Guardian Depositors' Corp. v. Wagner

• Decision Date: 22 December 1938
• Docket Number: No. 3.,3.
• Citation: 283 N.W. 29,287 Mich. 202
• Parties: GUARDIAN DEPOSITORS' CORPORATION OF DETROIT v. WAGNER et al.
• Court: Michigan Supreme Court

287 Mich. 202

283 N.W. 29

GUARDIAN DEPOSITORS' CORPORATION OF DETROIT

v.WAGNER et al.

No. 3.

Supreme Court of Michigan.

Dec. 22, 1938.

Suit by the Guardian Depositors' Corporation of Detroit against Robert Wagner and others to foreclose a mortgage. From an order dismissing the complaint as to named defendant, plaintiff appeals.

Reversed and remanded.

BUSHNELL, SHARPE, and CHANDLER, JJ., dissenting.Appeal from Circuit Court, Wayne County, in Chancery; Vincent M. Brennan, Judge.

Argued before the Entire Bench, except BUTZEL, J.

Bodman, Longley, Bogle, Middleton & Farley, and Carleton H. McIntyre, all of Detroit, for appellant.

Chester P. O'Hara, of Detroit, for appellees.

POTTER, Justice.

May 15, 1926, Robert J. Wagner and wife borrowed $12,500 from the Bank of Detroit and gave therefor their promissory note of $12,500, secured by real estate mortgage of even date made by them to the bank collateral thereto, the terms and conditions of which were made a part of the note.

Under any theory of the case, the mortgage is due and payable. October 30, 1937, plaintiff, as owner of the mortgage, filed a bill to foreclose the same. The trial court, on motion of counsel for defendants Wagner, ordered that the bill of complaint so far as the same pertains to the defendants Robert J. Wagner and Hazel A. Wagner be dismissed, with costs, to said defendants. Plaintiff appeals.

Proceedings to foreclose a mortgage may be maintained if commenced within 15 years from and after such mortgage shall become due and payable, or within 15 years after the last payment made on the mortgage. 3 Comp.Laws 1929, § 13975.

Where the mortgage debt is secured by the obligation or other evidence of debt of any other person besides the mortgagor, the plaintiff may make such person a party to the bill, and the court may decree payment of the balance of such debt remaining unsatisfied, after a sale of the mortgaged premises, as well against such other person as the mortgagor, and may enforce such decree as in other cases. Upon foreclosure sale, the mortgagors are liable under the statute for deficiency and the obligation or other evidence of debt of any other person besides the mortgagor may make them liable. 3 Comp.Laws 1929, § 14368. Upon foreclosure, the court ascertains and determines the amount due, orders a sale of the premises and if, upon sale, the proceeds thereof equal or exceed the amount due upon the mortgage debt, interest and costs, the same is satisfied. If there is a surplus, it is brought into the court for the use of defendants, subject to the order of the court. 3 Comp.Laws 1929, § 14373. And if the premises do not, upon mortgage sale, bring sufficient to satisfy the balance of the mortgage, interest and costs, the court may decree the payment of the balance of the mortgage debt remaining unsatisfied after a sale of the premises against the mortgagor and against any other person besides the mortgagor whose obligation or other evidence of debt secures the payment of such mortgage. 3 Comp.Laws 1929, §§ 14366, 14368.

The trial court was in error in dismissing the bill of complaint as to Wagner and wife who were proper parties to the suit.

Wagner and wife conveyed the premises by warranty deed September 1, 1926, to Philip C. Baker, as grantee, who assumed and agreed to pay the mortgage in question. The mortgage contained two clauses upon which defendants Wagner rely, one of which, inserted in the mortgage in typewriting, was as follows: ‘It is understood and agreed by the parties hereto that should default be made in any of the terms of this mortgage, then the entire amount due, including the unpaid balance on principal and interest and all expenses shall be in default and the mortgage (mortgagee) is hereby empowered to exercise the power of sale covering the entire amount then unpaid.’

The mortgage also contained in the printed form a provision: ‘That should default be made in the payment of any of the sums of money above mentioned, or any installment of interest, or in the performance of any of the covenants or agreements herein contained, and should such default continue for thirty (30) days, the whole principal sum of this mortgage, together with all arrearage of interest thereon shall, at the option of said mortgagee, its successors or assigns, and without notice, become and be due and payable immediately thereafter, although the period above limited for the payment thereof may not then have expired. The commencement by said mortgagee, its successors or assigns, of proceedings to foreclose this mortgage in any manner authorized by law shall be deemed an exercise of said option.’

