Guardian Depositors Corp. v. Darmstaetter

• Decision Date: 20 October 1939
• Docket Number: No. 84.,84.
• Citation: 290 Mich. 445,288 N.W. 59
• Parties: GUARDIAN DEPOSITORS CORPORATION OF DETROIT v. DARMSTAETTER.
• Court: Michigan Supreme Court

290 Mich. 445

288 N.W. 59

GUARDIAN DEPOSITORS CORPORATION OF DETROIT

v.DARMSTAETTER.

No. 84.

Supreme Court of Michigan.

Oct. 20, 1939.

Proceeding by the Guardian Depositors Corporation of Detroit against Armin A. Darmstaetter to recover a sum of money representing an alleged deficiency arising out of the foreclosure of a mortgage on real estate, wherein defendant filed a claim of set-off. From a judgment for defendant, plaintiff appeals.

Reversed.

BUSHNELL, CHANDLER, and McALLISTER, JJ., dissenting.

Appeal from Circuit Court, Wayne County; Arthur E. Gordon, judge.

Argued before the Entire Bench.

Bodman, Longley, Bogle, Middleton & Farley, of Detroit, for appellant.

Harold H. Emmons and Harold H. Emmons, Jr., both of Detroit, for appellee.

Robert S. Marx, Lawrence I. Levi and Ethan C. Prewitt, all of Detroit, for B. C. Schram, receiver of First Nat. Bank of Detroit.

POTTER, Justice.

Act No. 143, Pub.Acts 1937, relating to deficiency judgments in cases where the foreclosure of real estate mortgages is by advertisement, provides that the issue of whether the property was sold at substantially less than its true value shall be determined by the court without a jury.

It is sought to justify this provision of the statute because it relates to procedure, and methods of procedure are generally subject to legislative control.

Statutory changes in procedure denying the right of trial by jury are unwarranted and in conflict with the Constitution which provides ‘the right of trial by jury shall remain.’ Constitution (1908), art. 2, § 13.

The right of trial by jury being constitutional, no substantial changes in its character can be made by the legislature. Underwood v. People, 32 Mich. 1, 20 Am.Rep. 633;Swart v. Kimball, 43 Mich. 443, 5 N.W. 635.

Constitutional provisions similar to that of Michigan have uniformly been held to guarantee the continuance of the right as it existed at common law, or by statute, in the particular State at the time of the adoption of the Constitution. 35 C.J. p. 148, citing cases from 40 American jurisdictions.

The rule applies to cases of a similar character arising under statutes enacted subsequently to the adoption of the Constitution. 35 C.J. p. 149; Colon v. Lisk, 153 N.Y. 188, 47 N.E. 302,60 Am.St.Rep. 609;White v. White, 108 Texas 570,196 S.W. 508, L.R.A.1918A, 339;Plimpton v. Somerset, 33 Vt. 283;Tabor v. Cook, 15 Mich. 322;Risser v. Hoyt, 53 Mich. 185, 18 N.W. 611.

In Tabor v. Cook, 15 Mich. 322, a bill in equity was filed to quiet title to lands in possession of defendant by plaintiff who had purchased the same at tax sale. It was said:

‘It is not in the power of the legislature, under our present Constitution, to provide for the trial of titles to land in equity, in the cases which were triable at law at the time the Constitution was adopted, unless it shall first make provision for having the case tried by jury if the defendant shall so elect. The Constitution-Art. 6, § 27-says that ‘The right of trial by jury shall remain; but shall be deemed to be waived in all civil cases, unless demanded by one of the parties, in such manner as shall be prescribed by law.’ The intention here is plain: to preserve to parties the right to have their controversies tried by jury, in all cases where the right then existed-Work v. State, 2 Ohio [St.] 296 ;Norval v. Rice, 2 Wis. 22;Exline v. Smith, 5 Cal. 112;Hughes v. Hughes, 4 T.B.Mon. [Ky., 42], 43-and suitors can not constitutionally be deprived of this right except where, in civil cases, they voluntarily waive it by failing to demand it in some mode which the legislature shall prescribe.‘The present is one of those cases where a right to a trial by jury existed when the constitution was formed; and this right must therefore ‘remain.”

