Stover v. Whiting, Docket No. 85397
| Decision Date | 16 April 1987 |
| Docket Number | Docket No. 85397 |
| Citation | 157 Mich.App. 462,403 N.W.2d 575 |
| Parties | Chris L. STOVER, Plaintiff-Appellant, v. Kendall C. WHITING and Jani M. Whiting, Defendants-Appellees. 157 Mich.App. 462, 403 N.W.2d 575 |
| Court | Court of Appeal of Michigan — District of US |
[157 MICHAPP 463] Charles E. Oesterle, Mason, for plaintiff-appellant.
Bean & Bean, P.C. by Wiley E. Bean, Grand Ledge, for defendants-appellees.
Before CYNAR, P.J., and R.B. BURNS and F.X. O'BRIEN, * JJ.
Following a district court bench trial, judgment was entered in favor of the defendants (purchasers) on their counterclaim. Plaintiff (seller) appealed and the circuit court affirmed. This appeal is by leave granted.
The sole issue presented in this appeal is whether the purchasers may withdraw from an agreement to enter into a land contract to purchase 1 1/3 acres of land because the seller is not able to obtain conditional releases from lienholders on the 1 1/3 acres of land prior to the execution of the land contract.
On August 17, 1982, the parties entered into a sales-purchase agreement whereby the defendants agreed to purchase 1 1/3 acres of land on which a house was located, from the plaintiff, for $49,900 on a land contract. The defendants paid the plaintiff a $500 deposit, took possession of the house at [157 MICHAPP 464] the end of August, and made improvements on the house and land. 1
After the sales-purchase agreement was entered into, plaintiff secured a title insurance policy commitment dated August 24, 1982, and delivered it to the defendants. The title policy indicated certain mortgages encumbered the property, requiring their discharge or same to be shown on the final policy. Another requirement for issuance of the policy was a properly executed deed from Gilbert E. Drewyor and his wife to Chris L. Stover and his wife. Also required was a properly executed deed from Chris L. Stover and his wife to Kendall C. Whiting and Jani M. Whiting, husband and wife.
The 1 1/3-acre parcel of land was part of an [157 MICHAPP 465] eighty-acre tract which plaintiff was purchasing on a land contract from Gilbert and Grace Drewyor. The eighty-acre parcel was subject to a mortgage from the Drewyors to the Federal Land Bank. Also, the eighty-acre parcel, along with another 320 acres, personal property, and farm crops, secured a loan from Production Credit Association to the Agrivale Farms, a family business in which plaintiff was a minor stockholder.
Plaintiff's attorney's letter dated October 11, 1982, to defendants' attorney indicated that neither the proposed land contract nor the mortgages provided for a partial release. Further, the balance on the land contract was about $68,000, the balance on the Federal Land Bank mortgage was about $34,500, and the balance on the Production Credit Association mortgage was about $714,000. None of the secured parties were prepared at that time to make any specific agreements regarding any partial release.
There was an indication during the trial that the Federal Land Bank was willing to give a partial release upon payment of $20,000 on the debt to it. However, Stover could not get a firm commitment from the Drewyors to give a conditional release.
In a letter dated November 1, 1982, defendants were advised by their attorney against going through with the agreement since clear title might not be obtained although full payment was made. The letter pointed out that the property being purchased was a small part of a larger parcel of land which was mortgaged and the secured parties would not at that time enter into any specific agreement to a partial release.
Defendants, who took possession the last part of August and had made some $1,300 in improvements, had no intention to withdraw from the deal [157 MICHAPP 466] prior to October. However, based on their attorney's title opinion, they decided not to proceed with the closing. They remained on the property. Plaintiff commenced suit.
By stipulation, defendants vacated the property on December 31, 1982. Eventually, the plaintiff obtained releases from the Drewyors and mortgage holders and sold the property on December 15, 1983, for $44,000.
The trial court found that plaintiff did not have a marketable title nor was he in a position to perfect the title within a reasonable time. The plaintiff was not able to obtain a release of the 1 1/3-acre parcel from the Drewyors nor from the mortgage lienholders whose interests exceeded the value of the said 1 1/3-acre parcel many times. The trial judge ruled that defendants justifiably refused to complete the transaction because of the plaintiff's inability to tender marketable title within a reasonable time. The trial court awarded damages to the defendants in the amount of $760.
A distinction is made in land contract cases where the vendor has no title and cannot deliver title in accordance with the terms of the contract at the time agreed upon, and where the vendor has only an interest in the title at the time of execution, but can deliver and convey title at the time agreed upon.
In Silfver v. Daenzer, 167 Mich. 362, 133 N.W. 16 (1911), the parties executed a contract whereby the vendor agreed to sell two hundred acres of land for a consideration of $1,500. The main question was, "Can the vendee in an executory contract for the purchase of lands rescind the contract and recover the portion of the purchase price paid because of defective title to a portion thereof in advance of the time when, by the terms of the contract, the vendor is bound to convey?" 167 Mich. 369, 133 N.W. 16. The [157 MICHAPP 467] Supreme Court observed that this was not a case where the vendor had no title at all, or was not in a position to acquire title since it was undisputed that title would be perfected. It was sufficient that, at the time the contract was made, the vendor had acted in good faith and had such an interest that good title could be conveyed at the proper time. See also Rogers v. Eaton, 181 Mich. 620, 148 N.W. 348 (1914).
In Adadow v. Perry, 225 Mich. 286, 196 N.W. 190 (1923), the vendees sued to rescind a land contract on the ground of fraud, claiming the vendors orally represented to be the owners of the land when in fact they were purchasing on a land contract. The Supreme Court indicated that there were no liens or encumbrances on the property. While the vendors did not have a perfect title, they were in a position to, and did, perfect title within a reasonable time after the contract was made. The vendors, immediately after the execution of the land contract, paid off the balance...
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Dep't of Agric. & Rural Dev. & Acme Twp. v. Engle
...of commercial real property "may be rescinded because of a mutual mistake of the parties"), or a defect in title, see Stover v Whiting, 157 Mich.App. 462, 468; 403 N.W.2d 575 (1987) ("Generally speaking, the vendor is under an obligation to convey a merchantable or marketable title. Marketa......