Selik v. Goldman Realty Co.

• Decision Date: 01 December 1927
• Docket Number: Jan. Term.,No. 14,14
• Citation: 216 N.W. 422,240 Mich. 612
• Parties: SELIK v. GOLDMAN REALTY CO.
• Court: Michigan Supreme Court

240 Mich. 612

216 N.W. 422

SELIK

v.GOLDMAN REALTY CO.

No. 14, Jan. Term.

Supreme Court of Michigan.

Dec. 1, 1927.

Appeal from Circuit Court, Livingston County; Joseph H. Collins, Judge.

Suit by Joseph L. Selik against the Goldman Realty Company. Decree for plaintiff, and defendant appeals. Affirmed.

Argued before the Entire Bench.

Samuel J. Rhodes, of Detroit, for appellant.

Benjamin, Betzoldt & Bassett, of Detroit, for appellee.

SHARPE, C. J.

Plaintiff's bill was filed August 12, 1924, to have a deed dated February 15, 1921, for certain property fronting on Island Lake, in Livingston county, declared a mortgage, with right to redeem therefrom by paying defendant the amount of borrowed money it secured, with interest. Defendant answered in denial, claimed it had purchased the property outright as the deed imports, and the money it then paid was the purchase price for the property therein described.

The case was heard on pleadings and proofs taken in open court, resulting in a drcree for plaintiff granting the relief asked; the conclusion reached by the trial court in summarizing the case being that:

‘After considering all the testimony, the court is of the opinion that this transaction did constitute a loan and that the deed given was given as security therefor.’

[3] If so, the deed when given was a mortgage and once a mortgage always a mortgage is the general rule. Swetland v. Swetland, 3 Mich. 482; 19 R. C. L. § 7, p. 245. The law is well settled that oral proof is permissible to show that a deed was given to secure a loan and therefore in legal effect operated only as a mortgage. This case is essentially one of facts, the oral evidence being in direct conflict as to the intent and mutual understanding of the parties. The direct written evidence of the transaction consists of the short form warranty deed in question and the following option, dated six days later:

‘February 21, 1924.

‘Joseph Selik, Detroit, Michigan-Dear Sir: In accordance with verbal understanding we herewith propose to grant you an option covering the purchase of lots Nos. 33 and 34 situated on Island Lake, Livingston county; otherwise known as section 4, town 1 N., range 6 E., together with frame cottage situated thereon.

‘It is understood that this option expires August 21, 1924. Price to be $2,750, plus interest at 6 per cent. from date hereof.

‘Terms to be net cash when this option is exercised. The above price including taxes for year 1922.

‘Goldman Realty Company.

‘[Signed] L. Goldman, V. Pres.

‘Accepted: Joseph L. Selik.’

The land covered by the deed in question had a water frontage on Island Lake of 85 feet, extending back to a highway. It consisted of two lots in a subdivision, called Island Lake Colony Subdivision Annex, numbered 33 and 34, less a strip 5 feet wide taken from the northerly side of the latter lot for a driveway.

Prior to January, 1921, plaintiff purchased from the owners under a land contract lot 34, which had a shore frontage of 60 feet, at the contract price of $30 per front foot, and started building an 8-room summer home upon it, but later learned that he had inadvertently extended his building over the line onto lot 33, which was only 30 feet wide. He then made a deal with the owners by which he gave them the 5-foot strip off lot 34 and $350 in cash for lot 33, receiving a deed for it which was duly recorded on March 22, 1921. During the summer of 1921 he completed building his summer cottage, partly on both lots, at a cost of $2,000, and thereafter occupied it with his family as their summer home.

An apparently disinterested witness named Brown, who owned land in that locality and qualified as to knowledge of values, testified at the hearing, in August, 1924, that the market value of those lots was $35 per front foot, exclusive of improvements, and they had been selling lake frontage there at that price for the past year or two.

When he bought and built upon those lots in 1921, plaintiff was in business for himself, and so continued for some years after, but before this deed was given became financially embarrassed, and Louis Goldman, a director and vice president of defendant, Goldman Realty Company, had been appointed his receiver. The Goldman Realty Company was composed of said Louis Goldman, his father, and brother, who were also organized into a corporation called the Riverside Machinery Depot of which Louis was a director and its treasurer. He was defendant's chief witness and testified:

‘They both occupy the same office. The officers in one are practically the officers in the other.’

His assumptions and the tone of his testimony suggest that he was practically the manager and voice of both whenever he wanted to be. He and Selik had long known each other and apparently been friends for many years. Following his failure in business and appointment of Goldman as his receiver, Selik's money stringency became acute. He had pawned his jewelry, which it would require $1,250 to redeem, and was about to lose it when on his solicitation his friend Goldman redeemed it for him, taking his note for the amount and the jewelry as security. Before the transaction involved here arose and while his business assets were yet in Goldman's hands as receiver, Selik was given employment as a salesman with the Riverside Machinery Depot, but was unable to keep up the payments on his land contract for lot 34, and the owners of the contract took steps for its foreclosure. The money necessary to pay the balance due on the contract, back taxes, insurance, etc., and clear up all his indebtedness in connection with that lake frontage property amounted to $1,645.17. He first applied, as he testified, to Goldman to advance him that amount from money which Goldman had in his hands as receiver of Selik's estate, which Goldman refused.

Several interviews between them on that subject followed. Their testimony is in direct conflict as to what was said, understood, and agreed upon between them relative to this deed, which Selik and his wife executed on February 15, 1924, and delivered to Goldman; but the latter thereafter paid the various parties entitled to it the $1,645.17 and obtained a deed from defendant for lot 34 from the fee owners, resulting in a clear and unincumbered record title in defendant to the entire lake frontage property described in this deed, claimed by Selik to have been given as security for a loan to him of that money so applied. Goldman directly denied any such understanding or agreement, and testified that when repeatedly applied to for such loan by Selik he refused him, but on Selik's importunities and representations that if his property was saved from being lost through the impending foreclosure he could and would find a purchaser for it at its approximate value, Goldman, through friendship, consented to arrange for its purchase by defendant and give him an option to sell it for defendant at an advanced price with a division of the profits.

Most of the testimony in this record is that of Selik and Goldman. No other member of defendant or its allied company which had employed Selik was heard. What defendant thought, said, did, and...