Title: Kim v. J.P. Morgan Chase Bank, N.A. (Opinion - Leave Granted)
Citation: N/A
Docket Number: 144690
State: Michigan
Issuer: Michigan Supreme Court
Date: December 21, 2012

KIM v JPMORGAN CHASE BANK, NA 
 
Docket No. 144690.  Argued October 10, 2012 (Calendar No. 9).  Decided December 21, 2012. 
 
 
Euihyung and In Sook Kim brought an action in the Macomb Circuit Court against 
JPMorgan Chase Bank, N.A., seeking to set aside a sheriff’s sale of their home.  Plaintiffs had 
obtained a loan from Washington Mutual Bank to refinance their home and granted Washington 
Mutual a mortgage interest in the property to secure the loan.  The federal Office of Thrift 
Management subsequently closed Washington Mutual and appointed the Federal Deposit 
Insurance Corporation (FDIC) as receiver for the bank.  Defendant acquired Washington 
Mutual’s assets, including loans and loan commitments, pursuant to a purchase and assumption 
agreement that it reached with the FDIC.  After plaintiffs defaulted on their loan payments, 
defendant foreclosed on the property by advertisement and purchased the property at the sheriff’s 
sale.  Both parties moved for summary disposition.  Plaintiffs argued in part that defendant had 
failed to comply with the statutory foreclosure-by-advertisement requirements and that as a result 
the foreclosure sale was void ab initio.  The court, Richard L. Caretti, J., granted summary 
disposition in favor of defendant, finding that because defendant had acquired plaintiffs’ 
mortgage by operation of law, defendant was not required to record the mortgage assignment 
before beginning foreclosure-by-advertisement proceedings.  The Court of Appeals, DONOFRIO, 
P.J., and STEPHENS and RONAYNE KRAUSE, JJ., reversed, concluding that because defendant was 
not the original mortgagee and had acquired the loan by assignment rather than by operation of 
law, defendant was obligated under MCL 600.3204(3) to record the assignment of plaintiffs’ 
mortgage to it before foreclosing by advertisement.  The Court of Appeals determined that 
defendant’s failure to record the assignment rendered the sheriff’s sale void ab initio.  295 Mich 
App 200 (2012).  The Supreme Court granted defendant’s application for leave to appeal.  491 
Mich 915 (2012).   
 
 
In an opinion by Justice MARILYN KELLY, joined by Justices CAVANAGH, MARKMAN, and 
HATHAWAY, the Supreme Court held: 
 
 
When a subsequent mortgagee acquires an interest in a mortgage through a voluntary 
purchase agreement with the FDIC, the mortgage has not been acquired by operation of law and 
that subsequent mortgagee must comply with the provisions of MCL 600.3204 and record the 
assignment of the mortgage before foreclosing on the mortgage by advertisement.  Any defect or 
irregularity in a foreclosure proceeding results in a foreclosure that is voidable, not void ab 
initio.   
 
 
Michigan Supreme Court 
Lansing, Michigan 
Syllabus 
 
Chief Justice: 
Robert P. Young, Jr. 
 
Justices: 
Michael F. Cavanagh 
Marilyn Kelly 
Stephen J. Markman 
Diane M. Hathaway 
Mary Beth Kelly 
Brian K. Zahra 
This syllabus constitutes no part of the opinion of the Court but has been  
prepared by the Reporter of Decisions for the convenience of the reader. 
Reporter of Decisions: 
John O. Juroszek 
 
1.  The FDIC, when acting in its capacity as conservator or receiver of failed depository 
institutions, acquires by operation of law all rights, titles, powers, and privileges of the failed 
insured depository institution and title to the books, records, and assets of any previous 
conservator or other legal custodian of such institution under 12 USC 1821(d)(2)(A).  
Accordingly, the FDIC succeeded to Washington Mutual’s assets, which included plaintiffs’ 
mortgage, by operation of law.   
 
 
2.  Under 12 USC 1821(d)(2)(G), the FDIC may dispose of a failed bank’s assets (1) by 
merging the insured depository institution with another insured depository institution or (2) by 
transferring, subject to approval by the appropriate federal banking agency, any asset or liability 
of the institution to another depository institution.  A transfer occurs by operation of law when it 
takes place unintentionally, involuntarily, or through no affirmative action on the part of the 
transferee.  The transfer of Washington Mutual’s assets from the FDIC to defendant was an 
assignment and did not take place by operation of law because defendant acquired Washington 
Mutual’s assets in a voluntary transaction pursuant to 12 USC 1821(d)(2)(G)(i)(II).  The FDIC 
chose to transfer Washington Mutual’s assets through the voluntary purchase agreement, not by a 
merger, which would have effectuated the transfer of assets by operation of law under 12 USC 
1821(d)(2)(G)(i)(I). 
 
 
3.  Under MCL 600.3204(3), if the party foreclosing on a mortgage by advertisement is 
not the original mortgagee, a record chain of title must exist evidencing the assignment of the 
mortgage to the party foreclosing on the mortgage before the date of sale.  Defendant failed to 
record the assignment of plaintiffs’ mortgage before foreclosing on it by advertisement.   
 
 
4.  Defects or irregularities in a foreclosure proceeding result in a foreclosure that is 
voidable, not void ab initio.  To set aside a foreclosure-by-advertisement sale on the basis of a 
failure to follow the foreclosure requirements set forth in MCL 600.3204, the party claiming a 
defect must demonstrate prejudice by showing that it would have been in a better position to 
preserve its interest in the property absent the other party’s statutory noncompliance.  Because 
defendant failed to record its interest in plaintiffs’ mortgage in compliance with MCL 600.3204 
before foreclosing on the property by advertisement, the sale was voidable, not void ab initio as 
the Court of Appeals incorrectly determined.   
 
 
Affirmed in part, reversed in part, and remanded for further proceedings.   
 
 
Justice MARKMAN, concurring, wrote separately to emphasize that the dissent did not 
provide an affirmative definition of “operation of law,” did not explain the legal significance of 
its observation that the transaction at issue was “specialized,” and did not support its contention 
that the FDIC’s characterization of the transfer should be accorded respectful consideration in 
light of the fact that this case concerned only Michigan law and that the affidavit submitted was 
not a product of the standard rulemaking process.  Justice MARKMAN would also have offered 
additional guidance to the trial court concerning the nature of the prejudice that plaintiffs must 
demonstrate in order to set aside the foreclosure.  
 
 
Justice ZAHRA, joined by Chief Justice YOUNG and Justice MARY BETH KELLY, 
dissenting, would have reversed the judgment of the Court of Appeals and held that the FDIC’s 
transfer of Washington Mutual’s assets to defendant occurred by operation of law.  Under 12 
USC 1821(d)(2)(G)(i)(II), the FDIC is empowered to resolve the business of a failed bank by 
transferring any asset or liability without any assignment, or consent with respect to that transfer.  
As stated by the FDIC in an affidavit, the transfers of assets from Washington Mutual to the 
FDIC, as the receiver, and then almost immediately to defendant occurred by operation of law 
without an assignment; the transfer was not a simple sale as asserted by the majority.  The 
FDIC’s characterization of a transfer under its governing statute should be accorded respectful 
consideration.  Contrary to the majority’s conclusion, a transfer by operation of law does not 
have to be involuntary.  Such a rule ignores that other transfers, such as those that occur by 
intestacy or a joint tenancy, occur by operation of law but require acceptance by the transferee.  
The transaction between the FDIC and defendant was the legal equivalent of a merger because 
defendant received the assets and liabilities without an assignment and stepped into Washington 
Mutual’s shoes.  Because defendant acquired plaintiffs’ mortgage without assignment and by 
operation of law pursuant to the FDIC’s statutory authority, the recording requirements of MCL 
600.3204(3) did not apply.  Defendant was legally considered the original mortgagee, was not 
required to record anything in the chain of title, and properly foreclosed on plaintiffs’ mortgage 
by advertisement.   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
©2012 State of Michigan 
FILED DECEMBER 21, 2012 
 
S T A T E  O F  M I C H I G A N 
 
SUPREME COURT 
 
 
EUIHYUNG KIM and IN SOOK KIM, 
 
 
Plaintiffs-Appellees, 
 
 
v 
No. 144690 
 
JPMORGAN CHASE BANK, N.A., 
 
 
 
Defendant-Appellant. 
 
 
 
BEFORE THE ENTIRE BENCH 
 
MARILYN KELLY, J. 
At issue in this case is the manner in which defendant JPMorgan Chase Bank, 
N.A. (Chase), the successor in interest to Washington Mutual Bank (WaMu), acquired 
plaintiffs’ mortgage.  Plaintiffs’ mortgage was among the assets held by WaMu when it 
collapsed in 2008 in the largest bank failure in American history.1  Specifically, we must 
determine whether defendant acquired plaintiffs’ mortgage by “operation of law” and, if 
                                              
1 See Dash & Sorkin, Government Seizes WaMu and Sells Some Assets, NY Times, 
September 25, 2008, available at <http://www.nytimes.com/2008/09/26/business/ 
26wamu.html?pagewanted=all> (accessed December 20, 2012). 
 
