Turner v. Peoples State Bank

• Decision Date: 22 October 1941
• Docket Number: No. 53.,53.
• Parties: TURNER et al. v. PEOPLES STATE BANK.
• Court: Michigan Supreme Court

299 Mich. 438

300 N.W. 353

TURNER et al.

v.PEOPLES STATE BANK.

No. 53.

Supreme Court of Michigan.

Oct. 22, 1941.

Suit by Elizabeth Turner and Guy C. Turner against the Peoples State Bank for cancellation of mortgages and for an accounting wherein the defendant filed a cross-bill. From the decree, plaintiffs appeal and the defendants cross-appeal.

Decree dismissing bill of complaint as to plaintiff Guy C. Turner affirmed, and decree modified as to Elizabeth Turner by dismissal of bill and by granting defendant the relief sought in its cross-bill and cause remanded with directions.

Appeal from Circuit Court, Genesee County, in Chancery; Philip Elliott, Judge.

Argued before the Entire Bench.

Joseph R. Joseph, Dale C. Showley, Stephen J. Roth, and Graydon G. Withey, all of Flint, for appellants.

Lewis Kearns, of Flint, for appellee.

CHANDLER, Justice.

John Turner, deceased, the husband of plaintiff Elizabeth Turner and father of plaintiff Guy C. Turner, died August 30, 1925, owing defendant $3,532.47 on promissory notes. These notes were the sole obligation of John Turner, and as security for the same a mortgage in the sum of approximately $5,000 on 120 acres of land running from one E. L. Beecher to John Turner and wife, Elizabeth, one of the plaintiffs, on land known as the Beecher farm, was assigned to defendant by both John and Elizabeth. This mortgage was foreclosed in chancery subsequent to John Turner's death and plaintiff Elizabeth was joined as a party plaintiff, and upon the sale of the property, which was bid off for $5,000, received and accepted the commissioner's deed in her name. The mortgage foreclosed was a second mortgage, the first mortgage being in the sum of $1,400, which first mortgage was given by plaintiff Elizabeth and her husband at a time when they were the owners of the so-called Beecher farm. We are unable to find anything in the record in this case disclosing as to whether or not any benefits accrued to Mrs. Turner or any of the interested parties as a result of this sale.

At the time of the death of John Turner, he and his wife, one of the plaintiffs herein, held as tenants by the entireties the farm, which is the subject of this suit, and upon his death it became the sole property of Elizabeth as survivor. There were no assets in John's estate other than his interest in the Beecher mortgage held by the bank as collateral.

On December 29, 1926, about one and one-half years after the death of John, and two or three months after the commissioner's deed was issued to Elizabeth, she, Elizabeth, made a payment to the defendant bank on the obligations of her deceased husband amounting to about $1,298.87, and on the same day executed a mortgage to the bank covering the farm to which she had acquired a title on the death of her husband to secure payment of the indebtedness of her husband to defendant, said mortgage being in the sum of $2,500.

The money was paid and the mortgage executed under circumstances related by plaintiff Elizabeth to be as follows:

‘At the time my husband died he owed the bank of Flushing them notes. I did not sign any notes myself except the $1,400.00 mortgage on the Randall place. That was that first mortgage that the record refers to. I think 1917 is about the time it was made. That mortgage was the first mortgage on that property that later came into the hands of Mr. Beecher. I went into Flushing and talked to Mr. Mann (then cashier of defendant) about a year after my husband passed away, sometime in 1926 I think. Mr Mann said I would have to take up the notes that it was my duty to see that they were paid and I would have to do something or they would have to take some action to get the money. I made an offer, I asked him if he would take a small piece of property in Flushing, rental property, as collateral on the mortgage, and he said he would have to take it up before the bank directors and he could not let me know at that time. Later on I went back, he figured up the notes and I made the mortgage, he made the mortgage out. He did not seem to want to take my small place in Flushing. This place on which my mortgage was issued or given was my husband's property but we had a joint deed of all places. I was living on it at the time. I gave Mr. Mann a mortgage on it. As fast a I could I made payments on that mortgage.’

It is claimed by plaintiffs, but denied by defendant, that the principal sum of this mortgage included a mortgage tax of $12.50. The interest rate was 7% annually. The trial court found and we are not inclined to disturb such finding that the claim of the plaintiffs as to the inclusion of this mortgage tax in the principal sum of the mortgage is correct.

