Case ID: mich_240/html/0023-01.html
Source: Caselaw Access Project
Author: {"author": "Fellows, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

AUGUST v. COLLINS.
    1. Vendor and Purchaser — Contracts — Consideration—Naked Promise Unenforceable.
    Where the vendees in a land contract agreed that the title was satisfactory, a subsequent agreement by vendors, made without consideration, to perfect their title and suspend payments in the meantime, was a mere naked promise, and therefore void.
    2. Estoppel — Waiver of Conditions of Land Contract — Equity.
    Where the time of performance of a land contract has been waived under such circumstances that it would be inequitable to literally enforce it, the court will apply the doctrine of estoppel to the transaction.
    S. Same — Doctrine of Estoppel Not Applicable.
    Where the assignee of the vendee in a land contract assumed the contract, which agreed that the title was satisfactory, but subsequently refused to pay any more until the title was perfected and it was furnished with a copy of a contract to the vendors, an agreement by them to furnish it, but which they were unable to carry out because their copy of said contract was lost, did not estop them from enforcing the contract, especially where the record supports the claim that the assignee was merely seeking delay.
    “Contracts, 13 C. J. § 607; Vendor and Purchaser, 39 Cyc. p. 1352; D. E. A. 1915B, 55; 6 E. C. L. 916, 917; 2 E. C. L. Supp. 244; 4 R, C. L. Supp. 451; “Estoppel, 21 C. J. § 247; Vendor and Purchaser, 39 Cyc. p. 1345 (Anno); “Vendor and Purchaser, 39 Cyc. p. 1611 (Anno).
    Error to Wayne; Dunham (Major L.), J., presiding.
    Submitted June 23, 1927.
    (Docket No. 117.)
    Decided July 29, 1927.
    Summary proceedings by Isaac August and another against James J. Collins and the Barnard Toy Company for the possession of property sold on land contract. There was judgment of restitution before the commissioner, and defendants appealed to the circuit court. Judgment for plaintiffs on a directed verdict. Defendants bring error.
    Affirmed.
    
      Louis Starfield Cohane and Regene Freund Cohane, for appellants.
    
      Samuel J. Rhodes, for appellee.
    The plaintiffs as vendors entered into an agreement with one Collins on February 23, 1923, to sell him a piece of property in Detroit for $85,000; $4,000 was paid on this day. The payments were to be made as follows: $6,000 balance of down payment in 30 days, $750 monthly for the first three years, $1,000 monthly thereafter, all to be paid within eight years. There was a mortgage on the premises for $33,000, given to J. F. Webber, and another mortgage, by way of deed and contract back, to the United Fuel & Supply Company, upon which the indebtedness approximated $14,000. The attorney for Collins examined the contract with the latter company, and was satisfied with the condition of the title. He prepared the contract between August and Collins, which provided that time was of the essence of the contract. As to the title, it contained this provision:
    “It is understood that the title was examined by the second party and found satisfactory. Second party is purchasing the property with the understanding that it is mortgaged to J. F. Webber, and also a mortgage to the United Fuel & Supply Company, in the shape of a deed with an agreement back to J. S. which agreement was assigned to the said first party.”
    In the following month Collins and defendant company entered into an agreement whereby Collins assigned his interest in the contract, and defendant company assumed the obligations of it in the following language:
    “And the said, the Barnard Toy Company, a Michigan corporation, does hereby assume the obligations of the contract above referred to and does agree to carry out the same, and does hereby accept the foregoing assignment.”
    On March 30th, the defendant company drew its check for $6,750, being the balance of the down payment and the monthly payment then due. It is claimed that this check was delivered by defendant company’s agent in violation of instructions, and that plaintiffs and their representative agreed to furnish a copy of the contract with the United Fuel & Supply Company. In May a check for the April payment was made out and a letter of instructions was written directing the delivery only on condition that (1) plaintiffs sign a receipt, (2) that they consent to the assignment, and (3) that they furnish a copy of the contract. The check was delivered, however, and it is claimed plaintiffs agreed to furnish a copy of the contract. Defendants’ attorney also testified that an agreement was made that:
    “They both said all right, that we don’t need to make any further payments on that contract and none should become due until they furnished that agreement and that they would bring it in within a couple of days.”
    It further appears from the testimony that plaintiffs and their representative made diligent search for the contract but could not find it; that it had been lost; that the company refused to furnish a copy of the contract, but that it did furnish defendants’ attorney a statement of the amount due on it and its purport. It also appears that at the time of the trial the Webber mortgage had been reduced to $28,000, and the indebtedness to the United Fuel & Supply Company to around $4,500, and that plaintiffs were perfectly responsible financially.
   Fellows, J.

