McCurdy v. Van Os

• Decision Date: 20 October 1939
• Docket Number: No. 12.,12.
• Citation: 287 N.W. 890,290 Mich. 492
• Parties: McCURDY v. VAN OS et al.
• Court: Michigan Supreme Court

290 Mich. 492

287 N.W. 890

McCURDY

v.VAN OS et al.

No. 12.

Supreme Court of Michigan.

Oct. 20, 1939.

Suit by Allan A. McCurdy, receiver of the Grand Rapids National Bank, against Richard Van Os and others to foreclose a land contract and to obtain deficiency decree, wherein defendants James H. Ruel and another filed cross-bills. From an adverse decree defendants Jacob Baart and others appeal.

Plaintiff's complaint dismissed as to appellants.

POTTER and CHANDLER, JJ., dissenting.Appeal from Circuit Court, Kent County, in Chancery; Willis B. Perkins, Judge.

Argued before the Entire Bench, except McALLISTER.

Rathbun & Arvidson, of Lansing, for appellant James H. Ruel.

Linsey, Shivel, Phelps & Vander Wal, of Grand Rapids, for appellants Jacob Baart and Lena Baart.

Starr & Starr, of Grand Rapids, for appellant Arthur A. Northquist.

Seth R. Bidwell, of Grand Rapids, for appellants Frederick Wiersum and Florence Wiersum.

James T. McAllister, of Grand Rapids, for appellee Allan A. McCurdy, receiver Grand Rapids Nat. Bank.

NORTH, Justice.

The receiver of the Grand Rapids National Bank instituted this proceeding in chancery to foreclose a land contract and to obtain a decree for deficiency, if any. Such a decree was entered in the circuit court in chancery for Kent County. Certain of the defendants, claiming there was error in entering a decretal provision for deficiency, have appealed.

In December, 1927, the Grand Rapids National Bank executed this land contract as vendor of described improved real estate in the city of Grand Rapids, the purchase price being $23,000. Jacob Baart and wife were the original vendees. There were five subsequent assignments of the vendees' interest: (1) In February, 1928, by Baart and wife to Richard Van Os and wife. (2) In August, 1928, by Van Os and wife to James Ruel. (3) In June, 1929, by Ruel and wife to Arthur A. Northquist. (4) In June, 1931, by Northquist and wife to Frederick Wiersum and Florence Wiersum, husband and wife. (5) And a fifth assignment in May, 1932, by Mr. and Mrs. Wiersum. When offered in evidence, the name of James Ruel was typewritten in the spaces provided in the printed form for the name of the assignee; but one of the controverted questions is whether at the time these last assignors executed this assignment it ran to Ruel as assignee or whether the assignment was in blank. But it is clear this assignment was executed and delivered by the Wiersums under an agreement with the bank that they were surrendering any interest they had in the contract in consideration of the bank as vendor releasing the Wiersums from any and all further liability on this contract. In each of the assignments down to and including that of the Wiersums, the respective assignees assumed and agreed to perform the terms of the contract.

As between the parties to this appeal, their rights are determined by the character and effect of the transaction consummated at the time the Wiersums executed and delivered to the bank their assignment of the vendees' interest in May, 1932, at which time the contract was badly in default. No payments had been made after April 11, 1931; and a large amount of taxes was in default.

Plaintiff claims that among those who had held the vendees' interest in this contract defendant, James Ruel, was the one person who, as the bank's representatives understood, was financially responsible. As early as April, 1932, the bank was urging Ruel to care for this obligation, it having been assumed by him when he took an assignment of the contract in 1928. The testimony discloses that throughout 1932 Mr. Crimmins, cashier and vice-president of the bank, was carrying on negotiations with Ruel relative to his satisfying the bank's demands on this contract. Repeated interviews were had and correspondence passed. There was talk of having the contract retransferred to Ruel. The negotiations led to an oral agreement that Ruel would make payments sufficient to reduce the unpaid contract obligation to $13,000, and thereupon the bank would deed the property to Ruel and take back a mortgage for $13,000. A deed bearing date June 27, 1932, and a mortgage of like date were prepared by the bank and submitted to Ruel; but neither instrument was ever executed. Later there were negotiations relative to reducing the unpaid balance of the contract obligation. In September a reduction of $500 was seemingly agreed upon. Still later the bank agreed to accept a proposition from Ruel that he would pay the bank $5,000 and be released from further obligation on the contract; but this settlement was not consummated. During the course of negotiations Ruel offered to convey his interest in the contract property to the bank. On October 21, 1932, the deed and mortgage prepared by the bank were returned to it by mail. Negotiations continued between these parties, including consideration of Mr. Ruel's conveying certain properties to the bank in settlement of the contract. Nothing in the way of a consummated settlement resulted from these negotiations which continued at least until late in 1932 and possibly as late as the spring of 1934. In February, 1933, the bank closed for the banking holiday. It did not reopen, and nothing further of a definite character was done by Ruel relative to taking over the contract property or satisfying the obligation held by the bank, although there were numerous interviews between Ruel's representative, Mr. Amsden, and representatives of the bank. The bank's receiver filed this bill to foreclose the land contract July 21, 1934.

