author: J. H. Gillis, P.J.

text:
    S C GRAY, INCORPORATED v FORD MOTOR COMPANY
    Docket Nos. 77-648, 77-649.
    Submitted May 3, 1979, at Detroit.
    Decided October 15, 1979.
    Leave to appeal applied for.
    S. C. Gray, Incorporated, brought an action against Ford Motor Company, in Wayne Circuit Court, alleging that Ford had breached two separate and unrelated contracts. In count one Gray sought to recover for work done pursuant to oral modifications of a contract involving the manufacture of a machine which assembled and tested automobile transmission pumps. In count two Gray sought to recover the contract price for converting certain manually operated test stands to automatic operation.

      References for Points in Headnotes

       17 Am Jur 2d, Contracts §§ 62, 66.
    67 Am Jur 2d, Sales § 93.

       17 Am Jur 2d, Contracts §§ 82, 344.
    67 Am Jur 2d, Sales §§ 106, 183.
    Construction and application of UCC § 2-305 open price term contracts. 91 ALR3d 1237.

       22 Am Jur 2d, Damages §§ 22-25, 296.

       46 Am Jur 2d, Judgments § 127.

       1 Am Jur 2d, Actions §§ 80, 81.
    67 Am Jur 2d, Sales §§ 728, 730.
    Form and substance of notice which buyer of goods must give in order to recover damages for seller’s breach of warranty. 53 ALR2d 270.

       47 Am Jur 2d, Jury § 3.
    75 Am Jur 2d, Trial §§ 321, 322.

       31 Am Jur 2d, Expert and Opinion Evidence §§ 25-27, 29-32.

       67 Am Jur 2d, Sales § 739.
    Construction and effect of UCC Art 2 dealing with sales. 17 ALR3d 1010.

       17 Am Jur 2d, Contracts § 293.
    67 Am Jur 2d, Sales §§ 460, 461.

       30 Am Jur 2d, Evidence §§ 927, 928, 933.
    Letters to or from customers or suppliers as business records under statutes authorizing reception of business records in evidence. 68 ALR3d 1069.

       75 Am Jur 2d, Trial § 771.

       67 Am Jur 2d, Sales § 432.
    75 Am Jur 2d, Trial §§ 646, 651, 693.

       29 Am Jur 2d, Evidence § 258.
    30 Am Jur 2d, Evidence §§ 1092, 1093.

       46 Am Jur 2d, Judges § 219.

       67 Am Jur 2d, Sales §§ 559, 560, 622, 623.

       67 Am Jur 2d, Sales § 694, et seq.

       17 Am Jur 2d, Contracts § 240 et seq.

       76 Am Jur 2d, Sales § 391.

      The complaint was subsequently amended and a third count was added. Count three alleged that, as a result of Ford’s failure to pay the amounts requested in counts one and two, Gray was forced to borrow money at high interest rates to carry on its business. Gray sought to recover the interest expense.
    Ford Motor Company brought a counterclaim for breach of contract and breach of warranty in connection with the transmission pump machine.
    Count one and Ford’s counterclaim were tried together. The jury returned a verdict of $157,770 in favor of Gray on count one and of no cause of action on Ford’s counterclaim. The trial court, Thomas J. Foley, J., subsequently granted Ford’s motion for judgment notwithstanding the verdict and granted conditional new trials on both count one and the counterclaim. The trial court also granted Ford a new trial to determine damages on its counterclaim. Finally, the trial court granted Ford’s motion for partial summary judgment on count three for failure to state a claim upon which relief could be granted.
    A subsequent trial was held before Roman S. Gribbs, J., to determine the amount of damages due to Ford on its counterclaim. A judgment was entered awarding damages to Ford.
    In a separate trial on count two, the jury returned a verdict in favor of plaintiff. Ford’s motion for a judgment notwithstanding the verdict was denied, as was a subsequent motion for a new trial, Thomas E. Roumell, J.
    Gray appeals from the judgments on counts one and three and Ford’s counterclaim. Ford appeals from the judgment on count two. Numerous issues are raised on appeal. Held:

    1. Assuming that the trier of fact did believe testimony that Gray objected to the terms and conditions contained on Ford’s purchase order, which included a provision that all modifications of the contract were to be in writing, the terms and conditions did not become part of the contract and Gray was not precluded from showing oral modifications to the contract. The modifications did not have to be in writing to satisfy the statute of frauds since the machine was to be specially manufactured for the buyer and was not suitable for sale in the ordinary course of business.
    2. The price for the changes for which the plaintiff sought the extra compensation was to be the number of hours multiplied by the plaintiff’s hourly rate for performing such work. However, the plaintiff introduced evidence only as to the reasonable value of the changes. Since the price term was fixed, the reasonable value is not the proper measure of damages. It was incumbent upon the plaintiff to prove damages by means of the agreed-to formula. The trial court did not err in granting judgment notwithstanding the verdict as to count one.
    3. The trial court did not err in ruling, as to Ford’s counterclaim, that no question of fact was presented concerning the failure of the machine to operate properly. From the evidence presented, reasonable minds could not have differed in concluding that the machine as delivered by the plaintiff did not perform as required.
    4. Under the Uniform Commercial Code a buyer must notify the seller of a breach or be barred from any remedy. The jury was not required to believe testimony that the plaintiff had been given timely notice by the buyer. The trial court erred in granting judgment notwithstanding the verdict to Ford on Ford’s counterclaim.
    5. At the trial before Judge Gribbs on the issue of Ford’s damages, it was not improper to allow one of Ford’s witnesses to testify as to the scrap value of test stands and the preheat tank. The trial court did not abuse its discretion in allowing the witness to testify as to these matters based upon his background, experience and familiarity with the equipment.
    6. The only evidence upon which to base the amount of damages awarded to Ford on its counterclaim was testimony as to the price, the fact that the equipment was never used for production and the scrap value. The normal measure of damages for breach of warranty is the difference between the value of the equipment at the time and place of acceptance and what its value would have been if it had been as warranted. The evidence of only the purchase price and salvage value was inadequate to support the award for breach of warranty.
    7. Where the writings of the parties conflict as to warranties, neither provision becomes a part of the contract and the implied warranty provisions of the Uniform Commercial Code are in effect. In the case at bar, the warranty provisions of Gray and Ford did conflict, thus, the implied warranty provisions of the UCC control. The new trial should be based upon implied warranties.
    8. Certain exhibits consisting of purchase notifications to various suppliers were properly admitted into evidence under the business entry exception to the hearsay rule. A sufficient foundation for the admission of the records was established.
    9. The plaintiffs request for an "adverse inference” instruction to the jury, based on the defendant’s failure to call one of its employees as a witness, was properly denied since the witness in question, while an employee of the defendant, was within the jurisdiction and was available to the plaintiff by way of subpoena.
    10. The trial court’s instruction to the jury that acceptance of delivery and payment for the machine did not waive or bar damages for breach of contract or breach of warranty was a correct statement of the applicable law and was relevant since the question of acceptance was brought up at trial.
    11. The trial court’s instruction to the jury that the buyer is entitled to recover as damages the loss resulting in the ordinary course of events from the seller’s breach as determined in any manner which is reasonable should not be used at the new trial. The proper instruction to give is that the measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted.
    12. An instruction to the jury that if a negative response is given to a question the question is meaningless and should be disregarded was erroneous and should not be repeated at the new trial.
    13. Gray’s claim that Judge Gribbs evidenced bias, thereby depriving Gray of a fair trial, is not supported by the record.
    14. The damages claimed by plaintiff in count three, the interest expense on money it had to borrow to cover operating costs, were foreseeable and, therefore, fall into the category of consequential damages rather than incidental damages. The UCC does not allow a seller to recover consequential damages. The trial court was correct in granting Ford’s motion for summary judgment as to count three based on plaintiffs failure to state a claim upon which relief could be granted.
    15. In respect to count two, the trial court properly ruled that the contract involved was ambiguous. The trial court did not err in submitting to the jury the question of the interpretation of the contract.
    16. The trial court should not have submitted to the jury the question of whether Ford gave timely notice of its intent to cancel the contract. It is undisputed that oral notice was given on the date of inspection and that written notice followed six days later. As a matter of law, notice of rejection was given within a reasonable time.
    17. Plaintiffs contention that Ford was required to give notice of intent to cancel for late delivery is unfounded in light of testimony by Richard Gray, vice-president of S. C. Gray, Inc., that the reason for the rejection was the failure of the machine to test accurately at 70 parts per hour.
    The judgments on counts one and three are affirmed. The judgments on count two and the counterclaim are reversed and remanded for new trials.
    1. Contracts — Additional Terms in Acceptance — Merchants — Notification of Objection — Statutes.
    Additional terms contained in an acceptance of a contract are to be construed as proposals for additions to the contract; as between merchants, they become part of the contract unless notification of objection to them has already been given or is given within a reasonable time after notice of them is received (MCL 440.2207; MSA 19.2207).
    2. Contracts — Open Price Term — Reasonable Price — Statutes.
    The price will be a reasonable price where the parties to a contract have intended to make a contract but have left the price term open (MCL 440.2305; MSA 19.2305).
    3. Damages — Burden of Proof.
    A party asserting a claim has the burden of proving his damages with reasonable certainty.
    4. Judgments — Judgment Notwithstanding the Verdict — Standard.
    The standard, in ruling on a motion for a judgment notwithstanding the verdict, is whether, after reviewing the facts and all legitimate inferences therefrom in the light most favorable to the party opposing the motion, reasonable men could differ; if they can, the question is one for the jury.
    5. Sales — Breach of Contract — Notice of Breach — Uniform Commercial Code — Statutes.
    The Uniform Commercial Code provides that a buyer must notify a seller of any breach of a contract by the seller or be barred from any remedy; the burden is on the buyer to prove notice and not upon the seller to establish that no notice had been given (MCL 440.2607[3]; MSA 17.2607[3]).
    6. Evidence — Uncontradicted Evidence — Jury,
    A jury may disbelieve the most positiye evidence, even when it stands uncontradicted, and the trial judge cannot take from them their right of judgment.
    7. Witnesses — Expert Witnesses — Qualifications — Discretion — Formal Education.
    Determination of the qualifications of an expert witness is niade by the trial court and this determination will not be reversed absent an abuse of discretion; one need not have formal education to be an expert, but may have acquired special knowledge concerning a subject by reason of his employment.
    8. Damages — Breach of Warranty — Value — Place of Acceptance — Statutes.
    The normal measure of damages for breach of warranty is the difference between the value of the equipment at the time and place of acceptance and what its value would have been if it had been as warranted (MCL 440.2714; MSA 19.2714).
    9. Contracts — Warranties — Conflicting Provisions — Uniform Commercial Code — Implied Warranties.
    Neither party’s warranty provisions become a part of a contract and the implied warranty provisions of the Uniform Commercial Code are in effect where the writings of the parties conflict as to warranties.
    10. Evidence — Hearsay — Business Records — Foundation.
    A sufficient foundation was laid for the admission of certain exhibits into evidence under the business entry exception to the hearsay rule where the exhibits consisted of purchase orders listing a description of work to be performed, a vendor’s name and the vendor’s quoted price and where there was testimony that the records were made in the ordinary course of business and that it was a regular practice to make such records (MCL 600.2146; MSA 27A.2146).
    11. Witnesses — Failure to Produce Witness — Instructions to Jury — Adverse Inference Instruction.
    A plaintiff’s requested "adverse inference” instruction, based on a defendant’s failure to produce a certain witness, was properly denied where the witness was within the jurisdiction and available to the plaintiff by way of subpoena.

