Wilson v. Taylor
| Decision Date | 06 May 1998 |
| Docket Number | No. 5,Docket No. 105906,5 |
| Citation | 457 Mich. 232,577 N.W.2d 100 |
| Parties | Thomas D. WILSON and William G. Rappleye, Plaintiffs-Appellees, v. Robert Scott TAYLOR and Tonia Marie Taylor, Defendants-Appellants. Calendar |
| Court | Michigan Supreme Court |
Rappleye & Wilkins, P.C. by William G. Rappleye, Jackson, for plaintiff-appellee.
Stephen D. Conley, Jackson, for defendants-appellants.
Jerrold Schrotenboer, Jackson, amicus curiae for defendants.
Pepper, Hamilton & Scheetz, L.L.P. by Vicki R. Harding and Lisa S. Gretchko, Detroit, amicus curiae for Real Property Law Section of State Bar of Michigan.
In this case, we are called on to decide whether a defendant against whom a land contract forfeiture judgment has been obtained must pay an amount, representing the monthly payments under the contract, in excess of the judgment to preclude entry of a writ of restitution. 1 For the reasons detailed below, we reverse the decision of the Court of Appeals and conclude that the writ of restitution in this case was issued improperly.
Defendants in this case are husband and wife. They entered into a land contract for a two-unit residential property with Lynette Marie Luft in August 1989. In January 1992, Luft assigned her interest in that contract to the plaintiffs, two attorneys. In April 1992, plaintiffs commenced a forfeiture action in the 12th District Court. Plaintiffs voluntarily dismissed that action, and then filed a second forfeiture notice in August 1992. 2 It is this action from which the present appeal arises.
On October 27, 1992, the defendants, who were not represented by counsel, consented to entry of judgment in favor of the plaintiffs for $2,000. In a brief hearing, 3 both defendants acknowledged that $2,000 was "due and owing." Ms. Taylor also replied affirmatively when the court inquired if she was familiar with the terms outlined in the judgment. The defendants agreed with the court that, because less than half the total contract had been paid, the redemption period would be ninety days. Finally, plaintiff Rappleye also agreed with the court that $2,000 was the redemption amount.
The plaintiffs drafted the judgment on a standard State Court Administrative Office approved form. Included in this judgment, in paragraph 6, "Further Orders," was a provision that "all monies paid during redemption period shall first be applied to keep payments current and then to the outstanding judgment amount." This provision was not specifically mentioned on the record by the parties or the court, nor did the parties sign this judgment in the space provided for approval of content and form.
Between October 27, 1992, and the end of January 1993, the defendants paid the plaintiffs a total of $1,800. On February 5, 1993, after the redemption period had expired, but before any further action in this matter, the defendants paid an additional $350 to the plaintiffs, bringing the total amount paid to $2,150. Nonetheless, the plaintiffs moved for issuance of a writ on the ground that, following the "further orders" language, and applying the bulk of the monies paid to the $1,600 that had become due under the contract, 4 the defendants remained significantly in arrears. 5
The district court held a hearing on the motion on February 9, 1993. At that hearing, the plaintiffs presented a stipulation, signed by the defendants, that the "outstanding balance which was due and owing has not been paid in full," and agreeing that the defendants would have until February 18, 1993, to pay the $1,450 still owing, or a writ of restitution would be entered at any time thereafter. The stipulation was presented to the court at the hearing on the motion, and the court entered an order in accordance with it. The defendants again were unrepresented by counsel. The transcript of this hearing reveals that the court was aware of the "further orders" language, but at no time does it appear that the court was made aware of the fact that, at the time of the hearing, $2,150 had been paid to the plaintiffs. 6 The defendants did not make any further payments before February 18, 1993, and, on that day, the plaintiffs applied for and received a writ of restitution ex parte. The application for the writ indicated the "No payment has been made on the judgment and/or no rent has been received since the date of judgment, except the sum of $1,400.00 received under the following conditions: per the judgment." 7
While plaintiffs undertook actions to evict the defendants, while simultaneously offering them the option of renting the premises, the defendants, for the first time, obtained counsel to represent them in this matter. Counsel immediately moved for a stay of and relief from the judgment. Following a hearing, the district court denied the motion.
