Contracts Commons^™

Quasi-Contracts-Landlord And Tenant-Recovery For Overpayment Of Rent In Violation Of Statute, William P. Sutter

Michigan Law Review

Plaintiff occupied a dwelling house from 1928 to 1945, paying $35 per month rent until September, 1941. In that month, defendant, his landlord, increased the rent to $75, which plaintiff paid until September, 1945. The property was registered with the Office of Price Administration at a maximum rental of $35, and this fact was known to plaintiff. Plaintiff's suit to recover the overpayment of $40 per month was dismissed. On appeal, held, affirmed. No statute specifically authorized restitution, and the illegality of the contract precludes restitution in absence of statute. Jones v. Chennault, (Mich. 1948) 35 N.W. (2d) …

Coming Into Equity With Clean Hands, Zechariah Chafee, Jr.

Michigan Law Review

The most amusing maxim of equity is "He who comes into Equity must come with clean hands." It has given rise ,to many interesting cases and poor jokes. The maxim has been regarded as an especially significant manifestation of the ethical attitude of equity as contrasted with the common law. Pomeroy, for instance, argues that the principle involved in this maxim is "merely the expression of one of the elementary and fundamental conceptions of equity jurisprudence." Pomeroy's theory is that chancery has power to force a defendant to comply with the dictates of conscience as to matters outside the strict …

Insurance-Effect Of Incontestable Clause In Suit For Reformation Of Policy, N. S. Peterman S. Ed.

Michigan Law Review

For over twenty years, defendant insurer accepted premiums on a life insurance policy issued to plaintiff. Defendant then discovered that a clerical error had been made in the original policy, as a result of which plaintiff's premium payments were approximately one-half the premiums defendant normally received for the type of policy actually issued. Defendant asked for reformation of the policy on the ground of mistake, and the trial court granted the relief sought. On appeal, held, reversed. The action was barred by the incontestable clause. Richardson v. Travelers Insurance Co., (App. 9th, 1948) 171 F. (2d) 699.

Specific Performance-Marketable Title To Realty-Compelling Vendor To Purchase Outstanding Interest, Robert Dilts

Michigan Law Review

Plaintiffs sued for specific performance of a contract for the sale of real estate. Their attorney had concluded that the abstract furnished by defendant indicated a possible outstanding undivided one-half interest in the property. Refusing to accept a conveyance unless the alleged defect was eliminated or protection offered against an attack on the title, plaintiffs sought a decree requiring defendant to clear title and convey according to the contract. There was no showing that defendant could obtain a conveyance of the alleged outstanding interest. Held, specific performance denied. Bartos v. Czerwinski, 323 Mich. 87, 34 N.W. (2d) 566 …

Specific Performance-Scarcity As Justification For Specific Performance Of Contract For Purchase Of New Car, Richard H. Conn

Michigan Law Review

In two recent cases, prospective purchasers entered into written contracts with local automobile distributors for the purchase of new cars. Because of the scarcity of new cars, the prospective purchasers' names were put on waiting lists establishing a priority for delivery as new cars were received by the distributors. In both cases the distributors refused without excuse to perform when cars became available for delivery. The prospective purchasers sought specific performance on the basis that the current scarcity of new cars and the difficulty of obtaining them elsewhere for cash alone made the legal damage remedy inadequate. Held, (a) …

Quasi-Contracts -- Taxation -- Rescission Of Gift For Failure To Achieve Donor's Purpose Of Minimizing Federal Income Taxes, N. S. Peterman S. Ed.

Michigan Law Review

In 1937, plaintiff made a gift of stock in a closed corporation to his wife, the defendant. For two years defendant received cash dividends on the stock transferred to her and paid income taxes thereon. Late in 1938 the corporation was dissolved; the assets were distributed to the shareholders, and a partnership was formed. Defendant continued to report the income received by her from the partnership. In 1946, the Tax Court sustained the contention of the commissioner of internal revenue that the entire income from this partnership was taxable to plaintiff under the doctrine of Commissioner v. Tower. Plaintiff …

Contracts-Impossibility-Effect Of Crop Failure On Middleman's Contract, John C. Walker

Michigan Law Review

Defendant, a produce dealer, offered to sell to plaintiff a specified quantity of Texas "New Crop U.S. 1 blackeye peas." When the original offer was made on June 13, 1947, plaintiff asked how defendant could be sure the peas would be ''No. 1.'' Defendant replied that because the locality of Dilley, Texas, had been unusually dry, the pea crop would be sold as dry ''blackeyes;" defendant also stated that he had already made a contract to purchase 7,000 bags of these "blackeyes" from a certain canning company. On June 16 the contract for 800 bags of peas was consummated, delivery …