Subsequent to the execution of this mortgage payments were made upon the obligation on both principal and interest until March 9, 1938, on which date the balance due thereon was $2,011.13, including interest and unpaid taxes.

On January 21, 1937, plaintiff Elizabeth by quitclaim deed conveyed the property covered in the above mentioned mortgage to her son, Guy Turner, reserving to herself a life estate.

Prior to the time of the execution of the deed by Elizabeth to Guy, she had sold five acres off of the farm in question on a land contract on which a dwelling house had been constructed by the contract purchaser.

On March 9, 1938, plaintiff Guy Turner, who since the death of his father, had had charge of his mother's affairs notified the bank that his mother would make no further payments on said mortgage and note, because she had been so advised by her attorney. Later the reason for this notice was discussed and it was the claim of Guy to defendant that the mortgage and note were void because same were usurious by reason of the inclusion in said note and mortgage of the sum of $12.50, the mortgage tax. After some discussion between defendant's representatives and plaintiff Guy, it was agreed that credit should be given Elizabeth for the sum of $29.59, being the amount of said mortgage tax with interest from the date of the mortgage at 7%, and on June 6, 1938, the plaintiffs executed a new mortgage covering the same property described in the first mortgage, excepting the five acres which had been sold by Elizabeth on a land contract, to secure the payment of the old debt, principal and interest amounting to $2011.13.

Subsequent to the execution of this mortgage, and on October 12, 1938, the plaintiffs filed the bill of complaint herein praying for cancelation of both mortgages on the grounds of fraud and duress, it being alleged that the said Elizabeth executed the first mortgage by reason of certain false and fraudulent representations made to her by defendant and its agents. No other allegation of fraud is made as to the first mortgage. The bill also asked for an accounting and a money decree against defendant for the return of payments made on the first morgage. The bill further alleged that the defendant obtained the signature of plaintiffs to another mortgage bearing date June 9, 1938, and caused the same to be recorded in the office of the Register of Deeds of Genesee County. It is also alleged in the said bill of complaint that the acknowledgement of plaintiffs required by law to be attached to said mortgage of June 6, 1938, showed that same was executed as their free act and deed, when in truth and in fact the plaintiffs did not execute said mortgage as their free act and deed, and the plaintiffs did not acknowledge the execution of said mortgage as their free act and deed.

Defendant's answer to said bill of complaint denied the existence of any defects invalidating said mortgage and filed a cross bill praying for the foreclosure of same or, if it should be held invalid, for foreclosure of the first mortgage. Thereafter and on February 15, 1939, plaintiffs filed an amended bill of complaint so as to include the issue of usury as to the first mortgage, and denying that there was any consideration for the execution and delivery of the second mortgage.

Upon the submission of this case upon these pleadings, and proof taken, the trial court entered a decree upholding the validity of the mortgage executed on June 6, 1938, as to plaintiff Guy Turner but decreeing that the execution of this mortgage was not the voluntary act of the plaintiff Elizabeth and discharging the same as to her.

From this decree both plaintiffs appeal, and defendant bank files a cross appeal.

Appellant Elizabeth insists that the court was in error in not awarding to her a money decree for all sums of money paid by her upon either of said mortgages and the note or notes of her deceased husband, because said mortgages were based upon his sole debt, and that there was no consideration or benefit running to her in return for the execution of the first mortgage bearing date September 29, 1926. She also insists that the second mortgage is invalid as to her because the execution of same by her was not her free act and deed.

Appellant Guy Turner insists that the mortgage of June 6, 1938, is void as to him, for the reason that the first mortgage contained in its principal sum part of the usurious interest charged in the mortgage of 1926, and is therefore void, and as a consequence the second mortgage should be decree void for want of consideration.

We find as did the trial court that there is no merit to the contention made by appellant Guy Turner. It clearly and undisputably appears that defendant was making repeated demands upon plaintiff Guy for some arrangement about the payment of the first mortgage on the farm that had been deeded to him by his mother. That there was due upon said mortgage the sum of $2,011.13 after eliminating the sum of $29.50, which plaintiff Guy claimed was usurious. The new mortgage prepared by the bank was executed by Guy and was, as the trial court found, bis voluntary act, and even though the first mortgage had been usurious as to plaintiff Elizabeth, the question of usury being...