Jackson Investment Corp. v. Pittsfield Products, Inc.

• Decision Date: 30 December 1987
• Docket Number: Nos. 92941,93517,s. 92941
• Citation: 162 Mich.App. 750,413 N.W.2d 99
• Parties: JACKSON INVESTMENT CORPORATION, Plaintiff-Appellant, v. PITTSFIELD PRODUCTS, INC., a Michigan corporation and Interface Systems, Inc., a Michigan corporation, Defendants-Appellees. 162 Mich.App. 750, 413 N.W.2d 99
• Court: Court of Appeal of Michigan — District of US

Page 99

413 N.W.2d 99

JACKSON INVESTMENT CORPORATION, Plaintiff-Appellant, v. PITTSFIELD PRODUCTS, INC., a Michigan corporation and Interface Systems, Inc., a Michigan corporation Defendants-Appellees.

Nos. 92941, 93517.

162 Mich.App. 750, 413 N.W.2d 99

Court of Appeals of Michigan.

Submitted May 13, 1987.

Decided Sept. 9, 1987.

Released for Publication Oct. 15, 1987.

Leave to Appeal Denied Dec. 30, 1987.

[162 MICHAPP 751] Bassey & Selesko, P.C. (by Kieran F. Cunningham and George A. Contis), Southfield, for plaintiff-appellant.

Hooper, Hathaway, Price, Beuche & Wallace (by Mark R. Daane), Ann Arbor, for Pittsfield Products, Inc.

Dykema, Gossett, Spencer, Goodnow & Trigg (by James P. Cameron, Jr., and Terrence E. Haggerty), Ann Arbor, for Interface Systems, Inc.

Before DANHOF, C.J., and MacKENZIE and SWALLOW, ^* JJ.

SWALLOW, Judge.

On March 4, 1986, plaintiff brought the instant action to have a foreclosure sale declared invalid. On June 5, 1986, the Washtenaw Circuit Court entered two orders, one dismissing plaintiff's action with prejudice and the other finding that an earlier order was not a final and appealable order. From those orders, plaintiff appeals as of right.

The facts are not in substantial dispute. Defendant Pittsfield Products, Inc., entered into a mortgage agreement with plaintiff Jackson Investment Corporation on May 22, 1984, enabling Jackson to purchase certain property owned by Pittsfield. On September 10, 1985, Pittsfield commenced foreclosure proceedings and published a notice of foreclosure on September 10, 1985. While Jackson has at [162 MICHAPP 752] times asserted that there was a question concerning whether it was actually in default, Jackson has apparently not taken any legal steps to contest the asserted default. In addition to the notice published on September 10, 1985, notices of foreclosure were also published on September 17, 1985, September 24, 1985, and October 1, 1985. Jackson received actual notice of the sale sometime between September 10 and September 17. On October 3, 1985, the property was sold at public auction to defendant Interface Systems, Inc., for $310,000. The interval between the date of the first published notice and the date of the sale was twenty-three days, five days less than the circuit court construed was required by statute. ¹ Interface received a sheriff's deed on the date of the sale. Thereafter, Interface began paying insurance premiums, property taxes, and maintenance and utility expenses.

On March 4, 1986, Jackson filed the instant complaint and sought an order to show cause why the foreclosure sale should not be vacated. The complaint was based on the fact that the sale had occurred five days before the four-week publication period had expired. The circuit court construed plaintiff's motion as a motion for summary disposition and denied it. Thereafter, the court ruled that the sale was defective. However, the court refused to hold that the consequence of the defect was that the sale was void. Rather, the trial court held that the defect rendered the sale voidable. After examining the equities of the case, the court found plaintiff guilty of laches for waiting until five [162 MICHAPP 753] months of the six-month redemption period had passed before bringing suit to invalidate the sale. However, the trial court found some measure of relief was appropriate and ordered that the redemption period be extended by forty-three days.

On appeal, plaintiff raises two issues: (1) whether the trial court erred in holding that the sale was voidable, rather than void; and (2) whether the trial court erred in its application of the doctrine of laches to bar relief.

M.C.L. Sec. 600.3208; M.S.A. Sec. 27A.3208 provides in part:

"Notice that the mortgage will be foreclosed by a sale of the mortgaged premises, or some part of them, shall be given by publishing the same for 4 successive weeks at least once in each week, in a newspaper published in the county where the premises included in the mortgage and intended to be sold, or some part of them, are situated."

Jackson contends that the case law of this state holds that a foreclosure sale which occurs before the expiration of the notice period is void and without effect. In support of this assertion, Jackson cites two cases. One of the two decisions is Bacon v. Kennedy, 56 Mich. 329, 22 N.W. 824 (1885). The full text of that opinion reads:

"The only question in this case is whether a statutory foreclosure is valid where the sale was made on a notice which, although published twelve times in separate weeks, provided for selling on a day less than twelve weeks from the first publication. The statute does not say that notice shall merely be published twelve times, once a week, but once a week 'for twelve successive weeks.' The object of this was manifestly to give that full interval between the first notice and the sale. Such was the basis of the decision in Gantz v Toles, 40 Mich 725 [1879]; and the same principle [162 MICHAPP 754] has been applied in other cases, some of which were referred to on the argument.

"As the court below so held, the judgment was correct and must be affirmed."

The Bacon case stands for the proposition that the foreclosure sale may not take place within seven days of the last required weekly published notice, i.e., when publication is required "for twelve successive weeks," at least twelve full weeks or eighty-four days must pass from the date of the first notice before the sale can take place. In the instant case, the trial court followed the same reasoning when it held that the language of the current statute requiring publication "for four successive weeks at least once in each week" requires that at least twenty-eight days must transpire from the day of the initial notice until the date of sale. The issue of whether the sale may take place within seven days of the last required weekly published notice is distinct from the issue of what effect the defect should have. That issue was not raised in Bacon. Since the issue was not raised, the Court in Bacon did not decide whether the defect rendered the sale void or voidable. Even though the opinion suggests that the sale was not valid, that statement must be read and interpreted in light of the context in which it was decided.

Jackson also relies upon Casey v. Goetzen, 240 Mich. 41, 214 N.W. 948 (1927). Casey is factually similar to Bacon and the instant case, involving a situation where the foreclosure sale had taken place before a full week had passed after the last required notice. However, the legal...