Chicago Boulevard Land Co. v. Nutten

Plaintiff filed a bill to foreclose a land contract and for decree for deficiency against defendant Wesley L. Nutten. From a decree denying plaintiff a deficiency decree against defendant Nutten, plaintiff appeals. April 3, 1925, Jacob Singer and Goldie Singer his wife agreed to sell on land contract to Wesley L. Nutten for $6,000 lands in Oakland county mentioned and described in the land contract here involved. By mesne conveyances plaintiff acquired the Singers' interest and Nutten assigned his contract interest in the premises to the defendant Highland Corporation. On foreclosure plaintiff asked for decree for deficiency against Nutten and the court denied such decree upon the ground there had been a novation.

"It is a well-established rule that the necessary legal elements to establish novation are: (1) Parties capable of contracting; (2) a valid prior obligation to be displaced; (3) the consent of all parties to the substitution, based upon sufficient consideration; and (4) lastly, the extinction of the old obligation and the creation of a valid new one. All of these elements must be established by the evidence; not necessarily by direct evidence, but by evidence of such facts and circumstances as logically lead one to the conclusion that a new contract has been made." Harrington-Wiard Co. v.Blomstrom Manfg. Co., 166 Mich. 276, 286.

The agreement for a novation need not be in writing but there must be a substitution of one debtor for another or the substitution of a new obligation for an old one which is thereby extinguished. Husted v. Pogue,249 Mich. 410. The fact the assignment of the land contract by Nutten to the Highland Corporation was consented to by plaintiff does not constitute a novation: Foley v. Dwyer,122 Mich. 587, and the acceptance of payments by plaintiff from the assignee of the land contract, the Highland Corporation, does not operate to discharge the vendee from his liability under the contract. Steinberg v. Fine, 225 Mich. 281. There must have been an agreement between all the parties whereby plaintiff released the purchaser from liability under the land contract and agreed to take the assignee of such land contract as his debtor in place of the original vendee under the land contract who agreed to pay the purchase price for the premises.Fender v. Feighner, 265 Mich. 536. There must have been a release of the original debtor, the vendee under the land contract, and the substitution of a new debtor in the place thereof. Epworth Assembly v. Railway Co., 236 Mich. 565. In this case plaintiff could not have maintained a suit at law against defendant Highland Corporation. Tapert v. Schultz,252 Mich. 39; Fender v. Feighner, supra. We think under the circumstances the proof insufficient to show there was any release from liability of defendant Nutten by plaintiff or any agreement upon the part of plaintiff to look solely to the Highland Corporation for payment and satisfaction of the contract. The decree of the trial court should be reversed, with costs, and decree should be entered for plaintiff.

FEAD and WIEST, JJ., concurred with POTTER, J.