Jaarda v. Van Ommen

• Decision Date: 01 February 1934
• Docket Number: No. 78.,78.
• Citation: 265 Mich. 673,252 N.W. 485
• Parties: JAARDA v. VAN OMMEN et al.
• Court: Michigan Supreme Court

265 Mich. 673

252 N.W. 485

JAARDA

v.VAN OMMEN et al.

No. 78.

Supreme Court of Michigan.

Feb. 1, 1934.

Appeal from Circuit Court, Ottawa County, in Chancery; Fred T. Miles, Judge.

Suit by Gerrit Jaarda against Bert Van Ommen and others, wherein defendants filed a cross-bill, which was dismissed. From the decree rendered, the plaintiff appeals.

Case remanded, with directions in accordance with opinion.

Argued before the Entire Bench.Diekema, Cross & Ten Cate, of Holland, for appellant.

John R. Dethmers, of Holland, for appellees.

WIEST, Justice.

March 28, 1930, defendants Van Ommen, herein referred to as defendants, gave plaintiff a purchase-money mortgage for $2,300, due in ten years, interest payable semiannually, with an acceleration clause, operative upon default of interest payments. Defendants also agreed to pay all taxes and assessments levied upon the property and to keep the buildings erected thereon insured. An insurance policy was issued to defendant Bert Van Ommen, with loss, if any, payable to plaintiff as his mortgage interest might appear. Defendants did not pay interest upon the mortgage, nor the taxes upon the property, and plaintiff exercised the right of election under the acceleration clause and declared the full amount of the mortgage due. A barn upon the premises burned in July, 1932, and the insurance company issued a check for the loss, payable to the order of plaintiff and Bert Van Ommen. Mr. Van Ommen refused to indorse the check, and plaintiff has not received the money thereon. August 17, 1932, plaintiff filed the bill herein for foreclosure of the mortgage. Defendants, by answer, admitted default in payment of interest and taxes, and, by cross-bill, alleged fraudulent inducement in procuring the mortgage and asked for cancellation.

Defendants were in default and, under the terms of the mortgage, full payment thereof was at the election of plaintiff accelerated and made due. Plaintiff exercised the right agreed upon, and thereby definitely fixed the rights of the parties. Thereafter neither defendants nor the court could fix the rights of plaintiff otherwise. Defendants made no proof in support of their cross-bill, and it was dismissed and no appeal taken.

Defendants, during pendency of the suit, paid $170.75, being the taxes for 1930, 1931, and 1932, and the insurance premium paid by the plaintiff, with interest thereon to the date of payment. Defendants never paid any interest on the mortgage principal, and there was due at the time of hearing for such item the sum of $434.70.

Upon settlement of the decree plaintiff testified: ‘I have not received the cash on that check for the fire loss on the farm. I asked them this morning and he says he don't know if he can pay me the money in cash. That's what he told me this morning. That's what the insurance agent told me, the secretary of the insurance company. The Zeeland bank on which the check is drawn is not paying out cash. I didn't get any money at all. I went to the secretary of the insurance company, and asked for a new check and asked for the money, and he told me he couldn't pay. They didn't have no money on hand. They couldn't pay it. The secretary of the insurance company says, I will give you a note.’

The court decreed: ‘That the said defendant insurance company, upon surrender of said check, issue another check for the said sum of $560.00 payable to plaintiff alone and that the same, when paid, shall be satisfaction in full of the liability of said defendant insurance company on account of said fire loss, and that the said sum of $560,00, when paid, be applied by plaintiff as follows: $434.70 on interest here now found to be due on said note and mortgage, $65.50 on plaintiff's costs of suit, hereby allowed to plaintiff, and $59.70 on the principal sum of said note and mortgage.’

The decree did not, in terms, dismiss plaintiff's bill, but, in effect, it was a dismissal, and must be so considered. The court evidently entertained the view that Act No. 98, Public Acts 1933, commonly known as the Moratorium Act, authorized disposal of the case in the manner mentioned. The mentioned statute has no application, for it was not invoked by defendants; neither were any of its provisions followed by the court, and therefore its constitutionality is not here involved. Plaintiff's right to foreclose cannot be side-tracked in the manner attempted. The inability of plaintiff to obtain payment of the insurance from the company we have mentioned, but find it unnecessary to accord the fact more than passing notice. Plaintiff is entitled to a decree according him the rights contracted for in the mortgage, and operative by default of defendants, and such rights before the court commanded a decree of foreclosure, and the action had was an unwarranted closing of the court to plaintiff.

