Lewis v. Hook

18 Mich. App. 405 (1969) 171 N.W.2d 221

LEWIS
v.
HOOK

Docket No. 4,526.

Michigan Court of Appeals.

Decided July 29, 1969.

Alphonse Lewis, Jr., for plaintiffs.

Hayes & Davis, for defendant.

Before: R.B. BURNS, P.J., and J.H. GILLIS and CORKIN,^[*] JJ.

CORKIN, J.

Plaintiff Lewis, as public administrator of Kent county, sold real estate owned by decedent Jones to plaintiffs, Beauregard and Barbara Stubblefield. Defendant Hook is the holder of a mortgage on the premises that was a matter of record at the time plaintiff Lewis qualified as administrator of the estate and at the time the premises were sold, but not at the time of decedent's death.

Following is a chronology of the events giving rise to this action:

October 1, 1960 Mortgage by Jones to Hook January 30, 1962 Jones died February 5, 1962 Petition by public administrator filed February 28, 1962 Mortgage recorded by Hook March 9, 1962 Public administrator appointed and qualified June 12, 1963 Petition for license to sell real estate filed November 15, 1963 License to sell real estate issued April 30, 1964 Deed to Stubblefields May 25, 1964 Order confirming deed October 27, 1964 Final account in Jones estate December 18, 1964 Final account allowed March 11, 1965 Letter to plaintiffs, Beauregard and Barbara Stubblefield on foreclosure

Plaintiff Lewis was advised on or about January 30, 1962, that decedent Jones had died leaving no known heirs and shortly thereafter was advised that Jones owned the premises in question. Sometime before February 5, 1962, plaintiff Lewis examined the records in the register of deeds office and ascertained that Jones owned the property and found no recorded and outstanding mortgage. Apparently, no subsequent title examination was made and the sale was consummated without benefit of an abstract of title.

During the course of administration, defendant filed the mortgage note as a claim against the estate and it was allowed as a fifth-class claim, no mention being made that the note was secured by a real estate mortgage. As the estate proved to be insolvent, no payment was made on fifth-class claims.

Publication on the mortgage foreclosure began May 26, 1965, and the sheriff's sale was held and deed issued September 8, 1965.

On September 7, 1965, plaintiffs filed suit to set aside the foreclosure proceedings and to have the mortgage declared void as to plaintiff Stubblefield.

It is plaintiffs' claim that defendant is not entitled to the protection of the recording act^[1] because, on Jones' death, the property passed to the state by operation of law and thus title was perfected in the state before the recording of defendant's mortgage. The plaintiffs cite no authority that would sustain this claim.

In this case, defendant's mortgage was a matter of record when plaintiff Lewis became qualified to act as administrator of the estate, when he petitioned for and obtained license to sell and when plaintiffs Stubblefield purchased the property. Thus, at all pertinent and appropriate times relating to all three plaintiffs, the mortgage was on record and a conveyance of the premises would be subject to it.

Plaintiffs also claim that defendant is estopped from enforcing the mortgage because he filed a general claim and permitted, without objection, the sale of the property.

Having found that defendant's mortgage was effectively recorded at all pertinent times, it would follow that plaintiffs had constructive notice of the incumbrance.

The Probate Code provides in part:

"Subject to the right of homestead, to the widow's right of dower when elected by her, and to all prior charges against the estate, a decedent's or ward's estate, both real and personal, is subject to the payment of his debts, but no debts except those which are secured by a lien upon the property of the decedent or ward shall be paid unless filed in the probate court and allowed by the court and secured claims not so proved shall be paid only when the probate court, upon hearing, shall determine that the property covered by such lien is worth more than the amount of the indebtedness so secured." (Emphasis supplied.) CL 1948, § 708.1 (Stat Ann 1962 Rev § 27.3178[411]).

The plain import of the statutory language is that a secured creditor does not have to file a claim against an estate except as he may wish to protect himself against a deficiency in the security. Nor do we find a provision in the Probate Code requiring the mortgagee named in a recorded mortgage to inform the fiduciary or others of his lien.

We find no merit in plaintiffs' claim that defendant's failure to assert his rights under the mortgage during administration prejudiced plaintiffs so that defendant is now estopped from forcelosure. There were no contacts between defendant and plaintiffs respecting the sale of the property nor does the record show that defendant knew of the impending sale. Add the fact that plaintiffs had constructive notice of the existence of the mortgage and we have a situation devoid of the elements of estoppel.

The hard fact of this case is that real estate was sold without properly searching the record so that a mortgage that had been of record for 26 months before the execution of the deed of conveyance went unnoticed.

The decision of the circuit court is affirmed. Costs to defendant.

All concurred.

NOTES

[*] Circuit judge, sitting on the Court of Appeals by assignment.

[1] MCLA § 565.25 (Stat Ann 1969 Cum Supp § 26.543).