The facts above outlined are material as constituting a background which must be considered in determining the legal consequences of the assignment of their vendees' interest in this contract made by Mr. and Mrs. Wiersum in May, 1932. Admittedly this assignment was prepared by and was obtained at the instance of the bank. After execution by the Wiersums, it was delivered to a representative of the bank. And, together with both copies of the original contract, it was held by the bank until the trial of this case four years later. The Wiersum assignment was never accepted by Mr. Ruel. In behalf of the bank Mr. Crimmins testified:

‘At that time (April 7, 1932) there was some talk (with Ruel) about getting Mr. Wiersum to transfer this contract over to Ruel. * * *

‘Q. (by court) There was not any agreement to release the contract as far as the bank is concerned? A. None whatever. * * * When I made my oral contract with Mr. Ruel I was satisfied with that at that moment and was not looking to any of the other parties for pay. * * * The whole purpose of getting this assignment from Wiersum was so that we could go on and complete our deal directly with Ruel. * * *

‘Q. Did Mr. Ruel ever instruct you to obtain the assignment for him, of this contract? A. I really don't know how to answer that. I know that was a part of the transaction with Mr. Ruel to put us in a position to deal with Ruel.’

In regard to an interview with the bank's representatives had in the spring of 1934, two years after the Wiersum assignment, Ruel's representative, Mr. Amsden, testified: ‘Mr. Uhl (then receiver of the bank) turned to Mr. De Graff (former vice-president of the bank and then employed by the receiver) and told him to take the papers to the Bank's attorney and have whatever done as would be necessary to put the title to the property in the Bank, to get the building fixed up, to rent it and some income coming in from it. That was in the spring of 1934.’

Plaintiff's position was stated by its attorney to the trial court as follows: ‘Ruel was in there going to make this deal and he made this propositon (to take over the property or adjust the contract obligation) because he was liable. They (the bank) were willing to take him, let the others out and in order to do that the transfer was made to Ruel with intent that the transfer from Wiersum to Ruel, that was no cancellation of the contract by anybody * * *.’

But defendants contend that the bank in May 1932 took the Wiersum assignment incident to the bank's desire and effort to settle the whole matter in the contemplated adjustment with Ruel which was then pending and as to which negotiations continued thereafter over a period of months; that whether the assignment was taken in blank or whether the bank, which prepared the assignment, made it run to Ruel as assignee, it was obtained by the bank in consideration of its agreement with Mr. and Mrs. Wiersum that by giving the assignment and surrendering their copy of the contract they would be released from all further liability upon the contract; and further that such release by the bank released, as a matter of law, all of the prior assigness (including Mr. Ruel) who had respectively agreed as assignees to perform the terms of the contract.

Decision turns upon the facts attending the Wiersum assignment. On this phase of the case we quote the following testimony. Mr. Henry Stone, employed by plaintiff bank as a manager of a branch it operated in Grand Rapids, and at which bank Wiersum did his banking business, testified:

‘In 1932 I was called to the main office in connection with this property * * *. Mr. Woodhouse was Credit Manager. He asked me if Fred Wiersum had been in default on this conract for several months and he asked me at that time if I could get an assignment from Mr. Wiersum and his wife, to get an assignment on the contract and turn it back. I went and called on Fred Wiersum, * * * and asked him if he would assign this property back * * *.

‘After I talked with Mr. Woodhouse I went to Mr. Wiersum and asked him if he would sign this contract and give it up, and at first he said that he did not feel as though he wanted to because he had money into it. Well, after I talked to him and told him he could get out from under, in a way, * * * he would be through with it, he agreed to sign it, and he and his wife both signed the contract. * * * Mr. Woodhouse gave...