Green v. Ingersoll

• Decision Date: 20 March 1979
• Docket Number: Docket No. 78-1777
• Citation: 280 N.W.2d 496,89 Mich.App. 228
• Parties: Richard M. GREEN and Sandra L. Green, Plaintiffs-Appellants, v. Robert E. INGERSOLL and Pauline Ingersoll, husband and wife, jointly and severally, Defendants-Appellees, v. Roy BENNETT and Sharon Bennett, and Grand Rapids Mutual Federal Savings & Loan Association, a corporation, Third Party Defendants. 89 Mich.App. 228, 280 N.W.2d 496
• Court: Court of Appeal of Michigan — District of US

Page 496

280 N.W.2d 496

Richard M. GREEN and Sandra L. Green, Plaintiffs-Appellants, v. Robert E. INGERSOLL and Pauline Ingersoll, husband and wife, jointly and severally, Defendants-Appellees, v. Roy BENNETT and Sharon Bennett, and Grand Rapids Mutual

Federal Savings & Loan Association, a corporation,

Third Party Defendants.

Docket No. 78-1777.

89 Mich.App. 228, 280 N.W.2d 496

Court of Appeals of Michigan.

March 20, 1979.

Released for Publication July 12, 1979.

[89 MICHAPP 230] Mohney, Goodrich & Titta, P. C. by Thomas P. Hogan, Grand Rapids, for plaintiffs-appellants.

Craig S. Neckers, Grand Rapids, for defendants-appellees.

Wheeler, Upham, Bryant & Uhl, William R. DeVries, Grand Rapids, for G. R. Mutual.

Phelps, Linsey, Strain & Worsfold by Thomas A. Phelps, Grand Rapids, for Bennetts.

Before WALSH, P. J., J. H. GILLIS and T. M. BURNS, JJ.

WALSH, Presiding Judge.

Plaintiffs, Richard and Sandra [89 MICHAPP 231] Green, appeal the entry of judgment for defendants, Robert and Pauline Ingersoll, in the amount of $5,758.51, plus 6% Interest from July 20, 1977. The judgment was awarded on defendants' counterclaim against plaintiffs; plaintiffs' complaint was dismissed with prejudice.

Defendant, Robert Ingersoll, a residential builder since 1951, purchased fourteen parcels of property in Kent County. On November 4, 1970, the township issued a building permit to him for construction of a house on the lot at 7660 Hessler Drive, Rockford, Michigan. Construction was completed in May 1971, at which time a certificate of occupancy was issued. Mr. Ingersoll built a total of thirteen houses on the fourteen lots. The house at 7660 Hessler Drive was used by the Ingersolls as a model home. The garage of the house was used as a storage place for equipment and other items owned by defendants. Mr. Ingersoll and his son spent two nights in the house to protect it against Halloween vandalism. The house was at all times open for sale to the general public. During construction and after completion there were offers to purchase which did not result in sale of the house.

In June 1972, plaintiffs and defendants entered into a buy-sell agreement for the house at 7660 Hessler Drive. The purchase price was $41,400. Plaintiffs assumed an existing mortgage and made a down payment of approximately $5,000. They also agreed to execute a second mortgage in favor of defendants in the amount of $6,400. This amount was reduced to $5,758.51 due to agreed upon work done by Mr. Green on the house. It is undisputed that Mr. Ingersoll did not have a residential builders license during construction of the house or at the time of sale.

Within a few months plaintiffs began to experience[89 MICHAPP 232] problems with the house. Mr. Ingersoll visited the house in an attempt to remedy the problems.

On July 16, 1974, defendants filed an affidavit of lien with the Kent County Register of Deeds. In the affidavit they stated that plaintiffs had failed to execute the note and mortgage in accordance with their 1972 agreement. The affidavit's purpose was to notify subsequent purchasers that defendants claimed a lien on the property in the amount still owing to them for the home.

On July 11, 1977, plaintiffs sold the house to third-party defendants, Roy and Sharon Bennett. Because of the recorded affidavit of lien the title insurance company involved in the sale required delivery of $8,900 into an escrow account until the issue of liability on the mortgage mentioned in the affidavit was settled.