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 
so, whether MCL 600.3204(3), which sets forth requirements for foreclosing by 
advertisement, applies to the acquisition of a mortgage by operation of law.  We asked 
the parties to address whether, if the foreclosure proceedings that defendant initiated were 
flawed, the subsequent foreclosure is void ab initio or merely voidable.2 
We hold that defendant did not acquire plaintiffs’ mortgage by operation of law.  
Rather, defendant acquired that mortgage through a voluntary purchase agreement.  
Accordingly, defendant was required to comply with the provisions of MCL 600.3204.  
We further hold, differently than did the Court of Appeals, that the foreclosure sale in this 
case was voidable rather than void ab initio.  Accordingly, we affirm in part and reverse 
in part the judgment of the Court of Appeals and remand the case to the trial court for 
further proceedings. 
I.  FACTUAL BACKGROUND AND PROCEDURAL HISTORY 
On July 11, 2007, plaintiffs obtained a loan from WaMu in the amount of 
$615,000 to refinance their residence.  As security for the loan, plaintiffs granted a 
mortgage on the property to WaMu, which properly recorded it later that month. 
When WaMu collapsed on September 25, 2008, the federal Office of Thrift 
Management closed the bank and appointed the Federal Deposit Insurance Corporation 
(FDIC) as receiver for its holdings.  That same day, the FDIC, acting as WaMu’s 
receiver, transferred virtually all of WaMu’s assets to defendant under authority set forth 
                                              
2 “Void ab initio” is defined as “[n]ull from the beginning, as from the first moment when 
a contract is entered into.”  Black’s Law Dictionary (9th ed).  By contrast, “voidable” is 
defined as “[v]alid until annulled; [especially], (of a contract) capable of being affirmed 
or rejected at the option of one of the parties.”  Id. 
 
 
 
3 
in the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.3  Under 12 
USC 1821, the FDIC is empowered to transfer the assets of a failed bank “without any 
approval, assignment, or consent . . . .”4  However, in this case, it did not avail itself of 
that authority.  Instead, the FDIC sold WaMu’s assets to defendant pursuant to a purchase 
and assumption (P&A) agreement. 
Plaintiffs sought a loan modification in 2009 because they were having difficulty 
making their mortgage payments.  They assert that a WaMu representative advised them 
that they were ineligible for a loan modification because they were not at least three 
months in arrears on their payments.  Plaintiffs claim that on the basis of this information, 
they deliberately allowed their mortgage to become delinquent to qualify for a loan 
modification.  They further allege that they signed documents to complete the 
modification and that their attorney assured them that their loan modification had been 
approved. 
Defendant notified plaintiffs in May 2009 that it was foreclosing on their property.  
Plaintiffs contend that they attempted to ascertain whether the foreclosure notice had 
been sent in error in light of the purported loan modification and were advised by a 
WaMu representative “not to worry.”  Defendant published the required notice of 
foreclosure in May and June 2009.  The property was sold to defendant at a sheriff’s sale 
on June 26, 2009. 
                                              
3 PL 101-73, 103 Stat 183 et seq. 
4 12 USC 1821(d)(2)(G)(i)(II). 
 
 
 
4 
Plaintiffs filed suit on November 30, 2009, seeking to set aside the sale on the 
ground that they had received a loan modification and that defendant had not bid fair 
market value for the property at the sale.  Defendant responded with a motion for 
summary disposition.  The trial court granted summary disposition to defendant.  It ruled 
that defendant had acquired plaintiffs’ mortgage by operation of law.  As a consequence, 
MCL 600.3204(3), which requires that a mortgage assignment be recorded before 
initiation of a foreclosure by advertisement, was inapplicable. 
Plaintiffs appealed, pursuing only their claim that defendant had failed to comply 
with MCL 600.3204(3) and that, as a result, the foreclosure sale was void ab initio.  The 
Court of Appeals agreed.  It held that MCL 600.3204(3) applied to defendant because 
defendant was not the original mortgagee and acquired the loan by assignment rather than 
by operation of law.5  It reasoned that the FDIC, as receiver of WaMu’s assets, had 
acquired those assets by operation of law, but not defendant, which had purchased them 
from the FDIC.6  Hence, the Court of Appeals held that defendant had a statutory 
obligation to record the assignment of plaintiffs’ mortgage to it before foreclosing by 
advertisement.7  Moreover, the Court of Appeals held that defendant’s failure to record 
the assignment rendered the sheriff’s sale void ab initio.8  Accordingly, it remanded the 
case to the trial court for entry of judgment in favor of plaintiffs. 
                                              
5 Kim v JPMorgan Chase Bank, NA, 295 Mich App 200, 207; 813 NW2d 778 (2012). 
6 Id. 
7 Id. at 208. 
8 Id. 
 
 
 
5 
Defendant filed an application for leave to appeal in this Court.  We granted its 
application.9 
II.  ANALYSIS 
A.  LEGAL BACKGROUND 
We review de novo the grant or denial of a motion for summary disposition.10  We 
use the same standard to review questions of statutory interpretation.11 
At the heart of this dispute are the statutory provisions governing the foreclosure 
of mortgages by advertisement.12  MCL 600.3204 sets forth the requirements, providing 
in relevant part: 
(1) Subject to subsection (4) [providing certain exceptions 
inapplicable to this case], a party may foreclose a mortgage by 
advertisement if all of the following circumstances exist: 
(a) A default in a condition of the mortgage has occurred, by which 
the power to sell became operative. 
(b) An action or proceeding has not been instituted, at law, to 
recover the debt secured by the mortgage or any part of the mortgage; or, if 
an action or proceeding has been instituted, the action or proceeding has 
been discontinued; or an execution on a judgment rendered in an action or 
proceeding has been returned unsatisfied, in whole or in part. 
(c) The mortgage containing the power of sale has been properly 
recorded. 
                                              
9 Kim v JPMorgan Chase Bank, NA, 491 Mich 915 (2012). 
10 Briggs Tax Serv, LLC v Detroit Pub Sch, 485 Mich 69, 75; 780 NW2d 753 (2010). 
11 Midland Cogeneration Venture Ltd Partnership v Naftaly, 489 Mich 83, 89; 803 
NW2d 674 (2011). 
12 MCL 600.3201 et seq. 
 
 
 
6 
(d) The party foreclosing the mortgage is either the owner of the 
indebtedness or of an interest in the indebtedness secured by the mortgage 
or the servicing agent of the mortgage. 
*   *   * 
(3) If the party foreclosing a mortgage by advertisement is not the 
original mortgagee, a record chain of title shall exist prior to the date of sale 
under [MCL 600.3216] evidencing the assignment of the mortgage to the 
party foreclosing the mortgage. 
Thus, as a general matter, a mortgagee cannot validly foreclose a mortgage by 
advertisement before the mortgage and all assignments of that mortgage are duly 
recorded. 
This common understanding of the requirement of recordation before foreclosure 
by advertisement was also set forth in a 2004 Attorney General opinion.  Our Attorney 
General stated that “a mortgagee cannot validly foreclose a mortgage by advertisement 
unless the mortgage and all assignments of that mortgage (except those assignments 
effected by operation of law) are entitled to be, and have been, recorded.”13  In 2004, the 
operative language now set forth in MCL 600.3204(3) was found in MCL 
600.3204(1)(c).14 
                                              
13 OAG, 2003-2004, No 7147, p 93 (January 9, 2004). 
14 MCL 600.3204, as amended by 1994 PA 397, provided, in relevant part: 
(1) A party may foreclose by advertisement if all of the following 
circumstances exist: 
*   *   * 
(c) The mortgage containing the power of sale has been properly 
recorded and, if the party foreclosing is not the original mortgagee, a record 
chain of title exists evidencing the assignment of the mortgage to the party 
foreclosing the mortgage. 
 
