Meyering v. Russell

• Decision Date: 24 June 1974
• Docket Number: Docket No. 15192,No. 3,3
• Citation: 53 Mich.App. 695,220 N.W.2d 121
• Parties: Gerald C. MEYERING, Plaintiff-Appellee, v. Albert RUSSELL, Defendant-Appellee, and Cal Deitz and Mrs. Cal Deitz (whose proper name is unknown), Defendants- Appellants
• Court: Court of Appeal of Michigan — District of US

Page 121

220 N.W.2d 121

53 Mich.App. 695

Gerald C. MEYERING, Plaintiff-Appellee, v. Albert RUSSELL, Defendant-Appellee and Cal Deitz and Mrs. Cal Deitz (whose proper name is unknown) Defendants- Appellants.

Docket No. 15192.

Court of Appeals of Michigan, Division No. 3.

June 24, 1974.

Released for Publication July 24, 1974.

Rehearing Denied Aug. 2, 1974.

W. Wayne Walston, Landman, Hathaway, Latimer, Clink & Robb, Thomas H Linck, Muskegon, for defendants-appellants.

John M. Briggs, III, Muskegon, for plaintiff-appellee.

Before R. B. BURNS, P.J., and ALLEN and O'HARA,* JJ.

ALLEN, Judge.

This action for specific performance involves conflicting claims to commercial property in Muskegon Township, Michigan. The multiple transactions involved necessitate a detailed statement of the facts.

Defendant Russell, a car salesman, was the owner of the property subject to a mortgage to the Security First Bank of Ravenna. In 1968 he sold the property on a land contract to Robert Lynch for $24,500, with $2,500 down. By February 1969, Lynch was substantially in arrears on the monthly payments. On March 31, 1969, Russell, through Dorothy Farber, a real estate saleswoman and his agent, signed a purchase agreement with plaintiff, an insurance agent, to sell the property on land contract for $21,500, with $4,000 down, of which $2,000 would go to Farber as sales commission, and the balance of $17,500 payable at $185 per month with interest at 7 percent. The purchase agreement contained no reference to the Lynch contract, but closing was deferred to no later than August 5, 1969, to allow Russell time to initiate court proceedings to terminate the Lynch interest. Court proceedings were commenced by Russell who, on April 25, 1969, obtained a judgment from the district court determining that Lynch was in arrears $962.20, and giving Lynch until July 24, 1969, to redeem. Because the district court denied Russell's demand to accelerate the entire balance of about $20,000, Russell appealed to the circuit court. However, Lynch did not tender the $962, nor did he cross-file or take any legal action to stay the period for redemption.

In June 1969, defendant Deitz, a licensed real estate broker for 10 years, attempted to purchase the Lynch interest but the deal fell through. Shortly thereafter, public announcement was made that Meijer Thrifty Acres had purchased 100 acres of land just north of the Russell property and planned to construct a shopping-center complex thereon. In July Deitz contacted Russell informing him he would pay cash for the property and assume the balance of Russell's mortgage to the bank. Russell informed him of the March 31, 1969 purchase agreement with plaintiff and, through his attorney, showed Deitz a copy thereof.

The record is conflicting as to the Russell-Deitz relationship after the initial July contact. Deitz testified he waited 3 or 4 weeks and did not contact Russell again until after August 5, at which time he was told the building was available and that he should see Russell's attorney. Russell testified that he talked with Deitz 5 or 6 times prior to August 5. In any event, the record is clear that on August 11, Deitz signed a purchase agreement under which Deitz would purchase the property for $9,750 cash and assume the then mortgage balance of $10,211.06. Deitz gave Russell $250 earnest money and, on August 29, 1969, completed the transaction by paying the balance due and received a warranty deed from Russell which he recorded February 24, 1970.

Plaintiff testified that by May 7, 1969, he had arranged for financing sufficient to make the down payment and in July found a tenant who would pay $250 per month plus utilities. Between May 7 and mid-August, he attempted to close the purchase agreement with Russell. His contacts were both with Russell and more frequently with Farber. As the August 5th deadline drew closer his efforts to close became more frequent. He was always put off with explanations that legal complications involving the outstanding Lynch interest prevented the contract's immediate fulfillment but that Russell's attorney would take care of everything. Farber's testimony verified plaintiff's recitation of plaintiff's ability and willingness to close. She added that as late as August 6, plaintiff had phoned her offering to help pay the court cost of resolving the Lynch interest; that on August 7, she so informed Russell who then told her Deitz had informed him he had acquired a written assignment of the Lynch interest; that on August 8, Russell phoned back and said his attorney would first meet with Deitz; and that on August 12, Russell informed her he intended to close with Deitz.

