GRAYLING TAKE AWAY INC V LAUREN WHOLESALE INC
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STATE OF MICHIGAN
COURT OF APPEALS
GRAYLING TAKE AWAY, INC.,
UNPUBLISHED
March 13, 2001
Plaintiff-Appellee,
v
No. 221049
Crawford Circuit Court
LC No. 98-004621-CK
LAUREN WHOLESALE, INC.,
Defendant-Appellant.
Before: McDonald, P.J., and Fitzgerald and Saad, JJ.
PER CURIAM.
Defendant Lauren Wholesale, Inc. appeals as of right from an order granting judgment for
plaintiff. We affirm.
This dispute concerns the interpretation of a management agreement and option contract
to purchase a gas station and convenience store. Plaintiff brought suit to terminate the
management agreement, invalidate the option contract, and determine responsibility for payment
of real estate and property taxes. Defendant maintained the agreement was valid and continued
in possession of the property. Before trial, the parties settled most issues and the only questions
remaining were whether the option contract was to be strictly enforced with regard to its time
provisions and who was responsible for paying the outstanding taxes. These issues were decided
by the bench trial: the terms of the option contract were to be strictly construed and defendant
was responsible for paying the outstanding taxes. From this judgment defendant appeals.
Defendant first argues plaintiff should be estopped from enforcing the time provisions of
the option contract because of plaintiff’s acts of denying the validity of the option and bringing
legal action. Defendant cites O’Toole & Nedeau Co v Boelkins, 254 Mich 44, 47; 235 NW 820
(1931), for the principle that the equitable doctrine of estoppel should be applied against a vendor
who fails to close on a real estate transaction pursuant to an option after being informed the
purchaser was prepared to go forward. Defendant maintains it intended to exercise its option and
was prevented when plaintiff declared the option was invalid. After reviewing the record we
conclude defendant’s stated intent is without factual support and is distinguishable from O’Toole,
supra.
In general, an option contract for purchasing real property is a mere offer that requires
strict compliance with the terms of the option both concerning the exact thing offered and within
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the time specified. Twp of Oshtemo v Kalamazoo, 77 Mich App 33, 37; 257 NW2d 260 (1977).
Failure to so comply results in loss of the rights under the option. Id.
O’Toole involved a purchaser who actually attempted to tender an offer but was frustrated
by the non-attendance of the vendor. There, the Court held that the purchaser could not be
deprived of his rights under an option by the vendor avoiding the purchaser until the time of
performance had expired. Id. at 45.
Acts insufficient in themselves to make a complete tender, may operate as proofs
of readiness to perform, so as to protect the rights of a party under a contract,
where a proper tender is made impossible by reason of circumstances not due to
the fault of the debtor. . . . And if the tender is prevented through the contrivance
of the persons to whom it should be made, it will be excused or be considered
equivalent to a tender. [O’Toole, supra at 47.]
Here, although plaintiff asserted the agreement and the option were terminated, and
defendant continued as if they were valid, no tender of performance was made. Defendant could
have either treated plaintiff’s assertions as a breach of contract or exercised its option within the
time specified. Stoddard v Manufacturers Nat’l Bank of Grand Rapids, 234 Mich App 140, 163;
593 NW2d 630 (1999); Clark v Muirhead, 245 Mich 49, 50; 222 NW 79 (1928). A vendor’s
refusal to perform does not relieve the purchaser from accepting the option according to its terms
and constitutes neither a waiver of the vendor’s rights nor grounds for estoppel. Id. The terms of
the option were clear and unambiguous regarding timing, and plaintiff cannot be estopped from
insisting on strict construction of the terms because defendant did not believe or rely on
assertions that the option was invalid. UAW-GM Human Resource Center v KSL Recreation
Corp, 228 Mich App 486, 491-492; 579 NW2d 411 (1998); Conagra, Inc v Farmers State Bank,
237 Mich App 109, 140-141; 602 NW2d 390 (1999). Defendant’s letter to plaintiff stating that
the option was valid and defendant would soon decide whether to exercise it or seek injunctive
relief to stop a proposed sale was not an unequivocal statement of an intention to exercise the
option, much less tender of performance. See Clark, supra.
We are reminded of the equitable maxim that equity does not help those who slumber
upon their rights, Sheldon v Miller, 151 Mich 283, 288; 114 NW 1015 (1908), and in this
instance, we agree with the trial court – because defendant made no attempt to preserve its rights
under the option by attempting tender of the offer before October 21, 1998, defendant must
accept the clear and unambiguous terms and pay the increased purchase price. Accordingly, we
conclude the trial court did not err in granting judgment to plaintiff.
Defendant next argues the terms of the contract that govern the payment of real estate and
personal property taxes are ambiguous. Generally, a contract must be interpreted according to its
plain and ordinary meaning and is ambiguous only if its language may be reasonably understood
in different ways. UAW-GM, supra at 491. If unambiguous, the meaning of the language is a
question of law and the intent of the parties must be discerned from words used in the
instrument. Moore v Campbell, Wyant & Cannon Foundry, 142 Mich App 363, 367; 369 NW2d
904 (1985). Conflict between clauses should be harmonized, and the contract should not be
interpreted to render it unreasonable. South Macomb Disposal Authority v American Ins Co (On
Remand), 225 Mich App 635, 653; 572 NW2d 686 (1997).
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A close examination of the disputed provisions reveals ¶ 2 requires defendant to pay real
estate and personal property taxes and other expenses “necessary” to the operation of the
business, while ¶ 3(H) prohibits transfer of liabilities “incidental” to the operation of the
business. “Incidental” is defined as “depending upon or appertaining to something else as
primary; . . . something incidental to the main purpose.” Black’s Law Dictionary (6th ed), citing
Davis v Pine Mountain Lumber Co, 273 Cal App 2d 218, 223; 77 Cal Rptr 825 (1969). The
reasonable conclusion, according to the plain and ordinary meaning, is that there is no ambiguity,
and ¶ 3(H) prohibits the transfer of liabilities that are merely incidental to the operation of the
business. Michigan Nat’l Bank v Laskowski, 228 Mich App 710, 714; 580 NW2d 8 (1998).
Moreover, this interpretation conforms with the actions of the parties because defendant’s
payments of the rent and utilities evidences that the parties intended ¶ 2 govern “necessary”
expenses and ¶ 3(H) refer to incidental liabilities. Putman v Pere Marquette R Co, 174 Mich
246, 253; 140 NW 554 (1913). Accordingly, we agree with the trial court that defendant is
responsible for the payment of real estate and personal property taxes.
Affirmed.
/s/ Gary R. McDonald
/s/ E. Thomas Fitzgerald
/s/ Henry William Saad
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