 
 
 
7 
The general powers of the FDIC in its capacity as conservator or receiver15 that 
are germane to this case are set forth in 12 USC 1821.  Specifically, 12 USC 1821(d)(2) 
describes the manner in which the FDIC acquires assets.  It provides, in relevant part: 
(A) Successor to institution.—The [FDIC] shall, as conservator or 
receiver, and by operation of law, succeed to— 
(i) all rights, titles, powers, and privileges of the insured depository 
institution, and of any stockholder, member, accountholder, depositor, 
officer, or director of such institution with respect to the institution and the 
assets of the institution; and 
(ii) title to the books, records, and assets of any previous conservator 
or other legal custodian of such institution. 
Subsection (d)(2) also sets forth the FDIC’s authority to dispose of a failed bank’s 
assets, providing in pertinent part: 
(G) Merger; transfer of assets and liabilities.— 
(i) In general.—The [FDIC] may, as conservator or receiver— 
(I) merge the insured depository institution with another insured 
depository institution; or 
(II) subject to clause (ii), transfer any asset or liability of the 
institution in default (including assets and liabilities associated with any 
trust business) without any approval, assignment, or consent with respect to 
such transfer. 
                                              
Subsequent amendments by 2004 PA 186 and 2009 PA 29 produced the current 
language. 
15 The Federal Deposit Insurance Act (FDIA), 12 USC 1811 et seq., governs the actions 
of the FDIC.  The FDIA directs the FDIC to operate in two separate and legally distinct 
capacities: FDIC corporate and FDIC acting as receiver.  FDIC corporate functions as an 
insurer of bank deposits.  See 12 USC 1821(a).  This function of the FDIC is not at issue 
here. 
 
 
 
8 
(ii) Approval by appropriate Federal banking agency.—No transfer 
described in clause (i)(II) may be made to another depository 
institution . . . without the approval of the appropriate Federal banking 
agency for such institution. 
B.  APPLICATION 
Against this backdrop, we consider the manner in which defendant acquired 
plaintiffs’ mortgage and whether the requirements of MCL 600.3204 apply to that 
acquisition. 
1.  DEFENDANT DID NOT ACQUIRE PLAINTIFFS’ MORTGAGE BY OPERATION 
OF LAW 
Two transfers of plaintiffs’ mortgage occurred on September 25, 2008.  The first, 
between WaMu and the FDIC, was consummated when the Office of Thrift Management 
closed WaMu and appointed the FDIC as its receiver.  This transfer took place pursuant 
to 12 USC 1821(d)(2)(A)(i) and (ii), which provide that the FDIC “shall, as conservator 
or receiver, and by operation of law, succeed to . . . all rights, titles, powers, and 
privileges of the insured depository institution . . . and title to the books, records, and 
assets of any previous conservator or other legal custodian of such institution.”  
(Emphasis added.)  Thus, when the FDIC succeeded to WaMu’s assets, which included 
plaintiffs’ mortgage, it did so by clear operation of a statutory provision—12 USC 
1821(d)(2)(A).  With respect to this transfer, the FDIC acquired plaintiffs’ mortgage by 
operation of law. 
But the FDIC only briefly possessed WaMu’s assets, including plaintiffs’ 
mortgage.  It immediately transferred those assets to defendant.   The dispositive question 
in this case is whether the second transfer of WaMu’s assets—the transfer from the FDIC 
to defendant—took place by operation of law. 
 
 
 
9 
The seminal case discussing the term “operation of law” in the context of 
foreclosures by advertisement is Miller v Clark.16  In Miller, a mortgagee died intestate.  
The Court considered whether the guardian of his heirs was obliged to record an 
assignment of the mortgage before foreclosing on it by advertisement.  The Court held: 
The authority to foreclose such mortgages by advertisement is purely 
statutory, and all the requirements of the statute must be substantially 
complied with.  To entitle a party to foreclose in this manner it is required, 
among other things, that the mortgage containing such power of sale has 
been duly recorded; and if it shall have been assigned, that all the 
assignments thereof shall have been recorded.  And also that the notice 
shall specify the names of the mortgagor and the mortgagee, and of the 
assignee of the mortgage, if any. 
The assignments which are required to be recorded are those which 
are executed by the voluntary act of the party, and this does not apply to 
cases where the title is transferred by operation of law; the object of the 
statute being to restrict the execution of the power to the owner of the legal 
title to the instrument.[17] 
Thus, Miller contemplated that a transfer occurs by operation of law when it takes place 
involuntarily or as the result of no affirmative action on the part of the transferee. 
Miller’s interpretation of when a transfer occurs by “operation of law” is 
consistent with Black’s Law Dictionary’s definition of the expression.  Black’s defines 
“operation of law” as “[t]he means by which a right or a liability is created for a party 
regardless of the party’s actual intent.”18  Similarly, this Court has long understood the 
                                              
16 Miller v Clark, 56 Mich 337; 23 NW 35 (1885). 
17 Id. at 340-341 (emphasis added) (quotation marks omitted).  The statute governing 
foreclosures by advertisement in effect when Miller was decided in 1885, 1871 CL 6913, 
was considerably different from the current statute, MCL 600.3204. 
18 Black’s Law Dictionary (9th ed) (emphasis added). 
 
 
 
10 
expression to indicate “the manner in which a party acquires rights without any act of his 
own.”19  Accordingly, there is ample authority for the proposition that a transfer that 
takes place by operation of law occurs unintentionally, involuntarily, or through no 
affirmative act of the transferee. 
Applying this proposition, we hold that the transfer of WaMu’s assets from the 
FDIC to defendant did not take place by operation of law.  Defendant acquired WaMu’s 
assets from the FDIC in a voluntary transaction; defendant was not forced to acquire 
them.  Instead, defendant took the affirmative action of voluntarily paying for them.  Had 
defendant not willingly purchased them, it would not have come into possession of 
plaintiffs’ mortgage.  WaMu’s assets did not pass to defendant “without any act of 
[defendant’s] own”20 or “regardless of [defendant’s] actual intent.”21  Accordingly, the 
Court of Appeals correctly concluded that defendant did not acquire WaMu’s assets by 
operation of law. 
                                              
19 Merdzinski v Modderman, 263 Mich 173, 175; 248 NW 586 (1933) (emphasis added) 
(citation and quotation marks omitted); see also Union Guardian Trust Co v Emery, 292 
Mich 394, 406-407; 290 NW 841 (1940) (holding in a discussion of a constructive trust 
that, “[w]hile the term ‘constructive trust’ has been broadly defined as a trust raised by 
construction of law, or arising by operation of law, as distinguished from an express trust, 
in a more restricted sense and contradistinguished from a resulting trust it has been 
variously defined as a trust not created by any words, either expressly or impliedly 
evincing a direct intention to create a trust, but by the construction of equity in order to 
satisfy the demands of justice; one not arising by agreement or intention, but by 
operation of law”) (emphasis added). 
20 Merdzinski, 263 Mich at 175. 
21 Black’s Law Dictionary (9th ed). 
 
 
 
11 
Defendant and the dissent contend that the transfer occurred by operation of law 
because, although not a merger, the transfer was analogous to a merger and should be 
treated as one.  We find this reasoning unpersuasive.22  12 USC 1821(d)(2)(G)(i)(I) 
empowered the FDIC to merge WaMu with another financial institution such as 
defendant.  Had a merger occurred under that statutory provision, defendant would have a 
strong argument that it had merely stepped into the shoes of WaMu.  It would have had 
no need to engage in a transfer of any of WaMu’s assets.  And the transaction would have 
occurred without any voluntary or affirmative action by defendant, given that the FDIC 
may, at its discretion, merge a failed bank with another institution.  The transaction could 
have constituted a transfer by operation of law under traditional banking and corporate 
law.23 
                                              
22 We also find unpersuasive the FDIC’s characterization of the transfer as one that 
occurred by operation of law.  We have given respectful consideration to the FDIC’s 
position, but we do not resort to it for guidance in this matter due to its lack of 
persuasiveness.  In addition, the authorities cited by the dissent in support of its 
contention that the FDIC’s position should be accorded respectful consideration, post at 4 
n 10, are inapposite.  This case is concerned with Michigan law, not federal law.  The 
dispositive issue is whether defendant satisfied MCL 600.3204, which implicates whether 
the transfer from the FDIC to defendant occurred by operation of law.  Whether the 
transfer occurred by operation of law is governed by Michigan law. 
23 See, e.g., 12 USC 215a(e) (“All rights, franchises, and interests of the individual 
merging banks or banking associations in and to every type of property (real, personal, 
and mixed) and choses in action shall be transferred to and vested in the receiving 
association by virtue of such merger without any deed or other transfer.”); MCL 
450.1724(1)(b) (“When a merger takes effect, . . . the title to all real estate and other 
property and rights owned by each corporation party to the merger are vested in the 
surviving corporation without reversion or impairment.”). 
 
 
 
12 
But here, a merger did not occur.  In selling WaMu’s assets to defendant, the 
FDIC relied on a different statutory provision, 12 USC 1821(d)(2)(G)(i)(II), which allows 
the FDIC to “transfer” the assets and liabilities of failed institutions.  Hence, although the 
FDIC could have effectuated a merger in reliance on subsection (d)(2)(G)(i)(I), it 
explicitly chose not to do so.  Indeed, the FDIC submitted an affidavit to the Court that 
describes the transaction, specifically citing the subsection of the statute authorizing 
transfers, rather than the subsection authorizing mergers.24  Unlike the dissent, we will 
not conclude that a merger took place when the FDIC so clearly chose to engage in a 
different type of transaction under a different statutory provision.25 
In sum, the Court of Appeals correctly held that defendant did not acquire 
WaMu’s assets by operation of law. 
 
