*1
Ed Comm
155
STEFANAC v CRANBROOKEDUCATIONAL COMMUNITY
(AFTER REMAND)
(Calendar
7).
Argued
Docket No. 82317.
March
No. Decided
5, 1990.
July
brought
Judith Stefanac
action
the Oakland Circuit Court
against
Community, alleging wrongful
Cranbrook Educational
discrimination,
discharge,
employment
sex
and termination of
public
court,
J.,
policy.
Anderson,
in violation of
Robert C.
Co,
relying
(1984),
Brewery
on Leahan v Stroh
Reversed.
dissenting, stated that where a
Levin,
Justice
finds,
claims,
to
that there would be entitlement
and the court
is set aside because
consideration after a release
retain recited
represents payment that
the amount recited as consideration
separate
apart
owing
to
from
accrued and was
release,
by the
and that no
the claims that were settled
claims,
paid
to settle those
fact was
deciding
required
required.
suit
In
whether tender is
before
Supreme
obliged
accept
true the
Court is
this case the
response
allegations
plaintiff’s complaint
in her
in the
proceed
summary disposition,
on the
the motion for
assumptions,
judicial
at the trial level to
absent
determination
contrary,
in fact was obtained
both that
the release
plain-
indeed owes the
fraud or duress and that
defendant
equal
to the
tiff two weeks’ vacation
and thus an amount
addition,
In
it exalts form
consideration recited
the release.
require
appar-
suit where it is
over substance
tender before
*3
accepted the tender had
ent that the defendant would not have
promptly
it been
offered.
permitted
person
signed
to
A
who has
a release should
be
proceed in
in
the
until the
an action
disaffirmance of
release
paid
actually
consideration
for the release itself has been
provide
purpose of
rule
not to
a fair
returned. The
the tender
is
contracts,
necessary
against
instability
but
and
check
the
of
against
provide
unjust
a
rather to
check
the
enrichment
rescinding
rescinding party
party that would result if the
were
allowed to retain the benefits of the
contract attacked.
dispute
factual
in
action
set
a
does not
to
aside
release
plaintiff’s underlying
against
involve the merits of the
claim
the defendant that
the release if it is valid. It
were resolved
only
plaintiff
that
is
if and when the release is set aside
the
put
expense
defending
should be able to
defendant to the
of
the
against
underlying
the
claim.
paid
at
The consideration
the defendant to the
signed
provide protection
the time the release is
does not
against
procured by
a claim that the release itself was
fraud or
duress,
protect
very
to
the
instrument
is intended
litigation.
judicially
in
If it is
determined
ensure forbearance of
release,
signing
into
the
this case that the
was coerced
required
she should be
to
the release should be set aside and
obtaining
payment
a determination on the
return the
before
wrongful discharge
it is also so
of her claims of
unless
merits
judicially
her that amount
that the defendant owes
determined
pay.
as additional vacation
reading
majority’s
is
and contradicts
of Leahan
incorrect
of the law of contracts. Parol evidence
a well-established tenet
always
a
in a document
is
admissible to show that
statement
is
not true.
consideration,
precondition
although
of
a
to an action
Tender
law,
precondition
of an action
is not a
to commencement
at
majority
concluding
seeking equitable
in
relief. The
errs
procedural
law
abolition of
distinction between
the
power
equity
way
a
to order
in some
diminishes
of
court
developed
practices
in
with the rules
rescission
accordance
reforms,
equity.
procedural
conjunction with
Modem
jurisdiction
equitable
consolidation
legal
one court of
of both
claims,
necessity
prerequisite
of
a
eliminate the
tender as
seeking
commencement
an action
to
rescission.
of
obtain
proceedings,
judgment
may
unified
a court
a
Under
enter
conditioning rescission on the return of consideration received
plaintiff,
effectuating
purpose
of the tender
thus
rule,
residing party.
unjust
the avoidance of
enrichment of the
legal rights
relinquish
enforcement
warrant
Contracts
judicial
as
at least as much
surveillance
other contracts.
applica-
dissenting,
Archer,
Justice
stated
an inflexible
party
in this
a
tion
case of the rule
Leahan that
a
contract
settlement must tender
consideration received
precedent
repudiating
is neither
as a condition
the contract
fide,
dispute
complete
good-faith
is
nor fair.
there
a bona
Where
agreement
regarding whether consideration recited in a release
consideration,
actually
of Leahan
amounted to
the rule
is
unworkable.
Where,
transaction,
seeking
person
aside
resti-
from the
gave
tution would
to retain
the other
a
entitled
what
agreement,
is no
as a result
result of
there
enrichment
retained,
agreement
though
given
nor
even
what
Clearly, plaintiff
does it diminish
assets of the other.
the net
supporting
sufficiency
who contests the
consideration
agreement
allowed to
tender of
should be
withhold
alleged
judicial
until
there is
determination
*4
paid.
that consideration was in fact
If it is found
plaintiff
required
paid, the
consideration was
should
However, if
tender that amount.
the court determines
paid
plaintiff
already
owed
amount
for
release was
plaintiff,
plaintiff should be
to retain that
allowed
proceed
legal
any
amount
with
action.
case,
wages
plaintiff unquestionably
owed her
In this
was
Ed Comm
op
the Court
regarding
question
pay.
fact exists
A
find accrued vacation
owed,
any
amount
vacation
additional
whether
plaintiff should be
that owed the
in excess of
determined to be
following
time
within a reasonable
to the defendant
tendered
However,
plaintiff
to amend
should be allowed
resolution.
request
complaint to
rescission.
her
(1987)
App
reversed.
i resigned 1983, November On *5 435 Opinion of the Court personnel director of Cranbrook Educational Com- termination, plain- In connection with her munity. tiff signed a document entitled "Release 16, 1983, Claims.” The release is dated November in pertinent part and reads as follows: in For and consideration of Cranbrook Educa- (Cranbrook) acceptance Community’s tional (Stefanac) voluntary resignation of Judith Stefanac agreement and Cranbrook’s further nac for two Stefa- weeks, applicable less state and federal taxes, Stefanac, heirs, herself, withholding her for executors, hereby fully administrators and does release, acquit discharge and forever and Cran- brook, agents, representatives, its servants and claims, demands, any and from all and actions and kind, descrip- every causes of action of tion which Stefanac or cause, nature and had, may may now have have matter, may hereafter have reason of arising act or omission out of or connec- employment tion with Stefanac’s with and/or res- ignation from Cranbrook. signing plaintiff After the release received a check $2,090.65. pur- from defendant for The check was portedly payment intended four weeks accrued vacation time and two weeks’ severance pay.1
Plaintiff
filed
against
suit
on
9, 1984,
August
alleging
discharge,
wrongful
sex
discrimination,
termination
violation
public policy. Subsequently,
filed a mo-
defendant
tion for
judgment,
arguing
accelerated
plaintiff’s
barred
In response,
claims.2
challenging
filed an affidavit
validity
separate
had also received
checks for refunded retire
expenses.
ment contributions
travel
Thereafter,
September
Defendant’s motion was filed on
1984.
