Brodsky v. Allen Hayosh Industries, Inc.

• Decision Date: 15 November 1965
• Docket Number: No. 210,No. 2,210,2
• Citation: 137 N.W.2d 771,1 Mich.App. 591
• Parties: Herman BRODSKY, Plaintiff-Appellant and Cross-Appellee, v. ALLEN HAYOSH INDUSTRIES, INCORPORATED, a Michigan corporation, Defendant-Appellee and Cross-Appellant. Cal
• Court: Court of Appeal of Michigan — District of US

Page 771

137 N.W.2d 771

1 Mich.App. 591

Herman BRODSKY, Plaintiff-Appellant and Cross-Appellee, v. ALLEN HAYOSH INDUSTRIES, INCORPORATED, a Michigan corporation, Defendant-Appellee and Cross-Appellant.

Cal. No. 210.

Court of Appeals of Michigan, Division No. 2.

Nov. 15, 1965.

Rehearing Denied Dec. 16, 1965.

Gottlieb & Silitch, Detroit, for appellant.

Armstrong, Helm, Marshall & Schumann, Detroit, for appellee.

Before GILLIS, P. J., and McGREGOR and WATTS, JJ.

McGREGOR, Judge.

Herman Brodsky, the owner of a lot with two small residential buildings, and two officers of the defendant corporation signed a document, here at issue, on January 28, 1960. The instrument was entitled 'Agreement to Enter into a Lease' and referred to the plaintiff as landlord and to the defendant as tenant. By the terms of this instrument, the landlord agreed to grant and the tenant agreed to accept a lease according to the terms and conditions set forth in the instrument, which recited the legal description of the property, the term of the lease, the rental (which was ten cents per square foot per month, or approximately $1,550.00 per month) and included the following provision, which is the source of controversy:

'The Landlord agrees to construct on said premises a factory building containing approximately Fourteen Thousand Four Hundred (14,400) Square feet of factory space, and Eleven Hundred (1,100) Square feet of air-conditioned offices, according to plans and specifications to be attached to the Lease when executed, reserving to the Tenant the choice of minor modifications.'

This instrument also provided for $9,000.00 security deposit; $1,000.00 to be paid by the intended lessee at the signing of the agreement; $4,000.00 upon completion of building plans; and an additional $4,000.00 upon completion of the building. It also required the lease to contain all the provisions of the Detroit Real Estate Board Form--Business Property Lease. The premises were to be ready October 1, 1960, but rental was to begin at occupancy if completion were delayed.

In compliance with the terms of this agreement, the plaintiff proceeded to clear the land. However, on May 9th, 1960, plaintiff Brodsky was informed by the defendant's attorneys that defendant was not going to comply with the agreement. Plaintiff won a judgment for breach of contract before the trial court sitting without a jury. He brought this appeal, however, to recover a larger award of damages. The defendant corporation cross-appealed, contending that the agreement was not a binding contract.

The basic principle on preliminary agreements for the construction and lease of business premises is this:

'If the document or contract that the parties agree to make is to contain any material term that is not already agreed on, no contract has yet been made.' Professional Facilities Corp. v. Marks (1964), 373 Mich. 673, 679, 131 N.W.2d 60, 63, quoting with approval Hansen v. Catsman (1963), 371 Mich. 79, 123 N.W.2d 265.

In the Hansen case, the court held that the agreement, which described the lot and type of building to be erected, fixed the length of term and the rental, and required the intended lessee to deposit $1,000.00 in security, was not a binding contract because the language used was that of contemplation rather than promise or obligation. This same principle has been stated in another form:

'To be enforceable, a contract to enter into a future contract must specify all its material and essential terms and leave none to be agreed upon as the result of future negotiations.' Socony Vacuum Oil Co., Inc. v. Waldo (1939), 289 Mich. 316, 323, 286 N.W. 630, 632, quoting 12 Am.Jur., Contracts, § 24, p. 521.

The language of present agreement in the instrument before us contrasts strongly with the language of speculation and possibility in the Hansen case. Although the parties before us never actually agreed upon the building specifications, this Court is not of the opinion that the parties intended formulation of specifications to be a prerequisite to the binding force of the contract.

Long v. Mayor, etc., of Battle Creek (1878), 39 Mich. 323, held valid a contract for the construction of a bridge described only as 'good' and without any specification of material or design. Bushman v. Faltis (1915), 184 Mich. 172, 150 N.W. 848, held a lease to be a binding agreement, even though it omitted the rental due date and the time of conveyance in the event that the lessee exercised his option to purchase. The court stated that the agreement was precise enough even for specific performance because the following elements were present:

1. the names of parties to the lease;

2. adequate description of the premises;

3. length of term and amount of rent; and

4. sale price upon exercise of option.

The agreement which the plaintiff Brodsky and the defendant corporation signed contained all of these elements, except the fourth, which is not relevant to this case. The defendant contends that building specifications are an essential ingredient to a binding contract. The agreement, however, did not on its face leave anything to speculation but specified the amount of factory and air-conditioned office floor space. This agreement would imply a physical plant reasonably suited to defendant's manufacturing and office needs. No more certain specifications are needed for purposes of enforcing this lease agreement.

The question of damages remains. Before defendant repudiated the agreement plaintiff had demolished the residences, cleared the land, and hired an architect. Plaintiff...