                                              
24 The affidavit provides, in relevant part: 
3. As authorized by . . . 12 U.S.C. § 1821(d)(2)(G)(i)(II), the FDIC, 
as receiver of Washington Mutual, may transfer any asset or liability of 
Washington Mutual without any approval, assignment, or consent with 
respect to such transfer. 
4. Pursuant to the terms and conditions of a [P&A] Agreement 
between the FDIC as receiver of Washington Mutual and [defendant] . . . 
[defendant] acquired certain of the assets, including all loans and all loan 
commitments, of Washington Mutual. 
5. As a result, on September 25, 2008, [defendant] became the owner 
of the loans and loan commitments of Washington Mutual by operation of 
law. 
25 Although the FDIC’s affidavit purports that the sale of WaMu’s assets to defendant 
was effected by operation of law, the FDIC may not by unilateral declaration make it so. 
 
 
 
13 
2.  DEFENDANT’S FAILURE TO COMPLY WITH MCL 600.3204(3) RENDERS 
THE FORECLOSURE OF PLAINTIFFS’ PROPERTY VOIDABLE 
As noted earlier, MCL 600.3204 sets forth several requirements for foreclosing a 
property by advertisement.  Subsection (3) requires a party that is not the original 
mortgagee to record the assignment of the mortgage to it before foreclosing.  Because 
defendant acquired plaintiffs’ mortgage through a voluntary transfer, and given that it 
was not the original mortgagee, it was subject to the recordation requirement of MCL 
600.3204(3).  Having made that determination, we must now decide the effect of 
defendant’s failure to comply with that provision.26 
With meager supporting analysis, the Court of Appeals concluded that defendant’s 
failure to record its mortgage interest before initiating foreclosure proceedings rendered 
the foreclosure sale void ab initio.  It cited one case in support of its holding, Davenport v 
                                              
26 Because we have held that defendant acquired plaintiffs’ mortgage through a voluntary 
transfer, we need not decide whether MCL 600.3204(3) applies to the acquisition of a 
mortgage by operation of law.  The dissent must decide this issue to support its position.  
In doing so, it acknowledges that changes have been made to the language of the 
foreclosure-by-advertisement statute during the 127 years since Miller was decided.  It 
mentions that both versions “required the recordation of mortgage assignments before 
foreclosure was permitted.”  But it overlooks the fact that the 1871 statute required the 
recordation of assignments only “if [the mortgage] shall have been assigned,” 1871 CL 
6913, whereas the current statute, MCL 600.3204(3), requires recordation if the 
foreclosing party “is not the original mortgagee.”  These are two distinct triggering 
mechanisms for recordation.  Moreover, the fact that in the 1871 statute the recordation 
requirement was triggered by assignment seems particularly significant.  “Assignment” is 
defined as “1. The transfer of rights or property.  2. The rights or property so transferred.”  
Black’s Law Dictionary (9th ed).  By contrast, as noted earlier, “operation of law” 
expresses devolution of a right absent the acts of a party, such as assignment, to obtain 
them.  Thus, the Miller Court correctly focused on the voluntariness of transfer and 
concluded that involuntary transfers by operation of law did not trigger the recording 
requirement because they did not constitute assignments.  The same conclusion cannot be 
made when construing the language of MCL 600.3204(3). 
 
 
 
14 
HSBC Bank USA.27  There, the plaintiff, who was in default on her mortgage, brought an 
action to void a foreclosure.  The defendant, who was the successor in interest of the 
initial mortgagee, had initiated the foreclosure proceeding several days before acquiring 
its interest in the mortgage.  The trial court granted summary disposition to defendant. 
The Court of Appeals reversed the trial court’s ruling.  It held that the defendant’s 
failure to comply with MCL 600.3204(1)(d), which requires that a party own some or all 
of the indebtedness before foreclosing by advertisement, rendered the foreclosure 
proceedings void ab initio.28  But it cited not a single case in support of the proposition 
that the foreclosure was void ab initio as opposed to merely voidable. 
Davenport’s holding was contrary to the established precedent of this Court.  We 
have long held that defective mortgage foreclosures are voidable.  For example, in 
Kuschinski v Equitable & Central Trust Co,29 the Court considered a foreclosure 
undertaken in violation of a restraining order.  The Court held: 
Our attention is called to a few isolated cases where under a different 
factual set-up, such sales have been held to be void.  The better rule seems 
to be that such sale is voidable and not void.  Plaintiff was not misled into 
believing that no sale had been had because of the order restraining such 
action.  He knew of the sale and, although he was warned by defendants’ 
attorneys, violated the rule that in seeking to set aside a foreclosure sale, the 
moving party must act promptly after he becomes aware of the facts upon 
which he bases his complaint.  The total lack of equity in plaintiff’s claim, 
                                              
27 Davenport v HSBC Bank USA, 275 Mich App 344; 739 NW2d 383 (2007). 
28 Id. at 347-348. 
29 Kuschinski v Equitable & Central Trust Co, 277 Mich 23; 268 NW 797 (1936). 
 
 
 
15 
his failure to pay anything on the mortgage debt and his laches preclude 
him from any relief in a court of equity.[30] 
Similarly, in Feldman v Equitable Trust Co, the Court held that a foreclosure commenced 
without first recording all assignments of the mortgage is not invalid if the defect does 
not harm the homeowner.31  This Court, the Court of Appeals, and the United States 
District Court for the Eastern District of Michigan have consistently used this 
interpretation.32  We continue to adhere to it. 
Therefore, we hold that defects or irregularities in a foreclosure proceeding result 
in a foreclosure that is voidable, not void ab initio.  Because the Court of Appeals erred 
by holding to the contrary, we reverse that portion of its decision.  We leave to the trial 
court the determination of whether, under the facts presented, the foreclosure sale of 
plaintiffs’ property is voidable.  In this regard, to set aside the foreclosure sale, plaintiffs 
must show that they were prejudiced by defendant’s failure to comply with MCL 
600.3204.  To demonstrate such prejudice, they must show that they would have been in 
                                              
30 Id. at 26-27 (emphasis added) (citations omitted). 
31 Feldman v Equitable Trust Co, 278 Mich 619, 624-625; 270 NW 809 (1937). 
32 See, e.g., Fox v Jacobs, 289 Mich 619, 624; 286 NW 854 (1939) (holding that the 
failure of a foreclosure notice to specify an assignee of the mortgage, as required by 
statute, did not render the foreclosure sale absolutely void, but only voidable); Sweet Air 
Investment, Inc v Kenney, 275 Mich App 492, 502; 739 NW2d 656 (2007) (holding that a 
defect in notice renders a foreclosure sale voidable and not void); Jackson Investment 
Corp v Pittsfield Prod, Inc, 162 Mich App 750, 756; 413 NW2d 99 (1987) (“We 
conclude that the trial court correctly held that the notice defect rendered the 
[foreclosure] sale voidable and not void.”); Worthy v World Wide Fin Servs, Inc, 347 F 
Supp 2d 502, 511 (ED Mich, 2004) (“[E]ven if Defendant failed to comply with the 
foreclosure notice statute, I would not have sufficient grounds to invalidate the 
foreclosure sale, because of a lack of prejudice.”). 
 
 
 
16 
a better position to preserve their interest in the property absent defendant’s 
noncompliance with the statute.33 
III.  RESPONSE TO THE DISSENT 
At the outset, the dissent claims that the FDIC has more familiarity with the type 
of transaction that occurred in this case than does this Court.  We do not underestimate 
the FDIC’s grasp of what is involved in the liquidation of failed banking institutions.  
However, we are more familiar with the judicial review process of interpreting statutes 
and applying them to a set of facts than is an executive agency. 
The dissent states that pursuant to 12 USC 1821(d)(2)(G)(i)(I) and (II), the FDIC 
may merge a failed bank with or transfer a failed bank’s assets to a financially healthy 
bank.  It claims that, “[u]nder either provision, the statute provides for transfers by 
operation of law.”34 This is simply false.  Neither statutory provision indicates that either 
a merger or a transfer takes place by operation of law.  The language of 12 USC 
1821(d)(2)(G) is in stark contrast with that of 12 USC 1821(d)(2)(A), which explicitly 
provides that the FDIC succeeds to various property interests by operation of law.  The 
dissent compounds its error by conflating the FDIC’s statutory authority to engage in a 
transaction involving a failed bank’s assets and liabilities with the nature of the 
transaction itself.35 
                                              