On August 19, 1969, plaintiff filed suit against Russell and recorded a lis pendens. Before signing the purchase agreement on August 11, Deitz examined the real estate recordings but did not check again on August 29, when the property was conveyed to him by warranty deed.

Subsequently, Deitz and his wife were added as defendants and in turn filed a cross-claim against Russell, claiming that if plaintiff were held to have a superior claim, Russell should reimburse Deitz for payments made by him for the property.

Following trial, the court on February 24, 1972, withheld decision on the cross-claim but found Deitz 'a conveyance intermeddler' and entered judgment setting aside the conveyance by warranty deed to him. Specific performance of the purchase agreement dated March 31, 1969, between plaintiff and Russell was ordered and damages of $7,950 were assessed against Deitz. On August 24, 1972, the court entered judgment of no cause of action on the cross-claim of Deitz against Russell. Defendants Deitz appeal to this Court, claiming error both in the judgment of February 24, 1972, and August 24, 1972.

Because of the complexity of issues, we will first consider the issues raised by defendants Deitz on the judgment granting specific performance, and separately consider the trial court's denial of the cross-claim. As to the former, appellants claim error because (1) appellants were deprived of a fair trial by reason of improper examination of witnesses by the trial judge, (2) appellants were not purchasers pendente lite on August 11, 1969, when the purchase agreement was signed, and (3) appellants are not liable for damages, but, if liable, the computation thereof is excessive.

Examination Of Witnesses By Trial Court

The record discloses sharp and frequent questioning by the trial judge. The facts were confusing and the witnesses' responses occasionally ambiguous and frequently conflicting. Clarification of testimony was required. Under these circumstances, exhaustive and sharp questioning, particularly in nonjury cases, is not error. People v. Wilder, 383 Mich. 122, 124, 174 N.W.2d 562 (1970); Tait v. Ross, 37 Mich.App. 205, 207, 194 N.W.2d 554 (1971), lv. to app. den., 386 Mich. 787 (1972), cert. den., 407 U.S. 921, 92 S.Ct. 2462, 32 L.Ed.2d 806 (1972).

Purchasers Pendente Lite

On this issue, appellants assert the trial judge erred both as to the facts and law. As to the facts, it is contended that Deitz was a good-faith purchaser who did not renew his contact with Russell until 5 days after the August 5th closing deadline and only purchased after Russell informed him the Meyering deal was off. Although chancery cases are reviewed De novo this Court does not reverse or modify unless convinced it would reach a different result had it occupied the position of the trial court. Wells v. Wells, 330 Mich. 448, 47 N.W.2d 687 (1951); Stribley v. Michigan Marine, 42 Mich.App. 218, 221, 201 N.W.2d 702 (1972), lv. to app. den., 388 Mich. 786 (1972). Whether the action is in law or equity, principal regard must be given to the special opportunity of the trial court to judge the credibility of witnesses, and findings of fact will not be set aside unless clearly erroneous. GCR 1963, 517.1; Rencsok v. Rencsok, 46 Mich.App. 250, 253, 207 N.W.2d 910 (1973). Review of the record discloses sufficient facts upon which the trial judge could determine that defendant did not patiently wait until after August 5 to renew his contacts with Russell. Defendant knew of the Meyering agreement and, being an experienced real estate broker, knew or should have known that Lynch's claim to the property effectively expired July 24. He was aware of the increased value of the land resulting from the Meijer Thrifty Acres development. Deitz injected himself into the Meyering agreement by making an admittedly more attractive offer. While the price was slightly lower, the down payment was $9,750, compared to Meyering's $4,000, of which $2,000 was due Farber as sales commission.

Although the decisions are not unanimous, the prevailing rule is that a third-party purchaser who takes title under an executory contract made prior to the filing of a lis pendens is protected even though the deed is executed after suit is started or the lis pendens is filed. 93 A.L.R. 404; 51 Am.Jur.2d, Lis Pendens, § 12, pp. 958--959. This doctrine is often subject to exceptions where the third-party purchaser is (1) made a party to the suit before rendition of judgment, Tinnon v. Tanksley, 408 S.W.2d 98, 103 (Mo.1966), or (2) has knowledge of the adverse claim at the time of signing the executory contract, or (3) has paid only a portion of the purchase price before the lis pendens is filed, 93 A.L.R. 404 and cases cited therein. Of the exceptions, the most important is the requisite that the third-party purchaser has no knowledge of the adverse claim.

'It would seem to be a proper qualification of the rule that one who has entered into an executory contract to purchase before the institution of suit does not, by taking a deed while the suit is pending, become affected by the judgment therein as a purchaser pendente lite, that the contract must have been entered into without knowledge of the adverse claim, or at least without knowledge that a suit was...