      12. Sales — Warranties — Breach of Contract — Breach of Warranty — Instruction to Jury — Acceptance of Delivery — Payment — Damages.
    A trial court’s instruction to the jury that acceptance of delivery and payment for a machine does not waive or bar damages for breach of contract or breach of warranty is a correct statement of the law in an action for damages for the seller’s breach of contract or breach of warranty with respect to the machine; such an instruction is relevant where the question of acceptance is brought up during the course of trial (MCL 440.2607[2]; MSA 19.2607[2]).
    13. Damages — Contracts — Breach of Contract — Object of Damages.
    Damages for breach of contract are intended to place the injured party in as good a position as he would have been in had the promised performance been rendered.
    14. Evidence — Negative Evidence — Negative Response.
    Negative evidence is evidence to the effect that a circumstance or fact was not perceived or that it was, or is, unknown; it is generally of no probative value and, hence, inadmissible; however, a negative response to a question does not necessarily constitute negative evidence.
    15. Judges — Bias — Presumptions.
    It is presumed that a trial court is fair and impartial and a litigant who would challenge this presumption has a heavy burden.
    16. Sales — Damages — Breach of Contract — Buyer’s Breach — Incidental Damages.
    A seller may recover from a buyer the price of goods plus incidental damages resulting from the buyer’s breach of contract; incidental damages include any reasonable commercial charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer’s breach, in connection with the return or resale of the goods or otherwise resulting from the breach (MCL 440.2709, 440.2710; MSA 19.2709, 19.2710).
    17. Sales — Consequential Damages — Incidental Damages — Uniform Commercial Code.
    The Uniform Commercial Code recognizes a distinction between incidental damages and consequential damages; incidental damages normally are incurred when a buyer (or seller) repudiates a contract or wrongfully rejects the goods, causing the other to incur such expenses as transporting, storing or reselling the goods; consequential damages do not arise within the scope of the buyer-seller transaction, but rather stem from losses incurred by the nonbreaching party in its dealing, often with the third parties, which were a proximate result of the breach and which were reasonably foreseeable by the breaching party at the time of contracting.
    18. Sales — Damages — Consequential Damages — Incidental Damages — Foreseeability — Interest Expense.
    Interest expense, assuming it was foreseeable, incurred by a seller because a buyer breached a contract thereby causing the seller to have to borrow money at high interest rates, falls within the category of consequential damages, not incidental damages; the Uniform Commercial Code does not allow a seller to recover consequential damages.
    19. Contracts — Interpretation — Question op Law.
    The meaning of language contained in a written contract which is not ambiguous is a question of law for the courts.
    20. Sales — Rejection op Goods — Notice op Rejection — Statutes.
    Rejection of goods must be made within a reasonable time after delivery or tender of the goods; such rejection is ineffective unless the buyer seasonably notifies the seller (MCL 440.2602(1]; MSA 19.2602[1]).
    21. Sales — Rejection op Goods — Notice op Rejection — Reasonable Time — Undisputed Facts — Question op Law.
    The question of what is a reasonable time after delivery or tender within which a buyer must notify a seller of the buyer’s rejection of goods is a question of law, where the facts are undisputed.

      Turner & Turner, P.C. (by Carol Petsko), for plaintiff.

      Butzel, Long, Gust, Klein & Van Zile (by Leslie W. Fleming and Richard U. Mosher) (Robert B. Bailey, of counsel), for defendant.

      Before: J. H. Gillis, P.J., and Beasley and R. B. Webster, JJ.

       Circuit judge, sitting on the Court of Appeals by assignment.

   J. H. Gillis, P.J.

S. C. Gray, Inc., filed a complaint against Ford Motor Company, alleging Ford had breached two separate and unrelated contracts. In count one Gray sought to recover for work done pursuant to oral modifications of a contract involving the manufacture of a machine which assembled and tested automobile transmission pumps. In count two Gray essentially sought to recover the contract price for converting certain manually operated test stands to automatic operation.

The complaint was subsequently amended and a third count was added alleging that, as a result of Ford’s failure to pay the amounts requested in counts one and two, Gray was forced to borrow money at high interest rates to carry on its business. Gray sought to recover $48,000 as compensation for this expense.

Ford brought a counterclaim for breach of contract and breach of warranty in connection with the transmission pump machine.

Count one and Ford’s counterclaim were tried together. A jury returned a verdict of $157,770 in favor of Gray on its claim and no cause of action on Ford’s counterclaim. The trial court, Judge Thomas J. Foley, subsequently granted Ford’s motion for judgment notwithstanding the verdict and conditional new trials on both count one and the counterclaim. The trial court also granted Ford a new trial to determine damages on its counterclaim.

Finally, the trial court granted Ford’s motion for a partial summary judgment on count three for failure to state a claim upon which relief could be granted.

A jury trial, presided over by Judge Roman S. Gribbs, to determine the amount of damages due Ford on its counterclaim resulted in a verdict of $206,226.

The trial on count two was tried before Judge Thomas E. Roumell and a jury, resulting in a verdict in favor of plaintiff in the amount of $72,000. Ford’s motion for judgment n.o.v. or new trial was denied as was a subsequent motion for new trial.

Gray appeals from the judgments on counts one and three and Ford’s counterclaim. Ford appeals from the judgment on count two.

I

The factual situation underlying count one and Ford’s counterclaim is as follows. Ford was interested in acquiring a machine which would automatically assemble and test the hydraulic pumps which are installed in automobile transmissions. The machine was initially conceived of as consisting of three parts. Ford requested quotes on the cost of designing and manufacturing the three sections. Gray submitted quotes on the second and third sections. Ford accepted these quotes and Gray commenced work on the project.

Subsequently, Gray submitted a quote on supplying the first section of the machine which Ford accepted by way of an amendment to the original purchase order.

Five additional amendments to the purchase order were made, bringing the contract price to $275,541.20. This sum was paid by Ford and is not at issue here. Rather, it is Gray’s contention that Ford agreed to pay for additional changes but never did so.

Ford’s counterclaim is based upon its allegation that the machine did not meet the required specifications and that Gray had, therefore, breached its contract as well as an express warranty.

In ruling upon the post-trial motions, Judge Foley held that while Gray alleged there was an agreed upon formula for determining the price of a particular change, the evidence in support of damages was not based upon this formula. Instead a "reasonable market value or reasonable value” was relied upon to ascertain damages.

In addition, Judge Foley ruled that the jury verdict was, in part, contrary to the express agreement of the parties and the evidence adduced at trial and included damages not supported by factual proof. By way of an amended order, Judge Foley granted judgment notwithstanding the verdict to Ford on Gray’s claim.

Judge Foley also granted judgment notwithstanding the verdict to Ford on its counterclaim ruling that no issue of fact was created by the evidence and that Gray was liable for breach of contract and breach of warranty. A new trial, limited to the issue of damages, was granted. This trial resulted in an award to Ford of $206,226.

The first issue raised for our consideration is whether Judge Foley erred in granting judgment notwithstanding the verdict on Gray’s claim that it was entitled to payment for additional work done on the machine.

Gray contends that there was an oral modification to the contract. "Doc” Mapes, a Ford processing engineer in charge of the project, allegedly agreed that requested changes in the design and construction of the machine would be paid for according to Gray’s hourly rate.

At the outset Ford argues that oral modifications to the contract were precluded, since a provision to that effect was contained on the reverse side of its purchase order which constituted, along with Gray’s original quote, the contract. However, Richard Gray, vice-president of S. C. Gray, Inc., testified that upon receipt of the Ford purchase order he called Mr. Krolicki of Ford’s purchasing department and objected to the terms and conditions contained on the form.

