source: Caselaw Access Project

author: D. E. Holbrook, P.J. M. J. Kelly, J.

license: Public Domain

text:
    SALVADOR v CONNOR
    Docket No. 77-3648.
    Submitted June 15, 1978, at Lansing.
    Decided December 28, 1978.
    Leave to appeal applied for.
    Robert G. Salvador commenced an action in Oakland Circuit Court against Clyde C. Connor, Eileen Connor and Connor-Penn Corporation alleging various misdeeds on the part of the defendants with respect to the operation of a Lansing area restaurant, owned and operated by the parties herein, and seeking the appointment of a receiver and an accounting of profits, to enjoin the defendants from removing him either from the corporate board or from his managerial position with the restaurant, to prevent the defendants from modifying the corporation’s Federal tax subchapter S status and any other equitable and proper relief which the court might deem justified. A default judgment was granted to the plaintiff when the defendants failed to answer. Subsequently, pursuant to a stipulation entered into by the parties, the defendants were allowed to answer the complaint. The defendants filed a demand for a jury trial when they filed their answer. The plaintiff amended his complaint on two separate occasions, each time seeking the enforcement of an alleged oral agreement between the plaintiff and the defendants.
    The plaintiff contested the defendants’ jury demand, asserting that the defendants were not entitled to a jury trial in an action seeking only equitable remedies. The trial court characterized the plaintiff’s case as entirely equitable and held that the defendants were not entitled to a jury trial on any issue.
    The trial court issued an interlocutory order temporarily enjoining the individual defendants from removing the plaintiff from his position on the board of the defendant corporation or from his position as manager of the restaurant. The court further ordered the defendants to pay the plaintiffs unpaid salary and a portion of profits which had accrued during the pendency of the litigation while plaintiff continued to perform his employment duties. The defendants’ applications for leave to appeal these interlocutory orders were denied.

      References for Points in Headnotes

       19 Am Jur 2d, Corporations §§ 535, 589.
    Attorney’s fees and other expenses incident to controversy respecting internal affairs of corporation as charge against the corporation. 39 ALR2d 580.

       5 Am Jur 2d, Appeal and Error § 714.
    27 Am Jur 2d, Equity §§ 238-244.
    47 Am Jur 2d, Jury § 34.

       18 Am Jur 2d, Corporations § 497.

       4 Am Jur 2d, Appeal and Error § 541.
    5 Am Jur 2d, Appeal and Error § 570.

      The defendants sought to disqualify the circuit judge to whom the case had been assigned, alleging prejudice resulting from and evidenced by that judge’s verdict entered in an earlier, similar case involving the individual defendants. This motion to disqualify the assigned trial judge was denied after a hearing before another Oakland Circuit judge because the defendants’ delay of 26 months in seeking reassignment rendered their request untimely.
    The trial court, James S. Thorburn, J., ultimately ruled in plaintiffs favor regarding the allegations of fraudulent conduct on the part of the individual defendants, ordered a dissolution of the corporate defendant and awarded the plaintiff damages. The individual defendants appeal, alleging 1) that it was error to refuse to reassign this case to a different circuit judge after hearing the defendants’ allegations of prejudice, 2) that an award of $2,500 in attorneys fees to the plaintiff was improper and unauthorized, 3) that the refusal to grant the defendants’ demand for a jury trial, at least as to the issue of the existence and enforcement of the oral agreements, was error, and 4) that there was an insufficient evidentiary basis for the court to find a breach of fiduciary duty or to support the court’s award of the damages. Held:

    1. The decision that the defendants’ delay of 26 months in seeking reassignment was grounds for denial of the motion for reassignment of the case to another circuit judge was clearly not an abuse of discretion.
    2. The trial court’s final order on dissolution of the corporation and distribution of corporate assets was not error. The trial court did not err in providing that the judgment could be enforced either by execution or by garnishment.
    3. The award of $2,500 of attorneys fees to plaintiff’s attorney was unjustified.
    4. The trial court’s failure to impanel a jury to hear those claims arising out of the alleged oral agreements had no prejudicial effect upon the defendants whatsoever and was not reversible error since the court did not utilize these agreements as a foundation to award relief to the plaintiff.
    5. There is ample evidence to support the lower court’s determination of the amount of damages suffered by the plaintiff.
    Affirmed, with the concurrence of P. J. Marutiak, J., in the opinion of D. E. Holbrook, P.J., on all issues except the award of $2,500 attorneys fees.
    M. J. Kelly, J., dissented. He would hold:
    1. That the defendants were entitled to have a jury trial.
    2. That the trial court’s conclusion that the plaintiff, a neophyte in the restaurant business, was to have exclusive control of the restaurant, which was only one of several owned by the defendants, was clearly erroneous.
    He would reverse and remand for trial.
    Opinion op the Court
    1. Costs — Trial—Corporations—Attorney Fees — Court Rules.

      A trial court’s award of attorney fees in an action for equitable relief against a corporation and its majority stockholders "because of the extraordinary burden placed on the plaintiff despite the fact that the individual defendants admitted ultimately that the corporate profits due to the plaintiff were undistributed and had not been paid” was in compliance with the court rule and not unreasonable (GCR 1963, 111.6).

    2. Trial — Jury Trial — Legal and Equitable Issues — Appeal and Error — Reversible Error.
    A trial court’s failure to allow a jury trial of the legal issues involved in an action alleging both legal and equitable claims had no prejudicial effect and did not constitute reversible error where the court decided the controversy based entirely upon the equitable claims.
    3. Corporations — Majority Shareholders — Good Faith — Jury op Good Faith.
    The law requires of the majority in control of a corporation the utmost good faith in its control and management as to the minority and it is the essence of this trust that it be so managed as to produce to each shareholder the best possible return on his investment.
    Dissent by M. J. Kelly, J.
    4. Costs — Trial—Attorney Fees — Appeal and Error.
    An award by a trial court of attorney fees to plaintiff’s attorney because of "defendants’ attorneys’ vexatious conduct” was erroneous in the absence of support in the record for the conclusion that defendants’ attorneys’ conduct warranted an award of attorney fees.

      Paul W. Harty, for plaintiff.

      Thomas R. Sullivan and John A. Hamilton, for defendants.
    Before: D. E. Holbrook, P.J., and M. J. Kelly and P. J. Marutiak, JJ.

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

   D. E. Holbrook, P.J.

Plaintiff-appellee filed a complaint August 7, 1974, in Oakland County Circuit Court, alleging various misdeeds on the part of defendants-appellants with respect to the operation of a Lansing area restaurant owned and operated by the parties herein. A default judgment was granted against defendants when they failed to answer. Pursuant to a stipulation entered by the parties on October 2, however, the defendants were allowed to answer the complaint. Simultaneously with their answer the defendants filed a demand for a jury trial.

Plaintiff amended his complaint on two separate occasions, with each complaint alleging misuse of corporate funds by the defendant majority shareholders, breach of the plaintiff’s employment contract which conferred upon him the right to manage the restaurant which was the subject matter of the corporation, violation of the majority shareholders’ fiduciary duties with respect to the said corporation, and breach of the parties’ oral agreements. Defendants’ answer denied the existence of any oral agreements, denied any breach of fiduciary duty, and also controverted plaintiffs contentions of sole managerial authority.

Plaintiff sought various equitable remedies, including the appointment of a receiver and an accounting of profits. He sought to enjoin the defendants from removing him either from the corporate board or from his managerial position with the restaurant and also sought to prevent the defendants from modifying the corporation’s Federal tax subchapter S status. Plaintiff also sought any other equitable and proper relief which the court might deem justified. Plaintiff’s subsequent amended complaints also sought enforcement of the alleged oral agreement in which the plaintiff claimed that the individual defendants had promised:

"[T]hey would not take advantage of him and that they would not take any funds out of the Corporation except their share of the profits; and Clyde Connor further promised him that the Corporation would remain a "Sub-Chapter S” Corporation so that the Plaintiff would be assured of his one-third (1/3) of the profits, and that Plaintiff would have sole control in managing and running the Number Four Restaurant.”

Defendants based their demand for a jury trial upon the plaintiff’s request for enforcement of the alleged oral agreements. Plaintiff contested defendants’ jury demands, asserting that the defendants were not entitled to trial by jury in an action seeking only equitable remedies. Characterizing the plaintiff’s case as entirely equitable, the trial court held that the defendants were not entitled to jury trial on any issue.

By interlocutory order the trial court temporarily enjoined the individual defendants from removing plaintiff from his position on the defendant corporation’s board or from his position as manager of the parties’ restaurant. The court further ordered the defendants to pay the plaintiffs unpaid salary and profits in the amount of $15,708.76, which amount had accrued during the pendency of the litigation while plaintiff continued to perform his employment duties. Defendants’ attempts to appeal these interlocutory orders were denied.

Defendants also sought to disqualify the circuit judge to whom this case had been assigned, alleging prejudice resulting from and evidenced by that judge’s verdict entered in an earlier, similar case involving the individual defendants. This motion was heard by another Oakland County circuit judge, who found that the instant case, which had been assigned under local court rules, because of its similarity in subject matter to the earlier case, was not based upon such similar facts as to require assignment to a single circuit court judge. Nevertheless, it was held that defendants’ delay of 26 months in seeking reassignment rendered their request untimely. Reassignment was therefore denied. The assigned judge began taking proofs in the case during February of 1975. Testimony was interrupted by a default judgment entered against the defendants in April of 1976; this judgment was later set aside and testimony was heard once again beginning in January of 1977.

Testimony was taken first with respect to the value of the defendant corporation. One appraiser testified to an approximate worth of $385,900, while the second testified that the value of the restaurant business was only approximately $200,-000._

Testimony was then taken with respect to plaintiff’s claims of misconduct by individual defendants. Plaintiff alleged that his employment agreement was violated when the individual defendants independently hired their son and a nephew to managerial positions. Plaintiff contended that these relatives performed few, if any, services of value for the corporation. Further, plaintiff offered evidence that the individual defendants, again without calling a board meeting, opened an office in Lansing and improperly charged its expenses in part to the parties’ restaurant operation, with little or no benefit being received by the defendant corporation from this office.

