Hubscher & Son, Inc. v. Storey

• Decision Date: 06 March 1998
• Docket Number: Docket No. 200449
• Citation: Hubscher & Son, Inc. v. Storey, 578 N.W.2d 701, 228 Mich.App. 478 (Mich. App. 1998)
• Parties: HUBSCHER & SON, INC., Plaintiff/Counterdefendant-Appellee, v. Wayne H. STOREY and Janet L. Storey, Defendants/Counterplaintiffs-Appellants.
• Court: Court of Appeal of Michigan

Page 701

578 N.W.2d 701

228 Mich.App. 478

HUBSCHER & SON, INC., Plaintiff/Counterdefendant-Appellee, v. Wayne H. STOREY and Janet L. Storey Defendants/Counterplaintiffs-Appellants.

Docket No. 200449.

Court of Appeals of Michigan.

Submitted Feb. 10, 1998, at Lansing.

Decided March 6, 1998, at 9:10 a.m.

Released for Publication June 8, 1998.

Reynolds H. Campbell, Mt. Pleasant, for Plaintiff/Counterdefendant-Appellee.

Moore & Simon, P.C. by Dennis L. Moore, Edmore, for Defendants/Counterplaintiffs-Appellants.

Before McDONALD, P.J., and SAWYER and HOEKSTRA, JJ.

PER CURIAM.

Defendants appeal as of right from an order denying defendants' motion for summary disposition and granting plaintiff's motion for summary disposition. We affirm in part, reverse in part, and remand. ¹

In 1960, defendants' and plaintiff's predecessors in interest entered into a sand and gravel contract granting plaintiff's predecessor the exclusive right to extract sand and gravel from deposits on defendants' predecessors' property in exchange for an annual payment of a minimum royalty. Defendants, who amended the contract in 1987, terminated the contract in 1995 because it had been in existence for over thirty-five years without plaintiff extracting any sand or gravel. Seeking to have the contract enforced, plaintiff filed this declaratory judgment action. Defendants filed a counterclaim and affirmative defenses, stating that the contract was unconscionable and violated the rule against perpetuities. Both parties submitted motions for summary disposition pursuant to MCR 2.116(C)(8) and (9). The lower court granted only plaintiff's motion. Although we agree with the court that the rule against perpetuities does not apply to this property interest, we find that the pleadings were sufficient to state a claim of unconscionability.

Appellate review of a motion for summary disposition is de novo. Singerman v. Municipal Service Bureau, Inc., 455 Mich. 135, 139, 565 N.W.2d 383 (1997). A motion for summary disposition brought under MCR 2.116(C)(8) tests the legal sufficiency of a claim. Id. A motion brought under MCR 2.116(C)(9) seeks a determination whether the opposing party has failed to state a valid defense to the claim asserted against it. In re Smith Estate, 226 Mich.App. 285, 288, 574 N.W.2d 388 (1997). The motions are analogous to one another in that both are tested by the pleadings alone, with the court accepting all well-pleaded allegations as true and determining whether the defenses are so clearly untenable as a matter of law that no factual development could possibly deny a plaintiff's right to recovery. Id.

Defendants argue that the lower court erred in granting plaintiff summary disposition on the basis that the contract was conscionable. We agree. The examination of a contract for unconscionability involves inquiries for both procedural and substantive unconscionability. Northwest Acceptance Corp. v. Almont Gravel, Inc., 162 Mich.App. 294, 302, 412 N.W.2d 719 (1987). Accordingly, there is a two-pronged test for determining whether a contract is unenforceable as unconscionable, which is stated as follows:

(1) What is the relative bargaining power of the parties, their relative economic strength, the alternative sources of supply, in a word, what are their options?; (2) Is the challenged term substantively reasonable? [Id. (citing Allen v. Michigan Bell Telephone Co., 18 Mich.App. 632, 637-638, 171 N.W.2d 689 [1969] ).]