defendant
raised the release as an affirmative
defense
its answer
16,1984.
filed on October
Ed
Comm
v Cranbrook
Opinion of the Court
agreed
plaintiff's
parties
release. The
question
fact,
prejudice.
therefore
affidavit raised a
denied without
the motion was
period
year,
Following
discovery
of one
defen-
again
for dismissal of
action
dant
moved
grounds
suit. Defen-
the release barred
*6
plaintiff’s
argued
point,
that
at
this
dant also
in
consideration received
failure to tender
the
prevented
exchange
her from now
the release
for
agreement.
attempting
Defendant’s
to rescind the
position
on this Court’s decision
was based
Brewery Co,
v Stroh
Leahan
(1984).3
that Leahan
conceded
NW2d
merely
Plaintiff
it had existed
the
reaffirmed the law as
past,
that the facts of Leahan differed
but asserted
plaintiff
Further,
main-
from the instant case.
for lack of consid-
that
release was void
tained
the
money
entitled to all
eration and that she was
The trial
as a result of her termination.4
received
dispositive
interpreted
court
Leahan as
granted
motion.5
issue and
defendant’s
plaintiff
later,
filed a motion for
Three weeks
rehearing,
sought
rehearing.
plaintiff
the trial
On
original
after defendant’s
mo
3We decided Leahan three months
tion.
equivalent
of six weeks’
Plaintiff received a check which was
salary.
to be four weeks of
The check was itemized
defendant
pay
pay. Plaintiff claims
accrued vacation
that at her dismissal she had accrued
therefore the check did not include
the release
vacation
the
and two weeks’ severance
time
six weeks of vacation
exchange
any consideration in
Rather,
agreement.
money
the
was entitled.
received was for six weeks’
plaintiff
Defendant contends that
to which
accruing
prohibit
employee
policies
from
of the institution
more than four weeks of vacation time.
argument
persuaded by plaintiff’s
that defendant had
5We are not
raising
issue at the time
the first motion.
the burden of
It is sufficient that defendant
MCR
Leahan
the tender
as a
See
raised the release
defense.
2.116(C)(7).
significant
light
after the
especially
of the fact that
This is
ruling
decided until
three months
was not
Further,
specifically
did
when defendant
defendant’s first motion.
raise as a defense
plaintiff’s
considera
to tender the recited
failure
tion, plaintiff
any money received.
still refused to tender
435 op
the Court
considera-
disputed
court’s consent
to tender
and,
oppor-
money,
tender of
following
tion
This is
against defendant.
to refile her suit
tunity
willing to
plaintiff
first
was
indication
in the release. The
recited
repay
ruling,
previous
dismissing
judge
trial
affirmed
complaint
prejudice.
plaintiff’s
two
appealed
right,
raising
Plaintiff
as of
issues.
argue
Plaintiff continued to
she was entitled
and therefore
ten-
money
to all
received
not
in order
maintain
der was
required
argued
that her
Alternatively,
action.
disputed
offer to tender back the
consideration was
time under
within a reasonable
circumstances
Basing
analysis
of the case.
its
on an examination
Leahan,
Appeals
Court of
held:
consequence
is that
of the Leahan decision
[T]he
paid
if a release
that consideration was
recites
money
paid,
may
if
in fact
argue
money
actually
that the
was not
considera
*7
tion, regardless
to
any evidence
that effect. That
of
not,
to
If
believe
seems
it
be what Leahan holds.
we
up
Supreme
say
to the
Court
so. Conse
is
to
affirm.[6][Emphasis
quently, we
added.]
However,
Appeals
the Court of
did not directly
argument
plaintiff’s
address
alternate
disputed
consideration
occurred within
of
time.
Consequently,
reasonable
we issued
order
of the
vacating
judgment
Appeals
Court of
of the
remanded the case for consideration
second
(1987).
plaintiff.
judgment
preclude
opinion is intended
Nothing in this
findings
making appropriate
from
judge
trial
trial,
including
of how
resolution
after
of fact
much,
paid plaintiff were
the monies
any,
if
release.[8]
consideration
application
granted
for leave
defendant’s
We
(1988).
appeal.
Mich 8 Id. 435 Mich Opinion of the Court compromise and is not to be confused A release contract, equivalents in are which
with the law to exchanged, very essence of a release is for the expense right. litigation, at the of strict avoid even [*] [*] [*] repudi- general salutary It rule that one is a compromise ating seeking to settlement or avoid release, original right thereby revert or action, quo, place party must the other statu very payment, fact of in considera- otherwise the release, compromise likely oper- tion of the will 334-335. liability. ate as a confession [274 Emphasis original.] excepted that she should be Plaintiff asserts from this rule because the release was void and validity merely not voidable. The challenged plaintiff grounds it that was procured and was under du- lacked consideration plaintiff Specifically that ress and fraud. asserts agree- misrepresented the terms of the defendant she that defendant knew ment. Moreover asserts plaintiff legally money entitled to the she was money support received, that she needed the family, her and that defendant waved the checks give plaintiff refusing funds unless at her signed the release. she although
Plaintiff contends release re- received, was she in fact cites get exchange signing anything did not agreement. Therefore tender settlement prior filing necessary suit because "there is quo nothing to be returned to restore the status signed However, that she ante.” admits and that she received four checks. the release Subsequently she endorsed and cashed the checks received. presumption that the
We start with *9 Ed Comm 165 v Cranbrook Opinion of the Court knowingly9 executed the release the re cited consideration was received.10 Porth v Cadillac (1917). Co, Motor Car 501; 198 165 698 Mich NW Zinner, supra. Kirl v has the burden evidence, the showing, by preponderance of of the release is unfair or incorrect on its face. Id. in light presumptions Even of these and the burden, plaintiff’s must tender right recited consideration before there is a to Id. repudiate only recognized release. exceptions Michigan are a waiver plaintiff’s duty by defendant11 and fraud excep execution.12 Plaintiff has not raised either tion and thus is duty not relieved to tender the consideration recited in the release. reports are replete authority
Our that ne- In Niederhauser gate plaintiff’s contentions. Co, Detroit R 550, Citizens’ St 552; 131 Mich 91 (1902), 1028 NW we held: that, The law is well if settled one seeks ground
rescind a settlement on the mistake, place of fraud or must, fraud, discovering he after quo. in statu party the other Randall, supra at In Justice Stone wrote: 9 signed you you were mindful of what Q- [W]hen [the release] it contained? Yes, comprehend A. I had read it. I could what it said. 10 acknowledge you you something But did receive addition Q. ally, namely you the severance otherwise would not have received? pay? A. Not received terms of Yes. Q. right. A. That’s 11 Co, 347; Slater v United States Health & Accident Ins 133 Mich (1903). 95 89 NW Huron, Co, 413; 12 Randall v Port St 215 184 C & M C R NW (1957). (1921); Eldred, Stewart v NW2d Mich 155 Opinion op the Court conflict in the there is still some real "While has to be
