Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
C hief Justice Justices
Maura D. Cor rigan Michael F. Cavanagh
O pinion
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
____________________________________________________________________________________________________________________________
FILED SEPTEMBER 24, 2002
ELEANOR BRUNSELL,
Plaintiff-Appellant,
v No. 120051
CITY OF ZEELAND,
Defendant-Appellee.
__________________________________
PER CURIAM
In this case, plaintiff Eleanor Brunsell claims that
defendant city of Zeeland is liable to her as an intended
third-party beneficiary under a contract between the city and
a third party. The trial court granted summary disposition in
favor of the city. The Court of Appeals affirmed in an
unpublished opinion, relying on the lead opinion in Koenig v
South Haven, 460 Mich 667; 597 NW2d 99 (1999). We agree with
the conclusion of the lower courts that plaintiff was not an
intended third-party beneficiary under the circumstances of
this case and, accordingly, affirm the Court of Appeals
resolution of this issue.
I
Plaintiff alleges that she tripped and fell while walking
because of a defect1 in a sidewalk, resulting in a fractured
left wrist. The sidewalk was part of an area leased to the
city by the First Michigan Bank & Trust Company. The lease
agreement provided that a sidewalk was among the
“improvements” that the city, as lessee, was authorized to
construct. Pivotal to plaintiff’s third-party beneficiary
claim, the lease agreement included the following paragraph:
5. Maintenance. The Lessee [the city] shall
repair the improvements which it constructs on the
premises as may be necessary for the public safety.
The Lessor [the bank] shall remove snow, pick-up
litter, and perform such other sanitary maintenance
as may be required.
Plaintiff brought this action, alleging in pertinent
part, that the city was liable to her as a third-party
beneficiary for violating its contractual undertaking (in the
quoted paragraph of the lease agreement) to “repair the
improvements which it constructs on the premises as may be
necessary for the public safety.”2
1
Specifically, plaintiff claims that “there was a crack
between, and a difference in elevation in, adjoining sidewalk
slabs. . . .”
2
Plaintiff also brought a claim premised on the highway
exception to governmental immunity, MCL 691.1402. The lower
courts rejected this claim because the sidewalk at issue,
which was along part of a parking lot, was not adjacent to a
2
In granting summary disposition in favor of the city, the
trial court, applying the lead opinion in Koenig, concluded
that “there was not a sufficiently defined class to allow the
filing of a third party beneficiary claim.” In affirming, the
Court of Appeals similarly relied on the lead opinion in
Koenig in concluding that plaintiff was not an intended third
party beneficiary of the lease agreement with standing to sue
for its alleged violation. In particular, that Court
concluded that the agreement was primarily intended to benefit
the parties to it (the city and the bank) by allocating their
respective duties regarding maintenance of the leased area and
that “the public generally” was too broad a group to be
considered intended third-party beneficiaries of a contract.
II
We review the resolution of a summary disposition motion
de novo. Roberts v Mecosta Co General Hosp, 466 Mich 57, 62;
642 NW2d 663 (2002).
III
MCL 600.1405, the third-party beneficiary statute,
provides in pertinent part:
Any person for whose benefit a promise is made
by way of contract, as hereinafter defined, has the
same right to enforce said promise that he would
have had if the said promise had been made directly
public highway. That issue is outside the scope of this
opinion.
3
to him as the promisee.
(1) A promise shall be construed to have been
made for the benefit of a person whenever the
promisor of said promise has undertaken to give or
to do or refrain from doing something directly to
or for said person.
* * *
(2)(b) If such person is not in being or
ascertainable at the time the promise becomes
legally binding on the promisor then his rights
shall become vested the moment he comes into being
or becomes ascertainable if the promise has not
been discharged by agreement between the promisor
and the promisee in the meantime.
Importantly, the plain language of this statute reflects that
not every person incidentally benefitted by a contractual
promise has a right to sue for breach of that promise, but
rather only if the promisor has “undertaken to give or to do
or refrain from doing something directly to or for said
person.” MCL 600.1405(1) (emphasis added).
In other words, MCL 600.1405 draws a distinction between
intended third-party beneficiaries who may sue for a breach of
a contractual promise in their favor, and incidental third
party beneficiaries who may not. In this regard, we agree
with and adopt the following statutory analysis from the lead
opinion in Koenig, supra at 676-677, 680:
In describing the conditions under which a
contractual promise is to be construed as for the
benefit of a third party to the contract in § 1405,
the Legislature utilized the modifier “directly.”
Simply stated, section 1405 does not empower just
any person who benefits from a contract to enforce
4
it. Rather, it states that a person is a third
party beneficiary of a contract only when the
promisor undertakes an obligation “directly” to or
for the person. This language indicates the
Legislature’s intent to assure that contracting
parties are clearly aware that the scope of their
contractual undertakings encompasses a third party,
directly referred to in the contract, before the
third party is able to enforce the contract.
