FILED JULY 30, 2012 

S T A T E O F M I C H I G A N 

SUPREME COURT 

In re RECEIVERSHIP OF 11910 SOUTH 

FRANCIS ROAD. 

NASTASSIA PRICE and ERIN DUFFYPRICE, Personal Representatives of the 

Estate of DARRYL HOUSTON PRICE, 

 Plaintiffs, 

v No. 143123 

LORI JEAN KOSMALSKI and TRADE 

DEVELOPMENT COMPANY, a/k/a 

TRADE WORLD CORPORATION, INC., 

 Defendants, 

and 

Estate of RUDAFORD R. STERRETT, JR., 

 Defendant-Appellee, 

and 

THOMAS WOODS, Receiver, 

 Appellee, 

Michigan Supreme Court

Lansing, Michigan

Opinion Chief Justice: 

Robert P. Young, Jr. 

Justices: 

Michael F. Cavanagh 

Marilyn Kelly 

Stephen J. Markman 

Diane M. Hathaway 

Mary Beth Kelly 

Brian K. Zahra 
2

and 

DART BANK, 

 Intervening Defendant- 

 Appellant. 

BEFORE THE ENTIRE BENCH 

MARY BETH KELLY, J. 

This case involves the issue of the priority of competing liens between a courtappointed receiver and the holder of a first-recorded mortgage on real property located in 

DeWitt, Michigan. The receiver, Thomas Woods, seeks to recover receivership expenses 

before the holder of the first-recorded mortgage, Dart Bank, satisfies its mortgage 

interest. In affirming the circuit court’s order placing a first-priority lien on the property 

in the amount of the receiver’s expenses, the Court of Appeals relied, in part, on this 

Court’s decisions in Bailey v Bailey1

 and Fisk v Fisk2 and its own decision in Attica 

Hydraulic Exchange v Seslar,

3

 to hold that because Dart did not object to and benefited 

from the receivership, it therefore “may be held responsible for the receivership 

expenses.”4

 We granted Dart’s application for leave to appeal to determine whether the 

common-law rule that receivership expenses are entitled to first priority is controlling, 

 

1 Bailey v Bailey, 262 Mich 215; 247 NW 160 (1933). 

2 Fisk v Fisk, 333 Mich 513; 53 NW2d 356 (1952). 

3 Attica Hydraulic Exch v Seslar, 264 Mich App 577; 691 NW2d 802 (2004). 

4 In re Receivership of 11910 South Francis Road (Price v Kosmalski), 292 Mich App 

294, 299; 806 NW2d 750 (2011). 
3

notwithstanding that the holder of a prior recorded mortgage is statutorily entitled to 

priority under MCL 600.3236, and whether a mortgagee must explicitly consent to the 

receivership before the mortgagee may be required to pay those sums associated 

therewith. 

Before Michigan became a state, English courts developed the general rule that a 

receiver is entitled to be paid for his or her services on a first-priority basis. In 1846, 

Michigan revised and consolidated its statutes. Included within the revised statutes was 

1846 RS, ch 130, § 10, which provided that the purchaser of a sheriff’s deed following a 

foreclosure by advertisement holds the same title that the mortgagor had at the time the 

mortgage was executed and that only prior subsisting liens affected the purchaser’s 

interest. In all material respects, the statute has remained unchanged since 1846 and 

currently exists as MCL 600.3236. Following adoption of the pertinent foreclosure-byadvertisement statute in 1846, this Court applied the English common-law rule in 

situations not involving foreclosure by advertisement. So far as we can discern, the 

common-law rule has never been applied in Michigan to divest the purchaser of a 

sheriff’s deed of the purchaser’s statutory right of priority. 

This case requires us to determine whether this general common-law rule 

permitting the court to give priority to a receiver should be extended to the foreclosureby-advertisement context even though application of that rule would contradict the 

priorities established by a statute that has been in existence since 1846. 

We decline to extend the common-law rule to the situation before us. Rather, we 

hold that MCL 600.3236 controls and, by its plain language, requires that any liens 

preexisting the mortgage that is the subject of the foreclosure remain in the same order of 
4

priority as they existed at the time of the mortgage’s execution. Assuming a receiver’s 

lien postdates the mortgage subject to foreclosure under MCL 600.3236, as the receiver’s 

lien does here, it is clear that the receiver’s interest under the lien will be subordinated to 

the interests of the purchaser and any prior lienholders. Further, it is clear from our 

caselaw that a mortgagee may waive its right of first-priority satisfaction of its lien. 

Thus, we also hold that a mortgagee that forecloses consistently with MCL 600.3236 may 

waive its statutory right of priority and, if that occurs, the receiver may be entitled to 

compensation before the mortgagee, but only if the mortgagee’s waiver is explicitly and 

unequivocally given. 

Because the Court of Appeals in this case failed to recognize the applicability of 

MCL 600.3236 and erroneously extended the holdings in Bailey and Fisk to support its 

conclusion that even in the absence of affirmative consent, Dart could nevertheless be 

required to pay the receiver’s costs and fees, we reverse the judgment of the Court of 

Appeals and remand this case to the circuit court for entry of an order releasing the 

escrow funds in favor of Dart. 

I. FACTS AND PROCEDURAL HISTORY 

The real property involved in this action was previously owned by Rudaford 

Sterrett, Jr., and secured by a single mortgage held by Dart, which was duly recorded on 

August 8, 2003. Upon Sterrett’s death in April 2007, the real property was bequeathed to 

Lori Jean Kosmalski. At that time, the property was valued at $350,000, and the 

mortgage balance was less than $170,000. 

In September 2007, Nastassia Price and Erin Duffy-Price instituted an action 

against Kosmalski to collect a judgment in an unrelated lawsuit. When they learned that 
5

Kosmalski had inherited the real property from Sterret, they moved for the appointment 

of a receiver to seize and sell the real property in order to satisfy all or part of the 

judgment against Kosmalski. Dart was not provided notice of Price and Duffy-Price’s 

motion for receivership. 

In April 2008, the circuit court granted Price and Duffy-Price’s request for 

receivership and appointed Thomas Woods as receiver.5

 One week later, the circuit court 

entered an amended stipulated order of appointment, which authorized the receiver to 

take immediate possession of the property and keep, manage, operate, and preserve it 

until further order of the circuit court. The powers and duties conferred on the receiver 

incident to his appointment included the authority to expend the property’s equity or 

borrow funds for the repair, maintenance, and operation of the property necessary to 

preserve the property and make it saleable. Because the property was uninhabitable, the 

receiver borrowed approximately $20,000 to finance substantial repairs. These repairs 

included cleaning the home and its grounds, repairing the heating and air conditioning 

systems, installing an alarm system, repairing the water system and pool area, and 

installing a fence. 

