Court Opinion

ID: 4360888
Source: CourtListenerOpinion
Date Created: 2019-01-23 10:07:58.4115+00
Date Added: 2024-06-11T14:47:06.586398
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                            STATE OF MICHIGAN

                            COURT OF APPEALS

TRUSTLINK EQUITIES, LLC,                                             UNPUBLISHED
                                                                     January 22, 2019
               Plaintiff-Appellant,

v                                                                    No. 341883
                                                                     St. Clair Circuit Court
ST CLAIR COUNTY SHERIFF SALE                                         LC No. 2017-001657-PZ
SURPLUS,

               Defendant,
and

DITECH FINANCIAL, LLC,

               Defendant-Appellee.

Before: MARKEY, P.J., and M. J. KELLY and SWARTZLE, JJ.

PER CURIAM.

       Plaintiff, Trustlink Equities, LLC, appeals as of right the trial court’s order granting the
motion of defendant, Ditech Financial, LLC, for release of surplus funds after a mortgage
foreclosure sale. We affirm.

                                       I. BACKGROUND

       Brian K. Simms and Charlene A. Simms (“the mortgagors”) owned real estate located in
Mussey, Michigan (“the Property”). In 2003, the mortgagors granted a first mortgage to
Mortgage Electronic Registration Systems, Inc. (“MERS”), and that mortgage was subsequently
assigned to Federal National Mortgage Association. In 2006, the mortgagors granted a junior
mortgage to MERS, and that mortgage was subsequently assigned to The Bank of New York
Mellon Trust Company, N.A., as Trustee for GMACM Home Equity Loan Trust 2006-HE3 (“the
Bank”).

       On May 31, 2017, the day before the St. Clair County Sheriff conducted a mortgage
foreclosure sale of the Property on the first mortgage, the mortgagors quitclaimed their interest in
the Property to plaintiff. That same day, the mortgagors also granted an assignment of their right
to any surplus proceeds from the foreclosure sale to plaintiff, in exchange for payment of $500.
The assignment document conveyed to plaintiff “any and all right, title and interest to any
mortgage sale surplus funds and/or overbid funds or proceeds as allowed under law, with respect
to the mortgage foreclosure” of the Property.

        On June 1, 2017, the Sheriff conducted a mortgage foreclosure sale of the Property on the
first mortgage. Plaintiff submitted the highest bid at the sheriff’s sale, purchased the Property for
$239,000, and received a sheriff’s deed. The $239,000 foreclosure sale generated a surplus of
$77,490.54 over the amount due on the senior mortgage on the Property, but did not generate a
surplus sufficient to pay the junior mortgage on the Property, on which $162,497.12 remained
owing. Nonetheless, the proceeds from the sale of the Property to plaintiff satisfied the first
mortgage and the Sheriff received and deposited the $77,490.54 in surplus funds with the St.
Clair County Treasurer.

        On June 2, 2017, plaintiff filed a document with the Treasurer, seeking payment of the
$77,490.54 surplus funds as assignee of the mortgagors. One of the primary issues on appeal
concerns whether this filing qualified as a “demand” or as a “claim” under MCL 600.3252.
Plaintiff filed with the Treasurer a document titled “Verified Claim for Turn-Over of Proceeds of
Sale.” The document did not use the word “demand.” In addition to its title, the document
stated that plaintiff “makes a claim for the proceeds from the mortgage foreclosure sale”
(emphasis added). In the document, plaintiff alleged the amount owed on the first mortgage, the
amount that it bid for the property at the sheriff’s sale, and the amount of surplus created over
and above the amount owed on the first mortgage. Plaintiff further alleged in the document that,
as the assignee of the mortgagors, it was entitled to disbursement of the surplus funds received
by the Sheriff and deposited with the Treasurer.

        Seven days later, on June 9, 2017, Ditech (“defendant”)1 filed a document with St. Clair
County seeking payment of the surplus funds on behalf of the Bank, in an attempt to partially
satisfy the amount that remained owing on the junior mortgage. This document was titled
“Verified Claim for Surplus Proceeds of Sale” and it stated that defendant, on behalf of the Bank,
“makes a claim for the surplus proceeds in the sum of $77,490.54 from the June 1, 2017
foreclosure sale” of the Property (defendant’s “first claim”). In that document, defendant stated
that the “basis for the claim for surplus proceeds of sale is a junior mortgage” granted by the
mortgagors to MERS. Defendant stated that the original principal balance of the junior mortgage
was $160,550 and that the total amount due on the junior mortgage, as of June 1, 2017, was
$162,497.12. Defendant further stated that the junior mortgage was “to be assigned to” the Bank
at some point in the future. Therefore, on the date defendant filed its first claim on behalf of the
Bank, the Bank did not yet hold the junior mortgage.