Section 2-207 of the Uniform Commercial Code, MCL 440.2207; MSA 19.2207, provides that additional terms contained in an acceptance are to be construed as proposals for addition to the contract. As between merchants, they become part of the contract unless "notification of objection to them has already been given or is given within a reasonable time after notice of them is received”.

Assuming the trier of fact believed the testimony of Mr. Gray that he objected to the terms and conditions contained on Ford’s form, then, pursuant to the above section, the provision requiring modifications to be in writing did not become part of the contract.

Having determined that Gray was not precluded from showing oral modifications to the contract, we must next determine whether the trial court was correct in finding that plaintiffs evidence of damages was insufficient to support the verdict. The trial court noted that although plaintiff contended the contract price for changes was to be computed by multiplying Gray’s hourly rate by the number of hours spent on a change, the evidence of damages was based upon a "reasonable value” determination.

The evidence to support plaintiffs damages was supplied by Richard Gray. He testified that he did not keep records of the number of hours spent in making the changes for which he sought additional compensation. Instead, he gave his opinion as to the reasonable value of the changes.

Plaintiff points to testimony that Mr. Gray estimated the number of hours it took to make each change and then multiplied that by the hourly rate. Plaintiff contends that this testimony shows the claim for each change was based on the agreed upon formula.

We do not find this testimony in conflict with the trial court’s determination that plaintiffs evidence of damages was based upon reasonable value. On cross-examination Mr. Gray admitted that while he estimated it took approximately 160 hours to do a particular change he did not know whether, in fact, it took 160 or 260 hours. Hence, it is evident that plaintiffs itemization of damages had no relation to the actual hours spent on a change, but instead was based upon an estimate of a reasonable price for each change.

Where the parties have intended to make a contract but left the price term open, the price will be a reasonable price. UCC 2-305, MCL 440.2305; MSA 19.2305. However, in the instant case the price term was not left open. Hence, "reasonable value” is not the proper measure of damages.

The party asserting a claim has the burden of proving his damages with reasonable certainty. Thornton Construction Co, Inc v Mackinac Aggre gates Corp, 9 Mich App 467; 157 NW2d 456 (1968). Here, plaintiffs proofs were unduly speculative. Having alleged an agreed upon formula for determining the price of the changes, it was incumbent upon plaintiff to prove damages by means of that formula and not upon a theory of the reasonable value of the changes.

We conclude the trial court did not err in granting judgment n.o.v. Because of our discussion of the above issue we need not discuss plaintiffs remaining arguments concerning this claim.

II

Plaintiff next claims that Judge Foley erred by granting a partial judgment n.o.v. on the issue of liability to Ford on its counterclaim. In support of this contention plaintiff argues that the evidence created an issue of fact concerning (1) the failure of a portion of the machine to operate, and (2) whether Ford gave notice of the breach of warranty.

In ruling on a motion for judgment notwithstanding the verdict, the standard is whether, after reviewing the facts and all legitimate inferences therefrom in the light most favorable to the party opposing the motion, reasonable men could differ. If they can, the question is for the jury. Sparks v Luplow, 372 Mich 198; 125 NW2d 304 (1963), Isom v Farrugia, 63 Mich App 351; 234 NW2d 520 (1975).

The undisputed evidence indicates that the machine was never operated sufficiently to be used for the testing of pumps for production.

Gray points to testimony that at a tryout held in April, 1971, the machine ran for approximately one hour. While the machine ran at that time, subsequent examination revealed that the pumps were being damaged when inserted into the test stand.

Gray also cites the testimony of Herbert Joyner that the design of the machine was a good one and should work. As the trial court noted, this evidence did not create a question of fact of whether the machine actually did work. Even Ford employee Wedemeyer testified that the machine ran "like a charm” at one time when he let it cycle without any oil pumps in it. However, once he put one in the machine it started malfunctioning.

The trial court did not err in ruling that no question of fact was presented concerning the failure of the machine to operate properly. Even considering testimony that some of the problems Ford encountered with the machine were due to misuse, reasonable minds could not differ in concluding that the machine as delivered by Gray did not perform as required.

The next question is whether a question of fact was created concerning notice. Section 2-607(3) of the UCC, MCL 440.2607(3); MSA 17.2607(3), provides that the buyer must notify the seller of a breach or be barred from any remedy.

It is beyond dispute that Gray knew there were problems with the machine prior to the final tryout date in April, 1971. However, the only evidence that Ford gave notice after April, 1971, was the testimony of Edward Howe. He stated that he spoke to Sidney and Dick Gray and informed them of the problems Ford was having. While this evidence was not contradicted, the jury was not required to accept it as true. Mr. Howe may have been biased since he was an employee of Ford. Moreover, Gray’s counsel did not concede the notice issue and attempted to discredit Mr. Howe’s testimony on cross-examination.

As was stated long ago in Woodin v Durfee, 46 Mich 424, 427; 9 NW 457 (1881):

"The most of these facts the claimant insists are entirely undisputed on the evidence; and she claims that they establish beyond question the liability of Staley on the bond, and that the judge was at liberty to so instruct the jury. But the difficulty is that the facts were not conceded or beyond dispute: there was evidence of them which probably ought to have satisfied any one to whom it was addressed; but evidence is for the jury, and the trial judge cannot draw conclusions for them. It is said that on some points there was no evidence of a conflicting nature; but that does not aid the claimant. A jury may disbelieve the most positive evidence, even when it stands uncontradicted; and the judge cannot take from them their right of judgment. If they return what he thinks is a perverse verdict, he may set it aside and order a new trial; but he cannot take upon himself their functions as was done here.” (Emphasis supplied.)

This rule has been reiterated on numerous occasions throughout the years. Yonkus v McKay, 186 Mich 203; 152 NW 1031 (1915), Crampton v Crampton, 205 Mich 233; 171 NW 457 (1919), Cebulak v Lewis, 320 Mich 710; 32 NW2d 21 (1948), Hopkins v Lake, 348 Mich 382; 83 NW2d 262 (1957), People v Jackson, 390 Mich 621; 212 NW2d 918 (1973).

Ford argues that it is improper to rely upon the untruthfulness of the testimony of a witness as establishing the truthfulness of an inverse factual proposition, citing Employment Relations Comm v Cafana Cleaners, Inc, 73 Mich App 752; 252 NW2d 536 (1977). Nevertheless, in the instant case the burden was on Ford to prove notice and not upon Gray to establish that no notice had been given. Steel & Wire Corp v Thyssen Inc, 20 UCC Rep Serv 892, 895 (ED Mich, 1976). Assuming the jury disbelieved the testimony of Mr. Howe, the burden of proof remained unsatisfied. Hence, a verdict adverse to Ford was not improper.

We conclude the trial court erred in granting judgment n.o.v. to Ford on its counterclaim. Hence, the case is remanded for a new trial.

Ill

Gray also contends that numerous errors occurred during the trial before Judge Gribbs on the issue of Ford’s damages. Our review of the record convinces us that a new trial on this issue is also necessary.

Gray first argues that the trial court erred in allowing one of Ford’s witnesses, Herman Wedemeyer, to testify to the scrap value of the test stands and preheat tank.

Determination of the qualifications of an expert witness is made by the trial court and this determination will not be reversed absent an abuse of discretion. One need not have formal education to be an expert, but may have acquired special knowledge concerning a subject by reason of his employment. People v Ebejer, 66 Mich App 333; 239 NW2d 604 (1976). Here, the trial court allowed Mr. Wedemeyer to testify as to these matters based upon his background, experience, and familiarity with the equipment. We find no abuse of discretion.

The next issue raised by Gray concerns the measure of damages. The only evidence upon which to base damages was testimony as to the price, the fact that the equipment was never used for production, and the scrap value. The normal measure of damages for breach of warranty is the difference between the value of the equipment at the time and place of acceptance and what its value would have been if it had been as warranted. MCL 440.2714; MSA 19.2714. There was no evidence of the actual value of the equipment at the time of acceptance, although it may well have had some value since there was testimony that the test stands could be easily converted to manual operation and used as backups if automatic stands were being repaired. Evidence of only purchase price and salvage value is inadequate to support an award for breach of warranty under these circumstances. See Western Construction Co v R G Moeller Co, 1 Mich App 230; 135 NW2d 569 (1965).

In Western, the Court remanded for the taking of testimony of actual value of the machine at the time and place of acceptance. However, since we have already determined that a new trial is necessary on the issue of liability the appropriate remedy here is to remand the entire matter for a new trial on both the issues of liability and damages.

Because of our determination that a new trial should be held we address only those issues which are likely to arise again.

There is a dispute over which warranty provision controlled. Gray’s offer contained the following warranty:

"We warrant the workmanship for one (1) year after date of shipment and all standard component parts as warranted to us by our suppliers.”

Ford’s purchase order contains the following clause:

"Seller warrants that the supplies covered by this purchase order will conform to the specifications, drawings, samples, or other description furnished or specified by Buyer, and will be fit and sufficient for the purpose intended, merchantable, of good material and workmanship, and free from defect. The warranties and remedies provided for in this Paragraph and Paragraph 7 (Inspection) shall be in addition to those implied by or available at law and shall exist notwithstanding the acceptance by Buyer of all or a part of the supplies with respect to which such warranties and remedies are applicable.”

Where the writings of the parties conflict as to warranties, neither provision becomes a part of the contract and the UCC implied warranties are in effect. Bosway Tube & Steel Corp v McKay Machine Co, 65 Mich App 426; 237 NW2d 488 (1975).

