Stachnik v. Winkel

• Decision Date: 24 June 1975
• Docket Number: No. 19,19
• Citation: 394 Mich. 375,230 N.W.2d 529
• Parties: Andrew STACHNIK et al., Plaintiffs and Appellees, v. Carl O. WINKEL et al., Defendants and Appellants. 394 Mich. 375, 230 N.W.2d 529
• Court: Michigan Supreme Court

Page 529

230 N.W.2d 529

Andrew STACHNIK et al., Plaintiffs and Appellees, v. Carl O. WINKEL et al., Defendants and Appellants.

No. 19.

394 Mich. 375, 230 N.W.2d 529

Supreme Court of Michigan.

June 24, 1975.

Zerafa, Zerafa & Tremp, P.C., Elk Rapids, for plaintiffs and appellees.

Hubbell, Blakeslee, McCormick & Houlihan, Traverse City, for defendants and appellants Beaches.

Before the Entire Bench (Except SWAINSON and LINDEMER, JJ.).

WILLIAMS, Justice.

Plaintiffs ask this Court to require Defendant Mary E. Winkel ¹ to convey property. Plaintiffs worked for Defendants Beach cutting lumber on property adjacent to Defendant Winkel's property, which was the only access to the lumbering operation. Finding Plaintiffs Andrew Stachnik and Clayton Stevens misrepresented to Defendant Winkel that they were purchasing for 'the lumber company' and that Plaintiff Clayton Stevens acted without good faith toward his employer Defendant Beach in buying Defendant Winkel's land which Defendant Beach wanted to buy, we hold Plaintiffs come before us with unclean hands and decline to exercise our equitable powers. Having denied plaintiffs relief for lack of clean hands, it is unnecessary for us to decide whether the trial court was correct in holding that no contract existed at law between the plaintiffs and the Winkels.

I. FACTS

In October, 1967 plaintiffs, Clayton Stevens and Andrew Stachnik, entered into a contract with defendants, Harry and Marguerite Beach, who operated a lumber company, to cut timber on an 80-acre parcel of land in Leelanau County owned by the Beaches. (53a) The only available access for removing the cut timber from the defendant Beaches' property was across an adjacent parcel of land owned by defendants Carl and Mary Winkel, an elderly couple residing in the Flint area. (54a--55a)

In November, 1967, in the presence of plaintiff Stevens, defendant Beaches' attorney attached a note to a trailer located on the Winkel property indicating that the Beaches were interested in acquiring the parcel of land. (12b--13b)

When the defendant Winkels visited their property some time in April, 1967, they were disturbed to find it being used, without their consent, as an access route for the lumbering operations on the adjacent defendant Beaches property. (40a) They expressed their concern to plaintiff Stachnik who indicated that he worked for the lumber company and that he would inform his boss of the Winkels' concern. (40a--41a) It was agreed that Stachnik's boss would contact the Winkels at their home. (41a)

A week or two later, Stevens called the Winkels and asked if they wished to sell the property. As a result of this phone conversation a meeting was held on May 15, 1968 between the three plaintiffs and the Winkels. (42a--43a) A price of $3500 for the 23-acre parcel and the mobile home on the land was set. On May 16, 1968 the Winkels and Clayton Stevens signed the following agreement:

May 16, 1968

'Mr. Carl O. Winkel and

Mrs. Mary E. Winkel,

1205 West Stanley Road

Mt. Morris, Mich. 48458

'It is agreed that Andrew Stachnik and Clayton and Violet Stevens shall purchase by land contract your property located in Glen Arbor Twp. Leelanau Co situated on Wheeler Road.

'The conditions of purchase are, $3500.00 with a deposit of $200.00 toward said purchase the balance to be paid at the rate of $100.00 per month with interest 6% On the unpaid balance. Payments to commence on July 1, 1968. A 2 week grace period on said payments. The accompanying check to be cashed upon the submittal of the land contract properly signed and executed.

Clayton Stevens, et al.

Carl O. Winkel

Mary E. Winkel'

Mrs. Winkel gave unchallenged testimony that during the discussions leading up to the sale of the property, Stachnik and Stevens represented to her that they had been authorized to buy the property 'for the company.' (42a--43a)

After concluding the agreement with the Winkels the plaintiffs took possession. Defendant Beach, upon discovering that plaintiffs were occupying the 23-acre parcel, entered into discussions with the Winkels and their attorney concerning the sale of the property. On June 4, 1968 the Winkels executed and delivered a warranty deed to the Beaches for the 23-acre parcel. (46a--47a, 49a, 57a)

Plaintiffs vacated the property but filed a complaint in Leelanau Circuit Court seeking to have the conveyance from the Winkels to the Beaches set aside, and to require the Winkels to specifically perform their agreement with the plaintiffs.

