Zurcher v. Herveat, Docket No. 206948.

Decision Date10 February 2000
Docket NumberDocket No. 206948.
Citation605 N.W.2d 329,238 Mich. App. 267
PartiesDiane ZURCHER and James Zurcher, Plaintiffs-Appellants, v. Barbara HERVEAT, Defendant-Appellee.
CourtCourt of Appeal of Michigan — District of US

Marks and Legal Associates (by Marvin E. Marks), Ironwood, for the plaintiffs.

Goodman & Makinen (by Michael E. Makinen ), Hancock, for the defendant.

Before WHITBECK, P.J., and MARKMAN and O'CONNELL, JJ.

WHITBECK, P.J.

Plaintiffs Diane Zurcher and James Zurcher appeal as of right the trial court's denial of their pretrial motion for summary disposition, arguing that a document signed by them and defendant Barbara Herveat constituted a binding contract for the Zurchers' purchase of Herveat's real property in Torch Lake Township. The basic issue before us is whether there was a binding contract between the parties or whether Herveat's additions to the purchase agreement converted her acceptance into a counteroffer. The resolution of this issue is complicated by the fact that the underlying action was one for specific performance, an equitable action, with only a nominal claim for damages. Nonetheless, the trial court allowed the entire matter to go to a jury and therefore made no findings of fact regarding the Zurchers' equitable claim. We hold that this was clear error and therefore reverse and remand for further proceedings.

I. Basic Facts And Procedural History

In 1987, the Zurchers purchased a cottage on Rabbit Bay, which is located near Houghton in Michigan's Upper Peninsula. Herveat owned a cottage immediately adjacent to the Zurchers' cottage and, over the years, Herveat and Diane Zurcher became friends. In the course of their conversations in the mid-1990s, Herveat would occasionally express interest in selling her cottage. Diane Zurcher indicated that she and her husband were interested in buying the property if Herveat ever did decide to sell it.

In June 1995, Herveat decided to sell her cottage. Herveat sent a letter to the Zurchers to inform them about this decision, stating:

Dear Diane & Jim,
I have decided to sell Rabbit Bay. I had it appraised last summer. It was valued at $59,900, so that's what I'm asking. I promised you first chance. Please let me know if you're interested, if possible by July 5. I want to sell this summer. If you aren't interested, I want to get it on the market fast.
Love Barb

The same day they received the letter, the Zurchers decided to buy the cottage. Diane Zurcher called Herveat that night and, after inquiring whether Herveat was "really sure" about selling, told Herveat that she and her husband wanted to buy the cottage. Over the next week, the Zurchers reviewed their finances and, for purposes of obtaining a mortgage, visited Jay Ruohonen, a loan officer at Houghton National Bank. When the Zurchers met with Ruohonen, Diane Zurcher told him that Herveat was her friend and that the purchase agreement had been oral. Ruohonen told her that she should obtain a written contract, and he provided her with a standard form to complete.

Diane Zurcher completed the form, which was entitled "authorized purchase agreement" (the purchase agreement) and which stated at the top: "This is a legally binding contract. If not understood, seek competent advice."

The Zurchers signed the purchase agreement on July 21, 1995, and mailed the signed purchase agreement to Herveat for her signature. Herveat signed the purchase agreement on August 16, 1995, below the caption at the bottom of the form entitled "OWNER'S ACCEPTANCE." The first sentence below the caption stated, "I/WE HEREBY ACCEPT the above proposal and agree to sell and convey to the above named Purchaser the premises herein described at the time and subject to the terms above set forth." The purchase agreement correctly identified the property as "Part of Section 15, T54N-R32-W, Torch Lake Township" but incorrectly stated that it was in Oakland County. The purchase agreement stated that the purchase price was $59,900. The purchase agreement identified the Zurchers as the purchasers and Herveat as the seller. However, in the body of the purchase agreement, under the caption "THE TERMS OF PURCHASE to be as follows," the Zurchers had included the following typewritten sentence:

Purchase is to include all furnishings in house, sauna and shed, with the exception of: wall hangings and pictures, braided rugs, Singer Sewing Machine & Cabinet and small cedar chest located in living room.

