Practice Area(s):

Real Property

Issues: Doctrine of equitable subrogation; Whether plaintiff was properly categorized as a "mere volunteer"; Lentz v. Stoflet; Brown v. Genessee County Bd. of Comm’rs (On Remand); Whether equitable subrogation should have applied because the mortgage was allegedly obtained through fraud; Mistake of fact; Smith v. Sprague; Unjust enrichment; Schanhite v. Plymouth United Sav. Bank
Court: Michigan Court of Appeals (Published)
Case Name: Washington Mut. Bank, F.A. v. Shorebank Corp.
e-Journal Number: 27802
Judge(s): Sawyer, Markey, and Murray

The trial court properly granted summary disposition to defendants on plaintiff’s complaint seeking recovery on a loan secured by a mortgage. Plaintiff alleged it made a loan to the defendants-Shinas in the amount secured by a mortgage. Almost all of the loan proceeds were used to satisfy and discharge a prior first mortgage on the property. According to plaintiff, it was unaware of the fact at the time it made the loan to the Shinas, there were two other mortgages recorded against the property. The trial court held plaintiff had no legal obligation to pay off the mortgage and thus, plaintiff was a volunteer not entitled to equitable subrogation. Under Brown, the court held the doctrine of equitable subrogation does not allow a new mortgagee to take the priority of the older mortgagee merely because the proceeds of the new mortgage were used to pay off the indebtedness secured by the old mortgage. The court further held under Lentz, plaintiff was a mere volunteer and was not entitled to equitable subrogation. Affirmed.

Full Text Opinion

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