33 See, generally, Kuschinski, 277 Mich at 26-27; Sweet Air, 275 Mich App at 503; 
Jackson, 162 Mich App at 756. 
34 Post at 5. 
35 Similarly, the dissent’s focus on which of WaMu’s assets the FDIC transferred to 
defendant is irrelevant.  It is the nature of the transaction, not its contents, that informs 
 
 
 
 
17 
More problematic, however, is the dissent’s failure to analyze the issue most 
central to this case: what is meant by a transfer by “operation of law.”  The dissent states 
as an ipse dixit that “a transfer by operation of law need not be involuntary . . . .”36  It 
cites not a trace of authority for this fiat.  The dissent would also analyze whether a 
transaction took place by operation of law through the lens of the subjective intent of a 
related party.37  This cannot be.38 
By contrast, in giving meaning to the phrase “operation of law,” we have carefully 
considered decades-old precedent from this Court, as well as consulted a legal dictionary.  
We defer to these established authorities for the proposition that a transfer that takes 
place by operation of law is one that occurs unintentionally, involuntarily, or through no 
affirmative act of the transferee. 
                                              
our conclusion that the transfer did not take place by operation of law. 
36 Post at 8. 
37 In effect, the dissent’s definitionless approach to this case would redefine the phrase 
“operation of law” to mean “as provided by law.”  The dissent essentially argues that 
because the FDIC, by statute, may liquidate failed banks, when it does so the resulting 
transfer occurs by operation of law.  Under the dissent’s approach, any lawful transaction 
would constitute a transfer by operation of law.  It fails to recognize this contradiction. 
38 The dissent also attempts to undermine our definition of “operation of law” by arguing 
that transfers accomplished by intestate succession occur by operation of law.  It posits 
that, contrary to our definition of the phrase, those transfers cannot be completed without 
the affirmative act of a recipient in accepting the property.  This position is incorrect.  In 
intestacy succession, if an heir takes no affirmative action, he or she may acquire rights to 
a decedent’s property.  It is only if an heir takes the affirmative step of disclaiming his or 
her inheritance that it does not pass to that individual.  See MCL 700.2902(1). 
 
 
 
18 
Finally, the dissent also errs in its alternative argument that defendant is exempt 
from MCL 600.3204(3) even if the transfer in question did not occur by operation of law.  
This argument hinges on the belief that defendant did not acquire its interest in plaintiffs’ 
mortgage by assignment.  The statute plainly indicates that “a record chain of title shall 
exist” if the party foreclosing by advertisement “is not the original mortgagee.”  It is 
undisputed that defendant is not the original mortgagee.  Thus, regardless of why no chain 
of title exists, defendant cannot foreclose by advertisement.39 
IV.  CONCLUSION 
Defendant acquired plaintiffs’ mortgage through a voluntary purchase agreement 
with the FDIC.  It follows that it did not acquire the mortgage by operation of law.  
Accordingly, defendant was required to record its interest in compliance with the 
provisions of MCL 600.3204 before foreclosing on the property by advertisement.  We 
further hold, differently than did the Court of Appeals, that the sale of the foreclosed 
property was voidable rather than void ab initio.  Accordingly, we affirm in part and 
reverse in part the judgment of the Court of Appeals and remand the case to the trial court 
for further proceedings.  We direct the trial court to expedite its decision on remand. 
We do not retain jurisdiction. 
 
 
Marilyn Kelly 
 
Michael F. Cavanagh 
 
Stephen J. Markman 
 
Diane M. Hathaway 
                                              
39 The dissent opines that nothing exists that could be recorded in the chain of title 
evidencing the assignment of interest.  This is untrue.  For example, defendant could file 
a copy of the P&A agreement with the register of deeds. 
S T A T E  O F  M I C H I G A N 
 
SUPREME COURT 
 
 
EUIHYUNG KIM and IN SOOK KIM, 
 
 
Plaintiffs-Appellees, 
 
 
v 
No. 144690 
 
JPMORGAN CHASE BANK, N.A., 
 
 
 
Defendant-Appellant. 
 
 
 
MARKMAN, J. (concurring). 
I fully concur in the analysis and results of the majority opinion and write 
separately only to supplement that opinion with the following observations: 
First, it must be emphasized that the dissent fails entirely to provide an affirmative 
definition of the legal term of art that is at the heart of this dispute: “operation of law.”  
The closest the dissent comes is merely stating in the negative that “a transfer by 
operation of law need not be involuntary . . . .”  Post at 8.  However, it would be more 
instructive for the development of our law to know what affirmative meaning the dissent 
would ascribe to “operation of law.”  To the extent that some definition can be inferred 
from the dissent, that definition is, in my judgment, plainly incorrect.  As the majority 
points out, the dissent essentially seeks to redefine the term “operation of law” to mean 
“as provided by law.”  That is, the dissent argues that because the FDIC acted pursuant to 
or in accordance with federal statutes, its actions necessarily occurred by “operation of 
law.”  Under this theory, it is difficult to envision any transfer of money or property, 
short of the payment of a bribe or blackmail, that would not occur by “operation of law.” 
 
 
 
2 
Second, it is difficult to ignore the dissent’s repeated references to the fact that the 
transaction at issue “was not a simple contract for the sale of assets,” post at 1, but rather 
constituted a “specialized transaction,” see post at 3.  Although the dissent makes several 
references to the “special” nature of the transaction, it fails to explain how that nature 
communicates any legal significance.  In fact, there is no obvious reason, and the dissent 
supplies none, for the proposition that the assertedly “special” nature of the instant 
transaction has any bearing on the determination of whether a transfer is or is not by 
“operation of law.”  Certainly, that the transfer was “special” has nothing to do with the 
voluntariness of the transfer.  The dissent’s emphasis in this regard only has the effect of 
obscuring the legal realities of this case that are relevant.    
Third, I believe it deserves emphasis that the dissent’s contention that the FDIC’s 
characterization of the transfer should be accorded “respectful consideration” and the 
authorities cited in support of this contention, post at 4 n 10, are inapposite.  To begin 
with, this case is concerned with Michigan law, not federal law.  The critical issue is 
whether Chase satisfied the Michigan “foreclosure by advertisement” statute, which 
implicates whether the transfer from the FDIC to Chase was accomplished by “operation 
of law,” as that phrase is understood under Michigan caselaw.  Thus, clearly only issues 
of Michigan law are involved.  Furthermore, even if the issues in this case did implicate 
federal law, the FDIC’s purported “guidance” is offered through an affidavit submitted 
by an individual “receiver in charge” for the FDIC.  This affidavit is not the statement of 
the governing board of directors of the FDIC, it is not the statement of any single member 
of the governing board of directors of the FDIC, and it certainly is not the fruit of 
 
 
 
3 
rulemaking or adjudication by the FDIC.1  As the United States Supreme Court advised 
in United States v Mead Corp, 533 US 218, 229; 121 S Ct 2164; 150 L Ed 2d 292 (2001), 
“[a] very good indicator of delegation meriting [deference] is [an] express congressional 
authorization[] to engage in the rulemaking or adjudication process that produces the 
regulations or rulings for which deference is claimed.”  There is an utter absence of any 
such “indicator” in this case.   
Finally, I would offer additional guidance to the trial court concerning the nature 
of the “prejudice” that plaintiffs must demonstrate in order to set aside the foreclosure.  
Although a nonexhaustive listing, some of the factors that might be relevant in this 
demonstration would include the following: whether plaintiffs were “misled into 
believing that no sale had been had,” Kuschinski v Equitable & Central Trust Co, 277 
Mich 23, 26; 268 NW 797 (1936); whether plaintiffs “act[ed] promptly after [they 
became] aware of the facts” on which they based their complaint, id.; whether plaintiffs 
made an effort to redeem the property during the redemption period, Sweet Air 
Investment, Inc v Kenney, 275 Mich App 492, 503; 739 NW2d 656 (2007); whether 
plaintiffs were “represented by counsel throughout the foreclosure process,” Jackson 
Investment Corp v Pittsfield Prod, Inc, 162 Mich App 750, 756; 413 NW2d 99 (1987); 
and whether defendant “relied on the apparent validity of the sale by taking steps to 
protect its interest in the subject property,” id. at 757. 
 
Stephen J. Markman 
                                              
1 For these reasons, I would also characterize differently than does the majority opinion 
the “FDIC’s affidavit,” ante at 12 n 25, and the “FDIC’s position,” ante at 11 n 22. 
S T A T E  O F  M I C H I G A N 
 
SUPREME COURT 
 
 
EUIHYUNG KIM and IN SOOK KIM, 
 
 
Plaintiffs-Appellees, 
 
 
v 
No. 144690 
 
JPMORGAN CHASE BANK, N.A., 
 
 
 
Defendant-Appellant. 
 
