Court Opinion

ID: 825975
Source: CourtListenerOpinion
Date Created: 2013-03-01 19:53:46.946163+00
Date Added: 2024-06-11T10:24:01.144770
License: Public Domain

Order                                                                      Michigan Supreme Court
                                                                                 Lansing, Michigan

  November 16, 2011                                                                Robert P. Young, Jr.,
                                                                                             Chief Justice

  143178-9                                                                         Michael F. Cavanagh
                                                                                         Marilyn Kelly
                                                                                   Stephen J. Markman
                                                                                   Diane M. Hathaway
                                                                                       Mary Beth Kelly
  RESIDENTIAL FUNDING CO, L.L.C., f/k/a                                                Brian K. Zahra,
  RESIDENTIAL FUNDING CORPORATION,                                                                Justices
            Plaintiff-Appellant,
  v                                                      SC: 143178
                                                         COA: 290248
                                                         Kent CC: 08-011138-AV
  GERALD SAURMAN,
           Defendant-Appellee.

  _________________________________________/

  BANK OF NEW YORK TRUST COMPANY,
           Plaintiff-Appellant,
  v                                                      SC: 143179
                                                         COA: 291443
                                                         Jackson CC: 08-003406-AV
  COREY MESSNER,
           Defendant-Appellee.

  _________________________________________/

         On November 10, 2011, the Court heard oral argument on the application for leave
  to appeal the April 21, 2011 judgment of the Court of Appeals. On order of the Court,
  the application is again considered and, pursuant to MCR 7.302(H)(1), in lieu of granting
  leave to appeal, we REVERSE the judgment of the Court of Appeals. As the Court of
  Appeals dissenting opinion explained, “pursuant to MCL 600.3204(1)(d), Mortgage
  Electronic Registration System (MERS) is ‘the owner . . . of an interest in the
  indebtedness secured by the mortgage’ at issue in each of these consolidated cases”
  because “[MERS’] contractual obligations as mortgagee were dependent upon whether
  the mortgagor met the obligation to pay the indebtedness which the mortgage secured.”
  Residential Funding v Saurman, ___ Mich App ___ (2011) (WILDER, J., dissenting), slip
  op at 27-28, 36. We clarify, however, that MERS’ status as an “owner of an interest in
  the indebtedness” does not equate to an ownership interest in the note. Rather, as record-
  holder of the mortgage, MERS owned a security lien on the properties, the continued
                                                                                                               2

existence of which was contingent upon the satisfaction of the indebtedness. This interest
in the indebtedness — i.e., the ownership of legal title to a security lien whose existence
is wholly contingent on the satisfaction of the indebtedness — authorized MERS to
foreclose by advertisement under MCL 600.3204(1)(d).

       Furthermore, we add that the Court of Appeals’ conclusion to the contrary is
inconsistent with established legal principles governing Michigan’s real property law,
and specifically foreclosure by advertisement. “Under the settled law of this State, the
mortgage and the note are to be construed together.” Guardian Depositors Corp v
Wagner, 287 Mich 202, 208 (1939). “The rule is well-settled that . . . the mortgagee has
a lien on the land to secure the debt.” McKeighan v Citizens Commercial & Sav Bank,
302 Mich 666, 670 (1942). “It has never been necessary that the mortgage should be
given directly to the beneficiaries. The security is always made in trust to secure
obligations, and the trust and the beneficial interest need not be in the same hands. . . .
The choice of a mortgagee is a matter of convenience.” Adams v Niemann, 46 Mich 135,
137 (1881). See also, Canvasser v Bankers Trust Co, 284 Mich 634, 639 (1938). Indeed,
in interpreting predecessor foreclosure-by-advertisement statutes, in cases in which the
mortgagee had transferred a beneficial interest, but retained record title, this Court has
unanimously held that “[o]nly the record holder of the mortgage has the power to
foreclose; the validity of the foreclosure is not affected by any unrecorded assignment of
interest held for security.” Arnold v DMR Financial, 448 Mich 671, 678 (1995); see also,
Feldman v Equitable Trust Co, 278 Mich 619, 624-625 (1937).

       We discern no indication that when the Legislature amended MCL 600.3204(1) in
1994, it meant to establish a new legal framework in which an undisputed record holder
of a mortgage, such as MERS, no longer possesses the statutory authority to foreclose.
Rather, as explained above, the Legislature’s use of the phrase “interest in the
indebtedness” to denote a category of parties entitled to foreclose by advertisement
indicates the intent to include mortgagees of record among the parties entitled to
foreclose by advertisement, along with parties who “own[] the indebtedness” and parties
who act as “the servicing agent of the mortgage.” MCL 600.3204(1)(d). We therefore
reverse the Court of Appeals’ decision because it erroneously construed MCL
600.3204(1)(d).

      CAVANAGH, MARILYN KELLY, and HATHAWAY, JJ., would grant leave to appeal.

                         I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the
                   foregoing is a true and complete copy of the order entered at the direction of the Court.
                         November 16, 2011                   _________________________________________
       t1116                                                                 Clerk