Title: WILLIAM C KITCHEN V ROBERT W KITCHEN

State: michigan

Issuer: Michigan Supreme Court

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 APRIL 2, 2002  
WILLIAM C. KITCHEN, 
KITCHEN FARMS, INC., 
a Michigan corporation, 
and KITCHEN FARMS, 
a Michigan copartnership,  
Plaintiffs-Appellants,  
v  
No. 116459  
ROBERT W. KITCHEN and  
HARRIET ANN KITCHEN,  
Defendants-Appellees.  
BEFORE THE ENTIRE BENCH  
KELLY, J.  
In this case, we are called upon to resolve whether an  
oral license for the use of real property can become  
irrevocable by estoppel alone.  We hold that under Michigan  
law it cannot.  
The central issue here is whether the principle of  
estoppel applies to prevent defendants from revoking an  
alleged license they granted to plaintiffs for use of their  
property.  
Plaintiffs contend that (1) the principal defendant  
promised plaintiffs that part of an irrigation system would be  
allowed to travel across defendants' property in perpetuity,  
and (2) plaintiffs relied on that promise.  
The 
trial 
court 
granted 
summary 
disposition 
for  
defendants and awarded sanctions of approximately $70,000  
against plaintiffs for filing a frivolous supplemental  
complaint.  The Court of Appeals concluded that an irrevocable  
license could not be based on an oral promise alone.  It  
upheld the sanctions against plaintiffs.  We affirm the Court  
of Appeals conclusion that an irrevocable license was not  
created, but reverse the award of sanctions.  
I  
Most of the relevant facts in this case are not in  
dispute.  Brothers William and Robert Kitchen, a plaintiff and  
defendant respectively, lived in Antrim County and were equal  
owners of Kitchen Farms, one of the largest potato farming  
businesses in Michigan. Robert owns and resides on a parcel  
of property situated on the east side of the Kitchen farm.  
His property is bordered on the north, west, and south by the  
Kitchen farm, and his home is located on the south side of his  
parcel.  
2  
 
While the brothers were owners of Kitchen Farms, they  
farmed the northern section of Robert's parcel.  An arm of an  
irrigation system crossed that property.  
In 1995, a dispute arose between William and Robert,  
resulting in William filing a complaint for dissolution of the  
business.1  Thereafter, William and Robert entered into a  
written agreement to conduct a private auction at which the  
higher bidder would acquire the other's interest in Kitchen  
Farms.  William, as high bidder, purchased Robert's interest.  
The agreement did not address the farming of Robert's land or  
the irrigation system.  
After the buyout, Robert decided that he did not wish  
Kitchen Farms to use his land and prevented it from planting  
crops and using the irrigation system there. 
As a  
consequence, plaintiffs William and Kitchen Farms filed the  
supplemental complaint that is at issue in this case.  
In 
pertinent 
part, it asserted that Robert's oral promise  
gave rise to an irrevocable license by estoppel for the use of  
the land in question.  Specifically, it alleged that Robert  
orally represented in 1981 that the irrigation system could  
cross his land in perpetuity.2  The supplemental complaint  
1The complaint named Robert and his wife, Harriet 
Kitchen, as defendants. Harriet had served as a Director of  
Kitchen Farms since 1981.  
2It is undisputed that there was no written document in 
(continued...)  
3  
 
sought declaratory and injunctive relief allowing Kitchen  
Farms to continue planting crops on the property and making  
use of the irrigation system.3  
Eventually, plaintiffs decided to seek a dismissal  
without prejudice.  Defendants opposed the motion, requesting  
a dismissal with prejudice, and asking that plaintiffs be  
sanctioned for filing a frivolous lawsuit.  The trial court  
granted summary disposition for defendants and imposed  
sanctions 
against 
plaintiffs, 
concluding 
that 
their  
supplemental complaint was frivolous because it had no basis  
in fact or law.  
The Court of Appeals affirmed, concluding that Michigan  
law does not recognize a right to enforce an oral license once  
the grantor has acted to revoke it.  It found no error in the  
trial court's imposition of sanctions.4  Plaintiffs now appeal  
to this Court.  
II  
We conclude that plaintiffs' claim for an irrevocable  
2(...continued) 
which Robert made such a promise.  
3Because the irrigation arm operates on an arc, Robert's 
decision to prevent the arm from traversing his property 
apparently precluded irrigation of thirty-three acres of the 
adjacent Kitchen Farms farmland.  
4239 Mich App 190; 607 NW2d 425 (1999).  The Court of  
Appeals had previously reached an issue unrelated to this 
appeal in 231 Mich 15; 585 NW2d 47 (1998).  
4  
license based simply on an alleged oral promise5 must fail  
because it is barred by Michigan's statute of frauds, which  
provides:  
No estate or interest in lands, other than 
leases for a term not exceeding 1 year, nor any 
trust or power over or concerning lands, or in any 
manner 
relating 
thereto, 
shall 
hereafter 
be  
created, 
granted, 
assigned, 
surrendered 
or  
declared, unless by act or operation of law, or by 
a deed or conveyance in writing, subscribed by the 
party creating, granting, surrendering or declaring 
the same, or by some person thereunto by him 
lawfully authorized by writing. [MCL 566.106.]  
Plaintiffs claim they have a permanent and irrevocable  
license for the use of a portion of defendants' land.  Such an  
irrevocable license would constitute an "interest in lands"  
that cannot be granted orally in compliance with the statute  
of frauds, as it would involve a permanent right to use the  
property.  
Under the statute of frauds, Robert could have granted  
plaintiffs the claimed interest only through "a deed or  
conveyance in writing."  Thus, the statute of frauds bars  
plaintiffs' claim for an interest in defendants' land based on  
an oral promise and reliance by plaintiffs. We hold that an  
"irrevocable license" by estoppel cannot be created in  
Michigan on the basis of an oral promise because recognizing  
5 For purposes of resolving this case, we assume without 
deciding, as did the trial court in granting defendant's 
motion for summary disposition, that Robert actually made the 
alleged oral promise.  
5  
 
