Glanz & Killian Co. v. Garland Mfg. Co.

• Decision Date: 02 May 1974
• Docket Number: No. 1,Docket No. 17380,1
• Citation: 218 N.W.2d 791,53 Mich.App. 210
• Parties: GLANZ AND KILLIAN COMPANY, Plaintiff-Appellee, v. GARLAND MANUFACTURING COMPANY, Defendant-Appellant
• Court: Court of Appeal of Michigan — District of US

Page 791

218 N.W.2d 791

53 Mich.App. 210

GLANZ AND KILLIAN COMPANY, Plaintiff-Appellee, v. GARLAND MANUFACTURING COMPANY, Defendant-Appellant.

Docket No. 17380.

Court of Appeals of Michigan, Division No. 1.

May 2, 1974.

Released for Publication June 19, 1974.

Michael H. Feiler, Liberson, Fink, Feiler, Crystal & Burdick, Detroit, for defendant-appellant.

Jack C. Radcliffe, Jr., Detroit, for plaintiff-appellee.

Before J. H. GILLIS, P.J., and QUINN and O'HARA,* JJ.

QUINN, Judge.

Plaintiff filed this action to recover money allegedly due on a contract between Prestige Structures, Inc. and Taylor Garage Doors, as a third party beneficiary of that contract. Defendant answered and filed a counterclaim to quiet title to certain property on which plaintiff held a mechanic's lien. On plaintiff's motion, the trial court granted summary judgment in favor of plaintiff and dismissed defendant's counter-claim. Defendant appeals.

Plaintiff and defendant both supplied labor and material to Prestige Structures, Inc. in 1970. The last labor and materials supplied by plaintiff was on May 31, 1970. July 13, 1970, plaintiff filed a statement of account and lien on property then owned by Prestige. Subsequently, Prestige defaulted on payment of its debts to plaintiff and defendant.

September 10, 1970, Taylor Garage Doors, a division of defendant, filed its complaint against Prestige to recover the money owed by Prestige to Taylor on open account. In an attempt to settle this claim, Prestige and Taylor entered into an agreement March 15, 1971 by which Prestige agreed to sell and convey to Taylor two single family dwellings. (Plaintiff's mechanic's lien covered these same dwellings) Pertinent provisions of this agreement are:

'2. That the consideration for the two (2) dwellings shall be determined by two appraisals; Taylor to request an FHA appraisal, and Prestige to request an appraisal from Arthur N. King Real Estate, 15510 Livernois Avenue, Detroit, Michigan. The average of the two appraisals shall determine the consideration to be paid by Taylor, however, the consideration shall be no less than $17,000 for the three (3) bedroom dwelling, and no less than $19,500 for the four (4) bedroom dwelling.

'3. That the mutually agreed upon fair market value shall be set off by any mortgages, encumbrances or liens, of any nature whatsoever, that may be or have been placed against aforesaid properties. Said mortgages, encumbrances, or liens shall be assumed and paid by Taylor.

'4. That Prestige shall deposit with Kenneth G. Barnard, 1155 Guardian Building, Detroit, Michigan, as Escrow Agent, hereinafter called 'Escrow Agent', the necessary Warranty Deeds conveying the aforesaid properties to Taylor, to be delivered to Taylor when the fair market value has been mutually agreed upon between the parties hereto.

'5. That in the event a fair market value of aforesaid properties cannot be mutually agreed upon by the parties hereto, Taylor shall direct the Escrow Agent to return the deeds of conveyance to Prestige forthwith.'

On March 5, 1971, Prestige had executed the required deeds, which were not recorded until October 7, 1971.

July 2, 1971, plaintiff filed a complaint against Prestige to foreclose its mechanic's lien and filed notice of Lis pendens as to the property involved. By stipulation between plaintiff and Prestige, a consent judgment for $12,766 in favor of plaintiff and against Prestige was entered June 22, 1972. Under the judgment appealed from in the case before us, plaintiff recovered this $12,766 from defendant.

At trial and here, defendant contends that a question of fact existed as to its intent with respect to its assumption of mortgages, encumbrances and liens on the properties it received from Prestige. Defendant claims it had no intention to benefit anyone other than itself and Prestige by the agreement of March 15, 1971.

In disposing of this claim contrary to defendant's contention, the trial judge correctly relied on Guardian Depositors Corporation v. Brown, 290 Mich. 433, 287 N.W. 798 (1939). In discussing the third party beneficiary statute, the Guardian court stated at 437, 287 N.W. at 800:

'The standard which the legislature has prescribed for determining when a 'promisor has undertaken' to perform or refrain from performing a given act, we think, is an objective one, determined from the form and meaning of the contract itself. The language of the assumption clause above quoted leaves no doubt that the defendants' promise to pay off the mortgage must be taken to mean that they will pay to the party holding the mortgage and entitled to payment.'

The language of the assumption clause now before us leaves no doubt that defendant's agreement to assume meant it would pay lienholders, including plaintiff.

Defendant...