Kitchen v. Kitchen
| Decision Date | 02 April 2002 |
| Docket Number | Docket No. 116459, Calendar No. 3. |
| Parties | William C. KITCHEN, Kitchen Farms, Inc., a Michigan corporation, and Kitchen Farms, a Michigan copartnership, Plaintiffs-Appellants, v. Robert W. KITCHEN and Harriet Ann Kitchen, Defendants-Appellees. |
| Court | Michigan Supreme Court |
Fraser, Trebilcock, Davis & Dunlap, P.C. (by Michael E. Cavanaugh, Mark R. Fox, and Graham K. Crabtree), Lansing, and Brandt, Fisher, Alward & Roy, P.C. (by Edgar Roy III), Traverse City, for the plaintiffs-appellants.
Bowerman, Bowden & Moothart, P.C. (by Jonathan R. Moothart), Traverse City, for the defendants-appellees.
In this case, we are called upon to resolve whether an oral license for the use of real property can become irrevocable by estoppel alone. We hold that under Michigan law it cannot.
The central issue here is whether the principle of estoppel applies to prevent defendants from revoking an alleged license they granted to plaintiffs for use of their property. Plaintiffs contend that (1) the principal defendant promised plaintiffs that part of an irrigation system would be allowed to travel across defendants' property in perpetuity, and (2) plaintiffs relied on that promise.
The trial court granted summary disposition for defendants and awarded sanctions of approximately $70,000 against plaintiffs for filing a frivolous supplemental complaint. The Court of Appeals concluded that an irrevocable license could not be based on an oral promise alone. It upheld the sanctions against plaintiffs. We affirm the Court of Appeals conclusion that an irrevocable license was not created, but reverse the award of sanctions.
Most of the relevant facts in this case are not in dispute. Brothers William and Robert Kitchen, a plaintiff and defendant respectively, lived in Antrim County and were equal owners of Kitchen Farms, one of the largest potato farming businesses in Michigan. Robert owns and resides on a parcel of property situated on the east side of the Kitchen farm. His property is bordered on the north, west, and south by the Kitchen farm, and his home is located on the south side of his parcel.
While the brothers were owners of Kitchen Farms, they farmed the northern section of Robert's parcel. An arm of an irrigation system crossed that property.
In 1995, a dispute arose between William and Robert, resulting in William filing a complaint for dissolution of the business.1 Thereafter, William and Robert entered into a written agreement to conduct a private auction at which the higher bidder would acquire the other's interest in Kitchen Farms. William, as high bidder, purchased Robert's interest. The agreement did not address the farming of Robert's land or the irrigation system.
After the buyout, Robert decided that he did not wish Kitchen Farms to use his land and prevented it from planting crops and using the irrigation system there. As a consequence, plaintiffs William and Kitchen Farms filed the supplemental complaint that is at issue in this case.
In pertinent part, it asserted that Robert's oral promise gave rise to an irrevocable license by estoppel for the use of the land in question. Specifically, it alleged that Robert orally represented in 1981 that the irrigation system could cross his land in perpetuity.2 The supplemental complaint sought declaratory and injunctive relief allowing Kitchen Farms to continue planting crops on the property and making use of the irrigation system.3
Eventually, plaintiffs decided to seek a dismissal without prejudice. Defendants opposed the motion, requesting a dismissal with prejudice, and asking that plaintiffs be sanctioned for filing a frivolous lawsuit. The trial court granted summary disposition for defendants and imposed sanctions against plaintiffs, concluding that their supplemental complaint was frivolous because it had no basis in fact or law.
The Court of Appeals affirmed, concluding that Michigan law does not recognize a right to enforce an oral license once the grantor has acted to revoke it. It found no error in the trial court's imposition of sanctions.4 Plaintiffs now appeal to this Court.
We conclude that plaintiffs' claim for an irrevocable license based simply on an alleged oral promise5 must fail because it is barred by Michigan's statute of frauds, which provides:
No estate or interest in lands, other than leases for a term not exceeding 1 year, nor any trust or power over or concerning lands, or in any manner relating thereto, shall hereafter be created, granted, assigned, surrendered or declared, unless by act or operation of law, or by a deed or conveyance in writing, subscribed by the party creating, granting, surrendering or declaring the same, or by some person thereunto by him lawfully authorized by writing. [MCL 566.106.]