       Neither the Sheriff nor the Treasurer paid anyone the surplus funds. Having received two
documents, a “Verified Claim for Turn-Over of Proceeds of Sale” and a “Verified Claim for
Surplus Proceeds of Sale,” both purporting to be “claims” to the same surplus funds, the county

1
  Although the St. Clair County Sheriff Sale Surplus was also named as a defendant in this case,
it is not a party to this appeal. Therefore, we will refer to Ditech as defendant.

                                                -2-
officials took no action, effectively deferring the dispute between plaintiff and defendant for
resolution by the trial court.

        On June 21, 2017, plaintiff filed a petition with the trial court under MCL 600.3252,
requesting that the trial court award it the surplus foreclosure proceeds. In that petition, plaintiff
specifically referenced defendant and argued that defendant was not entitled to payment of the
surplus funds because the Bank held no interest in a junior mortgage on the date of the
foreclosure sale. On the same day, plaintiff filed a motion requesting that the trial court award it
the surplus foreclosure proceeds. In its motion, plaintiff again stated that it had filed a “claim”
with the Treasurer seeking the surplus funds, and did not allege that it had filed a “demand”
under MCL 600.3252.

        On July 10, 2017, defendant filed a response to plaintiff’s motion for distribution of the
surplus foreclosure proceeds. In its supporting brief, defendant argued that it timely filed a
“claim” for distribution of the surplus proceeds, on behalf of the Bank. In the alternative,
defendant argued that, even if the Bank was not a proper “claimant” under the surplus statute, the
Bank was nonetheless an interested party in the surplus funds. Therefore, on behalf of the Bank,
defendant applied to the trial court “for a taking of proofs, if necessary, for the distribution of the
proceeds” of the foreclosure sale. On July 10, 2017, defendant also filed a competing motion
and petition for distribution of the surplus proceeds from the sheriff’s sale, along with
affirmative defenses to plaintiff’s petition for disbursement of the surplus foreclosure proceeds.
In those affirmative defenses, defendant claimed that (1) MCL 600.3252 does not require that a
junior mortgagee have a recorded interest in the real property, (2) plaintiff’s assignment of the
mortgagor’s rights did not appear to be an arms-length transaction, and (3) plaintiff was
effectively seeking a refund of the amount by which its bid at the foreclosure sale exceeded the
amount owed on the first mortgage.

        On July 13, 2017, plaintiff filed an answer to defendant’s petition. In its answer, plaintiff
specifically stated that it did “not challenge the right of a mortgage servicer to act on behalf of a
mortgage holder.”2 Nonetheless, plaintiff argued that a proper claimant of surplus funds “must
be a subsequent mortgagee or lien holder encumbering the real estate as of the date of the
mortgage foreclosure sale and the date of filing its claim.” Plaintiff argued that the Bank held no
legal interest in the second mortgage on June 1, 2017, the date of the foreclosure sale, or on June
9, 2017, the date when defendant filed its first claim, because defendant’s first claim stated that
the junior mortgage was “to be assigned to” the Bank at some point in the future. Therefore,
plaintiff argued that it, rather than defendant, was entitled to the surplus proceeds, despite the
undisputed existence of an unsatisfied junior mortgage on the Property.

       The trial court held a hearing on the parties’ competing motions for disbursement of the
surplus funds. Plaintiff stated at the hearing that it had no objection to defendant asserting a
claim on behalf of the Bank, in a representative capacity:

2
 Plaintiff attempts to assert a contrary argument on appeal. For the reasons explained below, we
conclude that plaintiff has waived any argument that defendant, as a mortgage servicer, could not
act on behalf of the Bank for purposes of filing a “claim” for the surplus proceeds in this case.

                                                 -3-
              The Court: Or, or as, as, as they—I mean, Ditech is not—they’re, they’re
       making—they’re asserting a claim on behalf of a client in a representative
       capacity.

              [Plaintiff’s Counsel]: And I, I recognize they can do that. I don’t have a
       problem with that. [Emphasis added.]

