RUTH ANN RICE V BRIAN RICE
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STATE OF MICHIGAN
COURT OF APPEALS
RUTH ANN RICE, CHARLES RICE and
GREAT LAKES BUILDERS,
UNPUBLISHED
November 17, 2005
Plaintiffs-Appellees,
v
No. 253843
Genesee Circuit Court
LC No. 01-070306-CK
BRIAN RICE,
Defendant,
and
THELMA RICE,
Defendant-Appellant.
Before: Hoekstra, P.J., and Gage and Wilder, JJ.
PER CURIAM.
Defendant Thelma Rice1 appeals as of right a foreclosure order entered pursuant to an
order granting plaintiffs summary disposition. We affirm.
While defendants Brian Rice (“Brian”) and Thelma Rice were married, Brian acquired by
gift from his sister and his mother, plaintiff Ruth Ann (“Ruth Ann”), a quitclaim deed to a piece
of unimproved property in Genesee Township. Defendant was not named on the title. While
defendants were separated, but still married, Brian conveyed the land to his father, plaintiff
Charles Rice (“Charles”), and Ruth Ann, without defendant’s signature. This deed served as
collateral for a contractors’ agreement, pursuant to which plaintiff Great Lakes Builders2 agreed
to build a house on the land in exchange for payments from Brian. If Brian made all the
payments in full, the land would then be deeded back to him; otherwise, it would remain the
property of Charles and Ruth Ann. Defendant did not sign the contractors’ agreement.
1
Because defendant Brian Rice did not appear in the lower court and is not a party to this appeal,
we shall singularly refer to Thelma Rice as defendant.
2
Charles and Ruth Ann own Great Lakes Builders.
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After construction of the house was completed, Brian failed to make the required
payments, and Great Lakes sought foreclosure. The trial court granted a default against Brian for
failure to appear and summary disposition against defendant for failure to state a valid defense.
The trial court concluded that the deed of transfer from Brian to Charles and Ruth Ann was a
mortgage, which did not require defendant’s signature. The trial court also held that defendant
retained a right of redemption, but that her dower interest did not prevent foreclosure. Charles
and Ruth Ann subsequently purchased the property at a public foreclosure sale.
During the foreclosure proceedings, defendants’ divorce was finalized. The trial court
awarded defendant one-third of the appraised value of the home, less the value of the
unimproved land at the time it was gifted to Brian, or $37,666.66. Brian appealed the trial
court’s distribution of the marital estate and award of alimony. This Court concluded that the
quitclaim deed conveying the property to Charles and Ruth Ann was ineffective without
defendant’s signature. See Brian Rice v Thelma Rice, unpublished opinion per curiam of the
Court of Appeals, issued January 18, 2005 (Docket No. 249072). This Court also determined
that the trial court properly included the property in the marital estate, but reduced defendant’s
lien to one-half of the value of the gifted land without the house at the time of trial, or $7,500 of
$15,000.
On appeal, defendant argues that plaintiffs could not foreclose against her because she
did not sign the deed or contractors’ agreement. Defendant claims that the deed and contract
were void ab initio without her signature pursuant to the dower statute, MCL 558.1, and the
statute of frauds, MCL 566.108. She further argues that plaintiffs’ case should be dismissed as a
result of this Court’s recent opinion in the appeal of defendants’ divorce case. Rice, supra.
We review de novo a trial court’s decision on a motion for summary disposition. Graves
v American Acceptance Mortgage Corp (On Rehearing), 469 Mich 608, 613; 677 NW2d 829
(2004). Summary disposition pursuant to MCR 2.116(C)(9) is appropriate if the defendant fails
to raise a valid defense to the plaintiff’s claims. Wheeler v Shelby Twp, 265 Mich App 657, 663;
697 NW2d 180 (2005). Summary disposition is proper if the defenses asserted are so clearly
untenable as a matter of law that no factual development could possibly deny the plaintiff’s right
to recovery. Id. When reviewing equitable actions, this Court reviews the equitable decision de
novo, and findings of fact in support of the decision are reviewed for clear error. LaFond v
Rumler, 226 Mich App 447, 450; 574 NW2d 40 (1997). Findings of fact are considered clearly
erroneous if this Court is left with “a definite and firm conviction that a mistake has been made.”
Id.
Defendant argues that this Court’s opinion in her divorce case requires dismissal of
plaintiffs’ case. However, the law of the case doctrine is inapplicable because it applies only to
subsequent appeals of the same case. Grievance Administrator v Lopatin, 462 Mich 235, 259;
612 NW2d 120 (2000). Furthermore, collateral estoppel does not apply because plaintiffs were
not parties to the divorce case and could not have obtained review of the judgment in that case.
Monat v State Farm Ins Co, 469 Mich 679, 682-684; 677 NW2d 843 (2004).
A widow is entitled to “dower, or the use during her natural life, of 1/3 part of all the
lands whereof her husband was seized of an estate of inheritance, at any time during the
marriage, unless she is lawfully barred thereof.” MCL 558.1. When combined with the statute
of frauds, MCL 566.108, MCL 558.1 requires a wife’s signature for a contract for the sale of
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land to be valid. Slater Management Corp v Nash, 212 Mich App 30, 32; 536 NW2d 843
(1995).