cases as to whether or of the amount received when release aside there sought it is to set a fraud, weight ground on the into two authority divide themselves cases first, inducing classes, goes fraud where the release, the effect which injured party he understands. in that he was that has sign second, And, that fraud where inducing sign him a release under the belief something I signing am satisfied else. *10 Michigan recognized distinction and has this cited, held, already the in the cases where sign goes inducing injured party the to a fraud release, made within amount has to be the received length of time after reasonable fraud. was words, if party the In discovery of other induced, fraud, through he claims that enter into contract, the in to rescind that order contract, put parties quo. in he must the statu is, re- money That he must return the he ceived, or into it agreement ask to the contract or and have ground the that he entered release set aside on through fraud.” 335, Zinner, in Kirl at we said: Similarly supra party compromise "Where a to a desires to set aside original rights, the remitted to his or avoid same to be place in party he must the other quo returning tendering or the return of by statu has been received him under such whatever value, compromise, as cause thereof. This contract was induced in it is of so far case possible any right party lost the other be- though rule even obtains repre- or false fraud party, sentations of under other or was obtained duress, made under a mistake of fact law; or as to the and until this is done settle- good electing By constitute a defense. ment will retain the party be held to property, must applies ac- by the settlement. rule bound tions CJ, contractu as delicto.” 12 ex well ex p 57.§ Ed Comm v Cranbrook Court pronouncement in this area is most recent Our supra, Brewery in Co, which is Leahan v Stroh holding. supports In our with this case and accord rejection upheld Leahan, the lower court’s we challenge plaintiff’s in con- of a release executed resignation Brewery his from Stroh nection with against complaint Company. Mr. Leahan filed a alleging age defendant, discrimination employment contract. The defendant breach language plaintiff’s raised as a defense resignation released the defendant of letter which response, liability. In claimed further that because of duress the release was voidable case, Mr. As this and lack of consideration. receive did not claim that he did not Leahan anything exchange Rather, he for the release. money he was not con- that the received claimed sideration, representative of some but instead was entitled to under the other benefit that he was agreement. holding in Leahan reflects our Our position recited in this case that in the release must be tendered before arising out of maintain an action for claims can agreement. the settlement *11 allegations insufficient to
Plaintiff’s of fraud are bring in the her within the fraud execution claim exception. Plaintiff that she read and exe- admits agreement. person- She was the cuted the release nel director of the institution
and, fact, in had agreements in other with similar release dealt employment Thus, we can termination situations. understanding impute the terms and to her full of agreement. Additionally, defen- conditions of the during time the trial court dant has not at proceedings plaintiff’s obligation to tender waived agreement. in the consideration recited the release plaintiff’s allegation Finally, the release was directly it lacked consideration void because 435 Mich the Court express language contrary the release. to the duty plaintiff to tender of her Thus, is not relieved received. she the consideration
hi question whether The dissent raises equity precondition in based action to an is a Style in v Green- this Court rule announced (1961). In 679, 683; 112 slade, Style NW2d upheld in the release is "[i]f we held proceeding, chancery matter. end the that should plaintiff may invalid, then If the release is held proceed involving questions with her law action damages.” authority negligence this On allowing Stefanac the case would remand dissent complaint of the to seek cancellation to amend her dissenting) (post, p J., even 210, Levin, requested though plaintiff relief. such has not Style, initiative it at this Court’s Albeit p supra, "remanded and the case be enjoined plaintiff proceedings until therein further appropriate bring may and have determined authorizing Style chancery action,” read not as we disposition in the instant case but a similar plaintiff seeking precedent a re- that a avoid equitable may relief.13 lease first seek part However, no effort on the the record shows plaintiff case, the time of in the instant at bringing validity suit, issue as to the to raise an resig- conjunction with her the release executed nation. tence and terms ignored plaintiff merely Rather, the exis- agreement filed an of the agreement, while at in contravention of action Style remedy. it While We assume that was aware legal guide Style may options on her been suitable to have precedent, think it no clear we do not within when there was plead province It is not the function of this Court our a to do so now. legal options plaintiff’s specific for her. case or exercise *12 Ed Comm the of Court retaining from derived the benefit time the same challenge the agreement. not Plaintiff did the had validity until after defendant the release of barring plaintiff’s action at a defense it as raised law..
Conversely, to maintain has continued defendant of plaintiff’s the existence is barred action Although plaintiff.14 defen- release executed the specifically as nontender raise did dant passed year after had than one more until defense action, it suffi- we find commencement the binding nature the relied that defendant cient agreement to the defense affirmative as an of action.15 today would rule announced the tender
Whether bringing preclude plaintiff an action seek- from scope beyond equitable ing solely of relief is given grant and, order Court’s limited this goes beyond analysis case, such an this facts of dispute. necessary Accord- this to resolve what unnecessary ingly, on the contin- it to rule find we Style legitimacy of the fact that in view of ued chancery with courts court consolidation law16 no bring plaintiff longer requires that a n 2. See "generosity spirit” being inspired by credits us as The dissent litigation. plead allowing so late nontender defendant However, rebuking (Post, 212, Levin, J., dissenting.) risk of p at the specifical compliment, point need not out that defendant we must the ly tion recited terms release the considera until tenders issue because raise the tender release, the release and its existence of in the it is the pleading bringing By prohibit suit. from which defense, requirements complied with the has as a defendant 2.111(F). MCR legislature Michigan 1850 states that "[t]he Constitution of shall, practicable, law and distinctions between as far as abolish 1850, 6, provision was equity proceedings.” repeated 5. The same art § Const 7, 1908, Legisla 5. The Const art § Court in the 1908 Constitution. power Supreme by giving upon this directive ture acted improve practice practical may promulgate the rules to by equity abolishing law and distinctions between "[t]he approved April 1851. See also proceedings .” . . . 1857 CL *13 435 Mich Opinion of the Court equity separate no We make actions in and law. ruling who, under whether a further equitable separate Style, action, a decides to file precluded bringing an action from would later be princi- joinder mandatory rule,17or at law ples estoppel. judicata collateral How- of res requires ever, forth here the tender rule set legal raised in contravention whenever a claim is agreement, joined if with an of equitable settlement even precondition. Anything claim, tender is nullify purpose of the tender rule. less would argument there The dissent’s alternative allowing plaintiff unjust will be no enrichment proceed equally as filed is with her actions without merit. The dissent asserts: provide opportu- an Court should Stefanac [T]his prove nity to her claim that she could not obtain signing due her admittedly
