Daily Development for Friday, April 12, 2002

By: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

EASEMENTS; CREATION; EXECUTED LICENSES: Michigan rejects concept of executed license.

Kitchen v. Kitchen, 2002 WL 485813 (Mich. 4/02/02)

Brothers Robert and William operated a large potato farm. The farm bordered on three side a parcel separately owned by Robert. In 1981, The brothers built an irrigation system and an arm of that system crossed over Robert's parcel. Robert gave oral permission for this system to cross his land, but there was nothing in writing. This arm is necessary for the system to deliver irrigation to 38 acres, which apparently it will be difficult to irrigate if access to Robert's property is not available. In 1995, the brothers fell into a dispute concerning the operation of the farm.

They agreed to auction the business, with the highest bidder taking it all. William submitted the high bid, and shortly thereafter Robert notified William that he could no longer operate the irrigation system across Robert's parcel. This suit, based upon a theory of executed license, resulted. William alleged that at the time the system was built, the brothers were operating under the expectation that the right to cross Robert's land would be permanent, and this induced them to make the investments that followed. Although this allegation is essentially the critical allegation in many jurisdictions to establish an executed license (or easement by estoppel), the trial court concluded here that Michigan common law does not, and will not, recognize this doctrine.

Summary judgment for Robert, and sanctions against William. The Michigan Supreme court here affirmed the trial court on the substantive point, but denied sanctions, holding that the point was sufficiently in doubt prior to this case to conclude that William should not be subject to a sanctions order. The court relied upon established Michigan authority that the Statute of Frauds cannot be overcome by estoppel. It acknowledged that a revocable license can be conveyed by oral or written agreement, and said that this is the best case that William can make, even if it was assumed that Robert in fact made the alleged promise that the irrigation system could exist permanently.

Although other Michigan courts apparently had discussed the possibility of executed licenses in earlier cases, the court distinguished all prior authority by finding that additional factors existed - such as an argument for a license coupled with an interest (which the court does not otherwise describe) or prescription. There could be no easement by prescription here, the court concluded because the use did not continue for the required 15 years. (Despite the dates reported above).

Comment 1: The concept of estoppel giving rise to property interests is well established. Often the interests created are not permanent in character, but last only long enough to cure the inequity raised by the estoppel claim - such as for a period sufficient to amortize the investment in an executed license. The Michigan decision here rejects the Restatement of Property provision acknowledging the concept.

Comment 2: Perhaps there would be an argument based upon the business relationship of the brothers, with the irrigation right arguably being characterized as part of the business transferred in the auction. Further, again based upon the relationship, there might be some argument based upon the part performance doctrine. It is not clear whether William's side raised these arguments below, but they are not discussed in this appeal. There is also an argument based upon laches, if Robert knew that William was bidding at the auction in the belief that the irrigation system was part of the deal. The court's language here rejecting estoppel arguments, however, is arguably inclusive enough to include estoppel based upon laches. Is that really an appropriate interpretation? A wise outcome?

Comment 3: Note that the Statute of Frauds doesn't have the bite that it once did because of the Esign statute, which might have bound Robert if the irrigation systems conformation had been discussed in emails in which Robert had agreed to its installation across his land.

Readers are urged to respond, comment, and argue with the daily development or the editor's comments about it.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1‑6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Maria Tabor at the ABA. (312) 988 5590 or mtabor@staff.abanet.org

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. The same is true of all commentary provided by contributors to the DIRT list. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.

Parties posting messages to DIRT are posting to a source that is readily accessible by members of the general public, and should take that fact into account in evaluating confidentiality issues.

ABOUT DIRT:

DIRT is an Internet discussion group for serious real estate professionals. Message volume varies, but commonly runs 5 ‑ 10 messages per workday.

Daily Developments are posted every workday.

To subscribe to Dirt, send an e-mail to:

To:	ListServ@listserv.umkc.edu
Subject:	[Does not matter]
Text in body of message	Subscribe Dirt [your name]

To cancel your subscription to Dirt, send an e-mail to:

To:	ListServ@listserv.umkc.edu
Subject:	[Does not matter]
Text in body of message	Signoff Dirt

For information on other commands, send the message Help to the listserv address.

DIRT has an alternate, more extensive coverage that includes not only commercial and general real estate matters but also focuses specifically upon residential real estate matters. Because real estate brokers generally find this service more valuable, it is named "Brokerdirt." But residential specialist attorneys, title insurers, lenders and others interested in the residential market will want to subscribe to this alternative list. If you subscribe to Brokerdirt, it is not necessary also to subscribe to DIRT, as Brokerdirt carries all DIRT traffic in addition to the residential discussions.

To subscribe to Brokerdirt, send an e-mail to:

To:	ListServ@listserv.umkc.edu
Subject:	[Does not matter]
Text in body of message	Subscribe Brokerdirt [your name]

To cancel your subscription to Brokerdirt, send an e-mail to:

To:	ListServ@listserv.umkc.edu
Subject:	[Does not matter]
Text in body of message	Signoff Brokerdirt

DIRT is a service of the American Bar Association Section on Real Property, Probate & Trust Law and the University of Missouri, Kansas City, School of Law. Daily Developments are copyrighted by Patrick A. Randolph, Jr., Professor of Law, UMKC School of Law, but Professor Randolph grants permission for copying or distribution of Daily Developments for educational purposes, including professional continuing education, provided that no charge is imposed for such distribution and that appropriate credit is given to Professor Randolph, DIRT, and its sponsors.

DIRT has a WebPage at: http://www.umkc.edu/dirt/