In Risser v. Hoyt, 53 Mich. 185, 18 N.W. 611, 619, it was said: ‘It was against the enactment of new laws which ignored the proceedings according to the course of the common law, and provided summary methods of determining legal rights, that the protecting shield of the constitution was required. The true criterion is, does the act destroy or materially impair the right of trial by jury according to the course of the common law, in cases proper for the cognizance of a jury? The nature of the controversy between the parties, and its fitness to be tried by a jury according to the rules of the common law, and not the nature of the tribunal, nor the summary mode of proceeding therein, should decide the question.'

1. There is no doubt of the fitness of the issue in this case to be tried by a jury.

2. Prior to the enactment of this statute, the mortgagee, or his assigns, had a right, under the statutes in force at the time of the adoption of the Constitution, to trial by jury of the question of liability of the mortgagor for deficiency arising from the sale of mortgaged premises by advertisement.

3. Having a right of trial by jury of the issue of the mortgagor's liability at the time the Constitution was adopted, such right of trial by jury may not be abrogated by subsequent legislative enactment but ‘the right of trial by jury shall remain.'

I think the statute in question insofar as it prohibits a jury trial of the prescribed issue is unconstitutional and void, and the judgment should be reversed.

SHARPE, J., concurred with POTTER, J.

WIEST, Justice.

Right to foreclosure, while statutory, arises out of the contract between the parties. Under such foreclosure remedy for deficiency is on the law side of the court and, under the mentioned statute, involves an issue of fact as to the value of the property, and the right to trial by jury of such issue is of interest to both parties and the legislature cannot deprive either of the right.

The judgment should be reversed and the case remanded with right to trial by jury.

BUTZEL, C. J., concurred with WIEST, J.

BUSHNELL, Justice (dissenting).

Defendant and his wife executed a mortgage on their home located on Arden Park in the third block east of Woodward avenue, between Brush street and Oakland avenue, in the City of Detroit. Plaintiff, as assignee of the mortgagee, foreclosed and purchased the property at a sheriff's sale on November 12, 1937, for the sum of $17,000, there being due on the mortgage the sum of $23,603.96 according to plaintiff's bill of particulars. The bid made at the foreclosure sale was subject to outstanding delinquent state, county and city taxes in the sum of $2,197.79, and left a deficiency balance on the mortgage debt amounting to $6,503.96, according to the testimony of plaintiff's witness Trahern. Plaintiff commenced action on January 20, 1938, for the deficiency, which was met by a general denial of liability and a plea asserting the rights extended to mortgagors in such cause by Act No. 143, Pub.Acts 1937, Stat.Ann. § 27.1335. Plaintiff's motion to strike defendant's claim of set-off, based upon the unconstitutionality of the act, was denied and plaintiff was granted leave to reply to the set-off, the court holding that the act was constitutional.

The many questions raised by plaintiff as to ‘fair value’ are substantially the same as those raised by this same plaintiff in Guardian Depositors Corporation v. Hebb, Mich., 287 N.W. 796, decided July 6, 1939, which, although not res adjudicata, is controlling of this phase of the instant case. The trial judge found that-‘the property purchased by the plaintiff corporation at the foreclosure sale held on November 12, 1937, was then and there fairly worth at least the total indebtedness owed by defendant, * * *.’ This finding of the trial court is supported by competent testimony and, as said in the Hebb case, ‘this fact, which is found as a fact, was conclusive against the right of plaintiff to recover.'

Following our decision in September of 1936 of the case of New York Life Ins. Co. v. Erb, 276 Mich. 610, 268 N.W. 754, where we affirmed a summary judgment for a deficiency on the foreclosure of a mortgage by advertisement, the legislature enacted the act now under consideration, the same being approved July 2, 1937, and given immediate effect. The language of this act is quoted in full in Guardian Depositors Corporation v. Hebb, supra. We said that, ‘so far as the provisions of this statute are involved, we cannot say it violates the Constitution,’ citing Honeyman v. Jacobs, 306 U.S. 539, 59 S.Ct. 702, 83 L.Ed. 972 (decided April 17, 1939). See also Guardian Depositors Corporation v. Brown, Mich., 287 N.W. 798, also decided July 6, 1939.

Appellant in the present case insists that the act in question, by its mandatory terms, deprives the parties litigant of their constitutional right to a jury trial.

Plaintiff also insists that the retroactive feature of the 1937 act as affecting sales subsequent to February 11, 1933, and preceding the passage of the act, is an unconstitutional impairment of its contractual rights. So far as this argument applies to the instant facts, it is of no avail because the act became effective July 2, 1937, and the first notice of sale was published August 16, 1937....