Defendants appealed in the Jackson Circuit Court, which affirmed. In the course of this appeal, an appeal bond and escrow order was entered, requiring the defendants to continue their $400 land contract payments each month. The circuit court continued the appeal bond and escrow order to allow the defendants to proceed in the Court of Appeals. The defendants claim in this Court that they have continued to make every monthly payment since the entry of the escrow order, and the plaintiffs do not dispute that.
The Court of Appeals, in an unpublished per curiam opinion, 8 affirmed in part and reversed in part. Finding the district court to have erred in the application of the "further orders" language, the Court of Appeals held that such language was an "improper 'clog' on defendants' right of redemption." 9 The Court then affirmed the result, however, on the ground that the failure to make the monthly payments constituted a separate material breach and a proper ground for the issuance of the writ of restitution.
We granted leave to appeal to address this issue, which may affect a substantial number of land contract vendors and vendees, and invited the Michigan State Bar Real Property Law Section to file a brief amicus curiae. 10 We now affirm in part, and reverse in part.
The question before us concerns the appropriateness of the Court of Appeals sanctioning the use of summary forfeiture proceedings to enforce the payments due on the underlying land contract that accrue after a judgment has been entered, but prior to the issuance of a writ of restitution. The Court of Appeals held that the failure to make such payments constituted a material breach under the contract sufficient to support the issuance of a writ of restitution. We review this question of law de novo. Cardinal Mooney High School v. Michigan High School Athletic Ass'n, 437 Mich. 75, 467 N.W.2d 21 (1991).
The concept of forfeiture in the land contract setting has undergone a substantial evolution under Michigan law. Originally, a common-law forfeiture ended the land contract. The seller was discharged from his duty to convey, and the purchaser was discharged from his duty to pay. See Stevens v. Most, 251 Mich. 23, 231 N.W. 47 (1930). In Stevens, this Court examined a situation similar to the instant case. The defendant in Stevens argued that the notice of forfeiture operated to terminate his duty to pay, and hence he should be able to redeem the contract by paying the amount stated in the notice of forfeiture.
This Court rejected that argument, reasoning:
This method would cause a multiplicity of suits and serve no useful end. We believe that the practice heretofore generally followed of including all amounts due up to the date of the judgment is correct, and carries out the intent and purpose of the present statute. [Id. at 27, 231 N.W. 47.]
This same concern resonated in the views of the circuit court below. While the argument was abandoned here, the plaintiffs did advocate such a concern below. While we agree that such a concern can, in some circumstances, be very legitimate, we do not find it so here.
In Gruskin v. Fisher, 405 Mich. 51, 273 N.W.2d 893 (1979), we addressed the area of land contract forfeitures as concerning the issue of election of remedies. We noted that, historically, the effect of the service of a notice of forfeiture was to end the contract, and, thus, was an election of remedies. Under modern summary proceeding practice, however, we found that a notice of forfeiture actually acted more as a condition precedent to the commencement of summary proceedings. In modern practice, including summary proceedings under the Revised Judicature Act, M.C.L. § 600.5701 et seq.; M.S.A. § 27A.5701 et seq., a seller may pursue alternative remedies until a writ of restitution has been entered, even after a judgment of possession has been entered. Id. at 66-67, 273 N.W.2d 893.
We have recently restated the belief that the Revised Judicature Act is a codification of the common-law rule of election of remedies, with some arguable modifications. Michigan Nat'l Bank, Trustee v. Cote, 451 Mich. 180, 546 N.W.2d 247 (1996). While we do not return to the issues underlying Gruskin or Cote today, we are confident that the option of instituting a foreclosure action, as opposed to a forfeiture action, existed for the plaintiffs when they filed their initial claim. 11 Indeed, we note that the plaintiffs earlier had filed and then dismissed a forfeiture action, for reasons that are not clear from the record. Whatever their reasons, the possibility of the need to file repeated forfeiture actions appears to have been more than an abstract concept to the plaintiffs. Nonetheless, they chose to forgo the acceleration advantages of a foreclosure action in favor of the ease of a summary forfeiture proceeding.
This leads us to dispose of the problem that so troubled the circuit court and was a basis of arguments for the plaintiff below. A land contract vendor in the plaintiffs' position need never face the difficulty of being required to institute a multiplicity of suits....
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