(after stating the facts). It is insisted on behalf of defendants that there was a valid contract extending the time of payment as fixed in the contract, and that, if the claimed contract of extension is not valid and enforceable, there has been such waiver of its terms as to estop plaintiffs from its enforcement.

1. It will be noted that it was agreed in the contract, which defendants assumed and agreed to be bound by, that the title was satisfactory. If plaintiffs promised to extend the time and to furnish evidence to show that their title was satisfactory, it was but a naked promise without consideration and not enforceable. The general rule is thus stated in 6 R. C. L. pp. 916, 917, § 301:

“It has been said that a provision of a contract may be waived without a new consideration. But while there are some expressions in the cases which seem to dispense with the necessity of a consideration for a modification of a contract, yet a modification can be nothing but a new contract, and must be supported by a consideration like every other contract. * * * An oral agreement to enlarge the time or change the place of performance fixed by a written contract must be subsequent to the time of the execution of the latter, and constitute an independent agreement of itself, acquiring its binding effect either from an existing consideration at the time, or from having been acted upon by the parties until it could not be disregarded by one party without working an injury to the other party.”

In the case of Bartlett v. Smith, 146 Mich. 188 (117 Am. St. Rep. 625), which involved the extension of time for the performance of a land contract, it was said by Mr. Justice Grant, speaking for the court:

“The promise to extend the time of payment, if made, was a mere naked promise, resting in parol, without any consideration, and was therefore of no validity.”

2. While this court is committed to the rule stated by Justice Grant, it is likewise committed to the doctrine that, where the time of performance has been waived under such circumstances that it would be inequitable to literally enforce the contract, this court will apply the doctrine of estoppel to the transaction. Defendants’ counsel insist that we should hold that the facts of the instant case bring it within this rule, and they rely on Waller v. Lieberman, 214 Mich. 428; Fry v. Miller, 220 Mich. 463; Letinsky v. Smith, 220 Mich. 467; Zadigian v. Gard, 223 Mich. 147; Bugajski v. Siwka, 200 Mich. 415. Most of the cases where we have applied the doctrine have been equity cases in which the vendee has been seeking the right to make delayed payments, the right to pay up, to redeem; and where the vendor by theretofore accepting payments after they were due has lulled him into insecurity, and we have held, under such circumstances, that before the forfeiture could be effectively declared notice must be given to the vendee of the intention so to do and a reasonable time given in which to make the payments. We have likewise applied the doctrine in ejectment cases. Treat v. Railway, 157 Mich. 320 (133 Am. St. Rep. 347); Sliwinski v. Gootstein, 234 Mich. 74. In Drake v. Lippman, 234 Mich. 80, it was not necessary to decide, and we did not decide, that it should be applied to summary proceedings, as we there held there were no grounds of estoppel present. And that is quite the situation in the instant case. The ink was scarcely dry on the signatures to the agreement by which defendant company assumed the contract and agreed to be bound by its terms before it insisted it would not pay according to its terms or pay at all unless plaintiffs agreed to its modification, and it claims to have exacted a promise which subsequent events developed was impossible of performance. It claims that all payments which in fact were made reached the plaintiffs because the party to whom it intrusted the checks violated his instructions. It was in no way lulled into insecurity. There are no elements of estoppel present. Indeed, the question of estoppel was not brought into the case until it was apparent the court was about to direct a verdict for plaintiffs, when defendants’ counsel moved for a directed verdict on this ground. Plaintiffs’ counsel insists defendant company was seeking delay rather than an opportunity to pay with safety, and the record tends to support such claim. Such claim also finds support in the fact that the case was not submitted to this court until over three years after the trial in the circuit. The trial judge was right in denying defendants’ motion for a directed verdict and in granting that of the plaintiffs.

The judgment will be affirmed.

Sharpe, C. J., and Bird, Snow, Steere, Wiest, Clark, and McDonald, JJ., concurred.