Plaintiffs filed a complaint against defendants on July 20, 1977. They claimed, Inter alia, that defendants could not enforce their claim against plaintiffs because Mr. Ingersoll did not have a residential builders license when the house was constructed and sold. M.C.L. § 338.1516; M.S.A. § 18.86(116). Plaintiffs asked the circuit judge to declare defendants' lien illegal and void and to set aside the cloud on the title; to release the escrow funds to plaintiffs; to order defendants to pay the attorney fees and costs incurred by plaintiffs in removing the cloud from the title; to order defendants to release to plaintiffs all right, title and interest claimed by defendants in the property and to declare that defendants had no rights, title or interest therein; to bar defendants from maintaining any action against plaintiffs for money due on the home; and to grant such further relief as would accord with equity and good conscience. Defendants counterclaimed for the balance due on the agreed upon but unexecuted second mortgage.

[89 MICHAPP 233] After hearing the testimony of Mrs. Green and Mr. Ingersoll, the trial court found that Mr. Ingersoll had built the house "for sale but also for his own use and occupancy until that sale could be accomplished". The judge found that the house had been "used and occupied by him (Mr. Ingersoll) as an office, storage facility and showcase for open houses; also overnight on two occasions".

The trial judge concluded that the transaction between plaintiffs and defendants was exempt from the requirements of the residential builders licensing act, M.C.L. § 338.1501 Et seq.; M.S.A. § 18.86(101) Et seq., for the reason that defendants came within the statutory exemption from the licensing requirement for "Owners of property, with reference to structures thereon for their own use and occupancy". M.C.L. § 338.1503(b); M.S.A. § 18.86(103)(b). Accordingly, the court ruled that § 16 of the act did not bar defendants' counterclaim for a money judgment against plaintiffs. M.C.L. § 338.1516; M.S.A. § 18.86(116).

On appeal defendants, in support of the result reached by the trial court, argue that, since they did not enter into a construction contract with plaintiffs, the residential builders licensing act does not apply to them. The act's definition of residential builder, however, expressly includes a "person who erects a residential structure * * * except for his own use and occupancy on his own property". M.C.L. § 338.1502(b); M.S.A. § 18.86(102)(b). To come within the act's purview, a builder need not enter into a contract for construction with a particular buyer. Unless one of the statutory exemptions applies, defendants are precluded from seeking a money judgment against plaintiffs in connection with the sale of the house.

As noted above, the trial court relied on the [89 MICHAPP 234] statutory provision which exempts from the licensing requirement owners of property who build structures thereon for their own use and occupancy. M.C.L. § 338.1503(b). It is undisputed that defendants "used" the house. What is at issue is whether it was also "occupied" by them so as to remove them from the § 16 prohibition against suit by unlicensed builders. The trial judge adopted the following broad definition of occupancy: "to take or enter upon possession of; to hold possession of; to hold or keep for use; to possess; to tenant; to do business in". Black's Law Dictionary (4th ed. 1968) p. 1231.

In construing the term "occupancy" as used in another section of the residential builders licensing act, the Attorney General, noting the significance of the act's purpose to protect consumers, expressed approval of the following definition from American & Foreign Insurance Co. v. Allied Plumbing & Heating Co., 36 Mich.App. 561, 565, 194 N.W.2d 158, 161 (1971), Lv. den. 387 Mich. 753 (1972): "ordinarily a building is not * * * 'occupied' until it is put to a practical and substantial use for which it was designed * * *." OAG 1975-1976, No. 4782, p. 70 (April 30, 1975).

The Legislature has described the purpose of the residential builders licensing act as the protection of homeowners and persons undertaking to become homeowners. M.C.L. § 338.1501; M.S.A. § 18.86(101). The provisions of the act must be construed with this legislative purpose in mind. Tracer v. Bushre, 381 Mich. 282, 290, 160 N.W.2d 898 (1968). Artman v. College Heights Mobile Park, Inc., 20 Mich.App. 193, 199, 173 N.W.2d 833 (1969). According to the act...