MICHAEL KELLY V RAY MCCULLOUGH
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STATE OF MICHIGAN
COURT OF APPEALS
MICHAEL KELLY,
UNPUBLISHED
July 24, 2008
Plaintiff/Third-Party DefendantAppellant,
and
CATHERINE KELLY,
Plaintiff-Appellant,
No. 278904
Clinton Circuit Court
LC No. 06-010013-CK
v
RAY MCCULLOUGH and MARY
MCCULLOUGH,
Defendants-Appellees,
and
ELIZABETH BUTLER, f/k/a ELIZABETH
MCCULLOUGH and DAVID BUTLER,
Third-Party Plaintiffs-Appellees.
Before: Saad, C.J., and Fort Hood and Borrello, JJ.
PER CURIAM.
Plaintiffs appeal as of right from a circuit court order granting appellees summary
disposition pursuant to MCR 2.116(C)(10) and quieting title in the disputed property in favor of
Elizabeth and David Butler. We affirm in part, reverse in part, and remand for further
proceedings.
This action arises from an agreement to purchase property that was signed by plaintiff
Michael Kelly (“Kelly”), as buyer, and defendant Ray McCullough (“McCullough”), as seller,
but not by their wives. After the McCulloughs accepted payments from Kelly while he
attempted to arrange for financing, the McCulloughs sold the property to their daughter Elizabeth
and her future husband, David Butler. Plaintiffs sued the McCulloughs for breach of contract
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and specific performance. The Butlers filed a separate action against Kelly for trespass and to
quiet title. The actions were consolidated by the trial court.
The purchase agreement at issue is dated October 24, 2005, and is for 50 acres of a 60acre parcel. The agreement identifies “Ray and Mary McCullough” as “Seller” and Michael
Kelly, as “Buyer.” The agreement required Buyer to make a “deposit” of $500 on the first of the
month that was to be credited against the total price. The printed agreement states, “BUYER
FURTHER AGREES THAT FINANCING WILL BE SECURED WITHIN 90 DAYS FROM
THE DATE OF THIS AGREEMENT,” but the last three words are scratched out and the words
“WE AGREE UPON” are handwritten in the area. The change is not initialed. Ray McCullough
denied agreeing to this change. The agreement is dated November 21, 2005, as signed by Kelly,
and December 17, 2005, as signed by McCullough.
Kelly made payments that were due under the agreement. Elizabeth Butler (“Butler”)
arranged for a survey to delineate the 50 acres being sold. In March 2006, Kelly advised Butler
that he was experiencing difficulty in obtaining financing and inquired whether her parents
would lower the price. She told him that they would not. According to Kelly, he then obtained
loan approval by refinancing his house, but when he informed Butler, she said that her parents
were not going to continue with the purchase agreement and that she and David Butler had
“decided to keep it.” According to Butler, after Kelly was unable to obtain financing for the full
purchase price, she told him that “we” were going to obtain financing elsewhere. Her parents
intended to refinance the property to lower their payments. In April 2006, Elizabeth Butler
offered to purchase the property. Ultimately, the McCulloughs sold all 60 acres to her and David
Butler for the amount owed on the land, the closing costs, “and all those things.”
The Butlers and the McCulloughs moved for summary disposition pursuant to MCR
2.116(C)(8), (9), and (10), raising several different grounds. The trial court concluded that the
absence of Mary McCullough’s signature on the purchase agreement was fatal to plaintiffs’
claims and, therefore, granted the Butlers’ and the McCulloughs’ motions, stating:
The absence of Mary’s signature on the purchase agreement is fatal to the
Plaintiff’s [sic] claim factually. A tenancy by the entireties is a new legal person,
is a matter of legal fiction; that is to say, the husband and wife become a separate
legal entity, and that legal entity can only convey title or oblige itself to convey
title in a purchase agreement if both husband and wife sign the document
conveying or agreeing to convey an interest in the real estate. It’s not a statute of
frauds problem of the absence of a writing; that’s why, for example, part
performance or equitable defenses don’t make up for the absence of Mary’s
signature here. Indeed, this is a case, as Mr. Doyle [plaintiffs’ counsel] argues of
he said/she said. He, Ray, said he would sell the property; she, Mary, didn’t say
she would, and without Mary’s obligation, that tenancy by the entireties that had
title and was receiving title and that owned the property couldn’t be obliged to
convey it.
