Summary
holding that, although personal notice or service may be desirable, it is not required by MCL 600.3208
Summary of this case from McGuire v. Compass BankOpinion
Docket No. 135295.
Submitted November 10, 1993, at Lansing.
Decided February 8, 1994, at 9:25 A.M.
Richards DeWitt, P.C. (by David L. Richards), for the plaintiff.
Nolan Walker, P.C. (by Marguerite F. Walker, II), for Ann M. Edwards.
Plaintiff appeals as of right from an order of the Oakland Circuit Court granting summary disposition in favor of defendant Ann M. Edwards (hereinafter defendant). Plaintiff had sought a declaratory ruling that he, as a junior mortgagor, was entitled to personal notice rather than notice by publication when defendant foreclosed by advertisement her senior mortgage. We affirm.
Defendant and Charles B. Edwards were married until 1977. In their divorce judgment, defendant agreed to relinquish her interest in "Sir Charles Pub," the family business in Royal Oak. In order to secure the payment of funds that he owed as a result of the divorce, Charles executed a mortgage against the pub property, naming defendant as the mortgagee.
During the ensuing five years, defendant began several foreclosure proceedings against Charles because he was in default on the mortgage and eventually succeeded in foreclosing by advertisement and received a sheriff's deed to the property on December 21, 1984.
In the summer of 1985, Charles and his new wife, Gail, entered into negotiations with defendant to repurchase the property, and eventually a purchase agreement was executed by defendant as the seller and Charles and Gail as the purchasers. The agreement provided for a purchase price of $78,000, with a $62,000 down payment, with the balance of $16,000 to be paid within ninety days, with interest. A purchase money mortgage lien and note were executed, with Charles and Gail as the mortgagors and defendant as the mortgagee. Charles and Gail had obtained the entire $62,000 down payment from plaintiff, in return for which they executed a note and mortgage naming plaintiff as mortgagee. Both mortgages were recorded on the same date, but both parties agree that defendant's mortgage is the senior lien and plaintiff's mortgage is the junior lien. Charles continued to operate the pub until his death in 1986.
Charles and Gail failed to make any payments on the $16,000 owed to defendant. After default, but before foreclosure, defendant's attorney contacted plaintiff's attorney at that time by phone and informed him that the $16,000 payment had not been made and that a foreclosure action was being started.
Defendant, pursuant to enabling language in her mortgage, followed the procedures for foreclosure by advertisement, appeared at the foreclosure sale, and bid on the property in the amount of $16,956.56, the principal and interest due on the note. She was the only bidder and received a sheriff's deed on January 10, 1986. No redemption of the property was ever attempted.
Plaintiff filed the instant action, asserting that his mortgage remains as an encumbrance on the real estate. The trial court disagreed and granted defendant's motion for summary disposition.
Plaintiff asserts that notice of the foreclosure by publication in a newspaper and posting on the property was not adequate and proper notice reasonably calculated to apprise him, as an interested party, of the proceedings, nor did it afford him a reasonable opportunity to respond and protect his interest in the property. He also claims that because the foreclosure ultimately resulted in a sale at the circuit court with a sheriff present, and because defendant's original interest in the property arose from a circuit court action, a state action was involved and he was denied due process. We disagree.
We first note that the trial court was correct in its determination that plaintiff was not entitled to any greater notice than that required by the statute involved. Foreclosure by advertisement is controlled by statute. A mortgagee who uses this method of foreclosure must follow the statutory requirements found in MCL 600.3201; MSA 27A.3201 concerning the initial mortgage and procedural requirements, the publication and posting requirements found in MCL 600.3208; MSA 27A.3208, and the sales procedure requirements found in MCL 600.3216; MSA 27A.3216. There is no dispute that all the statutory requirements were followed by the defendant in the foreclosure underlying this action.
The constitutionality of foreclosure by advertisement has been reviewed and held valid previously by this Court in Nat'l Airport Corp v Wayne Bank, 73 Mich. App. 572, 576; 252 N.W.2d 519 (1977), by our Supreme Court in Cramer v Metropolitan Savings Loan Ass'n, 401 Mich. 252; 258 N.W.2d 20 (1977), cert den 436 U.S. 958 (1978), and by the United States Court of Appeals for the Sixth Circuit in Northrip v Federal Nat'l Mortgage Ass'n, 527 F.2d 23 (CA 6, 1975). Also, foreclosure by advertisement is not a judicial action and does not involve state action for purposes of the Due Process Clause, but rather is based on contract between the mortgagor and the mortgagee. Manufacturer's Hanover Mortgage Corp v Snell, 142 Mich. App. 548, 553; 370 N.W.2d 401 (1988); Cramer, supra at 259. As the trial court noted, "the statutes may be viewed as harsh or offensive but has [sic] remained unaltered either by legislative fiat or by judicial decision and applies equally to all who choose to involve themselves in this type of business."
We must also reject plaintiff's argument that the statute does not give sufficient notice to other parties and the mortgagee. As indicated, personal service is not required by the statute; instead, publication in a newspaper for four consecutive weeks and a posting of the foreclosure notice on the premises is all that is required. MCL 600.3208; MSA 27A.3208. Although personal notice to or service on other mortgagees (which was arguably given to plaintiff through his attorney) may be desirable, it is not required. Jennings v Arnold, 272 Mich. 599, 603; 262 N.W. 419 (1935); Robulus v American State Bank, 258 Mich. 21, 22; 241 N.W. 831 (1932). Further, a state action was not involved, because defendant's initial acquisition of the property arose from the prior domestic relations case. That judicial proceeding had nothing to do with the denial of plaintiff's interest in the property, but dealt instead with defendant's settlement of the marital estate with her former spouse.
Affirmed.