Gray contends Bosway is not controlling since Gray objected to the terms and conditions of Ford’s purchase order, one of which was the warranty provision. However, we see no reason why this objection should change the result. The reason for discarding both provisions where there is a conflict in the writings is because it is assumed that each party objected to the other’s clause. See UCC 2-207, Official Comment 6. Hence, Gray’s objection added nothing more. Had Gray wanted its warranty to control it should have taken additional steps to procure Ford’s consent.

Gray also contends it would be unfair to resort to the UCC implied warranties since they were substantially the same as those contained in Ford’s form, to which Gray objected. However, Gray’s oral objection to the terms and conditions of Ford’s form was insufficient to exclude the UCC implied warranties. See MCL 440.2316; MSA 19.2316. Hence, we see no reason why Gray should not be held to such warranties.

While the case was tried on the theory of breach of the express warranty contained on Ford’s form, a new trial perhaps could be based upon implied warranties.

Gray also contends that certain exhibits consisting of purchase notifications to various suppliers was erroneously admitted into evidence. Although these exhibits were not listed in the pretrial statement, we can foresee no possible prejudice to Gray should they be admitted at a new trial. Hence, we address only the claim that they did not fall within the business entry exception to the hearsay rule. MCL 600.2146; MSA 27A.2146.

The exhibits consisted of purchase orders listing a description of work to be performed, a vendor’s name, and the vendor’s quoted price. There was testimony that the records were made in the ordinary course of business and that it was a regular practice to make such records. This is a sufficient foundation for the admission of the records. People v Kirtdoll, 391 Mich 370, 390, fn 11; 217 NW2d 37 (1974).

While the records did not disclose whether the work was done or the price paid, they were memoranda of the agreements entered into by Ford and its vendors. Entering into an agreement would be an "act, transaction, occurrence or event” within the meaning of the statute.

Likewise it was not error to admit a series of photographs of the machine taken in 1975, after various changes had been made by Ford. It was clearly explained to the jury that the photographs were not intended to depict the machine as it appeared at the time of delivery. See Eastman v Ann Arbor R Co, 4 Mich App 540; 145 NW2d 252 (1966), Jackson v Sabuco, 21 Mich App 430; 175 NW2d 532 (1970).

The next several arguments concern the instructions given to the jury. Gray’s request that an "adverse inference” instruction, SJI 5.01(3), be given was properly denied since the witness was equally available to either party. Barringer v Arnold, 358 Mich 594; 101 NW2d 365 (1960), Urben v Public Bank, 365 Mich 279; 112 NW2d 444 (1961). While the witness was an employee of Ford, he was within the jurisdiction and was available to Gray by way of subpoena.

The trial court’s instruction that acceptance of delivery and payment for the machine does not waive or bar damages for breach of contract or breach of warranty was a correct statement of the applicable law. MCL 440.2607(2); MSA 19.2607(2). Moreover, the instruction was relevant since the question of acceptance was brought up during the course of the trial.

The trial court also instructed the jury that "the buyer is entitled to recover as damages the loss resulted in the ordinary course of events from the sellers [sic] breach as determined in any manner which is reasonable”. This instruction is essentially a paraphrase of UCC 2-714(1). Gray contends, and we agree, that it would be more appropriate to instruct the jury in accordance with § 2-714(2),

"The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted.” MCL 440.2714(2); MSA 19.2714(2).

While this rule is not meant to be exclusive, it is the usual, standard and reasonable method and the record fails to disclose any reason why it should not be applied in this case.

Ford contends that the instruction given was appropriate because there was a breach of contract as well as a breach of warranty. Damages for breach of contract are intended to place the injured party in as good a position as he would have been in had the promised performance been rendered. Allen v Michigan Bell Telephone Co, 61 Mich App 62; 232 NW2d 302 (1975). Here, if the jury is instructed in accordance with § 2-714(2), along with appropriate instructions on consequential and incidental damages, § 2-715, Ford will be fully compensated for its loss. Hence, at a new trial the court should instruct the jury in accordance with UCC § 2-714(2) and § 2-715.

The trial court also instructed the jury that if a negative response is given to a question, the question is meaningless and should be disregarded. This instruction was misleading and should not be repeated.

Negative evidence is evidence to the effect that a circumstance or fact was not perceived or that it was, or is, unknown. Serinto v Borman Food Stores, 380 Mich 637; 158 NW2d 485 (1968), 4 Callaghan’s Michigan Pleading & Practice (2d ed), § 36.193, p 28. It is generally of no probative value and, hence, inadmissible. However, a negative response to a question does not necessarily constitute negative evidence. For example, if the defendant in a murder trial were asked if he killed the victim and his response was "no”, the evidence would obviously not be meaningless and by no means should it be disregarded. The trial court’s instruction was, therefore, erroneous.

Gray’s final claim is that Judge Gribbs evidenced bias, thereby depriving Gray of a fair trial. It is presumed that a trial court is fair and impartial and a litigant who would challenge this presumption has a heavy burden. Mahlen Land Corp v Kurtz, 355 Mich 340; 94 NW2d 888 (1959). Our review of the record fails to disclose bias on the part of the trial court.

IV

Judge Foley granted Ford’s motion for summary judgment on count three of the complaint ruling that Gray had failed to state a claim for which relief could be granted. In that count Gray sought to recover for interest it paid on loans taken out to maintain the business when Ford failed to pay the money Gray claimed was due.

A seller may recover the price plus incidental damages resulting from the buyer’s breach. MCL 440.2709; MSA 19.2709. Incidental damages include:

"[A]ny commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer’s breach, in connection with return or resale of the goods or otherwise resulting from the breach.” MCL 440.2710; MSA 19.2710.

The difference between incidental and consequential damages was highlighted in Petroleo Brasileiro, SA v Ameropan Oil Corp, 14 UCC Rep 661, 667 (ED NY, 1974), wherein the court stated:

"While the distinction between the two is not an obvious one, the Code makes plain that incidental damages are normally incurred when a buyer (or seller) repudiates the contract or wrongfully rejects the goods, causing the other to incur such expenses as transporting, storing, or reselling the goods. On the other hand, consequential damages do not arise within the scope of the immediate buyer-seller transaction, but rather stem from losses incurred by the nonbreaching party in its dealings, often with third parties, which were a proximate result of the breach, and which were reasonably foreseeable by the breaching party at the time of contracting.”

While plaintiff attempts to characterize the interest it paid out as incidental damages, we think, assuming it was foreseeable, it falls within the category of consequential damages. The UCC does not allow the seller to recover consequential damages.

Hence, the trial court’s decision on this point was correct.

V

The trial on count two of the complaint involved an entirely separate contract than the one under consideration in the first portion of this opinion.

Ford had six testing machines at its Livonia transmission plant called "XPL Main Control Test Stands”. These machines were used to perform 30 different tests on the main control valve of an automatic transmission in order to insure that it worked properly. The test stands were operated manually and were capable of testing 35 parts per hour.

Ford requested quotations from various vendors, including Gray, for a price and delivery date to convert the test stands to automatic operation with an electrical readout system with production capability of 420 parts per hour. Gray submitted a quote containing options of 60 pieces per hour per machine or 70 pieces per hour per machine. Ford accepted the latter option and Gray proceeded with the project.

When Gray encountered difficulties, the delivery date was extended by mutual agreement to August 12, 1971. On August 11, 1971, Ford sent a telegram to Gray indicating that unless the test stands were satisfactorily completed by August 12, 1971, the order would be cancelled by default.

On the latter date a Ford team visited the Gray plant. The machines were capable of accurately testing only 40-45 parts per hour. Another tryout was held on August 19, 1971, which again proved unsuccessful.

On August 25, 1971, Ford sent a telegram to Gray cancelling the contract.

Gray brought suit for the contract price claiming the contract called for an electronic package capable of driving the test stands automatically at the rate of 70 parts per hour and not to undertake to redesign the entire machine to make it capable of accurately testing parts at that rate.

Ford’s motions for summary judgment and directed verdict were denied by the trial court and a jury returned a verdict of $72,000 in favor of Gray.

Ford raises five issues on appeal. First, it is contended that the contract is unambiguous and it was error to submit its interpretation to the jury.

Ford’s request for quotation included the following:

"Quote firm price and delivery to convert (6) existing XPL main control test stands to automatic operation with electrical accept-reject light read-out, retaining the manual capability. 'All quotations, for valid consideration, shall conform with the requirements of the Ford production Mach. & Equipment Procurement Handbook, and additional specifications listed.’ Electrical spec, form 2630 sheets 1 thru 4, Hydraulic spec, form 2631 sheets 1 thru 4, Pneumatic Part spec, form 2632 sheets 1 thru 4, Noise Control, Lubrication specs dated 12-26-69 sheets 1 thru 4.
"Part Name: XPL Main Control Production: 420/hr.”

The quotation submitted by Gray and subsequently accepted by Ford provided for the following modification to be made to the test stands:

"I. Basic Machine
"Existing test stand will be re-worked to remove kickdown actuator, shift selector, governor pressure control, main line flow control and throttle and governor flow meters.
"II. Fixture
"Automatic shift mechanism and kickdown actuator will be added to test stand.
"III. Hydraulic System
"Variable pressure generator will be provided to simulate governor pressure. Programmable flow control valve with flow meter readout will be provided to supply test oil.
* * *
"IV. Electrical & Electronic Control System
"Option A
"Electrical control system will be expanded and installed in larger electrical control panel. Pushbuttons will be provided to control automatic shift mechanism, kickdown actuator, variable pressure generator and flow control valve. Strain gage type transducer will be provided to monitor governor pressure. Potentiometric type transducers will be provided to monitor reverse clutch and main line pressure.
"Electronic instrumentation such as signal conditioning hardware, high/lor limit comparators, logic circuitry, throttle blow off detector, etc. will be provided to monitor and display the results of each test. Provisions will be made to test (12) models of the XPL; main control assembly.
"Option B
"Contains hardware described in Option A and includes additional instrumentation to decrease cycle time.
"V. Assembly and Tryout
"Complete system to be assembled and evaluated at S. C. Gray, Incorporated. System to be approved by Ford Motor Company personnel before shipment * * *
"(6) Machines — Total Build (Option A)----$18,000 ea.
"(6) Machines — Total Build (Option B)____$19,500 ea.
Total Design (Option A) ......$ 4,100 lot
Total Design (Option B).......$ 4,600 lot
"The above prices are F.O.B. our plant Detroit, Michigan and our terms are 1/4% 10 days, Net 30 days.
"Estimated cycle time 60 pieces/hour per machine (Option A) or 70 pieces/hour per machine (Option B).”

