Hornbeck v. Midwest Realty, Inc.

On January 21, 1925, plaintiffs, as vendees, entered into a written contract in which they agreed to pay $1,300 for certain real estate described as follows:

"Lot numbered 432, Dasher Estates Subdivision, according to the plat recorded in liber 52 of plats, at page 13, Wayne county records."

Defendant Fort Eureka Land Company was the original vendor in this contract. The remaining defendants acquired legal title to the property subsequent to the date of the contract, the Currier Lumber Company being the owner of record when plaintiffs' bill of complaint was filed. Plaintiffs made payments on their land contract until 1932. In April of 1936 plaintiffs received a notice of forfeiture, signed by Harry W. Brower as attorney for defendants Dasher, in which it was claimed that there was due $155.93 on the contract. After a conversation with Mrs. Robinson, an agent of defendant Midwest Realty, regarding payment, the balance due was agreed upon as $153.91, and plaintiffs paid the sum of $53.91 and agreed to pay the remaining $100 in monthly instalments. On June 16, 1936, the $100 was paid by check; plaintiffs requested a deed and abstract and were informed by Mrs. Robinson that the Midwest Realty was very busy and it would be a month or six weeks before the papers could be delivered. However, that same night Mrs. Robinson called again on the Hornbecks and told them that their check for $100 could not be accepted. A discussion followed in which Mrs. Robinson told Mrs. Hornbeck that the Midwest was going to build some houses in the subdivision and "we wondered if * * * Mr. Robinson would kind of like your lot." The Hornbecks were urged to visit the property and see if they would exchange their lot for another in the same subdivision. The Hornbecks agreed to consider the matter and, a little later, did examine the property but were not satisfied with the lot that was offered in exchange. In August the Hornbecks, after again requesting delivery of their deed and abstract, were urged to come out and see if they could not agree upon another lot. The Hornbecks again visited the property on August 9, 1936, and discovered, for the first time, that a house was being built upon their lot. Mrs. Robinson called again on the Hornbecks, who declined to make any exchange. A conference was had the day following, between Brower and Hornbecks, but without result and, on the 19th, the vendees were served with a notice of default. The $100 check however, had been deposited by Midwest Realty Inc., and was paid on June 22, 1936. On August 25 1936, plaintiffs filed a bill of complaint seeking specific performance of the land contract and, in lieu thereof, a decree entitling them to a rescission and the reimbursement of moneys paid on the contract, plus interest and taxes. The matter was referred to a circuit court commissioner, who took testimony, from which it appears that Harry Brower, agent of the Dashers and the president of Midwest Realty, Inc., apparently relied upon his assumption that the Hornbecks would take another lot and arranged with the Currier Lumber Company to furnish building materials and gave it a deed to the premises. This deed was recorded both as a deed and a mortgage.

The circuit court commissioner found that, from the date of the land contract to June 16, 1936, the Hornbecks had paid principal, interest and taxes totaling $1,713.33, and that the Currier Lumber Company had furnished building materials in the value of $1,700.29. The decree entered in the circuit court states that the amount due plaintiffs is $2,459.33, and gives the Currier Lumber Company a mortgage lien in the sum of $1,792.50. During the pendency of the cause the parties agreed that an order might be entered appointing a receiver over the property with authority to complete the house at a cost not to exceed $1,500, and with power to sell the premises at not less than $5,700. This agreement was embodied in the decree, which provided that the receiver should have power to rent, mortgage and sell the property, but that no sale should be made for less than $5,700, except upon petition to the court, and that the proceeds of the sale should be disbursed in the following order: To the receiver for his services, $100, and, in addition, such necessary expenses as might be allowed; to the receiver the amount disbursed by him in completing the building and the costs of mortgage and sale; to Currier Lumber Company, $1,792.50, with interest and costs, less any moneys realized by it from the certain other transactions therein detailed; to plaintiffs, $2,459.33, with interest and costs; and then to Midwest Realty, Inc., any balance that might be remaining.

Defendants contend that the court should have held plaintiffs to their agreement to take some other lot in exchange for lot 432.

Appellants argued that, although an oral agreement of this nature would ordinarily be void, there was such sufficient partial performance of the agreement to require the application of 3 Comp. Laws 1929, § 13415 (Stat. Ann. § 26.910), which reads:

"Nothing in this chapter contained shall be construed to abridge the powers of the court of chancery to compel the specific performance of agreements, in cases of part performance of such agreements."

