Jaye v. Tobin

202 N.W.2d 712, 42 Mich. App. 756, 1972 Mich. App. LEXIS 990

• Court: Michigan Court of Appeals
• Decided: September 26, 1972
• Docket: Docket 11507, 11508
• Status: Published

Opinions

V. J. Brennan, J.

On November 17,1965, James Cole, C. I. Rutledge and Harry Wolf (and their respective wives) purchased approximately 2,700 acres of land surrounding Beaver Lake in Alpena County. Most of this land was resold to a hunt club and is not involved in the present suit. The remainder of the land, approximately 600 acres, was immediately resold to Irving Stollman by land contract dated November 17, 1965.

By a written agreement dated April 18, 1966, Stollman retained Wolf and Rutledge as co-brokers to sell lots to be subdivided from the 600 acres on Beaver Lake. Wolf and Rutledge were to receive one-third of the net profits from the sales. Wolf and Rutledge then proceeded to advertise the property and solicit buyers. The plaintiffs, and their respective wives, entered into "purchase agreements” with Wolf and Rutledge for lots in the proposed subdivision.

Sometime in the summer of 1967, Wolf and Rutledge ceased advertising and soliciting buyers because improvements on the property were not proceeding according to schedule and because Stollman defaulted on the land contract. Faced with foreclosure proceedings on the land contract, Stollman then assigned his interest in the property to one Marshall Tobin, on September 16, 1967.

Plaintiffs were then informed that Mr. Tobin was the new owner of the subdivision and that the name of the subdivision had been changed. Mr. Tobin did not regard the "purchase agreements” as purchase agreements, but rather as deposits, and attempted to renegotiate sales with those who had entered into such agreements with Wolf and Rutledge.

A controversy arose regarding the nature of these agreements resulting in the present lawsuit which was tried by the circuit court, sitting without a jury, in Alpena County. The circuit judge found for plaintiffs, and awarded either specific performance or a certain amount of money damages for each lot purchased against the defendant Tobin. Since all plaintiffs elected the money damages, any issue in this case regarding specific performance is moot. The defendant appeals and raises several issues.

The defendant first argues that the "purchase agreements” are void for failure to comply with the statute of frauds. His argument is based on the following language from that statute:

"Every contract for the leasing for a longer period than 1 year, or for the sale of any lands, or any interest in lands, shall be void, unless the contract, or some note or memorandum thereof be in writing, and signed by the party by whom the lease or sale is to be made, or by some person thereunto by him lawfully authorized in writing: * * * .” MCLA 566.108; MSA 26.908.

The defendant is correct in stating that Wolf and Rutledge had no written authority from Stollman to convey the lots in question. However, as the plaintiffs indicate, a party may be estopped from raising the statute of frauds. In Hatch v Wolack, 316 Mich 258, 262 (1946) and again in Kent v Bell, 374 Mich 646, 653 (1965), our Supreme Court cited with approval the following language from Lyle v Munson, 213 Mich 250, 260 (1921):

"Misleading, fraudulent conduct by act or acquiescence is the underlying thought which moves the chancery court under the principle of equitable estoppel to deny resort to the statute of frauds as an instrument of fraud.”

Stollman, and therefore Tobin, his successor in interest who was aware of these transactions at the time of his purchase of the property, received regular reports on the activities of Messrs. Wolf and Rutledge. He took no action to cause them to cease their activities despite the fact that he stated he had no intention of selling the property at the prices in question. Due to his silence and acquiescence, defendant will not be permitted to raise the statute of frauds.

Defendant next argues that the purchase agreements are void for lack of mutuality. His argument is based on a provision in that agreement which provides that the purchasers may terminate the agreement at will any time prior to the delivery of a title insurance policy.¹ Defendant’s argument is not well taken. First, it has long been the law in this state that a cancellation clause does not invalidate a contract. J R Watkins Co v Rich, 254 Mich 82 (1931). And second, a contract lacks mutuality when one party is obliged to perform, but not the other. A cancellation clause releases both parties from the obligation. Therefore such an option in a contract does not render it invalid for lack of mutuality.

The final argument to be considered is defendant’s assertion that the plaintiffs failed to establish an adequate basis on which to compute damages. The record contained uncontradicted testimony which established the current market price of the property which was evidently used as a basis by the trial court in determining the amount of damages. Defendant’s argument is therefore without merit.

Affirmed.

Van Valkenburg, J., concurred.

1 Such title insurance policies were never delivered since the property was not platted until October of 1968.