In Exclusive Auto v. Mattawan Holdings, LLC, Docket No. 327045, the Michigan Court of Appeals entered a judgment regarding a building in Mattawan, Michigan. The ownership of the building was in dispute between a former tenant and his landlord in this case. The plaintiff tenant had met the defendant landlords, a man and his mother, to see a property that the landlords owned. The arrangement, according to the plaintiff was intended to be a rent-to-own situation. However, according to the plaintiff, the defendants wished for him to first enter into a commercial lease with a land contract to be made in the future so that they might avoid paying realtor fees.
The plaintiff signed a one-year commercial lease which contained language stating that the tenant was leasing the building in “as is condition” and that the tenant would have to make all repairs himself. The plaintiff made all such repairs and claimed that he routinely asked the defendants about the status of the land contract to which they consistently replied that their attorney was looking it over. When the lease ended, instead of a land contract, the parties entered into a new lease. A land contract was never signed and the tenant stopped making rent payment, placing the payments instead in an escrow account.
The tenant then filed suit for promissory estoppel and unjust enrichment, the defendants countersued to retake possession of the property and collect unpaid rent. The plaintiff lost the promissory estoppel and unjust enrichment claims on the basis that “courts will only impose contracts in equity if there is no express contract governing the subject matter of the controversy.” The plaintiff then argued that the lease was invalid since it was in fact the owner of the property’s mother who executed the contract and since she was not an expressly authorized agent, the contract was not binding. However, the court invokes the doctrine of apparent agency as well as MCL 566.108 which states that an authorized agent is necessary for lease agreements greater than one year in length. Since the leases were each one year or less and the mother had apparent agency, the contracts were valid.
The plaintiff lost based not only upon not having a written land contract, but also having signed a contract (the lease) which governed the matter. Therefore, it became a situation which equally rested on what he signed, as well as what he did not.
This article was written by Tyler Kemper, law clerk.