amounts release, without pay, and that the two weeks’ recited as release, was, asserts, consideration in the owed as an additional [Post, p as she pay. two weeks’ vacation J., 196, Levin, dissenting.] allegation plaintiff’s money However, that the 236, 9901, 1, repealed January 1948 CL 601.14 1963. 1961 PA effective § statute, Along separate statutory provision with this was jurisdiction in courts at law and courts enacted which vested distinct in until 1963 that 12299, equity, seq. It 1915 CL see also 1948 CL 606.1 et was not equitable legal jurisdiction claims was over both 600.601; 27A.601; solely in vested one circuit court. See MCL MSA 6, Const art 5.§ 2.203(A)(1) pertinent part: MCR states in pleading against opposing party, In a that states a claim an join pleader against pleader every that the has must claim serving pleading, opposing party if it at the time subject arises out of the transaction or occurrence that is the [Emphasis matter of the action .... added.] 2.203(A)(1) Furthermore, 1963, 203.1, upon GCR which MCR was based, specified party join every equitable legal that a must claim arising proceeding. in one out of the same transaction occurrence Ed Comm v Cranbrook op the Court already money her owed she received merely claim that the release a restatement Further, it consideration. because lacked is invalid plaintiff’s endorsing clearly the check actions pay” representing are con- "severance marked trary in this action. Absent her assertions validity proceeding appropriate to determine necessary it release, do not find we writings beyond offered our review extend support claims. of defendant’s analogy regard, draws an In this the dissent contract An accord is a an accord and satisfaction. *14 discharge preexist- obligee agrees whereby exchange perfor- ing duty in substituted some (See pp Contracts, 2d, § 281, 2 Restatement mance. 381-382). any from is to be drawn If conclusion plaintiff’s analogy, it must be that actions an such cashing By checks, to a satisfaction. amount perfor- accepted plaintiff substituted defendant’s (Id., duty discharged any further owed. mance and p Contracts, 2d, §69[2], also 1 Restatement see 164). reading Finally, that our the dissent contends tenet of the law "contradicts] a universal Leahan parol rule does not that evidence of contracts showing nonpay- prevent there has been (Post, p 206, Levin, of consideration” ment/failure J., dissenting). Properly understood, the tender rather is a rule is not a rule of evidence but rule procedure. the dissent’s enun- We do not contest parol encompassing principles ciation of plaintiff However, until either chal- rule. evidence lenges equitable validity of the release right challenge preserves grounds or tendering the consideration the release rescind recited simultaneously prior to or in the release bringing parol no suit, rule has evidence explain application. Parol evidence is admissible 435 Mich Opinion of the Court application only and has of the contract the terms agreement chal- have been the terms of the after lenged. claiming plaintiff is not observe that We money as a result did not receive she executing agreement. note We also the release asserting plaintiff merely a claim for an is not pay.18 plaintiff’s Rather, additional two weeks’ attempted of the an rescission actions amount agreement plaintiff whereby action rather than an release.19 to enforce the terms of the seeks IV general Having rule that a set forth duty recited in a has a release, to tender the consideration period question
we turn next to the
place.
during
of time
which the tender must take
line
that have addressed the
There are a
of cases
question
time within which
what is a reasonable
repudiate
plaintiff
filing
other than
can
and tender
dealing with this
a lawsuit. The earliest case
Regal
question
Co, 180
is Bertha v
Motor Car
(1914),
51; 146
in which
NW
Following
eye injury.
medical
treat-
suffered
that he
recover his
ment he was informed
would
plain-
approximately
eyesight seven weeks.
releasing
agreement
tiff entered into a settlement
the defendant of all claims for
from
learned that
*15
damages resulting
plaintiff
injury. Subsequently,
misrepresented the doctors had
immediately
injury.
extent of his
”He
caused
18
permit
employer
an
to
As the dissent states
law does
"[t]he
wages
payment
and other
amounts
due
withhold the
195, Levin,
J.,
(Post,
dissenting.) Accordingly,
employee
p
. . .
legal options
payment
plaintiff had other
available to her to receive
vacation
she now claims is due to
for the additional
two weeks’
her.
19See,
Corp,
462;
e.g., Crawley
183 Mich
pled the release defense, as a and the circuit court directed verdict in its favor. The Bertha Court reversed the holding defendant, verdict in favor of the plaintiff properly repudiated had the settlement agreement and that defendant’s actions in refusing accept paying tender and for the plaintiff’s to an medical treatment amounted adoption misrepre- and ratification of the doctors’ plaintiff’s injuries. of the extent of the sentation Reading This Court relied on Bertha in Burns v (1915), holding Estate, NW promptly that a must tender restitution delay upon discovery and without unreasonable the fraud or he will be ratified the held have plaintiff’s release. The Court found that fail- by refunding ure to rescind tion for a the contract considera- period eighteen months was an unrea- long acquiescence delay. sonable "His and failure complain promptly, duty discovery as was his operated, of the true conditions as a matter of law, ... to reaffirm contract of settlement prosecution which has now become bar original his stated cause of action.” Id. at added). (emphasis supra, Railway Co, Randall is also instructive specific on this issue. This Court made three find- ings First, in Randall. the Court adhered to general principle binding agreement that a settlement by repudiation
"until rescission and ten- Bertha, (i.e., safeguard As a in a situation such as refused) suggest plaintiff place offered but received in an escrow account with the court. Such action on the of a occurred. we the consideration part tender, fact, will remove doubt as to whether Further, provide it will a time frame from the trial which time. court can access whether tender occurred within reasonable *16 435 op the Court that tender Then the Court stated Id. at 423. der.” repudiate right prerequisite to to a the was a lawsuit is not the of a that proper commencement Finally, repudiate a settlement. means Court the held: that, if appellant finally
It is contended made on trial necessary, the tender tender was not, think for the reasons stated sufficient. We was and tender not further reason that long period of time. The made within a reasonable delay to date of tender from the date settlement trial, quarter years, a at the of two and cannot time as matter of law. said be a reasonable [Id. 424. at Citations omitted.] foregoing from the The rule that is derived analysis within reason- is that tender must occur grounds time learns of the able upon after could be which the release and settlement repudiated. under circum- What is reasonable court. a matter of discretion for trial stances case, offer Thus in had Ms. Stefanac made an this eight-month period between of the within filing suit, of the release and execution of her the issue of the reasonableness action would for the trial have been a matter discretion However, no court. the trial court had occasion repudiating rule on because instead this issue plaintiff proceeded agreement to file terms of the release. suit contravention Independent of the issue what constitutes repudiate settle- reasonable time within which question permissible tender is ment is the whether of an action contravention after commencement agreement. action, Prior to this the issue was of an squarely which before Court. cases factually after the com- have disallowed tender Ed Comm v Cranbrook Opinion of the Court always clearly have not mencement of an action *17 It has the rationale behind such action.21 identified litiga- not been clear in those cases whether the occur tion was barred because tender did not it the a reasonable time or whether within prevented plaintiff the from lawsuit asserting itself However, we find the rule to be a claim. right challenge preserve that in to order to the agreement, rescind a prior tender must occur release filing to or simultaneous with the of a suit alleging arising a cause of action out the release agreement. Carey Levy, 458;
Plaintiff relies on
329 Mich
(1951),
Dry-
and McDonald v Zinn
NW2d
(1984),
App
wall,
270;
134 Mich
In the suit to recover damages as a result of an automobile accident. As defense, a defendant offered release exe- parties. conditionally cuted The trial court plaintiff allowing forty- action, dismissed the grace period day within to make restitution. which plaintiff comply The then peal refused to the order and
