CHARLES KERLIKOWSKE V VILLAGE OF STEVENSVILLE
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STATE OF MICHIGAN
COURT OF APPEALS
CHARLES KERLIKOWSKE, a/k/a/ BUD KERLY
and SHIRLEY R. KERLIKOWSKE,
UNPUBLISHED
September 28, 1999
Plaintiffs-Appellees,
v
No. 206717
Berrien Circuit Court
LC No. 95-003829 CZ
VILLAGE OF STEVENSVILLE,
Defendant-Appellant.
Before: McDonald, P.J., and Neff and Smolenski, JJ.
PER CURIAM.
Defendant appeals as of right a judgment of the circuit court awarding plaintiffs $70,000
damages on their claims of innocent misrepresentation and mutual mistake of fact. We reverse in part
and affirm in part. We affirm the award of damages on the basis of mutual mistake.
I
This case arises from plaintiffs’ donation of a ten-acre parcel of land in Stevensville to defendant
in 1978 and 1979 for construction of a public park. Defendant later decided not to build the park and,
in 1991, listed the property for sale. Plaintiffs sought return of the property, contending that their
original agreement with defendant was that the property would be returned should the park not be
constructed. Defendant offered to convey the property back to plaintiffs if plaintiffs paid the property
taxes that would have accrued during the ten to fifteen years that defendant held the property. Plaintiffs
declined the offer and filed this action in circuit court to regain the property or for damages. Following a
trial, the court awarded plaintiffs $70,000 damages, on their claims of innocent misrepresentation and
mutual mistake of fact.
II
Defendant first claims that the trial court’s finding of innocent misrepresentation was erroneous
as a matter of law because the alleged misrepresentations related to future possibilities and cannot be
the basis for a misrepresentation claim. We agree.
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We review questions of law de novo. Bennett v Weitz, 220 Mich App 295, 299; 559 NW2d
354 (1996). Whether the evidence fails to support a claim becomes a question of law where there is a
total failure to prove an element necessary to a cause of action. In re Motion for Leave to Sue
Receiver of Venus Plaza Shopping Center, 228 Mich App 357, 360; 579 NW2d 99 (1998).
To prevail on a claim of innocent misrepresentation, a party must show detrimental reliance on a
false representation such that the injury inures to the benefit of the party making the misrepresentation.
Forge v Smith, 458 Mich 198, 211-212; 580 NW2d 876 (1998). It is well settled that, to be
actionable, a misrepresentation must relate to an existing or a past fact and not to future possibilities.
Roy Annett, Inc, Kerezsy, 336 Mich 169, 172; 57 NW2d 483 (1953); Gervais v Annapolis Homes,
Inc, 29 Mich App 378, 386; 185 NW2d 422 (1971). A promise concerning the future cannot form
the basis of an innocent misrepresentation claim. Forge, supra at 211-212.
The trial court found that defendant represented that the “donated property would be used for a
park” and such was a misrepresentation of the ultimate use of the property, which was never developed
as a park. We agree that the representations regarding the property’s future use were promissory in
nature. A finding of misrepresentation on the basis of defendant’s future use of the donated property
was in error.
Further, we find no misrepresentation of a past or an existing fact to support plaintiffs’ claim of
innocent misrepresentation. Defendant’s promise that the property would revert to plaintiffs in the event
that a park was not constructed, likewise relates to a future act. Although defendant’s attorney at the
time of the donation misrepresented that defendant was required to use the property for a park and
could not sell the property if it failed to do so, this representation was, in essence, a legal opinion; a
statement regarding a matter of law generally may not be a basis for a misrepresentation claim. City
Nat’l Bank of Detroit v Rodgers & Morgenstein, 155 Mich App 318, 323-325; 399 NW2d 505
(1986).
Because we find that plaintiffs’ claim of innocent misrepresentation fails as a matter of law on the
basis that the representations did not relate to a past or an existing fact, we need not address
defendant’s second contention, i.e., that plaintiffs’ innocent misrepresentation claim fails because
plaintiffs’ injury did not inure to the benefit of defendant. We note, however, that we find no error in the
court’s finding that this element was met. The innocent misrepresentation rule applies in circumstances
where “the defendant obtained what the false representations caused the plaintiff to lose.” Aldrich v
Scribner, 154 Mich 23, 28; 117 NW 581 (1908). Plaintiffs donated a $75,000 parcel of property to
defendant. Defendant subsequently sold the property for $70,000. Thus, plaintiffs’ loss became
defendant’s gain when plaintiffs deeded the property to defendant.