Plaintiff contended that all proceeds from candy and gum sales at the parties’ restaurant were improperly diverted to a fund created for the individual defendants’ children’s education, that the individual defendants improperly charged the corporation for the cost of maintaining a phone in their home, that the son and nephew were each provided with a car improperly charged to the defendant corporation, that the individual defendants utilized the profits of the corporation to pay another relative’s air fare from Arizona, that the defendants improperly deducted their legal fees in defending the instant action from the corporation’s profits, and finally, that a secretary performing bookkeeping services for the individual defendants in their home was improperly placed on the restaurant payroll. Plaintiff’s testimony was supported in part by the testimony of one of the restaurant’s employees but contradicted by testimony offered by the individual defendants. Ultimately the trial court ruled in favor of plaintiff’s allegations of fraudulent conduct on the part of the individual defendants, decreed a dissolution of the corporate defendant, and awarded the plaintiff damages in the amount of $167,896.87. This amount included accrued wages, attorney’s fees of $2,500, the plaintiff’s one-third share of the defendant corporation, whose assets were increased by the court’s judgment finding the individual defendants liable to the corporation for some $64,000 in improperly diverted profits, and $50,000 in exemplary damages.

The individual defendants appeal from the trial court’s ruling, alleging several errors. The defendants claim that it was error to refuse to reassign this case to a different judge after hearing the defendants’ allegations of prejudice. The decision that the defendants’ delay of 26 months in seeking reassignment was grounds for denial of this motion is clearly not an abuse of discretion and this issue may be dismissed summarily. Similarly, the trial court’s final order allowing dissolution of the corporation and distribution of corporate assets if the plaintiff was not timely satisfied by the individual defendants was not error, given the broad authority granted to the circuit court under MCL 450.1825; MSA 21.200(825), which provides that:

"(1) The circuit court of the county in which the registered office of the corporation is located may adjudge the dissolution of, and liquidate the assets and business of, a corporation, in an action filed by a shareholder when it is established that the acts of the directors or those in control of the corporation are illegal, fraudulent or wilfully unfair and oppressive to the corporation or to such shareholder.
"(2) In an action filed by a shareholder to dissolve the corporation on a ground enumerated in subsection (1), the circuit court upon establishment of such ground may make such order or grant such relief, other than dissolution, as it deems appropriate, including, without limitation, an order providing for any of the following:
"(a) Cancellation or alteration of a provision contained in the articles of incorporation, or an amendment thereof, or in the bylaws of the corporation.
"(b) Cancellation, alteration or injunction against a resolution or other act of the corporation.
"(c) Direction or prohibition of an act of the corporation or of shareholders, directors, officers or other persons party to the action.
"(d) Purchase at their fair value of shares of a shareholder, either by the corporation or by the officers, directors or other shareholders responsible for the wrongful acts.”

The trial court also did not err in providing that the judgment could be enforced either by execution or by garnishment.

The defendants next argue that the award of $2,500 in attorney’s fees to the plaintiff was improper and unauthorized. Defendants-appellants do not challenge the court’s general award of costs and attorney’s fees as provided by GCR 1963, 111.6, but only the $2,500 amount. Under MCL 600.2405; MSA 27A.2405, attorney’s fees are to be taxed and awarded as costs only as authorized by statute or court rule. Such awards are not allowed absent an applicable statute, court rule or recognized exception. State Farm Mutual Automobile Ins Co v Allen, 50 Mich App 71; 212 NW2d 821 (1973), City of Center Line v 37th District Court Judges, 74 Mich App 97; 253 NW2d 669 (1977), lv gtd, 401 Mich 810 (1977).

In Kittermaster v Brossard, 105 Mich 219, 221; 63 NW 75 (1895), the Michigan Supreme Court rejected the argument that "a court of equity may impose a reasonable solicitor’s fee”. Nevertheless, rule 111.6 specifically provides that reasonable attorney’s fees may be awarded to compensate a party who is required to put to proofs any matter which is improperly and unreasonably alleged or denied. The trial court stated in its opinion that the:

"[Extraordinary attorney fee of $2500 was ordered because of the extraordinary burden placed on the plaintiff despite the fact that the individual defendants admitted ultimately that the corporate profits due to the plaintiff were undistributed and had not been paid.”

Thus the court’s award of fees is in compliance with rule 111.6; it is not unreasonable.

The defendants also raise two additional errors which are not so easily disposed of. First, the defendants claim that the trial court’s refusal to grant the defendants’ demand for a jury trial, at least as to the issue of the existence and enforcement of the oral agreements, was error. As noted above, at the circuit court level the plaintiff opposed this demand alleging that the instant matter was entirely equitable; and the trial court held for the plaintiff on that ground. On appeal the plaintiff also questions the timeliness of the defendants’ demand. The plaintiff stipulated that the defendants might file a late answer in this matter, however, and the defendants promptly requested a jury trial following this late answer. Upon the authority of Nelson v Runnels, 31 Mich App 163; 187 NW2d 530 (1971), the defendants’ request for a trial by jury was therefore timely. We also find, however, that the defendants suffered no prejudice as a result of the trial court’s denial of trial by jury on the issue of the existence of the alleged oral contract; after close inspection of the trial court’s opinion and judgment in this matter, we find that the court under the authority of MCL 450.1825, supra, held against the defendants solely on the basis of the plaintiff’s equitable claims. The defendants alleged no rights arising out of the claimed oral agreements and in fact denied the existence of any such agreements. Therefore, since the court did not utilize these agreements as a foundation to award relief to the plaintiff, we are constrained to hold that the trial court’s failure to impanel a jury to hear those claims had no prejudicial effect upon the defendants whatsoever and was not reversible error.

In order that we might not be misunderstood we hasten to add that we fully recognize the defendants’ right to a jury trial on all legal issues joined in the instant case. See 2 Honigman & Hawkins, Michigan Court Rules Annotated (2d ed), pp 412-423. Further, we are aware that a separate panel of the Court of Appeals in Hackett v Connor, 58 Mich App 202; 227 NW2d 292 (1975), under somewhat similar circumstances, remanded the entire matter to circuit court in order to protect the defendants’ right to jury trial on legal issues. In Hackett the Court found that remand was necessitated by the trial court’s denial of defendants’ counsel’s motion for a continuance pending further discovery, which concern is not at issue here. That error alone required that the case be remanded to the circuit court. Further, the Court in Hackett found that the trial court’s judgment for the plaintiffs rested primarily upon "fraudulent breaches” of alleged oral agreements. The judgment reached by the trial court in the instant matter does not rest upon breach of any oral agreements. Rather, as will be seen below, the instant decision was grounded upon the fraudulent conduct of the individual defendants in breach of their fiduciary duties, and upon the trial court’s interpretation of the parties’ written agreements. Hackett does not control, therefore, and finding no prejudice to have resulted to defendants from the trial court’s denial of trial by jury on the legal issue alleged in the plaintiffs complaint, we refuse to remand this matter to the trial court for trial by jury.

Finally, the defendants argue that there was insufficient evidentiary basis for the court to find a breach of fiduciary duty or to support the court’s award of damages in the amount of $167,896.87. It is beyond dispute that in Michigan, directors and officers of corporations are fiduciaries who owe a strict duty of good faith to the corporation which they serve. See 6 Callaghan’s Michigan Civil Jurisprudence (2d ed), § 79, p 208, § 117, p 291. The same is true of majority shareholders, since:

"[T]he law requires the majority in control of the corporation the utmost good faith in its control and management as to the minority and it is the essence of this trust that it must be so managed so as to produce to each shareholder, the best possible return upon his investment.” 6 Callaghan, supra at § 166, p 365.

See also 19 CJS, Corporations, § 764, p 112, § 768, p 123, § 781, p 150, § 786, p 161, § 821, p 223, Thomas v Satfield Co, 363 Mich 111; 108 NW2d 907 (1961), L A Young Spring & Wire Corp v Falls, 307 Mich 69; 11 NW2d 329 (1943), and Thompson v Walker, 253 Mich 126, 134-135; 234 NW 144 (1931).

This Court must review the findings with respect to the plaintiffs equitable claims de novo, with due deference being given to the findings of the trial court under Barnett v International Tennis Corp, 80 Mich App 396, 404; 263 NW2d 908 (1978). In other words, this Court must sustain the findings of the court below unless it becomes convinced, upon review of the evidence, that had it heard the evidence in the first instance it would have been compelled to rule contrary to the ruling actually made by the trial court. The trial court in its holdings points to evidence supporting each of the following items of improper diversion of corporate funds: payment of corporate funds to defendants’ son and to their nephew with no service of value being rendered to the corporation in return, and without the consent of the plaintiff, a member of the corporation’s board of directors; the payment of expenses, including rent, for an office in Lansing which was of little or no benefit to the corporation, also without plaintiff’s consent; improper use of restaurant facilities to generate "gum and mint money”, which money did not accrue to the benefit of the corporation; and finally, payment of corporate funds for unauthorized legal fees and accounting services generally incurred entirely for the benefit of the individual defendants. Further, there is ample evidence to support the court’s determination of the amount of damages suffered by the plaintiff as a result of this misconduct. After reviewing the evidence in support of these findings, we are not left with a firm conviction that the trial court erred in its decision in favor of plaintiff. As the Court stated in Holden v Lashley-Cox Land Co, 316 Mich 478, 484; 25 NW2d 590 (1947):

"It is apparent that a corporation so conducted could not accomplish the purposes for which it was organized, and it was therefore the duty of its directors to wind up its affairs. * * * Their failure to do so, coupled with improper payments to themselves, was a breach of trust imposed in them by the stockholders, and, hence, a constructive fraud. Plaintiff stockholders are entitled to equitable relief to the extent of the appointment of a liquidating receiver, a dissolution of the corporation, and distribution of the assets to its stockholders.” (Citations omitted.)

See also Veeser v Robinson Hotel Co, 275 Mich 133, 137-138; 266 NW 54 (1936).

The individual defendants’ behavior in managing the corporation’s business affairs evidences a significant degree of nepotism, and an incredibly callous disregard for the financial well-being of the defendant corporation and its minority shareholders. The trial court is upheld.

Affirmed.

