Contracts Commons^™

Real Property-Landlord And Tenant-Transfer By Lessee As Sublease, Not Assignment, John S. Slavens

Michigan Law Review

X leased lands to plaintiff for a term of years, with a provision that if property truces were assessed against the property in excess of a certain amount, plaintiff would pay X a certain proportion of the excess amount as additional rent. Plaintiff then transferred his remaining term to defendant "subject to the terms" of the overlying lease. In addition, the sublease provided for a right to cancel the sublease if defendant failed to restore in case of fire or in the event of taking by eminent domain. Subsequent to the sublease, the tax assessments exceeded the amount stipulated in …

Torts--Inducing Breach Of Contract--Attorney-Client Contingent Fee Contract, Richard W. Pogue

Michigan Law Review

Plaintiff, a practicing attorney, undertook on a contingent fee basis to represent a husband and wife in separate claims for damages alleged to have been suffered by them through the negligence of the driver of a motor vehicle. The driver was insured under a policy issued by defendant. Defendant had notice of the contract. After plaintiff had started suit on the damage claim and as the case was about to be tried, defendant's adjusters, without knowledge on the plaintiff's part, allegedly induced the clients to discharge the plaintiff (and "thereby break their contingent fee contract with him") and subsequently to …

Agency-Imputation Of Agent's Knowledge To Principal-Insurance Contracts, Robert B. Krueger S.Ed.

Michigan Law Review

Defendant insurance company's soliciting agent falsified applicant's warranted answers to material questions in an application for automobile casualty insurance. The applicant signed, not knowing of the nature of the answers. On the basis of these answers, defendant issued a casualty policy on applicant's automobile, containing a clause prohibiting waiver or estoppel as to any of the terms of the contract because of the agent's knowledge. As a result of a subsequent accident, plaintiffs recovered judgments against applicant which applicant failed to satisfy. In an action by plaintiffs against defendant, on supplemental petition, defendant admitted recovery against applicant, but claimed no …

Business Associations-Partnership-Claims Against Partner Who Asserts Infancy, Harold S. Lentz S. Ed.

Michigan Law Review

An adult partner sought dissolution of the partnership, contribution of monies according to the contract, determination of liabilities for debts, ascertainment of respective interests, and an accounting from the infant partner. The infant partner asserted his infancy, disavowed the contract, and moved to dismiss the action. Held, motion granted except as to plaintiffs demand for a dissolution and accounting. Sacco v. Schallus, 11 N.J. Super. 197, 78 A. (2d) 143 (1950).

Contracts-Rights Of Third Party Beneficiary-Effect Of Michigan Beneficiary Contract Statute, Gordon W. Hueschen S. Ed.

Michigan Law Review

On agreement to make mutual wills, Stephen and his two sisters entered into an agreement whereby the sisters agreed to will to Stephen, or in event Stephen predeceased them, to his wife, all property which they should receive from their father. Stephen did predecease the sisters, whereupon they executed new wills with no provision for Stephen's widow. Upon death of the last sister, the widow's bill for specific performance of the agreement was dismissed by the circuit court. In affirming on appeal, the Michigan Supreme Court held that the agreement as to Stephen and all other persons except the sisters …

Civil Procedure-Verdicts-New Trial For Defendant Because Of Inadequacy Of Verdict Against Him, Cleaveland J. Rice S. Ed.

Michigan Law Review

Plaintiff sued on a contract for a pro rata share of an agreed $750 annual bonus in addition to salary. The evidence was undisputed that plaintiff had worked for at least the first six months of the year, and possibly seven. The jury was instructed that if it should find that there was such a contract, it should return a verdict for a fractional part of $750, the amount depending upon the portion of the year worked. The result was a verdict in favor of plaintiff for only $312.50. The trial court denied defendant's motion for new trial on grounds …

Contracts-Illegality-Effect Of Violation Of Assumed Name Statute, Gordon I. Ginsberg

Michigan Law Review

ln response to a subpoena, petitioner appeared as a witness before a United States district court grand jury. Several questions concerning· her knowledge and association with the Communist Party were put to her. In each case, she refused to answer the questions, claiming the constitutional privilege against self-incrimination. For refusal to answer these same questions when brought before the district court, petitioner was adjudged to be in contempt of court. The court of appeals affirmed the holdings, and certiorari was granted by the Supreme Court. Held, judgment reversed. The Smith Act makes it unlawful to advocate knowingly the desirability …

Insurance-Loan Contract Which Provides For Cancellation Of Debt In Event Of Named Contingencies As An Insurance Contract, Wendell B. Will

Michigan Law Review

In consideration of plaintiff's promise to pay $720 to defendant in twelve monthly installments, defendant promised to advance $600. Plaintiff's obligation was to be cancelled in case of his death, and his obligation to pay installments was to be suspended while plaintiff was disabled because of illness or accident. Plaintiff warranted his good health and agreed that the contract was neither usurious nor one of insurance. The contract having been executed, plaintiff sought recovery under the Texas usury statute. The trial court held that of the $120 paid in excess of the loan, $60 was for maximum legal interest, $12 …

Patents-Exclusive Licenses-Licensor And Licensee Relationship- Llicensee's Obligations, Gordon W. Hueschen S. Ed.

