Case Title: ELEANOR BRUNSELL V CITY OF ZEELAND

Citation: 

Docket Number: 120051

State: michigan

Court: Michigan Supreme Court

Date: 2002-09-24T00:00:00Z

Document:
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Michigan Supreme Court 
Lansing, Michigan 48909 
C hief Justice 
Justices 
Maura D. Corrigan  
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Clifford W. Taylor 
Robert P. Young, Jr. 
Opinion 
Stephen J. Markman 
FILED SEPTEMBER 24, 2002  
ELEANOR BRUNSELL,  
Plaintiff-Appellant,  
v  
No. 120051  
CITY OF ZEELAND,  
Defendant-Appellee.  
PER CURIAM  
In this case, plaintiff Eleanor Brunsell claims that  
defendant city of Zeeland is liable to her as an intended  
third-party beneficiary under a contract between the city and  
a third party.  The trial court granted summary disposition in  
favor of the city.  The Court of Appeals affirmed in an  
unpublished opinion, relying on the lead opinion in Koenig v  
South Haven, 460 Mich 667; 597 NW2d 99 (1999). We agree with  
the conclusion of the lower courts that plaintiff was not an  
intended third-party beneficiary under the circumstances of  
this case and, accordingly, affirm the Court of Appeals  
 
 
  
resolution of this issue.  
I  
Plaintiff 
alleges that she tripped and fell while walking  
because of a defect1 in a sidewalk, resulting in a fractured  
left wrist.  The sidewalk was part of an area leased to the  
city by the First Michigan Bank & Trust Company.  The lease  
agreement 
provided 
that 
a 
sidewalk 
was 
among 
the  
“improvements” that the city, as lessee, was authorized to  
construct. 
Pivotal to plaintiff’s third-party beneficiary  
claim, the lease agreement included the following paragraph:  
5. Maintenance. The Lessee [the city] shall 
repair the improvements which it constructs on the 
premises as may be necessary for the public safety. 
The Lessor [the bank] shall remove snow, pick-up 
litter, and perform such other sanitary maintenance 
as may be required.  
Plaintiff brought this action, alleging in pertinent  
part, that the city was liable to her as a third-party  
beneficiary for violating its contractual undertaking (in the  
quoted paragraph of the lease agreement) to “repair the  
improvements which it constructs on the premises as may be  
necessary for the public safety.”2  
1 Specifically, plaintiff claims that “there was a crack 
between, and a difference in elevation in, adjoining sidewalk 
slabs. . . .”  
2 Plaintiff also brought a claim premised on the highway 
exception to governmental immunity, MCL 691.1402. The lower  
courts rejected this claim because the sidewalk at issue, 
which was along part of a parking lot, was not adjacent to a  
2  
 
In granting summary disposition in favor of the city, the  
trial court, applying the lead opinion in Koenig, concluded  
that “there was not a sufficiently defined class to allow the  
filing of a third party beneficiary claim.”  In affirming, the  
Court of Appeals similarly relied on the lead opinion in  
Koenig in concluding that plaintiff was not an intended third­
party beneficiary of the lease agreement with standing to sue  
for its alleged violation. 
In particular, that Court  
concluded 
that 
the 
agreement was primarily intended to benefit  
the parties to it (the city and the bank) by allocating their  
respective 
duties 
regarding maintenance of the leased area and  
that “the public generally” was too broad a group to be  
considered intended third-party beneficiaries of a contract.  
II  
We review the resolution of a summary disposition motion  
de novo.  Roberts v Mecosta Co General Hosp, 466 Mich 57, 62;  
642 NW2d 663 (2002).  
III  
MCL 600.1405, the third-party beneficiary statute,  
provides in pertinent part:  
Any person for whose benefit a promise is made 
by way of contract, as hereinafter defined, has the 
same right to enforce said promise that he would 
have had if the said promise had been made directly  
public highway.  That issue is outside the scope of this 
opinion.  
3  
to him as the promisee.  
(1) A promise shall be construed to have been 
made for the benefit of a person whenever the 
promisor of said promise has undertaken to give or 
to do or refrain from doing something directly to 
or for said person.  
* * *  
(2)(b) If such person is not in being or 
ascertainable at the time the promise becomes 
legally binding on the promisor then his rights 
shall become vested the moment he comes into being 
or becomes ascertainable if the promise has not 
been discharged by agreement between the promisor 
and the promisee in the meantime.  
Importantly, the plain language of this statute reflects that  
not every person incidentally benefitted by a contractual  
promise has a right to sue for breach of that promise, but  
rather only if the promisor has “undertaken to give or to do  
or refrain from doing something directly to or for said  
person.” MCL 600.1405(1) (emphasis added).  
In other words, MCL 600.1405 draws a distinction between  
intended third-party beneficiaries who may sue for a breach of  
a contractual promise in their favor, and incidental third­
party beneficiaries who may not.  In this regard, we agree  
with and adopt the following statutory analysis from the lead  
opinion in Koenig, supra at 676-677, 680:  
In describing the conditions under which a 
contractual promise is to be construed as for the 
benefit of a third party to the contract in § 1405, 
the Legislature utilized the modifier “directly.” 
Simply stated, section 1405 does not empower just 
any person who benefits from a contract to enforce  
4  
 