 
  
 
such a conveyance would violate the statute of frauds.  
Our analysis is consistent with existing Michigan case  
law.  By definition, a license is "a permission to do some act  
or series of acts on the land of the licensor without having  
any permanent interest in it . . . ."  Sweeney v Hillsdale Co  
Bd of Road Comm'rs, 293 Mich 624, 630; 292 NW 506 (1940),  
quoting Morrill v Mackman, 24 Mich 279, 282 (1872). 
In  
general, a license is revocable at will and is automatically  
revoked upon transfer of title by either the licensor or  
licensee. 
Forge v Smith, 458 Mich 198, 210; 580 NW2d 876  
(1998); Sallan Jewelry Co v Bird, 240 Mich 346, 348; 215 NW  
349 (1927).  
Oral and written licenses, which are terminable at will  
by the grantor, are valid. See McCastle v Scanlon, 337 Mich  
122, 133; 59 NW2d 114 (1953).  The reason is that these  
licenses, because of their revocability, do not create an  
interest in land. 
Hence, the statute of frauds is  
inapplicable:  
"Where nothing beyond a mere license is  
contemplated, and no interest in the land is  
proposed to be created, the statute of frauds has 
no application, and the observance of no formality 
is important." [Id. at 133.]  
By contrast, Michigan law generally requires that the grant of  
a permanent interest in land be in writing to be enforceable.  
Id. at 128.  
Indeed, the fact that the interest is permanent brings it  
6  
within the statute of frauds.  Accordingly, this Court has  
distinguished between licenses and easements, utilizing the  
statute of frauds rationale as follows :  
A license grants permission to be on the land 
of the licensor without granting any permanent 
interest in the realty.  While easements constitute  
an interest in real estate, licenses do not. 
Because they are not considered interests in land, 
licenses 
do 
not 
have 
to 
comply 
with 
the  
requirements of the statute of frauds.  [Forge,  
supra at 210.]  
Michigan case law makes clear the justification for  
excluding licenses from the requirements of the statute of  
frauds:
 because they are revocable at will, they do not  
constitute an interest in the pertinent land.  By contrast,  
the "irrevocable license" claimed by plaintiffs would not be  
revocable at will.  Thus, it would not constitute a "license"  
falling outside the scope of the statute of frauds.  
Our case law indicates that an interest in land cannot be  
established on the basis of estoppel, as plaintiffs seek to  
do.  See Penfold v Warner, 96 Mich 179, 180; 55 NW 680 (1893).  
We stated in Huyck v Bailey, 100 Mich 223, 226; 58 NW 1002  
(1894):  
[T]he statute of frauds prevents the passing 
of title to realty by parol, and this cannot be 
done any more under the guise of an estoppel, in 
the absence of fraud, and when the estoppel 
consists only of an implied assent, than by showing 
a direct parol contract.  
As these cases reflect, the statute of frauds precludes  
an oral promise from forming the basis of a claim to an  
7  
interest in real property, even when estoppel is alleged.  As  
has been observed, no writing exists in this case to support  
plaintiffs' contention that they have more than a mere  
revocable license to use defendants' land.  Accordingly,  
plaintiffs' argument must fail.  
We note that plaintiffs rely heavily on 5 Restatement  
Property, § 519(4).  It provides that a licensee who makes  
expenditures in reliance on representations about the  
license's duration may continue to use the license to realize  
the value of the expenditures.  As plaintiffs admit, that  
Restatement provision is based on the doctrine of estoppel.  
Because Michigan does not permit an interest in land to  
transfer only on the basis of estoppel, it follows that  
§ 519(4) is inconsistent with Michigan law.6  
We reaffirm that a license may be granted orally, but  
hold that the oral license is necessarily revocable at the  
will of the licensor without regard for any promised duration.  
Neither 
a 
written 
"license" that evidences a promised duration  
nor the oral conveyance of an intended permanent interest in  
land is an "irrevocable license."  Instead, the grantor of  
6Plaintiffs rely on numerous Michigan cases for the 
proposition that an irrevocable license is recognized by 
Michigan law. Those cases are easily distinguished from the 
instant case and do not lend support to plaintiffs' position. 
Each involves either a license coupled with an interest in 
land or a written agreement sufficient to satisfy the statute 
of frauds.  
8  
   