Michigan Law Review

Patent licensing is today, as always, a very significant part of patent law. Since royalty licenses allow a patentee to realize pecuniary benefits from his invention without yielding ownership, as he would by an assignment, they are especially attractive to an inventor who anticipates considerable commercial success for his contribution, and who does not desire to lose all control of the invention for a lump sum, the adequacy of which must be, at best, speculative. From the licensee's standpoint, it is usually advantageous to be free of competition from others also operating under the same patent monopoly, at least within …

Contracts-Equitable Lien On Partnership Assets, Thomas P. Segerson

Michigan Law Review

The plaintiff and X, now deceased, entered into a partnership agreement whereby each was given the option, upon the death of the other, to wind up the partnership affairs according to law or to purchase the deceased's interest. On X's death, plaintiff exercised the option to purchase. In this suit plaintiff seeks to have a certain agreement construed as a deed and to quiet title. Defendants, as legal representatives of X, answered and filed cross bills claiming a lien on all partnership assets or decedent's partnership interest for the balance due on the purchase price. Defendants allege …

Agency-Election To Sue Undisclosed Principal Or Agent, Alan C. Boyd S. Ed.

Michigan Law Review

Plaintiff brought action against a principal and his agent to foreclose a mechanic's lien on the principal's real property, alleging that he had expended labor and materials in the improvement of the principal's land pursuant to a contract between himself and the agent. Though plaintiff joined the agent as a party defendant, he did not pray for relief against him. Both defendants moved to dismiss the action. Held, action dismissed as to the agent. Whether or not the principal was disclosed at the time the contract arose, the action was properly dismissed as against the agent. If the principal …

Insurance-Consummation Of The Contract-Delivery Of The Policy, John J. Gaskell S. Ed.

Michigan Law Review

An application for life insurance was accepted, and a policy issued, mailed to, and received by the agent of the insurer. The application provided that the policy would not take effect until "manual" delivery thereof. The agent made several unsuccessful attempts to deliver the policy, but before any physical transmission of the policy, the insured died. The beneficiaries sued to recover the amount of the policy. The trial court gave judgment for the defendant insurance company. On appeal, held, affirmed. Manual delivery was a valid condition precedent. There having been no manual transmission to the insured, and the plaintiffs …

Contracts-Measure Of Damages-Life Insurance Contract, Howard Van Antwerp

Michigan Law Review

When the plaintiff was expelled from defendant Brotherhood an insurance policy issued to the plaintiff by the defendant was canceled and the cash surrender value paid to him in accordance with the terms of his policy. The directors of the Brotherhood later decided that this expulsion had been wrongful, whereupon the plaintiff returned the cash surrender value of the policy and demanded the return of all premiums paid. When this demand was refused, the plaintiff sued to recover damages for wrongful cancellation of his policy. The trial court instructed the jury to return a verdict for the premiums paid with …

International Law-Jurisdiction-Application Of United States Seaman's Laws To Foreign Seamen On Foreign Vessels, Philip Smullin

Michigan Law Review

Libelants, eleven Greek seamen, signed a contract in the United States for a voyage from this country to Spain on a Greek vessel. They were discharged when the ship reached Barcelona. The shipowners made advance payments to these seamen, as they had in the past, and deducted such payments when settlements were made in the United States at the end of the voyage, a practice contrary to a federal statute. Prior to libelants' return to the United States from Spain, where they had been properly discharged, suit was instituted in their behalf for wages. Respondents paid into court a sum …

Bills And Notes-Liability Of Indorser After Statute Of Limitations Has Barred Action Against Marker, James F. Gordy S.Ed.