appealed. question ap- only at issue on obligation was whether the had an consideration. adopted rationale, Court its without ref- grace period, general proposition erence to the obligation had an to tender the consideration:_ 21See, Estate, Co, e.g., Reading supra, Railway Burns v Randall v Co,
supra, Speath
v Merchants’ Life Ins
plaintiffs i.e., the release from — litigation. "If that annoyance expense of (claimed memory) disposes of the matter loss of settlement, parties for open to to a safe retreat it shows an Kirl v easy way avoid a release.” Zinner, further, settlements between materially it would supra. And discourage parties tend involved in this cases, type of if the settlement Why without restitution. should could avoided sum his from one asserted substantial opposite if liability, he knows that party by advancing mental merely a claim of bring incompetency may disavow his release and *18 placing the defendant in statu suit without first Enrichment,” quo? Unjust See "Restitution and Jur, p Am 99. the requirement party "The the other to placed posi- original transaction tion exists ing be in his should prevent enrichment the rescind- to expense other.” party at the of the Restate- Law, Restitution, ch at ment of the §65e. [Id. 464-465. Emphasis added.] However, Court, reasoning, ap- this despite the trial which following the lead of the court parently defendant, re- disputed had not been the manded, tender giving plaintiff thirty days the to The of the restitution and reinstate the suit. issue The the Court. grace period simply not before object defendant’s failure trial court’s order amounted a waiver of issue. must, hold matter of that a
We as a law legal in all cases claim is raised in contra- where agreement, of an tender the consideration vention to or agreement recited simultane- prior filing grace To ously suit. allow Ed Comm v the Court period of a the commencement for tender after very rule announced would undermine lawsuit Although seemingly Carey. harsh, this Court necessary in order to rule is we find that this agreements. stability preserve of release As we previously stated, entitled to a defendant have rely agreement. binding The nature of the
on the very is to avoid of a release and settlement essence litigation. to retain the The is not entitled agreement time and at same benefit of bring agreement. in contravention of suit
CONCLUSION indispensable ingredient utility for the agreements principle enforceability. The is the agreement uniqueness that it is of an sue is rights agreement not to enforce other an agreement —an In an increas- to forbear enforcement. agree- ingly litigious society, utility of such an increasing importance, both ment takes on vitality. for economic overburdened courts and very However, is in- instrument when litigation itself insure forbearance of tended to fosters a separate litigation layer is in- litigability of the matter tended to resuscitate that was the subject settlement, enforceabil- of the defeating very ity (judicial scrutiny) can stability is intended to the contractual instrument rule, therefore, is of more than foster. *19 significance. historical legal totally
Certainly no instrument can be judicial in order to raise a isolated from review but agreement legal beyond a the terms of claim plaintiff a contract not to sue must tender. When allegation of there no consideration and is recites provides execution, rule in the the tender fraud instability necessary against the of check fair and 435 Mich Levin, J. would To hold otherwise not to sue. contracts enforceability principle of undermine contracts sense. in the broadest August brought 1984, it and suit on Plaintiff year later that more than a not until was disputed to tender an intention manifested not entitled We hold that consideration. the settle- in contravention of commence suit to ment agreement. Appeals judgment is re- the Court of
The of the versed, dismissal the trial court’s and prejudice plaintiff’s is reinstated. claim with Riley, C.J., Boyle, Griffin, Cavanagh, JJ., J. Brickley, concurred with persuaded (dissenting). majority,
Levin, The extolling impor- by employer advocate rhetoric orderly, played by in the role settlements tant expeditious, justice, and smooth administration inviolability importance protecting the and of releases reflecting settlements,1 Judith familiarity releases,2 holds asserted Stefanac’s accompanying See n 13 and text. majority states: The and executed the release Plaintiff admits that she read personnel agreement. and, employment of the institution She was the director fact, agreements in other had dealt with similar Thus, impute situations. we can termination understanding terms and conditions of full of the her agreement. [Ante, p 167.] negate knowledge not terms of the release does Stefanac’s signature A obtained fraud or duress. her claim that her person signs response perfectly clear threat acts know- to a who consequences, signer ingly. the threat and suffer could resist economic, quences suffering Signing physical avoid the conse- or other. accept signer could in the sense that the is a volitional act legal voluntary consequences signing, of not but is sense of that term. assessment, goes step concurring opinion further in factual ordinarily left to the trier fact: task *20 Ed Comm Stefanac v Cranbrook by Dissenting Opinion Levin, J. obtaining judicial precluded deter- from that she (i) that a her assertion merits of on the minations against signed of all claims she release (ii) by her duress, of and fraud obtained was required, com- before not that she was assertion mencing action, to Cranbrook to tender this release, two weeks’ in the recited consideration pay ($1,042.31), her Cranbrook owed because (iii) underlying pay, her of vacation amount as discharge. wrongful claims failed, majority holds because The so commencing action, to Cran- to tender this before in the $1,042.31, recited as consideration brook although release, year this after until more than
—it was not point. disagree plaintiff I do not Lastly, the dissent on one I signing The into the release. was coerced believe the surrounding question plaintiff’s the defendant’s gence, plaintiff. the circumstances failure to negli- alleged consideration reflects offer of defendant, part part on the of the but not on immediacy presumes of the dissent The agreement plaintiff sign request defendant’s plain- prohibited the necessarily tiff from that the defendant intimated disagree. retaining attorney. I an money,” threat, "sign forego your alleged implicit now or have notion that the should with it the still carried been, attorney, or at least hesi- concerned with or without any price, espe- signing away right to sue at her tant about wronged cially Therefore, in her dismissal. she had been if she felt view, my in this no actionable coercion there was [Post, p case. 227.] concurring opinion suggests expressed that as the view escalates, person threatened is less of the threat seriousness negligent, signing. justified, It for the trier fact more not, immediacy real or such whether the threat was decide that Stefanac’s person signature by A fraud or duress. was obtained might reject outright easily The trier of fact threat. not might position might respond intimidated however, conclude, person in Stefanac’s that a reasonable thinking by twice about to the threat and, delaying release, consequence, relinquishing or signing the as a words, might owing trier find receipt In other of monies to her. reacting unjustifiably in to the threat Stefanac did not act that thinking and, noncompliance only consequences first about the her, rights money concededly she receipt about the due after lost signing. Levin, raised the that Cranbrook action was commenced tender;3 issue of Stefanac’s failure $1,042.31 shortly after —Stefanac tendered the failure to to dismiss because of Cranbrook moved *21 tender;4 to would have refused assuredly
—Cranbrook $1,042.31 it at any- had been tendered accept time earlier.