P. J. Marutiak, J., concurs in this opinion, except as to the matter of $2,500 attorney’s fees.

M. J. Kelly, J.

(dissenting). I am unable to distinguish the jury trial issue in this case from that in Hackett v Connor, 58 Mich App 202; 227 NW2d 292 (1975). I would reverse and remand for a jury trial for the reasons stated therein. Even if this result were not mandated by Hackett, supra, I am convinced that on this record I would have reached a different result had I been trier of fact. I believe the trial court’s finding that the "Contract of Employment specifically placed the power of management exclusively in the plaintiff and the individual defendants had no power to employ anyone” is clearly erroneous. The defendants contributed their name, money and expertise to this operation which was only one of several and to conclude that this neophyte plaintiff-manager would have exclusive control of the restaurant through his one-third interest is in my view clearly erroneous.

I also arrive at the opposite conclusion as to the specific findings in c, d, e, f, h, i, and j of the findings of fact contained in the trial court’s opinion, but I see no productive reason to elaborate since the majority remains unconvinced.

I will comment on the $2,500 award of attorneys’ fees to Paul W. Harty, plaintiff’s attorney, in the hope of changing at least one of my brothers’ votes on that score. Under any standard, the award of attorneys’ fees in this case was unjustified and unjustifiable.

On August 20, 1975, defendants were ordered to pay $2,500 to Mr. Paul W. Harty as attorney fees and costs. The record does not indicate the trial court’s reasoning for so ordering. The final order of July 27, 1977, approximately two years later, merely includes that attorney fee award because defendants had refused to pay it during the litigation and while both successful and unsuccessful attempts to appeal had been undertaken. In this appeal, appellee’s brief says that the award was made under the trial court’s inherent authority because of "defendants’ attorneys’ vexatious conduct” citing GCR 1963, 111.6. The majority likewise relies on rule 111.6, but I submit that there is no record support for that reliance.

No explanation is made for the trial court’s failure to rule on defendant’s motion to set aside the default on six successive Wednesdays nor do we have the record of those proceedings; the default was ultimately set aside by stipulation. No explanation is made for the taking of a default on a second amended complaint. No explanation is made for the rule violation in awarding the attorneys’ fees to Mr. Harty directly, rather than to the plaintiff. GCR 1963, 111.6. Finally, there are no proofs, nor explanation for the lack of proofs, as to the reasonable expenses incurred. More mystifying still is the fact that at least some of the activity of which the appellee complains was taking place in the lower court while a stay of execution was pending in this Court, conditioned upon the furnishing of a $20,000 bond. In the absence of any support in the record for the conclusion that defendants’ attorneys’ conduct warranted the award of attorneys’ fees, the award was patently erroneous.

In any event, the power to tax costs is covered fully by statute and court rule. MCL 600.2401; MSA 27A.2401. Attorney fees are to be taxed and awarded as costs only if authorized. State Farm Mutual Automobile Ins Co v Allen, 50 Mich App 71; 212 NW2d 821 (1973), City of Center Line v 37th District Court Judges, 74 Mich App 97; 253 NW2d 669 (1977), City Bank & Trust Co v Kwaske Bros Construction Co, 78 Mich App 158; 259 NW2d 407, rev’d 402 Mich 844 (1977), Dassance v Nienhuis, 57 Mich App 422; 225 NW2d 789 (1975), Dozier v Automobile Club of Michigan, 69 Mich App 114; 244 NW2d 376 (1976), Shepard Marine Construction Co v Maryland Casualty Co, 73 Mich App 62; 250 NW2d 541 (1976), People v Cousino, 81 Mich App 416; 265 NW2d 355 (1978). These cases, it seems to me, translate into an appellate policy denying the trial court the use of the power of the purse against litigants who insist upon exercising their constitutional right to trial; in some contexts, that is due process. Nevertheless, if the majority opinion is upheld on this issue, it could revolutionize the practice of civil law in this state, for it is the business of judges to judge, not to intimidate. I fear the potential for abuse if this ruling is sustained.

In the very recent case of Charter Twp of Canton v Kaufman, 87 Mich App 719; — NW2d — (1978), the trial court awarded attorney fees and the argument to sustain the award was that the court had jurisdiction under GCR 1963, 504.1(2), claiming the court acquired the power to award the attorney fees from the language "upon such terms and conditions as the court deems proper”. Our Court had little difficulty turning away that contention and ruled that:

"While this rule may empower the court to tax costs as a condition of dismissal, it may still tax only those costs authorized by statute, GCR 1963, 526.1. Attorney fees are taxable only as authorized by statute, MCL 600.2405; MSA 27A.24Q5.” 87 Mich App 721.

I would reverse.

Addendum

Since the writing of the above dissent Judge Marutiak has communicated to this panel the following:

"I would concur in the Opinion of Judge Holbrook. I feel that he has adequately distinguished this case from the case of Hackett v Connor on the issue of the jury trial.
"I would, however, concur with that portion on the dissenting opinion of Judge Kelly which would deny the award of $2500.00 in attorney fees. I find insufficient compliance with GCR [1963], 111.6.”

Therefore the award of attorney fees is reversed. As to all other aspects Judge Holbrook’s opinion prevails.

       These values do not include real property, which was leased by the defendant corporation from a second corporation of which the individual defendants were majority shareholders.

       In support of the lower court’s interpretation of the parties’ written agreements, we cite with approval 5 Callaghan’s Michigan Civil Jurisprudence (2d ed), § 171, p 743:
      "In construing a written instrument, equity always attempts to get at its substance and to ascertain, uphold and enforce the rights and duties that spring from the real intention of the parties, and, in doing so, a court of equity will look into all circumstances under which the instrument was made in order to determine the proper meaning of the transaction, although words of the instrument will not be changed.” (Footnote omitted.)

       The court further found these hirings by the defendants to be contrary to the written contract of employment between the plaintiff and defendants.


author: D. E. Holbrook, J. Beasley, P.J.

text:
    CHEBOYGAN COUNTY ROAD COMMISSION v AUTO-OWNERS INSURANCE COMPANY
    Docket No. 77-4467.
    Submitted November 3, 1978, at Grand Rapids.
    Decided December 28, 1978.
    Leave to appeal denied, 406 Mich 909.
    The Cheboygan County Road Commission stored a quantity of salt on property which it owned in the Indian River area. The salt was owned by the State Highway Department. Salt seeped into the ground and contaminated the water supply of several persons in the vicinity. The highway department and the county road commission agreed to divide equally the cost of drilling new wells for the affected residents. The road commission then commenced an action against Auto-Owners Insurance Company, seeking to recover, pursuant to a contract of insurance, one-half of the total amount of the cost of the drilling. Cheboygan Circuit Court, Philip J. Glennie, J., found that a valid settlement contract existed wherein the plaintiff agreed to accept a lesser amount as full compensation for its claim. The plaintiff appeals. Held:

    1. A letter from the insurance company to the plaintiff, after the plaintiff’s attorney sent a letter to the insurance company’s attorney proposing an open-ended formula for dividing the plaintiff’s liability between the plaintiff and the insurance company, was a counter offer and not an acceptance of the plaintiff’s earlier proposal. The plaintiff’s claim was not barred by an accord and satisfaction.
    2. The insurance company waived its right to assert, as an affirmative defense, the plaintiffs noncompliance with a condition precedent by failing to have that defense included in the pretrial summary.

      References for Points in Headnotes

       17 Am Jur 2d, Contracts §§ 39, 62.
    Difference between offer and acceptance as regards place of payment or of delivery as variance preventing consummation of contract. 3 ALR2d 256.

       43 Am Jur 2d, Insurance §§ 754-756.
    44 Am Jur 2d, Insurance §§ 1944, 1946.

       61 Am Jur 2d, Pleading §§ 127, 395.

       44 Am Jur 2d, Insurance §§ 1553,1554.
    Liability insurance: insurer’s assumption of or continuation in defense of action brought against the assured as waiver or estop-pel as regards defense of noncoverage or other defense existing at time of accident. 38 ALR2d 1148.

       1 Am Jur 2d, Accord and Satisfaction §§ 1, 27.

      Reversed and remanded.
    Beasley, P.J., dissented. He would hold that the record supports the trial court’s conclusion that the plaintiffs attorney, acting within the authority given him by the plaintiff, had negotiated, in good faith, a binding accord and satisfaction with the insurance company. He would affirm.
    Opinion of the Court
    1. Contracts — Acceptance—Offer—Differing Terms — Rejection of Offer.
    A proposal to accept an offer which contains terms differing from the offer is a rejection of the offer.
    2. Insurance — Conditions Precedent — Affirmative Defense — Noncompliance — Court Rules.
    An insurance company, wishing to use as a defense a plaintiffs failure to comply with a condition precedent to recovery under the terms of the contract, must plead noncompliance with the condition precedent as an affirmative defense (GCR 1963, 112.4).
    3. Pleading — Affirmative Defenses — Waiver—Court Rules.
    Affirmative defenses which are not asserted in the pleadings are waived (GCR 1963, 111.3).
    4. Pleading — Pretrial Summary — Affirmative Defenses — Waiver —Court Rules.
    A defendant insurance company waived its right to assert as an affirmative defense a plaintiffs noncompliance with a condition precedent where the defendant failed to have that defense included in the pretrial summary (GCR 1963, 301.3).
    Dissent by Beasley, P.J.
    5. Accord and Satisfaction — Settlement of Disputed Claim— Agreement.

      It is necessary in order that an accord and satisfaction may constitute a settlement of a disputed claim that there must have been, ñrst, an agreement between the parties (an accord) that something new and different be substituted for the existing claims of the parties, and second, there must have been a

      satisfaction or at least some legal excuse for not performing and carrying out the accord.

      Lyon, Mellon & Conboy, for plaintiff.

      Carpenter, Fenner, Barney & Hofmann, for defendant.
    Before: Beasley, P.J., and D. E. Holbrook and G. R. Cook, JJ.