This is one of those cases that makes a sort of argument for the assistance
of counsel, and I don’t fault the parties for not having that, but it’s important that
they understand that their rights and obligations can be affected, and here, without
Mary’s signature, the present motion must be granted.
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As to the failure to secure financing within the agreed period, for the
record, for any subsequent use, the Court agrees with Mr. Doyle. Giving his
client the benefit of the doubt, there is a legitimate question of fact as to whether
or not that provision was modified or complied with, but I think that the absence
of Mary’s signature is fatal.
Summary disposition may be granted under MCR 2.116(C)(10) when “there is no
genuine issue of material fact, and the moving party is entitled to judgment . . . as a matter of
law.” This Court reviews a trial court’s decision on a motion for summary disposition de novo.
Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999).
Initially, plaintiffs’ reliance on the April 6, 2006, deed to argue that the McCulloughs did
not own the property as tenants in the entirety is misguided. That deed is for a ten-acre parcel
that was not part of the land that was the subject of the October 2005 purchase agreement.
However, the trial court erred in granting summary disposition on the basis that Mary
McCullough did not sign the purchase agreement, given that there is no dispute that she agreed
to sell the property. “It is true that neither the wife not the husband alone can contract effectually
to sell property owned by them as tenants by the entireties.” Vande Berg v Vanden Bosch, 242
Mich 37, 39; 217 NW 37 (1928); Way v Root, 174 Mich 418; 140 NW 577 (1913); Williams v
DeMan, 7 Mich App 71, 74; 151 NW2d 247 (1967). But if a purchase agreement is signed by
one spouse and the other has orally agreed to the sale, the absence of the latter’s signature is not
necessarily fatal to a claim for specific performance. In Vande Berg, supra, pp 39-40, our
Supreme Court stated:
It is true that neither the wife nor the husband alone can contract
effectually to sell property owned by them as tenants by the entireties. [Way,
supra]. But it is contended and proved here that both defendants, husband and
wife, agreed to exchange—made the contract to exchange—one in writing, the
other orally, and, as we have seen, the oral contract, in the circumstances, is
removed from the operation of the statute of frauds, and therefore the contract or
agreement with respect to both defendants is valid and existing. In principle and
in this regard the case would not be different if the defendant wife had indorsed
her assent in writing on the agreement signed by the remaining parties.
Thus, in this case, the absence of Mary McCullough’s signature is not dispositive of the
enforceability of the purchase agreement if her assent to the agreement is established in a manner
consistent with the statute of frauds. Although appellees advocated in their motion for summary
disposition that the agreement was not enforceable, the undisputed evidence was that Mary
McCullough had agreed to the sale. Her endorsement of the checks submitted by Kelly as
payments on the contract is evidence of her assent to the contract.
Moreover, the absence of Mary McCullough’s signature is not dispositive of the breach
of contract claim against McCullough. Like the present case, Joyce v Vemulapalli, 193 Mich
App 225; 483 NW2d 445 (1992), concerned a purchase agreement signed by the defendant
husband, but not his wife, for the sale of property. Disagreements arose at the closing and the
plaintiffs sued for breach of contract and sought specific performance. This Court held that
whether the wife’s interest was as a tenant in the entireties or a dower interest, the conveyance
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was “void for purposes of specific performance.” Id., p 228. However, the Court separately
considered whether damages could be awarded for breach of contract. The Court drew a
distinction between similar cases in which “the signature was a condition precedent pursuant to
the terms of the agreement,” where restitution of deposit money was ordered, id., p 229, and
those in which “the husband had expressly or impliedly promised to convey marketable title,”
and in which damages for breach of contract were available, id., p 230. The Court concluded
that the case fell into the latter group, stating, “The lack of the wife’s signature does not prohibit
the plaintiffs from bringing an action for damages against the husband based on his failure to
secure a properly executed purchase agreement.” Id., p 230.
