Fox v. Adrain Realty Co.

• Decision Date: 28 February 1950
• Docket Number: No. 43,43
• Citation: 41 N.W.2d 486,327 Mich. 89
• Parties: , 15 A.L.R.2d 1037 FOX v. ADRIAN REALTY CO. et al.
• Court: Michigan Supreme Court

Page 486

41 N.W.2d 486

327 Mich. 89, 15 A.L.R.2d 1037

FOX v. ADRIAN REALTY CO. et al.

No. 43.

Supreme Court of Michigan.

Feb. 28, 1950.

Theodore A. Joslin, Adrian, for defendants and appellants.

Robertson & Russell, Adrian (Robert T. Bartlow, Adrian, of counsel), Lawrence J. Hammond, Adrian, for plaintiff and appellee.

Before the Entire Bench.

NORTH, Justice.

The inception of this litigation was a summary proceedings in which plaintiff as owner of a three story building in Adrian sought to dispossess defendants, who, as tenants, had occupied the two upper stories for approximately seven years. On appeal to the circuit court, heard without a jury, plaintiff had judgment. Defendants have appealed.

In 1941 Lucretia D. Clark, then the owner of the property in suit, gave a lease of the two upper stories, with right of ingress and egress, to the Adrian Realty Company, a Michigan corporation. The lease was for a term of 'seven (7) years from and after the 1st day of August 1941,' and contained the following provision: 'First party (lessor) grants to second party the right to renew this lease at its expiration for a like period upon like terms; providing, however, that this renewal clause shall be inoperative in event first party shall sell said building at the expiration of this lease * * *.'

The individual defendants, Mary H. Joslin, Theodore A. Joslin and W. Belmont Joslin, are assignees of the original lessee, the Adrian Realty Company. In November, 1946, Lucretia D. Clark sold this property on contract, 'Subject to all outstanding leases,' to plaintiff and assigned to him her lessor's interest in the above noted lease. The contract provided for payment of $10,000 on the execution thereof and payment of the balance of the purchase price ($8,000) on August 1, 1948. Plaintiff fully performed his contract obligation, and received the deed of the property, dated August 2, 1948. The deed and the contract were recorded August 2, 1948. The contract had not previously been recorded. The deed was given by the executor of Lucretia D. Clark's estate, her demise having occurred March 6, 1947. While the reason therefor does not appear in the record, it seems that subsequent to plaintiff's purchase on the land contract, rents due from defendants were paid to the original lessor or to the executor of her estate, and presumably accounted for to plaintiff. So far as disclosed by the record defendants' first knowledge of plaintiff's purchase of the property came in a letter to defendants from the executor, dated July 18, 1948. In his letter the executor returned to defendants a check which was intended as a payment of rent for three months beginning August 1, 1948; stated that defendants' lease would expire 'at the end of this present month of July, 1948,' and that: 'The renewal clause in the lease is inoperative because of the sale of the property.' Also on July 24, 1948, plaintiff in writing advised defendants of his contract purchase and gave defendants the following notice:

'You are hereby notified that upon the expiration of your lease to the second and third floors of the building on said premises (above described) on August 1st, 1948, I will require possession of said premises on said date and demand is hereby made for the possession thereof on said date.

'Yours truly,

'Henry G. Fox.'

Thereafter and on July 31, 1948, defendants in writing notified plaintiff of their election to renew the lease for another term of seven years and tendered the rent for the next ensuing quarter. The tender of the rent was promptly rejected by plaintiff.

The first question presented by appellants is: 'Does the making of an executory land contract constitute a sale?' It is appellants' position that it does not. If, as applied to the circumstances of this case, the entering into a land contract by Lucretia D. Clark with plaintiff in November, 1946, did constitute a sale, then the contingent right of renewal in defendants' lease became inoperative.

'A...