Giannetti v. Cornillie

• Decision Date: 21 March 1994
• Docket Number: Docket No. 135381
• Citation: 204 Mich.App. 234,514 N.W.2d 221
• Parties: Patrick Joseph GIANNETTI and Anne T. Giannetti, Plaintiff-Appellees-Cross-Appellants, v. Charles J. CORNILLIE, Jr., Michael S. Cornillie, and Henry L. Cornillie, Defendant-Appellants-Cross-Appellees.
• Court: Court of Appeal of Michigan — District of US

Page 221

514 N.W.2d 221

204 Mich.App. 234

Patrick Joseph GIANNETTI and Anne T. Giannetti Plaintiff-Appellees-Cross-Appellants, v. Charles J. CORNILLIE, Jr., Michael S. Cornillie, and Henry L. Cornillie, Defendant-Appellants-Cross-Appellees.

Docket No. 135381.

Court of Appeals of Michigan.

Submitted Oct. 5, 1993, at Detroit.

Decided March 21, 1994, at 9:30 a.m.

Released for Publication April 27, 1994.

Lizza & Mulcahy, P.C. by John B. Lizza, Detroit, for plaintiffs.

Rupp, Ehrlich, Foley & Serwer, P.C. by Joseph H. Ehrlich, Troy, for defendants.

Before: TAYLOR, P.J., and HOOD and JASPER, ^* JJ.

HOOD, Judge.

Defendants appeal as of right from the trial court's judgment granting plaintiffs' petition for specific performance of an alleged agreement to sell real estate. Plaintiffs cross appeal from the trial court's determination of damages. We reverse.

Defendants were the copersonal representatives of their mother's estate. In that capacity, they listed her home for sale with a real estate agent. Plaintiffs offered $155,000 for the home and submitted a $2,500 deposit. Defendants counteroffered to sell the home for $160,000.

Upon receiving the counteroffer, plaintiffs orally inquired whether certain items could be included with the home. ¹ Defendants declined. Plaintiffs then purportedly accepted the counteroffer, but changed the mortgage amount from $124,000 to $128,000 and initialed the change. The real estate agent did not submit this modification for defendants' approval, but, rather, told defendants that plaintiffs had accepted their counteroffer. Defendants signed all the necessary probate court papers for the sale of the property. However, before the closing, defendants sought to rescind the deal. ² Plaintiffs declined and sued for specific performance.

Defendants' main argument is that the trial court clearly erred in finding that there was a contract where defendants never agreed to plaintiffs' change in the mortgage amount. We reluctantly agree.

As argued by defendants, "[a]n offer is a unilateral declaration of intention, and is not a contract. A contract is made when both parties have executed or accepted it, and not before. A counterproposition is not an acceptance." Kamalnath v. Mercy Memorial Hosp. Corp., 194 Mich.App. 543, 549, 487 N.W.2d 499 (1992) (citations omitted). An acceptance must be "unambiguous and in strict conformance with an offer." Dassance v. Nienhuis, 57 Mich.App. 422, 431, 225 N.W.2d 789 (1975). " '[A] proposal to accept, or an acceptance, upon terms varying from those offered, is a rejection of the offer, and puts an end to the negotiation, unless the party who made the original offer renews it, or assents to the modification suggested.' " Harper Bldg. Co. v. Kaplan, 332 Mich. 651, 656, 52 N.W.2d 536 (1952) (quoting Thomas v. Ledger, 274 Mich. 16, 21, 263 N.W. 783 [1935]. Thus, " '[a]ny material departure from the terms of an offer invalidates the offer as made and results in a counter proposition, which, unless accepted, cannot be enforced.' " Harper, supra at 655, 52 N.W.2d 536 (quoting Carrollton Acceptance Co. v. Ruggles Motor Truck Co., 253 Mich. 1, 5, 234 N.W. 134 [1931].

Plaintiffs argue that the modification of the mortgage amount did not vitiate their purported acceptance because the mortgage amount, unlike the purchase price, was not a material term of the contract. We disagree.

It is clear from the terms of the purchase offer that the obligation to buy the property was "contingent upon [the] Purchaser's ability to obtain a 30 year conv[entional] mortgage" in the amount written on the form. Thus, by changing the mortgage amount, plaintiffs modified a condition precedent to the existence of a binding agreement. Therefore, the modification was material and their purported acceptance was only a counteroffer. See Marshall Mfg. Co. v. Berrien Co. Package Co., 269 Mich. 337, 339, 257 N.W. 714 (1934) ("The acceptance must be absolute and unconditional, and if conditions are attached or if it differs from the offer, the transaction amounts only to a proposal and a counter-proposal.").

In other words, before the change, plaintiffs were obligated to buy the property if they obtained a mortgage for $124,000; after the change, no obligation to buy arose unless they obtained a $128,000 mortgage. Thus, the modification had the legal effect of widening the door through which plaintiffs could escape the contract and it was therefore material. See Anderson v. Donato, 224 Mich. 216, 218, 193 N.W. 805 (1923) ("It is only by determining the legal effect of the instrument before the alteration and after the alteration that it is possible to decide whether the change is material or not."). Because the modification was not initialed by defendants, the contract was void under the statute of frauds. M.C.L. § 566.106; M.S.A. § 26.906.

Because the purchase offer itself clearly states that "no promises have been made other than those that are in writing and signed by all parties involved (no verbal agreements will be binding)," we may not consider plaintiffs' contention that, although the purchase offer does not say so, the parties contemplated that eighty percent of the purchase price would be financed and that their modification of the mortgage amount merely reflected that understanding. Likewise, the fact that plaintiffs obtained the $128,000 mortgage does not constitute partial performance sufficient to take the alleged agreement out of the operation of the statute of frauds. See Thorbahn v. Walker's Estate, 269 Mich. 586, 591, 257 N.W. 892 (1934) (neither full nor partial payment is sufficient to take an agreement relating to realty out of the statute of frauds). The same is true of defendants' execution of the appropriate sale documents with the probate court.

In light of our decision, it is unnecessary to consider defendants' argument that plaintiffs voided the agreement by not applying for a mortgage within five days. ³ We also decline to consider plaintiffs' cross appeal regarding the calculation of damages.

Reversed.

JASPER, J., concurred.

TAYLOR, Judge (dissenting).

In the present case, the plaintiffs (buyers) offered $155,000 for the house, indicating that $124,000 of that sum (eighty percent of the purchase price) was to be secured by a mortgage. Defendants (sellers) made a counteroffer of $160,000, and left the $124,000 mortgage amount unchanged. Plaintiffs signed the counteroffer, but changed the amount of the price to be mortgaged to $128,000 (eighty percent of the agreed-upon price). The trial court found as fact that defendants saw (although they did not initial) the change made by plaintiffs, and conducted themselves in such a fashion as to indicate by their actions that the change was not a material term of the contract. I would affirm the decision of the trial court.

It is well-established contract law that the material elements of a real estate contract...