Harry Beach testified during the trial that not only did Stevens know that the Beaches were interested in acquiring the Winkel property but that he had asked Stevens to purchase the Winkels' parcel of land prior to the time Stevens and the other plaintiffs obtained the land for themselves. (54a--55a) At trial, Stevens denied ever talking the Beach about acquiring the property before he and the others entered into negotiations with the Winkels and purchased their property. (11b)

The Circuit Court, finding that Stevens and Stachnik had represented to the Winkels that they were authorized to make the purchase for the timber company, concluded that 'an error was made in having the agreement indicate a sale of the property to the Plaintiffs herein rather than to (the Beaches' company.)' The Court also found the agreement with the plaintiffs was not valid for lack of consideration.

The Court of Appeals in reversing the Circuit Court on October 31, 1973, ruled that there was a sufficient meeting of the minds and that the agreement did not lack adequate consideration. The Court also held that since neither the parties nor the circuit judge raised the issue of clean hands, it would be inappropriate to consider the question on appeal. 50 Mich.App. 316. We granted leave on March 29, 1974. 391 Mich. 796.

II. Court May Sua Sponte Raise Clean Hands Maxim.

'No citation of authority is necessary to establish that one who seeks the aid of equity must come in with clean hands.' Charles E. Austin, Inc. v. Secretary of State, 321 Mich. 426, 435, 32 N.W.2d 694 (1948). The clean hands maxim is an integral part of any action in equity. The U.S. Supreme Court captured the essence of the maxim when it said:

'(The clean hands maxim) is a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief, however improper may have been the behavior of the defendant. That doctrine is rooted in the historical concept of the court of equity as a vehicle for affirmatively enforcing the requirements of conscience and good faith. This presupposes a refusal on its part to be 'the abettor of iniquity.' Bein v. Heath, 47 U.S. 228, 6 How. 228, 247, 12 L.Ed. 416.' Precision Instrument Manufacturing Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806, 814, 65 S.Ct. 993, 997, 89 L.Ed. 1381 (1944).

Since the clean hands maxim is designed to preserve the integrity of the judiciary, courts may apply it on their own motion even though it has not been raised by the parties or the courts below. See Gaudiosi v. Mellon, 269 F.2d 873, 881, 882 (CA 3, 1959). See also Hall v. Wright, 240 F.2d 787, 795 (CA 9, 1957); Frank Adam Electric Co. v. Westinghouse Electric & Mfg. Co., 146 F.2d 165, 167 (CA 8, 1945).

This Court reviews equity actions De novo. To suggest, as the Court of Appeals below has done, that we may not consider whether the plaintiffs come before us with clean hands simply because neither the parties nor the judge in the Circuit Court raised the issue below would be contrary to the very rationale behind the creation of the clean hands maxim.

III. Plaintiffs' Misrepresentation to the Winkels.

In their efforts to acquire the Winkel property, the plaintiffs Stachnik and Stevens represented themselves as authorized to purchase the property 'for the company.' Since they intended to purchase the property for their own use, they misrepresented the facts to the Winkels and consequently cannot be said to come before us with clean hands.

The Court of Appeals concluded that Mrs. Winkel only 'thought' that the plaintiffs were acting as agents for the company and that they in fact had never made any such representations. However, the trial court found as a matter of fact that the plaintiffs Had represented themselves as authorized to act for the timber company.

While we, as did the Court of Appeals, review this proceeding De novo, we give 'considerable weight' to the findings of the trial judge because he 'Is in a better position to test the credibility of the witnesses by observing them in court and hearing them testify than is an appellate court which has no such opportunity.' Christine Building Co. v. City of Troy, 367 Mich. 508, 518, 116 N.W.2d 816, 820 (1962). See Kropf v. City of Sterling Heights, 391 Mich. 139, 215 N.W.2d 179 (1974). ²

The record supports the trial judge's conclusion that Stachnik and Stevens represented themselves as agents for the company. This fact is evident from the following excerpts from testimony given by Mrs. Winkel which was uncontested by the plaintiffs:

'Q. And what was discussed then, Mrs. Winkel?

'A. Well, the sale of property.

'Q. And who did you understand the purchaser to be?

'A. Well, I didn't understand when they (Stevens and Stachnik) talked about it. Before they talked like they were buying it for the company they worked for.

'Q. Who told you that?

'A. They both said that.

'Q. When?

'A. Well, when they came up to do this.

'Q. On the 15th?

'A. Yeah, I am not sure what he said to my husband over the phone. (Appellant's Brief, p. 42a)

'Q. I see. What did he (Stevens) tell you on the 15th exactly?

'A. That he had--I don't know if you would say, 'permission,' but he was supposed to buy the property if we wanted to sell.

'Q. Well, who did you understand the purchaser of the property to be?

'A. Well, we thought he was buying it for the company he worked for.

'Q. What company was...