Ford accepted option B, calling for a cycle time of 70 pieces per hour per machine.

There was testimony that if the speed was set to run at 70 parts per hour the electronic package would run through a complete test cycle. However, at any rate higher than 40 or 45 parts per hour the stands did not give accurate readouts.

Ford contends the contract was unambiguous and called for Gray to do whatever was necessary to get the test stands to automatically run accurate tests at 70 parts per hour. Gray contends the contract merely required them to manufacture electronic units necessary to automate the existing stands, with the minimal alterations to the stands themselves necessary to attach these electronic units.

The trial court ruled, and we agree, that there is some ambiguity in the contract. It should be noted that in the Gray quotation the work to be done was broken down into five categories. The heading under which Gray offered the options of 60 or 70 parts per hour is "Electrical and Electronic Control System”. Thus, Gray’s contention that they undertook to provide an electronic system capable of driving the test stands at 70 parts per hour and did not agree to rework the entire machine to make it capable of accurately testing 70 parts per hour is not entirely unreasonable.

Where the language of a writing is not ambiguous, its construction is a question of law for the court and it is error to submit the matter to the jury. Craib v Committee on National Missions of the Presbytery of Detroit of the United Presbyterian Church, USA, 62 Mich App 617; 233 NW2d 674 (1975). Here, the contract was somewhat ambiguous. Hence, the trial court did not err in submitting the question to the jury.

Ford also contends that it was error to submit the question of timely notice of Ford’s intent to cancel the contract.

According to UCC § 2-602(1) goods must be rejected within a reasonable time after delivery or tender. It is ineffective unless the buyer seasonably notifies the seller. MCL 440.2602(1); MSA 19.2602(1).

The testimony of Richard Gray indicates that at the August 12, 1971, tryout the electronic package drove the test stands at 70 parts per hour but, due to the capabilities of the basic machine, accurate test results were not achieved. At the final tryout, held August 19, 1971, the accurate readings were achieved at 40 to 50 parts per hour. However, at that time, according to Mr. Gray, the Ford personnel indicated that "it wasn’t working at 70, so they didn’t want it”. A telegram cancelling the contract was also sent 6 days later.

Where the facts are undisputed the question of what is a reasonable time is a question of law. Dulany-Vernay Co v Kalamazoo Stationery Co, 213 Mich 484; 181 NW 984 (1921), Reinforced Concrete Pipe Co v Boyes, 180 Mich 609; 147 NW 577 (1914).

Here, it is undisputed that oral notice was given on the date of inspection and written notice followed six days later. We conclude that as a matter of law notice of rejection was given within a reasonable time. Hence, the trial court should not have submitted the question to the jury.

Plaintiffs contention that Ford was required to give notice of intent to cancel for late delivery is unfounded in light of Mr. Gray’s testimony that the reason for rejection was the failure of the machine to test accurately at 70 parts per hour.

In addition, the issues of impossibility of performance and mutual mistake had no place in this case. Ford did not assert them as a defense, and they were irrelevant to Gray’s claim that they had substantially performed the contract and were entitled to the agreed upon price.

Because of our determination that the only issue properly submitted to the jury was the matter of contract interpretation, we conclude the case must be remanded for a new trial. The remaining allegations of error are thereby rendered moot.

The judgments below on counts one and three are affirmed. The judgments on count two and the counterclaim are reversed and remanded for new trials. No costs, neither party having prevailed in full.

       In addition, since the machine was to be specially manufactured for the buyer and not suitable for sale in the ordinary course of the seller’s business, modifications did not have to be in writing to satisfy the statute of frauds. UCC § 2-201(3)(a), MCL 440.2201(3)(a); MSA 19.2201(3)(a).


source: Caselaw Access Project

author: Danhof, C.J.

license: Public Domain

text:
    BERAR ENTERPRISES, INC v HARMON
    Docket Nos. 78-804, 78-1164.
    Submitted June 7, 1979, at Lansing.
    Decided October 15, 1979.
    Leave to appeal applied for.
    Intermar of Michigan, a copartnership consisting of L. Harmon and Herbert F. Schott, entered into a lease-option on several thousand acres of land in northern Michigan, and in addition purchased outright 3,000 acres. The 3,000 acres were sold on land contract in ten-acre parcels, with Berar Enterprises, Inc., acting as broker. A proviso of the land contracts was that when all 300 parcels were sold, Intermar would convey the remaining land (that subject to the lease-option) to a corporation formed by the titleholders of the 300 parcels. The parcels were sold and copies of the land contracts were placed in three different banks, including the First National Bank in Howell which received 88 of the contracts and was to deposit the vendees’ payments on those contracts in an account for Intermar. Inter-mar was unable to pay Berar’s commissions or to exercise its option on the land, and brought an action in Schoolcraft Circuit Court to quiet title. The original landowners counterclaimed, and the land contract vendees, now a corporation called Blaney Park, Inc., intervened, and later claimed that Intermar and Berar had acted fraudulently in the sale of the ten-acre parcels. The vendees also established an escrow account in a Manistique bank, and First National Bank in Howell received no further land contract payments.
    Berar then brought an action in Livingston Circuit Court to recover its unpaid commissions and filed prejudgment writs of garnishment against the three banks which held the land contracts. The Howell bank filed a disclosure asserting that it held no funds of or debts to Intermar.
    A consent judgment was entered in the Schoolcraft County action which, among other things, terminated all of Intermar’s interests in the land contracts and transferred those interests to Blaney Park, Inc. Intermar requested the Howell bank to surrender the 88 contracts it held for delivery to the School-craft Circuit Court, and the bank did so. Subsequently, the Livingston Circuit Court, Paul R. Mahinske, J., found in favor of Berar for its unpaid commissions, and also entered judgment against the bank, finding the bank liable for the full amount of the judgment because of the bank’s release of the 88 land contracts to Intermar contrary to the prejudgment writ of garnishment. The First National Bank in Howell appeals, alleging, among other things, that the land contracts were not subject to garnishment. Held:

      References for Points in Headnotes
    [1] 6 Am Jur 2d, Attachment and Garnishment §§ 2, 3, 12.
    [2] 6 Am Jur 2d, Attachment and Garnishment §§ 40, 41.
    [3] 6 Am Jur 2d, Attachment and Garnishment § 95.
    [4] 6 Am Jur 2d, Attachment and Garnishment § 126.
    [5] 6 Am Jur 2d, Attachment and Garnishment §§ 6, 7.

      1. The bank was merely a bailee of the land contracts, with no assigned interests or rights in the contracts, no power to enforce the vendees’ payments, and no responsibility for collection of amounts due. The contract documents themselves had no salable value, and were not "property” within the meaning of the garnishment statute. Neither did the bank’s obligation to return the documents to Intermar have any monetary value.
    2. The vendor’s interest in a land contract, to the extent that it is an interest in real estate, is not subject to garnishment.
    3. Intermar’s potential interest in the corporation to be formed by the vendees was entirely contingent on future events, and, in fact, was nonexistent at the time the writ of garnishment was served because Intermar had defaulted on its purchase option and was unable to convey the land to the corporation. Such potential interest was not subject to garnishment.
    Reversed.
    1. Garnishment — Preservation of Assets.
    The purpose of garnishment is to preserve a principal defendant’s assets in the hands of the garnishee so that those assets may later be available to satisfy a claim against the principal defendant.
    2. Garnishment — Property — Statutes.
    An object which is garnished must have some salable worth capable of being applied to satisfy the garnishor’s claim in order to come within the statutorily intended meaning of the term "property” in the garnishment statute (MCL 600.4011[1]; MSA 27A.4011[1]).
    3. Garnishment — Land Contracts — Vendor’s Interest — Real Estate — Personal Property — Statutes.
    A land contract vendor’s interest in the land contract, to the extent that it is an interest in real estate, is not subject to • garnishment because the garnishment statute only allows garnishment of personal property (MCL 600.4011[l][a]; MSA 27A.4011[l][a]).
    4. Garnishment — Contingent Interests.
    Interests whose very existence is uncertain and contingent on future occurrences are generally not garnishable.
    5. Garnishment — Limitations — Rights of Parties.
    Garnishment is a harsh statutory remedy the application of which is limited, where it is necessary to protect the rights of the parties, by a reasonable construction of the applicable statutes and court rules.

      Michael A. Hanna, for plaintiff.

      August, Thompson, Sherr & Miller, P.C. (by Ellen J. Alter and Irving A. August), for First National Bank in Howell.
    Before: Danhof, C.J., and V. J. Brennan and H. R. Carroll, JJ.

       Former circuit judge, sitting on the Court of Appeals by assignment pursuant to Const 1963, art 6, § 23 as amended in 1968.

   Danhof, C.J.