In the present case, McCullough signed a purchase agreement in which he represented
and warranted that he had “full power and authority to bind Seller” and that “Seller has the full
right and authority to enter into this Agreement, to consummate the sale, transfer and
assignments contemplated herein . . . .” It is unnecessary to resolve at this juncture whether
Mary McCullough’s signature was a condition precedent to the formation of the contract or
whether McCullough expressly or impliedly promised to convey marketable title, because the
parties do not brief this distinction. However, we conclude that the absence of Mary
McCullough’s signature was not a basis for granting summary disposition of plaintiffs’ breach of
contract claim.
We have reviewed the other arguments advanced by appellees as alternative grounds for
affirmance and find one to be meritorious.
Inasmuch as plaintiff Catherine Kelly was not a party to the purchase agreement,
dismissal of her claims for breach of contract and specific performance was appropriate pursuant
to MCR 2.116(C)(8). Plaintiffs state that she was included in this lawsuit “for the sole reason
that she is married to the Appellant, Michael Kelly.” They offer no legal authority showing that
her marital relationship to Kelly affords her legal rights under the contract.
We agree with the trial court that questions of fact remain concerning whether the 90-day
time period for obtaining financing, which was printed in the agreement and stricken out by
hand, was part of the agreement. Conflicting evidence was presented concerning this provision.
Contrary to appellees’ argument, the McCulloughs’ conveyance of the property to the
Butlers is not a basis for dismissal of plaintiffs’ claim for specific performance. There is support
for the view that the Butlers, as the subsequent grantees of the McCulloughs, as well as the
McCulloughs themselves, are necessary parties to an action for specific performance. “Persons
who acquire interests from the seller in the lands contracted to be sold, after the contract of sale,
are necessary parties to an action for specific performance of the contract for sale. In an action
against subsequent grantees of the seller, the seller is a necessary party although he or she has
parted with the legal title, unless the buyer has accepted an assignee.” 11A Callaghan’s
Michigan Pleading and Practice (2d ed), § 86.57, p 248. However, the court rule pertaining to
the joinder of necessary parties does not prescribe dismissal as the appropriate course of action
for nonjoinder of necessary parties. See MCR 2.205(B). “The defect could presumably have
been cured by amending the pleadings and joining the necessary parties.” Skiera v National
Indem Co, 165 Mich App 184, 188-189; 418 NW2d 424 (1987).
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Although appellees also argue that dismissal of plaintiffs’ breach of contract claim is
warranted because they did not suffer any damages, the measure of damages is generally the
difference between the agreed price and the value at the time of the breach. Stanton v Dachille,
186 Mich App 247, 252; 463 NW2d 479 (1990); Soloman v Western Hills Dev Co, 110 Mich
App 257, 266-267; 312 NW2d 428 (1981). The proponents of a motion for summary disposition
have the initial burden of presenting evidence that there is no disputed factual issue regarding the
absence of damages. MCR 2.116(G)(3); Quinto v Cross & Peters Co, 451 Mich 358, 362; 547
NW2d 314 (1996). Here, appellees did not present any evidence concerning the value of the
property to establish the absence of damages.
In sum, we affirm the trial court’s dismissal of plaintiff Catherine Kelly’s claims, but
reverse in all other respects.
Affirmed in part, reversed in part, and remanded for further proceedings. We do not
retain jurisdiction.
/s/ Henry William Saad
/s/ Karen M. Fort Hood
/s/ Stephen L. Borrello
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