Michigan Law Review

Defendant company made a note which was indorsed personally by defendant Heiselt, its president. The lower court, in rendering judgment against defendant Heiselt personally, held that the statute of limitations had run in favor of the defendant company but that it had not run in favor of the defendant Heiselt, as his absence from the state during a portion of the period had tolled the statute as to him. On appeal, held, affirmed. Under section 120(3) of the N.I.L. there had been no "discharge of a prior party" which would allow one secondarily liable to escape liability. Upton v. …

Bills And Notes--Indorsement "For Deposit Only"--Effect On Negotiability, Stephen A. Bryant S.Ed.

Michigan Law Review

Defendant, in payment for goods purchased, drew two checks payable to W which W indorsed "pay to order of plaintiff bank for deposit only" and deposited with plaintiff. Plaintiff credited W's account with the amount of the checks, which sum was immediately withdrawn. Defendant then stopped payment of the checks as W failed to deliver the goods purchased; and, since W was bankrupt, plaintiff sought to recover the amount of the checks from defendant. Defendant sought to assert a defense which was good against W, on the theory that plaintiff, as restrictive indorsee, was merely a trustee for …

Contracts-Validity Of "No Damage" Clause, Nancy J. Ringland

Michigan Law Review

A "no damage" clause in a contract with a housing authority for the construction of a housing development provided that "no payment or compensation of any kind shall be made to the contractor for damages because of hindrance or delay from any cause in the progress of the work, whether such delays be avoidable or unavoidable." Contractor sought to recover from the housing authority for delay caused by arbitrary and unreasonable conduct of the authority. Held, the contractor could not recover unless the delay or hindrance was caused by fraud, bad faith, or malicious intent. Psaty & Fuhrman, Inc. …

Contracts-Effect Of Supervening Temporary Impossibility, Robert H. Frick S.Ed.

Michigan Law Review

The plaintiff, a Japanese-owned corporation located in the United States, was operating under a limited license to do business granted under an executive order. On November 1, 1941, the plaintiff contracted to purchase from the defendant corporation 6,000 pockets of rice for delivery during November and December 1941 at the plaintiff's option. On December 7, 1941, the Secretary of the Treasury revoked all licenses issued under the executive order and the plaintiff's place of business was closed. Upon learning of this, the defendant corporation notified the plaintiff of his (defendant's) repudiation of the contract on December 9, 1941. On December …

Changing The Beneficiary Of A Life Insurance Contract, Grover C. Grismore

Michigan Law Review

A cursory examination of the court reports will reveal that there is a constant stream of cases coming before our courts in which the principal questions at issue involve the disposition of the proceeds of matured life insurance policies. The question arises most often when the insured, having reserved the right to change the beneficiary, had manifested an intention that someone other than the beneficiary named in the policy should receive the proceeds, but had not complied with the formalities prescribed in his contract for effecting a change. Unfortunately, the answer to the question in the particular case has often …

Landlord And Tenant-Interpretation Of Clause In A Lease Providing For Termination In Event Of Destruction Of Premises, Alan C. Boyd

Michigan Law Review

The plaintiff leased property from the defendant for a term of years. The lease provided that the lessor should repair damage from fire and that "the tenancy shall not be terminated unless such repairs shall require more than ninety days." A fire occurred which damaged the property so badly that it could not be repaired within ninety days. The lessor took the position that the tenancy had automatically terminated with the occurrence of the fire. The lessee filed a bill for a declaratory judgment, claiming that under the terms of the lease he had the option either to terminate or …

Conflict Of Laws-Validity Of A Contract-Application Of Renvoi, R. Lawrence Storms S.Ed.

Michigan Law Review

Plaintiff (British actor, James Mason) and defendant signed an agreement in England contemplating the formation of an American company for producing motion pictures. Plaintiff was to give his exclusive services to the company, and defendant was to make all financial arrangements and generally to manage the company. A dispute arose as to the legal effect of the agreement. Plaintiff won a judgment that the agreement was not a valid contract because of its indefiniteness as to essential terms. On appeal, held, affirmed. Mason v. Rose, (2d Cir. 1949) 176 F. (2d) 486.

Courts-Validity Of Contracts Restricting Venue In Actions Under The Federal Employers' Liability Act, John C. Walker S. Ed.

Michigan Law Review

Petitioner suffered injuries in the course of his duties as an employee of respondent railroad. Subsequently, respondent advanced money to petitioner and the latter agreed in writing that if his claim could not be settled he would sue only in the county or district where he resided at the time of the injury, or in the county or district where the injury was sustained. This agreement restricted petitioner's choice of venue to either a state or federal court sitting in Michigan. Ignoring the contract, petitioner sued in an Illinois court. Respondent then brought suit in the Michigan courts to enjoin …

Regulation Of Business-Antitrust Law As Affected By Standard Oil Company Of California V. United States, William R. Worth S. Ed.