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

   D. E. Holbrook, J.

The Cheboygan County Road Commission stored a quantity of salt on property which it owned in the Indian River area. The salt was owned by the State Highway Department. Salt seeped into the ground water and contaminated the water supply of several persons in the vicinity. The highway department and the road commission agreed to divide equally the cost of drilling new wells for the affected residents. At the date of trial the cost of such drilling totalled $30,911.95. The road commission sought to recover half of this amount from the defendant pursuant to a contract of insurance. After a bench trial the court found that a valid settlement contract existed wherein the road commission agreed to accept $6,120.93 as full compensation for its claim. We disagree with that finding.

The purported offer in this case is contained in a letter from the road commission’s attorney to the insurance company’s attorney dated November 27, 1972. That letter proposed an open-ended formula by which the insurance company and the road commission would split the road commission’s liability. The letter did not mention future claims.

The insurance company responded with a letter dated April 12, 1973, which offered a fixed dollar amount in return for which the road commission was to release the insurance company from all present and future liability.

It is elementary that a proposal to accept an offer which contains terms differing from the offer is a rejection. Board of Governors of Wayne State University v Building Systems Housing Corp, 62 Mich App 77; 233 NW2d 195 (1975). The insurance company’s letter of April 12, 1973, was a counteroffer. It did not purport to accept the terms of the November 27, 1972, letter. It offered new and different terms.

The plaintiff’s claim is not barred by accord and satisfaction.

The trial court also found that recovery under the contract was precluded by failure to establish compliance with a condition precedent contained in the insurance contract which was not waived by the defendant. The contract of insurance contained a clause requiring the company’s written authorization before payment of claims which were not judgment claims.

At trial the defendant moved to include noncompliance with the "written authorization” clause as an affirmative defense. The plaintiff objected saying that it was only prepared for trial on the one issue stated in the pretrial summary. The trial court ruled that the affirmative defense could not be added but that it would allow testimony concerning compliance with the same contract provision. In so ruling the court held that the plaintiff had the duty to plead and prove compliance with all conditions precedent to recovery contained within the insurance contract. This is contrary to GCR 1963, 112.4 which states specifically that an insurance company must plead noncompliance with a condition precedent as an affirmative defense. GCR 1963, 111.3 provides that affirmative defenses which are not asserted in the pleadings are waived. The defendant further waived its right to assert noncompliance with the condition precedent as an affirmative defense by failing to have that defense included in the pretrial summary. Farida v Zahar, 50 Mich App 137, 143; 212 NW2d 739 (1973), GCR 1963, 301.3.

In the pretrial summary the defendant specifically admitted liability under the policy but claimed that recovery was precluded by the existence of a settlement contract. The only issue at trial, therefore, should have been whether or not a valid settlement contract existed. We have found that a settlement contract did not exist. We reverse and remand with the instruction that a judgment in the amount of $15,455.97 be entered for the plaintiff.

Reversed and remanded, costs to appellant.

G. R. Cook, J., concurred.

Beasley, P.J.

(dissenting). I respectfully dissent.

After a bench trial, the trial judge filed a written opinion in which he made findings of fact and conclusions of law from which he awarded judgment to plaintiff in the sum of $6,120.93.

His findings of fact are supported by competent evidence and his conclusions of law are not clearly erroneous. I do not perceive the clear error that would cause reversal. I would vote to affirm. counter-offer. This conclusion seems hasty. By its terms, the November 27, 1972, letter refers to possible settlements with potential claimants, whereby new wells would be drilled at an estimated cost of $2,000 per well. The settlement offer is that upon furnishing to defendant of a release from a potential claimant, defendant will pay to plaintiff one-half of plaintiff’s share of the settlement cost.

Specifically, the majority states that in a letter dated November 27, 1972, the attorney for plaintiff made a written offer on behalf of plaintiff to settle with defendant insurance company. The majority says that defendant responded with a letter dated April 12, 1973, which was in the nature of a

The November 27, 1972, letter and the transcript make it clear that defendant was aware that plaintiff had made an agreement with the State Highway Department to share equally the settlement costs.

This November 1972 offer should be viewed in the light of the testimony which indicated continuing communication between the attorney for plaintiff and the attorney for defendant regarding settlement with the individual claimants. For example, plaintiff’s attorney testified:

"You have to understand this — every time a new claim arose, every time there was a new development of any kind, Mr. Gillett was contacted, the matter was discussed, and during the whole series of events in the series of conversations, the matter of dispute between Auto-Owners and the Cheboygan County Road Commission was also discussed. So I had many replies, but verbal; but this one is the first written one. You have to understand, the amounts involved were changing daily, or weekly, because while each individual claim was separate from the others, the amounts involved were different.”

Defendant’s April 1973 response was an acceptance of the November 1972 proposed settlement formula. Since defendant was aware of plaintiff’s agreement to share the cost of the settlements with the State Highway Department, agreeing to contribute one-quarter of the total of $23,400, or $5,850, was exactly the same thing as accepting an offer to "underwrite” one-half of the road commission cost.

Consequently, as far as the settlement formula was concerned, defendant’s April 1973 letter response was not a counter-offer, but, rather, an acceptance of plaintiff’s offer of a settlement formula for the plaintiff’s costs of settlement with the various individual claimants.

The majority states the letter did not mention future claims. As indicated, I do not so interpret it. The November 1972 letter refers to wells that had not yet been dug and which were to be dug only on obtaining a release from a potential claimant. I interpret the November 1972 letter as a unilateral, continuing offer by plaintiff to settle coverage under the insurance policy. Obviously, the attorneys for the parties treated it as a settlement. The April 12, 1973, letter response by the attorney for defendant constituted an acceptance of the claims that had been settled to that date. In the same letter, defendant sought a release for any future claims, but, in fact, defendant did not insist upon it. On the contrary, defendant accepted the settlement formula when further claims were made, as evidenced by defendant’s tender of a settlement check for an increased amount, namely, $6,120.93. The tender of the settlement check by defendant was not conditional upon a release of any possible future claims.

The trial court heard the testimony and reviewed the instruments. He then found an accord and satisfaction between plaintiff and defendant regarding defendant’s obligations under the policy. I do not find this to be erroneous under the definition which the Supreme Court set forth in Stadler v Ciprian:

"It is necessary in order that an accord and satisfaction may constitute a settlement of a disputed claim, there must have been, ñrst, an agreement between the parties, — an accord, — a meeting of the minds of the parties upon the proposition, that something new and different be substituted for the existing claims of the parties; and second, there must have been a satisfaction or at least some legal excuse for not performing and carrying out the accord.”

Further, he specifically found that plaintiff, Che-boygan County Road Commission, knew of the written offer its attorney made on November 27, 1972, and permitted its attorney to go ahead and negotiate settlements in conjunction with the attorney for defendant.

There is nothing in this record to indicate anything other than that plaintiff’s attorney negotiated settlements in good faith believing he had authority to do so.

The attorneys for plaintiff and defendant agreed there was a genuine issue under the insurance policy as to whether seepage of salt into the water supply system was an occurrence within the coverage.

The belated decision by plaintiff to go back on the agreement with defendant which its attorney had undertaken was ineffectual. I would hold that plaintiff was bound by its attorney’s actions rendered in good faith on behalf of plaintiff within the scope of his retainer. Similarly, defendant was bound by the actions of its counsel with respect to the settlement.

Contrary to the position of the majority, I do not find defendant offering new and different terms. The record supports the conclusion that a binding accord and satisfaction was made.

I would affirm the trial court’s entry of judgment in favor of plaintiff in the sum of $6,120.93.

       265 Mich 252, 262; 251 NW 404 (1933).

       This insurance coverage issue was never litigated on the merits.


author: D. E. Holbrook, J.

text:
    BELKIN v CITY OF BIRMINGHAM
    Docket No. 77-4478.
    Submitted December 5, 1978, at Lansing.
    Decided December 28, 1978.
    Leave to appeal applied for.
    Maurice Belkin and Milton H. Dressner filed a petition with the City of Birmingham for the rezoning of a certain piece of property in the City of Birmingham, citing the dramatic change in character of the immediate surroundings during the 30-odd years since their property was originally zoned. The petition, requesting that the property be rezoned for commercial use, was denied. Belkin and Dressner then commenced an action against the City of Birmingham seeking a judgment that the existing zoning classification was no longer reasonable and for such other relief consistent with equity. Oakland Circuit Court, Alice L. Gilbert, J., rendered a judgment concluding that due to dramatic changes in the surrounding area, residential zoning of the subject property was no longer reasonable and enjoining the defendant from enforcing the R-6 multiple dwelling zoning classification against the plaintiffs’ parcel. The judgment further ordered that the plaintiffs be permitted to develop the parcel in accordance with the city’s B-3 office and commercial use zoning classification and that the plaintiffs’ property be exempted from the off-street parking provisions of the defendant’s ordinance. The defendant appeals, claiming 1) that it was error for the trial court to exempt the subject parcel from the city’s on-site parking requirement, since the plaintiffs’ complaint did not specifically request such relief, 2) that the trial court erred in holding that the plaintiffs had sustained their burden of proving that the city’s R-6 zoning of the property was unreasonable, and 3) that it was improper for the trial court to enjoin the city from enforcing the R-6 classification of the subject parcel and effectively rezone the parcel to B-3. Held:

      References for Points in Headnotes

       46 Am Jur 2d, Judgments §§ 1, 7.

       27 Am Jur 2d, Equity §§ 103, 248, 249.

       5 Am Jur 2d, Appeal and Error § 703.
    27 Am Jur 2d, Equity § 266.

       5 Am Jur 2d, Appeal and Error § 822.
    27 Am Jur 2d, Equity § 266.

       82 Am Jur 2d, Zoning and Planning § 25.

       82 Am Jur 2d, Zoning and Planning § 15.

       82 Am Jur 2d, Zoning and Planning § 338.

       82 Am Jur 2d, Zoning and Planning §§ 326, 327.

       27 Am Jur 2d, Equity § 103.

      1. The ruling to exempt the parcel from the on-site parking requirement was an equitable determination which was clearly germane to the issues presented. There was no reversible error arising from the fact that the plaintiffs did not specifically request, in their complaint, exemption from the on-site parking ordinance.
    2. The plaintiffs sufficiently met their burden of proving that the classification of their property did preclude its use for any purpose to which it is reasonably adapted. The Court of Appeals is not convinced that had it been trial chancellor it would have reached a different result.
    3. The trial court’s action in enjoining the city from interfering with the plaintiffs’ use of their property consistent with the B-3 classification operated merely to protect the plaintiffs from further delay, expense or harassment in what the court found to be reasonable use of the plaintiffs’ property. Such action was reasonable to enforce the court’s decision on the merits of the case.
    Affirmed.
    1. Judgment — Relief Granted — Relief Requested — Pleading— Court Rules.
    Every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in his pleadings; a judgment must be based on what is proved rather than what is pleaded (GCR 1963, 518.3).
    2. Equity — Nature of Relief — Complaint.
    The shape of relief in equity is not of necessity controlled by the prayer for relief in the complaint, but is formed by the court according to the germane conditions and equities existing at the time the decree is made.
    3. Appeal and Error — Chancery Cases — De Novo Review.
    Appellate Courts hear and consider chancery cases de novo on the record on appeal.
    4. Appeal and Error — Chancery Cases — Findings of Trial Court.
    Appellate Courts give considerable weight to the findings of the trial judge in equity cases primarily because he is in a better position to test the credibility of the witnesses by observing them in court and hearing them testify than is an appellate court which has no such opportunity.
    5. Appeal and Error — Chancery Cases — Findings of Trial Court.
    An Appellate Court will not ordinarily disturb the findings of the trial judge in an equity case unless, after an examination of the entire record, it reaches the conclusion that it would have arrived at a different result had it been in the position of the trial court.
    6. Zoning — Ordinances—Presumption of Validity — Case-by-Case Determination.
    There is a presumption in favor of the, validity of a zoning ordinance; however, arbitrary action or the unreasonable exercise of authority may not be justified; each case must be determined upon its own facts.
    7. Zoning — Municipal Corporations — Ordinances—Reasonableness.
    The power granted municipalities to enact zoning ordinances is at all times limited by the word "reasonable”.
    8. Zoning — Reasonableness—Governmental Interest — Requested Change of Classification — Constitutional Law — Equal Protection — Just Compensation.
    The correct test for judicial review of requested zoning changes is that the plaintiff requesting rezoning must show: first, that there is no reasonable governmental interest being advanced by the present zoning classification itself, or, second, that an ordinance may be unreasonable because of the purely arbitrary, capricious and unfounded exclusion of other types of legitimate land use from the area in question; persons challenging a zoning ordinance may also show that the governmental body acted unreasonably in that its ordinance denied them equal protection of the laws or failed to make just compensation where constitutionally required.
    9. Zoning — Ordinances—Invalid Provisions — Equity—Injunctive Relief — Future Action by Zoning Authorities.
    Courts generally will not issue injunctive orders restraining future action by municipal zoning authorities with respect to rezoning after a judicial determination of unconstitutionality of a particular provision as applied to a specific parcel of land; however, such injunctions may be permitted in certain circumstances.

      10. Zoning — Equity—Courts—Traditional Power — Relief Granted to Enforce Decision.
    A foundation exists in the traditional power, inherent in courts of equity, which permits a court of equity in zoning cases to shape the relief granted according to the circumstances of the particular case; while this power must be exercised with restraint, a court of equity is not precluded from taking action to enforce its decision on the merits of the case.

      Hyman, Gurwin, Nachman, Friedman & Winkel-man (by Hanley M. Gurwin and Jeffrey N. Cole), for plaintiffs.

      Beier, Howlett, McConnell, Googasian & Mc-Cann, for defendant.
    Before: D. E. Holbrook Jr., P.J., and D. E. Hol-brook and Cynar, JJ.
   D. E. Holbrook, J.

The defendant, City of Birmingham, appeals from a November 8, 1977, judgment, entered in Oakland County Circuit Court, enjoining the city from enforcing the terms of the existing R-6 multiple dwelling zoning classification against the plaintiffs’ 1/3-acre parcel of real property. The judgment further ordered that the plaintiffs be permitted to develop the said lot in accordance with the city’s B-3 office and commercial use zoning classification and that the plaintiffs’ property be exempted from the off-street parking provisions of defendant’s ordinance.

The evidence taken at trial indicates that the property in question is improved by a two-story brick building, built more than 50 years ago, and since converted into five separate apartment units. The lot is located at the northwest corner of the intersection of Maple Road and Chester Street in the defendant city’s central business district; it was zoned R-6 multiple family dwelling, in 1941.

A Jacobson’s Department Store complex comprising an entire city block is located at the northeast corner of the above intersection. The block located at the southeast corner of the intersection contains a church and the city post office. The property located directly south of the subject property and across Maple Road is presently vacant, however it has been purchased by the defendant city which intends to erect a public parking structure at that location. The remainder of this block contains one office building, one residence, and vacant land upon which the defendant contemplates constructing a senior citizen multiple dwelling facility.

The city’s central business district continues directly east from this intersection, along Maple Road, the main east-west route of defendant city. Chester Street, which formerly was only lightly traveled, has been turned by the defendant into the westerly leg of a "ring road” encompassing the central business district. In 1966 the defendant purchased the southeast corner of plaintiffs’ land in order to enlarge Chester Street and better accommodate the increased traffic flow.

Adjoining plaintiffs’ land to the north and extending the length of the block is additional church property. To the west and to the north of this property is a limited amount of residential property abutted further west by city park land. Adjoining plaintiffs’ land to the west is a three-family apartment; next lies a single family residence which was vacant at the time of trial; the two succeeding residences have been purchased by the city and converted to public use.

Citing the dramatic change in character of the immediate surroundings during the 30-odd years since their property was originally zoned, the plaintiffs filed a rezoning petition with the city in July of 1974. The plaintiffs’ application, seeking that the property be rezoned for commercial use, was denied in January of 1975. The instant action commenced in March 1975, with the plaintiffs alleging that the existing zoning classification was no longer reasonable, that the defendant’s refusal to rezone the subject property was unreasonable, and that no present substantial relationship existed between the present R-6 zoning and the health, safety and welfare of the defendant’s residents.

At trial the plaintiffs preferred substantial evidence to support the claims made above. One of the plaintiffs testified that it was riot feasible to continue the present usage of the land or to redevelop it as presently zoned. He stated that the plaintiffs’ efforts to sell the land or to finance improvements thereon had met with no success.

A traffic expert testified to the dramatic increase in vehicular traffic at plaintiffs’ location and concluded that access to the property was thereby rendered difficult and dangerous. It was shown that the volume of traffic on Chester Street had increased by 63 per cent since 1964, with nearly 5,000 vehicles now passing in a six-hour period. Traffic on Maple had increased by 30 per cent during the same period and the following data was offered by way of illustration: almost 11,000 cars passed on Maple Road in a six-hóúr period; the average number of vehicles passing was 2,600 per hour; although an average of 3,300 vehicles passed per hour during the "rush” periods.

An accoustical engineer certified that tests conducted by him indicated an average noise level in excess of applicable Federal standards for residential areas. During the "rush” hour, the noise level was measured at a mathematical average of 83 decibels.

An architect related his opinion that the subject property was not suited for residential use. In making this assessment, he stressed the unfavorable impact of the high traffic volume, the unacceptable noise level, the danger and difficulty of vehicle ingress and egress, the small size of the subject site, and the very close proximity of the department store across the street.

A real estate appraiser, called by the plaintiffs, agreed that improvement of the property was economically unfeasible as presently zoned. He also concurred in the conclusion expressed earlier that the difficulty of vehicular ingress and egress to and from the subject property rendered on-site parking overly dangerous.

Another of plaintiffs’ expert witnesses, an apartment management expert, expressed the opinion that an apartment complex of ten or fewer units could not be operated economically on this property. The plaintiffs-appellees also called the Royal Oak City Planner as an adverse witness. This witness testified that the existing zoning was unreasonable, that vehicular access to the site should be minimized, that limited commercial use of the property was feasible and that some residential use of the property might be reasonable.

In an effort to rebut the plaintiffs’ claims, the defendánt called a real estate expert, the next-door property owner, and their own city planner. The testimony of defendant’s witnesses was directed primarily toward controverting the plaintiffs’ claim that the property could not reasonably be used consistent with the present residential zoning.

The real estate expert noted several advantages, such as the proximity of city park land, to residential utilization of the subject property. He also pointed out that larger apartment complexes were being developed on major traffic arteries nearby, and that several housing units of comparable size were currently being operated in the defendant city without experiencing the negative cash flow problems testified to by plaintiffs. This expert witness also disputed estimated valuations offered by plaintiffs’ expert witnesses; as might be expected defendant valued the subject parcel highly, even if used for residential purposes, while the plaintiffs contended that the value of the property varied greatly depending upon the use to which it would be put. While conceding that the plaintiffs’ experts were better qualified in this area, defendant’s expert also controverted' plaintiffs’ estimates of the probable income and expenses which would result from a new residential development.

The owner of the three-family dwelling next door to the subject property testified that she has resided at that location since 1941 and is not bothered by the traffic or by exhaust fumes. She stated that her apartments rent easily.

Defendant’s city planner testified that the present zoning is reasonable. He testified that plaintiff’s proposal would have the negative effects of interjecting further nonresidential activity into a primarily residential area, and of exacerbating the existing traffic problem at Maple and Chester. He further opined that plaintiffs’ site was not too small for economical residential use and that the demand for apartments in Birmingham is high.

Although the parties agreed to submit proposed findings and conclusions, when they failed to reach an accord, the court independently issued its decision on July 13, 1977. In this decision, upon which the court’s November 8, 1977, judgment was based, the court concluded that due to dramatic changes in the surrounding area subsequent to 1941, residential zoning of the subject property was no longer reasonable as the property was unsuitable for such use. The court held that the property could reasonably be used for office or limited commercial use, and therefore granted the injunction referred to above. In reaching these conclusions, the court stressed the following findings of fact.

Ingress and egress to the site have become difficult and dangerous. There exists a lack of visual privacy, and because of the intense usage of the surrounding area, the site offers little "peace and quiet”. As currently utilized the property presents a negative cash flow, °yet the existing structure must be replaced in the near future. Financing for development is not available as currently zoned, and such development would not be economically feasible.