A
deciding
required
In
tender
before
whether
suit,
Appeals
and the Court of
the circuit court
were,
is, obliged
accept
to
as true
and this Court
1984,
September,
this action
Cranbrook moved in
a month after
commenced,
summary disposition
of the release.
was
for
on
basis
fraud,
responded
Stefanac
duress,
the release was invalid because
was
and lack of consideration. The motion
denied.
later, November, 1985,
year
again
More than a
moved
disposition, alleging
summary
for
failed to tender the consideration recited
responded
not in fact received
for the first time that Stefanac had
Stefanac
the release.
tendering
should
from
because she had
that she
be excused
consideration.
court,
Co,
Brewery
relying on
The circuit
Leahan Stroh
(1984),
December,
response summary disposition. to the motion for obliged proceed This Court is thus sumptions, on the as- judicial absent determination at both that contrary, trial level to the the release inwas fact obtained fraud or duress and that Cranbrook did indeed owe Stefanac two weeks’ paid vacation signed. to her the release when appears, majority however, It from the and con curring opinions,5 disposition by that the the Court appeal part of this is in based on inferences that majority upon the any has taken itself to draw without regard having
issue in that been raised disposition summary motion for or otherwise at the trial level.
B
*22
disposition
majority’s
barring
Stefanac from
obtaining judicial determinations on the merits is
hypertechnical.
It exalts form over substance to
require tender before commencement of an action
apparent
to set aside a release
defendant would not have
it
when
is
that the
accepted
the tender if it
promptly.
had been made
generally
Courts
excuse tender of consideration
Surely
where tender would be futile.6
it would not
seriously
contended that Cranbrook would have
5See n 2.
6 Corbin, Contracts,
61, 1116,
627;
Tromble,
p
5
ch
Duncombe v
§
8;
(1922);
Campbell,
1;
219 Mich
NW 789
188
267
NW
Lackovic v
225 Mich
194
(1923).
Misura,
152, 155;
(1924),
In
v
Burns
228 Mich
jected shows,’” plaintiff’s and the attitude the defendant so preclude recovery equity. failure to tender should not in a court of lawyer contended, however, Stefanac’s has not that since tender refused, assuredly required. would have it been was not 435 Levin, J. thereby accepted Stefanac, $1,042.31 from agreed release, had that amount to set aside the action was commenced. this been tendered before delay prejudiced Nor was Cranbrook tender.7
c reading majority’s v Stroh Brew- of Leahan (1984),8 ery Co, is 359 NW2d incorrect, tenet a well-established and contradicts always Parol evidence is of the law of contracts.9 a statement a document admissible to show is true. not Although payment of recites the two the release (severance pay), pay Stefa- as consideration
weeks’ contending nothing precluded from nac is pay actually paid Cran- because was severance amount, as vacation brook owed her paid purported $1,042.31, have been as consider- separate And, thus, no ation. actually paid underlying release of her for the owing And, $1,042.31 therefore, because claims. to pay, not return the as vacation she need her $1,042.31 if were to be set aside for the release accordingly, And, was no there fraud need duress. against protect $1,042.31 tender than a did not the tender issue until more Since Cranbrook reuse commenced, only prejudice year this that Cran etfter action was delay in tender weis the have suffered as a result brook could expense during litigation interval sustained the three-week be time it raised time the circuit tween the issue it. court decided temerity may to raise the counsel not have had the Cranbrook’s *23 not have it was so clear Cranbrook would tender issue because $1,042.31 timing accepted The a tender had it been earlier offered. suggests summary disposition on this issue decision in Leahan of Cranbrook’s motion to do so this it was emboldened Court’s December, 1984. 8 accompanying ff. text. ns 58 and See 9 accompanying text. 60 ff. See ns Ed Comm Levin, prevail
unjust she of Stefanac should enrichment the release should be so set on her claim that aside. question without consid- whether question whether recited
eration is valid and in all be tendered áre consideration must events presented questions. question is not different the release is valid or there must be whether consideration, but whether whatever is recited as must, and cir- consideration cumstances, whatever facts tendered before suit. be arguendo, may concede, I that a release will although monetary no some circumstances be valid paid.10 It does not follow that consideration was whatever is recited as consideration must be ten- payment may dered before suit. The recital of payee may false. The be entitled to retain the the paid amount if the release is aside set because paid belongs payee amount all events to the paid separate not as consideration for the payee’s underlying release of the claims. ample, authority
There is well-established required tender before suit is not where the credi (Stefanac) tor valid the amount in claims both that the release is otherwise does bar the action and that is, in all recited consideration (Stefanac) owing events, to the creditor (Cranbrook). exception debtor This is based on requiring tender, the reason for avoidance of the unjust enrichment of the that would re permitted retain, if sult is set he were after a release paid aside, therefor.12 plaintiff claims, finds, court Where that he would be entitled to retain the recited necessary It is not to consider or decide whether release needs supported by payment monetary to be or other consideration. accompanying See ns 49 ff. and text. accompanying See n 47 and text. *24 Dissenting Levin, J. is because the release set aside after the release consideration for recited as the amount represents owing money and was that accrued fact plaintiff separate apart the from the to that no the that were settled claims paid those in fact to settle consideration claims, required. is tender not
D legal argument is motivates Cranbrook’s What prevent prejudice to so much a to not Cranbrook prevent unjust desire delay resulting or to from in tender resulting of enrichment Stefanac $1,042.31, to as it a desire retention of the is from convert requirement jurisdictional into the law of tender sorts, of of new statute limitation —a to protects against stale the one that addition litigation poten- costly of claims—that bars the tially embarrassing claims. rigid that of
Cranbrook contends enforcement proliferation of rule reduce the the tender will discharge wrongful litigation. unjustifiable majority The agrees, stating apparently releases, litigation, they discourage are to contracts because breeding ground not become should themselves litigation.13 is, tender to the further The rule for indispensable agreements ingredient utility is for the of The uniqueness agreement principle enforceability. of The of an rights agreement to is that it not enforce other sue is an agreement increasingly enforcement. In an —an forbear agreement society, utility litigious increasing of such an takes importance, courts and for both overburdened However, very vitality. is economic when instrument litigation to insure of itself fosters intended forbearance separate layer litigation of is intended to resuscitate settlement, subject litigability enforceability (judicial scrutiny) was the matter that of very defeating can be of the stability the contractual instrument intended to foster. rule, therefore, significance. is of more than historical [Ante, p 177.] v Ed Comm Dissenting Opinion by Levin, majority, litigation discouraging a means validity of a release. purpose not, however, tender rule is provide against necessary check a "fair
instability provide contracts,”14 but rather against unjust re- check scinding enrichment rescinding
party that would *25 if the result party to were allowed retain the benefits of the contract he attacks.15
E stating majority, precon- The in is a that tender legal to dition suit "whenever a claim is raised in agreement, contravention of settlement even if equitable joined ignores only claim,” with an not unjust the enrichment rationale the tender rule, but also a critical difference between an equity in action to set aside a release and an on a count in action "law” disaffirmance of the release. dispute in factual an action to set a aside plaintiff’s
release does not involve the merits of against underlying claim the defendant that were only resolved the release if it It is valid. is if plaintiff when and should be able of the release is set that the aside put expense the to the to defendant defending against underlying the claim. agree majority "very
I es- of a is sence”16 release and settlement to avoid 14Ante, pp 177-178.