Approximately one month before the receiver’s appointment, Kosmalski had 

defaulted on the mortgage, and Dart initiated foreclosure proceedings by advertisement in 

 

5

 On April 18, 2008, Dart’s former counsel, Jon Jenkins, acknowledged by facsimile his 

receipt of the circuit court’s April 10, 2008, receivership order. However, in an affidavit 

dated May 20, 2009, Jenkins asserted that it was not until after initiation of the 

foreclosure process that Dart learned of the receivership order. 
6

mid-April 2008.6

 At the June 5, 2008, sheriff’s sale, Dart—the sole bidder—purchased 

the property for $169,312.50, which was the balance due on its mortgage, and obtained a 

sheriff’s deed to the property subject to a one-year redemption period.7

 On May 18, 

2009, the receiver moved to void the sale, arguing that Dart had violated the court’s 

receivership order, which prohibited any interference with the receiver’s possession and 

management of the property. Dart subsequently intervened in opposition to this motion, 

asserting that Dart had validly initiated foreclosure proceedings and that, during the 

pendency of the redemption period, it had not interfered with the receiver’s possession of 

the property. The circuit court denied the receiver’s motion but extended the redemption 

period until August 25, 2009, to allow the receiver additional time to sell the property. 

When the receiver was unable to sell the property within the extended redemption period, 

Dart received title to the property effective August 26, 2009. 

In October 2009, the receiver filed a motion seeking to hold Dart liable for 

payment of the costs and fees incurred in the administration of the receivership. The 

receiver claimed $41,874.57 in total expenses, which reflected the costs incurred in 

repairing, maintaining, and attempting to sell the property, fees for his professional 

services, and costs for attorney fees incurred as a result of the receiver’s motions to 

enforce the receivership order. At the motion hearing, the receiver argued that because 

Dart had acquiesced in the receivership and the receiver’s expenditures, he was entitled to 

 

6

 In a letter dated May 27, 2008, the receiver acknowledged that he was aware of Dart’s 

foreclosure action and indicated that he did not intend to interfere with the process. 

7

 The property was reappraised on June 6, 2009. At that time, the value of the property 

had fallen to $245,000. 
7

reimbursement of his costs and fees from Dart. Dart responded that it could not be 

charged with the receiver’s costs and fees when it had not consented to those surcharges. 

The circuit court accepted the receiver’s argument and entered an order on 

November 5, 2009, approving the receiver’s final report and granting the receiver a lien 

on the net proceeds from the sale of the property in the amount of $41,874.57, which was 

given priority over Dart’s preexisting mortgage. The lien order further required that the 

receiver relinquish possession of the property to Dart and discharged the receiver and 

canceled his bond.8

Dart appealed as of right the circuit court’s order granting the receiver a firstpriority lien over the property, arguing that a receiver is not entitled to any greater rights 

than the original owner would have had and, therefore, the receiver took title to the 

property subject to Dart’s preexisting mortgage. The Court of Appeals affirmed and, 

citing Bailey,

9 Fisk,10 and Attica,11 held that Dart could be held responsible for the 

receivership expenses.12 Under its interpretation of these cases, the Court of Appeals 

concluded that even without explicitly consenting to the receiver’s appointment, Dart 

 

8

 Dart raised for the first time in its application for leave to appeal in this Court the 

applicability of MCR 2.622(D), which confers on the circuit court the discretion to direct 

the party who sought the appointment of the receiver to pay the receivership expenses. 

Thus, the circuit court did not consider the relevance of the court rule when it granted 

relief in favor of the receiver. 

9 Bailey, 262 Mich 215. 

10 Fisk, 333 Mich 513. 

11 Attica, 264 Mich App 577. 

12 In re Receivership, 292 Mich App 294. 
8

could nevertheless be required to pay the receiver’s costs and fees because it benefited 

from the receivership.13

We granted leave to appeal to consider, in relevant part, “whether the statutory 

right of first priority belonging to the holder of the recorded mortgage, MCL 600.3236, 

overrides the common-law rule that a receiver’s costs and fees are entitled to first 

priority” and “whether a mortgagee must affirmatively consent to the appointment of a 

receiver to be required to pay the receiver’s costs and fees . . . .”14 

II. STANDARD OF REVIEW 

Whether the circuit court had the authority to order the holder of a first-recorded 

mortgage to pay for the expenses of a receivership to which it did not explicitly consent is 

a question of law that this Court reviews de novo.15 Questions of statutory interpretation 

are also reviewed de novo.16 A circuit court’s factual findings are reviewed for clear 

error, and its legal conclusions are reviewed de novo.17

III. ANALYSIS 

 Dart asserts that it has a statutory right to first priority under MCL 600.3236 and 

that its mortgage interest cannot be made subordinate to subsequently incurred 

 

13 Id. at 299. 

14 In re Price Estate (Price v Kosmalski), 490 Mich 902 (2011). Because these issues are 

dispositive to the resolution of this appeal, it is unnecessary to address the third issue in 

our order granting leave. 

15 Attica, 264 Mich App at 588. 

16 People v Osantowski, 481 Mich 103, 107; 748 NW2d 799 (2008). 

17 Hendee v Putnam Twp, 486 Mich 556, 566; 786 NW2d 521 (2010). 
9

receivership expenses. The receiver, on the other hand, argues that a common-law rule 

grants a receiver’s expenses first priority, despite the existence of any preexisting liens on 

the property. Resolution of this dispute first requires an understanding of the commonlaw principles that have developed on the issue of the priority of payment of receivers’ 

liens. 

A. THE COMMON LAW 

It is well established that our common law is descended from England,18 and, 

consequently, the law of receiverships in Michigan is generally adopted from English 

common law. As far back as 1759, the English Court of Chancery recognized that the 

“master is to allow [a receiver] a reasonable salary for his care and pains therein.”19 In 

the event that a competing property interest existed, as in the present case, the English 

Court of Chancery and the Court of Common Pleas consistently held that a receiver was 

entitled to this “reasonable salary” for the receiver’s services and expenditures on a firstpriority basis regardless of which party ultimately prevailed or was held liable to pay for 

the receiver’s services and expenditures.20 

 

18 In re Lamphere, 61 Mich 105, 108; 27 NW 882 (1886). 

19 Carlisle v Lord Berkley, 27 Eng Rep 390; Ambler’s Rep 599 (Ch, 1759). 

20 See Malcolm v O’Callaghan, 40 Eng Rep 844; 3 Myl & Cr 52; SC 1 Jur (OS) 838 (Ch, 

1837) (holding that a receiver is entitled to have out of the funds collected or realized by 

him his costs and fees properly incurred in the discharge of his duties as receiver); 

Morison v Morison, 4 Myl & Cr 215 (Ch, 1838) (in a suit to administer a West Indian 

estate, a court-appointed consignee was held entitled to repayment out of the corpus of 

the estate his costs and fees, which were to be given priority over competing claims in the 

suit); Gilbert v Dyneley, 133 Eng Rep 1038; 3 Man & G 12; SC 3 Scott, NR 364; 5 Jur 

843 (1841) (holding that the receiver was entitled to deduct from the moneys received by 

him the reasonable costs and fees he incurred in the administration of the receivership 
10

We noted this common-law rule in In re Dissolution of Henry Smith Floral Co21

when we held that “the compensation of the receiver and his counsel are part of court 

administrative costs and entitled to priority over receiver’s certificates constitut[ing] a 

first lien on [the] assets.”22 The Court reasoned: 

The compensation of a receiver and his attorneys is out of funds or 

property in custodia legis, and no lien, authorized by the court, on the funds 

or property has priority of such court administrative costs. The lien, 

granted holders of the receiver’s certificates, was not superior to such 

administrative costs. Administrative costs are not at all of the nature of a 

lien, and a first lien on assets has no priority of such court costs and 

expenses.

