Lutz v. Dutmer

• Decision Date: 10 November 1938
• Docket Number: No. 108.,108.
• Citation: 282 N.W. 431,286 Mich. 467
• Parties: LUTZ et ux. v. DUTMER et al.
• Court: Michigan Supreme Court

286 Mich. 467

282 N.W. 431

LUTZ et ux.

v.DUTMER et al.

No. 108.

Supreme Court of Michigan.

Nov. 10, 1938.

Suit for specific performance and to foreclose a land contract and for deficiency by Henry Lutz and another against William E. Dutmer and others, wherein defendants filed cross-bill. From an adverse decree, defendants appeal.

Reversed and remanded.Appeal from Circuit Court, Washtenaw County, in Chancery; George W. Sample, Judge.

Argued before the Entire Bench.

Bland A. Pugh, of Detroit, for appellants.

Burke & Burke and Jacob F. Fahrner, all of Ann Arbor, for appellees.

POTTER, Justice.

June 12, 1928, plaintiffs Henry Lutz and Mary A. Lutz, his wife, sold part of their farm in Washtenaw county on land contract to defendants William E. Dutmer and Frances K. Dutmer, husband and wife, for $30,000. $4,700 was to be paid in cash on the execution of the contract. It was provided there should be paid the sum of $300 when the abstract of the seller was corrected by proper decree in chancery making the title in the seller merchantable and marketable in accordance with objections raised to the title thereto by attorneys for the purchasers, ‘it being understood that said abstract will be corrected by said seller within a period of four months from the date of this contract, and that such title clearing proceedings will be commenced in the proper court by said seller within two weeks from the date of this contract. It is understood and agreed that if such title clearing proceedings are not commenced by said seller within such time as stated, then and in that event, the said purchaser shall have the right to commence such title clearing proceedings in the proper court for and on behalf of the seller and pay therefor on account of expenses of such proceedings and attorney's fees to an amount not exceeding the sum of three hundred dollars ($300.00) hereby retained by said purchaser for the expense of such title clearing proceedings.’ The balance of the purchase price was to be paid over a period of years. Interest on the unpaid balance was to be paid annually. Payments on principal of $2,000 per year were to begin June 12, 1931, and to be paid yearly thereafter. The full amount of the contract was to be paid within 10 years from the date it was entered into. A supplementary agreement dated May 5, 1932, extended the time of payment in full and provided all of the balance was to be paid on or before June 12, 1941. It also altered the provisions of the original contract in relation to interest for a period of two years. $250 was paid by the Dutmers to plaintiffs on the date of the supplemental agreement and they promised to pay $100 in one month, and $175 three months from June 12, 1932, and $175 each three months thereafter for a period of two years. Principal payments of $2,000 were to start at the end of the year following the two-year period, on June 12, 1935. The land contract provided the sellers were to pay any special assessments, including all road assessments, assessed against the property during the life of the contract. Plaintiffs agreed that upon request they would join in the execution of any proper platting and also release to the purchasers any lot or lots from the contract and any conveyance therefor on payment of one and one-half times the acreage value of each lot or lots, the acreage value being $1,100 per acre.

The Dutmers platted and subdivided the property together with adjacent land into a number of lots known as the Bonnie Brae Country Club subdivision. The plat was recorded in Washtenaw county and according to it certain portions of the subdivision were dedicated to the public and certain portions were dedicated to the property owners in the subdivision. Whether the Lutzes signed the recorded plat is in dispute. The Dutmers spent large sums of money in making improvements for the purpose of selling lots.

The Home Land Lake Company, an alleged copartnership, was formed by the Dutmers and Mr. and Mrs. Kendall, Mrs. Dutmer's parents. It is urged by defendants that neither the copartnership nor the Kendalls had any interest in the property covered by the land contract, that their only interest was to earn commissions as a selling organization. The Dutmers and Kendalls filed under the assumed name statute, Comp.Laws 1929, § 9825 et seq., showing they would do business under the style ‘Home Land Lake Company.’ In a suit in chancery in the circuit court for Wayne county brought in the copartnership's name, it was stated in the bill of complaint the land contract here involved was assigned to the Home Land Lake Company. The bill of complaint was signed by the Home Land Lake Company, by Wm. E. Dutmer and Frances K. Dutmer. The names of the Kendalls were signed by their daughter, Mrs. Dutmer. June 4, 1932, the copartnership executed a contract to seel a certain lot to Ernest R. and Gertrude Hartzog. Below the copartnership name appeared the signature of Douglas A. Kendall who signed as its president.