15 accompanying See n 47 and text. must, plaintiff We hold as a of law a in matter all cases legal agreement, where a tender simultaneously is raised in of an claim contravention agreement prior the consideration recited to or filing grace period with the of suit. a To allow for tender after the commencement of a lawsuit would under very Carey Levy, mine rule announced this Court [v harsh, (1951)].Although seemingly NW2d 435 Levin, J. concerning litigation litigation the settlement of — litigation validity underlying claims, not of the itself. equity17 permitting to
The rule release without action to set aside a maintain an paid for the release does tender not expense "annoyance put the defendant litigation”18 discharged by claims release. paid by a defendant
The consideration signed protects at the time release is against litigation underlying only claims, of the provide paid secure, and is and cannot not protection19 against, litigation of a claim procured by fraud or duress. release was protect, in not the words consideration does majority, "very instrument that is intended litigation.”20 ensure forbearance of paid for the release does Since the consideration litigation protect against of a claim that invalid, not be the consideration need *26 release precondition to an attack on the returned as a validity distinguished from of the release itself as litigation underlying sure, To if claims. be invalid, to the release is found be considera- paid against litigation protect under- to of the tion lying certainly returned claims must most then be preserve necessary in to we find that this rule is order stated,
stability agreements. previously have a of release As we binding rely of the defendant agreement. is to on the nature entitled very is to of a release and settlement essence litigation. is not entitled to retain avoid bring agreement of an and at the same time suit benefit contravention agreement. [Ante, pp 176-177.] "equity” required Tender before commencement text, accompanying to set a See ns 65 ff. and action aside release. p Carey, supra, n 16 465. protection. Even some 20Ante, p 177. Ed Comm Stefanac v Levin, J. permitted proceed plaintiff may be before litigation underlying claims. with
i years employed Stefanac was for more than two personnel private Cranbrook, director of located in a northwest Detroit suburb. Ste- school deposition, morning fanac, testified that on the 16, 1983, she advised her of November supervisor, was Kipp, employment Robert was her day, Powell, William terminated. Later administrator, entered her office Cranbrook presented and According Stefanac, form. her, Powell waved several checks in front of but them. Stefanac did not allow her to examine be- expense payroll and reim- lieved checks checks. Stefanac testified that she bursement implying if he that she would asked Powell signed the re- not receive the checks unless she lease and that Powell responded, "you’ve never Explaining person.” she been a dumb needed support children, checks to said her Stefanac signing that she was the release under duress.21 day Cranbrook’s account of the events on the signifi- employment Stefanac’s was terminated is cantly different.22_ Stefanac, The release stated that Cranbrook’s acceptance resignation agreement pay of her her for two work, demands, claims, weeks’ would release Cranbrook from all pay, causes of action. The release made no mention of severance nor was severance discussed. 22According Kipp, to Powell and after the termination of Stefanac’s employment, Kipp present asked Powell to meet Kipp give her with the release. instructed Powell to Stefanac two (one checks for travel for retirement contri reimbursement and one bution) (itemized to tell her she not receive the third but that weeks’ vacation would *27 including pay four as both and two weeks’ severance 26) signed Kipp legal
pay n said that unless she release. —see sign him and counsel had advised condition her to have Stefanac release to receipt signing pay on her the release. severance 435 Mich Levin, alleging that commenced this action
Stefanac dutifully faithfully performed job her and she had policy discharge violated Cranbrook’s and or her that terminating only practice employees ma- for professional jor She further conduct. failures against alleged discriminated on that she had been terminating her her and that the basis of sex23 public policy.24 employment violated Stefanac after checks delivered to Three were signed for Two were amounts she release. for travel reimbursement and retirement owed her designated The was four third contribution.25 pay two vacation and weeks’ severance weeks’ pay.26 in issue. contends third check is Cranbrook employ- time it Stefanac’s
that at the ment, terminated pay, her and it owed four weeks’ vacation designated pay, on the that two weeks’ Stefanac, meeting immediately that he Powell testified gave checks and told she telling contribution her the travel reimbursement and retirement give her that not her the third check unless he could asked, going signed you "are the release. Powell denies Stefanac document, my sign get I that unless this I’m me responded, money,” "you’ve . . . . .” he been . . and that never dumb sign Powell that he advised Stefanac not asserted responded until Powell said that Stefanac that she had she felt better. release, anything anyway, helped develop it did not mean going sign it. Powell that Stefanac said— and that she was other than in the context of this lawsuit —that sured denied pres- she had the release. been signing in connection with coerced spread by employees rumors about her sex She cited authority explicit made to men in at life and sexual advances her Cranbrook. report destroy ordered to show Stefanac asserted that she was. Cranbrook, dispose ing records of a Cranbrook Jewish students. hire practices sex at and to discrimination policy discriminating in the admission charged Stefanac further that she was instructed only positions only for females for other males certain practices positions and knowledge opposition employment. that her of and to these policies to the of her led termination 25 addition, regular paycheck may In have received a wages. $3,126.93 gross pay check voucher indicates ($2,084.62 $1,042.31 pay). in vacation severance *28 Ed v Cranbrook Comm 189 Dissenting Opinion by Levin, accompanying pay, the pay voucher check as severance ($1,042.31) the two weeks’ recited as consideration the release. employ- that,
Stefanac asserts at the time her terminated, her ment was Cranbrook owed at least pay.27Thus, six weeks’ vacation paid when Cranbrook paid pay, only her six weeks’ it her the her the the pay pay it her vacation two weeks’ owed and did pay recited as release.
n protecting majority’s I share the concern with integrity surely is, however, It settlements. at least debatable whether the law should charac- terize as a settlement what occurred at Cranbrook day discharged. on the Stefanac was
A
Stefanac claims that a few hours after her dis-
charge
she had asserted a claim of
—before
against
kind
Cranbrook —a Cranbrook official con-
fronted her with a release form and led
her
only way
believe that
she could take home
admittedly
checks for amounts
owed her was to
sign the release.
only
fairly
A release is valid
if it is
and know-
ingly made,28 and
if
is invalid
entered into as a
result of
duress29
fraud.30 Parol evidence is ad-
missible to show duress31or fraud.32
27Stefanac maintains
that Cranbrook owed her four weeks’ vaca
pay
year
tion
vacation
for her last
at
two or more weeks’
preceding year.
for the
28
332,
(1957).