This court has held that the court of equity has power to relieve the mortgagor from the effect of an operative acceleration clause when the default upon which the acceleration election is exercised is the result of some unconscionable or inequitable conduct of the mortgagee. Wilcox v. Allen, 36 Mich. 160;Zlotoecizski v. Smith, 117 Mich. 202, 75 N. W. 470;Rathje v. Siegel, 243 Mich. 376, 220 N. W. 658. Nothing of such a nature is present in the case at bar. The default of defendants and the election of plaintiff made the full amount of the mortgage due, and the court could not decree otherwise.

In Graf v. Hope Building Corporation, 254 N. Y. 1, 171 N. E. 884, 885, 70 A. L. R. 984,right of election, under an acceleration covnant, was exercised, followed by tender of the payment in default, and the court employed the following language pertinent to the instant case: ‘Plaintiffs may be ungenerous, but genersoity is a voluntary attribute and cannot be enforced even by a chancellor. Forbearance is a quality which under the circumstances of this case is likewise free from coercion. Here there is no penalty, no forfeiture (Ferris v. Ferris, 28 Barb. [N. Y.] 29;Noyes v. Anderson, 124 N. Y. 175, 180,26 N. E. 316, 317,21 Am. St. Rep. 657), nothing except a covenant fair on its face to which both parties willingly consented. It is neither oppressive nor unconscionable. Valentine v. Van Wagner, 37 Barb. [N. Y.] 60. In the absence of some act by the mortgagee which a court of equity would be justified in considering unconscionable he is entitled to the benefit of the covenant. The contract is definite and no reason appears for its reformation by the courts. Abrams v. Thompson, 251 N. Y. 79, 86, 167 N. E. 178. We are not at liberty to revise while professing to construe. Sun P. & P. Ass'n v. Remington P. & P. Co., 235 N. Y. 338, 346, 139 N. E. 470. Defendant's mishap, caused by a succession of its errors and negligent omissions, is not of the nature requiring relief from its default. Rejection of plaintiffs' legal right could rest only on compassion for defendant's negligence. Such a tender emotion must be exerted, if at all, by the parties rather than by the court. Our guide must be the precedents prevailing since courts of equity were established in this state. Stability of contract obligations must not be undermined by judicial sympathy.’

The case is remanded to the circuit court, with direction to enter decree of foreclosure.

Plaintiff will recover costs.

POTTER, SHARPE, NORTH, FEAD, and BUTZEL, JJ., concurred with WIEST, J.

McDONALD, C. J., took no part in this decision.

WEADOCK, Justice.¹

On March 28, 1930, defendants purchased a farm from plaintiff for the sum of $4,300, and made a down payment of $2,000 in cash, giving a promissory note secured by first mortgage for $2,300, to become due March 28, 1940, the mortgage providing that the whole amount of principal shall become due forthwith if the interest remains unpaid for thirty days.

Defendants never paid any interest, and, after five installments remained unpaid for more than thirty days, plaintiff instituted foreclosure proceedings. Defendants never paid any taxes, and the plaintiff paid them for three years.

It was provided further in the mortgage that the defendants were to keep the buildings on the farm insured against loss by fire and assign the policy and certificates to the plaintiff, and that, in the event of failure to comply with this provision, the principal should become due at the option of the mortgagee. Defendants did procure insurance on the property in their name with a loss clause payable to the plaintiff as his interest might appear, but failed to have the policies assigned to plaintiff.

On July 6, 1932, the barn burned, and the insurance company issued a check for $560 payable to plaintiff and defendant, Bert Van Ommen. Van Ommen refused to sign the check, and later the bank upon which it was drawn closed and was placed in the hands of a conservator, and the check remains unpaid.

The court refused to grant a decree of foreclosure on the grounds that an emergency exists and that the Michigan Legislature had passed Act No. 98, Pub. Acts 1933, empowering courts to continue actions for the foreclosure of real estate mortgages until not later than March 1, 1935. The court ordered the defendants to pay the taxes and the premium on a policy of insurance taken out by plaintiff after foreclosure proceedings were started within sixty days. The defendants paid this amount, and the court ordered the insurance company to issue another check for $560 to plaintiff, the same to be applied on back interest payments, plaintiff's costs of suit, and the balance on the principal. Plaintiff went to the insurance company, and was told by the secretary that they could not pay the claim in cash, but would give a note for the amount due.

Defendants in their cross-bill claimed misrepresentation upon the sale of the farm, and asked that the mortgage be canceled and the farm deeded to them free and clear of the mortgage. The court found no proof of misrepresentation, and dismissed the cross-bill. Plaintiff app...