Following this sentence, Herveat, in handwriting, added these words before Ruohonen faxed the purchase agreement to the Zurchers:

[With the additional exception of] lawn mower and ceramic vases—Also all costs & fees (except for proration of 1995 taxes below and preparation of deed) related to sale will be paid by Purchaser, including certifications[.]

After Ruohonen faxed the purchase agreement to the Zurchers, Herveat visited her attorney, who prepared a warranty deed for the transfer of the property in exchange for $59,900. The attorney was to present the deed to Ruohonen at the closing, because Herveat was leaving the Houghton area and could not attend the closing in person. Herveat apparently signed the deed. When the deed was being prepared, Herveat apparently began having second thoughts about selling the property, but still felt that the maintenance would be too difficult for her. That night, however, a neighbor approached Herveat and offered to help with the maintenance of her cottage, and Herveat apparently began to feel that she could keep the property and decided that she could not go through with the agreement. Once home, Herveat telephoned the Zurchers and spoke with Diane Zurcher, telling her that she could not sell the property.

In mid-November 1995, the Zurchers sued Herveat for breach of contract and sought specific performance as well as reimbursement for expenses incurred as a result of the alleged breach. In her answer, Herveat claimed that no contract had existed between the parties and that, even if one had existed, it was rescinded by mutual agreement.

In early October 1996, the Zurchers moved for summary disposition under MCR 2.116(C)(10), claiming that the parties had formed a legally binding contract from which the Zurchers had not released Herveat. Herveat responded with her own motion for summary disposition, claiming (1) that a contract had not existed between the parties because the purchase agreement misidentified the property, listed no time for closing, and contained no remedy provision, (2) that Herveat's addition of terms to the purchase agreement created a counteroffer that the Zurchers did not accept, and (3) that the offer was revoked when Herveat informed Diane Zurcher that she did not want to sell the property. In late October 1996, the trial court denied both parties' motions for summary disposition. The core of the trial court's determination regarding the motions was as follows:

There are questions. There are questions of fact that have to be resolved. And I'm going to deny both motions. Taking the evidence in the most favorable light to the opposing party, I do not feel that summary judgment is warranted at this time. [Emphasis supplied.]

In a subsequent order, the trial court ordered that the matter be mediated and the mediators unanimously awarded $6,000 to the Zurchers, "so long as acceptance constitutes complete settlement of all claims." The Zurchers filed no response to the mediation evaluation, effectively rejecting the evaluation. The case then went to trial on both the Zurchers' equitable claim for specific performance and their claim for damages. At the close of the evidence both parties moved for a directed verdict, the trial court denied both motions, the jury found that no contract had existed between the parties, and the trial court awarded Herveat $4,130.97 in mediation sanctions. On appeal the Zurchers contend that the trial court erred in denying their motion for summary disposition1 and that they were and are entitled to specific performance of the purchase agreement.2

II. Standard Of Review

This Court reviews a trial court's grant or denial of summary disposition pursuant to MCR 2.116(C)(10), based on a finding that there is no genuine issue of material fact, de novo. Pinckney Community Schools v. Continental Casualty Co., 213 Mich.App. 521, 525, 540 N.W.2d 748 (1995). As does the trial court, we look at the entire record and, viewing the evidence in favor of the nonmoving party, decide if an issue exists about which reasonable minds might differ. Id.

III. Material Terms Of A Binding Contract For The Sale Of Land
A. Introduction

At the outset, it is well to keep certain key distinctions with respect to this area of the law firmly in mind. First, there is the distinction between the form of a contract for the sale of land and the substance of that contract. Second, there is the distinction between a contract for the sale of land and a "land contract."

B. Form Versus Substance

(1) Form As Dictated By The Statute Of Frauds

In Michigan, as elsewhere, the form of a contract for the sale of land is dictated by the statute of frauds.3 In its current form, the statute of frauds states:

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, assigning, surrendering or declaring the same, or by some person thereunto by him lawfully authorized by writing. [MCL 566.106; MSA 26.906.]
Every contract for the leasing for a longer period than 1 year, or for the sale of any lands, or any interest in lands, shall be void, unless the contract, or some note or memorandum thereof be in
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