        At the close of the motion hearing, the trial court allowed the parties additional time to
brief defendant’s ability to seek a disbursement of the surplus funds, given the fact that the Bank
finalized its assignment of the junior mortgage after the foreclosure sale on the senior mortgage
occurred. Both parties submitted that additional briefing. In addition to its supplemental
briefing, and in response to plaintiff’s objections regarding the date on which the Bank acquired
its assignment of the junior mortgage, defendant filed a second claim (defendant’s “second
claim”). In that document, defendant again stated that the “basis for the claim for proceeds from
the sale is [a] junior mortgage” originally granted by the mortgagors to MERS. Defendant
further stated that, at that point, the junior mortgage “has been assigned” to the Bank.
Defendant’s second claim did not repeat the details contained in its first claim regarding the
amount of the original principal balance of the junior mortgage or the total amount then due on
the junior mortgage.

        After receiving and considering the parties’ supplemental briefs, the trial court issued an
opinion and order awarding defendant, on behalf of the Bank as holder of the junior mortgage,
the surplus funds created by the mortgage foreclosure sale. Plaintiff now appeals.

                                          II. ANALYSIS

                                 A. THE SURPLUS STATUTE

        MCL 600.3252 (the “surplus statute”) provides a process and criteria for the distribution
of surplus funds created by a mortgage foreclosure sale. The statute provides:

                If after any sale of real estate, made as herein prescribed, there shall
       remain in the hands of the officer or other person making the sale, any surplus
       money after satisfying the mortgage on which the real estate was sold, and
       payment of the costs and expenses of the foreclosure and sale, the surplus shall be
       paid over by the officer or other person on demand, to the mortgagor, his legal
       representatives or assigns, unless at the time of the sale, or before the surplus shall
       be so paid over, some claimant or claimants, shall file with the person so making
       the sale, a claim or claims, in writing, duly verified by the oath of the claimant,
       his agent, or attorney, that the claimant has a subsequent mortgage or lien
       encumbering the real estate, or some part thereof, and stating the amount thereof
       unpaid, setting forth the facts and nature of the same, in which case the person so
       making the sale, shall forthwith upon receiving the claim, pay the surplus to, and
       file the written claim with the clerk of the circuit court of the county in which the
       sale is so made; and thereupon any person or persons interested in the surplus,
       may apply to the court for an order to take proofs of the facts and circumstances
       contained in the claim or claims so filed. Thereafter, the court shall summon the

                                                -4-
       claimant or claimants, party, or parties interested in the surplus, to appear before
       him at a time and place to be by him named, and attend the taking of the proof,
       and the claimant or claimants or party interested who shall appear may examine
       witnesses and produce such proof as they or either of them may see fit, and the
       court shall thereupon make an order in the premises directing the disposition of
       the surplus moneys or payment thereof in accordance with the rights of the
       claimant or claimants or persons interested.

       In the case of In re $55,336.17 Surplus Funds, 319 Mich App 501; 902 NW2d 422
(2017), this Court explained the standards that this Court must apply when construing the proper
meaning and application of the surplus statute. As this Court stated:

               This Court reviews de novo questions of statutory interpretation. Our
       primary goal in statutory interpretation is to reasonably infer the legislative intent
       as evidenced by the statutory language. If the language of a statute is clear and
       unambiguous, the statute must be enforced as written and no further judicial
       construction is permitted. If the intent of the Legislature is not clear, courts must
       interpret statutes in a way that gives effect to every word, phrase, and clause in a
       statute and avoid an interpretation that would render any part of the statute
       surplusage or nugatory. Words and phrases used in a statute should be read in
       context with the entire act and assigned such meanings as to harmonize with the
       act as a whole. Further, statutes that relate to the same subject or that share a
       common purpose are in pari materia and must be read together as one law, even if
       they contain no reference to one another and were enacted on different dates. [Id.
       at 506-507 (cleaned up).]

                     B. A “DEMAND” UNDER THE SURPLUS STATUTE

        Plaintiff first argues that MCL 600.3252 requires that all surplus proceeds created by a
foreclosure sale must be paid to the mortgagor’s assignee “on demand.” Plaintiff argues that the
statute does not define the form of a “demand” but merely provides that the surplus shall be paid
over “on demand, to the mortgagor, his legal representatives or assigns.” Plaintiff argues that its
June 2, 2017 submission to the Treasurer was a “demand,” but was not a “claim,” for purposes of
the surplus statute. We conclude that plaintiff did, in fact, file a “demand” as contemplated
under the surplus statute, even though plaintiff frequently and inartfully characterized its filing as
a “claim.”

