R.B. BURNS, J.
Plaintiffs appeal from the trial court's grant of summary disposition to defendants pursuant to MCR 2.116(C), subds (7), (8), and (10) on plaintiffs' complaint seeking relief arising from defendants' proceeding with a land contract forfeiture against plaintiffs.
Defendants built Carrier Creek Condominiums. On May 14, 1981, plaintiffs, James L. and Denise L. Thelen, entered into a subscription agreement whereby plaintiffs would purchase a condominium for $54,900. On May 29, 1981, defendants and plaintiffs executed a land contract. Under that contract, plaintiffs were obliged to pay defendants $61,900 for the same condominium, over a three-year period. Plaintiffs made an $11,900 down payment, leaving a land contract balance of $50,000. The land contract provided for an interest rate of eleven percent. The balance due on the land contract was to be paid in full on May 29, 1984. Upon that final payment, the contract was to be discounted by fourteen percent.
At the same time that they signed the land contract, the parties executed a lease agreement. Defendants agreed to lease the condominium back from plaintiffs for a monthly rent of $476.17, which was equivalent to the plaintiffs' monthly
Plaintiffs failed to make the 1984 balloon payment and defendants began forfeiture proceedings on July 27, 1984. On August 27, 1984, a hearing on the land contract forfeiture was held in the 56-2 District Court. At that hearing, plaintiffs consented to the entry of a land contract forfeiture judgment which would reserve their right to assert a usury defense in circuit court. On August 27, 1984, the district court entered its judgment.
On November 21, 1984, plaintiffs filed a complaint in circuit court. Under their first count, plaintiffs alleged usury. Under their second count, plaintiffs alleged that they were entitled to a 14 percent discount by the terms of the land contract once it was paid in full. Under the third count, plaintiffs asked for an injunctive order to keep defendants from seeking a writ of restitution upon the district court judgment.
On appeal, plaintiffs raise several issues and we reverse in part.
We first address plaintiffs' argument that the trial court erred in granting summary disposition based upon res judicata on its claim for the fourteen percent discount. MCR 2.116(C)(7).
This Court has held that, for the doctrine of res judicata to apply, three prerequisites must be found:
In this case, summary proceedings were commenced in district court on the land contract. Defendants and plaintiff stipulated to the entry of a judgment of $49,655.34. Judgment was entered by the district court for that amount. That judgment further provided:
However, the following colloquy took place at the forfeiture proceedings in district court:
The Court: Is that agreeable, Mr. Manning?
From this discussion it appears that the only issue preserved by plaintiffs was the issue of usury. To the extent that the fourteen percent discount represents a contractual right,
We next consider plaintiffs' argument that the trial court erred in granting summary disposition to defendants on plaintiffs' usury claim. At issue is a "time-price differential" of $7,000. The condominium "Reservation and Subscription Agreement", dated May 14, 1981, provided for a purchase price of $54,900. However, the land contract, dated May 29, 1981, set the purchase price at $61,900.
Black's Law Dictionary (rev 5th ed, 1979), p 1330, defines "time-price differential" as follows:
Generally, time-price differentials do not come within the provisions of the usury statute. MCL 438.31; MSA 19.15(1); see also Silver v International Paper Co, 35 Mich.App. 469; 192 N.W.2d 535 (1971). Although we believe that Silver correctly interprets that section, we conclude that the provisions of MCL 438.31c(6); MSA 19.15(1c)(6), adopted subsequent to the Silver decision, controls the case at bar. MCL 438.31c(6); MSA 19.15(1c)(6) provides as follows:
15 USC 1605(a)(1) specifically includes time-price differential within the definition of "finance charge."
We, therefore, conclude that a time-price differential in a land contract subject to MCL 438.31c(6); MSA 19.15(1c)(6), as is the land contract in the case at bar, must be considered part of the finance charge. Furthermore, in the case at bar, since the maximum allowable rate of eleven percent was being charged even without consideration of the time-price differential, it is clear that, once the time-price differential is considered, the loan is usurious. Thus, the trial court erred in granting summary judgment on this issue.
We now consider the question of whether plaintiffs are entitled to restitution for the usurious interest paid to defendants. A lender who charges a usurious interest rate is barred from recovering any interest. MCL 438.32; MSA 19.15(2). However, the usury defense is waived if the entire obligation is voluntarily satisfied. Osinski v Yowell, 135 Mich.App. 279, 287-288; 354 N.W.2d 318 (1984). The Osinski Court explained the nature of this exception:
In this case, plaintiffs paid the loan only after judgment was rendered against them.
Before moving to the next issue, however, we would like to briefly discuss the peculiar procedural posture of this case. By stipulation of the parties, the usury issue was separated from the forfeiture action in district court. Plaintiffs agreed to let judgment be taken against them subject to the stipulation that they could bring a usury claim in circuit court. The basic rule in Michigan is that usury is a defense and that there is no right to repayment of usurious interest by means of an independent action. Michigan Mobile Homeowners Ass'n v Bank of the Commonwealth, 56 Mich.App. 206, 216; 223 N.W.2d 725 (1974).
Thus, plaintiffs would not normally be entitled to maintain this action at all. However, since the parties stipulated to this procedure, it would be inequitable to now deny plaintiffs relief. The preferred
The next issue is similar to the preceding issue, namely, whether plaintiffs are entitled to recover the fourteen percent discount lost by reason of their late payment. This issue differs from that discussed under Issue I, supra, because Issue I dealt with plaintiffs' contractual rights under the land contract and the instant issue concerns plaintiffs' rights under the usury statute.
There are two potential classifications of the discount which may render it recoverable under MCL 438.32; MSA 19.15(2). First, it could be an improper delinquency charge. Second, since fourteen percent of the amount financed, $50,000, is equal to the time-price differential mark-up, $7,000, the discoujt may relate to the differential and, perhaps, be considered part of the usurious finance charge. However, it does not appear that this issue was fully explained below. Since we reverse on other issues, we leave it to the trial court to first determine the nature of the discount and whether it is recoverable under the usury statute.
Plaintiffs also argue that the trial court erroneously considered defendants' intent to violate the usury statute. We agree. A party's intent is generally irrelevant in determining whether the land contract was usurious. Houghteling v Gogebic Lumber Co, 165 Mich. 498; 131 NW 109 (1911);
Finally, we consider whether the trial court erred in dissolving the temporary injunction after it had dismissed plaintiffs' case. The trial court employed the correct procedure. Having disposed of plaintiffs' case by summary disposition, the temporary injunction was properly dissolved. See Niedzialek v Barbers Union, 331 Mich. 296; 49 N.W.2d 273 (1951). Plaintiffs' remedy at that point was to seek a stay pending appeal.
Affirmed in part, reversed in part and remanded for further proceedings consistent with this opinion. Jurisdiction is not retained. No costs, neither side having prevailed in full.