Michigan National Bank v. Martin

J. H. Gillis, P. J. On November 18,1965, defendant Harry A. Martin executed and delivered to plaintiff two promissory notes in the amounts of $50,000 and $150,000, as evidence of a debt owed plaintiff. As collateral security, defendants Martin and his wife jointly executed three separate mortgages on real estate located in Kent and Benzie counties in the State of Michigan. Each mortgage instrument covered a single parcel of real estate, namely, defendants’ residence in Kent county, a leasehold interest on defendants’ cottage in Benzie county and a ski resort in Benzie county. Each mortgage recited that it secured the $200,000 indebtedness. In April, 1966, involuntary bankruptcy proceedings were commenced against the defendants. Thereafter, upon defendants’ default on the notes, plaintiff commenced three separate foreclosure actions, each seeking foreclosure upon one of the parcels of real estate and a deficiency judgment. The first two actions were brought in Kent county circuit court and sought to foreclose the mortgages upon defendants’ residence and cottage property. A third *461 action was brought in Benzie county circuit court to foreclose upon the mortgaged sld resort property. This latter action was consolidated with a foreclosure suit brought against defendants by the Manistee County Savings Bank upon a mortgage which also covered property at the ski resort. The Benzie county action proceeded to trial, subject to defendants’ objection that plaintiff had failed to join all three mortgage claims in the Benzie litigation. A judgment of foreclosure was entered and the ski resort was sold. There remained, however, a substantial indebtedness on the notes. Thereafter, in each of the Kent county cases, defendants filed a motion for accelerated judgment of dismissal, pursuant to G-CB. 1963, 116.1(5), upon the ground that plaintiff’s claims were barred because of their merger in the prior Benzie judgment. The motions were denied and the cases were consolidated for trial. From a judgment of foreclosure entered in the consolidated cases, defendants appeal. Defendants invoke the common-law rule against splitting a cause of action: “If the cause of action is single, it cannot be split and made the subject of several suits.” Tuttle v. Everhot Heater Co. (1933), 264 Mich 60, 63. This rule is incorporated in GCR 1963, 203.1, upon which defendants principally rely, although it is there expressed in terms of joinder of claims rather than as a rule against splitting. See Committee Comment, GCR 1963, 203.1. Defendants contend that plaintiff, by its failure to foreclose upon all three mortgages in the Benzie litigation, is precluded from foreclosing upon the two additional mortgages. The trial court was of the opinion that Bule 203.1 had not been violated. Judge Letts noted: “I would agree that the transaction of November 18th created in the plaintiff a single cause of action *462 as to the debt itself, but tbe defendants lose sight of tbe fact tbat tbe action in tbe Benzie county case was not upon tbe debt itself, tbat having been admitted, but upon tbe question as to foreclosure of the mortgage. * * * “Tbe court in its own judgment denies tbat there was a splitting of a cause of action because it is of the opinion that each foreclosure was a separate action in and of itself.” (Emphasis added.) We agree. Each mortgage instrument constituted a separate and distinct contract, capable of independent enforcement. So long as defendants’ indebtedness remained unsatisfied, plaintiff’s foreclosure in tbe Benzie action did not preclude subsequent foreclosure upon tbe additional mortgages in the Kent county litigation. In 1 CJS, Actions, § 103(c)(6), pp 1324, 1325, we find stated: “Tbe bolder of a secured obligation may maintain separate actions on tbe obligation and on tbe security, and, if there are several, on the different securities without splitting his cause of action. (Emphasis added.) * * * “Different mortgages constitute different contracts so tbat a suit to foreclose one will not preclude another suit to foreclose the other.” Of like import is 59 CJS, Mortgages, § 489, p 773: “[T]wo or more mortgages or separate properties to secure tbe same debt may be foreclosed successively until tbe debt is satisfied.” See also 59 CJS, Mortgages, § 705, p 1284; 10 Thompson on Real Property, § 5125, p 8. Defendants have not cited any authority which would apply tbe rule against splitting to bar successive foreclosures upon separate mortgage instruments. Dooly v. Eastman (1902), 28 Wash 564 (68 *463 P 1039), relied upon by defendants, is distinguishable, since there the mortgagee held but a single mortgage which covered several tracts of land. It was held that, where one holding a single mortgage upon two tracts of land foreclosed against one only, he thereby waived any right to later foreclose upon the other tract. In the instant case, plaintiff held not one, but three separate mortgages. Cf. Tacoma Savings Bank & Trust Co. v. Safety Inv. Co. (1923), 123 Wash 481 (212 P 726). Moreover, we have found several cases which reject the same argument made here by defendants. See Koppang v. Steenerson (1907), 100 Minn 239 (111 NW 153); Union Central Life Ins. Co. v. Drake (CA 8, 1914), 214 F 536; Miller v. Wentz (1944), 194 Okla 280 (149 P2d 778). Although of ancient vintage, the words of Mr. Chief Justice Cooley in McKinney v. Miller (1869), 19 Mich 142, 152, are appropriate. We acknowledge their continuing validity after one hundred years. “One who holds several mortgages as mortgagee, to secure a single debt, may foreclose either of them at his option separately until his debt is satisfied.” This is not to say that a mortgagee who holds several mortgages securing the same debt must foreclose each mortgage in separate actions. Cases may arise in which it would be convenient to join foreclosures upon separate mortgages in one action. Indeed, upon plaintiff’s motion, the two suits brought in Kent county were consolidated for trial. However, there may also arise cases in which adoption of any rule of compulsory joinder would work serious hardship on both mortgagor and mortgagee. Where one of several mortgaged properties, if sold upon foreclosure, would yield funds sufficient to satisfy the principal debt, requiring foreclosure *464 upon all properties would needlessly involve the additional properties in litigation. Also, where the mortgagor is in default on only one of several secured notes, all evidencing the some loan, a rule of compulsory joinder would force a mortgagee either to wait until the other notes are due before foreclosing upon all mortgaged properties or, in the alternative, to lose foreclosure rights upon the security for notes not yet due. Cf. Tacoma Savings Bank & Trust Co. v. Safety Inv. Co. (1923), 123 Wash 481 (212 P 726). We cannot adopt a rule which compels such unfortunate results. Furthermore, the policies which support rules against splitting of claims and rules requiring joinder were not offended by plaintiff’s conduct in this case. One such policy is prevention of vexatious litigation. LaBour v. Michigan National Bank (1952), 335 Mich 298. However, plaintiff commenced foreclosure in Benzie county only in response to the Manistee County Savings Bank’s foreclosure action upon the same ski resort. The Manistee bank and plaintiff shared security interests in the same property. Since piecemeal sale of the resort property might well have reduced the value of plaintiff’s mortgage on that property, plaintiff commenced its Benzie action. We cannot charge plaintiff with indulging in vexatious litigation. Since the trial court in these consolidated cases should be affirmed on the merits, it is unnecessary to consider plaintiff’s contention that defendants, by their failure to appeal the refusal of the Benzie county court to require joinder, waived their objection to nonjoinder in the present cases. Affirmed. Costs to appellee. All concurred.