        The trial court recognized that the surplus statute does not define the terms “demand” and
“claim.” Therefore, the trial court held that the usual and customary meanings of those terms
applied when interpreting the statute as a whole. “Where a word is not defined within a statute,
it should be given its plain and ordinary meaning, and a court may consult dictionary
definitions.” Welch Foods, Inc v Attorney General, 213 Mich App 459, 462-463; 540 NW2d
693 (1995). The term “demand” is defined as “an act of demanding or asking esp. with
authority . . . something claimed as due.” Merriam-Webster’s Collegiate Dictionary (11th ed).
In addition, the term “demand” is defined to mean the “assertion of a legal right” and an
“imperative request preferred by one person to another, under a claim of right, requiring the

                                                 -5-
latter to do or yield something,” or a request “for payment of debt or amount due.” Black’s Law
Dictionary (6th ed).

        The trial court did not expressly decide whether plaintiff filed a “demand” or a “claim”
with the Treasurer. The trial court stated that, while the document filed by plaintiff “could be
interpreted as [a] ‘demand’ [it] was not labeled as such. It is not known whether the St. Clair
County Treasurer treated the ‘Verified Claim’ as a demand or a claim, or whether it made any
such distinction.” The trial court also suggested that the Treasurer may have treated the
“demand” as a “claim” because plaintiff never used the word “demand” in its filing, but did use
the word “claim” throughout that document.

        The surplus statute provides that “the surplus shall be paid over by the officer or other
person on demand, to the mortgagor, his legal representatives or assigns.” MCL 600.3252
(emphasis added). The statute does not contain any specific requirements regarding the form of
a “demand” or the information that must appear in a “demand.” In fact, the statute does not even
require that a “demand” be in writing.3 On June 2, 2017, plaintiff filed a document with the
Treasurer in which it alleged entitlement to the surplus from the mortgage foreclosure sale.
Because plaintiff conveyed to the Treasurer its assertion of its right to disbursement of the
surplus funds, and because the statute contains no specific requirements for the form or content
of a “demand,” we conclude that plaintiff filed a “demand” for purposes of MCL 600.3252.

        While recognizing the usual and customary meanings of the terms “demand” and
“claim,” the trial court also noted that these terms appear in the statute “in a context that
distinguished them, specifically by associating a ‘demand’ with the interests of a mortgagor
seeking the surplus and a ‘claim’ with the interests of a subsequent mortgagee seeking the
surplus.” The trial court correctly understood the statute. Only “the mortgagor, his legal
representatives or assigns” can present a “demand” for disbursement of surplus funds that remain
after a mortgage foreclosure sale. In contrast, only a party with “a subsequent mortgage or lien
encumbering the real estate, or some part thereof” can file a “claim” for disbursement of those
surplus funds. MCL 600.3252.

         Plaintiff correctly points out that it could not have filed a valid “claim” under the surplus
statute. We agree that, because plaintiff never held a subsequent mortgage or lien encumbering
the real estate, it could not have filed a valid “claim” under the statute. The fact that plaintiff’s
filing did not qualify as a valid “claim” did not, however, necessarily make that filing a
“demand.” It is possible for a junior mortgage holder to file a “claim” that is defective because it
fails to satisfy the statutory requirements in some respect. If that junior mortgage holder was not
also the legal representative or assignee of the mortgagor, an unlikely scenario, the junior
mortgage holder could not file a “demand” for the surplus funds, but could only file a “claim” for
the surplus funds. Therefore, any attempt by the junior mortgage holder to file a “claim” could

3
  In contrast, the statute does expressly require that a “claim” be filed in writing. The statute
provides that “some claimant or claimants, shall file with the person so making the sale, a claim
or claims, in writing, duly verified by the oath of the claimant, his agent, or attorney.” MCL
600.3252.

