Court Opinion

ID: 3496661
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:04:22.918461+00
Date Added: 2024-06-11T14:05:14.293681
License: Public Domain

Josephine M. Obenauer owned certain premises. Arthur H. Linenberg and his wife, Cora, desired the premises for their home, but were unable to make the payment required for purchase on land contract. Pauline A. Linenberg, mother of Arthur, entered into a land contract under which she became the purchaser. The contract provided for monthly payments and contained an acceleration clause. Josephine M. Obenauer conveyed the premises and assigned the land contract to plaintiff company with the following guaranty:
"I hereby guarantee that the vendee therein named or her assignees will faithfully perform said contract and make all payments which fall due therein."
Default in payments was made, acceleration exercised, and the bill herein was filed to foreclose the land contract and obtain a decree for deficiency, if any, against both Pauline A. Linenberg and Josephine M. Obenauer.
Defendant Pauline A. Linenberg, by answer and cross-bill, brought in Arthur and Cora Linenberg and asked for a decree holding that Arthur and Cora were the vendees in fact and that she have an equitable lien on the property for the money she had paid the vendor.
Josephine M. Obenauer, by answer, denied liability under the guaranty for more than the monthly payments in default, pleaded misjoinder of parties, and, by cross-bill, prayed relief against Pauline *Page 145 
A. Linenberg for any sum required of her under the guaranty.
The court found the amount due on the land contract as accelerated, and adjudged Pauline A. Linenberg liable as vendee and Josephine M. Obenauer liable as guarantor for the full amount thereof, decreed sale of the property, and provided that if any part of the deficiency was collected from Josephine M. Obenauer she should be entitled to "an assignment from the plaintiff of a like portion of said deficiency judgment as against defendant Pauline.A. Linenberg and defendant Josephine M. Obenauer shall have execution thereof against defendant Pauline A. Linenberg."
Josephine M. Obenauer and Pauline A. Linenberg both review by appeal.
In behalf of Mrs. Linenberg we are urged to hold that her son and his wife are the vendees in the land contract and she stands in the relation of their mortgagee. Cases holding that a deed given as security is a mortgage as between parties have no application to any issue here presented. The relation of mortgagor and mortgagee between the Linenbergs might be declared without at all affecting Mrs. Linenberg's liability to plaintiff.
Arthur and Cora Linenberg were in possession of the premises, and Mrs. Linenberg claims they should have been made parties to the foreclosure. They were brought before the court by Mrs. Linenberg under her cross-bill. They were not parties to the land contract, and plaintiff was under no obligation to make them parties in the original bill.
The guaranty of Josephine M. Obenauer cannot be extended beyond its plain terms. The land contract called for monthly payments of not less than $75, and required full performance within 10 years *Page 146 
from and after the first day of June, 1926. The bill herein was filed March 1, 1930, and the decree was entered March 13, 1931.
The proofs in this case were taken before a circuit court commissioner and the decree was entered upon the findings of fact by the commissioner and approval of his conclusions of law.
The commissioner in his report stated:
"I find that on January 25, 1928, plaintiff sent a letter to defendant Josephine M. Obenauer advising her that Pauline A. Linenberg was then in default under the said land contract, and calling the attention of said Josephine M. Obenauer to her guaranty thereof. I further find that the contract became in default as set forth in the bill of complaint on or about May 10, 1929, and has remained in default ever since, but that the plaintiff, the Mortgage  Contract Company, the present holder of the title and vendor's interest in said land contract, did not give any additional notice to defendant Josephine M. Obenauer hereunder, of such default until on or about the time of the commencing of this action to establish the vendor's lien in the same."
We do not find any subsequent notice of default.
In his conclusions of law the commissioner stated:
"I further find that the plaintiff was not obliged to give Josephine M. Obenauer any notice of the default of said vendee."
The undertaking by the guarantor was subsequent to the contract fixing the obligation of the vendee and founded upon a separate consideration. The obligation of the vendee to pay was not the primary obligation of the guarantor. Her obligation was collateral to and contingent upon default in payment by the vendee, and, being secondary, she was entitled *Page 147 
to notice of default and an opportunity to protect herself by payment.
In the language of Mr. Justice Story in Douglass v. Reynolds, 7 Pet. (32 U.S.) 113:
"By the very terms of this guaranty, as well as by the general principles of law, the guarantors are only collaterally liable, upon the failure of the principal debtor to pay the debt. A demand upon him, and a failure on his part to perform his engagements, are indispensable to constitute a casusfœderis."
Defendant Obenauer was entitled to notice of default before the suit against her. Palmer v. Schrage, 258 Mich. 560.
When a payment became due under the land contract, and the vendee was in default, the plaintiff had the option to call upon Mrs. Obenauer for payment thereof or to take proceedings in equity to enforce the contract, and, if it exercised the latter, then, according to the terms of the land contract, it might declare the entire amount owing thereon to be due from and payable by the vendee, for such is the land contract provision. The remedy against the guarantor, however, would arise only after notice of default on the part of the vendee and demand upon her for payment.
Defendant Obenauer is in a court of equity and must abide equitable relief.
If defendant Obenauer pays all sums now in default within 20 days after this opinion is filed the decree should be reversed, with costs to her. Otherwise the decree should stand affirmed, with costs to plaintiff.
McDONALD and SHARPE, JJ., concurred with WIEST, J. *Page 148