Michigan Supreme Court
Lansing, Michigan 48909
_____________________________________________________________________________________________
C hief Justice Justices
Maura D. Cor rigan Michael F. Cavanagh
Opinion
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
____________________________________________________________________________________________________________________________
FILED APRIL 2, 2002
WILLIAM C. KITCHEN,
KITCHEN FARMS, INC.,
a Michigan corporation,
and KITCHEN FARMS,
a Michigan copartnership,
Plaintiffs-Appellants,
v No. 116459
ROBERT W. KITCHEN and
HARRIET ANN KITCHEN,
Defendants-Appellees.
___________________________________
BEFORE THE ENTIRE BENCH
KELLY, J.
In this case, we are called upon to resolve whether an
oral license for the use of real property can become
irrevocable by estoppel alone. We hold that under Michigan
law it cannot.
The central issue here is whether the principle of
estoppel applies to prevent defendants from revoking an
alleged license they granted to plaintiffs for use of their
property. Plaintiffs contend that (1) the principal defendant
promised plaintiffs that part of an irrigation system would be
allowed to travel across defendants' property in perpetuity,
and (2) plaintiffs relied on that promise.
The trial court granted summary disposition for
defendants and awarded sanctions of approximately $70,000
against plaintiffs for filing a frivolous supplemental
complaint. The Court of Appeals concluded that an irrevocable
license could not be based on an oral promise alone. It
upheld the sanctions against plaintiffs. We affirm the Court
of Appeals conclusion that an irrevocable license was not
created, but reverse the award of sanctions.
I
Most of the relevant facts in this case are not in
dispute. Brothers William and Robert Kitchen, a plaintiff and
defendant respectively, lived in Antrim County and were equal
owners of Kitchen Farms, one of the largest potato farming
businesses in Michigan. Robert owns and resides on a parcel
of property situated on the east side of the Kitchen farm.
His property is bordered on the north, west, and south by the
Kitchen farm, and his home is located on the south side of his
parcel.
2
While the brothers were owners of Kitchen Farms, they
farmed the northern section of Robert's parcel. An arm of an
irrigation system crossed that property.
In 1995, a dispute arose between William and Robert,
resulting in William filing a complaint for dissolution of the
business.1 Thereafter, William and Robert entered into a
written agreement to conduct a private auction at which the
higher bidder would acquire the other's interest in Kitchen
Farms. William, as high bidder, purchased Robert's interest.
The agreement did not address the farming of Robert's land or
the irrigation system.
After the buyout, Robert decided that he did not wish
Kitchen Farms to use his land and prevented it from planting
crops and using the irrigation system there. As a
consequence, plaintiffs William and Kitchen Farms filed the
supplemental complaint that is at issue in this case.
In pertinent part, it asserted that Robert's oral promise
gave rise to an irrevocable license by estoppel for the use of
the land in question. Specifically, it alleged that Robert
orally represented in 1981 that the irrigation system could
cross his land in perpetuity.2 The supplemental complaint
1
The complaint named Robert and his wife, Harriet
Kitchen, as defendants. Harriet had served as a Director of
Kitchen Farms since 1981.
2
It is undisputed that there was no written document in
(continued...)
3
sought declaratory and injunctive relief allowing Kitchen
Farms to continue planting crops on the property and making
use of the irrigation system.3
Eventually, plaintiffs decided to seek a dismissal
without prejudice. Defendants opposed the motion, requesting
a dismissal with prejudice, and asking that plaintiffs be
sanctioned for filing a frivolous lawsuit. The trial court
granted summary disposition for defendants and imposed
sanctions against plaintiffs, concluding that their
supplemental complaint was frivolous because it had no basis
in fact or law.
The Court of Appeals affirmed, concluding that Michigan
law does not recognize a right to enforce an oral license once
the grantor has acted to revoke it. It found no error in the
trial court's imposition of sanctions.4 Plaintiffs now appeal
to this Court.
II
We conclude that plaintiffs' claim for an irrevocable
2
(...continued)
which Robert made such a promise.
3
Because the irrigation arm operates on an arc, Robert's
decision to prevent the arm from traversing his property
apparently precluded irrigation of thirty-three acres of the
adjacent Kitchen Farms farmland.
4
239 Mich App 190; 607 NW2d 425 (1999). The Court of
Appeals had previously reached an issue unrelated to this
appeal in 231 Mich 15; 585 NW2d 47 (1998).
4
license based simply on an alleged oral promise5 must fail
because it is barred by Michigan's statute of frauds, which
provides:
No estate or interest in lands, other than
leases for a term not exceeding 1 year, nor any
trust or power over or concerning lands, or in any
manner relating thereto, shall hereafter be
created, granted, assigned, surrendered or
declared, unless by act or operation of law, or by
a deed or conveyance in writing, subscribed by the
party creating, granting, surrendering or declaring
the same, or by some person thereunto by him
lawfully authorized by writing. [MCL 566.106.]