Unless we can find that an oral agreement was completed, there is no need to consider the question of part performance. The testimony presented in the record does not justify the finding that the parties had completed an oral agreement to exchange real estate. Taken as a whole, the facts indicate that the transaction between the parties was not completed and, at most, their dealings were in the state of negotiation. No one claims that the alleged oral agreement was definite. We are unable to find enough testimony to show mutual promises. One asserting an oral contract in relation to land has the burden of proving it by clear and convincing evidence. Bame v. Bame, 250 Mich. 515.

Plaintiffs did not know that anyone had taken possession of their property until August 9, 1936, when they visited the premises and saw a house being erected upon their lot. They had never consented to the use of their land nor could anything in their previous conversations with Brower or his agent, Mrs. Robinson, be construed as an authorization of or acquiescence in such use. On the contrary, Mrs. Hornbeck called on Brower the following day and secured legal advice two days later and plaintiffs' bill of complaint was filed August 25th. The facts strongly contradict any claim of consent, approval or laches.

It is argued that "where one by mistake built a house on the lot of another, the owner can recover no more than the value of his lot." Appellants maintain that this view is supported byRzeppa v. Seymour, 230 Mich. 439, and Hardy v. Burroughs,251 Mich. 578. Both of these cases dealt with a situation arising out of a bona fide mistake, and equitable relief was granted. The facts in this appeal cannot support a finding that there was a bona fide mistake on the part of Brower, Midwest Construction or Midwest Realty. Brower testified on direct examination that he assumed that plaintiffs would take another lot. He said:

"It was my understanding they were going to take another lot and I had been informed by everybody that came in contact with her that she would take another lot and I naturally became worried because we had spent quite a little money. The first thing after her visit I wrote her a letter and asked her if she wouldn't pick out another lot. When I received no reply to this letter we sent out a notice of intention that declared the contract void, which was followed by a forfeiture notice which was introduced into evidence in this case. We gave one I think in the forepart of April, April 10th, in which we told them that the balance on this lot was $155.95 and if they paid this on or before April 25, 1936, we would accept that as full settlement."

Relying on this understanding and, in the absence of a definite written agreement to that effect, Midwest conveyed to Currier, thereby making delivery of a deed to plaintiffs impossible if and when their obligation under the contract had been fully performed. Midwest did more. Having failed to secure plaintiffs' agreement to exchange lots, they sent a notice of forfeiture of the land contract and thereafter accepted and retained the entire amount which was agreed upon as the balance due on the land contract. Midwest's conveyance to the Currier Lumber Company amounted to a rescission on the part of the vendors. Himebaugh v. Chalker, 261 Mich. 80. In Re Reason'sEstate, 276 Mich. 376, the court said:

"One who has contracted to sell a piece of property, whether real or personal, to another and who sells or transfers the same property to a third person while the contract still remains in force and executory, violates the contract by disabling himself from performing it and thereby gives to the other party the right to rescind it or treat it as abandoned and to recover whatever he may have given in consideration of it. 1 Black on Rescission and Cancellation, §§ 210, 211; 2 Black on Rescission and Cancellation, § 432.

"This was the rule recognized in Atkinson v. Scott, 36 Mich. 18, and cases cited therein, as well as in Weaver v. Aitcheson,65 Mich. 285, and Himebaugh v. Chalker, 261 Mich. 80."

Appellants cite Hafner v. A. J. Stuart Land Co., 246 Mich. 465, in support of their argument that the court erred in decreeing individual liability on defendants when there was no showing of the amounts received by each of them on the land contract. The original vendor, Fort Eureka Land Company, assigned the contract to Lieber Norton, Inc., a corporation, which later changed its name to Edward J. Lieber, Inc., and it in turn assigned to defendants Dasher, who assigned to Midwest Realty, Inc., who deeded to Midwest Construction, Inc. The various defendants were held jointly and severally liable for the payment of the money due plaintiffs. The record in this appeal does not contain any testimony as to the respective dates of transfer of title, beginning with Fort Eureka Land Company and ending with Midwest Construction, Inc. Although defendants might have been entitled to a determination of this phase of the case had the question been raised at the time of trial, we do not pass upon questions that were not raised in the trial court. The decree provides for the appointment of a liquidating receiver and sale of the premises. Furthermore, the trial court expressly reserved jurisdiction over matters of accounting, management, liquidation and disbursements of moneys and retained the right to make orders relating thereto.

The decree is affirmed, with costs to appellees.

WIEST, C.J., and SHARPE, POTTER, CHANDLER, NORTH, and McALLISTER, JJ., concurred. BUTZEL, J., did not sit.