Coats v. Uhlmann, Docket No. 77-767

• Decision Date: 05 December 1978
• Docket Number: Docket No. 77-767
• Citation: 87 Mich.App. 385,274 N.W.2d 792
• Parties: Eli COATS and Sarah S. Coats, Plaintiffs-Appellants, v. Robert C. UHLMANN and Eleanor A. Uhlmann, Defendants and Third-Party Plaintiffs-Appellees, and Russell Klaasen Realtors and Milton Beelen, Defendants and Third-Party Defendants-Appellees, and Roger J. MacLeod, Defendant-Appellee, and Francis Seats, d/b/a L & F Seats Realty, Third-Party Defendant.
• Court: Court of Appeal of Michigan — District of US

Page 792

274 N.W.2d 792

87 Mich.App. 385

Eli COATS and Sarah S. Coats, Plaintiffs-Appellants, v. Robert C. UHLMANN and Eleanor A. Uhlmann, Defendants and Third-Party Plaintiffs-Appellees and Russell Klaasen Realtors and Milton Beelen, Defendants and Third-Party Defendants-Appellees and Roger J. MacLeod, Defendant-Appellee and Francis Seats, d/b/a L & F Seats Realty, Third-Party Defendant.

Docket No. 77-767.

Court of Appeals of Michigan.

Dec. 5, 1978.

Released for Publication Feb. 9, 1979.

Willingham, Cotee, Hanslovsky, Griffith & Foresman, P. C. by John L. Cotee, East Lansing, for plaintiffs-appellants.

Robert W. Dilley, Grand Rapids, for Uhlmanns.

Richard D. Ward, by Robert A. Benson, Grand Rapids, for Klaasen, Beelen, and MacLeod.

Max R. Murphy, Holland, for Seats.

Before DANHOF, C. J., and V. J. BRENNAN and CAMPBELL, ^* JJ.

CAMPBELL, Judge.

This appeal arises out of a suit precipitated by a sale of land in Holland, Michigan. Defendant realtors, Russell Klaasen Realtors, Milton Beelen and Roger MacLeod, represented the buyers, plaintiffs in this suit, throughout the sale until its closing on July 8, 1971.

The final deed excepted a portion of the land the buyers thought was to be included for the purchase price. At the closing, the realtors misrepresented the exception as a mere license or easement in favor of the sellers. Later, it became apparent to the buyers that the sellers were claiming full ownership of the excepted tract. ¹

The buyers sued the sellers on July 25, 1972, seeking reformation of the deed. After substantial procedural delays, the realtors were joined as defendants on November 12, 1975. The amended complaint charged them with failure to apprise the buyers of the true nature of the exception in the deed.

The trial court found the realtors had acted as agents for the buyers and had negligently misrepresented the nature of the deed exception, but ruled the buyers' claim barred by the two-year statute of limitations for malpractice, M.C.L. §§ 600.5805(3), 600.5838(2); M.S.A. §§ 27A.5805(3), 27A.5838(2).

On appeal the buyers argue theories of delayed accrual and relation back. Alternatively, they urge us to apply the six-year statute of limitations for contract claims, M.C.L. § 600.5807(8); M.S.A. § 27A.5807(8). We agree to reverse, but on different grounds.

The negligent misrepresentation of the deed exception by the realtors was a breach of contract as well as a tort. See 3 Am.Jur.2d, Agency, §§ 200, 299, pp. 581-82, 687-88; Anno.: Broker's liability for damages or losses sustained by vendor of real property to vendee because of broker's misrepresentations ; 61 A.L.R.2d 1237. See generally, Anno.: Right of principal to recover punitive damages for agent's or broker's breach of duty, 67 A.L.R.2d 952. Relevant to such situations are several statute of limitations provisions.

The starting point is M.C.L. § 600.5813; M.S.A. § 27A.5813, which provides that all personal actions "shall be commenced within the period of six years after the claims accrue and not afterwards unless a different period is stated in the statutes". An exception to this general six-year rule is found in M.C.L. § 600.5805; M.S.A. § 27A.5805, which requires "any action to recover damages for injuries to persons or property", not including certain specified tort actions, to be commenced within three years after the claim first accrues. There is an exception to the exception in M.C.L. § 600.5807(8); M.S.A. § 27A.5807(8) that re-establishes a six-year period of limitations on "actions to recover * * * for breach of contract", which according to the most recent Supreme Court interpretation applies to actions for damages to persons and property, so long as the suit is based on an express promise rather than a duty implied in law. Huhtala v. Travelers Ins. Co., 401 Mich. 118, 257 N.W.2d 640 (1977). ² Finally, a special two-year limit has been worked out for malpractice suits, M.C.L. §§ 600.5805(3), 600.5838(2); M.S.A. §§ 27A.5805(3), 27A.5838(2). It governs claims based on malpractice by "a member of a state licensed profession" and by other expressly enumerated health care workers.