[23] 

One year later in Detroit Trust Co v Detroit City Service Co,

24 we likewise applied 

this general common-law rule when we held that the receivers were entitled to deduct 

their fees and expenses from profits earned in the operation of the business held in 

receivership, proceeds from the sale of the equity of redemption, and proceeds from the 

sale of unmortgaged property before those funds were distributed as dividends to 

 

before applying those, in whole or in part, in satisfaction of the outstanding mortgage 

interest). 

21 In re Dissolution of Henry Smith Floral Co, 260 Mich 299, 301-302, 306; 244 NW 480 

(1932). 

22 Id. at 302-303. 

23 Id. at 302 (emphasis added). 

24 Detroit Trust Co v Detroit City Serv Co, 262 Mich 14, 51-53; 247 NW 76 (1933). 
11

creditors.25 And later, in In re Rite-Way Tool & Mfg Co,

26 wherein this Court addressed 

whether the liquidation proceeds of personal property held in receivership should be 

applied toward property taxes assessed on the receivership property before satisfying the 

preexisting mortgage indebtedness, this Court similarly held that receiver’s costs were 

entitled to first priority. We stated: 

[T]he receiver should first apply funds received from liquidation of 

the receivership assets (including the chattel mortgaged property) in 

payment of the costs of administration of the receivership, including taxes 

herein involved, and the fees of the receiver and his attorney as fixed by the 

court; and thereafter in the following order apply receivership funds in his 

hands in payment of (2) the chattel mortgages; (3) claims of general 

creditors; and (4) the balance of such funds, if any, to the partners.[27]

Henry Smith, Detroit Trust Co, and Rite-Way Tool, therefore, applied the 

common-law rule that the receiver invokes here: that a receiver’s unpaid fees and 

compensation, which are in the nature of “administrative costs,” may be paid from the 

property or funds held in receivership before those funds are made available to prior 

creditors. None of those cases, however, involved foreclosure by advertisement. And 

while the pertinence of the common-law rule seems apparent, the Court of Appeals erred 

by failing to recognize that a provision of the foreclosure-by-advertisement statute, MCL 

 

25 See id. at 51 (directing the trial court to “estimate[] and deduct[] . . . the further 

expenses of the receivership . . . that must be paid from such profits before they become 

available for dividend purposes”) (emphasis added), and id. at 52 (“In determining the 

amount of the dividends to be paid, a fair sum should be estimated and deducted for fees 

of the receiver, attorneys, and for all other lawful charges.”) (emphasis added). 

26 In re Rite-Way Tool & Mfg Co, 333 Mich 551; 53 NW2d 373 (1952). 

27 Id. at 558-559 (emphasis added). 
12

600.3236, is directly applicable to this matter and that no Michigan case has applied the 

common-law rule in this context.28

B. STATUTORY RIGHT OF PRIORITY 

Notwithstanding the receiver’s contrary assertion, the plain language of MCL 

600.3236 creates a statutory right of priority.29 When interpreting a statute, our primary 

goal is to ascertain and give effect to the Legislature’s intent.30 The best indicator of that 

intent is the language used.31 When construing statutory language, we must read the 

statute as a whole and in its grammatical context, giving each and every word its plain 

and ordinary meaning unless otherwise defined.32 If statutory language is clear and 

 

28 The issue whether the rule from these cases continues to apply outside of the context 

presented in this case is not before us, and we leave resolution of that question for 

another day. Further, we do not speculate whether, absent the statute, the receiver in this 

case would have been entitled to superior priority over Dart as the mortgagee because, 

assuming that the general common-law rule would have applied in those circumstances, it 

is not ascertainable from what source the receiver’s compensation would have been 

payable given the function of MCR 2.622(D). See note 8 of this opinion. 

29 The first version of this statute was enacted in 1844 and subsequently included in the 

1846 revision and consolidation of the statutes, nearly 10 years after Michigan became a 

state. See 1846 RS, ch 130, § 10 and 1844 PA 40, § 6 (establishing that the purchaser of 

a sheriff’s deed acquires the interest held by the mortgagor at the time the mortgage was 

executed). The provision underwent several minor amendments and was included in 

subsequent compilations before it was reenacted in 1961 as MCL 600.3236 (effective 

January 1, 1963), in the Revised Judicature Act (RJA), MCL 600.101 et seq. In all 

material respects, however, the statute has remained unchanged since 1846. 

30 Wickens v Oakwood Healthcare Sys, 465 Mich 53, 60; 631 NW2d 686 (2001). 

31 Id. 

32 MCL 8.3a; Veenstra v Washtenaw Country Club, 466 Mich 155, 160; 645 NW2d 643 

(2002). 
13

unambiguous, then judicial construction is neither required nor permitted, and the statute 

must be applied as written.33

MCL 600.3236 describes the legal effect of a sheriff’s deed obtained at a 

foreclosure sale upon the expiration of the applicable redemption period.34 The statute 

provides in full: 

Unless the premises described in such deed shall be redeemed within 

the time limited for such redemption as hereinafter provided, such deed 

shall thereupon become operative, and shall vest in the grantee therein 

named, his heirs or assigns, all the right, title, and interest which the 

mortgagor had at the time of the execution of the mortgage, or at any time 

thereafter, except as to any parcel or parcels which may have been 

redeemed and canceled, as hereinafter provided; and the record thereof 

shall thereafter, for all purposes be deemed a valid record of said deed 

without being re-recorded, but no person having any valid subsisting lien 

upon the mortgaged premises, or any part thereof, created before the lien 

of such mortgage took effect, shall be prejudiced by any such sale, nor shall 

his rights or interests be in any way affected thereby.