                                                 -6-
fail, without that failed “claim” transforming into a “demand.” Likewise, a party alleging that it
is the mortgagor’s assignee can file a “demand” for the surplus funds but cannot file a valid
“claim” for those funds unless that party also holds a subsequent mortgage or lien encumbering
the real estate. Contrary to the implication contained in plaintiff’s argument, the fact that
plaintiff’s filing did not qualify as a valid “claim” did not necessarily mean that its filing
qualified as a valid “demand.” Nonetheless, because plaintiff conveyed to the Treasurer its
assertion of its right to disbursement of the surplus funds, we conclude that plaintiff made a
“demand” for purposes of MCL 600.3252.4

                 C. OBLIGATION TO PAY A “DEMAND” IMMEDIATELY

        Plaintiff next argues that, once it filed a “demand” for the surplus funds, the Treasurer
should have immediately paid it the $77,490.54 surplus created by the foreclosure sale. We
conclude that the trial court was correct in (1) recognizing that the statute required neither the
Sheriff nor the Treasurer to pay plaintiff’s “demand” within a specified period of time, and (2)
holding that the Treasurer properly deferred the dispute between plaintiff and defendant to the
trial court once defendant filed a “claim” for the surplus funds. Therefore, the trial court did not
err in awarding the surplus funds to defendant under MCL 600.3252, even though plaintiff filed
a “demand” for those funds before defendant filed a “claim” for those same funds.

        Plaintiff argues that the statute requires that surplus funds shall be paid over “on
demand,” and that the phrase “on demand” means immediately, not within a reasonable period of
time. Although plaintiff did file a “demand” under the statute, because its filing was not labeled
as a “demand” and because its filing was easily mistaken for a “claim,” we conclude that the trial
court did not err in holding that the Treasurer had a reasonable period of time in which to process
plaintiff’s filing and the Treasurer acted properly in declining to pay plaintiff once it received
defendant’s competing “claim.”

        As an initial matter, the trial court stated that the reason why county officials did not
make an immediate payment to plaintiff was unknown. The trial court stated, “What is known is
that the Treasurer did not make an immediate payment of the surplus to Trustlink. It is not
known why an immediate payment to Trustlink was not made, as it was the only party interested
in the surplus funds at the time.” Further, the trial court held that, although “nothing in the
statute prevents the Treasurer/Sheriff from evaluating the merits of a demand or determining
whether a demand is misfiled as a claim, MCL 600.3252 does not require it.” The trial court also
held that the statute does not specify a timeframe for the payment of surplus funds once a
demand is made. Therefore, the trial court held that neither the Sheriff nor the Treasurer was

4
  Defendant argues that plaintiff did not make a proper “demand” under the statute because
plaintiff filed its document with the Treasurer, rather than the Sheriff. Generally, an issue must
be raised, addressed, and decided in the trial court to be preserved for review. Dell v Citizens Ins
Co of America, 312 Mich App 734, 751 n 40; 880 NW2d 280 (2015). Defendant did not make
this argument in the trial court and the trial court did not rule on this issue. Therefore, this issue
is not properly preserved for appellate review and we need not decide it.

                                                 -7-
statutorily compelled to pay plaintiff the surplus funds during the seven days that passed between
the filing of plaintiff’s demand and the filing of defendant’s claim.

       Plaintiff argues that the phrase “on demand” is not synonymous with the phrase “a
reasonable time.” Plaintiff cites Palmer v Palmer, 36 Mich 487, 491 (1877) (holding that “a note
payable on demand is payable at once”); and Citizens’ Savings Bank v Vaughan, 115 Mich 156,
159 (1897) (holding that, “in suits upon a note between the promisor and the promisee . . . the
universal rule is that the note is due at once”). We consider this case law inapplicable because
these century-old decisions addressed contractual promises to pay a debt, a scenario that is not
analogous to a public office holder’s statutory obligation to pay a party claiming entitlement to
funds created by the sale of another person’s real property.

        Plaintiff argues that the phrase “on demand” is also found in various statutes involving
records and documents. See MCL 41.62 (requiring a township supervisor to deliver books,
assessment rolls, and other papers on demand to his successor in office); MCL 449.20 (requiring
business partners to render their partners or the legal representative of their deceased partners
true and full information on demand); MCL 462.381 (requiring a railroad police officer to
exhibit his metallic badge on demand and before making an arrest); and MCL 554.1021(1)
(requiring that a receiver of real estate receive on demand possession of receivership property
and payment of debts “matured or payable on demand”). Plaintiff argues that each of these
statutory provisions contemplates immediate action, not action undertaken at the discretion of the
actor in a reasonable time. Plaintiff further argues that the Legislature knows how to use the
phrase “a reasonable time” when it intends to do so, citing MCL 600.557b(5) (providing that
money deposited in a certain fund shall be refunded to the parties in a reasonable time); MCL
600.2911(2)(b) (providing a defendant in a libel action a reasonable time to publish a retraction);
and MCL 600.8703(3) (holding that the time specified in an appearance citation for a municipal
civil infraction “shall be within a reasonable time after the citation is issued”). Although we
agree that the phrases “on demand” and “a reasonable time” are not synonymous, we conclude
that the statutory authority cited by plaintiff is inapplicable because the statutes cited pertain to
entirely different subject matters than the issue currently before this Court.