In 1968, principal defendant Inter-mar of Michigan entered into a lease- option agreement with Stewart and Elsie Earle, the owners of a large vacation resort in Schoolcraft County, Michigan, called Blaney Park. The agreement afforded Intermar a lease on 13,500 acres of the resort and an. option to purchase that acreage during the term of the lease until January 1, 1971. Intermar also purchased outright 3,000 acres of the resort area from the Earles.

Intermar engaged the services of plaintiff Berar Enterprises, Inc., as real estate broker in charge of selling Blaney Park for a 50% commission amounting to $1,500,000. Intermar and Berar agreed that the 3,000 acres owned by Intermar would be divided into 300 ten-acre parcels and sold on land contract to individual purchasers. When all of the parcels were sold, Intermar would in addition convey the remaining 13,500 acres of Blaney Park to a corporation formed by the purchasers of the parcels.

By August, 1969, Berar had succeeded in finding land contract purchasers for all of the ten-acre parcels. Intermar’s copies of the land contracts, which had been executed in duplicate, were placed in three banks. Garnishee defendant First National Bank in Howell (hereinafter "defendant”) received 88 of the 300 land contracts. Defendant’s sole function was to deposit any payments received from the land contract vendees in an account set up by Intermar.

Intermar then began to experience increasing financial difficulties. It was unable to continue paying Berar’s commission or to exercise its option to purchase the 13,500 acres of Blaney Park leased from the Earles. When the Earles refused to accept its alternative option proposals, Intermar filed suit in Schoolcraft County (hereinafter the School-craft suit) on December 31, 1970. Intermar alleged that the Earles were negotiating in bad faith and sought to quiet title in itself.

The Earles counterclaimed to quiet title to the disputed acreage in themselves. Furthermore, the land contract vendees, who had by then incorporated as Blaney Park, Inc., became concerned about Intermar’s ability to obtain clear title to the land and were allowed to intervene in Intermar’s suit against the Earles. A few months later, the vendees filed a claim against Intermar and against Berar as third-party defendant, alleging that Inter-mar and Berar had acted fraudulently in selling the ten-acre parcels. The vendees also opened an escrow account at the First National Bank of Manistique in which they placed further payments due on the land contracts. On May 26, 1971, defendant received a letter from Intermar notifying it that, because of the vendees’ creation of an escrow account, it would no longer receive any land contract payments.

On June 22, 1971, Berar filed suit in Livingston County against Intermar to recover the unpaid remainder of its commission. At the same time, pursuant to MCL 600.4011; MSA 27A.4011, Berar filed prejudgment writs of garnishment on the three banks, including defendant, which were still holding copies of Intermar’s land contracts. On June 30, 1971, defendant filed a disclosure asserting that it held no funds of or debts to Intermar and listing the names of the vendees on the 88 land contracts in its possession.

On September 15, 1972, a consent judgment was entered in the Schoolcraft suit involving all parties except Berar. Title to the 13,500 acres in dispute was quieted in the Earles, but was ordered transferred in fee from the Earles to Blaney Park, Inc., subject to the corporation’s satisfactory performance of a land contract with the Earles. The consent judgment also terminated all of Intermar’s interest as vendor in the land contracts on the ten-acre parcels and transferred those interests to Blaney Park, Inc.

Intermar duly informed defendant that it had no further interests in the land contracts. On September 22, 1972, Intermar presented defendant with a copy of the consent judgment and requested that the bank surrender the 88 land contracts so that Intermar might deliver them to the Schoolcraft Circuit Court pending their transfer to Blaney Park, Inc. In compliance with the request, defendant gave Intermar the land contracts.

On June 9, 1975, the Livingston County Circuit Court entered judgment in favor of Berar against Intermar for unpaid commissions in the amount of $576,124.76. Berar subsequently filed a motion for entry of judgment against the garnished defendant and Brighton State Bank. Defendant objected to any judgment against it because it held no property of or obligation to Intermar.

Nevertheless, in September, 1977, the Livingston County Circuit Court found defendant liable for the full amount of the principal judgment for Berar against Intermar plus statutory interest, costs and attorneys’ fees. Defendant’s liability was predicated on its earlier release of the 88 land contracts to Intermar contrary to the prejudgment writ of garnishment. Defendant appeals as of right.

Although defendant raises several issues worthy of discussion, we need to resolve only one in order to reverse the judgment below. We conclude that the land contracts held by defendant were not subject to garnishment within the meaning of the statute. The prejudgment writ of garnishment should therefore have been quashed upon the filing of defendant’s disclosure.

At the time the writ was issued, defendant disclosed that it held only Intermar’s 88 land contracts. Berar does not dispute that defendant was merely a bailee of the documents with no assigned rights or interests in the contracts, no power to enforce vendees’ payments pursuant to the contracts, and no responsibility for collection of amounts due from vendees. Defendant acted solely as a depository for the vendees’ payments, a function it could have performed without possession of the land contracts. The arrangement was for Intermar’s convenience and was terminable at will.

According to MCL 600.4011(1); MSA 27A.401K1), a writ of garnishment may issue against:

"(a) Personal property belonging to the person against whom the claim is asserted but which is in the possession or coñtrol of a third person * * *;
"(b) An obligation owed to the person against whom the claim is asserted * * *.”

GCR 1963, 738.1 likewise provides:

".1 Persons Subject to Garnishment. After a personal action arising upon contract has been commenced in a court of record or after any judgment from a court of record, or any transcript of a judgment filed in a court of record, any person except as hereinafter otherwise provided is entitled to proceed in the circuit court by writ of garnishment against 1 or more third persons possessing or controlling property of or owing an obligation to a person or persons against whom a claim is asserted in the situations provided for and subject to the limitations provided in the garnishment statute.”

We agree with defendant’s insistent contention that the land contracts it held fell within neither specified category and were not garnishable.

Berar first points out that the contract documents in themselves constituted personal property because they were physical objects capable of being owned. Insofar as the pieces of paper in defendant’s possession were owned by Intermar, they were its "property”. Berar is also correct in stating that neither the court rule nor the statute sets the threshold value for property subject to garnishment.

But the purpose of garnishment is to preserve a principal defendant’s assets in the hands of the garnishee so that those assets may later be available to satisfy a claim against the principal defendant. Johnson v Kramer Bros Freight Lines, Inc, 357 Mich 254; 98 NW2d 586 (1959), Posselius v First National Bank, 264 Mich 687; 251 NW 429 (1933). The garnishment of 88 pieces of paper with no salable value does not effectuate the purpose of the statutory procedure, wastes both the court’s and the parties’ time, and needlessly harrasses the garnishee. In order to come within the statutorily intended meaning of the term "property” in the garnishment statute, the garnished object must have some salable worth capable of being applied to satisfy the garnishor’s claim. Cf., Gould v New York Life Ins Co, 132 F 927, 931 (ED Ark, 1904), holding that personalty with no salable value generally is not liable to execution nor does it pass to the trustee in bankruptcy proceedings because nothing is realized for the creditor by its surrender or sale. See also 6 Am Jur 2d, Attachment and Garnishment, §§ 91, 97, pp 627, 630-631; Rosenthal v Muskegon Circuit Judge, 98 Mich 208, 214-215; 57 NW 112 (1893).

The same reasoning disposes of Berar’s contention that it could garnish defendant’s "obligation” to return the land contract documents to Intermar on request. The clear import of both statute and court rule is that only monetary indebtedness by the garnishee to the principal defendant or at least some obligation convertible to a monetary value is subject to garnishment. Defendant’s obligation to return 88 pieces of paper to Intermar has no monetary value.

Berar also states that personal property includes intangible choses in action, Royal Oak Twp v City of Berkley, 309 Mich 572, 580; 16 NW2d 83 (1944), and that the tangible personalty which defendant held, the contract documents themselves, represented corresponding intangible personal property in the form of the vendor’s interests in the land contracts, Klever v Klever, 333 Mich 179, 190; 52 NW2d 653 (1952). If Berar is contending that it garnished Intermar’s interests as vendor by garnishing the documents in defendant’s possession, it is clearly misguided. As defendant has repeatedly asserted, it was not assigned any interest in the contracts when Intermar handed them to defendant. Defendant thus controlled only the pieces of paper in which the vendor’s interest was evidenced. See Rosenthal, supra.

Furthermore, the Supreme Court has held in Brooks v Gillow, 352 Mich 189, 192-195; 89 NW2d 457 (1958), that a vendor’s interest in a land contract is not personal property insofar as it cannot be the subject of an oral gift. Any conveyanee or transfer of such an interest must be in writing to comply with the statute of frauds. To the extent that a land contract vendor’s interest is an interest in real estate, it cannot be garnished because the statute only allows garnishment of personal property. MCL 600.4011(l)(a).

Finally, Berar contends that the land contract documents were in the nature of stock certificates or stock option agreements. A contract addendum provided that upon the sale of all 300 ten-acre parcels, Intermar would convey title to the remaining 13,500 acres of Blaney Park to a corporation formed by the 300 titleholders. Berar reasons that each land contract therefore represented a share in this future corporation. In the event of a vendee’s default on payments under a land contract, that vendee’s share in the future corporation would become Intermar’s personal property. Berar concludes that Intermar’s potential interest in the projected corporation as represented in the land contract documents was subject to garnishment.

Corporate share certificates belonging to Inter-mar and in defendant’s possession at the time the writ was issued would be garnishable. See GCR 1963, 738.5(3); Detroit Fidelity & Surety Co v Schinagel, 262 Mich 685; 247 NW 782 (1933). But it is obvious that Intermar’s interest in the future corporation was entirely contingent upon future events, including Intermar’s exercise of its option to purchase the land to be transferred to the future corporation. Interests whose very existence is uncertain and contingent on future occurrences are generally not garnishable. See 6 Am Jur 2d, Attachment and Garnishment, § 126, p 650. Besides, at the time the writ of garnishment was served on defendant, Intermar had already defaulted on its purchase option and was unable to convey the land. Intermar’s potential for acquiring corporate shares was thus worthless and nonexistent.