Reasonableness is the primary consideration. Stenke v. Masland Development Co., Inc., 152 Mich.App. 562, 572-573, 394 N.W.2d 418 (1986); Gianni Sport Ltd. v. Gantos, Inc., 151 Mich.App. 598, 601, 391 N.W.2d 760 (1986).

Here, defendants alleged in their counterclaim both that their predecessors in interest were unrepresented by counsel during negotiations and execution of the original contract and that defendants were unrepresented during the negotiations and execution of the 1987 amendment. Additionally, defendants' pleadings contain several allegations of unreasonableness attributed to the length of time since the contract's inception, during which plaintiff never extracted sand or gravel from the property. When these allegations are accepted as true, we cannot conclude that they are defenses so clearly untenable as a matter of law that no factual development could possibly deny plaintiff's right to recovery. However, in granting plaintiff's motion for summary disposition, the lower court made a contrary determination that the contract was "easily comprehensible" and did not involve "trickery." This determination constitutes a finding of fact that is inappropriate to make when considering a motion for summary disposition pursuant to MCR 2.116(C)(8) or (9). Because motions pursuant to these two subrules concern only the sufficiency of the pleadings, the lower court was required to presume that defendants' allegations were true and was not permitted to create its own factual findings. In re Smith Estate, supra at 288, 574 N.W.2d 388. Accordingly, the court should not have granted plaintiff summary disposition on this basis.

Next, defendants argue that the lower court erred in granting plaintiff summary disposition on the basis that the parties' contract did not violate the rule against perpetuities. We disagree. The rule against perpetuities, which is codified at M.C.L. § 554.51; M.S.A. § 26.49(1), is violated if, at the time the instrument creating a future estate comes into operation, it is not certain that the estate will either vest or fail to vest within twenty-one years of the death of a person named in the instrument. Stevens Mineral Co. v. Michigan, 164 Mich.App. 692, 695, 418 N.W.2d 130 (1987). The rule applies only to nonvested property interests. M.C.L. § 554.53; M.S.A. § 26.49(3). Therefore, in all cases where a party invokes application of the rule, the first consideration is whether the character of the interest is vested. Toms v. Williams, 41 Mich. 552, 562, 2 N.W. 814 (1879). A vested property interest is one that is capable of becoming possessory immediately upon the expiration of the preceding estate. Stevens, supra at 696, 418 N.W.2d 130. Stated another way, a vested interest exists when there is no condition precedent to the holder taking possession other than the termination of prior estates, however and whenever that may occur. 1 Cameron, Michigan Real Property Law (2d ed), § 7.2, pp. 234-235. If there is a condition precedent, then the interest is contingent or nonvested. Id.

Plaintiff's property interest pursuant to the contract in this case is properly characterized as a profit a prendre in the form of the right to extract and acquire defendants' sand and gravel. A profit a prendre is the right to acquire, by severance or removal from another's land, something previously constituting part of the land. VanAlstine v. Swanson, 164 Mich.App. 396, 405, 417 N.W.2d 516 (1987) (citing Evans v. Holloway Sand & Gravel, Inc., 106 Mich.App. 70, 78, 308 N.W.2d 440 [1981] ). Additionally, because there is no condition precedent to plaintiff's property interest, we find that plaintiff's profit a prendre vested at the time of the creation of the contract. Although plaintiff has not yet exercised its right to enter the property and extract sand and gravel, plaintiff nonetheless possesses a present right to do so. This is true even though plaintiff will not possess a property interest in the materials themselves until after extracting the sand or gravel. See Stevens, supra at 698, 418 N.W.2d 130. Accordingly, we hold that the lower court properly granted plaintiff summary disposition on this basis because plaintiff's vested property interest may not be voided by application of the rule against perpetuities. ²

Defendants argue that the lower court should have applied the rule against perpetuities in this case because plaintiff's profit a prendre will not vest until plaintiff begins extracting sand or gravel from the property. ³ For their position, defendants primarily rely on this Court's statement in Stevens, supra at 698, 418 N.W.2d 130, that until the profit a prendre...