Brown Bros. Equipment Co. v. State

• Decision Date: 01 March 1974
• Docket Number: Docket No. 13646,No. 2,2
• Citation: 215 N.W.2d 591,51 Mich.App. 448
• Parties: BROWN BROTHERS EQUIPMENT COMPANY, a Michigan corporation, Plaintiff-Appellee, v. STATE of Michigan and Michigan State Highway Commission, Defendants- Appellants,
• Court: Court of Appeal of Michigan — District of US

Page 591

215 N.W.2d 591

51 Mich.App. 448

BROWN BROTHERS EQUIPMENT COMPANY, a Michigan corporation Plaintiff-Appellee, v. STATE of Michigan and Michigan State Highway Commission Defendants- Appellants,

Docket No. 13646.

Court of Appeals of Michigan, Division No. 2.

March 1, 1974.

Released for Publication March 19, 1974.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Robert J. Taube, Asst. Atty. Gen., for defendants-appellants.

Roland F. Rhead, Glassen, Parr, Rhead & McLean, Lansing, for plaintiff-appellee.

Before BASHARA, P.J., and McGREGOR and BRONSON, JJ.

BASHARA, Presiding Judge.

This case arose out of the anticipated condemnation of real estate for purposes of constructing I--496 in Lansing Township. The real estate, including manufacturing facilities located on it, were owned by plaintiff Brown Brothers Equipment Company. The actual management and control of the manufacturing business was not in plaintiff but in a separate corporation, Brown Brothers, Inc., not a named party to this suit.

Preliminary negotiations between the state and plaintiff were begun with the view that an agreement might be reached which would settle or lessen the damages to plaintiff's business resulting from condemnation of the underlying land. The discussions were concerned with the relocation of plaintiff's facilities and equipment, as the new highway would sever access to a railroad spur necessary to plaintiff's business. Initially the state offered to pay, Inter alia, for the relocation of certain equipment, pay the cost of a conveyor running from plaintiff's plant to the railroad and pay for the railroad spur itself. The plaintiff would then be obliged to sign a possession and use agreement permitting the state to proceed with construction of the highway. Plaintiff alleges that the negotiations and actions which ensued terminated in a binding contract which defendants emphatically deny.

The state filed its petition for condemnation ¹ in September, 1966, and in February of 1967 plaintiff commenced suit in the Court of Claims seeking damages for breach of contract. After a lengthy trial the court found that a contract had been entered into be the parties, that the defendant commission had breached that contract, and as a result plaintiff had suffered damages in the amount of $184,325.74. The judgment reflected costs for an engineering study of $12,337.08, alleged loss of future profits for $60,133.08, and $111,855.58 for costs incurred by the plaintiff in relocating its ready-mix facilities. Defendants appeal those findings and awards made by the Court of Claims.

The defendant's first claim on appeal is that the trial court erred in concluding that an agreement existed between the parties. It points to the voluminous record and argues that the court's finding was clearly erroneous. In reviewing the court's decision, findings of fact made by the Court of Claims have the same status as findings of fact made by circuit judges hearing a case without a jury. W. H. Knapp Co. v. State Highway Department, 311 Mich. 186, 18 N.W.2d 421 (1945). This Court will not set aside a trial court's factual determination unless it is clearly erroneous, GCR 1963, 517.1; Ross v. Richardson, 29 Mich.App. 110, 185 N.W.2d 106 (1970). On the basis of the whole record, we are unable to say that the finding of the court that an agreement was reached is clearly erroneous.

The state has conceded that if the decision that an agreement existed is upheld on appeal then the $12,337.08 awarded to plaintiff for its engineering study should not be disturbed. It is the remaining two elements of damage, relocation costs and lost future profits, to which the state takes exception.

Our discussion will first be addressed to the issue of $111,855.58 expended for the relocation of plaintiff's readymix equipment. It is plaintiff's contention that these relocated facilities are now worthless without the railroad spur for which defendant agreed to pay. Plaintiff, without citation to law on point, maintains that the relocation costs represent damages incurred in reliance on the defendant's promise to perform. As stated in 22 Am.Jur.2d, Damages, § 46, P. 72, the reliance interest is that interest of the nondefaulting party in the expenditure which he made or the property which he transferred or consumed in Reliance on the contract.

When reliance is alleged one of the necessary elements for recovery of damages is lack of knowledge by the nondefaulting party that a breach has occurred. The record before us discloses that such ignorance on the part of the plaintiff was contrary to the facts. Further, plaintiff instituted suits during 1967 in both the Court of Claims and the United States District Court to enforce the contract which d...