        Regarding the speed with which a county official must respond to an assertion of the
right to payment of surplus funds created after a mortgage foreclosure sale, we find instructive
this Court’s decision in the case of In re $55,336.17 Surplus Funds. In that case, the real
property owners granted a first and second mortgage. After several bank mergers, PNC Bank
held both mortgages. Both of the real property owners died and PNC foreclosed on the real
property under the first mortgage. A third party purchased the real property at a sheriff’s sale for
an amount that satisfied the first mortgage and created a surplus of $55,336.17. In re $55,336.17
Surplus Funds, 319 Mich App at 504. A month after the sheriff’s sale, PNC filed a verified
“claim” for the surplus proceeds in the circuit court, as holder of the junior mortgage, and the
surplus amounts were deposited with the circuit court. Id. at 504-505. The personal
representative of the estate of one of the original property owners then filed a competing “claim”
for the surplus proceeds in the circuit court. Id. at 505. The personal representative argued that
PNC’s junior lien on the property was extinguished upon foreclosure of the first mortgage,
rendering PNC an ordinary creditor without a remaining security interest in the real property.
The circuit court ordered the release of surplus proceeds to PNC, holding that the language of the

                                                -8-
surplus statute indicated an intent to prioritize the claims of junior mortgagees over the interest
of the original mortgagor. Id. at 506.

        On appeal, this Court recognized that the foreclosure of a senior mortgage extinguishes
the lien of a junior mortgagee where the junior mortgagee does not exercise its right to redeem.
Id. at 509. This Court distinguished, however, between the potential existence of a security
interest in the property as junior mortgagee and the right to claim a priority interest in the surplus
funds, over the mortgagor, pursuant to the explicit language of the surplus statute. Id. at 510.
This Court held that the surplus statute “was intended to apply for the protection of subsequent
mortgage claimants or lienholders,” granting them “a limited interest in foreclosure sale surplus
proceeds superior to the mortgagor after a senior mortgage is satisfied.” Id. at 510 (quotation
marks and citation omitted). This Court concluded that there was “no question that PNC’s
interest in the surplus funds, as a junior mortgagee, was superior to appellant’s, as the legal
representative of the mortgagor.” Id. at 514.

       Furthermore, the In re $55,336.17 Surplus Funds Court addressed the speed with which a
county official must respond to an assertion of the right to payment of surplus funds created after
a mortgage foreclosure sale. As this Court stated:

               The plain language of MCL 600.3252 provides that the surplus should be
       paid to the mortgagor “unless at the time of the sale, or before the surplus shall be
       so paid over” a claim is filed by a subsequent mortgagee or lienholder. The
       Legislature therefore provided a period during which a subsequent mortgagee or
       lienholder may file a claim to foreclosure sale surplus proceeds, without regard to
       continuing security interests in the property itself or the statutory redemption
       period. [Id.]

In that case, because the junior lienholder filed its claim for the surplus funds “just over a month
after the foreclosure sale,” this Court held that the junior lienholder complied with the statutory
requirements and that it was “therefore entitled under the statute to consideration as a claimant to
the foreclosure sale surplus proceeds.” Id. at 512.

        Applying the holding of In re $55,336.17 Surplus Funds to the present case, we conclude
that the trial court properly interpreted and applied the language of the surplus statute. The
Sheriff (or the Treasurer acting as the Sheriff’s agent) could have properly paid the surplus funds
to plaintiff in response to its written “demand,” during the seven-day period between the filing of
that “demand” and the filing of defendant’s first claim. Had the Sheriff or Treasurer done so,
defendant would likely have had no recourse.5 For whatever reason, neither the Sheriff nor the
Treasurer in this case had yet disbursed the surplus funds to plaintiff when defendant filed its
“claim” seven days later. Despite plaintiff’s argument to the contrary, the trial court correctly
held that the statute does not require either the Sheriff or the Treasurer to pay a demand for

5
  See Schwartz v Irons, 4 Mich App 628; 145 NW2d 357 (1966) (holding that a claimant has no
ability to pursue the sheriff for surplus funds after the sheriff has paid those funds to another
claimant).

