ARKAN D ALTON V AMERIQUEST MORTGAGE CO
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STATE OF MICHIGAN
COURT OF APPEALS
AMERIQUEST MORTGAGE COMPANY,
FOR PUBLICATION
November 28, 2006
Plaintiff-Appellee,
v
No. 264213
Oakland Circuit Court
LC No. 2004-058731-CH
ARKAN D. ALTON,
Defendant-Appellant.
ARKAN D. ALTON,
Plaintiff-Appellant,
v
No. 264214
Oakland Circuit Court
LC No. 2004-058944-CH
AMERIQUEST MORTGAGE COMPANY,
Defendant-Appellee.
Before: Fitzgerald, P.J., and Murphy, Talbot, Meter, Schuette, Fort Hood and Borrello, JJ.
BORRELLO, J. (dissenting).
I respectfully dissent from the majority opinion and would adopt verbatim this Court’s
opinion in Ameriquest Mortgage Co v Alton, _____ Mich App _____; ____NW2d _____ (2006)
because this Court in Ameriquest correctly concluded that, contrary to the holding in Washington
Mut Bank, 267 Mich App 111; 703 NW2d 486 (2005), Michigan case law and the Restatement
of Property (Mortgages) 3d, Section 7.6, p. 508 supports the application of equitable subrogation
to permit a new mortgagee to take the priority position of a former mortgagee when proceeds
from the new mortgage are used to pay off and retire a former mortgage.
The holding in Washington Mut Bank v ShoreBank Corp, supra, presumes its outcome on
the assertion that the decisions in Walker v Bates, 244 Mich 582; 222 NW 209 (1928), and Lentz
v Stoflet, 280 Mich 446; 273 NW 763 (1937), cannot be distinguished. I disagree.
In Walker, supra, the defendants purchased a home and mortgaged the property with
Commonwealth Federal Bank and used the proceeds of the loan to pay off and retire a previous
mortgage. Thus, the Walker Court found that Commonwealth Federal Bank was entitled to be
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subrogated to the position of the prior mortgagee because it was clear that Commonwealth
Federal Bank paid the prior mortgage at the direction of defendants, thereby acting to fulfill a
duty to them.
In Lentz, the plaintiffs loaned money to defendants in return for a mortgage on certain
property which the defendants then used to pay off an existing mortgage. When defendants
defaulted on the loan, the Court in Lentz found that plaintiffs were not entitled to be subrogated
to the position of the prior mortgage because they had no interests to protect when they advanced
the funds.
The principle that emerges from a reading of these two cases is that equitable subrogation
is not available to a payor who acts strictly as a volunteer, with no interest to protect or duty to
fulfill, but if the payor acts to protect an interest or fulfill a duty, including to pay loan proceeds
as directed, the payor is entitled to subrogation. Thus, because I would hold that this Court in
Washington Mut Bank created a far too restrictive reading of Michigan law based on the
erroneous conclusion that Walker and Lentz are irreconcilable, I would adopt the reasoning of
this Court in Ameriquest, supra.
/s/ Stephen L. Borrello
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