Plaintiffs claim they have a permanent and irrevocable
license for the use of a portion of defendants' land. Such an
irrevocable license would constitute an "interest in lands"
that cannot be granted orally in compliance with the statute
of frauds, as it would involve a permanent right to use the
property.
Under the statute of frauds, Robert could have granted
plaintiffs the claimed interest only through "a deed or
conveyance in writing." Thus, the statute of frauds bars
plaintiffs' claim for an interest in defendants' land based on
an oral promise and reliance by plaintiffs. We hold that an
"irrevocable license" by estoppel cannot be created in
Michigan on the basis of an oral promise because recognizing
5
For purposes of resolving this case, we assume without
deciding, as did the trial court in granting defendant's
motion for summary disposition, that Robert actually made the
alleged oral promise.
5
such a conveyance would violate the statute of frauds.
Our analysis is consistent with existing Michigan case
law. By definition, a license is "a permission to do some act
or series of acts on the land of the licensor without having
any permanent interest in it . . . ." Sweeney v Hillsdale Co
Bd of Road Comm'rs, 293 Mich 624, 630; 292 NW 506 (1940),
quoting Morrill v Mackman, 24 Mich 279, 282 (1872). In
general, a license is revocable at will and is automatically
revoked upon transfer of title by either the licensor or
licensee. Forge v Smith, 458 Mich 198, 210; 580 NW2d 876
(1998); Sallan Jewelry Co v Bird, 240 Mich 346, 348; 215 NW
349 (1927).
Oral and written licenses, which are terminable at will
by the grantor, are valid. See McCastle v Scanlon, 337 Mich
122, 133; 59 NW2d 114 (1953). The reason is that these
licenses, because of their revocability, do not create an
interest in land. Hence, the statute of frauds is
inapplicable:
"Where nothing beyond a mere license is
contemplated, and no interest in the land is
proposed to be created, the statute of frauds has
no application, and the observance of no formality
is important." [Id. at 133.]
By contrast, Michigan law generally requires that the grant of
a permanent interest in land be in writing to be enforceable.
Id. at 128.
Indeed, the fact that the interest is permanent brings it
6
within the statute of frauds. Accordingly, this Court has
distinguished between licenses and easements, utilizing the
statute of frauds rationale as follows :
A license grants permission to be on the land
of the licensor without granting any permanent
interest in the realty. While easements constitute
an interest in real estate, licenses do not.
Because they are not considered interests in land,
licenses do not have to comply with the
requirements of the statute of frauds. [Forge,
supra at 210.]
Michigan case law makes clear the justification for
excluding licenses from the requirements of the statute of
frauds: because they are revocable at will, they do not
constitute an interest in the pertinent land. By contrast,
the "irrevocable license" claimed by plaintiffs would not be
revocable at will. Thus, it would not constitute a "license"
falling outside the scope of the statute of frauds.
Our case law indicates that an interest in land cannot be
established on the basis of estoppel, as plaintiffs seek to
do. See Penfold v Warner, 96 Mich 179, 180; 55 NW 680 (1893).
We stated in Huyck v Bailey, 100 Mich 223, 226; 58 NW 1002
(1894):
[T]he statute of frauds prevents the passing
of title to realty by parol, and this cannot be
done any more under the guise of an estoppel, in
the absence of fraud, and when the estoppel
consists only of an implied assent, than by showing
a direct parol contract.
As these cases reflect, the statute of frauds precludes
an oral promise from forming the basis of a claim to an
7
interest in real property, even when estoppel is alleged. As
has been observed, no writing exists in this case to support
plaintiffs' contention that they have more than a mere
revocable license to use defendants' land. Accordingly,
plaintiffs' argument must fail.
We note that plaintiffs rely heavily on 5 Restatement
Property, § 519(4). It provides that a licensee who makes
expenditures in reliance on representations about the
license's duration may continue to use the license to realize
the value of the expenditures. As plaintiffs admit, that
Restatement provision is based on the doctrine of estoppel.
Because Michigan does not permit an interest in land to
transfer only on the basis of estoppel, it follows that
§ 519(4) is inconsistent with Michigan law.6
We reaffirm that a license may be granted orally, but
hold that the oral license is necessarily revocable at the
will of the licensor without regard for any promised duration.
Neither a written "license" that evidences a promised duration
nor the oral conveyance of an intended permanent interest in
land is an "irrevocable license." Instead, the grantor of
6
Plaintiffs rely on numerous Michigan cases for the
proposition that an irrevocable license is recognized by
Michigan law. Those cases are easily distinguished from the
instant case and do not lend support to plaintiffs' position.