Upon the filing of the bill of complaint, the defendants Wagner and wife made a motion to dismiss the bill of complaint for the reason that plaintiff was foreclosed from the right to recover a deficiency decree against Wagners for the reason that its right to recover the same was barred by 3 Comp.Laws 1929, § 13976, as amended, which statute provides that all actions in any court of this State shall be commenced within 6 years after the cause of action shall accrue, and not afterwards, and the cause of action upon the note accrued on May 15, 1929. Counsel for defendants Wagner also claimed plaintiff was barred by the statute of limitations for the reason that under the provisions of the mortgage above mentioned and the date of payments of interest upon said mortgage, any right of action based upon the covenants of said mortgage was breached and plaintiff's cause of action accrued more than 10 years prior to the filing of the bill of complaint. The trial court held with defendants as above indicated and dismissed the bill of complaint, with costs, as to the defendants Robert J. Wagner and Hazel A. Wagner.

Under the settled law of this State, the mortgage and the note are to be construed together. Sutton v. Beckwith, 68 Mich. 303, 36 N.W. 79,13 Am.St.Rep. 344;Interstate Construction Co. v. United States Fidelity & Guaranty Co., 207 Mich. 265, 174 N.W. 173;Grover v. Gratiot Macomb Development Co., 257 Mich. 26, 240 N.W. 66.

The trial court relied upon 3 Comp.Laws 1929, § 13989, which provides that if there are two or more joint contractors, no one of them shall lose the benefit of the provisions of this chapter so as to be chargeable by reason only of any payment made by any other or others of them. It is settled in this State that in all matters not covered by this chapter the common law prevails. Atwood v. Gillett, 2 Doug. 206;Pennoyer v. David, 8 Mich. 407;Sigler v. Platt, 16 Mich. 206;Littlefield v. Dingwall, 71 Mich. 223, 39 N.W. 38;Patterson v. Collier, 113 Mich. 12, 71 N.W. 327,67 Am.St.Rep. 440;Rentchler v. Lawton, 113 Mich. 14, 71 N.W. 330;Curtiss v. Perry, 126 Mich. 600, 85 N.W. 1131;Borden v. Fletcher's Estate, 131 Mich. 220, 91 N.W. 145;Brown v. Hayes, 146 Mich. 474, 109 N.W. 845. This statute has no application. The parties sought to be held here were not joint contractors and we are unable to find any provision in the statute expressly covering the question here involved.

It is immaterial that the remedy at law upon a note which accompanied the mortgage was barred. That would not affect the validity of the mortgage or the remedy upon it, Powell v. Smith, 30 Mich. 451, which remedy may be enforced although action on the debt secured or the evidence thereof is barred. 37 C.J. p. 703. When suit is brought on a mortgage note, such suit is governed by the applicable statute of limitations. Though the statute of limitations may have run against a mortgage note, that does not affect the validity of the mortgage lien given to secure the payment of the same, which mortgage lien may be foreclosed at any time within 15 years after the last payment. Stringer v. Stevens' Estate, 146 Mich. 181, 109 N.W. 269, 8 L.R.A.,N.S., 393, 117 Am.St.Rep. 620,10 Ann.Cas. 337. Payment upon the obligation by anyone who could be compelled to pay, Sutherlin v. Roberts, 4 Or. 378; In re Frisby, 43 Ch. D. 106, or by anyone who has agreed in writing to pay the debt, Town of Huntington v. Chesmore, 60 Vt. 566, 15 A. 173, or by one who has assumed the debt, Cockfield v. Farley, 21 La.Ann. 521; 37 C.J. p. 1160, is sufficient to toll the statute. Payments made by a grantee who takes subject to the mortgage, but who does not agree to pay the debt secured by the mortgage, will not suspend the statute as to the mortgagor. 37 C.J. p. 1166.

‘* * * and payment of interest by a person who, as between himself and the mortgagor, is bound to pay it, although he is under no contract with the mortgagee to do so, are payments sufficient to prevent the statute from running.’ 19 Halsbury's Laws of England, pp. 94, 95.

In Bradshaw v. Widdrington, [1902] 2 Ch. D. 430, Lord Justice Buckley said: ‘* * * looking upon it upon principle, in the first instance, apart from authority, it seems to me that all principle and common sense lead to the conclusion that it is sufficient that the payment be made by a person who, as between himself and the mortgagor, is bound to pay. You have to see whether the mortgagor has made an admission. That is the basis of it all. If the mortgagor has himself paid, or whether he has called upon somebody else and bound somebody else towards him to pay and that person has paid, equally, as it appears to me, the mortgagor has made an admission.’

He then reviewed the authorities, Chinnery v. Evans, 11 H.L.C. 115; Harlock v. Ashberry, 19 Ch. D. 539; Lewin v. Wilson, 11 App.Cas. 639, and said: ‘* * * I agree that payment was not made by the mortgagor, James Edward Bradshaw. Whether it was made by his agent or not is another matter. For the present purpose I am assuming that William Bradshaw was not his agent. Assuming that he was not his agent, still it was made by William, who was, I think, as between himself and his father, the person who was bound to pay. Inasmuch as that was so, William's payment, made in pursuance of his contractual obligations towards...