Burkhardt v. Bailey
680 N.W.2d 453 · Michigan Court of Appeals · 2004
Facts
Michael L. Bailey owned vacant property secured by a mortgage held by Bond Corporation. Bailey failed to pay property taxes, and in May 1997, Burkhardt purchased the property at a tax sale, obtaining a tax deed on August 31, 1998. Burkhardt served Bailey with notice of reconveyance, but Bailey did not redeem the property within six months. Burkhardt did not serve notice on Bond Corporation. Later, in 1999, while an appeal was pending, Ralph and Lona Hamilton (Bailey's sister and brother-in-law) loaned Bailey $25,000, using $10,000 to pay off Bailey's debt to Bond. On December 2, 1999, Bailey granted the Hamiltons a new $25,000 mortgage on the property. On January 14, 2000, Bond's mortgage was discharged and recorded, and the Hamiltons' new mortgage was also recorded.
Procedural history
Burkhardt filed a complaint to quiet title. The trial court initially granted summary disposition to Bailey and Bond, declaring Burkhardt's tax deed void. The Court of Appeals affirmed in part (Bond's right to notice) and reversed in part (Bailey's redemption rights and voiding of the tax deed). On remand, the trial court vacated portions of its prior decision, and the Hamiltons intervened. The trial court then granted summary disposition to Bailey and the Hamiltons, ruling they were legal/equitable assignees of Bond and entitled to redeem, and ordered the property redeemed. Burkhardt appealed this second trial court decision.
Issue
Did Bond Corporation's discharge of its mortgage extinguish its right to notice of reconveyance and its right to redeem the property? If not, did the Hamiltons succeed to Bond's right of redemption, either legally or equitably, despite Bond having discharged its mortgage?
Holding
The trial court erred by applying principles of equity to overcome the plain language of the mortgage discharge. Bond's right to redeem was extinguished when its mortgage was discharged, and the Hamiltons did not succeed to any right of redemption from Bond. The court reversed the trial court's grant of summary disposition to Bailey and the Hamiltons and remanded for entry of summary disposition for Burkhardt.
Rule
The right to redeem property sold for delinquent taxes is limited to those persons or entities entitled to notice under MCL 211.140, or their successors in interest, who continue to hold an existing interest described in MCL 211.141. A mortgage cannot be assigned after it has been discharged because a mortgage is merely a secondary incident to the debt. An assignment requires a clear manifestation of the assignor's intent to presently transfer the interest, and unilateral subjective intent of one party cannot control the terms of a contract. Equity cannot be used to avoid the dictates of a statute, absent fraud, accident, or mistake, nor to save parties from poor business decisions or legal mistakes without clear intent from the assignor.
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