MILLS v. PESETSKY

No. 103502, COA No. 157395.

556 N.W.2d 478 (1996)

William H. MILLS, Plaintiff-Appellee, v. Ann Z. PESETSKY n/k/a Anna Fugate, Defendant-Appellee.

Supreme Court of Michigan.

As Amended December 26, 1996.


ORDER

Having granted leave to appeal on May 1, 1996, and after hearing oral argument on November 12, 1996, we affirm the Court of Appeals decision to use the blending approach to determine whether the land contract was usurious. However, in applying the blending approach, the Court of Appeals erred in holding that the land contract was not usurious because that determination should have been made by the trial court given the lack of evidence on that issue before the Court of Appeals. Thus, we vacate the Court of Appeals judgment and we remand the case to the trial court to determine whether the land contract was usurious using the blending approach. MCR 7.316(A)(7). We do not retain jurisdiction.

BRICKLEY, Chief Justice, states:

I dissent from the above order, which adopts a "blending" rule for usurious contracts. My concern is that this new rule has the potential to create mischief because of its unintended consequences.

The separate-document doctrine, or "blending" approach, is disturbing because of the anomalous results that it could create. Under the majority's approach, two separately-enforceable land contracts, the first at 1% interest, the second at 21% interest, could be blended together so that both were legal. If the 1% contract were terminated, would the 21% contract still be legal? While I concede that in certain situations two agreements might be properly considered as part of one transaction, my concern is that today we are setting a troublesome precedent that will create uncertainty for lenders and borrowers.

Accordingly, I would adopt the reasoning of Judge Kobza with regard to the blending approach.

BOYLE, Justice, states:

I would not dispose of this case by order but would decide by written opinion the issues raised in the briefs on appeal.


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