Examining this issue from another perspective, we note that a circuit court can only issue a writ of garnishment if the plaintiff files an affidavit stating that

"the plaintiff is justly apprehensive of the loss of his claim against the defendant unless a writ of garnishment is issued and setting forth the facts in support of this claim.” GCR 1963, 738.2(3).

Where the only items in the defendant’s possession arguably subject to garnishment were 88 pieces of paper evidencing a contractual relationship between Intermar and various third parties not involved in the principal litigation, it cannot be maintained that Berar was justly apprehensive about losing its claim against Intermar unless garnishment was allowed. Berar could acquire no security for the eventual payment of its claim because the garnishee defendant did not possess any of the valuable rights or obligations evidenced in the documents.

Garnishment is a harsh statutory remedy whose application is limited, when necessary to protect the rights of the parties, by a reasonable construction of the applicable statute and court rule. People’s Wayne County Bank v Stott, 246 Mich 540; 224 NW 352 (1929), Sears, Roebuck & Co v A T & G Co, Inc, 66 Mich App 359; 239 NW2d 614 (1976). In this instance, we do not believe that the Legislature intended to impose on defendant herein the burden of strict compliance with garnishment proceedings or the possibility of a severe penalty for noncompliance with the writ of garnishment. The invocation of the statutory garnishment procedure is pointless where the garnishee possesses no assets of the principal defendant with any value capable of being applied to satisfy the plaintiffs claim.

Reversed. Costs to defendant.

       Intermar also placed 132 land contracts in the Brighton State Bank and the remainder in the McPherson State Bank.

       Brighton State Bank and McPherson State Bank disclosed that they both held certain funds belonging to Intermar at the time the writs of garnishment were served. Brighton State Bank additionally disclosed the names of the vendees on the land contracts it held.

       Berar refused to sign the consent judgment because it did not provide for the payment of the remainder of Berar’s commission.

       The judgment was affirmed by this Court in an unpublished memorandum opinion (Docket Nos. 25321, 25322, July 23, 1976).

       Brighton State Bank complied with the court’s judgment ordering it to release to Berar the land contracts and funds it held. The file does not indicate that McPherson State Bank ever disclosed whether it had any of Intermar’s land contracts or that Berar ever motioned for entry of judgment pursuant to its writ of garnishment against that bank.

       Defendant held no funds belonging to Intermar at the time the writ was served nor did it thereafter receive any vendees’ payments under the land contracts.

       MCL 600.4011(1); MSA 27A.4011(1) gives the circuit courts the power to apply obligations to the satisfaction of a garnishor’s claim. An obligation without monetary value is obviously not amenable to such application. GCR 1963, 738 refers to obligations as debts.

       See Alco Construction Corp v H & S Electric, Inc, 49 Mich App 667; 212 NW2d 598 (1973), where this Court held that a plaintiff is required to disclose some fact beyond the mere conclusion of apprehension of loss to secure a writ of garnishment.

       We note that, after entry of judgment against it for surrendering the land contracts contrary to the writ of garnishment, garnishee defendant secured the return of 82 of the 88 contracts from Blaney Park, Inc. The six contracts not returned had been forfeited when the vendees ceased payments after August, 1972.
      On February 6, 1978, defendant tendered the 82 contracts to Berar in open court pursuant to its motion for relief from judgment under GCR 1963, 528. Berar strongly resisted the motion, arguing that the land contracts had become worthless to anybody because they had been paid off and all the rights incident to those contracts converted into stock interests in Blaney Park, Inc. Defendant’s motion was denied.
      Berar’s indignation at defendant’s belated tender of the land contracts is ironic and disingenuous. Defendant was in fact offering Berar the only property of Intermar’s it ever possessed and the only property ever garnished: various pieces of paper evidencing a contractual relationship. That the rights and obligations stated in the documents had become worthless was irrelevant because Berar had never acquired any interest in them by garnishing defendant. Regardless of the changed circumstances, the contracts were worth no more and no less to Berar on the date of tender than on the date of garnishment.


author: J. H. Gillis, P.J. N. J. Kaufman, J.

text:
    CROSS v WHEDON
    Docket No. 78-816.
    Submitted June 13, 1979, at Detroit.
    Decided October 15, 1979.
    Plaintiffs, Joyce Cross, Harold Di Pasquale, Aimer H. Gruebener, James E. Hall, James Lafferty, William Ringler, Alfred N. Sahr II, Walter F. Steffens, and Ella Jane Trombley, employees of the City of Mount Clemens, sued it and its city manager, Edwin E. Whedon, to prevent the city from enforcing its residency requirement against them. William Ringler is the city treasurer, whose residency was required by the city charter, but that requirement had been ignored from the late 1950’s until November, 1971. In 1956 the city adopted a residency requirement rule and in November, 1971, began to enforce it against plaintiffs. A suit to prevent enforcement was begun by the American Federation of State, County and Municipal Employees (AFSCME) and, in May of 1972, the city adopted guidelines for granting exceptions to the residency rulé. The AFSCME suit was dismissed and the city again moved to enforce the rule. Plaintiffs filed this suit in the Macomb Circuit Court and George R. Deneweth, J., granted plaintiffs an injunction, noting that all were hired during a time when the city’s attitude toward enforcement of the residency requirement was ambivalent. The court also found that some of the plaintiffs were hired even though they evidenced a negative attitude about moving into the city and that it would be manifestly unfair and unjust to require plaintiffs to move into the city. Defendants appeal. Held:

      References for Points in Headnotes
    [1, 4] 56 Am Jur 2d, Municipal Corporations, Counties, and Other Political Subdivisions § 527.
    Applicability of doctrine of estoppel against government and its governmental agencies. 1 ALR2d 338.
    [2] 56 Am Jur 2d, Municipal Corporations, Counties, and Other Political Subdivisions §§ 421, 528.
    63 Am Jur 2d, Public Officers and Employees § 47.
    Applicability of doctrine of estoppel against government and its governmental agencies. 1 ALR2d 338.
    [3, 5] 56 Am Jur 2d, Municipal Corporations, Counties, and Other Political Subdivisions §§ 247, 421.
    63 Am Jur 2d, Public Officers and Employees § 47.
    Applicability of doctrine of estoppel against government and its governmental agencies. 1 ALR2d 338.

      1. Estoppel may arise against a municipal corporation where positive acts of municipal officials induced a party to act in a certain manner and where the party, relying on the official’s acts, incurred a change of position or made expenditures. Estoppel will not lie where the municipal corporation acted beyond its powers but will where the matter is within the municipal corporation’s authority and not illegal, even where the power has been exercised in an irregular fashion or in disregard of a directory provision in its charter.
    2. A municipal body is not estopped by the illegal or unauthorized acts of its officers or employees. A municipal corporation is not estopped from asserting a residency requirement for employment in the city charter for which there is no exception, even after a history of ignoring the provision. The city may enforce the residency requirement against its treasurer.
    3. A municipal corporation is not estopped from asserting a residency requirement against an employee who was hired prior to the adoption of a residency rule, who, when the rule was adopted was told to and did move into the city, who married a nonresident and moved out of the city without telling anyone and against whom the city took no action for six years.
    4. A municipal corporation is estopped to assert a residency requirement for which the city commission may make exception for good and sufficient reason against: an employee who was told by his dépártment head when he hired in not to worry about it and who would not have accepted the employment had he known the residency requirement would be enforced; an employee who indicated on his job application that he could not maintain residency but was hired anyway and who would not have accepted employment had he known the requirement would be enforced; an employee who was told by the city manager that residency was not being enforced and who would not have accepted employment had he known the requirement would be enforced; an employee who was told by the assistant personnel director that residency would not be required of him and who had the references to required residency crossed off his employment application by the assistant personnel director; and an employee who moved out of the city after being informed by the police chief that the residency requirement was not being enforced. In each case there was a substantial change of position induced by reliance upon the acts of the city.
    Affirmed in part and reversed in part.
    N. J. Kaufman, J., concurred in part and dissented in part. He would hold that, as to those employees who either indicated on their employment applications that they could meet the residency requirement or ignored the question, the city is not estopped to enforce the requirement.
    Opinion of the Court
    1. Estoppel — Municipal Corporations.
    Estoppel may arise against a municipal corporation where positive acts of municipal officials induced a party to act in a certain manner and where the party, relying on the official’s acts, incurred a change of position or made expenditures; estoppel will not lie where the municipal corporation acted beyond its powers but will where the matter is within the municipal corporation’s authority and not illegal, even where the power has been exercised in an irregular fashion or in disregard of a directory provision in its charter.
    2. Estoppel — Municipal Corporations — Employers and Employees — Residency Requirements.
    A municipal body is not estopped by the illegal or unauthorized acts of its officers or employees; a municipal corporation is not estopped from asserting a residency requirement for employment in the city charter for which there is no exception, even though there is a history of ignoring the provision.
    3. Estoppel — Municipal Corporations — Employers and Employees — Residency Requirements.
    A municipal corporation is not estopped from asserting a residency requirement against an employee who was hired prior to the adoption of a residency rule, who, when the rule was adopted was told to and did move into the city, and who married a nonresident and moved out of the city without telling anyone, even though the city took no action against the employee for six years.
    4. Estoppel — Municipal Corporations — Employers and Employees — Residency Requirements.
    A municipal corporation is estopped to assert a residency requirement for which the city commission may make exception for good and sufficient reason against: an employee who was told by his department head when he hired in not to worry about it and who would not have accepted the employment had he known the residency requirement- would be enforced; an employee who indicated on his job application that he could not maintain residency but was hired anyway and who would not have accepted employment had he known the requirement ’would be enforced; an employee who was told by the city manager that residency was not being enforced and who would not have accepted employment had he known the requirement would be enforced; an employee who was told by the assistant personnel director that residency would not be required of him and who had the references to required residency crossed off his employment application by the assistant personnel director; and an employee who moved out of the city after being informed by the police chief that the residency requirement was not being enforced.
    Concurrence in Part, Dissent in Part by N. J. Kaufman, J.
    5. Estoppel — Municipal Corporations — Employers and Employees — Residency Requirements.