 
 
ZAHRA, J. (dissenting). 
I respectfully dissent from the majority’s conclusion that plaintiffs’ mortgage did 
not pass to JPMorgan Chase Bank, N.A., by operation of law.  Under federal law, the 
Federal Deposit Insurance Corporation (FDIC) has broad statutory powers for resolving 
the business of a failed bank. The FDIC’s transfer of plaintiffs’ mortgage to Chase was 
part of a larger, specialized transaction authorized under federal law that was undertaken 
by the FDIC to resolve the business of Washington Mutual Bank (WaMu), a failed bank.  
Pursuant to this federal authority, the FDIC was permitted to transfer the assets of WaMu 
“without any approval, assignment, or consent . . . .”1  The particular transaction 
consummated here was not a simple contract for the sale of assets, as characterized by the 
majority.  The majority’s conclusions represent a fundamental misunderstanding of the 
FDIC’s authority to liquidate WaMu. 
                                              
1 12 USC 1821(d)(2)(G)(i)(II). 
 
 
 
2 
Michigan law has long recognized that a mortgage obtained by operation of law 
need not be recorded before foreclosure is allowed because the successor mortgagee steps 
into the shoes of the original mortgagee.2  Because Chase obtained plaintiffs’ mortgage 
from the FDIC by operation of law, I would hold it exempt from the recordation 
requirement of MCL 600.3204(3).  I would reverse the judgment of the Court of Appeals. 
I.  ALL TRANSFERS OF ASSETS UNDER 12 USC 1821(d)(2)(G)(i) OCCUR BY 
OPERATION OF LAW 
The majority correctly concludes that “when the FDIC succeeded to WaMu’s 
assets, which included plaintiffs’ mortgage, it did so by clear operation of a statutory 
provision—12 USC 1821(d)(2)(A).  With respect to this transfer, the FDIC acquired 
plaintiffs’ mortgage by operation of law.”3  But I disagree with the majority that the 
subsequent transfer, from the FDIC to Chase, did not occur by operation of law.  In fact, 
the FDIC transferred WaMu’s assets to Chase by operation of another statutory 
provision—12 USC 1821(d)(2)(G)(i)(II).  This provision empowers the FDIC to resolve 
the business of a failed bank by transferring any asset or liability “without any approval, 
assignment, or consent with respect to such transfer.”4 
The majority, following the erroneous logic employed by the Court of Appeals, 
characterizes the transaction between the FDIC and Chase as a simple contractual sale.5  
                                              
2 Miller v Clark, 56 Mich 337, 340-341; 23 NW 35 (1885). 
3 Ante at 8. 
4 12 USC 1821(d)(2)(G)(i)(II).   
5 The majority states: 
 
 
 
 
3 
Simply put, this characterization fundamentally misunderstands the structure of the 
agreement.  Rather than an ordinary sale of assets, this was a specialized transaction 
facilitated by the FDIC in accordance with its mandate to resolve the businesses of failed 
banks.6  The FDIC, through its statutory powers, enabled a transition in which it stepped 
into WaMu’s shoes as receiver and took possession of WaMu’s assets and liabilities 
without any assignment; then, almost instantaneously, the FDIC transferred substantially 
all of WaMu’s assets and liabilities to Chase.  This transfer of assets was intended to be 
accomplished by operation of law and again without an assignment.  The FDIC 
confirmed 
as 
much in its 
October 2, 2008, affidavit, 
which it 
executed 
contemporaneously with the transfer.  In pertinent part, the FDIC stated the following: 
2. On September 25, 2008, Washington Mutual Bank, formerly 
known as Washington Mutual Bank, FA (“Washington Mutual”), was 
closed by the Office of Thrift Supervision and the FDIC was named 
receiver.  
3. As authorized by Section 11(d)(2)(G)(i)(II) of the Federal Deposit 
Insurance Act, 12 U.S.C. § 1821(d)(2)(G)(i)(II), the FDIC, as receiver of 
Washington Mutual, may transfer any asset or liability of Washington 
Mutual without any approval, assignment, or consent with respect to such 
transfer. 
                                              
Under 12 USC 1821, the FDIC is empowered to transfer the assets 
of a failed bank “without any approval, assignment, or consent . . . .”  
However, in this case, it did not avail itself of that authority.  Instead, the 
FDIC sold WaMu’s assets to defendant pursuant to a purchase and 
assumption (P&A) agreement.  [Ante at 3.] 
6 12 USC 1821(c)(2)(A)(ii) (“The [FDIC] shall be appointed receiver, and shall accept 
such appointment, whenever a receiver is appointed for the purpose of liquidation or 
winding up the affairs of an insured Federal depository institution . . . .”).  
 
 
 
4 
4. Pursuant to the terms and conditions of a Purchase and 
Assumption Agreement between the FDIC as receiver of Washington 
Mutual and JPMorgan Chase Bank, National Association (“JPMorgan 
Chase”), dated September 25, 2008 (the “Purchase and Assumption 
Agreement”), JPMorgan Chase acquired certain of the assets, including all 
loans and all loan commitments, of Washington Mutual. 
5. As a result, on September 25, 2008, JPMorgan Chase became the 
owner of the loans and loan commitments of Washington Mutual by 
operation of law.[7]  
This affidavit is not, as the majority suggests, the FDIC’s attempt to make, by 
unilateral declaration, the transaction one completed by operation of law.8  Rather, it is 
the FDIC, which undoubtedly has more familiarity with this particular type of transaction 
than the majority,9 accurately characterizing the actions it took pursuant to federal law.10  
                                              
7 Emphasis added.  The affidavit was executed contemporaneously with the transfer at 
issue in this case, long before any litigation commenced. 
8 Ante at 12 n 25 (“Although the FDIC’s affidavit purports that the sale of WaMu’s assets 
to defendant was effected by operation of law, the FDIC may not by unilateral 
declaration make it so.”). 
9 Between October 1, 2000, and December 1, 2012, the FDIC was appointed receiver or 
conservator in 502 bank failures.  See Failed Bank List, FDIC, available at 
 (accessed December 20, 
2012). 
10 Though not binding on this Court, the FDIC’s characterization of a transfer under its 
governing statute should be accorded respectful consideration. See United States v Mead 
Corp, 533 US 218, 227; 121 S Ct 2164; 150 L Ed 2d 292 (2001) (“[A]gencies charged 
with applying a statute necessarily make all sorts of interpretive choices, and while not all 
of those choices bind judges to follow them, they certainly may influence courts facing 
questions the agencies have already answered.”); Skidmore v Swift & Co, 323 US 134, 
140; 65 S Ct 161; 89 L Ed 124 (1944) (“We consider that the rulings, interpretations and 
opinions of the Administrator under this Act, while not controlling upon the courts by 
reason of their authority, do constitute a body of experience and informed judgment to 
which courts and litigants may properly resort for guidance.”); see also Wells Fargo Bank 
v FDIC, 354 US App DC 6; 310 F3d 202, 208 (2002)  (“At the very least, however, 
because the FDIC is charged with administering this highly detailed regulatory scheme, 
 
 
 
 
5 
I cannot accept the majority’s conclusion that the FDIC and Chase entered into a simple 
sale rather than a transfer by operation of law considering that the FDIC’s receivership 
powers—reserved only for the special situation of a bank failure—do not contemplate 
ordinary sales like the one suggested by the majority.  Pursuant to 12 USC 
1821(d)(2)(G)(i), the FDIC as receiver may either merge a failed bank with a healthy 
bank11 or transfer any asset or liability of the failed bank “without any approval, 
assignment, or consent with respect to such transfer.”12  Under either provision, the 
statute provides for transfers by operation of law.  If the FDIC attempted to transfer assets 
of a failed bank without relying on one of the provisions of 12 USC 1821(d)(2)(G)(i), it 
would be acting outside the scope of its statutory authority.13  
The majority erroneously concludes that a transfer completed by operation of law 
must be one that occurred involuntarily, ignoring basic business realities.  For example, 
                                              
we may resort to its ‘body of experience and informed judgment’ for guidance to the 
extent that its position is persuasive.”).  The majority instead chooses to entirely ignore 
the FDIC’s position that it, in fact, transferred the WaMu assets to Chase by operation of 
law.  While we are ultimately interpreting the requirements of MCL 600.3204(3), the 
question whether the transfer at issue occurred “by operation of law” truly concerns the 
character of the transaction as defined by federal law, which the FDIC is tasked with 
administering.  Thus, contrary to the majority’s assertion, the issues raised in this case 
certainly implicate federal law and the majority would do well to give some deference to 
the contemporaneous transaction documents indicating that this transfer is understood 
under federal law to have been completed by operation of law. 
11 12 USC 1821(d)(2)(G)(i)(I). 
12 12 USC 1821(d)(2)(G)(i)(II). 
13 Louisiana Pub Serv Comm v FCC, 476 US 355, 374; 106 S Ct 1890; 90 L Ed 2d 369 
(1986) (“[A]n agency literally has no power to act . . . unless and until Congress confers 
power upon it.”). 
 