Our research of Michigan law does not reveal a clear statement of reasons underlying these rules. ³ They can, however, be reconciled with two policies identified by the commentators. In modern legal history, personal and property damage liability is on the upswing, due to the courts' willingness to impose a broader spectrum of implied duties, ⁴ to uphold excessive jury awards of damages, ⁵ and to establish new causes of action. ⁶ In fairness to defendants and in recognition of the administrative restraints on courts, the short period of limitations in § 5805 practically limits the instance of personal and property damage suits. See Peyton, Case Comment: U.C.C.-Statute of Limitations Conflicts between personal injury and sales contract Statute of Limitations, 75 W.Va.L.Rev. 201, 206-207 (1972). The six-year period under § 5807 has been opened by Huhtala only to the narrow class of personal and property damage claims based on expressly assumed duties. Huhtala also accords with the evidentiary function of the statute of limitations, since express contracts are more likely to be reduced to writing and, therefore, preserved as evidence. See Developments in Law Statutes of Limitations, 63 Harv.L.Rev. 1177, 1185 (1950). But see Crawford, Comment: Tort in Contract: A New Statute of Limitations, 52 Or.L.Rev. 91, 101 (1972) (historic validity of difference between tort and contract statutes of limitations eroded by modern practices of data storage and investigation).

Applying the above statutes with their judicial gloss, we find the buyers' claim falls within the six year rule of section 5813, and is not removed by any other code provision.

The buyers' action is clearly personal. Through it they seek to recover damages caused by the realtors' misrepresentations, alleged to equal the amount necessary to acquire the disputed tract from the sellers. In addition they have pled general and punitive damages. We find these are not allegations of injury to persons or property within the meaning of section 5805.

This Court does not ascribe to the view that "injuries", as that term is used in section 5805, means "physical injuries". Accord, Stringer v. Board of Trustees of Edward W. Sparrow Hospital, 62 Mich.App. 696, 233 N.W.2d 698 (1975). But see Case v. Goren, 43 Mich.App. 673, 204 N.W.2d 767 (1972). Such a narrow reading would be inconsistent with the social policies discussed above. Section 5805 should be construed comprehensively to include actions brought for injuries resulting from invasions of rights that inhere in persons as persons and property owners. However, the injury must be to the person or specific property, and not simply relating to the person or specific property. See Sweet v. Shreve, 262 Mich. 432, 435, 247 N.W. 711, 712 (1933); Schenburn v. Lehner Associates, Inc., 22 Mich.App. 534, 177 N.W.2d 699 (1970). In the case at bar, the realtors' misrepresentations did not invade any property interest the buyers had in the Holland land, they merely led the buyers to expect more than they received. Framed this way, the case is controlled by Sweet v. Shreve, supra, which held that damages caused by a real estate dealer's misrepresentations to a buyer as to the value of land, were not injuries to persons or property within the meaning of the three-year statute of limitations. The judgment recovered by plaintiffs in that case roughly equal to the difference between the actual and represented values of the land are closely analogous to the damages sought in this case. While the realtors' misrepresentations in the instant dispute were of physical boundaries, the harm remains in the first instance, as in Shreve, to the buyers' expectations. The fact that the present controversy arises from negligence, rather than fraud, does not alter the nature of the injury. Nor does the circumstance that the buyers claim punitive damages. Although it is stated in Michigan that "(e) xemplary damages are awarded to compensate the injured person, and not as a punishment to the defendant", 9 Mich. Law & Practice, Damages, § 91, p. 87, they are granted and measured, not according to the victim's harm, but primarily by reference to the defendant's moral culpability. Id. §§ 92, 93, pp. 89, 90.

Since the buyers' suit is not for injuries to person or property, it is unnecessary to consider whether the claim is based on malpractice, as the malpractice period of limitations, by its language, only governs suits for injuries to persons or property. ⁷ It is also fruitless to determine whether plaintiffs' action is based on a breach of contract under Huhtala, since the period proscribed by the contracts provision would not change our result. ⁸

Applying the rule of section 5813, we find the buyers' suit is not time barred. The record shows the negligent misrepresentation occurred July 8, 1971, and the realtors were joined November 12, 1975. Under any theory of accrual the action was commenced within six years.

Reversed and remanded. Costs to plaintiffs. We retain no jurisdiction.

* ROBERT H. CAMPBELL, 21st Judicial Circuit Judge, sitting on Court of Appeals by assignment pursuant to Const.1963, Art. 6, Sec. 23, as amended 1968.

1 Plaintiffs were put on notice of the sellers' claim in 1972, by a letter offering to sell the disputed tract to plaintiffs, and by the sellers' subsequent acts of showing the land to prospective purchasers.

2 There have been earlier indications to the contrary. Thus, in State Mutual Cyclone Ins. Co. v. O & A Electric Cooperative, 381 Mich. 318, 161 N.W.2d 573 (1968), the Supreme Court found "a total absence of any legislative mandate or thought that we distinguish between actions on express contracts to recover damages for injury to person or property and actions based upon implied contract". Id. at 325, 161 N.W.2d at 576. See also ...