Woodliff v. Citizens' Bldg. & Realty Co., s. 110

• Decision Date: 22 December 1925
• Docket Number: 111.,Nos. 110,s. 110
• Citation: 233 Mich. 288,206 N.W. 542
• Parties: WOODLIFF et al. v. CITIZENS' BUILDING & REALTY CO. et al. DETROIT TRUST CO. v. DE VOS et al.
• Court: Michigan Supreme Court

233 Mich. 288

206 N.W. 542

WOODLIFF et al.

v.CITIZENS' BUILDING & REALTY CO. et al.

DETROIT TRUST CO.

v.DE VOS et al.

Nos. 110, 111.

Supreme Court of Michigan.

Dec. 22, 1925.

Appeal from Circuit Court, Wayne County, in Chancery; Fred S. Lamb, Judge.

Separate suits in equity by Richard S. Woodliff against the Citizens' Building & Realty Company and others, and by the Detroit Trust Company, receiver, against Kenneth M. De Vos and wife. Defendants in the latter suit filed a cross-bill for foreclosure of land contracts, and by amended bill were made parties defendant to the first suit, in which the McDonald Coal & Brick Company intervened as plaintiff. The suits were consolidated. From an adverse decree, defendants De Vos and wife appeal, Reversed and rendered.

Argued before McDONALD, C. J., and CLARK, BIRD, SHARPE, MOORE, STEERE, FELLOWS, and WIEST, JJ.E. R. Milburn and Prewitt Semmes, both of Detroit, for appellants De vos.

Elroy O. Jones, of Detroit, for appellee McDonald Coal & Brick Co.

D. W. Closser, and R. S. Woodliff, both of Detroit, for appellee Woodliff.

McDONALD, C. J.

The matters here involved are presented in two chancery suits, which have been consolidated and will be disposed of together.

The defendants Kenneth M. De Vos and Mary Alice De Vos are the owners in fee of the Astor Court Apartments, located on the West Grand boulevard, in the city of Detroit, Mich. The premises are incumbered by two trust mortgages, given to secure an issue of bonds aggregating the sum of $525,000. These bonds mature in monthly installments of $4,500, and with the interest thereon require a monthly payment of $6,600.

On the 17th of March, 1921, Kenneth M. De Vos and Mary Alice De Vos, his wife, leased the apartments with their furnishings to one Ralph W. McKinney for the term of ten years with the exclusive option to purchase within three years from date for the sum of $901,000. It was provided in the lease that no assignment thereof should be made without the written consent of the lessors. With their consent McKinney sold and assigned the lease to Lester H. Cheeseman, who went into possession of the apartments in May, 1922. He remained in sole possession until November 23, 1922, at which time he entered into an agreement with Richard S. Woodliff, Louis A. Nall, and Justice R. Pierson for the sale of his interest. The lease was not assigned to them by Cheeseman, because the agreement of sale was never fully preformed, but they made payments to him and deeded some property, a part of which is herein referred to as the Towar farm, located in Oakland county. Subsequently it was agreed that Cheeseman should retain an interest, and that the business should be conducted as a joint undertaking. This agreement was not reduced to writing, but there is no dispute between the parties as to their respective interests. The lessors refused to consent to an assignment of the lease, and it remained in Cheeseman's name. On the 1st day of May, 1923, Cheeseman exercised his option under the lease to purchase the apartments, but the conditions of the sale were not complied with by him until the 27th of July, 1923, at which time the purchase contract was delivered and the lease surrendered. As a part of the inital payment, Cheeseman deeded to De Vos the Towar farm, and received back a contract to repurchase it for $25,000. This amount was credited to him on the Astor Apartments contract. On the 1st day of August, 1923, Cheeseman sold and assigned these contracts to the Citizens' Building & Realty Company. This company, being unable to make their payments, was compelled to borrow $10,000 from Arthur Ledbetter. To secure the payment of the loan and a bonus charge of $5,000, the Realty Company gave an assignment of the Cheeseman contracts. Ledbetter gave back an agreement to reassign on payment of the loan. This loan was made from the Ford State Bank through the agency of John N. Anhut and Byron J. Oades, both of whom were officers of that bank. Ledbetter then assigned his interest to one Henry B. White, and White assigned to the Irving Apartment Hotel Corporation, in which White and Anhut owned all of the stock. This corporation subsequently sold and assigned its interest in the contract to Oades.

The McDonald Coal & Brick Company furnished coal for the apartments, and war a creditor, first of Cheeseman, then of Cheeseman, Woodliff, Pierson, and Nall. When the assignment of the contract was made to the Citizens' Building & Realty Company, it assumed the obligation to pay the account of the McDonald Coal & Brick Company. It was not paid, and when the first one of these two suits was started the McDonald Coal & Brick Company was permitted to intervene as a party plaintiff.

The first suit was begun by Woodliff. In his bill, after reciting his interest in the contract, he asked that the assignment to the Citizens' Building & Realty Company, and all subsequent assignments, be set aside on the ground of fraud; that he be given a lien on the De Vos-Cheeseman contract for his interest; that the Citizens' Realty Company and the other defendants be required to pay the indebtedness assumed by the Realty Company; that all of the defendants be enjoined from making any further assignments or selling or mortgaging the property; and that a receiver be appointed to take possession of the apartments, collect the income, and pay all outstanding indebtedness. Kenneth M. De Vos and Alice Mary De Vos were not made parties to this suit. Defendants Ross, Honeywell, Oades, and Moesta were made parties, on the claim that, as active directors of the Citizens' Building & Realty Company, they were individually liable for its acts. On the hearing the court made an interlocutory decree, in which he set aside the assignment to the Citizens' Realty Company and all subsequent transfers, and declared the vendees' interest in the De Vos-Cheeseman contract to be in Cheeseman, subject to the conditions existing at the time of its assignments, and to the expenditures made in good faith by all subsequent assignees, all of which was to be determined by a special commissioner appointed for that purpose. The Detroit Trust Company was appointed receiver.

The interlocutory decree was filed July 28, 1924. On the 5th of August, 1924, the Detroit Trust Company, receiver, began suit against De Vos and wife to restrain them from declaring a forfeiture of the Cheeseman contract, and from prosecuting any proceedings for foreclosure other than in chancery. The defendants answered with a cross-bill, in which, by way of affirmative relief, they asked for the foreclosure of the land contract. On the 20th of December, 1924, the plaintiff in the first suit, Richard S. Woodliff, filed an amended bill making Kenneth M. De Vos and wife parties defendant. When the receiver's suit came on to be heard the two suits were consolidated, and the court made a decree in which he incorporated many of the provisions of the interlocutory decree, dismissed the cross-bill of defendants Kenneth M. De Vos and Mary Alice De Vos, enjoined them from foreclosing the land contracts, declared the surrender of the lease to be void as to Woodliff, Pierson, Nall, and their creditors, and directed that the receiver sell at public or private sale the interests of all of the parties...