On appeal, the defendant first contends that it was error for the trial court to exempt the subject parcel from the defendant’s on-site parking requirement, since the plaintiffs’ complaint did not specifically mention such on-site parking provisions or request the relief which was ultimately granted. The plaintiffs sought several specific remedies and also "such other relief as may be warranted by the proofs and which is consistent with equity”. Several witnesses unanimously testified to the danger and difficulty resulting from vehicular ingress and egress to and from the subject property. GCR 1963, 518.3, in pertinent part provides that: "every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in his pleadings”. In applying this rule to questions regarding the amount of damages awarded a party, this Court, in Piatkowski v Mok, 29 Mich App 426, 428; 185 NW2d 413 (1971), held:

"The language of [GCR 1963] 518.3, in no uncertain terms, states that a judgment must be based on what is proved rather than on what is pleaded. To base a judgment solely on what is pleaded totally ignores the word 'entitled’ and the phrase 'even if contained in GCR 1963, 518.3. The plain meaning of a general court rule should not be ignored by this Court.” (Footnotes omitted.)

See also: Gibeault v Highland Park, 49 Mich App 736; 212 NW2d 818 (1973), aff'd, 391 Mich 814 (1974). The testimony alluded to above suggests that the court below properly responded to the existing conditions and equities in granting the contested relief. See Seifert v Keating, 344 Mich 456; 73 NW2d 894 (1955), Kent v Bell, 374 Mich 646; 132 NW2d 601 (1965), Miller v Magline, Inc, 76 Mich App 284, 315; 256 NW2d 761 (1977), lv den, 402 Mich 801 (1977). Also see, discussion in Ellickson, Suburban Growth Controls: An Economic and Legal Analysis, 86 Yale LJ 385, 489 et seq. (1977). Since the trial court’s equitable decree granted relief which was clearly "germane to the issues presented” by the plaintiffs to the court, we find no reversible error arising from the fact that plaintiffs did not specifically request exemption from the defendant city’s on-site parking ordinance in their complaint, Drinski v Drinski, 309 Mich 479, 487; 15 NW2d 714 (1944). As the Court said in Advance Dry Wall Co v Wolfe-Gilchrist, Inc, 14 Mich App 706, 712; 165 NW2d 906 (1968): "The shape of relief in equity is not of necessity controlled by the prayer, but is formed by the court according to the germane conditions and equities existing at the time [the] decree is made.”

Next, the appellant city contends that the trial court erred in holding that the plaintiffs-appellees had sustained the burden of proving that the city’s R-6 zoning of the subject property was unreasonable. The proper standard for review in such a case was set forth in the oft-quoted opinion of Mr. Justice T. M. Kavanagh in Christine Building Co v City of Troy, 367 Mich 508, 517-518; 116 NW2d 816 (1962):

"We hear and consider chancery cases de novo on the record on appeal. * * * This Court, however, is inclined to give considerable weight to the findings of the trial judge in equity cases. This is primarily because the trial judge is in a better position to test the credibility of the witnesses by observing them in court and hearing them testify than is an appellate court which has no such opportunity. We do not ordinarily disturb the findings of the trial judge in an equity case unless, after an examination of the entire record, we reach the conclusion we would have arrived at a different result had we been in the position of the trial judge.” (Citations omitted.)

See also Kropf v Sterling Heights, 391 Mich 139, 152, 163; 215 NW2d 179 (1974).

The zoning enabling act, MCL 125.581; MSA 5.2931, provides that:

"[R]egulations shall be made in accordance with a plan designed to lessen congestion on the public streets, to promote public health, safety and general welfare, and shall be made with reasonable consideration, among other things, to the character of the district, its peculiar suitability for particular uses, the conservation of property values and the general trend and character of building and population development.”

The majority in Christine Bldg Co, at 516, 517, 518, held that:

"[E]ach case must be determined upon its own facts.
" 'Under the act, arbitrary action or the unreasonable exercise of authority may not be justified. * * * The presumption is in favor of validity.’ [Hitchman v Oakland Twp, 329 Mich 331, 335; 45 NW2d 306 (1951)]

"[Nevertheless, the power to zone] is at all times limited by the word 'reasonable’.” (Emphasis added.) (Citations omitted.)

See also, Kropf, supra, 156-157.

Of late, the Michigan Supreme Court has interpreted this "reasonableness” requirement to:

"[R]equire that for an ordinance to be successfully challenged [on due process grounds] plaintiffs prove:
" '[F]irst, that there is no reasonable governmental interest being advanced by the present zoning classification itself * * * or .
" '[S]econdly, that an ordinance may be unreasonable because of the purely arbitrary, capricious and unfounded exclusion of other types of legitimate land use from the area in question.’ [Kropf v Sterling Heights] 391 Mich 139, 158 [215 NW2d 179 (1974)].” Kirk v Tyrone Twp, 398 Mich 429, 439; 247 NW2d 848 (1976).

The plaintiffs may also show, of course, that the city acted unreasonably in that its ordinance denied the plaintiffs equal protection of the laws or failed to make just compensation where the Constitution requires. Kropf, at 156-157.

In the instant case, the plaintiffs claimed that R-6 zoning of the subject property was a denial of due process for both of the reasons stated above; further, the plaintiffs contended that residential zoning of the property rendered it economically unproductive, thereby depriving them of a valuable property right. The evidence in support of these contentions has been thoroughly summarized above. The evidence indicates, and the trial court found, that due to the change in character of the surrounding area, the greatly increased traffic volume, the difficulty of access, the lack of "visual privacy”, the small size of the lot, and the "unacceptable” noise level, the R-6 classification of the subject property no longer advanced a legitimate governmental objective. Residential use of the property was no longer "feasible” under the circumstances, and also did not contribute to the public health, safety or welfare. See, e.g., Gust v Canton Twp, 342 Mich 436; 70 NW2d 772 (1955).

The lower court’s finding that "[t]he present zoning of the land has deprived the plaintiffs of the enjoyment of their property for any use to which it is reasonably adapted” was based upon evidence that the property, in its existing condition, generated a negative cash flow. The court also relied upon the plaintiffs’ evidence showing that multiple residential use development was impractical and that financing would be unavailable for such development.

Applying the standard set forth above to the lower court’s conclusion that R-6 zoning of the subject property is "unreasonable”, we are not convinced that had we been trial chancellor we would have arrived at a different result. The evidence adduced at trial strongly supports the determination that the defendant city’s classification of the subject property no longer operates to benefit the general welfare. Further, the evidence does suggest that as presently classified, the subject property has little or no economic value. The plaintiffs met their burden of proof. We find that the circuit court correctly held the defendant city’s zoning ordinance to be unconstitutional as applied to the plaintiffs’ property, under the standard applied in Christine Bldg and Kropf, supra. R-6 classification of this property does "preclude its use for any purpose to which it is reasonably adapted”. Kirk, supra, at 439, citing Kropf, at 163. (Emphasis added.)

Finally, the defendant city decries the lower court’s action in enjoining the city from enforcing its R-6 classification of the subject parcel and in effectively "re-zoning” the parcel B-3, office-limited commercial-residential. As pointed out in 86 Yale LJ 385, 490, supra, confusion over the proper relief to be awarded in zoning cases has continued at least since the United States Supreme Court’s decision in Nectow v City of Cambridge, 277 US 183; 48 S Ct 447; 72 L Ed 842 (1928). Says the author:

"As one of the few Supreme Court decisions on zoning, Nectow has been an influential case. Its impact has been detrimental in three respects. First, by grounding relief on the Federal Constitution, the Supreme Court federalized an issue of landowner rights that it should have left to state courts and state constitutions. Second, the case has been construed to mean that a landowner’s standard remedy against overly restrictive zoning should be some form of injunctive relief and not damages. Third, by failing to specify what type of injunctive relief the landowner was to receive, Nectow reinforced the judicial tendency toward sloppiness in the specification of remedies in zoning cases.”

One impact which this confusion has had upon the Michigan law of zoning is illustrated by the concluding paragraphs of the Court of Appeals’ opinion in Daraban v Redford Twp, 15 Mich App 132, 136-137; 166 NW2d 295 (1968), aff'd, 383 Mich 497; 176 NW2d 598 (1970). In a section later adopted verbatim by the reviewing court, the unanimous panel stated:

"Generally, the courts will not issue injunctive orders restraining future action by municipal zoning authorities with respect to rezoning after judicial determination of unconstitutionality of a particular provision as applied to a specific parcel of land. Christine Building Company v. City of Troy (1962), 367 Mich 508 [116 NW2d 816] (where 'under the present record’ the refusal of the trial court to set minimum lot sizes was affirmed); Roll v. City of Troy (1963), 370 Mich 94 [120 NW2d 804],
"A review of the cases indicates, however, that such injunctions have been permitted in certain circumstances. Industrial Land Company v. Birmingham (1956), 346 Mich 667 [78 NW2d 656]; Long v. City of Highland Park (1950), 329 Mich 146 [45 NW2d 10]; Redford Moving & Storage Company v. City of Detroit (1953), 336 Mich 702 [58 NW2d 812]; Dequindre Development Company v. Charter Township of Warren (1960), 359 Mich 634 [103 NW2d 600]; Lacy v City of Warren (1967), 7 Mich App 105 [151 NW2d 245].” (Emphasis added.)

None of the cases cited above, however, has explained under which circumstances the court may depart from the general rule and invoke injunctive restraints against future municipal action.

We find that such a foundation must exist, nonetheless, in the traditional power, inherent in courts of equity, to shape the relief granted according to the circumstances of the instant case. Sei-fert v Keating, supra, and Kent v Bell, supra. While the line of cases including Christine Bldg Co, supra, and Roll v City of Troy, 370 Mich 94; 120 NW2d 804 (1963), indicate that this equitable power must be exercised with restraint (it won’t be utilized to create entirely new minimum lot sizes, for example), it does not preclude a court from taking action to enforce its decision on the merits of the case. In the instant case, the court’s action in enjoining the city from interference with the plaintiffs’ use of their property consistent with the B-3 classification operated merely to protect the plaintiffs from further delay, expense or harassment in what the court found to be reasonable use of the plaintiffs’ property.

