People v. Jory
| Citation | 443 Mich. 403,505 N.W.2d 228 |
| Decision Date | 31 August 1993 |
| Docket Number | M,Docket No. 93232,No. 9,9 |
| Parties | In re PEOPLE v. JORY. GENESEE PROSECUTOR, Plaintiff-Appellee, v. GENESEE CIRCUIT JUDGE, Defendant, and Alan Dale Jory, Defendant-Appellant. arch Term. Calendar |
| Court | Supreme Court of Michigan |
We are called upon to decide whether failure by a seller to disclose the existence of a mortgage on real property sold under a land contract may constitute a false pretense within the meaning of M.C.L. § 750.218; M.S.A. § 28.415. 1 Although we conclude that, under some circumstances, failure to speak when it is necessary to do so can be a false pretense, we reverse the Court of Appeals decision in this case because other elements of the offense were not sufficiently established to support a conviction.
Defendant 2 Alan Jory was convicted by a jury of obtaining money by false pretenses, M.C.L. § 750.218; M.S.A. § 28.415, in part on the basis of his failure to disclose the existence of a mortgage on property he sold on a land contract to the seventy-one year old complainant, Pearl Brumit. Although Mrs. Brumit made timely payments on the land contract, defendant defaulted in his obligation to make payments on the mortgage, which resulted in foreclosure of the mortgage and transfer of title to the mortgagee.
In 1978, Brenda Marble financed the purchase of a house and lot on Branch Road in the City of Flint by executing a mortgage in favor of the Guardian Mortgage Company as security for an obligation of $22,750, with interest at 8.75 percent. 3 Later, Marble moved to a second house and rented the Branch Road property.
Marble hired defendant Jory to remodel her second house. Upon learning that he was a licensed real estate broker, Marble asked defendant to sell the Branch Road property for her. In 1984, defendant purchased the property himself for $25,500 from Brenda Marble, who conveyed her interest to defendant by a warranty deed, which referred to the Guardian mortgage. Marble testified that, in accordance with her agreement with defendant, she discounted the purchase price by $4,000 in lieu of payment for defendant's remodeling services, and defendant informally agreed to assume the mortgage. 4
After acquiring title, defendant rented the subject property to a daughter of Mrs. Brumit under a lease that included an option to purchase. Later, when health problems forced the daughter to relocate to a warmer climate, the complainant moved into the house. Subsequently, Mrs. Brumit initiated negotiations and agreed to purchase the house from defendant under a land contract, for a purchase price of $27,900, with an eleven percent interest rate. She made a $1,600 down payment and agreed to pay defendant $337 per month to amortize the balance. The land contract, which was prepared by defendant and made no reference to the mortgage, was signed by the complainant and her two sons at a closing conference on December 3, 1985, in the presence of the defendant's business associate, Oscar Manning. Defendant was not present at the closing.
At trial, Mrs. Brumit testified that when she signed the land contract, she was not aware of a mortgage on the property. She did not recall whether she spoke with defendant or Mr. Manning when earlier she had initiated negotiations to buy the house. She stated that she conversed with both defendant and Mr. Manning about the property before signing the land contract; however, she could not remember how many discussions transpired or the dates of the conversations. She testified that at no time, either before or after signing the contract, did defendant or his business associate, Mr. Manning ever tell her of the existence of the Guardian mortgage.
Mrs. Brumit denied having any discussions with defendant or Mr. Manning about alternative ways to finance her purchase of the property. She denied that she bought the property on a land contract because the closing costs would be less than if she had purchased it by means of a new mortgage. However, she stated that she could not recall the substance of her discussions with either defendant or Mr. Manning.
Mrs. Brumit testified that she believed the defendant owned the property when she entered into the land contract. This belief, she said, was not based upon an express representation of ownership by defendant, but upon his comment to her that he would be saving the money from the land contract payments for his children's college education.
Mrs. Brumit claimed that if she had been informed of the existing mortgage, she would have acquired the property in a "different way"--by making arrangements directly either with Marble or the Guardian Mortgage Company.