III
Defendant next argues that the parties’ mistaken belief that defendant had “irrevocably
committed itself” to constructing a park cannot serve as a basis for a claim of mutual mistake of fact
because it is a promise for future performance. A mistake of fact claim must involve a belief related to a
fact in existence at the time the contract is executed; the belief “may not be, in substance, a prediction as
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to a future occurrence or non-occurrence.” Lenawee Co Bd of Health v Messerly, 417 Mich 17, 24;
331 NW2d 203 (1982); see also Britton v Parkin, 176 Mich App 395, 398; 438 NW2d 919
(1989).
A
The trial court found that “both parties were of the mistaken belief that [defendant] had
irrevocably committed itself to the development of a park on the donated land.” Defendant contends
that this mistake is, in substance, a prediction about the future. However, the parties did not merely
believe that defendant’s irrevocable commitment was promissory in nature. The parties’ belief is more
accurately viewed as a belief that defendant’s rights to the property were restricted, from the moment of
the donation. That is, defendant had an existing, binding and continuing obligation to use the property
for a park or return it to plaintiffs. In substance, the mistaken belief of defendant’s irrevocable
commitment equates to a belief that defendant’s legal rights were restricted.
The trial court’s factual findings and the testimony support the conclusion that the parties
believed not that defendant merely promised to use the property for a park, but that defendant could not
do otherwise. The trial court cited the testimony of plaintiff, Charles Kerlikowske (“Kerlikowske”),
regarding a meeting that he, Art Kasewurm, the then-village mayor, and another council member had
with the then-village attorney, Tom Adams, where they discussed defendant’s obligations regarding the
property. The trial court noted:
that the then-Village attorney represented to [Kerlikowske] that [defendant] was
required to use the property for a park and could not sell the property if it failed to do
so, causing [Kerlikowske] to believe that it was unnecessary to put any limiting language
in the deeds of conveyance to [defendant].
Kerlikowske’s testimony, referenced by the court, was as follows:
Tom Adams was the village attorney at the time. And at that meeting I recall
Kasewurm saying that, “I’ve promised Bud that if we don’t make a park that we’ll give
him the property back.” And Tom Adams said, “That isn’t necessary, because by
statute if they don’t make a park, they can’t sell it anyhow. So the village will always
have it.” And I said, “okay. Then we don’t have to put anything in there.”
Thus, the parties’ belief of an irrevocable commitment was not simply founded on a promise of
defendant. They believed that defendant could not sell the property. Evidence was also adduced of
similar beliefs on the part of other council members at the time of the donation. Evidence of this
common understanding, both testimony and exhibits, was cited by the trial court in its factual findings.
In this case, the parties’ mistaken belief fundamentally related not to what defendant “would”
do, but what defendant “could” do. This was a fact in existence. Plaintiffs’ claim of mistake of fact
does not fail on the ground that it related to a promise regarding future conduct.
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B
Even though the parties’ mistaken belief could be viewed as relating to a matter of law, we note
that Michigan courts have long recognized equitable principles which allow relief for a mistake of law
under certain circumstances. 17 Michigan Civil Jurisprudence (1998 rev vol), Mistake and Ignorance
of the Law, §§ 9-16, pp 518-528. Relief may be granted where a party is mistaken as to his
antecedent and existing private legal rights, interests, or estates. Renard v Clink, 91 Mich 1, 3; 51
NW 692 (1892); 17 Michigan Civil Jurisprudence, supra, § 13, pp 524-525. Further, Michigan courts
have long allowed restitution on a theory of unjust enrichment, whether for a mistake of fact or a mistake
of law. 17 Michigan Civil Jurisprudence, supra, § 16, pp 527-528.
"‘The important question was not whether the mistake was one of law or fact, but
whether the particular mistake was such as a court of equity will correct, and this
depends upon whether the case falls within the fundamental principle of equity that no
one shall be allowed to enrich himself unjustly at the expense of another by reason of an
innocent mistake of law or fact entertained by both parties.’" [Lowry v Collector of
Internal Revenue, 322 Mich 532, 541; 34 NW2d 60 (1948), quoting Moritz v
Horsman, 305 Mich 627, 634; 9 NW2d 868 (1943), quoting Reggio v Warren, 207
Mass 525, 534; 93 NE 805 (1911).]
The trial court recognized that “the doctrines of innocent misrepresentation and mutual mistake
are based upon preventing unjust enrichment.” The court found that plaintiffs donated, and defendant
accepted, the property on the basis that defendant must use the property for a park or return it to
plaintiffs. Defendant was subsequently unjustly enriched when it sold the property. Whether a party is
entitled to relief in equity is decided on a case-by-case basis. Lowry, supra at 545. In this case, the
trial court properly determined that plaintiffs were entitled to relief.1
IV
Defendant next claims that the trial court’s finding that defendant had irrevocably committed
itself to the development of the park was clearly erroneous. A finding of fact is clearly erroneous when,
although there is evidence to support it, the reviewing court is left with a definite and firm conviction that
a mistake has been made. Triple E Produce Corp v Mastronardi Produce, Ltd, 209 Mich App 165,
171; 530 NW2d 772 (1995).