[35] 

The first clause under this provision describes the legal effect and operation of a 

deed upon the mortgagor’s failure to exercise its statutory right of redemption following 

foreclosure. The first clause of MCL 600.3236 makes plain that if property is not 

redeemed within the applicable statutory window, then the deed becomes “operative,” 

 

33 Sun Valley Foods Co v Ward, 460 Mich 230, 236; 596 NW2d 119 (1999). 

34 If a mortgagor defaults on a mortgage containing a power of sale, like Dart’s mortgage 

here, the property may be foreclosed on and sold at a sheriff’s sale. See MCL 600.3201 

through 600.3224. Upon that sale, the purchaser acquires a sheriff’s deed, which only 

becomes effective if the mortgagor does not exercise his or her right of redemption within 

the applicable statutory window. See MCL 600.3228; MCL 600.3232; MCL 

600.3240(1). 

35 Emphasis added. 
14

vesting in the grantee “all the right, title, and interest which the mortgagor had at the time 

of the execution of the mortgage . . . .” This clause refers to those rights that existed at 

the time that the mortgage subject to foreclosure was executed. The grantee thus 

succeeds to the same rights—no greater and no fewer—as those held by the mortgagor 

when the mortgage was executed. By logical implication, this first clause renders 

absolute the mortgagee’s title to the property it purchased in a foreclosure proceeding, 

extinguishing any “right, title, and interest” created subsequent to the creation of the 

mortgage being foreclosed upon, which includes liens created after the execution of the 

mortgage.36 

The last clause of MCL 600.3236, which is central to the legal question in this 

case, makes plain, however, that any interests preexisting the execution of the subject 

mortgage will not be prejudiced by a foreclosure sale. Specifically, the pertinent 

language of this clause provides that “no person having any valid subsisting lien upon the 

 

36 At oral argument, the receiver argued that the pertinent statutory language in this first 

clause is the phrase “or at any time thereafter,” which, according to the receiver, allows a 

court to subordinate a senior mortgage to a junior lien. Specifically, the receiver asserts 

that because Sterrett “has incurred a liability by virtue of the appointment of a receiver, 

and that affected his immediate title and therefore that’s the same title that the bank has 

inherited.” That interpretation cannot be reconciled with the plain text of MCL 600.3236. 

The phrase “or at any time thereafter” clearly refers to the mortgagor’s positive title in 

the property. Thus, the phrase “or at any time thereafter” cannot be interpreted to mean 

that a subsequently imposed lien takes priority over the mortgagee’s interest because that 

would nullify MCL 600.3236. Indeed, if the receiver’s interpretation were accurate, then 

the last phrase of MCL 600.3236, which establishes the principle that only liens imposed 

before execution of the mortgage at issue are not prejudiced by foreclosure, would be 

contradictory. Further, the receiver’s interpretation poses a practical dilemma to the 

extent that Sterrett’s interest could never have been subject to the receivership lien given 

that he died 21⁄2 years before its imposition. 
15

mortgaged premises . . . created before the lien of such mortgage took effect, shall be 

prejudiced by any such sale, nor shall his rights or interests be in any way affected 

thereby.” Although the statute does not define “valid subsisting lien,” the next phrase 

qualifies that term to mean a lien “created before . . . such mortgage took effect . . . .”37 

The provision then mandates that such liens “shall” not be “prejudiced” or “in any way 

affected” by the foreclosure sale. The clear import of this language is that those 

lienholders whose interests preexisted the mortgage’s execution will have the exact same 

rights following foreclosure as those previously held at the time the mortgage was 

executed. It follows that the order of priority at the time of the mortgage’s execution 

must be maintained after a foreclosure sale.38 

 

37 According to its plain language, MCL 600.3236 necessarily limits a “valid subsisting 

lien” to one that was created before the mortgage took effect because “subsist” means “to 

have existence[.]” Webster’s Third New International Dictionary, Unabridged Edition

(1965). To allow a lien that did not exist at the time the mortgage was executed to 

prejudice the purchaser’s title would result in judicial subrogation, wherein the party with 

the statutory right of priority is displaced by the party favored by the court. When the 

Legislature has prescribed the order of priority, our courts may not vary it by resort to 

equity. Cf. Stokes v Millen Roofing Co, 466 Mich 660, 673; 649 NW2d 371 (2002) 

(holding that an unlicensed builder could not “have equitable relief because any such 

relief would allow equity to be used to defeat the statutory ban on an unlicensed 

contractor seeking compensation for residential construction”). This is particularly so 

here, given that this Court has provided a means to ensure that a receiver’s expenses are 

paid by the party seeking to establish a receivership. See MCR 2.622(D). 

38 Michigan is a recording-priority jurisdiction and, thus, a recorded mortgage lien is held 

superior to any lien subsequently recorded. This rule, generally referred to as “first in 

time, first in right,” is subject to several statutory exceptions that grant certain liens first 

priority no matter their time of creation. See MCL 324.20138(2) (environmental 

remediation costs), MCL 211.40 (real estate taxes), and MCL 570.1119(3) (construction 

liens). However, there is no statutory exception for receivership expenses. 
16

When read as a whole, then, MCL 600.3236 requires that any interests in property 

created after the mortgage subject to foreclosure was executed will be extinguished upon 

expiration of the redemption period after a sheriff’s sale; however, any interests 

preexisting the mortgage’s execution will not be affected by “any such sale,” and the 

grantee under a sheriff’s deed will take the property subject to those preexisting interests. 

Accordingly, we hold that MCL 600.3236, by its plain language, requires that after a 

sheriff’s sale and expiration of the redemption period, any lien preexisting the mortgage 

that was the subject of the foreclosure sale remains in the same order of priority as at the 

time of that mortgage’s execution. 

 Because Dart foreclosed on the property by advertisement, MCL 600.3236 

applies, and its application makes clear that Dart’s first-recorded mortgage has first 

priority, given that no other liens existed when the mortgage was executed. By operation 

of MCL 600.3236, any liens created after the execution of Dart’s mortgage in 2003, 

which includes the receiver’s lien created by order of the circuit court in 2009, could not 

prejudice Dart’s priority interest.39 The receiver argues, however, that the common-law 

 

39 This statutory priority rule is actually in accord with Michigan common-law priority 

rules established in related areas of law involving judicially created receiverships. Cf. 

Gray v Lincoln Housing Trust, 229 Mich 441; 201 NW 489 (1924), in which a receiver 

was appointed to manage the affairs of the failing trust, which held as an asset the 

plaintiff’s mortgage. When the trust breached a related agreement with the plaintiff, the 

plaintiff filed suit against the trust to cancel the mortgage, and the receiver, who had been 

appointed after the plaintiff initiated suit, intervened to recover his compensation. The 

Court ruled in favor of the plaintiff, reasoning that “‘the relative rank of claims and the 

standing of liens remain unaffected by the receivership.’” Id. at 447, quoting 23 Ruling 

Case Law, § 118, p 108. The Court further stated: 

We think it must be taken as the settled law in this jurisdiction that 

the receiver does not take title as a bona fide purchaser but takes the assets 
17

rule controls and grants his lien first priority over Dart’s preexisting mortgage. We 

disagree with the receiver’s argument because, while the general common-law rule 

pertaining to receivership priority has certainly been recognized throughout our 

jurisprudence, the caselaw on which the receiver relies demonstrates that this rule has not 

been applied in the foreclosure-by-advertisement context. Indeed, we are aware of no 

Michigan case that imposed the common-law rule as adopted from England so as to 

divest the purchaser of a sheriff’s deed of his or her statutory right of priority pursuant to 

MCL 600.3236. To apply the common-law rule despite the imperative of the plain 

statutory language, providing the holder of a prior recorded mortgage with a right of 

priority over all subsequently created interests in the property, would impermissibly shift 

a receivership lien that is created subsequent to the time at which the mortgage subject to 

 

subject to the equities existing between the parties. His title and right can 

be no greater than the one for whose assets he is receiver and in whose 

shoes he stands. [Gray, 229 Mich at 446.] 

