Plas v. Aldrich

• Decision Date: 01 April 1927
• Docket Number: No. 116.,116.
• Parties: PLAS v. ALDRICH et al.
• Court: Michigan Supreme Court

238 Mich. 343

213 N.W. 80

PLAS

v.ALDRICH et al.

No. 116.

Supreme Court of Michigan.

April 1, 1927.

Appeal from Circuit Court, Wayne County, in Chancery; Henry A. Mandell, Judge.

Suit by Joseph Plas against Ralph L. Aldrich and another, in which the defendant named filed a cross-bill, and defendant William T. Wulf filed an answer and cross-bill. Decree for defendant Wulf, and plaintiff and defendant Aldrich appeal. Affirmed.

Argued before the Entire Bench.Anderson, Wilcox, Lacy & Lawson, of Detroit (Clarence E. Wilcox and Ward H. Peck, both of Detroit, of counsel), for appellants.

Campbell, Dewey, Stanton & Bushnell, of Detroit (Arthur F. Neef, of Detroit, of counsel), for appellee.

McDONALD, J.

The defendant Wulf is the owner of four acres of land in Ecorse township, Wayne county, Mich. Some time in March, 1921, he sold it on land contract to one Harry Brower. The consideration was $7,500, of which $200 was paid down in cash, and $800 was to be paid on the delivery of the abstract. The $800 was not paid, and no other payments were made, except $37.50 interest, which was paid some time in the summer. After this the contract seems to have been abandoned. On the 18th of December, 1922, a new contract was entered into between the same parties and one Rupersberg, a business associate of Mr. Brower. The consideration was $8,500. On this contract the down payment was to be $700, on which the $200 paid on the former contract was credited, and a 30-day note for $500 signed by Brower and Rupersberg was taken for the balance. When the note became due, it was not paid. It has never been paid. Another payment of $500 was to be made on June 18, 1923, and $500 each six months thereafter until the balance of the purchase price was fully paid, with interest at 6 per cent., payable annually. None of these payments have been paid. On January 3, 1923, Browner and Rupersberg assigned the contract to defendant Ralph L. Aldrich. On September 12, 1923, Aldrich sold the property on land contract to the plaintiff, Plas, together with twelve acres adjoining, which Aldrich held as vendee in a land contract with one Quandt. The defendant, who claims to have rescinded the contract in February, 1923, has paid all of the taxes, and has been in possession of the property since that time. He has received no payments from any of the various vendees.

The plaintiff claims possession, and filed this bill to enjoin Wulf from interfering with it. Wulf filed an answer and cross-bill, in which he asked for a decree quieting his title. The defendant Aldrich filed a cross-bill, praying for specific performance of the Wulf contract. On the hearing the circuit judge entered a decree for defendant Wulf. The plaintiff and the defendant Aldrich have appealed.

The important question presented by the record relates to the alleged rescission of the contract.

The defendant Wulf contends that, when the $500 note became due, and was not paid, Brower and Rupersberg were in default, and that, under the stipulation of the contract, he had a right to rescind it for that reason; that he did rescind it, and resumed possession of the property, which possession he has retained ever since. The plaintiff insists that he did not rescind it; that no grounds for rescission existed, because no payments were due at that time; and that therefore there was no default.

There was $500 due on the contract at the time when Mr. Wulf claims to have rescinded it, unless the note which was not paid is to be regarded as having been accepted as an absolute payment. And that question is to be determined by ascertaining, if possible, the understanding of the parties. It is not claimed that there was any specific agreement in regard to it. The language of the contract in reciting the payments makes no reference to the note. It contains no acknowledgment by the vendor of the receipt of the down payment. It says that $700 is to be paid on the execution and delivery of the contract, but omits the usual language, ‘the receipt of which is hereby acknowledged.’ In the absence of any evidence from the contract or elsewhere of an express understanding, the question is controlled by the legal presumption that it was not accepted as an absolute payment. Unless there is evidence of a clear understanding to the contrary, the law will presume that, by accepting the note, the vendor did not intend to release his security to the extent of the debt which the note represents:

‘If there is an express agreement by the creditor to receive a note as absolute payment and to run the risk of its being paid, it will be held to be an extinguishment or payment of the precedent debt, whether the note is afterwards paid or not; but a clear agreement or manifestation of intention of both parties to that effect is essential.’ 21 R. C. L. p. 72, sec. 72; Swan v. Gregory, 195 Mich. 457, 161 N. W. 933.

‘Where the extinguishment of a debt has the effect to strike down a lien or a title securing its payment, the presumption that it is not discharged by the acceptance of the note of the debtor in payment of it is strengthened, because in such a case the discharge of a lien is more unusual and unreasonable; and the general rule is that the receiving of a promissory note by a creditor will not have the effect to discharge a lien, statutory or contractual which the creditor has for the security of his debt. Applying this rule, it is held that a vendor's lien on land is not extinguished by taking the purchaser's note for the purchase money.’ 21 R. C. L. p. 75, § 77.

We find no evidence sustaining the claim that the defendant Wulf accepted this note as an absolute payment. The effect of taking the note was merely to extend the time for making the payment agreed upon. When that time expired, the payment was not made. Brower and Rupersberg were in default for nonpayment. The contract provided that, on failure of the vendees to make any of the stipulated payments, the vendor might immediately declare it void. In view of this provision, it will be considered that time was of the essence of the contract. But Mr. Wulf did not immediately declare the contract void. He went to Mr. Brower's office, and demanded payment of the note. ‘I told him I wanted my money on that note. He said that he had no money; that the deal wasn't gone through yet, and they couldn't pay the note. And then he said, ‘Come in Saturday, and we will have some money.’ I went back Saturday. He had no money. Saturday Mr. Rupersberg was with Mr. Brower. I told him if he couldn't pay it I would pull out. Mr. Brower says, ‘Well, if you pull out, we can't have it.’ Then I called for my abstract. He had the abstract at that time. I asked him for it. He did not give...