The trial court concluded that the deed and contract between Brian and plaintiffs
constituted a mortgage rather than a transfer of land. An agreement merely involving a deed that
is absolute on its face may be deemed a mortgage if equity so requires. The controlling factor is
the intention of the parties. Koenig v Van Reken, 89 Mich App 102, 106; 279 NW2d 590 (1979).
The contractors’ agreement explicitly states that the deeded property is to serve as collateral for
the building agreement. We therefore conclude that the contract intends a mortgage. Thus, we
must consider whether defendant’s signature was required for Brian to enter into a valid
mortgage contract.
We are not persuaded that the contract was a purchase money mortgage (“PMM”), which
does not require a wife’s signature in order to be valid pursuant to MCL 558.4 and Young v
McKee, 13 Mich 552, 555 (1865). A mortgage is a PMM only when the mortgage is given at the
same time as the purchase of the security in a single transaction. MCL 558.4; Young, supra at
552. Because Brian acquired the land more than two years before executing the contractors’
agreement with plaintiffs, the agreement cannot be considered a PMM. Regardless, Michigan
law does not explicitly require a wife’s signature for a husband to create a valid mortgage, even
if it is not a PMM. Rather, a wife has the right to redeem the mortgaged property upon
foreclosure. Tuller v Detroit Trust Co, 259 Mich 670, 676; 244 NW 197 (1932). In Tuller, as in
the instant case, the wife was financially unable to redeem the property. The Court did not
question the validity of the mortgage on this basis, despite the fact that the wife effectively lost
all rights to the property when she was unable to redeem. Id. at 677-679. Thus, we hold that the
trial court did not err when it found that Brian’s contract with plaintiffs was a valid mortgage.
The trial court therefore correctly granted plaintiffs summary disposition because defendant’s
dower rights were not a valid defense to the foreclosure proceedings as a matter of law. MCR
2.116(C)(9); Wheeler, supra at 663.
However, the terms of the trial court’s judgment of foreclosure inaccurately stated the
parties’ rights upon foreclosure. The judgment of divorce, which was entered in February 2003,
transformed defendant’s dower rights into a $7,500 money judgment secured by a lien on the
property. Therefore, defendant did not retain a right to redeem, and the priority of defendant’s
lien and plaintiffs’ mortgage must be addressed. The prioritization of encumbrances on property
is governed by Michigan’s race-notice statutes and applicable case law. MCL 565.25; MCL
565.29. Generally, the first-recorded encumbrance takes priority over subsequently recorded
instruments. MCL 565.25(4). The order of recording is inapplicable in this case, however,
because plaintiffs had notice of defendant’s preexisting rights. Michigan Nat’l Bank v Morren,
194 Mich App 407, 410-411; 487 NW2d 784 (1992). Moreover, judicial liens on marital
property may be enforced as “is necessary to accord complete equity and to conclude the
controversy.” Walworth v Wimmer, 200 Mich App 562, 564; 504 NW2d 708 (1993).
Defendants married in 1993 and separated in April 1999. When plaintiffs executed their
mortgage with Brian in November 1999, they were aware of defendants’ separation and
defendant’s forthcoming claims to the property in the divorce action. Plaintiffs therefore had
actual notice of defendant’s rights. Accordingly, we order the equitable enforcement of
defendant’s lien as established in the judgment of divorce and in this Court’s opinion in the
appeal of the divorce action. We note that defendant’s lien on the property appears to be her
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only security for the amounts awarded in the divorce, and further, that her lien could be rendered
valueless if plaintiffs’ mortgage takes priority. Furthermore, in May 2004, plaintiffs bought the
property subject to defendant’s February 2003 lien, and they may not be considered purchasers
in good faith because they were aware of defendant’s lien. MCL 565.29(4); Michigan Nat’l
Bank, supra at 410-411. Accordingly, defendant’s lien takes priority over plaintiffs’ mortgage.
Plaintiffs request that this Court cancel defendant’s notice of lis pendens because
defendant did not redeem the property within the redemption period. The purposes of notice of
lis pendens are to protect the right to litigation regarding real property and to apprise prospective
purchasers of disputes about rights in the land. Kauffman v Shefman, 169 Mich App 829, 837;
426 NW2d 819 (1988). Because we have resolved defendant’s rights regarding the property at
issue, and the property has already been sold to plaintiffs at auction, we find that notice of lis
pendens is no longer necessary. We therefore order that the notice of lis pendens is canceled.
Lastly, defendant requests that we remand on the issue of attorneys’ fees. The judgment
of foreclosure awarded fees to plaintiffs to be paid by defendants. Costs are to be allowed to the
prevailing party in an action unless otherwise directed by the court or prohibited by statute.
MCR 2.625(A)(1). Defendant was never a party to the contractors’ agreement. Furthermore, by
the time of foreclosure, defendant had become a fellow interest holder who, nonetheless, bore the
burden of defending the suit because Brian did not appear. We therefore order that the full costs
of prosecution expended by plaintiffs, as determined in the judgment of foreclosure, shall be paid
by Brian.
Affirmed.
/s/ Joel P. Hoekstra
/s/ Hilda R. Gage
/s/ Kurtis T. Wilder
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