The rule articulated in Gray has been relied on in other cases. See Uhl v Wexford Co, 

275 Mich 712, 715; 267 NW 775 (1936) (holding that a validly appointed receiver takes 

the assets of the property subject to those interests that existed between the parties at the 

time of his or her appointment); Franklin Co v Buhl Land Co, 264 Mich 531, 535; 250 

NW 299 (1933) (holding that because the plaintiff’s receiver was appointed after the 

commencement of the suit, the defendant’s setoff of its judgment against the plaintiff did 

not lead to a preference over other creditors because a receiver takes the assets subject to 

equities existing between the parties at the time of his or her appointment); and Stram v 

Jackson, 248 Mich 171, 176; 226 NW 888 (1929) (holding that the purchaser of 

mortgaged property stands in the shoes of the mortgagor and can urge no defense to the 

mortgage not open to mortgagor); see also Rickman v Rickman, 180 Mich 224, 248, 250; 

146 NW 609 (1914) (holding that a plaintiff who brings suit before the filing of a bill of 

dissolution of a firm acquired priority over other creditors, including the receiver, who 

takes only the rights of the firm and is affected by all claims, liens, and equities which 

would prevail against the firm).
18

foreclosure took effect to the first-priority position. Because application of the commonlaw rule would irreconcilably conflict with application of MCL 600.3236, we decline to 

extend the common-law rule to circumstances like those presented here, in which MCL 

600.3236 specifically controls the order of priority of preexisting competing liens, 

including receivership liens, after a foreclosure by advertisement.40

C. CONSENT 

Relying on Bailey41 and Fisk,

42 the receiver, like the Court of Appeals, 

nevertheless insists that he is entitled to prior satisfaction of his costs and fees, even 

without Dart’s explicit consent, on the basis that Dart acquiesced in the receivership. 

However, the receiver’s assertion is wholly unsupported by our jurisprudence. In Bailey, 

this Court held that when a mortgagee consents to the appointment of a receiver as well 

as to the reordering of the priorities, the mortgagee may be charged with payment of the 

receiver’s costs and fees. Likewise, in Fisk, the Court held that when a party agreed by 

stipulation to the appointment of certain receivers, that party was precluded from 

challenging payment of a receiver’s compensation. Thus, both Bailey and Fisk are 

distinguishable from the facts of this case, given that it is undisputed that Dart did not 

explicitly consent to either the appointment of a receiver or to the reordering of the 

 

40 See Pulver v Dundee Cement Co, 445 Mich 68, 75 n 8; 515 NW2d 728 (1994) (holding 

that if there “if there is a conflict between the common law and a statutory provision, the 

common law must yield”). 

41 Bailey, 262 Mich 215. 

42 Fisk, 333 Mich 513. 
19

priorities.43 Certainly, a party can waive its statutory rights.44 No legal authority, 

however, justifies the extension of the rule articulated in Bailey and Fisk to circumstances 

like the present, in which the mortgagee failed to object to, or merely acquiesced in, the 

receiver’s appointment, and the Court of Appeals erred by holding to the contrary.45 

 

43 Though Justice CAVANAGH does not disagree with our conclusion that Bailey and Fisk 

are more akin to our waiver jurisprudence and do not create a common-law rule that 

permits the mortgagee’s priority to be subordinated without the mortgagee’s explicit 

consent to the receivership, he curiously extends the holdings in those cases to conclude 

that acquiescence is sufficient to effect a waiver. However, the resolution reached in 

Bailey and Fisk appears to have been prompted by the Court’s interest in preventing the 

mortgagee from actually agreeing that the receiver incur costs only to subsequently deny 

responsibility for payment of those costs. Again, as we note later in this opinion, all the 

confusion about who should bear the cost of the receiver’s expenses is entirely avoided 

by use of MCR 2.622(D), and we advise courts to consider using this court rule in the 

future when the appointment of receivers is contemplated. 

44 “As defined by this Court, ‘waiver’ connotes an intentional abandonment of a known 

right.” Roberts v Mecosta Co Gen Hosp, 466 Mich 57, 64 n 4; 642 NW2d 663 (2002), 

citing People v Carines, 460 Mich 750, 762 n 7; 597 NW2d 130 (1999). Conversely, “a 

‘forfeiture’ is the failure to assert a right in a timely fashion.” Roberts, 466 Mich at 69, 

citing Carines.

45 Our waiver jurisprudence generally does not recognize mere acquiescence as a means 

to waive a known right. See Quality Prod & Concepts Co v Nagel Precision, Inc, 469 

Mich 362, 365; 666 NW2d 251 (2003) (holding that “[m]ere knowing silence generally 

cannot constitute waiver”). Even Justice CAVANAGH’s creative interpretation of Bailey

and Fisk does not support this proposition. Justice CAVANAGH interprets Bailey as 

supporting his assertion that “waiver may also occur by way of acquiescence.” Post at 2. 

However, that “[t]he mortgagees dealt with the receiver promptly and in an effort to save 

loss to themselves by keeping the hotel a going concern, and receivership was used in an 

attempt to effect sale of the property” and that the mortgagees “availed themselves of any 

possible advantage of the receivership” was not the Court’s pronouncement that 

acquiescence is sufficient to constitute waiver, but simply a corollary of the Court’s 

recognition that the “bill [of receivership costs] was filed by consent.” Bailey, 262 Mich 

at 219 (emphasis added). Justice CAVANAGH’s reliance on Bailey for his acquiescence 

argument is unsustainable. Justice CAVANAGH’s similar interpretation of Fisk is likewise 

unsustainable for reasons we explain later in this opinion. 
20

 Nor is there any legal authority supporting the Court of Appeals’ conclusion that a 

party merely benefiting from a receivership may be liable for the receiver’s costs and 

fees. Neither Bailey nor Fisk supports that conclusion. In both Bailey and Fisk, it was 

the fact that the parties had expressly consented to the receivership that justified the 

Court’s reordering of the priorities and imposition of the receiver’s fees, respectively. 