 
 
6 
when two companies merge—an action requiring affirmative intent and, often, substantial 
consideration14—the law is settled that the assets of the merging companies vest in the 
resulting company by operation of law.15  And even the majority admits that a merger 
results in the transfer of assets by operation of law.16  Thus, the majority’s conclusion that 
a transfer by operation of law can only occur involuntarily simply does not follow. 
Moreover, the majority’s conclusion that operation-of-law transfers must be fully 
involuntary ignores the standards applicable to the most fundamental operation-of-law 
transactions.  Surely the majority would agree that transfers accomplished by intestacy or 
                                              
14 For example, when AOL and Time Warner merged on January 10, 2000, in the largest 
merger in history, AOL purchased Time Warner for $165 billion to facilitate the merger.  
Both companies intended to enter the deal, and hefty consideration was paid.  See 
Hansell, Media Megadeal: The Overview; America Online Agrees to Buy Time Warner 
for $165 Billion; Media Deal is Richest Merger, NY Times, January 11, 2000, available 
at 
<http://www.nytimes.com/2000/01/11/business/media-megadeal-overview-america-
online-agrees-buy-time-warner-for-165-billion.html> (accessed December 20, 2012). 
15 See 12 USC 215(e) (“All rights, franchises, and interests of the individual 
consolidating banks or banking associations in and to every type of property (real, 
personal, and mixed) and choses in action shall be transferred to and vested in the 
consolidated national banking association by virtue of such consolidation without any 
deed or other transfer.”); MCL 450.1724(b) (“The title to all real estate and other 
property and rights owned by each corporation party to the merger are vested in the 
surviving corporation without reversion or impairment.”). 
16 Ante at 11 (“Had a merger occurred . . . , defendant would have a strong argument that 
it had merely stepped into the shoes of WaMu.”).  The majority further states that the 
FDIC could have merged WaMu and Chase pursuant to 12 USC 1821(d)(2)(G)(i)(I) 
without Chase’s consent.  But the statute in no way proposes that the FDIC could merge a 
failed bank and a healthy bank without the healthy bank’s consent.  On the contrary, it is 
12 USC 1821(d)(2)(G)(i)(II) that allows transfers without approval.  The majority’s 
concept of a forced merger utterly lacks a statutory basis and further demonstrates the 
majority’s misunderstanding of the FDIC’s authority. 
 
 
 
7 
a joint tenancy occur by operation of law.17  Yet neither of these traditional operation-of-
law transfers can be completed without the affirmative decision of the recipient to accept 
the property.18  Michigan law allows a party to disclaim an operation-of-law 
conveyance.19  Thus, a transfer by operation of law cannot occur unless the recipient 
voluntarily decides not to exercise his or her right to disclaim the conveyance.  Our sister 
court in New Hampshire eloquently described the rationale behind a right of disclaimer: 
[W]e held that a devisee has the power to renounce a testamentary 
gift.  An intestate heir also may disclaim an intestate share under our 
common law.  The same is true of a right of survivorship in a joint 
tenancy. . . .  The motivating factor permitting renunciation of these 
interests is that one should not be forced to accept burdensome, 
unbargained for tenders.[20]  
                                              
17 See, e.g., Simon v Simon’s Estate, 158 Mich 256, 259; 122 NW 544 (1909) (“The 
property of one dying intestate goes, by operation of positive law, . . . to certain persons 
in certain shares.”); Klooster v City of Charlevoix, 488 Mich 289, 303; 795 NW2d 578 
(2011) (“When one of only two joint tenants dies, an estate in land passes by operation of 
law to the survivor.”). 
18 It is also worth noting that both types of transfers occur pursuant to statutory authority.  
MCL 700.2101(1) (“Any part of a decedent’s estate not effectively disposed of by will 
passes by intestate succession to the decedent’s heirs as prescribed in this act . . . .”) 
(emphasis added); Title of 1925 PA 126, MCL 557.81 et seq. (“An act to provide for the 
payment to the survivor of husband and wife, of land contracts, and of notes and other 
obligations secured by a mortgage, given as part of the purchase price of lands held as a 
tenancy by the entirety, and the vesting of the title of the mortgage or land contract in the 
survivor.”); MCL 491.616(2) (creating a joint tenancy in multiperson bank accounts 
unless specified otherwise). 
19 MCL 700.2901 to 700.2912. 
20 In re Lamson Estate, 139 NH 732, 733-734; 662 A2d 287 (1995) (citations omitted); 
see also Nat’l City Bank of Evansville v Oldham, 537 NE2d 1193, 1197 (Ind App, 1989) 
(“Generally speaking, legal title to real property devised by will vests in the devisee upon 
the decedent’s death by operation of law.  It has long been recognized, however, that a 
person cannot be forced to accept property against his will and therefore a transfer of title 
 
 
 
 
8 
By similar logic, the fact that Chase could have refused, but voluntarily accepted, the 
transfer does not destroy its character as an operation-of-law transaction. 
Having established that a transfer by operation of law need not be involuntary, I 
have no trouble concluding that the instant transaction was completed by operation of 
law.  I am also not troubled by the conclusion that the FDIC/Chase transaction was for all 
intents and purposes the equivalent of a merger.  By this transaction, Chase absorbed 
substantially all of WaMu’s assets and liabilities.  In a September 25, 2008, press release 
announcing the transaction, FDIC Chairman Sheila C. Bair called the transaction “simply 
a combination of two banks.”21  Chase did not sort through the various assets of WaMu 
and pick and choose only the most appealing items; it absorbed the entire bank except for 
very select assets and liabilities that remained with the receiver.22  The first page of the 
                                              
is not complete until it is accepted by the recipient.”) (citations omitted); 20 Am Jur 2d, 
Cotenancy and Joint Ownership, § 4 (“Under the Uniform Disclaimer of Property 
Interests Act, a surviving joint tenant may disclaim the transfer of any property or interest 
by right of survivorship by delivering a written disclaimer.  The purpose of allowing such 
disclaimer is that one should not be forced to accept burdensome, unbargained-for 
tenders.”). 
21 FDIC, Press Release, JPMorgan Chase Acquires Banking Operations of Washington 
Mutual, 
September 
25, 
2008, 
available 
at 
<http://www.fdic.gov/news/news/ 
press/2008/pr08085.html> (accessed December 20, 2012) (emphasis added). 
22 See, e.g., schedule 3.5 of the purchase and assumption (P&A) agreement, captioned 
“Certain Assets Not Purchased” (excluding only payouts on or refunds for insurance 
policies, actions or judgments against directors or underwriters of the failed bank, leased 
premises, fixtures, and equipment, and criminal/restitution orders in favor of the failed 
bank from the agreement); schedule 2.1 of the P&A agreement, captioned “Certain 
Liabilities Not Assumed” (excluding only preferred stock and pending litigation against 
WaMu, subordinated and senior debt, some employee benefit plans sponsored by 
WaMu’s holding company, and certain deferred compensation and consulting agreements 
maintained by WaMu). 
 
 
 
9 
purchase and assumption (P&A) agreement indicates that Chase acquired much more 
than a loan portfolio, stating that with the FDIC acting as the conduit, it received 
“substantially all of the assets and assum[ed] all deposit and substantially all other 
liabilities” of WaMu.23  And while the P&A agreement established the framework for the 
transfer, the actual transaction was completed under the FDIC’s statutory authority to 
transfer assets and liabilities “without any approval, assignment, or consent . . . .”24  
Having received the assets and liabilities without any assignment, Chase stepped into 
WaMu’s shoes and began occupying WaMu’s legal status.  While this conclusion is 
perhaps the result of a legal fiction, like a merger, this is the manner in which the law 
treats these transactions.  Accordingly, no further formalities were necessary to vest the 
rights Chase acquired from WaMu because, as with a merger, they vested upon 
completion of the deal. 
At its heart, the majority’s and the Court of Appeals’ errors are in redefining this 
transaction, giving short shrift to the specialized context in which it occurred.  The FDIC 
and Chase did not execute a simple contractual sale; it was a transfer of assets and 
liabilities consummated without any assignments that only could have been completed 
under the FDIC’s statutory authority for resolving failed banks.  Accordingly, I would 
hold that Chase acquired plaintiffs’ mortgage by operation of law.25 
                                              
23 See also Brooks, The Federal Deposit Insurance System: The past and the potential for 
the future, 5 Ann R Banking L 111, 112 (1986) (“A purchase and assumption transaction 
is a merger of the failing bank into a successful bank; the successful bank assumes all 
deposit liabilities of the failing bank.”). 
24 12 USC 1821(d)(2)(G)(i)(II). 
25 Alternatively, as fully explained in part II of this opinion, I question whether the 
 
