Sewell v. Nu Markets, Inc.

• Decision Date: 09 September 1958
• Docket Number: No. 28,28
• Citation: 353 Mich. 553,91 N.W.2d 861
• Parties: Douglas SEWELL, d/b/a Sewell Insulation Company, Plaintiff and Appellant, v. NU MARKETS, Inc., a Michigan corporation; Keller-Koch, Inc., a Michigan corporation; Massachusetts Mutual Life Insurance Co., a foreign corporation, and Jess McNeal, Inc., a Michigan corporation, Defendants and Appellees.
• Court: Michigan Supreme Court

Page 861

91 N.W.2d 861

353 Mich. 553

Douglas SEWELL, d/b/a Sewell Insulation Company, Plaintiff and Appellant, v. NU MARKETS, Inc., a Michigan corporation; Keller-Koch, Inc.,

a Michigan corporation; Massachusetts Mutual Life Insurance

Co., a foreign corporation, and Jess McNeal, Inc., a

Michigan corporation, Defendants and Appellees.

No. 28.

Supreme Court of Michigan.

Sept. 9, 1958.

Beer & Rowston, Pontiac, for plaintiff and appellant.

Irwin I. Cohn, Detroit (John Sklar, Detroit, of counsel), for defendant and appellee Nu Markets, Inc.

Before the Entire Bench.

KAVANAGH, Justice.

Plaintiff, a general contractor, filed his bill to foreclose a claimed lien for materials and labor furnished defendant Keller-Koch, Inc., original lessee of the defendant Nu Markets, Inc. Defendant Massachusetts Mutual Life Insurance Company holds a prior recorded mortgage. Defendant Jess McNeal, Inc., is the present lessee.

Plaintiff entered into a contract with the lessee, Keller-Koch, Inc., to alter and improve a certain warehouse building owned by defendant Nu Markets, Inc., to adapt it to the use of an automobile sales and service agency. The building had been formerly occupied by Wrigley Stores.

The contract called for the removal of several doors and partitions and installation of larger doorways. Construction was to March 16th of the same year. In March 16th of the the same year. In accordance with section 3 of the lease between Keller-Koch, Inc., and Nu Markets, Inc., dated December 17, 1955, all plans, specifications, and designs were prepared by a competent, registered architect and submitted to the owner for approval before any alterations were made. Keller-Koch, Inc., paid the cost of improvements with the exception of $5,261.70. Plaintiff's claim was reduced to judgment in the law case of Sewell v. Keller-Koch, Inc., which judgment was taken September 14, 1956. Efforts to collect that judgment failed.

The last of the materials and labor were furnished on March 16, 1956, to defendant Keller-Koch, Inc. On April 6, 1956, a verified statement of the number and names of all subcontractors, material men and laborers, together with the amount due each and statement of account and lien, both verified by affidavit, were served personally upon the lessee and filed in the office of the Oakland county register of deeds. The statement of account and lien, when filed with the Oakland county register of deeds, specifically named only the lessee as the person against whom the lien was then being claimed. Appellee Nu Markets, Inc., was not named in the claim of lien. However, on the back of the form, below the sworn claim of lien, the owner's name and address were given. Subsequently, on April 13, 1956, proof of service was filed in the office of the register of deeds. The owner, defendant Nu Markets, Inc., was served by registered mail on April 16, 1956, in the city of Detroit, Wayne county, Michigan. Defendant Keller-Koch, Inc., vacated the premises in the latter part of March, 1956.

On September 18, 1956, Nu Markets, Inc., entered into a supplemental agreement with Keller-Koch, Inc., which did not terminate the lease but turned over possession to the lessor for the purpose of reletting the premises in order to mitigate damages and apply any rentals received against the obligation of the existing lease. Defendant Nu Markets, Inc., then subleased to defendant Jess McNeal, Inc., for a shorter term than the original lease and at a reduction in rental of $300 per month.

On April 5, 1957, this action was brought, and named as defendants all persons and corporations exhibiting any interest in said premises. It was stipulated that any lien established by plaintiff is subject to prior rights of the Massachusetts Mutual Life Insurance Company, which holds a mortgage from the owner.

On May 14, 1957, defendant Nu Markets, Inc., filed a sworn answer and a motion to dismiss. The motion to dismiss was noticed for Monday, May 20, 1957. On May 29, 1957, answer to motion to dismiss was filed by plaintiff. Judge Holland ruled on the motion to dismiss on June 11, 1957, and on the same day he entered an order denying the motion to dismiss. On June 27, 1957, a motion for rehearing of order denying motion to dismiss and notice of hearing was filed. On July 30, 1957, a stipulation of facts was entered on the record and the case was submitted on briefs. On November 18, 1957, a decree dismissing the bill of complaint was entered. Plaintiff appeals to this Court.

The pertinent provisions of the 10-year lease, at a rental of $2,100 per month, having to do with the alterations in the building were as follows:

'The Tenant shall have the right to make all alterations, additions, and improvements that it deems necessary for the conduct of its business at its own cost and expense, provided any architectural changes shall be designed by a competent registered architect and shall be in conformity with the general colonial architecture of the existing building. Said plans and specifications shall be approved by the Landlord in writing. Landlord will not unreasonably withhold his approval of the plans and specifications provided that the above intent is carried out.

'It is understood and agreed that in the event that this lease shall be terminated because of default of Tenant, Tenant shall, at the option of Landlord, restore the building to its original form, at its own cost and expense, but that otherwise there shall be no such obligation of restoration.'

Plaintiff in the lower court, as it does here, claimed the right to impress a lien against the premises of the defendant Nu Markets, Inc., for the alterations and improvements ordered and procured by the lessee. The claim is premised upon the theory that the property of the lessor is subject to a mechanic's lien for the improvements contracted by the lessee in that the lessor, as a part of the consideration for the lease, made the lessee his agent and conferred upon him the requisite authority to make the improvements which were to become a part of the real estate and revert to the lessor.

Defendant Nu Markets, Inc., denies any such agency, and claims that it merely consented to and permitted alterations and improvements, and claims the lease requirement for submitting plans and specifications for its approval was solely to insure preservation of the architectural design of the building. Defendant also contends that plaintiff's claim of lien as to Nu Markets, Inc., is further barred because of its failure to comply with the statutory requirements with reference to service of a nonresident owner, for failure to file any proof of service as to the owner with the register of deeds either before or after suit.

We answer first the question as to whether plaintiff in this action can impress a lien against the premises of defendant-owner, lessor, for the alterations and improvements ordered and procured by the lessee.

The language set out in the lease with reference to alterations and improvements of the premises indicates that the cost is to be at the expense of the tenant. The request for approval of the plans by the lessor so as to make sure lessee does not alter the architectural design of the building is reasonable and understanding in this...