Pungs v. Hilgendorf , 289 Mich. 46 ( 1939 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] On August 13, 1921, Mary Witherspoon entered into a land contract by which she agreed to convey certain lands in the county of St. Clair to John and Mary Hilgendorf. Mrs. Witherspoon and the Hilgendorfs have all died since the date of the contract. On June 10, 1929, the probate court assigned the residue of the estate of Mary Witherspoon, deceased, in accordance with her will, as follows: A one-fourth share to each of her children, i. e., Isabelle M. Baxter, Grace N. Pungs, and Howard C. Witherspoon, a one-eighth share to her son, William H. Witherspoon, and the remaining one-eighth part to plaintiff Pungs as testamentary trustee for the benefit of Dorothy May Witherspoon and Howard Witherspoon, her grandchildren. This order also fixed the penal sum of Pungs' bond at $6,000. On November 25, 1930, Pungs as trustee was authorized by the probate court to deed the property in question to the contract purchaser upon receipt of the amount remaining due under the contract. Howard C. Witherspoon and wife, William H. Witherspoon, Jr., and wife, Grace N. Pungs, and Isabelle M. Baxter, prior to the entry of the order assigning the residue and on June 7, 1929, conveyed their interest in the property in question to Pungs as trustee for Dorothy and Howard Witherspoon, minors. This deed was recorded on October 16, 1930, but the statutory bond required of Pungs as testamentary trustee was not filed, examined and approved until December 29, 1930.

The record does not contain any information as to the probating of the estates of the land contract vendees but it is admitted that Mary Hilgendorf pre-deceased her husband and that, on the death of John Hilgendorf, his estate was probated in Wayne county and no claim was filed therein with respect to the balance due upon the land contract in question. Defendant, Philip J. Hilgendorf, is the sole heir at law of the vendees.

On December 17, 1936, trustee Pungs filed a bill in which he sought an accounting as to the balance due upon the contract and, in default of payment thereof, a foreclosure in equity, with a sale of the premises and a decree for any deficiency remaining unsatisfied after such sale. To this defendant, Hilgendorf, made answer denying that he had assumed the obligations of the contract but admitting that he was in possession of the property under an order of the probate court for Wayne county. He asserted there had been no default in carrying out the obligations of the vendees and that plaintiff was not in a position to comply with the covenants of the contract because, for six years, there had been a continuous failure on Pungs' part to comply with defendant's demand for the delivery of a good and marketable title. The decree from which defendant appeals shows that the trial court found that he was in default and that there was due plaintiff on the land contract $4,784.67, of which $2,830.36 was principal and $1,954.31 was interest from September 15, 1930 to April 7, 1938. The court ordered this entire amount paid within five days, together with plaintiff's taxable costs, and, in default thereof, that the property be sold, but that no decree for deficiency should be entered. The decree permitted defendant to redeem within six months from the date of the foreclosure sale.

Appellant questions plaintiff's right as testamentary trustee to file a bill of complaint for the foreclosure of the land contract, citing the following statutes, Gibney v. Allen,156 Mich. 301, and other authorities.

3 Comp. Laws 1929, § 15865 (Stat. Ann. § 27.3044) reads in part:

"Every testamentary trustee before he enters upon his duties as trustee, shall give bond, with sufficient sureties, in such sum as the probate court for the county in which the will is proved or allowed may order, payable to the judge of said court and his successors, with conditions substantially as follows."

3 Comp. Laws 1929, § 15870 (Stat. Ann. § 27.3049) provides:

"Every trustee who neglects to give bond in accordance with law, within thirty days after the probate court shall fix the penal sum of said bond, shall be considered to have declined or resigned the trust."

Gibney v. Allen, supra, is distinguishable on the facts. In that case the trustee — "ignored the order of the court relative to the bond required, and filed a bond of less than half the penal sum which was never approved." Other authorities cited are not in point.

Pungs' failure to give his bond to the probate court within the time prescribed by statute, in the light of subsequent events, is of little consequence. Although failure to give a bond amounts to a declination or resignation of a testamentary trustee, Pungs' belated action in this respect, and the probate court's acceptance and approval of the bond, had the effect of a reappointment of Pungs as trustee. See In re Erdman's Estate, 179 Mich. 567. The only complaint made is by defendant who succeeded to the rights of the original land contract purchasers. The trustee's bond is for the protection of the beneficiaries under the will and they are apparently satisfied. Under the circumstances, the objections raised by this defendant should not be considered.

All of the testamentary devisees, excepting the minor grandchildren, conveyed their respective interests in the property to Pungs by the warranty deed hereinbefore mentioned. This deed reads in part:

"To have and to hold the said premises, as herein described, with the appurtenances, unto the said party of the second part, and to his heirs and assigns forever, and the said above mentioned parties of the first part, for themselves, their heirs, executors and administrators, do covenant, grant, bargain and agree to and with the said party of the second part, his heirs and assigns, that at the time of the ensealing and delivery of these presents they are well seized of the above granted premises in fee simple; that they are free from all incumbrances whatever and that they will, and their heirs, executors, administrators shall, warrant and defend the same against all lawful claims whatsoever."