Michigan Law Review

In Standard Oil Company of California v. United States, the Supreme Court of the United States has given what appears to be a final and definitive answer to this question, although differing from what had formerly been thought to be the "final and definite answer." This comment will be centered on that case and its implications.

Negotiable Instruments Under The Uniform Commercial Code, George E. Palmer

Michigan Law Review

The ambitious undertaking of the American Law Institute and the National Conference of Commissioners on Uniform State Laws to draft a "Uniform Commercial Code" includes a proposed revision of the Negotiable Instruments Law. This is not merely an attempt to patch up the present statute. It is virtually a complete rewriting. It includes many changes and additions in substance as well as a radical reorganization and rephrasing of language where no change in substance is designed. · It includes the much needed separation of the provisions relating to investment instruments such as corporate bonds from those relating to bills, checks, …

Partnerships-Limited-Failure To Comply With Statutes As Basis For Unlimited Liability, Fred W. Freeman S. Ed.

Michigan Law Review

The recent decision of the Eighth Circuit Court of Appeals in Kistler v. Gingles, that a limited partner under the Arkansas Limited Partnership Act fails to avoid unlimited liability if the terms of the statute are not complied with, illustrates the inherent danger of the limited partnership. This statute, which is typical of the limited partnership statutes antedating the Uniform Limited Partnership Act, provides, in part, for an affidavit by one of the general partners stating that the sums which each limited partner proposes to contribute to the enterprise have actually and in good faith been paid into the …

Contracts - Mutuality- Consideration In A "Requirements" Contract, Robert W. Shadd S. Ed.

Michigan Law Review

Plaintiff, a wholesale liquor distributor, and defendant entered into a contract under which plaintiff agreed to place orders with defendant from time to time for all such wines as it might require under labels bearing plaintiff's own brand or trade name. Defendant agreed to fill these orders for a period of sixteen months, as well as orders for other wines bottled under labels not the exclusive property of plaintiff. As to the latter types of wine, however, plaintiff was expressly left free to purchase from others. When defendant refused to complete orders pursuant to this agreement, plaintiff brought an action …

Contracts-Duration Of Indefinite Employment Contracts That Specify Period Of Pay, Paul E. Anderson S.Ed.

Michigan Law Review

Normally a contract which does not express a time for performance is treated as enforceable. The courts interpret it to require that performance be completed within a reasonable time, basing their conclusion on a presumption of the intention of the parties. However, in the area of employment contracts, an exception to the reasonable time rule has developed. An indefinite contract for services is generally held to be terminable at will. The questions that come to mind are two: What is" the basis for the unique treatment of employment contracts? What are the manifestations of intent that will defeat application of …

Insurance-Liability Of Insurer For Judgment In Excess Of Policy Limits, Clinton R. Ashford S.Ed.

Michigan Law Review

A liability insurer has issued a policy, reserving the sole right to effect a settlement, and refuses to settle, within the limits of the policy, a claim against the insured. A judgment in excess of the policy limit is then recovered against the insured. These circumstances present the question whether the insurer may be liable to the insured for the amount of the judgment in excess of the policy limit.

This comment will be limited to consideration of cases involving only the above facts, and no attempt will be made to consider the liability of the insurer for failing to …

Constitutional Law--Commerce Clause--Is Organized Baseball Interstate Commerce, Charles Hansen

Michigan Law Review

Plaintiff contracted to play baseball for defendant ball club. The agreement contained the usual "reserve" clause whereby the player agreed not to perform for a team other than defendant unless assigned or released. By terms of the contract, broad disciplinary power over the contracting parties was accorded the commissioner of baseball, and when plaintiff breached the reserve clause, an exercise of that power resulted in his being barred from Organized Baseball for a period of five years. Suit was brought against the organizations comprising Organized Baseball under the Sherman Act, for damages caused by the consequent deprivation of plaintiff's means …

Contracts - Municipal Corporations - Revocability Of Offer Submitted Under Statutory Competitive Bidding, Richard H. Conn

Michigan Law Review

In accordance with statutory provisions, the city commissioners of Atlantic City advertised for bids for certain public improvements. Plaintiff submitted a sealed bid accompanied by a deposit of $5,000, as required by the advertisement, to guarantee execution of the contract if it were the successful bidder. When the bids were opened, plaintiff was the lowest bidder by a considerable margin. Investigation disclosed that an appreciable error had been made in the calculation of its bid, however, and before any official action had been taken, plaintiff advised the city commission of the mistake and withdrew the bid. Nevertheless, the contract was …