Each involves either a license coupled with an interest in
land or a written agreement sufficient to satisfy the statute
of frauds.
8
such an intended interest, in effect, orally conveys an
easement.7 Although one can grant an express, irrevocable
easement, it must be evidenced by a writing manifesting a
clear intent to create an interest in the land. Forge, supra,
at 205. As that did not occur here, defendants were free to
revoke the oral license.
III
Turning to the issue of sanctions, we reverse the Court
of Appeals decision upholding sanctions against plaintiffs.
A trial court's finding that an action is frivolous is
reviewed for clear error. In re Attorney Fees & Costs, 233
Mich App 694, 701; 593 NW2d 589 (1999). A decision is clearly
erroneous where, although there is evidence to support it, the
reviewing court is left with a definite and firm conviction
that a mistake has been made. Id.
Whether a claim is frivolous within the meaning of MCR
2.114(F) and MCL 600.2591 depends on the facts of the case.
MCL 600.2591(3) defines "frivolous" as follows:
(a) "Frivolous" means that at least 1 of the
7
Because plaintiffs do not claim that their interest in
defendants' property constitutes an "easement by
prescription," we need not address whether such an interest
could have been established under these facts. See Outhwaite
v Foote, 240 Mich 327, 331-332; 215 NW 331 (1927); Plymouth
Canton Community Crier v Prose, 242 Mich App 676, 684-685; 619
NW2d 725 (2000). We note that, in any event, the use did not
continue for the fifteen-year period generally considered
necessary to establish an easement by prescription. See id.
at 679; MCL 600.5801(4).
9
following conditions is met:
(i) The party's primary purpose in initiating
the action or asserting the defense was to harass,
embarrass, or injure the prevailing party.
(ii) The party had no reasonable basis to
believe that the facts underlying that party's
legal position were in fact true.
(iii) The party's legal position was devoid of
arguable legal merit.
The trial court concluded that plaintiffs were subject to
sanctions pursuant to MCR 2.114 for filing the supplemental
complaint, which it found ungrounded in law or fact.
The issue whether plaintiffs should be subject to
sanctions is much closer than the Court of Appeals made it
appear. Although plaintiffs' claim for an irrevocable license
must ultimately fail, plaintiffs presented a sufficient
argument grounded in law and fact to avoid a finding of
frivolity. The mere fact that plaintiffs did not ultimately
prevail does not render the supplemental complaint frivolous.
While our decision today is based on the statute of
frauds and our prior case law, it was not easily resolved.
There has been no authority in Michigan that clearly and
unequivocally addresses whether an oral license can become
irrevocable by estoppel. We now firmly establish that it
cannot.
Plaintiffs point out accurately that there is support for
their position in authorities from other jurisdictions and in
10
the Restatement of Property. 5 Restatement Property, §
519(4). In addition, the pertinent principles of real
property law are complex. For example, considerable analysis
is needed to determine why a classic license is not an
interest in land subject to the statute of frauds and why the
rationale for that principle should not extend to a claimed
"irrevocable license." Not every error in legal analysis
constitutes a frivolous position. Moreover, merely because
this Court concludes that a legal position asserted by a party
should be rejected does not mean that the party was acting
frivolously in advocating its position.
We recognize that plaintiffs' argument before this Court
is more refined than that made before the trial court.8
Nonetheless, we conclude that plaintiffs' initial allegations
and legal argument were sufficient to avoid sanctions for a
frivolous lawsuit. Thus, the circuit court clearly erred in
its award of sanctions predicated on finding the suit
frivolous.
IV
In conclusion, we hold that Michigan law does not permit
8
There, plaintiffs claimed: (1) there was a prescriptive
easement over the north part of defendants' property; (2)
there was a perpetual noncancelable license to use the north
part of defendants' property; (3) on the basis of plaintiffs'
detrimental reliance on Robert's promise of perpetual use,
defendants were estopped from barring plaintiffs' use of the
north part of defendants' property.
11
an oral license to ripen into a permanent interest in the use
of land on the basis of estoppel alone. Accordingly, in
order to constitute a permanent interest, plaintiffs' alleged
license would have to have been conveyed through a deed or
conveyance in compliance with the statute of frauds. Because
the claimed interest is based merely on an alleged oral
promise, we affirm the Court of Appeals decision upholding
summary disposition for defendants.
However, because plaintiffs advanced a claim sufficiently
grounded in law and fact, we reverse the award of sanctions.
CORRIGAN , C.J., and CAVANAGH , WEAVER , TAYLOR , YOUNG , and
MARKMAN , JJ., concurred with KELLY , J.
12
Kitchen v. Kitchen
Court: Michigan Supreme Court
Date filed: 2002-04-02
Citations: 641 N.W.2d 245, 465 Mich. 654
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