Uniprop, Inc. v. Morganroth

• Decision Date: 04 May 2004
• Docket Number: Docket No. 243077.
• Citation: 678 N.W.2d 638,260 Mich. App. 442
• Parties: UNIPROP, INC., Plaintiff-Appellant, v. Mayer MORGANROTH and Morganroth & Morganroth, P.C., Defendants-Appellees.
• Court: Court of Appeal of Michigan — District of US

678 N.W.2d 638

260 Mich. App. 442

UNIPROP, INC., Plaintiff-Appellant, v. Mayer MORGANROTH and Morganroth & Morganroth, P.C., Defendants-Appellees.

Docket No. 243077.

Court of Appeals of Michigan.

Submitted January 7, 2004, at Detroit.

Decided February 3, 2004, at 9:00 a.m.

Released for Publication May 4, 2004.

Hyman Lippitt, P.C. (by H. Joel Newman and Daniel J. McCarthy), Birmingham, for the plaintiff.

Morganroth & Morganroth, PLLC (by Mayer Morganroth and Jeffrey B. Morganroth), and Lopatin, Miller, Freedman, Bluestone, Herskovic & Domol, P.C. (by Sheldon L. Miller), Southfield, Southfield, for the defendants.

Before: OWENS, P.J., and SCHUETTE and BORRELLO, JJ.

BORRELLO, J.

Plaintiff Uniprop, Inc., appeals from the trial court's grant of summary disposition in defendants' favor on plaintiff's breach of contract claim. Plaintiff contends that defendants undertook a contractual obligation to repay monies owed to plaintiff by defendants' client, Barry Yaker. The trial court granted summary disposition, holding that defendants neither undertook nor owed a contractual duty to ensure plaintiff was paid. We affirm the trial court's decision by holding that agency agreements do not create rights in third parties.

Defendant Mayer Morganroth represented Barry Yaker in legal proceedings in the state of New York. During those proceedings, plaintiff asserted that Yaker owed a debt to it in the amount of $333,000. In lieu of taking other actions to secure their debt, plaintiff entered into a contract entitled "Partial Assignment of Proceeds." That agreement reads as follows:

1. Chemical Bank has instituted a lawsuit against Barry Yaker which is entitled as follows: Supreme Court of the State of New York County of New York, Part 36 Chemical Bank, Plaintiffagainst-Barry Yaker, Defendant, Index No. 10448/94

2. In said lawsuit, Chemical Bank filed a Writ of Attachment prior to Judgment causing one million dollars of funds due and payable to Barry Yaker from New York Life Insurance Company to be tied up pending the resolution of the aforesaid lawsuit.

3. Said one million dollars of funds have been deposited since 1994 with the Supreme Court of New York, County of New York, pending the outcome of said lawsuit.

4. Upon the court granting a decision in favor of Barry Yaker in the aforesaid lawsuit, one million dollars, together with interest earned, thereon will become the property of Barry Yaker and will be paid over to him.

5. Barry Yaker owes certain sums of money to Uniprop Inc. for monies loaned to Barry Yaker as evidenced by Promissory Notes held by Uniprop Inc. Barry Yaker wishes to secure Uniprop Inc. in relation to certain portions of those funds by making a Partial Assignment of Proceeds to the deposit money above referred to and to direct counsel for Barry Yaker in the above referred to lawsuit to take notice of said Assignment and to not allow disbursement of the attached funds when they become available to Barry Yaker without provision for payment to Uniprop Inc. of the amount set forth in this Partial Assignment of Funds.

NOW THEREFORE, this Partial Assignment of Funds provides:

a. Barry Yaker hereby assigns to Uniprop Inc. from the amount held under the Writ of Attachment in the above-described lawsuit, the sum of $333,000.

b. Barry Yaker hereby directs Mayer Morganroth of the law firm of Morganroth & Morganroth, his legal counsel in the above entitled matter, that from the one million dollars of attached funds as above referred to that the sum of $333,000 shall be paid to Uniprop Inc.

c. Barry Yaker directs and requests that Mayer Morganroth confirm to Uniprop Inc. that he has received the instructions set forth herein by acknowledging a copy of this Agreement.

Yaker signed the Partial Assignment of Funds on February 8, 1996. Thereafter, Mayer Morganroth signed the assignment. Above his signature appeared the following:

The Undersigned acknowledges receipt of a copy of the Partial Assignment of Proceeds by Barry Yaker to Uniprop Inc. and agrees to proceed in accordance with the instructions set forth herein, dated this 16th day of February, 1996.

Plaintiff contends that under this partial assignment, Morganroth promised to: (1) follow Yaker's instructions entirely; (2) secure payment of $333,000 for Uniprop; (3) prevent disbursement of the funds made available to Yaker until payment to Uniprop was secured; and (4) notify Uniprop that Morganroth received both Yaker's instructions and a copy of the Partial Assignment of Funds. Plaintiff argues that it has status as a third-party beneficiary from the "contract" between Yaker and Morganroth wherein Morganroth agreed to accept direct responsibility for securing plaintiff's share of the escrow funds, agreed to expressly and directly prevent disbursement of the funds when they became available, and agreed to be personally liable. Thus, plaintiff argues that by failing to undertake these promises, Morganroth breached his duty to plaintiff.

We disagree, because the Partial Assignment of Funds did not create a contract between Yaker and Morganroth. Two of the essential elements of a valid contract are consideration and a meeting of the minds, both of which are missing from the Partial Assignment of Funds. In the agreement, Morganroth expressly agreed to follow Yaker's instructions. Morganroth never expressly agreed to secure payment, nor did Morganroth incur any form of liability to plaintiff. Thus, Morganroth was clearly acting as the agent for his client by agreeing to act in accordance with his client's instructions. In such cases, where the agent expressly acknowledges the principal's actions and agrees to follow the principal's instructions, an express agency agreement is created, not a contract. Thus, the legal...