Evidence supporting the court’s finding was discussed, supra. The trial court relied on
Kerlikowske’s testimony that the then-village attorney represented to Kerlikowske, Kasewurm, and
another council member that defendant “was required to use the property for a park and could not sell
the property if it failed to do so.” Kerlikowske testified that Kasewurm told the then-village attorney
that the property would be returned if the park was not developed. Testimony from other witnesses,
and several letters admitted into evidence, also supported the finding that defendant believed that it was
irrevocably committed to constructing a park on the donated property, or, alternatively returning the
property. Bernice Schoenfelder, former village clerk, testified at trial that Kerlikowske donated the ten
acres of property to defendant for a park, that the donation was discussed at village council meetings,
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and the understanding was, if the property was not used as a park, it was to be returned to
Kerlikowske. Kevin Green, a former employee of defendant, corroborated Schoenfelder’s testimony
that at council meetings, during the time of plaintiffs’ donation, it was discussed that if the park was not
built, defendant would return the property.
A review of the evidence does not result in a definite and firm conviction that a mistake has been
made. The trial court’s finding that defendant believed it made an irrevocable commitment to
developing a park on the donated land was not clearly erroneous.
V
Defendant next claims that the trial court erred as a matter of law in failing to make a
determination as to which of two blameless parties should be required to bear the burden of the alleged
mistake of fact. In exercising its equitable powers in cases of mistake, a court is required to determine
which of two blameless parties must assume the loss resulting from the shared misapprehension.
Dingemen v Reffitt, 152 Mich App 350, 357; 393 NW2d 632 (1986). In balancing the equities, a
court must examine its notions of what is reasonable and just under all the circumstances. Id.
In the hearing on the motion for summary disposition, the trial court expressly stated that the
equities were on plaintiffs’ side. Further, the court’s balancing of the equities is implicit in the court’s
decision that plaintiffs were entitled to damages in the amount of the fair market value of the property
conveyed. The trial court did not fail to consider which of the two parties should be required to bear
the burden of the mutual mistake.
VI
Finally, defendant claims that the trial court’s award of damages in the amount of $70,000 was
clearly erroneous. We disagree.
This Court reviews an award of damages under the clearly erroneous standard. Triple E
Produce Corp, supra at 177. Where this Court finds that a trial court was aware of the issues and
correctly applied the law, no clear error will be found if the award of damages is within the range of the
evidence. Id.
Evidence was admitted at trial showing that the fair market value of the property was $75,000
at the time it was donated. Defendant sold the land for $70,000. The trial court’s award of damages of
$70,000 was within the range of the evidence and, therefore, was not clear error.
With regard to defendant’s claim that the trial court failed to consider that plaintiffs reaped
substantial tax savings, defendant’s contention is without merit or irrelevant. Plaintiffs did not have
control or use of the property during the period it was held and used by defendant; there is no
justification for defendant to recoup property taxes from plaintiffs for this period. Thus, plaintiffs had no
property tax savings. With regard to income tax savings, there was no evidence of the amount of actual
tax savings to plaintiffs, if any, from the property donation. Regardless, it is not the court’s role to
determine the overall tax implications to plaintiffs. Plaintiffs presumably would account for any return of
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their donation upon receipt, in the tax year received, thus addressing any earlier tax benefit pursuant to
the tax laws. With regard to defendant’s claim of costs associated with the donated property, these
costs were incurred as a matter of choice by defendant. Defendant’s improvement costs apparently
were after the fact and related to the development of the subdivision; therefore, they are irrelevant to the
instant action.
Reversed in part, affirmed in part.
/s/ Gary R. McDonald
/s/ Janet T. Neff
/s/ Michael R. Smolenski
1
We note that any seeming contradiction in our conclusion that relief in this case is proper on a theory
of mistake, but not on a theory of misrepresentation is explained by distinguishing the particular facts at
issue with regard to each theory. Plaintiffs’ misrepresentation claim fails because the representation that
the property would be used as a park is a future promise, and the parties’ mistaken belief of defendant’s
irrevocable commitment to a park relates to a matter of law, i.e., a belief that defendant could not sell
the property because its legal rights were restricted pursuant to statute, neither of which may support a
misrepresentation claim. However, the parties’ latter belief, even though a mistake of law, is grounds
for equitable relief on the basis of mistake.
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