At the closing, Mr. Manning presented the land contract to Mrs. Brumit with defendant's signature already affixed. At first, Mrs. Brumit testified that the land contract was the only document she saw that day; however, upon further questioning she said she could not remember whether other papers were presented to her for review or for her signature.
Mrs. Brumit's two sons, Karl Brumit and Gordon Duehring, were also present at the closing, and each signed the land contract. Both testified that they were never informed at any time by defendant or Mr. Manning that there was an outstanding mortgage on the property. Each of the sons said he had met defendant on only one prior occasion. Karl Brumit recalled signing other papers at the closing, but he did not remember the contents of the other papers. Duehring testified that no documents were reviewed at the closing other than the land contract, although he said he did see other paperwork on Mr. Manning's desk.
By contrast, Mr. Manning, the sole defense witness at trial, testified that he told Mrs. Brumit about the underlying mortgage before she signed the land contract. He maintained that he had explained to Mrs. Brumit that there were different methods by which the property could be purchased, i.e., she could obtain a new mortgage, or assume the underlying mortgage, or purchase by land contract. He said Mrs. Brumit chose the land contract method because she did not have enough money at the time to assume the underlying mortgage.
Mr. Manning testified that he spoke with Mrs. Brumit on three or four occasions before the closing conference and that he had discussed the underlying mortgage with her on more than one of these occasions, explaining to her that it was an assumable mortgage and that she "could probably get a little better buy on the house because she could simply assume it and it will add a little better interest rate than a land contract would have."
According to Mr. Manning, he presented Mrs. Brumit at the closing with a full package of papers, including affidavits regarding sewer, water, and tax information, and the closing statement. Mr. Manning testified that he reviewed with Mrs. Brumit a title search of the property that extended through June 1985, and that he also showed her the warranty deed from Brenda Marble to the Jorys, which expressly referred to the underlying mortgage. Mr. Manning claimed also that he had earlier shown Mrs. Brumit a listing agreement that recited the existence of the mortgage. He further testified that Mrs. Brumit expressed no concern about the underlying mortgage to him. Mrs. Brumit was not provided with title insurance or an abstract of title at the closing. Mr. Manning claimed that the sons of Mrs. Brumit should have been aware of the mortgage because they were at the closing with their mother. In his testimony, Mr. Manning conceded that he was a "close friend," as well as a business associate of the defendant.
There was no testimony at trial that defendant had ever denied the existence of the mortgage or had ever asserted that his title was free of encumbrances.
Mrs. Brumit made timely and regular land contract payments to defendant, but defendant, after making five or six payments, failed to make further payments on the underlying mortgage. Thereafter, in July 1985, Guardian Mortgage Company contacted one of the original mortgagors, Brenda Marble, who in turn twice contacted defendant by telephone concerning the arrearage. After several foreclosure warning letters were received by Marble, she visited Mrs. Brumit at her house in the winter of 1986, thinking that she was responsible for the arrearage. Mrs. Brumit testified that it was at this time that she first learned of the mortgage. Marble said she telephoned defendant from Mrs. Brumit's house, and, according to Marble, he agreed to apply Mrs. Brumit's land contract payments directly to the mortgage. 5
Mrs. Brumit continued to make land contract payments to defendant for another few months, until a Guardian Mortgage Company representative came to the house, informed her of the mortgage default, and posted a foreclosure notice. Mrs. Brumit moved out of the house. An arrearage of $985 in mortgage payments was owing at the time of foreclosure, and the redemption amount of the mortgage was $22,787. As a result of a foreclosure sale, title to the subject property was acquired by the Guardian Mortgage Company.
Thereafter, the Genesee County prosecutor charged defendant with larceny by false pretenses under M.C.L. § 750.218; M.S.A. § 28.415, and, following a two-day trial, a jury found him guilty as charged.
After imposing a flat sixty-day jail sentence, the trial court addressed defendant's motion for a directed verdict, which had been taken under advisement during the trial. In an oral opinion the trial court granted the motion, and vacated the conviction, stating:
"The Court's of the opinion that as there was no representation which was false, for that reason, there would not be a good case of false pretenses."
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