                                                 -9-
surplus funds within any specified period of time. The surplus statute contains no express time
requirement for filing a “claim” with the seller of foreclosed property and if a statute does not
provide a specific time limit for the completion of a particular task, a reasonable time is implied.
Flint Cold Storage v Dep’t of Treasury, 285 Mich App 483, 497; 776 NW2d 387 (2009). The In
re $55,336.17 Surplus Funds Court held that a “claim” for surplus funds was properly and timely
filed “just over a month after the foreclosure sale.” Id. at 512. In this case, we conclude that the
seven-day period between the filing of plaintiff’s “demand” and the filing of defendant’s “claim”
is a presumptively reasonable period of time, given the speed with which local units of
government operate and this Court’s prior ruling that one month is a reasonable period of time.

        Although plaintiff makes a valid point that an obligation to make payment “on demand”
generally requires immediacy, the specific facts of this case support the trial court’s ruling that
the Treasurer was justified in delaying payment for seven days while it conducted its due
diligence in evaluating plaintiff’s filing. Plaintiff provided the Treasurer with a document titled
as a “Verified Claim” and only began to argue on appeal from the trial court’s ruling that the
document was in fact a “demand” and not a “claim.” Plaintiff also included in the document
many of the details statutorily required of a “claim,” including (1) a writing; (2) duly verified by
the oath of the claimant’s attorney; (3) setting forth the amount of the underlying debt on the first
mortgage, the amount of the successful bid, and the amount of the surplus; and (4) setting forth
other facts and the nature of the claimant’s alleged entitlement to the surplus funds. The
Treasurer could have reasonably believed that the document was a “claim” that was not
immediately payable “on demand” but was payable only after consideration of the claimant’s
statutory entitlement to the surplus funds. Therefore, we will not disturb the trial court’s ruling
that the Treasurer acted reasonably in examining plaintiff’s written filing for seven days without
issuing immediate payment to plaintiff.

                               D. DEFENDANT’S FIRST CLAIM

        Plaintiff next argues that defendant’s first attempt at filing a claim was defective and that
it did not qualify as a “claim” under MCL 600.3252. Plaintiff argues that, because defendant’s
first purported “claim” failed to state that the Bank had a subsequent mortgage or lien
encumbering the Property, it was not a properly filed “claim” under the surplus statute. Plaintiff
further argues that the trial court erred when it held that the surplus statute does not require a
claimant to have an actual present ownership interest in the subsequent mortgage at the time the
“claim” is filed with the person holding the surplus funds. We conclude that plaintiff’s argument
is without merit.

        The trial court correctly recognized that defendant’s “claim” to the surplus proceeds was
properly before the trial court because the Bank finalized its assignment of the junior mortgage
before the trial court proceedings occurred. In this case, it is undisputed that (1) the mortgagors
granted a second mortgage on the Property, (2) that second mortgage was duly recorded, (3)
plaintiff was on notice of the second mortgage when it filed its “demand” for the surplus funds as
assignee of the mortgagors, and (4) the Bank received an assignment of the second mortgage
before proceedings to determine entitlement to the funds began in the trial court. In Schwartz v
Irons, 4 Mich App 628, 632; 145 NW2d 357 (1966), this Court stated that the surplus statute
“was intended to apply for the protection of subsequent mortgage claimants or lien holders.” In
this case, it is undisputed that the Bank acquired a valid junior mortgage on the Property.

                                                -10-
Therefore, it is appropriate to construe the statute in a manner that allows the holder of the junior
mortgage to recover the surplus funds created by the foreclosure sale on the senior mortgage.

         In the alternative, defendant argues that it was entitled to proceed in the trial court even if
its first claim was defective because it was filed before the Bank obtained its assignment of the
junior mortgage. Defendant notes that portion of the surplus statute that describes the
proceedings in the circuit court. The statute provides:

       [I]n which case the person so making the sale, shall forthwith upon receiving the
       claim, pay the surplus to, and file the written claim with the clerk of the circuit
       court of the county in which the sale is so made; and thereupon any person or
       persons interested in the surplus, may apply to the court for an order to take
       proofs of the facts and circumstances contained in the claim or claims so filed.
       Thereafter, the court shall summon the claimant or claimants, party, or parties
       interested in the surplus, to appear before him at a time and place to be by him
       named, and attend the taking of the proof . . . and the court shall thereupon make
       an order in the premises directing the disposition of the surplus moneys or
       payment thereof in accordance with the rights of the claimant or claimants or
       persons interested. [MCL 600.3252.]

