Kahn-Reiss, Inc. v. Detroit & Northern Savings & Loan Ass'n

228 N.W.2d 816, 59 Mich. App. 1, 1975 Mich. App. LEXIS 1311
CourtMichigan Court of Appeals
DecidedFebruary 24, 1975
DocketDocket 17255
StatusPublished
Cited by18 cases

This text of 228 N.W.2d 816 (Kahn-Reiss, Inc. v. Detroit & Northern Savings & Loan Ass'n) is published on Counsel Stack Legal Research, covering Michigan Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kahn-Reiss, Inc. v. Detroit & Northern Savings & Loan Ass'n, 228 N.W.2d 816, 59 Mich. App. 1, 1975 Mich. App. LEXIS 1311 (Mich. Ct. App. 1975).

Opinion

Allen, P. J.

This appeal from a two-part judgment, May 15, 1973, involves two issues arising out of a sale of property by plaintiff to defendant Detroit & Northern Savings & Loan Association. Issue I is the cross-appeal raising the question of whether or not plaintiff retained an easement of way over a portion of the land sold. On this issue, the trial court in Part I of its opinion found in favor of defendants. Plaintiff cross-appeals. Issue II concerns a boundary-line question of whether defendants could remove a concrete wall and chimney which defendants allege is on the property purchased from plaintiff. On this issue, the trial court in Part II of its judgment found in favor of plaintiff, and defendants appeal. For convenience purposes, defendant Detroit & Northern Savings & Loan Association will be referred to as D&N, and Frank A. Douglass Agency, Inc., as Douglass. References to lots and boundary lines relate to the map attached.

*4 PARTI

In December 1969, plaintiff granted an option to Douglass which was acting as agent for D&N for the purchase of lots 6 and 7 on the diagram attached. This option was drafted by plaintiffs attorney. Paragraph 7 provided:

"After the delivery of a Warranty Deed from Optioner to Optionee, Optionee shall be responsible for the maintenance, not including snow removal, of a suitable and passable means of ingress and egress to the East exit of the Pic Theatre Building, which is adjacent to the described real property. However, the parties hereto may agree to modify the existing route of ingress and egress prior to the execution of documents of transfer of title.” 1

On May 19, 1970, plaintiff by warranty deed conveyed to D&N all of plaintiffs interests in lots 6 and 7. The deed was drafted by D&N and totally omitted any mention of the easement referred to in paragraph 7. Both the option and the warranty deed were signed on plaintiffs behalf by Norbert Kahn as plaintiffs president and by Louise Rice, as plaintiffs secretary. Kahn was an experienced businessman who had assisted Douglass in acquiring other lots in the block and who, prior to the option, had negotiated with Douglass in regard to a fee which he claimed Douglass owed for this assistance. Kahn was a 40% stockholder in Kahn-Reiss Corporation (his wife owned an additional 20%), a 50% shareholder in the corporation-owned *5 Pic Theatre and was the sole representative of Kahn-Reiss with Douglass on the purchase of lots 6 and 7.

Some months after the execution of the deed, Kahn (who died prior to trial) raised the question of ingress and egress being omitted from the deed and apparently also discussed with Douglass the matter of his commission on other lots purchased by Douglass for D&N. Some time prior to June 17, 1971, Douglass and D&N informed Kahn they would settle the claim for services and the claim for ingress and egress by payment of $1500. On June 17, 1971, Douglass made payment by check to Kahn personally of $1500. No written release of the respective claims was secured from Kahn who informed Douglass when the question was raised "You don’t have to have any signature from me, my word is bond”. Previously, when lots 6 and 7 were purchased, the check was made out to Kahn-Reiss Corporation but was endorsed over to Kahn individually on the same day.

Following extensive trial on the issues raised in Part I, the court, in a written opinion, held against plaintiff, finding (1) that there was insufficient evidence to support mutual mistake, fraud or misrepresentation, (2) that as a matter of law, the option was merged in the warranty deed, Clifton v Jackson Iron Co, 74 Mich 183; 41 NW 891 (1889), (3) that the option as drafted was too indefinite and uncertain to be protected in chancery, (4) that Kahn acted with actual and apparent support for the corporation, and all claims were fully and completely released upon payment to him of the $1500. In its cross-appeal, plaintiff does not contest the trial court’s conclusion on (1) but does claim error on (2), (3), and (4). Additionally, plaintiff argues that as a matter of law, plaintiff reserved *6 an implied easement over lots 6 and 7 for vehicular traffic.

We do not agree with the trial court that as a matter of law the option agreement was merged and thus extinguished in the warranty deed. Clifton v Jackson Iron Co, supra, cited by the trial judge, did not involve an easement condition. That case concerned a contract for the sale of land reserving the right of removing growing timber for a specified time. Before the time ran out the owner conveyed the land by warranty deed without mentioning the right to remove the timber. The court held the deed nullified the timber-cutting rights. Neither did we find the cases relied on by plaintiff, Goodspeed v Nichols, 231 Mich 308; 204 NW 122 (1925), and Mueller v Bankers Trust Co of Muskegon, 262 Mich 53; 247 NW 103 (1933), each of which holds that a warranty deed does not extinguish a collateral contractual provision, controlling. 2 These cases, too, do not involve an easement reservation. In fact, we can find no decision in Michigan involving the reservation of an easement and thus an open question exists as to whether or not a contractual provision for an easement is "collateral”. Accordingly, we look to Chicago Title & Trust Co v Wabash-Randolph Corp, 384 Ill 78; 51 NE2d 132 (1943). In that case the court held, inter alia, that, where a purchaser’s agreement to establish an easement which could not become effective until after delivery of their deed, the easement provision was not merged in the deed upon delivery of the deed so as to render such provision in the contract ineffectual. The court *7 recognized the contractual easement provision as one which the delivery of the deed did not fulfill, hence rejecting the general rule that if terms of a contract for sale of realty are fulfilled by delivery of the deed, there is a merger of the contract and the deed. See also in this connection the helpful annotation entitled Deed As Imposing Upon Vendee Obligation Additional To, or as Superseding or Merging Obligations Imposed By, Antecedent Contract, 52 ALR2d 647 (1957). The instant case closely parallels Chicago Title and Trust Co, particularly because the option paragraph calls for a condition "after the delivery of a warranty deed”.

Was the option too indefinite and uncertain to be protected and enforced by an equity court? Both parties acknowledge the general rule stated in Fox v Pierce, 50 Mich 500, 504; 15 NW 880 (1883), but differ as to whether it applies in this situation. This case was tried before the trial judge, who had the opportunity to examine the exhibits, listen to the testimony and assess its weight and credibility. The trial court’s finding that the option was too indefinite will not be reversed unless we are persuaded that the determination was clearly erroneous. GCR 1963, 517.1. See Osius v Dingell, 375 Mich 605, 611-612; 134 NW2d 657 (1965). See also

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Bluebook (online)
228 N.W.2d 816, 59 Mich. App. 1, 1975 Mich. App. LEXIS 1311, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kahn-reiss-inc-v-detroit-northern-savings-loan-assn-michctapp-1975.