White v. Production Credit Assn. of Alma

• Decision Date: 08 June 1977
• Docket Number: Docket No. 29175
• Parties: Neil E. WHITE, Plaintiff-Appellee, v. PRODUCTION CREDIT ASSOCIATION OF ALMA, Defendant-Appellant. 76 Mich.App. 191, 256 N.W.2d 436
• Court: Court of Appeal of Michigan — District of US

Page 436

256 N.W.2d 436

Neil E. WHITE, Plaintiff-Appellee, v. PRODUCTION CREDIT ASSOCIATION OF ALMA, Defendant-Appellant.

Docket No. 29175.

76 Mich.App. 191, 256 N.W.2d 436

Court of Appeals of Michigan.

June 8, 1977.

Released for Publication Aug. 12, 1977.

[76 MICHAPP 192] Fortino, Plazton & Moskal by John J. Moskal, Alma, for defendant-appellant.

Timothy J. Taylor, Mount Pleasant, for plaintiff-appellee.

Before DANHOF, C. J., and R. B. BURNS and QUINNELL, ^* JJ.

R. B. BURNS, Judge.

A jury returned a verdict in favor of plaintiff for $100,000. Defendant appeals and we affirm.

Plaintiff is a cattle farmer who has been buying, raising, and selling feeder cattle since 1960. The business requires periodic financing to cover basic operating expenses and the purchase of cattle. [76 MICHAPP 193] Defendant is a federally-chartered lending institution.

In the fall of 1970, James Orr, a representative of defendant, represented to plaintiff that defendant could and would provide exclusive financial assistance to plaintiff. Plaintiff accepted Orr's offer, submitted a financial statement and a loan application for $128,000. The loan was approved within two days.

Due to drought and other problems, 1970 was a poor year for plaintiff. He and Orr discussed the feasibility of irrigation and both agreed that it would be the answer to plaintiff's problem. According to plaintiff, defendant agreed to finance the irrigation project and provide financing for the balance of plaintiff's operation, including the purchase of cattle each year, for a period of 7 to 10 years, the time period anticipated to pay off the irrigation equipment loan. This irrigation loan was to be repaid in seven equal installments.

Plaintiff agreed to maintain a herd of approximately 500 cattle each year. As security for the financing, plaintiff agreed to deliver mortgages and security agreements to defendant covering all of the farm's real estate and fixtures, all crops, both present and future, all livestock on hand and to be acquired, and all machinery and equipment, including the irrigation system.

Defendant advanced the long-term loan for the irrigation project and plaintiff executed the security agreements.

Within five months, and seven months before the first payment was due, defendant reversed its position and wrote to plaintiff requesting he refinance the irrigation loan with another institution. Plaintiff was unable to acquire another source to refinance the irrigation project. Defendant then [76 MICHAPP 194] refused to loan plaintiff money to finance the purchase of cattle for the 1972 and the 1973 seasons. Plaintiff was unable to secure other financing because all of his security was pledged to defendant. Orr admitted at trial that the only reason defendant did not finance plaintiff's cattle operations for the years 1972 and 1973 was that plaintiff did not refinance the long-term irrigation project with another lending institution.

After numerous attempts, plaintiff finally obtained FHA refinancing in March, 1974, and the obligation to defendant was paid in full, including over $25,000 in interest. During the 2-year period, plaintiff was unable to purchase any cattle due to lack of financing. Testimony established that plaintiff lost $85,304 in 1972 and $34,445 in 1973.

These damages were essentially unchallenged and the jury returned a verdict for plaintiff of $100,000.

At the close of plaintiff's opening statement, defendant moved for a summary judgment on the basis that the alleged oral contract was within the statute of frauds because it could not have been completed within one year. M.C.L.A. § 566.132(1); M.S.A. § 26.922(1).

Plaintiff's attorney argued that the statute did not apply because the defendant was estopped to assert the statute as the plaintiff had relied on the oral contract to his detriment.

The doctrine of equitable estoppel is set forth in 3 Williston, Contracts (3d ed.), § 533A, p. 796:

"Where one has acted to his detriment solely in reliance on an oral agreement, an estoppel may be raised to defeat the defense of the Statute of Frauds."

[76 MICHAPP 195] In Oxley v. Ralston Purina Co., 349 F.2d 328, 336 (C.A. 6, 1965), a factually similar case, the Court quoted the aforementioned doctrine from Williston and then stated:

"We agree with the rule as above stated and believed that the Michigan Supreme Court would have applied the foregoing language had the problem in this case been before it."

The doctrine was again applied in Pursell v. Wolverine-Pentronix, Inc., 44 Mich.App. 416, 205 N.W.2d 504 (1973).

In the instant case the plaintiff relied upon the defendant's promise, installed an irrigation system and granted defendant a security interest in all of his collateral, to his detriment. It was proper for the trial judge to apply the doctrine.

Defendant also complains that the trial judge read to the jury an instruction taken from a reported case rather than use defendant's requested instruction. The instructions as given were fair and...