Benincasa v. Mihailovich, Docket No. 8175

Decision Date23 March 1971
Docket NumberDocket No. 8175,No. 3,3
PartiesWilliam BENINCASA and E. Kathleen Benincasa, Plaintiffs-Appellants, v. Risto MIHAILOVICH et al., Defendants-Appellees
CourtCourt of Appeal of Michigan — District of US

Larry D. Fowler, Lansing, for plaintiffs-appellants.

Harold M. Street, Muskegon, for Risto Mihailovich.

Harry J. Knudsen, Muskegon, for Volney Swift.

Before FITZGERALD, P.J., and V. J. BRENNAN and T. M. BURNS, JJ.

V. J. BRENNAN, Judge.

This appeal arises out of a suit to foreclose a land contract. From a judgment in favor of the defendant vendee, the plaintiffs appeal.

The plaintiffs, William and Kathleen Benincasa, were the owners of improved land in Laketon Township on which was situated a motel and a combination bar and restaurant. In 1964, plaintiffs leased the bar and restaurant to William J. Perry and George C. Ollier. The lease gave the plaintiffs a right of first refusal to purchase the goodwill of the business and the class C liquor license. On February 14, 1966, plaintiffs entered into a land contract with defendant Mihailovich for the sale of the motel. On that same day, the parties entered into two other agreements. First, Mihailovich executed a document entitled 'Security Agreement', which created a security interest in the furniture, equipment, and fixtures contained in the motel in favor of the plaintiffs. It provided that a default under the land contract was a default under the security agreement. This was intended as additional security for the land contract. Second, the plaintiffs executed a document entitled 'Assignment,' in which they assigned their interest in the lease and their right of first refusal to defendant. As part of that same agreement, defendant Mihailovich covenanted as follows:

'In the event Risto Mihailovich acquires the Class 'C' liquor license aforementioned and, during the existence of the land contract between the said Risto Mihailovich and William J. Benincasa and E. Kathleen Benincasa, the said Risto Mihailovich should default on his obligations to the said Benincasas, then, and in that event, the Benincasas shall be entitled to purchase from the said Risto Mihailovich all of his right, title and interest in and to said liquor license for a sum identical to that expended by the said Risto Mihailovich in the purchase of said license, unless said Risto Mihailovich shall cure said default in accordance with the terms of said land contract.

'It is further agreed that so long as William J. Benincasa and E. Kathleen Benincasa have any interest in the Tally-Ho Motel, under the terms of said land contract, Risto Mihailovich agrees that he will not voluntarily dispose of said liquor license.'

The intent here also was to give the sellers additional security for the debt owing on the land contract.

Thereafter, Mihailovich did in fact acquire the liquor license, but in December of 1967, he sold his interest in the bar and restaurant and the liquor license to one Volney Swift. The purchase agreement provided:

'The purchaser (Swift) agrees that he will not attempt to transfer the liquor licenses now in the name of the seller (Mihailovich) from the premises during the original term of such Lease or any option term thereof.'

On March 7, 1968, the plaintiffs instituted the present suit to foreclose the land contract and to force Volney Swift to reassign the liquor license to the plaintiffs. Plaintiffs filed a motion for summary judgment praying for acceleration of the balance due on the land contract as provided therein. Defendants likewise filed a motion for summary judgment. The trial court, having decided that there were no disputed issues of fact, granted the defendants' motion for summary judgment. As requested by the plaintiffs, however, the court enjoined Swift and Mihailovich from petitioning the Liquor Control Commission to make any further transfers of the license until the plaintiffs are paid or unless they consent thereto. The court stated in its opinion that the vendee had not defaulted in any payments and that the injunction would sufficiently protect the security of the vendors.

Since it is undisputed that the defendant Mihailovich has breached his promise to refrain from disposing of the liquor license, we must determine whether the plaintiffs were entitled to declare a default and accelerate the balance due under the land contract.

Looking to the terms of various agreements which comprised the transaction in question, we are unable to find a provision in any of them which states that breach of the above-quoted covenant in the Assignment agreement is a default under the Land contract. The acceleration clause in the land contract applies only if 'the Buyer shall fail to perform any of the covenants or conditions Contained in this Contract.' (Emphasis supplied.) It is clear that such clause is expressly limited to breach of the covenants contained on the face of the land contract itself. Furthermore, the relevant portion of the assignment agreement does not provide for...

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3 cases
  • Carpenter v. Smith
    • United States
    • Court of Appeal of Michigan — District of US
    • 21 Marzo 1986
    ...absence of an acceleration clause in the contract". Lutz v. Dutmer, 286 Mich. 467, 488, 282 N.W. 431 (1938), Benincasa v. Mihailovich, 31 Mich.App. 473, 478, 188 N.W.2d 136 (1971). But "where there has been an anticipatory breach of a contract by one party * * * the other party may treat th......
  • Johnson v. Johnson
    • United States
    • U.S. District Court — Western District of Michigan
    • 9 Abril 1974
  • Gary Boat Club, Inc. v. Oselka, Docket No. 8173
    • United States
    • Court of Appeal of Michigan — District of US
    • 23 Marzo 1971

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