Plaintiffs claim they have a permanent and irrevocable license for the use of a portion of defendants' land. Such an irre vocable license would constitute an "interest in lands" that cannot be granted orally in compliance with the statute of frauds, as it would involve a permanent right to use the property.
Under the statute of frauds, Robert could have granted plaintiffs the claimed interest only through "a deed or conveyance in writing." Thus, the statute of frauds bars plaintiffs' claim for an interest in defendants' land based on an oral promise and reliance by plaintiffs. We hold that an "irrevocable license" by estoppel cannot be created in Michigan on the basis of an oral promise because recognizing such a conveyance would violate the statute of frauds.
Our analysis is consistent with existing Michigan case law. By definition, a license is "a permission to do some act or series of acts on the land of the licensor without having any permanent interest in it...." Sweeney v. Hillsdale Co. Bd. of Road Comm'rs, 293 Mich. 624, 630, 292 N.W. 506 (1940), quoting Morrill v. Mackman, 24 Mich. 279, 282 (1872). In general, a license is revocable at will and is automatically revoked upon transfer of title by either the licensor or licensee. Forge v. Smith, 458 Mich. 198, 210, 580 N.W.2d 876 (1998); Sallan Jewelry Co. v. Bird, 240 Mich. 346, 348, 215 N.W. 349 (1927).
Oral and written licenses, which are terminable at will by the grantor, are valid. See McCastle v. Scanlon, 337 Mich. 122, 133, 59 N.W.2d 114 (1953). The reason is that these licenses, because of their revocability, do not create an interest in land. Hence, the statute of frauds is inapplicable:
"Where nothing beyond a mere license is contemplated, and no interest in the land is proposed to be created, the statute of frauds has no application, and the observance of no formality is important."[Id. at 133, 59 N.W.2d 114.]
By contrast, Michigan law generally requires that the grant of a permanent interest in land be in writing to be enforceable. Id. at 128, 59 N.W.2d 114.
Indeed, the fact that the interest is permanent brings it within the statute of frauds. Accordingly, this Court has distinguished between licenses and easements, utilizing the statute of frauds rationale as follows:
A license grants permission to be on the land of the licensor without granting any permanent interest in the realty. While easements constitute an interest in real estate, licenses do not. Because they are not considered interests in land, licenses do not have to comply with the requirements of the statute of frauds. [ Forge, supra at 210
, 580 N.W.2d 876.]
Michigan case law makes clear the justification for excluding licenses from the requirements of the statute of frauds: because they are revocable at will, they do not constitute an interest in the pertinent land. By contrast, the "irrevocable license" claimed by plaintiffs would not be revocable at will. Thus, it would not constitute a "license" falling outside the scope of the statute of frauds.
Our case law indicates that an interest in land cannot be established on the basis of estoppel, as plaintiffs seek to do. See Penfold v. Warner, 96 Mich. 179, 180, 55 N.W. 680 (1893). We stated in Huyck v. Bailey, 100 Mich. 223, 226, 58 N.W. 1002 (1894):
[T]he statute of frauds prevents the passing of title to realty by parol, and this cannot be done any more under the guise of an estoppel, in the absence of fraud, and when the estoppel consists only of an implied assent, than by showing a direct parol contract.
As these cases reflect, the statute of frauds precludes an oral promise from forming the basis of a claim to an interest in real property, even when estoppel is alleged. As has been observed, no writing exists in this case to support plaintiffs' contention that they have more than a mere revocable license to use defendants' land. Accordingly, plaintiffs' argument must fail.
We note that plaintiffs rely heavily on 5 Restatement Property, § 519(4). It provides that a licensee who makes expenditures in reliance on representations about the license's duration may continue to use the license to realize the value of the expenditures. As plaintiffs admit, that Restatement provision is based on the doctrine of estoppel. Because Michigan does not permit an interest in land to transfer only on the basis of estoppel, it follows that § 519(4) is inconsistent with Michigan law.6
We reaffirm that a license may be granted orally, but hold that the oral license is necessarily revocable at the will of the licensor without regard for any promised duration. Neither a written "license" that evidences a promised duration nor the oral conveyance of an intended permanent interest in land is an "irrevocable license." Instead, the grantor of such an intended interest, in effect, orally conveys an easement.7 Although one can grant an express, irrevocable easement, it must be evidenced by a writing manifesting a clear intent to create an interest in the land. Forge, supra, at 205, 580 N.W.2d 876. As that did not occur here, defendants were free to revoke the oral...
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