Case Name: URICK v. BURGE
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1957-07-31
Citations: 350 Mich. 165
Docket Number: Docket No. 19, Calendar No. 46,854
Parties: URICK v. BURGE.
Judges: Sharpe and Carr, JJ., concurred Avith Kelly, J.
Reporter: Michigan Reports
Volume: 350
Pages: 165–175

Head Matter:
URICK v. BURGE.
1. Reformation of Instruments — Mutual Mistake — Evidence.
A court should not reform a written instrument on the ground of mutual mistake without clear and satisfactory evidence.
2. Same — Lease—Lessees’ Right to Purchase — Evidence.
Testimony of defendant lessor and of plaintiff’s former partner, who had negotiated 10-year lease, that phrase relative to lessees' exclusive right to purchase was only to be exereised at the end of the term, instead of during the term as written in the lease, TielS, to constitute clear and satisfactory evidence of a mutual mistake entitling lessor to reformation of the lease.
3. Landlord and Tenant — Construction of Lease — Mistake— Reformation of Instruments.
A lessee under a 10-year written lease containing an option to purchase during the term is entitled presently to a determination of rights as to whether there was a mutual mistake as to when sueh option might be exercised and as to whether part or all of lot was involved and is not to be delayed some 4 years until the end of the term to have such issues resolved.
4. Specific Performance — Remand—Evidence.
Eull opportunity to both parties to offer proofs will be afforded upon remand of suit for specific performance of option to purchase during term of lease, where remand has been necessitated by erroneous determination of trial court in effect reforming the lease on insufficient proofs and failing to give plaintiff an opportunity to give rebuttal evidence.
References for Points in Headnotes
19 Am Jur, Equity § 389; 45 Am Jur, Reformation of Instruments §116.
32 Am Jur, Landlord and Tenant § 47.
32 Am Jur, Landlord and Tenant § 299 et seq.
14 Am Jur, Costs § § 10,11.
5. Costs — Failure of Either Party to Prevail in Full.
No eosts are allowed in suit to reform a lease, wliere neither party has prevailed in full.
Appeal from Genesee; Gadola (Pañi V.), J.
Submitted April 3, 1957.
(Docket No. 19, Calendar No. 46,854.)
Decided July 31, 1957.
Bill by Stephen J. Urick, Jr., doing business as U. & M. Enterprises, against Grace E. Burge, also known Grace B. Burge, for specific performance of option to purchase contained in lease. Cross bill to reform description of property. Bill dismissed. Plaintiff appeals.
Reversed and remanded.
Guy W. Selby (L. James Hieles, of counsel), for plaintiff.
Frank 0. Smith, for defendant.

Opinion:
Kelly, J.
Plaintiff commenced an action in equity to compel defendant to convey to plaintiff "Lot 110 of Assessor's Plat of Maple Hill Gardens," Flint, Michigan, in accordance with the provisions of a written lease. The court concluded that the lease did not express the agreement between the parties, and dismissed plaintiff's bill of complaint.
Plaintiff appeals, contending (1) that the court erred in making a contract for the parties contrary to the clear and definite terms of the lease; (2) that the record does not sustain the court's finding that plaintiff and defendant were "mutually mistaken with regard to the time they agreed upon for the exercise of the option to purchase provision;" and (3) that the court erred in rendering a decision before defendant rested her case and before plaintiff had an opportunity to offer evidence in rebuttal.
The lease was for a 10-year period (July 1, 1951, to June 30, 1961), with plaintiff's right to renew for an additional 10 years.
Plaintiff contemplated erecting a drive-in dairy bar and restaurant, and the lease provided that if plaintiff constructed the dairy bar and decided not to renew his lease for an additional 10-year period defendant would pay to him the dairy bar construction cost. Plaintiff constructed the dairy bar after the lease was signed.
The clause in the lease which the trial court refused to enforce reads as follows:
"It is agreed and understood between the parties hereto that the second parties (plaintiff), their heirs, successors and assigns, during the term of this lease shall have the exclusive right, option and privilege to purchase the above described premises from the first party hereto (defendant) for the sum of $2,000 under terms and conditions to be agreed upon between the parties hereto. If second parties elect to exercise this option, they shall notify first party in writing by registered mail, return receipt requested, properly addressed to her, her heirs, assigns or successors, at her or their last known place of residence."
Three witnesses testified. Defendant was called by plaintiff under the statute and testified that she signed the lease and read same before signing. Plaintiff also placed on the stand the appraiser, who testified that before the lease was signed he had appraised the property at $2,000, without buildings. Defendant's case consisted of her testimony and that of Mr. Maxwell.
Defendant testified that before signing the lease she questioned plaintiff and his attorney about the option to purchase clause, and was advised by them that if she "wanted to sell it at the end of 10 years time, he (plaintiff) would have the first chance to buy it," and that plaintiff would have no right to purchase if defendant did not want to sell.