Contracts-Duty To Mitigate Damages Upon Anticipatory Breach Of Forward Contract Of Sale, William F. Snyder

Michigan Law Review

The theory of our law in regard to damages for breach of contract has been to give the innocent party as nearly as possible what he would have received had the contract been performed. To this end, our courts have worked out a rough formula which has been described by Professor Grismore as follows:

" ... The promisee is, in general, entitled to recover the economic equivalent of the performance promised, at the time and place fixed in the contract, plus any losses incurred or gains prevented through not receiving it, less any savings that have resulted to the promisee …

Contracts--Mutual Assent--Effect Of Insanity, Earl R. Boonstra

Michigan Law Review

Defendant listed a hotel with plaintiff, a broker, who procured a purchaser. Defendant refused to sell and pleaded insanity in defense to an action for a commission. The jury was charged to hold for defendant if it found defendant mentally incapable of entering into the contract. On appeal from a judgment for defendant, held, the instruction was erroneous. The unadjudicated insanity of one of the parties is not sufficient reason for setting a contract aside where the executed contract was made in good faith, for a fair consideration, and without notice of infirmity, and if the parties cannot be …

Landlord And Tenant-Lessee's Covenant To Pay Taxes-Liability Of Assignee Who Has Reassigned, L. K. Cooperrider S.Ed.

Michigan Law Review

A 100-year lease contained the following covenant, " . . . lessee further agrees that he will, as additional rent, pay . . . all taxes and assessments . . . which shall, during said term, be levied, assessed, or otherwise imposed. . . The lessee 'agrees that he will pay such taxes . . . before any fine . . . may be added thereto for non-payment thereof." Defendant, assignee of the lessee, had reassigned on December 16, 1936; Plaintiff, lessor, sought to recover from him unpaid taxes for the calendar year 1936. In Minnesota, property taxes are assessed …

Contracts - Impossibility - Effect Of Temporary Inability To Perform, E. C.V. Greenwood S.Ed.

Michigan Law Review

On August 16, 1940, plaintiff village and defendant corporation entered into a contract under which defendant agreed to build for plaintiff an electric plant and distribution system. This contract contained two provisions that became significant in the light of the litigation that ensued: (1) a not uncommon provision for extension of time beyond the 180 days allotted for performance, in case of delay caused by the fault of the plaintiff, or by the fault of neither party, and (2) a provision for postponement of the commencement of performance until after termination favorable to plaintiff of a pending suit for declaratory …

Recent Developments In Restitution: Rescission And Reformation For Mistake, Including Misrepresentation, Edward S. Thurston

Michigan Law Review

In accordance with underlying equitable principles, restitution is granted where a mistake has been made by one or both parties to a transaction or series of transactions because of which one of them has obtained an advantage which it would be unjust for him to retain.

There are two forms of relief, one based upon rescission, the other upon reformation. The first seeks the undoing of a transaction and the replacing of the parties into the positions, as nearly as may be, originally occupied. On the other hand, reformation seeks the performance of an agreement as the parties to it …

Quasi-Contracts-Taxation-Rescission Of Gifts Where Gift Fails To Achieve Donor's Purpose Of Minimizing Federal Income Taxes, Charles M. Soller S.Ed., Edwin F. Uhl S. Ed.

Michigan Law Review

A recent Michigan case, Stone v. Stone, presents problems of complexity and far-reaching importance. The plaintiffs, husband and wife, each owned a one-half interest in a family business partnership, and each apparently reported a proportionate share of the partnership earnings for federal income tax purposes. For the purpose of further reducing taxes on the income of the family unit, each parent transferred a one-quarter interest in the partnership to one of their two minor children, and thereafter each parent and child filed separate income tax returns reporting one-fourth of the partnership earnings as individual income. Each parent, under a …

Contracts-Broker's Listing Agreement-Effect Of Lease Of Property By Owner, C. E. Becraft

Michigan Law Review

Plaintiff, a broker, procured from defendant a listing agreement for the sale of defendant's property. Plaintiff produced a purchaser, ready, willing, and able to purchase the property, but defendant refused to convey inasmuch as he had leased the property after giving the listing agreement. The lessee refused to cancel the lease for less than $3,000. Plaintiff brought an action to recover his commission and defendant disclaimed liability as the execution of the lease was known to plaintiff and to the prospective purchaser before the offer to purchase was made. Held, defendant could not alter the plaintiff's rights by placing …

Contracts-Remedies For Misrepresentation-Measure Of Recovery, Richard J. Archer S.Ed.