 
 
 
10 
II.  THE RECORDING REQUIREMENT OF MCL 600.3204(3) DOES NOT APPLY 
TO TRANSACTIONS PROPERLY COMPLETED WITHOUT ASSIGNMENT, 
INCLUDING MORTGAGES ACQUIRED BY OPERATION OF LAW 
MCL 600.3204 provides the requirements for foreclosure by advertisement.  MCL 
600.3204(1) lists the four general requirements before a mortgagee can foreclose: 
(a) A default in a condition of the mortgage has occurred, by which 
the power to sell became operative. 
(b) An action or proceeding has not been instituted, at law, to 
recover the debt secured by the mortgage or any part of the mortgage; or, if 
an action or proceeding has been instituted, the action or proceeding has 
been discontinued; or an execution on a judgment rendered in an action or 
proceeding has been returned unsatisfied, in whole or in part. 
(c) The mortgage containing the power of sale has been properly 
recorded. 
(d) The party foreclosing the mortgage is either the owner of the 
indebtedness or of an interest in the indebtedness secured by the mortgage 
or the servicing agent of the mortgage. 
MCL 600.3204(3) states an additional requirement: 
If the party foreclosing a mortgage by advertisement is not the 
original mortgagee, a record chain of title shall exist prior to the date of sale 
under [MCL 600.3216] [setting the conditions for the sheriff’s sale] 
evidencing the assignment of the mortgage to the party foreclosing the 
mortgage. 
Chase was exempt from the requirements of MCL 600.3204(3) because it obtained 
the mortgage by operation of law.  The key phrase in making this determination is 
“evidencing the assignment.”  If there has been no assignment—i.e., if the mortgage was 
                                              
majority’s conclusion that the transfer did not occur by operation of law resolves the 
matter.  Indeed, the operative recording statute, MCL 600.3204(3), only requires the 
recordation of mortgages that have been assigned, and pursuant to 12 USC 
1821(d)(2)(G)(i)(II), the mortgage here was transferred without an assignment. 
 
 
 
11 
transferred by operation of law—then there can be no chain of title because the party 
holding the mortgage is, by law, the original mortgagee.  This is so even if the party 
holding the mortgage was not the party that actually recorded the mortgage.  In other 
words, the statute implies that when no assignment has occurred, the party holding the 
mortgage has stepped into the shoes of the original mortgagee.  When there has been no 
assignment of a mortgage, there can be no assignment to record.  Accordingly, because 
Chase acquired the plaintiffs’ mortgage by operation of law instead of by assignment, and 
was thus legally considered the original mortgagee, it was not required to record anything 
in the chain of title. 
Michigan law has long recognized that only transfers completed by assignment 
need to be recorded before foreclosure by advertisement is permitted.  In the 1885 
decision of Miller v Clark, this Court analyzed the foreclosure-by-advertisement statute 
and determined that mortgages obtained by operation of law need not be recorded before 
foreclosure by advertisement is permitted.26  In Miller, the mortgagee was an individual 
who died with the mortgage passing as part of his estate to the guardian of his heirs.27  
The guardian foreclosed on the mortgage without recording it.28  This Court, in 
discussing whether the recording requirement applied to the peculiar way that the 
guardian came to possess the mortgage without an assignment, held that “[t]he 
                                              
26 Miller, 56 Mich at 337.  The foreclosure-by-advertisement statute in effect in 1885, 
1871 CL 6913, contained different language than the current statute but similarly 
required the recordation of mortgage assignments before foreclosure was permitted. 
27 Id. at 339-340. 
28 Id. at 340. 
 
 
 
12 
assignments which are required to be recorded are those which are executed by the 
voluntary act of the party, and this does not apply to cases where the title is transferred 
by operation of law . . . .”29  So if there is no assignment to record because the mortgage 
passed by operation of law, then the recording requirement does not apply. 30  Because 
Chase obtained the plaintiffs’ mortgage without an assignment pursuant to the FDIC’s 
                                              
29 Id. at 340-341 (emphasis added).  The majority relies on this quote to erroneously 
conclude that a transfer by operation of law must be involuntary.  But Miller made no 
such determination.  The quoted language only held that voluntary assignments must be 
recorded, making no determination whatsoever with respect to voluntary operation-of-
law transactions like corporate mergers or the transfer that took place here. 
The majority also concludes that the rule of Miller does not control because the 
recording requirement has been modified and the “triggering mechanisms for 
recordation” are different now than when Miller was decided, with the mechanism now 
being only that the foreclosing party “is not the original mortgagee.”  As explained 
earlier, this errant focus on the “triggering mechanisms” prevents the majority from 
viewing the statute as a whole and ignores the fact that MCL 600.3204(3) still only 
requires a recording to exist “evidencing the assignment.”  Again, one cannot evidence an 
assignment that does not exist and need not exist to effectuate the transfer.  An 
assignment is thus necessary both under MCL 600.3204 as it exists now and as its 
predecessor provided when Miller was decided. 
30 Michigan’s Attorney General reiterated the Miller holding in 2004, stating that “[a] 
mortgagee cannot validly foreclose a mortgage by advertisement unless the mortgage and 
all assignments of that mortgage (except those assignments effected by operation of law) 
are entitled to be, and have been, recorded.”  OAG, 2003-2004, No 7147, p 93 
(January 9, 2004) (emphasis added).  When the Attorney General made this statement, 
the recording requirement was found in MCL 600.3204(1)(c) but used the same language 
as the current statute.  MCL 600.3204(1)(c), as amended by 1994 PA 397, provided in 
relevant part: 
The mortgage containing the power of sale has been properly 
recorded and, if the party foreclosing is not the original mortgagee, a record 
chain of title exists evidencing the assignment of the mortgage to the party 
foreclosing the mortgage. 
 
 
 
13 
statutory authority, MCL 600.3204(3) did not require Chase to record the mortgage 
before foreclosing. 
Alternatively, it is not at all clear that the transfer must even be characterized as 
one completed by operation of law to be exempt from the recordation requirement of 
MCL 600.3204(3).  Indeed, the statutory language itself does not explicitly exempt 
transfers completed by operation of law; instead, it requires recordation when there is an 
assignment.31  So in 1885, when this Court held that an operation-of-law transaction was 
exempt from the recordation requirement, it did so not because the transaction was 
completed by operation of law but because the transaction was not an assignment.32  
Thus, even if the instant transaction was not by operation of law per se, it would still be 
exempt from the recording statute if no recordable assignment existed.  And indeed, 
pursuant to 12 USC 1821(d)(2)(G)(i)(II), the FDIC transferred WaMu’s assets to Chase 
without an assignment.  So even accepting the majority’s conclusion that this was not a 
transfer by operation of law, MCL 600.3204(3) would still not apply because no 
assignment existed and none was necessary to complete the transfer.33 
                                              
31 The original statute, 1871 CL 6913, required recording if the mortgage had been 
assigned; the current statute, MCL 600.3204(3) requires a recording “evidencing the 
assignment.” 
32 See Miller, 56 Mich at 337. 
33 In responding to this alternative argument, the majority states that a record chain of 
title must exist before foreclosure is permitted, yet it does not say what should be 
recorded in the chain of title to “evidenc[e] the assignment” as required by MCL 
600.3204(3).  Here, no assignment occurred, so nothing exists that can be recorded in the 
chain of title.  Indeed, under the majority’s construction, Chase could never satisfy MCL 
600.3204(3) because it is not the original mortgagee, but it also lacks the ability to record 
an assignment in the chain of title. 
 
 
 
14 
III.  CONCLUSION 
By redefining the character of the transaction between the FDIC and Chase, the 
majority, like the Court of Appeals before it, erroneously concludes that it was an 
ordinary contractual sale rather than a specialized transfer by operation of law. In reality, 
the transaction was possible only because of the FDIC’s special statutory powers for 
resolving the business of a failed bank like WaMu.  Moreover, Chase was not required to 
record the mortgage before foreclosing because it obtained the mortgage by operation of 
law and stepped into WaMu’s shoes as the original mortgagee.  Thus, the recording 
requirement of the foreclosure-by-advertisement statute was inapplicable.  Accordingly, I 
respectfully dissent and would reverse the judgment of the Court of Appeals.34 
 
 
Brian K. Zahra 
 
Robert P. Young, Jr. 
 
Mary Beth Kelly 
                                              
34 Because I conclude that no defect existed in the foreclosure, it is unnecessary for me to 
decide whether a defect in the foreclosure renders the foreclosure sale voidable or void ab 
initio.  However, because the majority reaches this issue, I note my agreement with the 
majority’s reasoning on this issue and conclusion that “defects or irregularities in a 
foreclosure proceeding result in a foreclosure that is voidable, not void ab initio.” Ante at 
15.