The deed described Pungs as a trustee, but the interest in the property held by the grantors was conveyed to Pungs and to his heirs and assigns forever. The title thus conveyed did not vest in Pungs as trustee. The words "Sydney C. Pungs, trustee," etc., are merely descriptio personæ and the title was conveyed to Pungs individually. Sanborn v. Loud, 150 Mich. 154 (121 Am. St. Rep. 614).

Pungs, having submitted himself to the jurisdiction of a court of equity, can be ordered to convey to himself as trustee the title which he acquired from the testamentary devisees.

Defendant says there is an outstanding inchoate dower interest in the wife of Pungs, but this argument ignores the fact that, at the time Pungs acquired title, the land in question had been sold under a land contract and that the vendor's interest acquired by Pungs was "not a subject of dower." Detroit Trust Co. v. Baker, 230 Mich. 551, 559. See 17 Am. Jur. p. 672. In order to further satisfy defendant, plaintiff could secure and record a quitclaim deed from his wife or the trial court can direct that she be made a party defendant so that her claimed rights, if any, may be determined.

Appellant also insists that, because of a reservation in a certain deed to Mrs. Witherspoon and her husband for a pathway of five feet in width along the channel bank, plaintiff cannot give "a good and sufficient warranty deed of said above-described premises, free and clear of and from all liens and incumbrances," as provided in the land contract, and that this is an additional reason why plaintiff was not entitled to a decree of foreclosure.

The record does not contain sufficient testimony to permit determination of the extent and effect of the claimed defect. The record does show, however, that defendant admitted the vendees went into possession of the premises August 13, 1921, when the land contract was executed, and that he is now in possession of the same. In Jordan v. Morony, 250 Mich. 593, defendants, who were vendees in possession of premises, claimed immunity from foreclosure because of plaintiff vendor's inability to furnish a merchantable title as provided in the contract. This court adopted and approved the following findings of the circuit judge in that case:

" 'The court is of the opinion, however, that such a defense cannot be made because those who make it are in possession of these premises and have been for several years since the date of the Morony contract. If the title was defective and not perfected it was the duty of Morony and those holding under him to surrender possession of the premises and bring suit for any damage sustained because of breach of contract against those liable for the same. The contract purchasers here cannot forever withhold from the plaintiff their land and enjoy the possession and profits thereof and pay nothing on their contract because they claim the plaintiffs cannot furnish to them a merchantable title.' "

See authorities therein cited and annotation in 77 A.L.R. 270, 289.

We do not pass upon the question of whether or not the easement in the case before us is a bar to delivery of marketable title, there being insufficient testimony in this record to permit decision on that question. We do hold, however, under the authority of the Jordan Case, such a defect, if it exists, is not a bar to foreclosure of a land contract against one in possession. Wexler v. Poe, 245 Mich. 442, is not applicable, that being a bill by vendees, not in possession, for specific performance of an agreement to enter into a land contract. The Wexler Case is also distinguishable on other facts.

A foreclosure of a land contract in equity is controlled by equitable principles, 66 C. J. p. 1284, and, although several issues may be involved in the foreclosure proceedings, if related, equity may determine each of them. The rule that a vendor's defective title is not a bar to a foreclosure action against a vendee in possession is but another way of stating that one who occupies under another's title is estopped to deny that title without having first surrendered possession. 27 R.C.L. p. 543, 77 A.L.R. p. 290. But where, as here, vendee requests equitable relief in a manner consistent with good conscience, he should be given the opportunity to obtain such relief. This was accorded him in part when the court below correctly acted within its discretion in ordering a foreclosure sale without permitting a deficiency decree. In order to adjudicate all of the equities between the parties where a decree of foreclosure sale includes a right of redemption, the court may, upon the application of the vendee, adjust the redemption amount if the vendor cannot convey the kind of title required by the contract. Dirr v. Hitchman, 260 Mich. 179. The discretion thus exercised differs in no material respect from that exercised in denying a deficiency decree or in determining an action for specific performance or for cancellation of a land contract.Bonninghausen v. Hall, 267 Mich. 347. A vendor who cannot perform according to the covenants of his agreement is not in a position to complain of such procedure because a party seeking equity should be required to do equity. This practice has the advantage of settling all the disputed questions in one action, a traditional aim of equity. Under this doctrine the trial court should have considered the prayer of defendant vendee's cross-bill and adjudged the claimed defects in the title. If the claimed defects are found to exist and are of a nature that can be compensated for by an adjustment of the contract price, that adjustment should be made in the redemption amount. Dirr v. Hitchman and Bonninghausen v. Hall, supra.

Although we are in accord with the view of the trial judge, as expressed in the decree, that foreclosure of the land contract should be had and, in the event of sale for less than the balance due thereon, no decree of deficiency should be entered, it is nevertheless necessary to set aside this decree in order to require plaintiff to execute and record a good and sufficient deed conveying title from himself individually to himself as trustee, and for the consideration of the other matters discussed herein.

The decree is vacated and the cause is remanded for further action in conformity with this opinion and the entering of a new decree in the circuit court. Costs to appellant.

BUTZEL, C.J., and SHARPE, CHANDLER, NORTH, and McALLISTER, JJ., concurred with BUSHNELL, J.