Michigan Law Review

In a preceding comment in this series, the various remedies affording relief for misrepresentation were examined for the purpose of determining what remedies are available in case of an innocent misrepresentation. Discussion was directed toward actions for damages for deceit, actions at law and in equity for restitution, the recovery of damages for breach of warranty, and the action based on the enforcement of representations on a theory of estoppel. The purpose of the present comment is to re-examine these remedies to determine what relief can be obtained by each of them, assuming for this purpose that all of the …

Contracts--Specific Performance-Defense Of Hardship Caused By Defendant's Improvements After Giving Option To Purchase, Robert E. Anstaett

Michigan Law Review

In a lease of plaintiff's corner lot to defendant corporation in 1941, the latter granted plaintiff a five-year option to purchase adjacent lots owned by defendant for $35,000, which was then a fair price. In 1945 defendant's officers, overlooking the option agreement, authorized construction of a warehouse on the adjacent property. After defendant had expended about $20,000 in the construction, plaintiff exercised her option by giving notice to defendant. Upon defendant's refusal to convey, plaintiff sued for specific performance. The trial court dismissed the complaint. Held, reversed and remanded with instruction to decree specific performance upon condition that plaintiff …

Labor Law - "Channeling" The Duty To Bargain - Effect Of Violation Of "No-Strike" Clause In Existing Agreement, John F. Buchman S.Ed.

Michigan Law Review

Employer and union had an existing collective agreement which provided detailed procedures for adjusting grievances, including arbitration as the final step, and contained a no-strike clause. Disputes arose concerning action taken by the employer affecting working schedules, overtime work, and other conditions of employment without consulting the union; and disciplinary measures were taken against certain employees in pursuance of the new working rules. The union finally called a strike, without filing grievances according to the contract procedure on the disputes which were the immediate causes of the strike. The employer discontinued hearings on two pending grievances and refused to negotiate …

Quasi-Contracts--Duress--Recovery Of Payments Made Under Economic Pressure, E.C. V. Greenwood

Michigan Law Review

On September 1, 1939, plaintiff company, engaged in the business of refining, purchasing, transporting and selling gasoline and other petroleum products, entered into two written contracts with defendant retailer. One contract provided for purchase by defendant from plaintiff of real property by monthly installments totaling $32,000, and the other stipulated for purchase from plaintiff of all the gasoline and petroleum products handled by defendant for a period of five years from date. Defendant defaulted in the payment of monthly installments on the real estate contract, and plaintiff brought suit to recover the unpaid balance of $15,200 and sought foreclosure of …

Insurance-Death Of Insured Resulting From Criminal Abortion- Right Of Beneficiary, R. V. Wellman

Michigan Law Review

Insured died as the result of a criminal abortion to which she had voluntarily submitted. The policies issued on her life contained a provision to the effect that no benefits should be payable or recoverable should the insured die as a result of a violation of law. The insurer resisted the action brought by the named beneficiary on the policy on two grounds: (a) The insured's death was caused by her violation of law; (b) Although the stated terms of the policy be held not to exclude the risk of death thus caused, it would be contrary to public policy …

Bills And Notes-Imposters In The Law Of Bills And Notes, Ralph W. Aigler

Michigan Law Review

Two crooks, Baron and Brasch, now apparently residents of the New Jersey penitentiary, yielded to the temptation to acquire money by supposedly easy means. They selected as their victim a Miss Russell, a retired school teacher with more cash than is usual in the cases of people with her background. She seems to have had a strong leaning towards charitable contributions, and it was this trait which commended her to Baron and Brasch.

Quasi-Contracts-Recission-Liability And Remedies For Innocent Misrepresentation, Bruce L. Moore S.Ed.

Michigan Law Review

A number of courts and most writers recognize the existence of three types of misrepresentation. One type is described as intentional, a second type as negligent, and a third type as innocent. An innocent misrepresentation may be defined as one believed to be true and made without negligence, but false in fact.

Constitutional Law - War Contracts - Effect Of Constitutional Issues On The Exhaustion Of Administrative Remedies Doctrine, Richard V. Ehrick

Michigan Law Review

Plaintiff, a manufacturer of war materials under subcontracts with government contractors, filed suit in the District Court for the District of Columbia requesting a declaratory judgment holding the First and Second Renegotiation Acts unconstitutional and, as a consequence thereof, injunctive relief from threatened action by the defendants to recover alleged excessive profits. The district court dismissed the complaint on the grounds (1) that the suit was premature, plaintiff having failed to exhaust the prescribed administrative procedure, and (2) that the available legal and administrative remedies were adequate, the right to equitable relief not being established either on the basis of …

Equity-Jurisdiction To Enjoin Acts Of A Federal Officer In Excess Of Statutory Authority, William J. Schrenk

Michigan Law Review

As a device for recovering excessive profits, federal legislation authorized the Secretary of War to order concerns holding contracts with the government to withhold and pay over to the government amounts due from them to parties against which the excessive profits had been determined. Acting under this authority, the Secretary ordered twelve government contractors to withhold sums due or to become due to plaintiff, of which they were customers, after a determination against the plaintiff of $7,000,000 in excessive profits. Plaintiff sought to enjoin defendant from using this means of collection, contending that because the order was not limited to …

Landlord And Tenant-Lease Covenant Against Unlawful Business, Bruce L. Moore S.Ed.

