Opinion
Docket No. 84920.
Decided June 3, 1986.
Eugene A. Goreta, for plaintiff.
Thomas F. Chernot, for defendants Dasher.
Plaintiff appeals as of right from an order entered by the trial judge granting defendants' motion for summary disposition pursuant to MCR 2.116(C)(10), the court finding no genuine issue of material fact.
It appears that the defendants Dasher and Mate owned the premises in fee simple at 1374 Cleveland in Lincoln Park, Michigan, and on December 22, 1980, sold the property to plaintiff, Travis Tidwell, and defendant Marie Tidwell, who at that time were husband and wife, for the sum of $42,500 with a $7,500 cash down payment and the balance to be paid on land contract at $350 per month, including ten percent interest.
On October 9, 1981, plaintiff secured a judgment of divorce from defendant Marie Tidwell, who has failed to enter an appearance or file a brief in this matter on appeal. In the judgment of divorce, she was given the real estate free and clear of any claim on the part of the plaintiff, subject to the land contract encumbrance and any home improvement loan or loans thereon which she was to assume and agree to pay and hold the plaintiff harmless therefrom. Then the judgment provided: "It is further ordered and adjudged that the above described property should be subject to a lien in the sum of seven thousand ($7,000) dollars in favor of the plaintiff, Travis Tidwell and said lien shall be payable when the marital home is sold or within the period of ten (10) years, whichever event occurs first." According to plaintiff's brief, the divorce judgment was recorded in the Wayne County Register of Deeds office on November 26, 1981, in Liber G62321268, p 749692. Defendant Tidwell, as vendee, defaulted on the land contract and also failed to pay taxes and water bills. On November 12, 1982, she filed for bankruptcy and listed the plaintiff as a creditor in her bankruptcy schedule for the $7,000 on the property settlement, and also listed as creditors the vendors for the debt owed under the land contract. Counsel stated at oral argument and alleged in the briefs filed that the trustee of the bankruptcy estate abandoned any interest in the land contract as having an inconsequential value. On March 17, 1983, defendant Tidwell, as vendee, was discharged in bankruptcy of her debts.
On February 5, 1983, the vendee executed a quitclaim deed in lieu of foreclosure to the vendors to clear the title. Plaintiff filed the complaint which is the subject of this case to foreclose his divorce judgment lien on October 4, 1983, naming the vendors and the vendee as defendants, and the vendors filed a countercomplaint against the plaintiff for a bill to clear the cloud on the title. In February, 1985, the parties agreed that plaintiff would discharge his lien claim on the real estate so that the property could be sold, and the property was subsequently sold to a third party for $39,000 with the sum of $8,000 placed in an escrow account pending judicial determination of the rights of the parties.
After hearing oral argument on April 5, 1985, the circuit judge denied plaintiff's motion for summary disposition and granted the vendor defendants' motion for summary disposition based on no disputed issue of material fact, and also ordered that the plaintiff's complaint be dismissed.
Plaintiff on appeal alleges that the quitclaim deed from the vendee to the vendors in lieu of foreclosure does not extinguish his recorded junior judgment lien, and also alleges that her discharge in bankruptcy does not discharge the interests of the judgment lien recorded prior to the filing of the bankruptcy petition.
The defendant vendors in this case allege that the lien imposed by the divorce judgment is not enforceable against them because they were not parties to the divorce and the lien attached only to the defendant wife's equity interest in the real estate and, because her equity is zero, there is no interest to be attached by plaintiff's lien.
Summary disposition under MCR 2.116(C)(10) should not be granted if a genuine issue exists as to any material fact. The test as stated in Rizzo v Kretschmer, 389 Mich. 363, 371-373; 207 N.W.2d 316 (1973), is whether the record which might be developed, giving the benefit of reasonable doubt to the opposing party, would leave open an issue upon which reasonable minds might differ. To grant summary disposition the court must be satisfied that it would be impossible for the claim to be supported at trial because of some deficiency which cannot be overcome. See GCR 1963, 117.2(3); Jackson Dist Library v Jackson Co #1, 146 Mich. App. 392, 400; 380 N.W.2d 112 (1985).
Though the former wife of plaintiff had been discharged in bankruptcy, the law seems quite clear that a discharge in bankruptcy does not affect a lien of a mortgage, as a discharge is no bar to a subsequent foreclosure but only relieves the discharged bankrupt from personal liability on the obligation. See First State Bank v Zoss, 312 N.W.2d 127 (SD, 1981). Congress has recently amended the bankruptcy code effective October 8, 1984, to provide that a discharge no longer operates as an injunction against an act to collect, recover or offset any discharged debt from property of the debtor, whether or not the discharge is waived. A discharge therefore no longer operates to prohibit the enforcement of a lien upon property of the debtor that has not otherwise been avoided. See 9A Am Jur 2d (1985 Cum Supp), Bankruptcy, § 779, p 166. 11 U.S.C. § 524(a)(2) was amended in 1984 by Pub L 98-353, effective October 8, 1984.