We affirm.


author: Danhof, C.J.

text:
    GREEN v GREEN
    Docket No. 78-1508.
    Submitted October 12, 1978, at Lansing.
    Decided December 28, 1978.
    Plaintiff, David Green, was married to but separated from defendant, Debbie Green, and the parties had one minor child. All were living in Texas when plaintiff took the child and moved into his parents’ home in Ann Arbor. Defendant immediately filed in a Texas court for divorce and custody of the child. Plaintiff then filed for an order of custody in the Washtenaw Circuit Court and was granted temporary custody. Mrs. Green obtained a Texas judgment of divorce and custody. She then came to Michigan and moved the court to enforce the Texas judgment. The court accorded the Texas judgment full faith and credit but stayed execution to allow plaintiff an opportunity to petition the Texas court for an amendment. When plaintiff learned that he could not petition for a change in Texas for one year, he petitioned the Michigan court to reconsider and determine custody. Judge Ross Campbell then telephoned the Texas court and the judges agreed that it would be expedient for the Michigan court to determine custody. After a hearing the Washtenaw Circuit Court granted custody to plaintiff so long as he remained unmarried and living in his parents’ home. Defendant appeals. Held:

    1. The purposes of the Uniform Child Custody Jurisdiction Act are to assure that child custody is determined by the state that can best decide the case in the interests of the child and to discourage relitigation and unilateral removal of children by avoiding judicial conflicts and by promoting cooperation and exchange of information between judges; a mutual decision of judges of a Michigan court and a foreign court that the Michigan court should decidé custody in a case adequately serves the purposes of the act where the judges conversed by phone, later confirmed by letter of record, and the decision was officially recorded in the Michigan proceeding.

      References for Points in Headnotes

       42 Am Jur 2d, Infants §§ 33, 41.
    Jurisdiction to award custody of child having legal domicil in another state. 4 ALR2d 7.
    Jurisdiction of court to award custody of child domiciled in state but physically outside it. 9 ALR2d 434.

      2. The determination of child custody should be made by the court most likely to decide correctly, that is, by the court having maximum access to the relevant evidence; thus, a Michigan court which had all the parties concerned with the child’s welfare before it and which had been provided studies of the child’s present Michigan home and potential home in a foreign jurisdiction properly exercised jurisdiction to determine custody under the Uniform Child Custody Jurisdiction Act despite the petitioner’s failure to return the child to the one entitled to custody under a decree of the foreign jurisdiction entered in an action commenced subsequent to the child’s removal to Michigan.
    3. The trial court did not err in deciding custody in the best interests of the child without recognizing a presumption so as to place a burden of proof on either party.
    4. The trial court did not abuse its discretion in making its order of custody in contemplation of possible changes in environment since, upon a material change in circumstances, the noncustodial parent may petition for a change of custody by law, which the order merely recognized, and since the order does not automatically shift custody upon the happening of the stated contingencies.
    Affirmed.
    1. Parent and Child — Custody—Jurisdiction—Statutes—Statutory Purpose.
    The purposes of the Uniform Child Custody Jurisdiction Act are to assure that child custody is determined by the state that can best decide the case in the interests of the child and to discourage relitigation and unilateral removal of children by avoiding judicial conflicts and by promoting cooperation and exchange of information between judges; a mutual decision of judges of a Michigan court and a foreign court that the Michigan court should decide custody in a case adequately serves the purposes of the act where the judges conversed by phone, later confirmed by letter of record, and the decision was officially recorded in the Michigan proceeding (MCL 600.651 et seq.; MSA 27A.651 et seq.).

    2. Parent and Child — Custody—Jurisdiction—Statutes.
    The determination of child custody should be made by the court most likely to decide correctly, that is, by the court having maximum access to the relevant evidence; thus, a Michigan court which had all the parties concerned with the child’s welfare before it and which had been provided studies of the child’s present Michigan home and potential home in a foreign jurisdiction properly exercised jurisdiction to determine custody under the Uniform Child Custody Jurisdiction Act despite the petitioner’s failure to return the child to the one entitled to custody under a decree of the foreign jurisdiction entered in an action commenced subsequent to the child’s removal to Michigan (MCL 600.651 et seq.; MSA 27A.651 et seq.).

      Jack Dulgeroff (Toomey, Stewart & Bambery, of counsel), for plaintiff.

      William H. Price, Jr., for defendant.
    Before: Danhof, C.J., and Bashara and Cynar, JJ.
   Danhof, C.J.

This case involves the custody of a minor child, presently living with her father, the plaintiff, and her paternal grandparents at the latter’s home in Ann Arbor.

The plaintiff brought the child to Michigan in February, 1977, from Texas, where he had separated from the child’s mother. Subsequently, the mother, defendant in this suit, won custody of the child by default judgment filed in Texas on June 2, 1977, and within two weeks thereafter came to Michigan to enforce the decree in the Washtenaw County Circuit Court. The circuit court agreed to accord full faith and credit to the Texas judgment, but stayed enforcement until the father had had a reasonable opportunity to petition the Texas court for an amendment based on a change in circumstances.

The plaintiff discovered that by Texas law the judgment could not be amended in that state for one year. Therefore, he petitioned the Washtenaw court to reconsider its order and determine the permanent custody of the child. The Washtenaw County Friend of the Court informed the court that, because the child was in a critical stage of her development, it was imperative to decide the custody question immediately.

Whereupon, Washtenaw County Circuit Judge Ross Campbell telephoned the Texas court that had entered the initial custody decree to discuss whether Michigan should exercise its concurrent jurisdiction to modify the decree. The judges agreed by phone, later confirmed by letter of record, that it would be expedient for the Michigan court at that time to make some determination of the child’s custody. Accordingly, Judge Campbell held a hearing which both parties attended with counsel, and concluded it was in the best interest of the child to stay with the father so long as he remained unmarried and living at his parents’ home.

The defendant appeals that decision raising issues under both the Uniform Child Custody Jurisdiction Act, MCL 600.651 et seq.; MSA 27A.651 et seq., and the Child Custody Act, MCL 722.21-722.29; MSA 25.312(1)-25.312(9).

I

She first contends that the Washtenaw County Circuit Court did not have subject matter jurisdiction to determine questions relating to the child’s permanent custody. The authority to modify the custody decree of a foreign court is granted and conditioned by three sections of the Uniform Child Custody Jurisdiction Act.

The basic grant of jurisdiction is in § 3 (MCL 600.653; MSA 27A.653) which provides in pertinent part:

"(a) A court of this State which is competent to decide child custody matters has jurisdiction to make a child custody determination by initial or modification decree if:
"(1) This State (i) is the home state of the child at the time of commencement of the proceeding, or (ii) had been the child’s home state within 6 months before commencement of the proceeding and the child is absent from this State because of his removal or retention by a person claiming his custody or for other reasons, and a parent or person acting as parent continues to live in this State; or
"(2) it is in the best interest of the child that a court of this State assume jurisdiction because (i) the child and his parents, or the child and at least one contestant, have a significant connection with this State, and (ii) there is available in this State substantial evidence concerning the child’s present or future care, protection, training, and personal relationships.”

Neither party seriously contends that the Wash-tenaw County Circuit Court lacked minimal jurisdiction. The plaintiff asserts that the court had jurisdiction under subsections 3(a)(1) and 3(a)(2). We agree there was jurisdiction under 3(a)(2).

The first condition to a court’s § 3 jurisdiction to modify a foreign custody decree is stated in subsection 14(a), MCL 600.664(1); MSA 27A.664(1):

"If a court of another state has made a custody decree or judgment, a court of this state shall not modify that decree or judgment unless it appears to the court of this state that the court which rendered the decree or judgment does not now have jurisdiction under jurisdictional prerequisites substantially in accordance with sections 651 to 673 or has declined to assume jurisdiction to modify the decree or judgment and the court of this state has jurisdiction.”

The theory of this subsection is that courts rendering custody decrees normally retain continuing jurisdiction to modify them, and other states, in order to achieve greater stability of custody arrangements and avoid forum shopping, will defer to that continuing jurisdiction so long as the original state retains jurisdiction under the standards of the act. 9 Uniform Laws Annotated (Master ed), Uniform Child Custody Jurisdiction Act, Commissioner’s Note, p 122. (Hereinafter Commissioner’s Note.)

In this case, as the Washtenaw County Circuit Court acknowledged, Texas retained continuing jurisdiction to modify its original decree. See Commissioner’s Note, supra. We find, however, that the Texas court declined to exercise jurisdiction by its phone conversation and letter.

In determining whether to decline or retain jurisdiction, the Texas and Michigan judges admirably followed the procedures prescribed by the Uniform Child Custody Jurisdiction Act, § 7, MCL 600.657; MSA 27A.657, including the suggestion in subsection d that the courts communicate and exchange pertinent information.

In her brief the defendant complains that the Texas court’s declination of jurisdiction was too informal, that "courts speak through their written orders, not through letters between Judges”. Neither the language of § 14 nor the corresponding commissioner’s notes require a court to formally decline to assume jurisdiction. The act is to be construed to promote its purposes, which are generally to assure that child custody is determined by the state that can best decide the case in the interest of the child, and to discourage relitigation and unilateral removal of children by avoiding judicial conflicts and by promoting cooperation and exchange of information between judges. See Uniform Child Custody Jurisdiction Act, § 1, MCL 600.651; MSA 27A.651. While we would encourage judges in the future to decline jurisdiction by order, we find the purposes of the act were adequately served in the present case by the judges’ mutual decision and its official recordation.

A second qualification to a court’s authority to modify under § 3 is the "clean hands” principle of MCL 600.658(2); MSA 27A.658(2). That subsection is in two parts. The first mandates the court, "[ujnless required in the interest of the child,” to decline to exercise jurisdiction to modify a foreign custody decree "if the petitioner, without consent of the person entitled to custody, has improperly removed the child from the physical custody of the person entitled to custody or has improperly retained the child after a visit or other temporary relinquishment of physical custody”. Clearly, the present plaintiffs acts of removing his daughter from Texas and keeping her in his parents’ home after the Texas decree was entered do not fall within the last clause of the quoted sentence. Neither do we reason that his removal was improper under the preceding clause. "Improperly” under subsection 8(b) means illegally, qualified by a special circumstances justification. Commissioner’s Note §8(b), p 116. Compare, Uniform Child Custody Jurisdiction Act, § 8(a), MCL 600.658(1); MSA 27A.658(1) (definition of "wrongfully”). Since both spouses had a right to custody until a court determination was made, and since the plaintiff removed the child from Texas before the Texas court entered its initial decree, his acts were not illegal.