         Defendant is correct that the statute allows both (1) parties who filed a “claim” with the
person making the sale, and (2) any person or persons interested in the surplus, to apply to the
circuit court for distribution of the surplus funds after a foreclosure sale. Although plaintiff filed
a “demand” rather than a “claim” with the Treasurer, plaintiff indisputably filed a petition with
the circuit court seeking an order resolving the parties’ entitlement to the surplus funds. That
filing allowed the circuit court to determine the rights of all “claimants or persons interested” in
the surplus funds. MCL 600.3252. Even if defendant’s first “claim” was invalid, plaintiff’s
filing of its petition in the trial court allowed the trial court to award defendant (on behalf of the
Bank) the surplus funds, as a party “interested in the surplus.” Therefore, plaintiff is not entitled
to relief on this claim.

                    E. VALIDITY OF THE TRIAL COURT PROCEEDINGS

        Plaintiff next argues that, because neither the first nor the second purported “claim” filed
by defendant constituted a valid “claim” under the surplus statute, the Sheriff could not
“forthwith upon receiving the claim, pay the surplus to, and file the written claim” with the trial
court, as required by the statute. Plaintiff further complains that the Sheriff never filed either of
defendant’s two purported “claims” with the trial court. Plaintiff argues that the trial court’s
involvement was never triggered under the statutory language because the Sheriff never paid the
surplus to or filed defendant’s claim with the trial court. Therefore, plaintiff argues that the
entire procedure in this case was defective.

        Yet, plaintiff indisputably applied to the trial court for payment of the surplus funds as an
interested party to those funds. Because plaintiff chose to initiate the trial court proceedings
when it filed its petition with the trial court, it will not now be heard to complain that the trial
court should have refrained from determining the parties’ respective interests. The dispute over
entitlement to the surplus proceeds reached the correct forum—the circuit court. Plaintiff has

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suffered no harm from the fact that it, rather than the Sheriff or Treasurer, filed the petition.
Plaintiff has also failed to articulate how the result in this case would have been different if the
Sheriff or the Treasurer, rather than plaintiff, had filed the case in the circuit court. Therefore,
plaintiff is not entitled to relief on this issue.

                                F. WAIVER AND FORFEITURE

        Plaintiff makes three additional arguments: (1) defendant could not act as an agent for the
Bank for purposes of filing a “claim” for disbursement of surplus funds under the surplus statute
because defendant was only a mortgage servicer and servicers are only entitled to collect
installment payments under a mortgage; (2) defendant’s first and second “claims” were invalid
because those documents were not signed by the claimant, his agent, or attorney; and (3)
defendant’s second “claim” was invalid because it failed to state the amount unpaid on the
second mortgage.

        With regard to plaintiff’s argument that defendant could not act as an agent for the Bank
in this case, we decline to reach this issue because plaintiff clearly waived this issue in the trial
court. In its answer to defendant’s petition for disbursement of the surplus foreclosure proceeds,
plaintiff specifically stated that it did “not challenge the right of a mortgage servicer to act on
behalf of a mortgage holder.” Furthermore, at the motion hearing in the trial court, plaintiff
specifically stated that defendant could assert a claim on behalf of the Bank in a representative
capacity. These statements constitute a waiver of plaintiff’s appellate argument that defendant
had no authority as a servicer to act as the Bank’s agent in the filing of a “claim” under the
surplus statute. See People v Carter, 462 Mich 206, 214; 612 NW2d 144 (2000).

       With regard to plaintiff’s two additional arguments, we hold that these issues are not
properly preserved for appellate review because plaintiff never made these arguments in the trial
court and the trial court never ruled on these issues. Because appellate consideration of
unpreserved claims of error is disfavored, People v Frazier, 478 Mich 231, 241; 733 NW2d 713
(2007), we decline to address the arguments that plaintiff raises for the first time on appeal.

       Affirmed. Defendant may tax costs under MCR 7.219.

                                                              /s/ Jane E. Markey
                                                              /s/ Michael J. Kelly
                                                              /s/ Brock A. Swartzle

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