      A municipal corporation should not be estopped from enforcing its residency requirement against employees by the mere fact that someone told them the residency requirement was not being enforced where they were asked on their employment applications whether they could maintain residency if hired and they either answered that they could or ignored the question.

      Dank, Treppa & Sowle, for plaintiffs.

      Daner, Freeman, McKenzie & Matthew, P.C. (by Kenneth E. Scherer and George J. Freeman), for defendants.
    Before: J. H. Gillis, P.J., and N. J. Kaufman and R. M. Ransom, JJ.

       Circuit judge, sitting on the Court of Appeals by assignment.

   J. H. Gillis, P.J.

Defendants appeal from a decision of the Macomb County Circuit Court which held that the City of Mount Clemens was estopped from enforcing its residency requirement against the nine named plaintiffs. Plaintiffs are employed in various capacities by the city.

In 1956, the city adopted personnel rule 6.1, which provides:

"Residence: Employees in the competitive service need not be residents of the City of Mount Clemens at the time of appointment, but shall establish residence within the City within one year after appointment and shall maintain such residence during employment by the City. Employees in the competitive service not residing within the City at the time of adoption of these rules shall establish residence within the City within six months and shall maintain such residence during employment by the City. The City Commission may make exceptions to the residence requirements for good and sufficient reason.”

One of the plaintiffs, William Ringler, is the City Treasurer. As an officer, his residency is required by § 65 of the Charter of the City of Mount Clemens, which provides, in pertinent part:

"All officers of the city shall be United States citizens. If any such officer is not a resident of the city at the time of his appointment, he shall become a resident thereof within 90 days after his appointment and shall so remain throughout his tenure in office.”

The testimony indicates that this rule was enforced in the late 1950’s but generally ignored thereafter. In November, 1971, a renewed effort to enforce the rule was made and the plaintiffs were instructed to move into the city or face dismissal.

A suit was initiated by AFSCME Locals 1884 and 2599 resulting in an injunction issued March 1, 1972, restraining the city from enforcing the residency rule.

In May, 1972, guidelines were adopted for granting exceptions to the residency rule. Seven of the nine plaintiffs requested exceptions, which were denied.

Apparently the AFSCME suit was dismissed in September, 1975.

In May, 1976, the city sent a letter to all nonresident employees advising them that they would have to move into the city by October 1, 1976, or face dismissal. Plaintiffs then commenced the instant suit seeking injunctive relief.

In granting the requested relief, the trial court noted that all of the employees were hired prior to 1971, during a time the city’s attitude toward enforcement of the residency rule was ambivalent. In addition, the court found that some of the plaintiffs were hired even though they evidenced a negative attitude about moving into the city. The court concluded that it would be manifestly unfair and unjust to require plaintiffs to move into the city and, therefore, held that defendants were estopped from enforcing the residency requirement against the nine plaintiffs.

We first note that, on the surface, residency requirements have been held to be constitutional, Detroit Police Officers Ass’n v Detroit, 385 Mich 519; 190 NW2d 97 (1971), although they may be unconstitutional in their application. State, County & Municipal Employees Local 339 v Highland Park, 363 Mich 79; 108 NW2d 898 (1961).

In the instant case plaintiffs concede that the current residency requirement passes constitutional muster. However, they contend that application of the doctrine of estoppel precludes the city from enforcing the requirement against them.

In Parker v Twp of West Bloomfield, 60 Mich App 583, 591; 221 NW2d 424 (1975), the Court ruled that estoppel could be applied to a municipality in certain situations, stating:

"Generally, estoppel may arise pursuant to the positive acts of municipal officials which induced plaintiff to act in a certain manner, and where plaintiff relied upon the official’s actions by incurring a change of position or making expenditures in reliance upon the officials’ actions.”

Estoppel will not lie in every situation. A municipal corporation may not act beyond its powers. However, where the matter is within the city’s authority and not illegal the municipality will be bound by its dealings even though the power has been exercised in an irregular fashion or in disregard of a directory provision in its charter. Parker, supra, 592.

In addition, a municipal body is not estopped by the unauthorized or illegal acts of its officers or employees. Parker, supra, 594. Blackman Twp v Koller, 357 Mich 186; 98 NW2d 538 (1959), City of Highland Park v Oakland County Drain Comm’r, 300 Mich 501; 2 NW2d 479 (1942).

In the instant case personnel rule 6.1 contained a provision for granting exemptions. Hence, a waiver of this residency requirement was obviously not outside the authority of the city so as to preclude application of estoppel. However, the charter provision applicable to William Ringler, the City Treasurer, provided for no exceptions. Moreover, this was not merely a "directory provision” as envisioned in Parker, supra. Therefore, there is no basis for application of the doctrine of estoppel to Mr. Ringler’s case. The lower court erred as a matter of law in holding that the city was estopped from enforcing its residency requirement against William Ringler.

In addition, our de novo review of the record convinces us that the circumstances of some of the plaintiffs does not justify application of the doctrine of estoppel.

Joyce Cross was initially employed by the city in 1955. After the residency rule was adopted she was told to move into the city. She did so in 1958. In 1970 she married a nonresident and moved out of the city without ever informing anyone in the city of her intentions.

We fail to see any positive acts of the city which induced Ms. Cross to change her position in reliance thereon. She was well aware of the residency policy and, in fact, moved into the city because of it. Her move in 1970 was not induced by any acts of the city and her assertion that following her move no immediate action was taken against her is insufficient to support a claim of estoppel.

The testimony of Alfred Sahr also fails to make out a case of estoppel. He bought a home outside of the city in 1973 because of statements made by his union representative that the residency rule had been dropped. Mr. Sahr admitted he never asked anyone from the city about the matter. There is no other competent evidence to support a claim of estoppel.

Harold Di Pasquale testified that he was aware of the residency requirement from the outset and has been attempting to comply with it. He failed to testify to any acts of the city which induced him to change his position in reliance thereon. Hence, the facts are insufficient to support a claim of estoppel.

The remaining plaintiffs presented evidence to support their claims of estoppel. James Hall testified that when interviewing for the job, he discussed residency with his department head and was told not to worry about it. He also stated that he would not have taken the job had he known that residency would be enforced.

Walter Steffens testified he indicated on his application that he would not be able to maintain residence within the city but was hired anyway. He also stated he would not have accepted the job had he known the residency rule would be enforced against him.

Aimer Gruebener testified that the city manager, Mr. Whedon, told him residency was not being enforced. Mr. Gruebener also stated that he would not have accepted a position with the city had he known the rule would be enforced.

James Lafferty testified he discussed the residency requirement with Carol Mitzner, whom he identified as the assistant personnel director, and she informed him that it would not be enforced. Mr. Lafferty also stated that when he pointed out the relevant clause on the employment application, Mrs. Mitzner crossed it out. Mr. Lafferty’s employment application, with the clause deleted, was introduced as an exhibit.

Ella Jane Trombley testified that she moved out of the city in 1968 only after she was informed by the police chief that residency was not being enforced.

We find the testimony of these five plaintiffs to be sufficient to support their claim that the city should be estopped from enforcing the residency requirement against them. In each case there was a substantial change of position induced by reliance upon the acts of the city.

In addition, because the city charter gives the department heads the authority to hire and dismiss employees without confirmation by the city commission, defendants’ contention that plaintiffs had no right to rely on the representations of these persons is without merit.

Defendants’ other contentions do not merit discussion.

The decision of the lower court is affirmed as it relates to plaintiff James Hall, Walter Steffens, Aimer Gruebener, James Laflferty, and Ella Jane Trombley. It is reversed as to Joyce Cross, Alfed Sahr, Harold Di Pasquale and William Ringler. No costs, a public question being involved.

R. M. Ransom, J., concurred.

N. J. Kaufman, J.

Each of these three people completed and signed an application form which included the following certification:

"14. CERTIFICATE OF APPLICANT. Read carefully before signing.
"J certify that all statements made on both sides of this application are true. I understand that any omission or misstatement of material facts will cause forfeiture of my rights to employment by the City of Mt. Clemens. I also understand that if appointed I must establish residence inside the city limits of Mt. Clemens within six months and remain a resident as long as I am employed by the City. ”

The reverse side of the application contained the following question:

"8. PERSONAL INFORMATION
"If appointed will you be able to maintain residence within the City?.....Yes-No-”. Mr. Hall and Ms. Trombley marked the Yes blank; Mr. Gruebener skipped the question.

The mere fact that someone told them the residency requirement was not being enforced changes neither the plain language of the applications nor these plaintiffs’ representations on the applications. People cannot simply agree to ignore or violate a proper city rule and thereby establish immunity from the rule. The city should not be estopped from enforcing its residency requirement against these plaintiffs.

However, due to the city’s previous lackadaisical enforcement policy, and in light of the time spent in hearings and on appeal, I would give the plaintiffs who must comply with the residency requirement six months from the date this opinion is released to move into the city.