Further, the Court of Appeals’ reliance on Attica was misplaced because Attica

erroneously characterized Fisk as unequivocally holding “that the party who benefited 

from the receivership is responsible for the receivership expenses . . . .”46 Rather, Fisk

held that the general rule is that a receiver’s fees should be taken from the property in the 

receivership. In this case, however, in which the property is insufficient to satisfy the 

mortgagee’s superior lien and the receiver’s fees, this general rule cannot be applied. 

 

Moreover, the additional caselaw cited by Justice CAVANAGH in support of his 

contention that this Court has recognized waiver based on acquiescence is distinguishable 

from the present matter. See Bloomfield Estates Improvement Ass’n, Inc v City of 

Birmingham, 479 Mich 206, 219, 223; 737 NW2d 670 (2007) (holding that a party is not 

precluded from enforcing a deed restriction despite the party’s failure to contest a prior 

violation as long as the prior violation was of a “less serious character” than the 

subsequent one when a contrary rule would “create increasing chaos in the enforcement 

of deed restrictions”); Sampeer v Boschma, 369 Mich 261, 263, 266; 119 NW2d 607 

(1963) (holding that the defendants had waived strict compliance with a procedural rule 

requiring the court to file and serve on both parties a pretrial statement when defense 

counsel had knowledge of the procedural irregularity and to which no objection was 

made at the time); and Smith v First United Presbyterian Church, 333 Mich 1, 11; 52 

NW2d 568 (1952) (holding that by “vigilant[ly]” maintaining the single-residential 

character of subdivision property in accordance with the general subdivision plan, the 

purchaser “acquiesced in the general plan . . . and waived any right she or her grantees 

would have to act outside of it”). Those same policy concerns, factual circumstances, 

and affirmative conduct by the party deemed to have waived a known right are clearly 

not at issue in the present matter. These cases, therefore, fail to demonstrate Dart’s 

intentional relinquishment of its statutory right of first priority. 

46 Attica, 264 Mich App at 592. 
21

Indeed, the mere receipt of a benefit because of the receiver’s actions does not justify 

disregarding MCL 600.3236. Rather, when MCL 600.3236 is applicable, a receiver’s 

expenses will generally not be entitled to first priority; only when the mortgagee has 

unequivocally waived this statutory right of first priority will the receiver be entitled to 

prior satisfaction of his or her expenses consistently with the common-law rule. For 

these reasons, it was improper for the Court of Appeals to rely on Bailey, Fisk, and Attica

as its bases for requiring Dart to pay the receiver’s costs and fees.47 

IV. APPLICATION 

Application of the statute to the facts of this case mandates that Dart, as the holder 

of a first-recorded mortgage, be entitled to satisfaction of its mortgage interest from the 

proceeds of the foreclosure sale on a first-priority basis. Dart’s first-recorded mortgage 

took effect on August 8, 2003. Dart validly foreclosed on its mortgage, the property was 

not redeemed within the extended redemption period, and Dart became the legal and 

equitable titleholder of the real property under the sheriff’s deed on August 26, 2009. 

 

47 The receiver also relies on this Court’s decision in In re Petition of Chaffee, 262 Mich 

291; 247 NW 186 (1933), for the proposition that because Dart did not move for leave to 

proceed independently of the receiver, it was precluded from interfering with the 

receivership. Chaffee, however, is inapplicable because that case involved the validity of 

a foreclosure sale, not the competing priority of a receiver’s lien and a preexisting 

mortgage. Further, to the extent the receiver attempts to attack the validity of the 

foreclosure proceedings, we note that Chafee is plainly distinguishable. In that case, we 

affirmed a circuit court’s decision to void a foreclosure sale when the mortgagee 

proceeded with foreclosure proceedings without the court’s permission. In this case, the 

receiver indicated before the foreclosure sale that he did not intend to interfere with 

Dart’s foreclosure. Moreover, when the receiver did move to void the foreclosure sale, 

nearly a year after the sale had taken place, the circuit court merely extended the 

redemption period. The receiver has not appealed that decision and, therefore, the 

validity of the foreclosure proceeding is not before this Court. 
22

The receivership lien was subsequently created on November 5, 2009, by order of the 

circuit court. Because a purchaser of a sheriff’s deed takes the property with only those 

liens that existed at the time the mortgage took effect, and there was no receivership lien 

when Dart’s mortgage took effect in 2003, Dart’s first-recorded mortgage has a statutory 

right of priority under MCL 600.3236 over all other subsequent liens. Moreover, because 

Dart did not explicitly waive its statutory right of priority, the rule articulated in Bailey 

and Fisk is inapplicable and the receiver is precluded from recovering the receivership 

expenses from Dart. 

Further, although the receiver’s lien in this case could not prejudice Dart’s priority 

interest, we acknowledge the need for guidance with regard to priority and payment of 

receivers’ liens. Circuit courts appointing receivers should be cognizant of MCR 

2.622(D), which permits a circuit court, “on application of the receiver,” to set the 

compensation of the receiver, and to require the party requesting the receivership to bear 

the costs associated with it. But regardless of whether a circuit court chooses to exercise 

its discretion under the court rule, the circuit court, at the time it appoints a receiver, 

should nevertheless make provision for the payment of receivership expenses and should 

be aware of the order of priority of any competing interests and other relevant collateral 

issues that could affect a receiver’s compensation. This is particularly important in the 

context of foreclosure by advertisement, when, as in the present case, a receiver’s lien 

may be extinguished by operation of MCL 600.3236. Not only did the circuit court in the 

instant case fail to consider the effect of MCL 600.3236 on the receiver’s lien, it also 

failed to consider the court rule. By application of MCR 2.622(D), the receiver might 

nonetheless have received compensation for the expenses incurred in his administration 
23

of the receivership despite the order of priorities, potentially avoiding a situation like that 

here. That is, had the circuit court exercised its discretion under the court rule, Price and 

Duffy-Price, as the parties requesting the receivership, might have been liable for 

payment of the receivership expenses out of their own funds and the receiver might not 

have been deprived of any compensation.48

V. CONCLUSION 

Because MCL 600.3236 operates to preserve the order of priority following 

expiration of the applicable redemption period, it necessarily follows that the order of 

priority for any liens preexisting the mortgage that is the subject of the foreclosure will 

remain as it did at the time of the mortgage’s execution. Because this statutory provision 

cannot be reconciled with the common-law rule and because the common-law rule has 

never been applied to a foreclosure by advertisement under MCL 600.3236, we decline to 

extend the common-law rule in this case and, consequently, the statute controls. We 

 

48 If, for example, there had been sufficient equity in the property to satisfy both Dart’s 

preexisting mortgage interest and the receiver’s costs and fees, the proper order of 

distribution of the proceeds following the sale of the DeWitt property would have first 

required satisfaction of Dart’s prior recorded mortgage followed by payment of the 

receiver’s costs and fees. Thus, when seeking payment, a receiver looks first to the 

property itself. Fisk, 333 Mich at 516. If there are insufficient funds because, for 

example, a creditor with a superior lien is owed more than what the property is worth, 

then the receiver may petition the court pursuant to MCR 2.622(D) to order the party who 

sought the appointment of the receiver to compensate the receiver for his or her costs and 

fees. 
24

therefore reverse the judgment of the Court of Appeals imposing on Dart the costs of the 

receivership and remand this case to the circuit court for entry of an order in Dart’s favor 

consistent with this opinion. 

