Court Opinion

ID: 3502022
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:08:53.574723+00
Date Added: 2024-06-11T14:05:21.580466
License: Public Domain

I concur in the opinion of Mr. Justice WIEST. The trial judge may not fix an upset or minimum price unless it is based upon proper testimony taken for that purpose. He must also consider the amount of unpaid tax liens that are outstanding against the property.
The testimony in the present case shows that the upset price fixed by the judge was fixed at the balance due on the contract, an amount far in excess of the value of the property, as appraised by witnesses both for plaintiffs and defendants. Plaintiffs further show that the vendor gave the vendee every consideration in granting extensions and forbearance. It also appears that taxes aggregating about $9,000 are a prior lien against the property and should have been paid by the vendee. It also appears, after deducting the aggregate amount of these unpaid taxes against the property from the total amount of payments, the balance if apportioned over the term of 11 years the contract has been in existence, will net the vendor but a small return on the entire purchase price. During all this time, the vendee was entitled to any possible increase in the value of the property, as well as the rent from the two stores, the residence above the stores, and the two houses on the property. The trial judge, however, decreed that the vendor must assume the major portion of the loss occasioned by the deflation of values accompanying the depression.
In discussing Act No. 229, Pub. Acts 1933 (amending 3 Comp. Laws 1929, § 14366), we consider both the obligations of mortgagors and those of vendees in executory land contracts. Equitable considerations are not as impelling in the case of such vendees as they may be in the case of mortgagors. The former, even though purchasing for investment, are entitled to all the profits resulting from enhancement *Page 656 
in value. Is there any equitable reason why they should not pay the loss, should there be one? Neither should the burden of the loss owing to depreciation of real estate values be borne by the mortgagee. Michigan Trust Co. v. Cody, 264 Mich. 258. Mortgages are one form of investment heretofore approved of for estates. There are hundreds of thousands of bank depositors in this State most seriously affected through the inability to collect on mortgages. They are entitled to protection. A large part of the present financial distress is due to the loss in values that has followed, what may be termed, a wild speculation in real estate. Subdivisions of farm lands have been laid out so as to take care of a city population far in excess of present needs. Possibly in the course of years such property may be utilized. In its present condition, particularly where a farm has been broken up through the sale of lots, or where the property has been "improved" by sidewalks or street pavements, it no longer is suitable for farm purposes, nor has it much value for home purposes on account of its location, lack of improvements, etc. Much of the present tax delinquency is due to the fact that taxes exceed or absorb the larger part of the rental value of the property. The query arises then: What is the value of such property? May a judge arbitrarily say that it is the balance still due on the contract or mortgage and thus fix the minimum price at which it may be sold? Is this not a distinct impairment of the obligation of a contract? The moral and financial responsibility of the borrower is of prime importance in the making of a loan. Is he to be discharged from this liability? Is it fair and equitable to direct the holder of the obligation to make a useless attempt to sell at a price out of *Page 657 
reason, and be put to the expense and delay of advertising for six successive weeks, etc., in order to prove that the judge is mistaken? If mortgagors or vendees desire additional time and are willing to do equity, they can be fully protected under the moratorium act, Act No. 98, Pub. Acts 1933.
The order of the circuit judge is set aside, and the case remanded with instructions to take further action in accordance with this opinion.
POTTER, NORTH, and FEAD, JJ., concurred with BUTZEL, J. McDONALD, C.J., and WEADOCK, J., took no part in this decision.