Part two of subsection 8(b) requires the court in its discretion to decline to exercise jurisdiction, "if the petitioner has violated any other provisions of a custody decree or judgment of another state * * * [and it] is just and proper under the circumstances” to decline jurisdiction. We agree with the Oregon case of Settle v Settle, 276 Or 759; 556 P2d 962 (1976), rev’g, 25 Or App 579; 550 P2d 445 (1976), that the failure to return a child to the one entitled to custody under the decree of another state amounts to a violation of that state’s decree under part two of subsection 8(b). Under the circumstances of this case, however, the Washtenaw County Circuit Court did not abuse its discretion in retaining jurisdiction.

In Settle, supra, the Oregon Supreme Court held it was proper for a lower court to exercise jurisdiction to modify an Indiana custody decree even though the petitioner’s failure to obey the foreign decree was aggravated by her acts of removing the children from Indiana to Oregon during the pen-dency of a marriage dissolution proceeding in Indiana and secreting the child’s whereabouts in Oregon. In contrast, the petitioner in the present case removed his daughter to Michigan before his wife began marriage dissolution proceedings in Texas and never secreted the child’s whereabouts in this state. Indeed, the petitioner obtained a temporary custody order shortly after he arrived in Michigan, and has maintained custody ever since under a series of orders and judgments of the Washtenaw County Circuit Court.

In the final analysis the court should not decline jurisdiction under the clean hands principle to punish the parent at the expense of the child. Settle, supra; Nelson v District Court ex rel Second Judicial District, 186 Colo 381; 527 P2d 811 (1974). Professor Leonard Ratner emphasizes that "[t]he welfare of the child is the first consideration in determining its custody”, and "[t]his determination should, whenever feasible, be made by the court most likely to decide correctly, i.e., by the court having maximum access to the relevant evidence”. (Emphasis in original.) Ratner, Child Custody in a Federal System, 62 Mich L Rev 795, 809 (1964). In the instant case the Washtenaw County Circuit Court had all the parties concerned with the child’s well being before it and had been provided studies of the child’s present home in Michigan and potential home with her mother in Texas. We find it was the court most likely to decide the custody question correctly. Cf. Nelson, supra, (best interests of child should be determined by state with maximum access to evidence, even when petitioner has violated mandatory part of equity section).

McDonald v McDonald, 74 Mich App 119; 253 NW2d 678 (1977), relied on in opposition to the circuit court’s retention of jurisdiction, is clearly distinguishable from the present case.

II

The defendant’s brief raises three issues under the Child Custody Act. All three call into play the following standard of review:

"To expedite the resolution of a child custody dispute by prompt and final adjudication, all orders and judgments of the circuit court shall be aifirmed on appeal unless the trial judge made findings of fact against the great weight of evidence or committed a palpable abuse of discretion or a clear legal error on a major issue.” MCL 722.28; MSA 25.312(8).

A. Burden of Proof.

In deciding the custody rights of the child in this case the circuit court apparently proceeded under the act’s § 5, MCL 722.25, MSA 25.312(5), to determine the best interests of the child, without allocating a special burden of proof to either side. The nonprevailing defendant claims the court should have proceeded under § 7, MCL 722.27; MSA 25.312(7), to place the burden of proof by clear and convincing evidence on the plaintiff. Section 7 provides in part that: "[t]he court shall not modify or amend its previous judgments or orders or issue a new order so as to change the established custodial environment of a child unless there is presented clear and convincing evidence that it is in the best interest of the child”.

We find § 7 inapplicable to the case at bar, since the court’s order did not change the established custodial environment. Such an environment is created "if over an appreciable time the child naturally looks to the custodian in such environment for guidance, discipline, the necessities of life and parental comfort”. Id. At the time the defendant petitioned the Washtenaw County Circuit Court for enforcement of the Texas decree, the child had been gone from her for four months. When the plaintiff moved for a modification of the Texas decree, the child had been with him for 6 months, and for 13 months at the time of trial. If anywhere, the established custodial environment was with the plaintiff in his parents’ home. Cf. Berman v Berman, 84 Mich App 740; 270 NW2d 680 (1978) (in determining whether custodial environment has been established, look to existing custodial arrangement rather than denomination of custody decree).

We would not go so far, as the plaintiff would have us, to place the burden of proof by clear and convincing evidence on the defendant. That would disrespect the Texas court’s earlier finding that "it would be in the best interest of said child if the Petitioner herein, Deborah Green, were appointed to be the Managing Conservator”. Under the special circumstances of this case, the judge did not err in determining the best interests of the child without recognizing a presumption in favor of either parent.

B. Findings of Fact.

We disagree with the defendant that the trial court failed to make findings on each of the factors enumerated in § 3 of the Child Custody Act, MCL 722.23; MSA 25.312(3). We have reviewed each of the court’s findings, together with the defendant’s corresponding objections, and have not found them to be against the great weight of the evidence.

C. Finality of the Custody Determination.

After specifying the various kinds of relief a circuit court may grant in a custody dispute, § 7 of the Child Custody Act authorizes the court to "[t]ake any other action considered to be necessary”. MCL 722.27(f); MSA 25.312(7)(f). This broad authority, however, is qualified by the objectives of the act, one of which is to achieve stability in a child’s home environment. Berman v Berman, supra.

The defendant contends that the circuit court’s order in the instant case, by granting custody to the plaintiff so long as he remains unmarried and living with his parents, undermines the stability objective. While we do not generally favor orders that contemplate a probable change in environment, we cannot say the circuit court committed a palpable abuse of discretion.

The courts of this state, under the particular circumstances of the cases presented, have upheld custody decrees that were probationary, McLay v McLay, 354 Mich 19; 91 NW2d 824 (1958), alternative, Schilleman v Schilleman, 61 Mich App 446; 232 NW2d 737 (1975), and temporary, Berman v Berman, supra. All of the above decisions are distinguishable from the present, it is true, in that the custody decrees upheld were reviewable after specified periods of time. The decree on review here is more indefinite. It is similar to the above-accepted decrees, nonetheless, in that it does not contemplate an automatic shift in the custodial environment upon happening of the stated contingencies. Rather, it calls for a hearing and review of the custody decision under the then-existing circumstances. Clearly, the home the plaintiff had made for the child with his parents was a material circumstance in Judge Campbell’s decision. Upon a change in material circumstances a nonprevail-ing parent may seek to modify or change an earlier custody order. By restating that right in its order, the circuit court has not obviously thwarted the statutory purpose.

Affirmed. Costs to appellee.

       The "home state” concept is not clearly applicable. At the time the child’s mother commenced enforcement proceedings on June 2, 1977, the 22-month old child had not lived in either Michigan or Texas for six consecutive months. The father challenged the enforcement on jurisdictional grounds. When the father moved the Washtenaw County Court to reconsider its order and to modify the Texas decree on grounds of changed circumstances on September 28, 1977, the child had been living in Michigan for more than six consecutive months (since the end of February). Subsection 3(a)(1) was apparently drafted with initial custody proceedings in mind. See 9 Uniform Laws Annotated, Uniform Child Custody Jurisdiction Act, Commissioner’s Note, § 3, p 107, citing Ratner, Child Custody in a Federal System, 62 Mich L Rev 795, 818 (1964). Neither the act nor the commentary indicates whether the date of the above enforcement or modification petitions should be considered "the time of the proceeding” under subsection 3(a)(1). The parties have not pointed us to a case that would aid us in that determination.
      In any event, subsection 3(a)(2) jurisdiction is established by the facts that the father is domiciled in this state, the child’s four (or six) month stay established significant contacts, all individuals who have an interest in the child’s well being and custody were either domiciled in Michigan or sought to enforce their legal rights by way of enforcement or permanent custody petitions in this state, and substantial evidence concerning the child’s present or future care, protection and training clearly was available in this state. Accord, Nelson v District Court ex rel Second Judicial District, 186 Colo 381; 527 P2d 811 (1974).

       In addition to concurring with Michigan jurisdiction, the Texas court by its letter informed the Washtenaw County Court that the mother’s attorney had moved for a prompt home investigation of the mother in Texas. The Texas court promised that it would order a copy of any such investigation to be forwarded to Michigan.

       A Michigan court in that case declined to exercise concurrent jurisdiction to determine permanent custody over children that had been removed by their mother during the pendency of permanent custody proceedings in Washington. In contradistinction to the present case, the Washington and Michigan courts in McDonald had not mutually decided that Michigan would be a more appropriate forum under the policies of the act. We note also that the decision to exercise concurrent jurisdiction over pending custody proceedings is distinct in a policy sense from the decision to modify an already entered custody decree. The two decision making processes are guided by different rules under the Uniform Child Custody Jurisdiction Act. For provisions applicable to simultaneous custody proceedings see § 6, MCL 600.656; MSA 27A.656.

       The circuit court stated in its opinion:
      "I must say that my decision is based in large part on the fact that the child is now living in Mr. Green’s home, which he is making with his parents, and I stress with his parents, and I do not contemplate the child being removed from that home and Mr. Green being there with it without the Court reconsidering the effect which that would have on the child and what kind of a home is offered at that point in time by both Mr. Green and by the present Mrs. Gregory.”

       To the extent the mother’s objection on this point is really a challenge to the court’s findings of fact under subsection 3(e) as to "the permanence, as a family unit, of the existing or proposed custodial home”, MCL 722.23(e); MSA 25.312(3)(e), we incorporate our summary holding under Part II-B.
      We add here that subsection 3(d) of the act requires the court also to consider and evaluate "[t]he length of time the child has lived in a stable, satisfactory environment and the desirability of maintaining continuity”. MCL 722.23(d); MSA 25.312(3)(d). Given that the child had lived in its existing home for 13 months at the time of trial and that the Friend of the Court had reported she was in a critical stage of her development, we cannot say it was against the great weight of evidence that her best interests lie in her staying with the father.