Mary Beth Kelly 

 Robert P. Young, Jr. 

 Stephen J. Markman 

 Brian K. Zahra 
S T A T E O F M I C H I G A N 

SUPREME COURT 

In re RECEIVERSHIP OF 11916 SOUTH 

FRANCIS ROAD. 

NASTASSIA PRICE and ERIN DUFFYPRICE, Personal Representatives of the 

Estate of DARRYL HOUSTON PRICE, 

 Plaintiffs, 

v No. 143123 

LORI JEAN KOSMALSKI and TRADE 

DEVELOPMENT COMPANY, a/k/a 

TRADE WORLD CORPORATION, INC., 

 Defendants, 

and 

Estate of RUDAFORD R. STERRETT, JR., 

 Defendant-Appellee, 

and 

THOMAS WOODS, Receiver, 

 Appellee, 

and 

DART BANK, 

 Intervening DefendantAppellant. 

CAVANAGH, J. (dissenting). 
2

I respectfully dissent from the majority’s conclusion that a mortgagee only waives 

its rights to superior priority under MCL 600.3236 if the mortgagee expressly consents to 

a receivership or the reordering of priorities. Rather, I would hold that a mortgagee may 

also waive its superior priority rights if the mortgagee acquiesces to and benefits from the 

receivership. 

In support of its conclusion that a receiver may only obtain superior priority in 

relation to a mortgagee “when the mortgagee has unequivocally waived this statutory 

right of first priority [under MCL 600.3236],” the majority cites Bailey v Bailey, 262 

Mich 215; 247 NW 160 (1933), and Fisk v Fisk, 333 Mich 513; 53 NW2d 356 (1952). 

Ante at 21. However, in my view, Bailey and Fisk provide that a waiver may also occur 

by way of acquiescence.1

In Bailey, a receiver was appointed for a hotel, which was subject to a mortgage. 

All parties involved sought to have the receiver operate the hotel during the summer of 

1931, but the receiver refused unless the mortgagees consented to his borrowing money 

and obtaining a first lien with priority over the mortgagees. The mortgagees agreed. 

 

1 Waiver by acquiescence is well known in a variety of legal situations. See, e.g., 

Bloomfield Estates Improvement Ass’n, Inc v City of Birmingham, 479 Mich 206, 214; 

737 NW2d 670 (2007) (stating that an unambiguous deed restriction is enforced as 

written “unless the restriction . . . has been waived by acquiescence”) (emphasis added); 

Sampeer v Boschma, 369 Mich 261, 265; 119 NW2d 607 (1963) (“If the action of the 

trial court was irregular, the irregularity was waived by making no objection until after 

the verdict was rendered.”) (emphasis added; quotation marks and citation omitted); and 

Smith v First United Presbyterian Church, 333 Mich 1, 11; 52 NW2d 568 (1952) 

(holding that when the purchaser of real property from a subdivider was vigilant in 

maintaining the property in accordance with the general plan, the purchaser “acquiesced

in the general plan . . . and waived any right she or her grantees would have to act outside 

of it”) (emphasis added). 
3

Subsequently, the real estate market collapsed, but the mortgagees did not seek to 

foreclose and instead cooperated with the receiver in his efforts to sell the property. No 

acceptable offers were received, however. 

In determining whether the receiver held priority over the mortgagees for his 

costs, Bailey initially focused on the fact that the mortgagees consented to the receiver’s 

superior priority: 

If the mortgagees had kept out of this matter, except perhaps in 

respect of contest of the receiver’s account, there might be force in their 

contention that they are liable for no part of the administration costs and 

expenses of the receivership. But, as stated, the bill was filed by consent. 

[Bailey, 262 Mich at 219 (emphasis added; citation omitted).] 

However, this Court also stated that even if the mortgagees had not given prior, specific 

consent to the receiver’s priority, their conduct would nevertheless have precluded them 

from seeking to obtain priority over the receiver because “[t]he mortgagees dealt with the 

receiver promptly and in an effort to save loss to themselves by keeping the hotel a going 

concern, and receivership was used in an attempt to effect sale of the property.” Id. 

Accordingly, because the mortgagees “availed themselves of any possible advantage of 

the receivership, they will not be heard to say that the property in the hands of the 

receiver is not chargeable with the receiver’s expense and administration costs, even 

though it may result practically in a corresponding loss to them.” Id. at 219-220 

(emphasis added). This was so because “[a]dministration expenses are incurred on the 

theory that they benefit the parties ultimately entitled to the property.” Id. at 220. Bailey 

was also careful to limit the scope of its holding, explaining that a court may only allow a 
4

receiver’s expenses to displace prior liens when the expenses are required to preserve the 

property and allow the property to become saleable. Id. at 221. 

Also, in Fisk this Court considered a situation in which the parties had agreed to 

the appointment of receivers over the corporation at issue while the parties settled a 

dispute regarding who owned the corporation. This Court held that, when the primary 

purpose of a receivership is to preserve and protect the property involved in a 

controversy, “it logically follows that he who ultimately establishes his right to the 

property thus held is the one who benefits from the property having been protected and 

preserved.” Fisk, 333 Mich at 516, citing Bailey, 262 Mich 215. Fisk also noted that 

both parties had agreed to the appointment of the receivers and, “by doing so, appellant in 

effect waived any complaint he might otherwise make regarding the propriety or legality 

of the appointment and its effect upon the question of who was to bear the receivership 

expenses.” Fisk, 333 Mich at 516 (citation omitted). 

In my view, Bailey and Fisk indicate that although consent by the mortgagee is 

one method by which a receiver may obtain superior priority, acquiescence by a 

mortgagee is also sufficient to grant a receiver’s expenses priority over a preexisting 

mortgage. Bailey and Fisk supported this conclusion by reasoning that the receivership is 

intended to protect and preserve the property held by the receiver and because a 

mortgagee or an eventual owner of the receivership property benefits from the receiver’s 

expenditures, it is proper to impose those expenses on the party that benefits. See Bailey, 

262 Mich at 219-220 (stating that because the mortgagees “availed themselves of any 

possible advantage of the receivership, they will not be heard to say that the property in 

the hands of the receiver is not chargeable with the receiver’s expense and administration 
5

costs, even though it may result practically in a corresponding loss to them”). Thus, in 

my view, the majority incorrectly states that acquiescence by a mortgagee with 

knowledge of the receivership is insufficient to provide the receiver superior priority. See 

ante at 19 (claiming that this interpretation would require an “extension of the rule 

articulated in Bailey and Fisk”), and ante at 18 (claiming that this interpretation is 

“wholly unsupported by our jurisprudence”). Rather, Bailey specifically supports this 

conclusion. 

