Taylor v. Adams

• Decision Date: 22 April 1937
• Docket Number: No. 62.,62.
• Citation: 272 N.W. 733,279 Mich. 433
• Parties: TAYLOR v. ADAMS et al.
• Court: Michigan Supreme Court

279 Mich. 433

272 N.W. 733

TAYLOR

v.ADAMS et al.

No. 62.

Supreme Court of Michigan.

April 22, 1937.

Suit by James R. Taylor, Conservator of the Romulus State Bank, against Nelson F. Adams, trustee in bankruptcy of the estate of Thomas Olszynski, bankrupt, and others, wherein the first named defendant filed a cross-bill. From a decree for plaintiff, the cross-plaintiff appeals.

Affirmed. Appeal from Circuit Court, Wayne County, in Chancery; Harry J. Dingeman, Judge.

Argued before the Entire Bench.

Arthur J. Adams, of Detroit, for appellant.

Harry J. Lippman, of Detroit, for appellees Stella Olszynski, Victoria Olszynski, and Anthony Lachowski.

SHARPE, Justice.

On June 22, 1926, the Romulus State Bank loaned Stella Olszynski $6,500 and took as security therefor a mortgage on her farm located in Van Buren township, Wayne county, Mich. The description of the property so mortgaged was not wholly accurate, and on about June 17, 1931, a corrected mortgage was obtained and recorded. Prior to March 9, 1931, Nelson F. Adams, trustee in bankruptcy of the estate of Thomas Olszynski, bankrupt and husband of Stella Olszynski, instituted a chancery proceeding against Stella Olszynski to recover property of the bankrupt. On March 9, 1931, a decree was entered in said cause decreeing to Nelson F. Adams, trustee in bankruptcy, a lien in the form of an equitable mortgage in the sum of $3,500 against the above-described property. On or about June 29, 1931, the payments on the bank mortgage being in default, foreclosure proceedings were commenced by publication; on October 22, 1931, the property was sold by sheriff's deed to Charles H. Schutz, then receiver for the Romulus State Bank; and the sheriff's deed was recorded October 24, 1931. The notice of mortgage foreclosure sale was so improvised as to embrace the original and corrected mortgage.

On September 18, 1931, the Romulus State Bank closed its doors. A bill of complaint was subsequently filed in the Wayne county circuit court by the state banking commissioner asking for the appointment of a temporary and permanent receiver; on September 26, 1931, Charles H. Schutz was appointed temporary receiver; and on October 19, 1931, the appointment was made permanent. The notice of the foreclosure sale was published in the name of the Romulus State Bank and continued to run under that name until the date of sale. On October 29, 1932, the bank through its proper officers executed a land contract with Victoria Olszynski, daughter of Stella Olszynski, in the sum of $8,600 with a $1,200 down payment and the balance of $7,400 to be paid in stated periods.

Subsequent to the date of the above contract, the trustee in bankruptcy of the estate of Thomas Olszynski made a claim to the Romulus State Bank that his mortgage was in force and superior to the bank mortgage. As the result of such claim the bank filed a bill in chancery to establish the priority of its mortgage and to remove any cloud arising out of the equitable mortgage of the trustee in bankruptcy. The defendant Nelson F. Adams, as such trustee, filed an answer to the bill of complaint denying the material allegations in said bill and also filed a cross-bill asking that the equitable mortgage be foreclosed. The cause came on to be heard on reference before a circuit court commissioner who made a report recommending that a decree be granted to plaintiff. Objections were filed to this report, but the report was confirmed by the circuit judge and a decree entered June 2, 1936.

The defendant and cross-plaintiff appeals and contends that the foreclosure of the mortgage of the Romulus State Bank was not valid and regular because during the publication of the notice of foreclosure sale under the statute, there was a legal transfer of the mortgagee's interest; because the power of sale contained in the mortgage could not be exercised after the closing of the bank on September 18, 1931; and because the receiver of the bank had no authority to carry on the foreclosure of the mortgage.

The bank receiver in the case at bar was appointed under and by virtue of the authority conferred by Act No. 66, Pub.Acts 1929, §§ 62 and 63, and the order of the circuit judge as of October 19, 1931. Act No. 66, Pub. Acts 1929, provides:

‘Sec. 62. If the commissioner shall become satisfied that * * * [conditions under which commissioner may ask for the appointment of a receiver] the commissioner of the banking department shall communicate such facts to the attorney general and, with his concurrence, application may be made by the attorney general, in behalf of the commissioner, to a court of competent jurisdiction for the appointment of a receiver of such bank. Upon presentation of said application to said court, and upon its being made satisfied that * * * [certain conditions exist] the said court shall immediately appoint the banking commissioner, his deputy, or one of the banking examiners in the banking department, * * * as receiver and shall determine his bond and prescribe his duties, and may make such further order as shall seem proper: Provided, * * * The receiver, if any be appointed, shall, under the direction of the court, take possession of the books, records, and assets of every description, of such bank, collect all debts, dues and claims belonging to it, and sell or compound all bad or doubtful assets and sell all the real and personal property of such bank, on such terms as the court shall direct and may, if necessary, to pay the debts of such bank, enforce all individual liabilities of the stockholders. Such receiver shall forthwith pay over the money so collected or received to the state treasurer, and also make report to the commissioner of all his acts and proceedings.

‘Sec. 63. Whenever arrangements shall be made by any such bank or the stockholders thereof by re-organization or otherwise, to the satisfaction of the commissioner of the banking department, to pay all creditors thereof, aside from the stockholders, and to make good the impairment of the capital stock in all particulars, and to pay the expenses of the receivership, if any have accrued, such facts shall be presented to the...