. The chancellor ruled as follows:

'I believe further that the duty is upon the plaintiff to establish the claim of fraud here made that there was no acceleration clause in the original mortgage and I am not willing to find from the proofs here submitted that this language was not in the mortgage at the time the same was executed. It is a case of balancing the testimony of the plaintiff against that of the defendant and something stronger than a mere preponderance of the evidence is necessary to establish fraud.'

We are of the opinion that the chancellor was correct. The evidence of fraud adduced by the plaintiffs was neither 'convincing, clear nor satisfactory.' Brucker v. Welch, 226 Mich. 535, 198 N.W. 234; Gardner v. Gardner, 311 Mich. 615, 19 N.W.2d 118; Grimshaw v. Aske, 332 Mich. 146, 50 N.W.2d 866; Broaden v. Doncea, 340 Mich. 564, 66 N.W.2d 216.

The second question raised by the plaintiffs relates to imposition of the loss sustained when the farmhouse was destroyed by fire. Plaintiffs sought to charge the loss against the mortgage given to the defendants. It appears from the record that although the house had a furnace in the basement capable of heating the entire house of 12 rooms the defendants, while in possession under the side agreement, continued to heat the structure by means of two small stoves of the sheet iron variety. These had been installed during the September previous to the sale of the farm and were used to heat the two rooms in which they stood in the east portion of the building; a third room, a bedroom, was used but not heated. The remainder of the house was used for storage. Plaintiffs attempted to show that the fire started at the thimble (of the stove in the kitchen) which assertedly extended through the partition wall of the kitchen into the chimney in the adjoining room, and that such start was attributable to the negligence of the defendants. It was said that these stoves were dangerous, that they were installed without inspection or investigation of the chimney and accessories, and that the defendants were on notice that the...