Mr. Maxwell testified that he was plaintiff's partner when the lease was signed; that he had terminated the partnership and sold all interests in the lease to plaintiff about 1 year before plaintiff endeavored to exercise his right to purchase, and that defendant was advised of this fact; that he carried out negotiations for the lease with the defendant and that he then advised the attorney as to "the terms and conditions of that lease, and as to the amount that the property was to be purchased for;" that an appraisal of the property was made and defendant agreed with plaintiff and himself that $2,000 was a fair valuation and, consequently, this amount was written into the lease in the option clause; that his understanding of the lease was that after the expiration of the 10-year period plaintiff would have the first opportunity to purchase provided defendant "wanted to sell the lot."
The trial court, relying upon the testimony of defendant and Mr. Maxwell, stated in its opinion:
"Both of them testified it was their idea the option was not to be exercised until the expiration of the lease; they both testified to that. It is not in the lease in that way. In the opinion of the court, as far as the parties were concerned, it was understood and was considered by each of them, and was their understanding, and they were mutually mistaken.
"The court is not at this time going to pass upon the question of the exercise of the option, because, in the opinion of the court, under the agreement of the parties, it should have been in the lease. It did not contemplate the exercise of the option until the expiration of the lease. So the bill of complaint will lie dismissed without prejudice."
The court's opinion that "it was not at this time going to pass upon the question of the exercise of the option," was followed by a decree which stated:
"From the undisputed testimony, the intent of both lessor and lessee was that any option to purchase by the lessee could only be exercised at the expiration of the term of said lease, to-wit: June 30, 1961, and, hence, plaintiff's action is premature."
The court "ordered, adjudged and decreed that the plaintiff's bill of complaint be dismissed without prejudice to further action upon the expiration of the term of said lease."
A court should not reform a written instrument without clear and satisfactory evidence. In Goldberg v. Cities Service Oil Co., 275 Mich 199, 211, we approved the following:
" 'Courts do not make contracts for parties, and this truism has given rise to the cautionary rule requiring clear and satisfactory evidence of a mutual mistake before reforming a written instrument. Back of nearly every written instrument lies a parol agreement, merged therein, but the writing controls unless a court of equity, on invocation of its power, finds the writing does not express what the minds of the parties met on, and intended, and supposed they had expressed, but which miscarried by mutual mistake.' "
.Defendant admits she read the lease, but does not testify that she did not understand its terms nor that she believed the option clause therein provided that plaintiff was to have first right to purchase if she decided to sell. Defendant gives no reason why the written provision was allowed to remain in the lease if same was contrary to plaintiff and defendant's understanding as to plaintiff's right to purchase.
Maxwell merely offered his conclusion as to an understanding between the parties contrary to the clear terms of the lease, but offers no testimony as to any conversation between the parties to sustain such conclusion, or any reason as to why a lease was signed that did not express the agreement.
The testimony of the defendant and of Maxwell does not constitute "clear and satisfactory evidence of a mutual mistake," as required under Goldberg v. Cities Service Oil Co., supra.
Defendant filed a cross bill asking the court to reform the lease so that the property leased be confined to the 58 feet now occupied by plaintiff, instead of the entire lot as described in the lease. Defendant testified that the agreement only related to the front half of the lot upon which the dairy bar was to be constructed, and Maxwell testified that he also understood the lease only referred to the front half of lot 110. The trial court commented upon their testimony in his opinion, but did not, in said opinion nor in the decree, grant or refuse defendant's request that the lease be reformed.
Plaintiff filed a motion for rehearing and supported same with an affidavit by the attorney who tried the case, stating "that the court, on its own initiative, rendered a decision which was prejudicial to the plaintiff before the defendant had rested, and also before the plaintiff had the opportunity to introduce rebuttal witnesses on his behalf who were present in court or available." The court denied the motion for rehearing without in any way commenting upon the matters set forth in said motion or in the affidavit.
Plaintiff and defendant are entitled to a determination of rights, both in regard to the option to purchase and as to whether the lease or agreement refers to all of lot 110 or only a part thereof. This should not be held in abeyance until the conclusion of the 10-year period.
It is not necessary in this opinion to comment on plaintiff's claim that the court prematurely rendered a decision, as this case is remanded for further proofs and plaintiff will have full opportunity to offer testimony. Likewise, defendant will have a similar opportunity, and our opinion herein expressed that the proofs submitted in this record do not constitute clear and satisfactory evidence authorizing the court to reform the written instrument, does not restrict defendant from offering proof on this question on further hearing, including amplification and clarification of the testimony of both Mr. MaxAvell and defendant.
An order should enter remanding the case for the purpose of taking further proofs and determining the issues presented on the record, in accordance with this opinion. Appellant may have costs of this appeal.
Sharpe and Carr, JJ., concurred Avith Kelly, J.
See OL 1948, § 617.66 (Stat Ann § 27.915).—Reporter.