Michigan Law Review

In an action to dispossess defendants of certain leased property, plaintiff alleged that defendants breached an express covenant in the lease by which defendants covenanted that they would use the premises for a store, and would not use the premises "for any unlawful business or purpose whatever." Defendants used the premises for a general mercantile store, operating under the trade name "Stop 'N Shop." In so doing, defendants failed to comply with a statute which provided that "It shall be unlawful for any person to engage in a business . . . under any name which does not plainly show …

Constitutional Law-Tax Exemption Contract, Grétel Schinnerer

Michigan Law Review

A charter granted in 1863 by the State of Georgia to the Atlantic Coast Line Railroad Company provided as follows: "The stock of said company shall be subject to a tax not exceeding ½ per cent per annum on the net proceeds of its investments." In 1931, the Georgia legislature levied a tax of 5½ per cent on corporate net income. The railroad brought an action seeking to have an assignment under this tax declared invalid, on the theory that the tax as applied to the plaintiff railroad violated the contract clause of the federal Constitution. The Georgia Supreme Court …

Contracts--Consideration-Performance Of One Alternatlve When There Is Dispute As To Which Is Owed, L. B. Lea

Michigan Law Review

Defendant issued a membership certificate to one Flowers providing for payment of $5000 in case of accidental death or $500 in case of death due to heart disease. Later Flowers was injured in an automobile accident and died an hour afterward. The beneficiary submitted proofs of loss, including a statement of a physician that death was caused by "coronary thrombosis. Shock from auto accident about one hour before death." Defendant sent to the beneficiary a draft for $500 clearly stating on its face that the endorsement of the check would be a settlement in full. After cashing the check, the …

Evidence-Parol Evidence Rule-Admission Of Parol Evidence To Show Contract Was Sham, Frank E. Roberts S.Ed.

Michigan Law Review

Plaintiffs, executors, brought a bill in equity for an accounting on a contract between defendant and one Broder, deceased, dated April 27, 1944, as modified by a writing dated July 24, 1944. In support of a motion to dismiss, defendant offered parol evidence to show that the writing dated July 24, 1944 was actually executed December 31, 1944 and was not intended to bind the parties, but was designed to effectuate a scheme by which certain advancements to be made to Broder for services rendered in 1945 would be treated as salary paid to Broder during 1944 for purposes of …

Contracts-Law Applying To Government Contracts-Penalty Clauses, Hubert L. Rowlands S.Ed.

Michigan Law Review

Petitioner contracted with the Federal Surplus Commodities Corporation of the United States Department of Agriculture to supply dried eggs under the Lend-Lease Act of 1941. Delivery was to be made on the "first day of a 10-day period within which the F. S. C. C. will accept delivery." The ten-day period started on May 18, 1942, and the eggs were to be inspected and ready for shipment on that date. Two provisions for "liquidated damages" were stated: one for delays in delivery, the other for failure to have the products inspected and ready on the specified dare. Petitioner failed to …

Quasi-Contracts-Concept Of Benefit, George A. Rinker S.Ed.

Michigan Law Review

One of the basic elements of quasi-contract, and probably the most complex, is the concept of benefit. Its origin lies in the early actions to recover for unjust enrichment, and the early characteristics, for the most part, have persisted to the present time. While "enrichment" is no longer an accurate synonym for benefit, as it once was, the qualitative "unjust" still retains its vigor. Thus, "unjustified benefit" is a more accurate name for the concept. As used in quasi-contract and related fields of law, the concept is composed of several factors, no one of which can be considered as invariable. …

Bills And Notes-Construction Of Negotiable Instruments And Contemporaneous Written Agreements, Ralph J. Isackson

Michigan Law Review

On April 12, 1938, M executed a demand promissory note, negotiable in form, payable to the order of his daughter, the plaintiff. Simultaneously M prepared and attached a written instrument to the note stating that the plaintiff agreed that she would not attempt to collect the note until M died. The attached instruments were delivered to plaintiff immediately after execution. M died May 23, 1945. Plaintiff, who held the instruments from the date of execution without making any demand for payment, filed the note with the defendant, M's administrator, as a claim against M's estate. The defendant objected …