such an intended interest, in effect, orally conveys an  
easement.7  Although one can grant an express, irrevocable  
easement, it must be evidenced by a writing manifesting a  
clear intent to create an interest in the land.  Forge, supra,  
at 205. As that did not occur here, defendants were free to  
revoke the oral license.  
III  
Turning to the issue of sanctions, we reverse the Court  
of Appeals decision upholding sanctions against plaintiffs.  
A trial court's finding that an action is frivolous is  
reviewed for clear error.  In re Attorney Fees & Costs, 233  
Mich App 694, 701; 593 NW2d 589 (1999).  A decision is clearly  
erroneous where, although there is evidence to support it, the  
reviewing court is left with a definite and firm conviction  
that a mistake has been made. Id.  
Whether a claim is frivolous within the meaning of MCR  
2.114(F) and MCL 600.2591 depends on the facts of the case.  
MCL 600.2591(3) defines "frivolous" as follows:  
(a) "Frivolous" means that at least 1 of the  
7Because plaintiffs do not claim that their interest in 
defendants' 
property 
constitutes 
an 
"easement 
by 
prescription," we need not address whether such an interest 
could have been established under these facts.  See Outhwaite  
v Foote, 240 Mich 327, 331-332; 215 NW 331 (1927); Plymouth  
Canton Community Crier v Prose, 242 Mich App 676, 684-685; 619 
NW2d 725 (2000).  We note that, in any event, the use did not 
continue for the fifteen-year period generally considered 
necessary to establish an easement by prescription. See id.  
at 679; MCL 600.5801(4).  
9  
 
following conditions is met:  
(i) The party's primary purpose in initiating 
the action or asserting the defense was to harass, 
embarrass, or injure the prevailing party.  
(ii) The party had no reasonable basis to 
believe that the facts underlying that party's 
legal position were in fact true.  
(iii) The party's legal position was devoid of 
arguable legal merit.  
The trial court concluded that plaintiffs were subject to  
sanctions pursuant to MCR 2.114 for filing the supplemental  
complaint, which it found ungrounded in law or fact.  
The issue whether plaintiffs should be subject to  
sanctions is much closer than the Court of Appeals made it  
appear.  
Although 
plaintiffs' claim for an irrevocable license  
must ultimately fail, plaintiffs presented a sufficient  
argument grounded in law and fact to avoid a finding of  
frivolity. The mere fact that plaintiffs did not ultimately  
prevail does not render the supplemental complaint frivolous.  
While our decision today is based on the statute of  
frauds and our prior case law, it was not easily resolved.  
There has been no authority in Michigan that clearly and  
unequivocally addresses whether an oral license can become  
irrevocable by estoppel.  We now firmly establish that it  
cannot.  
Plaintiffs 
point out accurately that there is support for  
their position in authorities from other jurisdictions and in  
10  
 
the Restatement of Property.  5 Restatement Property, §  
519(4).
 In addition, the pertinent principles of real  
property law are complex. For example, considerable analysis  
is needed to determine why a classic license is not an  
interest in land subject to the statute of frauds and why the  
rationale for that principle should not extend to a claimed  
"irrevocable license."  Not every error in legal analysis  
constitutes a frivolous position.  Moreover, merely because  
this Court concludes that a legal position asserted by a party  
should be rejected does not mean that the party was acting  
frivolously in advocating its position.  
We recognize that plaintiffs' argument before this Court  
is more refined than that made before the trial court.8  
Nonetheless, we conclude that plaintiffs' initial allegations  
and legal argument were sufficient to avoid sanctions for a  
frivolous lawsuit. Thus, the circuit court clearly erred in  
its award of sanctions predicated on finding the suit  
frivolous.  
IV  
In conclusion, we hold that Michigan law does not permit  
8There, plaintiffs claimed:  (1) there was a prescriptive 
easement over the north part of defendants' property;  (2) 
there was a perpetual noncancelable license to use the north 
part of defendants' property; (3) on the basis of plaintiffs' 
detrimental reliance on Robert's promise of perpetual use, 
defendants were estopped from barring plaintiffs' use of the 
north part of defendants' property.  
11  
 
 
 
an oral license to ripen into a permanent interest in the use  
of land on the basis of estoppel alone.   Accordingly, in  
order to constitute a permanent interest, plaintiffs' alleged  
license would have to have been conveyed through a deed or  
conveyance in compliance with the statute of frauds.  Because  
the claimed interest is based merely on an alleged oral  
promise, we affirm the Court of Appeals decision upholding  
summary disposition for defendants.  
However, 
because 
plaintiffs 
advanced 
a 
claim 
sufficiently  
grounded in law and fact, we reverse the award of sanctions.  
CORRIGAN, C.J., and CAVANAGH, WEAVER, TAYLOR, YOUNG, and  
MARKMAN, JJ., concurred with KELLY, J.  
12