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01/06/76 CHABUT v. CHABUT

January 6, 1976


Appeal from Genesee, John W. Baker, J.

R. B. Burns, P. J., and D. E. Holbrook and D. F. Walsh, JJ.


1. Evidence -- Real Estate -- Appraisals -- Mortgage Value.

Appraisals of the value of real estate, made by a qualified expert, were properly admitted into evidence as substantive evidence of the value of a mortgage on the property.

2. Evidence -- Admissibility -- Expert Testimony -- Judges -- Discretion -- Value of Property -- Factual Basis of Testimony.

The admissibility of testimony of an expert witness and the investigation which the expert has conducted, upon which his opinion is based, is within the sound discretion of the trial Judge, and a ruling that an expert on property values had conducted an investigation of the market values of similar properties and that no more testimony was necessary to establish the factual basis for the expert's valuation was not an abuse of the Judge's discretion.

3. Mortgages -- Foreclosure -- Setting Aside Sale -- Inadequacy of Price.

A foreclosure sale may not be set aside solely because of inadequacy of price because a debtor-mortgagor can protect himself from an unreasonably low bid through his right of redemption; therefore, a portion of a judgment which gave a mortgagee bank the option of setting aside a foreclosure sale at which it had obtained the mortgaged property and conducting a new sale because the sale price was inadequate, was erroneous.

4. Judgment -- Alternatives -- Validity of Judgment.

The invalidity of one alternative of a trial court's judgment which allowed a defendant two alternative courses of action does not impair the validity of the second alternative, where the net effect with respect to the defendant's reimbursement to the plaintiff is the same whether the defendant elects one option or the other.

5. Mortgages -- Foreclosure -- Deficiency -- Defenses -- Insufficient Bid -- Claim Against Mortgagee -- Statutes.

A statute which provides that a mortgagor against whom the mortgagee has a deficiency judgment after a foreclosure sale may show as a defense and set-off that the property sold was fairly worth the amount of debt secured by it or that the amount bid was substantially less than the property's true value does not provide a mortgagor with a claim against a mortgagee who is satisfying a deficiency out of available additional collateral, after the mortgagee has sold mortgaged property for an unreasonably low price (MCLA 600.3280; MSA 27A.3280).

6. Principal and Surety -- Creditors -- Duty of Creditors.

A surety may require the creditor to resort to property of the principal which is subject to the indebtedness or to collateral security in the principal's possession before resorting to the surety or any security furnished by him, and the creditor has the duty to preserve and enforce the collateral held by him for the principal debt and dispose of and apply it not only for his own security but also for the surety's indemnity.

7. Creditors' Suit -- Satisfaction of Debt -- Accommodation Endorsers -- Collateral -- Value of Property.

A creditor must, in satisfaction of a debt, proceed against the collateral in such a fashion so as to protect the rights of an accommodation endorser, and the value of the collateral used to satisfy the debt is the value at the time that the property is taken.

8. Mortgages -- Foreclosure -- Deficiency -- Value of Property -- Additional Collateral.

A mortgagee bank which chose not to attempt to bid in property at its fair market value on the date of the foreclosure sale, and instead bid in at a lower price, had no claim against additional collateral which accommodation endorsers had pledged as security, and money which the endorsers had paid to the bank to redeem this collateral was wrongfully obtained, where the property was worth the entire amount of the indebtedness at the time of the sale.

The opinion of the court was delivered by: Holbrook

Complaint by Hector M. Chabut and Joanne R. Fox against Hector Chabut, Jr., Jean Chabut, Thomas Verleni, Ruth Verleni, and Genesee Merchants Bank and Trust Company to recover money paid by plaintiffs to Genesee Merchants Bank and Trust to redeem stock previously pledged as additional collateral to facilitate issuance of a mortgage. Judgment for plaintiffs. Defendant bank appeals.

In this case plaintiffs, Hector M. Chabut, M. D. and Joanne R. Fox, commenced this action on October 11, 1972, seeking to recover from defendants Hector and Jean Chabut, Jr., and Thomas and Ruth Verleni, an amount of money which the plaintiffs had paid to defendant Genesee Merchants Bank and Trust. The amount of money, $76,165.06, was paid to defendant bank by the plaintiffs to redeem an amount of stock which the plaintiffs had previously pledged as additional collateral in order to facilitate the issuance of a mortgage by defendant bank. Plaintiffs subsequently filed an amended complaint adding defendant bank as a party defendant, ...

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