Hayes v. Kent Real Estate Co.

Danhof, J. This is a land contract dispute. On May 20,1970 plaintiff, an attorney and executor of an estate which holds the vendor’s interest in a land contract with defendants-vendees, served upon the defendants a form entitled "Notice of Intention to Declare Land Contract Forfeited and Demand for Payment”. On June 1, 1970 plaintiff caused a document entitled "Complaint and Affidavit to Recover Land on a Land Contract”, which only prayed for possession of the premises covered by the land contract, to be served upon the defendants. On June 23, 1970 plaintiff recovered a default judgment in the District Court for the 61st District. When the plaintiff learned that the judgment was not a money judgment he filed a motion in the district court to set aside the default judgment. The district court refused to set aside the judgment and the plaintiff appealed to the circuit court. The circuit court reversed the district court and the defendants have appealed on leave granted. We reverse the judgment of the circuit court and affirm the judgment of the district court. It has long been settled that a valid notice of forfeiture terminates any right to bring an action on the contract. Taylor v Parkview Memorial Association, 317 Mich 164 (1947), Windmill Point Land Co v Strickland, 264 Mich 79 (1933). In *198 Chicago Boulevard Land Co v Apartment Garages, 245 Mich 448, 450 (1929), the Court tersely stated the rules saying: "The purpose and effect of a valid declaration of forfeiture are to end the contract and discharge vendor of the duty to convey and vendee of duty to pay. Consequently, after forfeiture, action at law will not lie for recovery of any part of the purchase price.” The plaintiff contends that MCLA 600.5637; MSA 27A.5637 allows him to obtain a money judgment even after notice of forfeiture. The relevant portion of the statute reads: "The plaintiff may allege in the complaint that defendant is indebted to him for breach of the lease or land contract or by reason of wrongful possession of the premises for which possession is sought in the complaint. A money judgment may be rendered in such action against any defendant over whom the court has personal jurisdiction. A defendant against whom a claim is made may file a counterclaim against the plaintiff by way of setoff or recoupment. If the claim for money or counterclaim exceeds the jurisdiction of the court, the court shall hear the claim for possession but shall dismiss the claim for money and counterclaim without prejudice to subsequent action thereon. ” (Emphasis added.) We believe it would be a mistake to construe the statute as allowing a money judgment in this proceeding. In enacting the foregoing statute the Legislature did not intend to allow the vendor of a land contract to bring an action for possession or, in the alternative, money damages, i.e., the unpaid portion of the purchase price. The statute is aimed at an entirely different problem. Under MCLA 600.5667; MSA 27A.5667, the vendor has a right to recover incidental damages. In the past the prob *199 lem has been that he could not do so in the action he brought to recover possession, but was forced to do so in a separate action. The reason for enacting MCLA 600.5637; MSA 27A.5637 was to allow the award of incidental damages when they fell within the jurisdictional amount of the district court. The statute was not intended to allow recovery of a portion of the contract price after notice of forfeiture had been given. A valid notice of forfeiture is still a binding election of remedy. The last sentence of the quoted portion of MCLA 600.5637; MSA 27A.5637 clearly indicates that the Legislature did not intend that the vendor be allowed to recover part of the purchase price in this action. For example, assume a case where the unpaid portion of the purchase price exceeds the jurisdictional amount. Under the interpretation urged on us by the plaintiff, the vendor could obtain possession in the district court and then obtain the purchase price in the circuit court. Obviously the Legislature intended no such result. The judgment of the circuit court is reversed and the judgment of the district court is reinstated. Costs to the defendants. All concurred.