Moore v. Muskegon Trust Co.

• Decision Date: 03 October 1938
• Docket Number: No. 39.,39.
• Parties: MOORE v. MUSKEGON TRUST CO.
• Court: Michigan Supreme Court

286 Mich. 21

281 N.W. 423

MOORE

v.MUSKEGON TRUST CO.

No. 39.

Supreme Court of Michigan.

Oct. 3, 1938.

Suit by Glade E. Moore against Muskegon Trust Company for specific performance of parol agreement to extend period of redemption of mortgaged property and for amortizing mortgage debt, in which defendant filed a cross-bill. From a decree for defendant, plaintiff appeals.

Affirmed.

Appeal from Circuit Court, Muskegon County, in Chancery; Joseph F. Sanford, Judge.

Argued before the Entire Bench.

Turner & Cochran, of Muskegon, for appellant.

Arthur W. Penny, of Muskegon, for appellee.

CHANDLER, Justice.

On January 1, 1928, Glade E. Moore, being the owner of certain realty located in the City of Muskegon, mortgaged the same to the Bankers Trust Company, later known as the Muskegon Trust Company, said mortgage securing 19 bonds which were held by 12 individuals. Thereafter, on December 23, 1932, the Bankers Trust Company, pursuant to its usual practice, assigned the mortgage to itself as trustee. Upon defult in payment of principal, interest and taxes, the mortgage was foreclosed by advertisement and bid in by the Bankers Trust Company as trustee for the sum of $10,417.14, the sheriff's deed bearingdate of April 1, 1933, placing the expiration of the period of redemption on April 1, 1934.

On March 29, 1934, two days before title to the property was to become absolute in the trust company as trustee, plaintiff, through his attorneys, directed a letter to Mr. Thurston, president of the trust company, which indicated that plaintiff intended to invoke the provisions of the emergency mortgage moratorium statute to extend the period of redemption unless some satisfactory arrangement could be made without recourse to litigation. Immediately thereafter, plaintiff discussed the possibility of a moratorium with Mr. Thurston at the latter's office, and was granted more time to meet his obligation under an oral agreement, which is the subject matter of this dispute.

Mr. Moore testified that upon broaching the subject of starting an action in court under the moratorium statute, Mr. Thurston replied, ‘It is not necessary to put a moratorium on and make expense for the bondholders.’ Plaintiff insists that he sought to obtain the same rights by agreement with the trust company to redeem this property that a court might have given him under the moratorium statutes. Plaintiff further testified that an agreement was reached whereby he was to pay $50 per month for the entire building as its fair rental value, that there was no talk about a month to month rental agreement, that he never agreed to pay any taxes, and that such charges were to come out of the money paid as the rental value, and, finally, that no certain time was provided to pay up in full.

On the other hand, Mr. Thurston testified that he was not granting an extension of the period within which to redeem but was simply giving Mr. Moore the right to rent the property; that the lease extended to April 1, 1935, with rental fixed at $50 per month, plus taxes and expenses incident to the upkeep of the building; that plaintiff only had the exclusive right to purchase the property until the date last mentioned; and, that if Moore had not purchased by that time, the property was to be returned to the trust company.

Directly after this oral conversation, the two versions of which are briefly set forth above, counsel for plaintiff received the following letter under date of March 30, 1934, signed by Mr. Thurston as president of defendant company:

‘Your letter of March 29th received stating that you had been retained by Mr. Glade E. Moore to invoke the provisions of the emergency mortgage moratorium statute to extend the period of redemption on Lots 8 and 9, Block 169, City of Muskegon.

‘Rather than subject our bondholders to the expense of litigation in this matter, we are quite agreeable, with the consent of the bondholders, to allow Mr. Moore the same rights which he would acquire under the provisions of the mortgage moratorium statute, and, accordingly if Mr. Moore will turn in to us each month an amount, which will represent the true rental value of this property, we will permit him to remain in possession and enjoyment of the real estate until March 1, 1935.’

Pursuant to the agreement, plaintiff paid $50 on April 28, 1934, and made payments totaling $278 from that date to March, 1935. Actually under the arrangement, according to plaintiff's own version, $550 should have been paid, and in addition thereto he should have paid the 1934 taxes if defendant's contention is accepted. The trust company, during the time plaintiff remained in possession of the property, issued receipts for the payments made, variously labeled, ‘deposit on moratorium agreement’, ‘deposit as per agreement’, ‘deposit on account’, and simply ‘deposit’.

Defendant did not bill plaintiff for the back rental but in April, 1935, he was told that he would have to pay $70 per month on a month to month basis. Mr. Thurston testified that as long as Mr. Moore could still pay something he could repurchase this property, and that Moore was told that he would lose the property if it were sold during the course of the month. However, both parties agree that they continued in much the same manner as under the original agreement. For the next twelve month period, plaintiff paid defendant $553 or $287 less than the agreed amount, payments ranging from $20 to $72.

In February, 1937, the parties arrived at another oral agreement whereby the trust company was to collect the rent from the tenants and charge 5 per cent for the service. The tenants were informed of this change, and plaintiff who then occupied but a small part of the building as a tavern, agreed to contribute $20 ‘to boost’, as he says, the monthly payments, but not as rent. This sum was paid in February and March 1937, being evidenced by receipts containing the words ‘Receipt for rent’ rather than the form theretofore used. The payment for May was waived when Moore informed the defendant that he was unable to obtain a renewal of his tavern license unless he paid a delinquent $58 water bill. Thereafter, although Mr. Thurston testified that the trust company desired to give Moore the first opportunity to re-purchase the property, and plaintiff had made various offers from time to time which were not acceptable to the defendant, the latter, having found a purchaser in one George Dobben, sold the premises on land contract on the first day of June, 1937. Plaintiff instituted this action to secure specific performance of the agreement of the parties extending the period of redemption under the mortgage so long as plaintiff should pay the fair rental value in monthly instalments, and in the alternative, plaintiff prayed for an accounting if the agreement was not capable of being specifically enforced. Defendant filed a cross-bill demanding an accounting for rentals due and owing and for the removal of certain plumbing and light fixtures by plaintiff when he partially moved out of the premises upon failure to obtain a renewal of his tavern license. Defendant also demanded that Moore be...