it.  Rather, it states that a person is a third­
party beneficiary of a contract only when the 
promisor undertakes an obligation “directly” to or 
for the person. 
This language indicates the 
Legislature’s intent to assure that contracting 
parties are clearly aware that the scope of their 
contractual undertakings encompasses a third party, 
directly referred to in the contract, before the 
third party is able to enforce the contract. 
Subsection 1405(2)(b)’s recognition that a contract 
may crate a class of third-party beneficiaries that 
includes a person not yet in being or ascertainable 
precludes an overly restrictive construction of 
subsection 1405(1). 
That is, it precludes a 
construction that would require precision that is 
impossible in some circumstances, such as would be 
the case if there were a requirement in all cases 
that a third-party beneficiary be referenced by 
proper name in the contract.  This is simply to say 
that the Legislature, in drafting these two  
provisions, apparently wanted to strike a balance 
between an impossible level of specificity and no 
specificity at all. This means that there must be  
limits on the use of subsection 1405(2)(b) to 
broaden the interpretation of subsection 1405(1) 
because otherwise the result is to remove all  
meaning from the Legislature’s use of the modifier 
“directly.”  
* * *  
[A] third-party beneficiary may be a member of  
a class, but the class must be sufficiently 
described.
 
This 
follows 
ineluctably 
from  
subsection 1405(1)’s requirement that an obligation 
be undertaken directly for a person to confer 
third-party beneficiary status.  As can be seen  
then, this of course means that the class must be 
something less than the entire universe, e.g., “the 
public”; otherwise, subsection 1405(2)(b) would rob 
subsection 1405(1) of any narrowing effect. The 
rationale would appear to be that a contracting 
party can only be held to have knowingly undertaken 
an obligation directly for the benefit of a class  
of persons if the class is reasonably identified. 
Further, in undertaking this analysis, an objective 
standard is to be used to determine from the  
contract itself whether the promisor undertook “to  
5  
  
give or to do or to refrain from doing something 
directly to or for” the putative third-party  
beneficiary. 
Guardian Depositors [Corp v Brown, 
290 Mich 433, 437; 287 NW 798 (1939)] (emphasis 
added). [Opinion of Taylor, J.]  
In the present case, plaintiff can only plausibly claim  
third-party beneficiary status under the lease agreement as a  
member of the public because her claim is premised on  
contractual 
language 
referring 
to 
the 
city 
repairing  
improvements “as may be necessary for the public safety.”  
There is nothing in the lease agreement that specifically  
designates plaintiff (or any reasonably identified class) as  
an intended beneficiary of the promise.  Accordingly, as  
explained in the lead opinion in Koenig, plaintiff cannot be  
considered an intended third-party beneficiary under MCL  
600.1405 because the public as a whole is too expansive a  
group to be considered “directly” benefitted by a contractual  
promise.  
Moreover, an objective analysis of the contract at issue  
indicates 
that 
the 
contractual provision at issue was intended  
to delineate the obligations of the city and the bank with  
regard to the premises, not to directly benefit third parties.  
The allocation to the city of responsibility to “repair the  
improvements which it constructs on the premises as may be  
necessary for the public safety” is in the same paragraph of  
the lease agreement as the allocation to the bank of the  
6  
 
duties to “remove snow, pick-up litter, and perform such other  
sanitary maintenance as may be required.”  This reflects that  
the parties were defining their obligations to each other with  
regard to maintenance concerns, not acting for the purpose of  
directly benefitting third parties.3
 With regard to its  
promise, the city was assuring the bank that the bank would  
not be responsible for repairing the improvements on the  
premises to protect public safety.  There is no reason to  
conclude that the bank, obviously a business and not a  
charitable institution, was acting to protect parties other  
than 
itself 
in 
receiving this promise.  Accordingly, plaintiff  
was not an intended third-party beneficiary of the lease  
agreement because an objective analysis reflects that the  
city’s promise to the bank that the city would be responsible  
3  This is strikingly similar to the circumstances of  
Koenig.  In Koenig, the plaintiffs’ decedent was seriously 
injured as a result of being swept off of a pier on Lake 
Michigan by a large wave.  The piers in the relevant area were 
owned by the Army Corps of Engineers, but a memorandum of 
understanding (MOU) between the corps and the city of South 
Haven essentially provided South Haven with the authority to 
control public access to the piers while the corps had the 
responsibility to provide fence-type barricades. Plaintiffs  
alleged that South Haven breached its duty under the MOU to 
preclude access to the pier under dangerous conditions and 
that 
their 
decedent 
was an intended third-party beneficiary of 
that agreement.  In the course of rejecting that position, the 
lead opinion in Koenig stated that “[a]n objective assessment 
of the MOU demonstrates that, rather than undertaking an 
obligation for the benefit of a putative third-party 
beneficiary, 
it 
allocates 
responsibilities 
between 
South 
Haven 
and the corps regarding restricting access to the piers during 
periods of dangerous conditions.” Id. at 680-681.  
7 
 
 
 
 
for repairs was not intended to directly benefit third  
parties.  
IV  
For these reasons, we affirm the decision of the Court of  
Appeals with regard to the third-party beneficiary issue.  In  
all other respects, we deny leave to appeal because we are not  
persuaded that the questions presented should be reviewed by  
this Court.  
CORRIGAN, C.J., and WEAVER, TAYLOR, YOUNG, and MARKMAN, JJ.,  
concurred.  
CAVANAGH and KELLY, JJ., would not dispose of this case by  
opinion per curiam, but would grant or deny leave to appeal.  
8