Opinion ID: 2982027
Heading Depth: 4
Heading Rank: 1

Heading: Michigan’s statute on uses and trusts

Text: Carmack first claims that the assignment of the mortgage to BNYM “as trustee for the Certificateholders CWALT, Inc. Alternative Loan Trust 2005-J12 Mortgage Pass-Through Certificates, Series 2005-J12” violated a provision of Michigan’s statute on uses and trusts, Mich. Comp. Laws § 555.5, which states: Every disposition of lands, whether by deed or devise, hereafter made, except as otherwise provided in this chapter, shall be directly to the person in whom the right to the possession and the profits shall be intended to be vested, and not to any other, to the use of, or in trust for, such person; and if made to 1 or more persons, in trust 5 To the extent that Carmack asserts (without any developed argument) that the mortgage assignment was “forged” or “robosigned,” these claims do not appear in his complaint. Nor did he seek leave to amend his complaint to add these claims. We therefore deem these claims waived. See United States v. Stewart, 628 F.3d 246, 256 (6th Cir. 2010); DaimlerChrysler Corp. Healthcare Benefits Plan v. Durden, 448 F.3d 918, 922 (6th Cir. 2006). 9 No. 12-1953 Carmack v. The Bank of New York Mellon, et al. for, or to the use of another, no estate or interest, legal or equitable, shall vest in the trustee. Carmack contends that the CWALT Trust is a passive trust and therefore the assignment of mortgage to BNYM as trustee did not vest a security interest in BNYM. By virtue of Michigan’s prohibition against passive trusts, Carmack contends that BNYM is not the valid mortgage holder and could not properly foreclose the mortgage under § 600.3204. A passive trust “is defined to be a trust in which the property is vested in one person upon trust for another, and the nature of the trust, not being qualified by the settlor, is left to construction of the law.” Woolfitt v. Histed, 175 N.W. 286, 288 (Mich. 1919) (internal quotation marks omitted); see Cone v. Zelony, No. 233034, 2003 WL 21995422, at  (Mich. Ct. App. Aug. 21, 2003) (explaining that a trust is passive when the trustee has no duties, and affirming a lower court’s finding that trust was not passive where the trustee was “charged with holding title”); 1 John G. Cameron, Jr., Michigan Real Property Law: Principles and Commentary § 10.4 at 369 n.7 (3d ed. 2005) (“The trustee under a passive trust has no power of actual disposition and management, and no trust duties imposed on the trustee.”). “Passive trusts are abolished by statute in [Michigan], but where a deed is so worded as to create a passive or naked trust, [the] statute on uses and trusts . . . executes it by forthwith passing the title to the beneficiary.” Woolfitt, 175 N.W. at 288; see Bays v. Charter Twp. of Waterford, No. 237782, 2003 WL 1883463, at  (Mich. Ct. App. Apr. 15, 2003) (holding that a deed that conveyed property to a township “to be held in trust for the lot owners” vested legal title to the property in the beneficiaries, i.e., the lot owners, and not in the township). 10 No. 12-1953 Carmack v. The Bank of New York Mellon, et al. According to Carmack, any transfer of the mortgage interest in his property vested that interest in the certificate holders of the CWALT Trust not BNYM by operation of § 555.5. Section 555.5, however, concerns “disposition of lands, whether by deed or devise” rather than assignments of security interests. Further, as the district court correctly observed, the statute does not apply to a conveyance to an existing trust but rather pertains to a conveyance that purports to create a trust without any duties. See Loring v. Palmer, 118 U.S. 321, 343 44 (1886) (holding that the statute does not apply to a trust not created in the deed itself but by an independent instrument); cf. Woolfitt, 175 N.W. at 288. Here, neither the mortgage assignment nor the sheriff’s deed created a passive trust. Rather, the assignment was conveyed to BNYM as trustee for the already existing CWALT Trust, with relationships and duties set forth in the trust’s pooling and servicing agreement. Carmack argues that even if § 555.5 applies only to a passive trust created by the deed itself, the mortgage assignment and the deed in this case created a new trust in favor of the certificate holders because BNYM “took the mortgage and then the subject property by [s]heriff’s [d]eed as trustee for the certificate holders of the Trust and not in its capacity as trustee for the Trust itself.” This allegation, however, contradicts Carmack’s complaint (alleging that MERS assigned the mortgage to BNYM “as trustee for the trust”) and was not raised below. Moreover, even if we were to overlook Carmack’s failure to raise this allegation below, and even if § 555.5 applies to the mortgage assignment or sheriff’s deed, the CWALT Trust is not passive. First, the trust’s pooling and servicing agreement established BNYM as trustee of the CWALT Trust. Second, BNYM, as the trustee, is obliged under the terms of the trust’s agreement to, among other duties, ensure that the 11 No. 12-1953 Carmack v. The Bank of New York Mellon, et al. public records for the mortgage assignments are in proper form, retain possession and custody of each mortgage file, maintain a distribution account, and make periodic distributions to the certificate holders. Thus, the CWALT Trust is more properly classified as a permissible active trust. See Hunt v. Hunt, 83 N.W. 371, 372 73 (Mich. 1900) (holding that a trust is an “active trust” where the trustee is obligated to collect income from lands and pay the proceeds to the beneficiaries); cf. Rishoi v. Deutsche Bank Nat’l Trust Co., No. 12-12957, 2013 WL 142258, at  (E.D. Mich. Jan. 11, 2013).