Defendants Dutmer made all their payments under the original contract and supplemental agreement up to and including September 12, 1932, but refused on and after September 12, 1932, to make further payments. They claim that at about the time of their refusal they learned that plaintiffs falsely and in conspiracy with certain lot contract purchasers were endeavoring to freeze out the Dutmers. They say that Lutz told the Dutmer contract purchasers to refuse to pay on their contracts which would cause the Dutmers to fall behind in their payments which would enable Lutz to foreclose on the contract. In return for the cooperation on the part of the lot purchasers in the freeze-out, Lutz was to give the Dutmer vendees more advantageous terms of purchase and larger parcels of land. Lutz emphatically denied every portion of the claimed chicanery, stating on the trial he had assisted the Dutmers.

The vendors did not institute title clearing proceedings within two weeks from the date of the contract. Such proceedings have never been instituted by either party. The Lutzes failed to pay a special assessment for drainage of $138.60, which the Dutmers paid and which they claim was a failure to comply with the terms of the contract on the part of plaintiffs. Another claimed failure on the part of the sellers urged by the Dutmers is that a lot was not released in response to a demand and in accordance with the contract and subsequent agreement.

Plaintiffs filed a bill for specific performance, and to foreclose the land contract and for deficiency. The defendants Dutmer filed answers denying plaintiffs were entitled to the relief prayed. Defendants Kendall filed answers denying any contractual relations with plaintiffs or any liability on the contract. Defendants Dutmer filed a cross bill and asked affirmative relief because of the alleged subterfuge and conspiracy and that their damages be assessed and set off against any claim of default on their part for moneys due plaintiffs under the contract. A decree was entered granting plaintiffs the relief prayed for in their bill of complaint, whereupon the Dutmers filed a petition for relief under the moratorium act, Act No. 122, Pub.Acts 1933, as amended by Act No. 4, Pub.Acts 1935. The decree entered by the trial court ordered a sale of the premises to satisfy the sum remaining unpaid on the contract and provided for a personal decree against all of the defendants for deficiency. Defendants appeal.

1. Defendants claim the trial court erred in granting plaintiffs the relief asked because plaintiffs breached the contract in several material ways before defendants Dutmer refused to make further payments, which breaches on the part of plaintiffs justified them in refusing to go on with the contract; that the action of plaintiffs caused the default of defendants about which plaintiffs now complain. The trial judge held otherwise, and in this we think he was correct.

2. Defendants contend there was a breach on plaintiffs' part in not commencingtitle clearing proceedings within two weeks and correcting the abstract within four months from the date of the contract. The abstract is in the same condition it was June 12, 1928. Defendants had a right to commence proceedings if the plaintiffs failed to do so within the specified period and $300 was retained by the defendants from the urchase price for the expense of such title clearing proceedings. Defendants are in no position to complain. Chappus v. Lucke, 246 Mich. 272, 224 N.W. 432. The contract provided a specific remedy for failure upon the part of plaintiffs to begin proceedings to quiet title. The defendants Dutmer did not regard the failure of plaintiffs to institute proceedings to clear the title of sufficient importance to commence proceedings themselves for which they had retained the $300 and did not raise the question until after the lapse of four years.

3. Defendants claim plaintiffs violated the contract when they were asked by defendants' attorney at the request of defendants to release a lot in the subdivision in neglecting and refusing to comply with the request. The letter of defendants' attorney asked plaintiffs when they would furnish a deed covering the lot and stated, ‘we are prepared to pay, and herewith tender you the correct amount of $99.31 (1 1/2 times the acreage cost). You may forward deed and we will forward check for payment.’ The land contract provided that plaintiffs would, ‘when so requested, release from under this contract and any conveyance therefor, on payment to seller, their heirs or assigns, one and one-half the acreage value of each lot or lots released or deeded.’ The letter above quoted was the only written communication between the parties in relation to this release. Plaintiffs did not answer the letter. Both the land contract and the supplemental agreement stated that any lot would be released if certain things were done. Payment was a condition of release. It cannot be...