Subsection 1405(2)(b)’s recognition that a contract
may crate a class of third-party beneficiaries that
includes a person not yet in being or ascertainable
precludes an overly restrictive construction of
subsection 1405(1). That is, it precludes a
construction that would require precision that is
impossible in some circumstances, such as would be
the case if there were a requirement in all cases
that a third-party beneficiary be referenced by
proper name in the contract. This is simply to say
that the Legislature, in drafting these two
provisions, apparently wanted to strike a balance
between an impossible level of specificity and no
specificity at all. This means that there must be
limits on the use of subsection 1405(2)(b) to
broaden the interpretation of subsection 1405(1)
because otherwise the result is to remove all
meaning from the Legislature’s use of the modifier
“directly.”
* * *
[A] third-party beneficiary may be a member of
a class, but the class must be sufficiently
described. This follows ineluctably from
subsection 1405(1)’s requirement that an obligation
be undertaken directly for a person to confer
third-party beneficiary status. As can be seen
then, this of course means that the class must be
something less than the entire universe, e.g., “the
public”; otherwise, subsection 1405(2)(b) would rob
subsection 1405(1) of any narrowing effect. The
rationale would appear to be that a contracting
party can only be held to have knowingly undertaken
an obligation directly for the benefit of a class
of persons if the class is reasonably identified.
Further, in undertaking this analysis, an objective
standard is to be used to determine from the
contract itself whether the promisor undertook “to
5
give or to do or to refrain from doing something
directly to or for” the putative third-party
beneficiary. Guardian Depositors [Corp v Brown,
290 Mich 433, 437; 287 NW 798 (1939)] (emphasis
added). [Opinion of Taylor, J.]
In the present case, plaintiff can only plausibly claim
third-party beneficiary status under the lease agreement as a
member of the public because her claim is premised on
contractual language referring to the city repairing
improvements “as may be necessary for the public safety.”
There is nothing in the lease agreement that specifically
designates plaintiff (or any reasonably identified class) as
an intended beneficiary of the promise. Accordingly, as
explained in the lead opinion in Koenig, plaintiff cannot be
considered an intended third-party beneficiary under MCL
600.1405 because the public as a whole is too expansive a
group to be considered “directly” benefitted by a contractual
promise.
Moreover, an objective analysis of the contract at issue
indicates that the contractual provision at issue was intended
to delineate the obligations of the city and the bank with
regard to the premises, not to directly benefit third parties.
The allocation to the city of responsibility to “repair the
improvements which it constructs on the premises as may be
necessary for the public safety” is in the same paragraph of
the lease agreement as the allocation to the bank of the
6
duties to “remove snow, pick-up litter, and perform such other
sanitary maintenance as may be required.” This reflects that
the parties were defining their obligations to each other with
regard to maintenance concerns, not acting for the purpose of
directly benefitting third parties.3 With regard to its
promise, the city was assuring the bank that the bank would
not be responsible for repairing the improvements on the
premises to protect public safety. There is no reason to
conclude that the bank, obviously a business and not a
charitable institution, was acting to protect parties other
than itself in receiving this promise. Accordingly, plaintiff
was not an intended third-party beneficiary of the lease
agreement because an objective analysis reflects that the
city’s promise to the bank that the city would be responsible
3
This is strikingly similar to the circumstances of
Koenig. In Koenig, the plaintiffs’ decedent was seriously
injured as a result of being swept off of a pier on Lake
Michigan by a large wave. The piers in the relevant area were
owned by the Army Corps of Engineers, but a memorandum of
understanding (MOU) between the corps and the city of South
Haven essentially provided South Haven with the authority to
control public access to the piers while the corps had the
responsibility to provide fence-type barricades. Plaintiffs
alleged that South Haven breached its duty under the MOU to
preclude access to the pier under dangerous conditions and
that their decedent was an intended third-party beneficiary of
that agreement. In the course of rejecting that position, the
lead opinion in Koenig stated that “[a]n objective assessment
of the MOU demonstrates that, rather than undertaking an
obligation for the benefit of a putative third-party
beneficiary, it allocates responsibilities between South Haven
and the corps regarding restricting access to the piers during
periods of dangerous conditions.” Id. at 680-681.
7
for repairs was not intended to directly benefit third
parties.
IV
For these reasons, we affirm the decision of the Court of
Appeals with regard to the third-party beneficiary issue. In
all other respects, we deny leave to appeal because we are not
persuaded that the questions presented should be reviewed by
this Court.
CORRIGAN , C.J., and WEAVER , TAYLOR , YOUNG , and MARKMAN , JJ.,
concurred.
CAVANAGH and KELLY , JJ., would not dispose of this case by
opinion per curiam, but would grant or deny leave to appeal.
8