Applying Bailey and Fisk to this case, I believe that, at a minimum, Dart Bank 

acquiesced to the receivership. Specifically, Dart never objected to the receiver’s actions, 

despite its knowledge of the receiver’s efforts. This Court has long recognized the 

inherent authority of a court of equity to appoint a receiver under appropriate 

circumstances, see McDonald, 351 Mich at 575-576, and Dart does not argue that the 

receivership in this case was improper. Moreover, the Court of Appeals has held that 

entities that are not parties to a receivership order but are nevertheless affected by the 

receivership order need not be served with notice under MCR 2.105(D), particularly 

when the affected entity receives actual notice of the order. In re Contempt of Cornbelt 

Beef Corp, 164 Mich App 114, 120; 416 NW2d 696 (1987), citing Davis v Davis, 137 

Mich App 291, 293; 358 NW2d 6 (1984), and Tuller v Wayne Circuit Judge, 243 Mich 

239, 243-245; 219 NW 939 (1928). Accordingly, Dart was not entitled to formal notice 

of the receivership. 

Furthermore, although Dart was not a party to the receivership order entered on 

April 10, 2008, and Dart initiated a foreclosure by advertisement on April 15, 2008— 

before it was aware of the receivership—Dart admitted that it had received actual notice 
6

of the receivership only three days later, on April 18, 2008. Moreover, the majority’s 

notation that “‘[m]ere knowing silence generally cannot constitute waiver,’” ante at 19 n 

45, quoting Quality Prods & Concepts Co v Nagel Precision Inc, 469 Mich 362, 365; 666 

NW2d 251 (2003), is irrelevant because Dart did not merely stand mute when it learned 

of the receivership. Rather, in a letter acknowledging the receivership, Dart’s attorney 

stated that it “would be willing to work with [the receiver] . . . in terms of arranging for a 

sale of the property so that this mortgage can be paid.” Also, Dart’s subsequent 

interaction with the receiver during the year between its acknowledgement of the 

receivership and the sheriff’s sale substantiates Dart’s willingness to work with the 

receiver. Additionally, during the October 14, 2009, hearing in the trial court, Dart’s 

attorney admitted that Dart “acquiesced to the fact that there was a receiver out 

there . . . .” The trial court, the receiver, and Dart agreed that the property was in terrible 

condition and, although the expenses of repairing it were high, they were necessary in 

this case. Furthermore, the receiver provided reports documenting his expenditures 

related to repairing the property in hopes of returning it to a saleable condition, and Dart 

never acted to formally challenge any specific expenditure by the receiver related to the 

property’s repair. Thus, in my view, Dart’s conduct was sufficient to establish that Dart 

had knowledge of and acquiesced to the receivership. Accordingly, in my view, Dart 

clearly engaged in “affirmative conduct” that was sufficient to show that Dart “waived a 

known right,” ante at 20 n 45, just as did the parties in Bloomfield Estates Improvement 

Ass’n, Inc v City of Birmingham, 479 Mich 206, 214; 737 NW2d 670 (2007); Sampeer v 

Boschma, 369 Mich 261, 265; 119 NW2d 607 (1963); and Smith v First United 

Presbyterian Church, 333 Mich 1, 11; 52 NW2d 568 (1952). 
7

Additionally, as mortgagee, Dart benefited from the receiver’s efforts to repair, 

preserve, and protect the property because the repairs increased the property’s value. 

Therefore, the receiver’s efforts improved Dart’s chances of recovering the full amount 

of its mortgage when the receiver sold the property. The fact that the receiver was not 

able to sell the property at a suitable price does not undercut this analysis because Bailey

held that the receiver’s costs take priority “even though it may result practically in a 

corresponding loss to [the mortgagee].” Bailey, 262 Mich at 219-220. Accordingly, as 

stated in Bailey, Dart should not “be heard to say that the property in the hands of the 

receiver is not chargeable with the receiver’s expense” when the mortgagee “availed 

[itself] of any possible advantage of the receivership . . . .” Id. at 219.

2

 

2 Bailey’s discussion of the importance of who receives the benefit of a receiver’s efforts 

is consistent with this Court’s discussion of the issue in other opinions. For example, in 

Holmes v Holmes, 265 Mich 16, 18; 251 NW 360 (1933), this Court stated that imposing 

responsibility for the receiver’s expenses on the receivership property is appropriate 

when the receiver “performed valuable services” that “were beneficial” and the parties 

had consented to the receiver’s appointment. Likewise, in Fisk, this Court stated that 

“[r]eceivers ordinarily have a right to compensation for their services and 

expenses, and such right is a strong equity, analogous to an obligation 

founded upon an implied contract, and is not dependent upon the mere 

arbitrary discretion of the court, if the appointment of the receiver was 

regular and his conduct has been free from exception. Such right of the 

receiver to compensation is a charge on the property or fund in 

receivership.” [Fisk, 333 Mich at 518 (citation omitted).] 

See, also, Cohen v Cohen, 125 Mich App 206, 215; 335 NW2d 661 (1983) (upholding a 

receiver’s fees because the fees were not “excessive” and were “reasonable in light of the 

actions the receiver was required to take in order to protect the property”), and 65 Am Jur 

2d, Receivers, § 220, p 777 (“The general rule is that the compensation of a receiver, 

where the receivership proceedings are not sought by a mortgagee, is subordinate to the 

lien of the mortgage, at least where the mortgagee receives no benefit therefrom.”) 

(emphasis added). 
8

Finally, as the ultimate owner of the property through the foreclosure process, Dart 

also benefited from the receiver’s efforts to repair, preserve, and protect the property. 

This aspect of the case falls under Fisk’s conclusion that when the primary purpose of a 

receivership is to preserve and protect the property involved in a controversy, “it logically 

follows that he who ultimately establishes his right to the property thus held is the one 

who benefits from the property having been protected and preserved.” Fisk, 333 Mich at 

516. Accordingly, because Dart, as the eventual owner of the property, benefited from 

the receiver’s efforts to repair, preserve, and protect the property in that Dart received a 

habitable, sellable property, I would require Dart to bear the cost of that benefit. 

Thus, I would affirm the judgment of the Court of Appeals because, in my view, 

Dart waived its statutory right to superior priority under MCL 600.3236 because it had 

knowledge of the receivership, acquiesced to the receivership, and benefited from the 

receiver’s efforts to repair, preserve, and protect the property. 

 Michael F. Cavanagh 

 Marilyn Kelly 

 Diane M. Hathaway