Just as the vendors' interest was not discharged by bankruptcy proceedings, neither can it be found on the state of facts as existed when the matter was argued before the trial court that the lien provided in the judgment of divorce was discharged as it affected the property. See also Mary v Lewis, 399 Mich. 401, 410-412; 249 N.W.2d 102 (1976).
A question is also raised in this case as to whether the defendant vendors are on notice of the lien created by the divorce judgment. There is no question but what the vendors were aware of the plaintiff's having an interest in the premises because he was an original signatory with them and with his ex-wife to the land contract which is the subject matter of this case. Michigan law is quite clear that, when property is sold on a land contract, legal title is retained by the vendor and an equitable title or interest is obtained by the vendee. See General Electric Co v Levine, 50 Mich. App. 733, 736; 213 N.W.2d 811 (1976). Whether the vendors' accepting a quitclaim deed solely from the ex-wife in order to avoid having to foreclose on the land contract is an indication of notice is a question of fact which has not been resolved in this case. An additional question exists as to whether the vendors are on notice of any recordings in the Register of Deeds, registration of the divorce judgment having come after the signing of the land contract, and there is a question also as to whether the vendors searched the records to determine that only defendant Marie Tidwell needed to sign the quitclaim deed conveying the interest of the parties back to the vendors.
The principal issue in this case, which is not adequately dealt with by either side in the briefs, is the question as to whether there was a merger of the vendor's lien upon the quitclaim deed's being given by Marie Tidwell to the vendors and, thus, how the intervening liens are affected. The question of intention of a mortgagee or vendor is a question of fact which must be developed from evidence produced to show what that intention was at the time the acts were done, and is not something that can be summarily dealt with as was done in this case.
See Anno: Deed from mortgagor to mortgagee or from purchaser to vendor as merger of mortgage or of vendor's lien as regards intervening liens, 148 ALR 816. The Michigan cases cited in the annotation generally refer to proceedings on foreclosure of mortgage or accepting of a mortgagor's interest by the mortgagee. See French v De Bow, 38 Mich. 708 (1878); Titus v Cavalier, 276 Mich. 117; 267 N.W. 799 (1936); Bugden v Bailey, 279 Mich. 12; 271 N.W. 534 (1937). The Revised Judicature Act, 1961 PA 236, effective January 1, 1963, relating to foreclosure of mortgages and land contracts, MCL 600.3101 et seq.; MSA 27A.3101 et seq., deals equally with the authority to foreclose mortgages on real estate and land contracts.
In land contract law, the Legislature and the court cases have provided a number of remedies for vendors. It has been said that nearly a dozen remedies traditionally have been available to foreclose on land contracts. See Gruskin v Fisher, 70 Mich. App. 117, 125; 245 N.W.2d 427 (1976), rev'd on other grounds 405 Mich. 51 (1979). As a competing consideration, the plaintiff in this case as the plaintiff in the divorce action could have had a clause placed in the contract allowing him to redeem or to step into the shoes of the ex-wife vendee upon her failure to comply with terms and conditions of the land contract. We are merely suggesting that there are a number of considerations which raise questions of fact which should not have been dealt with by a summary disposition in this matter.
The vendors in this case also argue that the plaintiff's lien attached only to the vendee's equity interest in the real estate and, since there was no equity interest in the land contract in the ex-wife, there was nothing for the lien to attach to at the time of its imposition. The Michigan Supreme Court in Hooper v Van Husan, 105 Mich. 592, 597; 63 N.W. 522 (1895), indicated that the legal title remains in the vendor but is held as security for the payment of the purchase price and the vendee upon payment in full of the purchase price has a right to have a conveyance of the legal title.
Equitable title generally gives the right of possession, and thus a vendee in a land contract has more than merely an equitable title. It is accurate that a vendee can give a lien on his property only to the extent of the interest the vendee holds. See 53 CJS, Liens, § 7, p 852. In this case, the fact that a vendee may or may not have had an equity in the property at the time it was sold by the vendors after the vendee's default is of no consequence, because the vendors took a reassignment of the vendee's interest and did not pursue a foreclosure action.
Reversed and remanded for trial of the fact issues.