McHugh v. Trinity Building Co. , 254 Mich. 202 ( 1931 )

This is a bill by vendees to rescind a land contract, alleged to have been induced by false representations, and have a vendee's lien for payments made. Rescission was denied, but an award of damages decreed and credited upon the contract.

Defendant Northwestern Investment Company, assignee of the vendor, prosecutes this appeal. The land contract was executed January 16, 1928, with plaintiffs, vendees, and the Trinity Building Company, vendor, and the same day assigned by the vendor to defendant Northwestern Investment Company.

The house was built upon swamp ground, the building was improperly constructed, has settled, the interior walls have cracked, doors and windows do not fit, the roof leaks and many other defects exist, all contrary to representations made by the builder, defendant Trinity Building Company. There was sharp controversy over the question of a swamp at the point where the house stands, but considering the mute evidence furnished by the house and the articulate evidence by frogs in the back yard, we are satisfied that the witnesses who said there was formerly a swamp at that point are correct. But it is said that no such claim was set up in the bill. The bill alleged representations made, and averred falsity thereof, and sufficiently connected many of the defects with the mentioned cause. The house was new, and when the frost left the ground in the spring the building soon disclosed defects. Plaintiffs complained, relied on promises to repair, and made payments of installments for many months.

The circuit judge held the right to rescind lost, but the right to have justice remained, and awarded a sum sufficient to remedy the wrong done.

At the hearing it was claimed, and in this court it is urged, that:

This land contract should not have been admitted in evidence and when at the close of the hearing the tax had not been paid the court should have granted defendant's motion to dismiss the bill."

The record does not show payment of the tax, but in the brief of counsel for plaintiffs it is said that the tax was paid by the Northwestern Investment Company in September, 1929, when that company brought suit on the contract in the common pleas court, and set forth the certificate of the county treasurer. This, not being in the record, cannot be considered beyond leading us to say that, hearing the case de novo, we will withhold decree until it is made a part of the record by stipulation of counsel or filing of such certificate in this court.

In its answer to the bill defendant stated:

"This defendant further shows that plaintiffs * * * were served with summons in case No. 6228 in the common pleas court as the return of the officer will show, in which case they appeared by attorney, and pleaded thereto. And that on October 28, 1929, a valid judgment in the sum of $460.60 was rendered in favor of the Northwestern Investment Company against the plaintiffs and a motion for new trial was made, argued and denied, reference to which is prayed, which judgment is in full force and effect and has never been appealed and which isres adjudicata to all the claims which the plaintiffs attempt to raise in this suit."

The bill herein was filed October 16, 1929, and before the judgment was rendered in the common pleas court. The original record returned to this court shows that upon filing the bill an order was made for defendants to show cause, if any, why an injunction should not issue restraining prosecution of the action in the common pleas court, together with a restraining order in the meantime. October 26, 1929, the restraint was modified and the Northwestern Investment Company permitted to proceed with its action in the common pleas court, but required any money collected to be deposited with the clerk of the circuit court to await further order of the court. January 22, 1930, the order modifying the restraint was vacated and the cause "referred back to Hon. Theodore J. Richter, circuit judge." February 14, 1930, the restraining order was dissolved for failure to file a bond. March 10, 1930, the order dissolving the restraining order was set aside and an injunction authorized and issued restraining defendants "from taking any summary action either before the circuit court commissioner or in any other manner, for the purpose of collecting on said contracts during the pendency of this suit, and from proceeding any further with the action now instituted in the common pleas court for the city of Detroit." This case was heard in June, 1930.

Upon this record we cannot hold that the judgment in the court of the common pleas is res adjudicata of issues herein.

The answer of the Northwestern Investment Company, in the nature of a cross-bill, alleged default by plaintiffs and prayed foreclosure. The answer to plaintiffs' bill called for no counter pleading by plaintiffs, but the cross-bill demanded an answer, and it was no answer to merely deny that defendant was entitled to the relief prayed in the cross-bill. But this is of little moment, for plaintiffs admitted nonpayment, alleged excuse, and asked for relief. Plaintiffs asked for rescission or other relief agreeable to equity and good conscience.

We said in Witte v. Hobolth, 224 Mich. 286:

"A bill in equity praying rescission proceeds on the theory that there has been no rescission, not on the theory that rescission has already been accomplished."

The bill gave the court of equity jurisdiction. The court evidently thought that right to have rescission was lost by laches and payments. Plaintiffs not having appealed we may not hold otherwise. Upon the subject of laches see Culver v. Avery,161 Mich. 322; Witte v. Hobolth, supra; Plate v. DetroitFidelity Surety Co., 229 Mich. 482.

In Jefferson Park Land Co. v. Wayne Circuit Judge, 234 Mich. 341, we said:

"This seems to be a case in which equity and exact justice may or may not require rescission, and incapable of determination until the proofs are in. Even under a bill to rescind, if equity demands affirmance and damages instead, it may be so decreed."

In the case at bar the court, upon refusing rescission, was not required to remit plaintiffs to an action at law.

We think the decree just, and it is affirmed, with costs to plaintiffs.

BUTZEL, C.J., and CLARK, McDONALD, POTTER, SHARPE, NORTH, and FEAD, JJ., concurred.