342;
Utley,
Denton v
350 Mich
It claims was Stefanac armed with against negotiated employer, her with Cranbrook acknowledged: Cranbrook acknowledge Although parties all that she [Stefa- involved discharged, involuntarily signed Plaintiff a
nac] designating departure "voluntary her claims resignation . . . Ed Comm v Cranbrook Levin, in full accepted two weeks’ ultimately rather, was, sought It Cranbrook settlement. termina- a few hours after only out Stefanac confronted employment. of her tion time to writing before she had Stefanac with experienced claimed she the stress she overcome discharge employment, or of her from as a result possible consider courses causes time to to frame a lawyer or to consult with a action bartering for her claims. strategy "haste,” coupled with when very fact [T]he potent is a factor courts take payment, nominal cases like this arrive before into account when Co, 368 Mich Construction them. v Strom [Hall 253, 261; (1962).] 118 NW2d might be found trier Cranbrook’s conduct fact, allow the factual issues were this Court merits, comparable to be to be decided on the insurer who obtains preemptive strike person shortly from an injured "rush release” after an accident.34_
34In that context it has been said: *30 time, length expired of time that The element of such as the damage injury of the and the between the occurrence release, signing ing fraud. If the releasee obtained the release may important in determin- of the be an factor be held invalid for mistake or whether a release should days within a few occurred, possibility injury that the releásor there is a after the did not have a chance to discover the true extent or to injuries Release, 2d, place proper Am Jur a value on them. [66 62, pp § 746-747.] And further: bargaining parties sharp inequality of the "The economic generally has been exists in this class of cases also
which
by
this doc
the courts in their consideration of
considered
Pacenti,
260-261,
App
[Id.,
quoting Clancy
pp
Ill
2d
v
15
trine.”
171, 177;
(1957).]
It has become common for obtaining a "rush interview as a means of exit discharged separa- offering employee release” a basis. on a take-it-or-leave-it tion or severance sign employee he is if he does not told before room, be the offer will withdrawn. leaves expects justice lawyers system of to move A positions settle civil and from take-it-or-leave-it ponder to bestow criminal cases35should whether imprimatur legitimacy signed on a release lacking unrepresented, discharged employee, by an responding resources, and under emo- in economic on-the-spot, stress to an take-it-or-leave-it tional economically advan- offer well-advised and employer. taged lawyer not
There was time when would signed by prepare documents for a client to be party, represented by not to be another known lawyer counsel, client, unless or the in submit- strongly ting party, to the other document unrepresented party recommended that the obtain signing allowed counsel before document and to do so. time Corp,
In Motors Wahsner American Sales (ED 1984), Supp plaintiffs, Pa, F co- investors/operators dealership, an automobile against an action manufac- filed automobile manager and its termina- turer zone bad-faith Day in tion violation of the Automobile Dealers’ saying anything 35 I do wish be understood there wrong provided with a offer where offeree is take-it-or-leave-it legal position. adequate A time obtain counsel and evaluate his generous. might offer take-it-or-leave-it *31 Ed Comm Cranbkook Levin, interposed as a de- The defendants Court Act.36 plaintiffs day signed by on the fense releases employment was terminated.37 their plaintiffs were not noted that The court warning employment given their advance that provided they terminated, were not be would with an more than given opportunity to consult counsel twenty to decide whether to minutes sign decision that could affect the release —a their economic lives. rest of But the duress issue was decided under 36 15 USC 1221-1225. Pennsylvania law: law, Pennsylvania which the conditions under Wahs Under may signed constitute duress. ner and Novin the releases appropriate apply Pennsylvania law is the law to here with respect validity of the v American to the releases. [Wahsner (ED Pa, Corp, Supp 1984).] Sales 597 F Motors operating dealership plaintiffs just After had been they meeting years, short of three directors and their were called into a of the board of having resignations requested. plaintiffs, were forewarning resignations requested no that their would at this had meeting, They them two flabbergasted request resign. were at the and refused to they resign that if did not the board remove were told would meeting nothing they with at all. and would leave When $5,000 again resign, men to the board offered them refused settlement, company pay, two weeks’ of the cash severance use twenty car. The board allowed the two men offer in minutes to discuss the private. discussing together, plaintiffs they After the offer decided that resign. manager they should each receive recommendation and continued tendered their The branch reassured them that would $5,000 agreed provide them with letters of hospital coverage. plaintiffs then $8,184.58 resignations. Both men received checks for (two $5,000 taxes), withholding plus severance less two weeks’ car, days’ pay, company weeks’ and three vacation use of the contin- insurance, plaintiffs ued medical executed certain and a letter of recommendation. The stock, resignation, assignments waivers of letter.8 rights agreements, general under the stock releases. deposition, plaintiffs they stated that believed that On nothing manager’s they they if branch statement would receive resign they did not meant would have walk home because plaintiffs they company had in a car. also arrived One testified great pressure sign that he felt under cerned that he would have could family the release —he was con- difficulty finding work elsewhere and he losing security being not risk offered because he had a support and a child a heart ailment. *32 435 Mich 155
194 Levin, J. negotiation than were of more benefits Plaintiffs’ according originally court, not, to the did offered counsel. The court substitute for the assistance of plaintiffs presented with an all- that were said or-nothing they they choice; told that if did were resign during meeting they leave not would nothing. Holding meeting absolutely that Pennsylvania law, under the conditions under signed might which the men the releases consti- duress, mo- tute the court denied defendants’ judgment. summary tion for
D
compromise
does indeed favor
and set-
law
recognizes,
agree,
persons
tlement. It also
I
they
choices,
often face difficult
and that
should
agreements.38
it is the
role
held to their
But
courts’
compromises,
This
not to create them.39
to enforce
province of
trier
fact in
Court invades the
finding
that what occurred at Cranbrook on
employment
day Stefanac’s
was terminated consti-
"compromise.”40
tuted a
or a
"settlement”
38
nSee
35.
39
Detection, Inc,
953,
Chicago
Burglary
&
957
Baker v
Fire
489 F2d
(CA 7, 1973).
40
greatly expanded
early
has
The doctrine of duress
been
since its
general enlargement
origin. Despite the
common-law
of the doctrine
duress,
Michigan may
encompass
law in
duress to
economic
of
have
Michigan
Hackley
lagged
fairly
cases
v
Some
recent
cite
behind.
569;
(1881),
Headley,
propositions
45
If there was cashing validity, the check no release has pay not a satisfac- was the two weeks’ included tion.41
E
paid
it
the amounts
Stefanac
Had Cranbrook
admittedly
and,
therefor
after checks
owed her
delivered,
two weeks’
offered Stefanac
had been
exchange
any
pay
and all
for a release of
parties
negotiation
has been
true
between
The absence
regarded
See Wise v
there
economic duress.
as an indication that
(1950).
Motors,
46; 42
404
231 Minn
NW2d
Midtown
248, 253;
Corp,
Capps Georgia
F deposition, supervisors testified Stefanac’s payment they effect, that did withhold they in- had and that been to Stefanac amounts structed to deliver expense reimbursement re- to her without contribution checks retirement gard signed the release.44 she to whether pay was, how- the two weeks’ severance check for ever, that had been in the same check included pay Cran- four weeks’ vacation written for the support, That tends to it her. brook conceded owed could not somewhat, assertion that she Stefanac’s pay unless she weeks’ vacation obtain the four signed the release. provide may, it this Court should
Be that as prove opportunity her claim Stefanac an she admittedly due her could not obtain amounts *34 signing release, that the two without pay, release, in the as recited consideration weeks’ was, asserts, as an additional two as owed she pay. vacation weeks’
hi person general is, indeed, who that a The rule 42 Including for an additional two weeks’ vacation the claim complaint alleged in her filed this action. the other claims well as 43 following n 35. n 34 and also But see text 44 n 22. See v Ed Comm 197 Levin, that he has rescinded a contract claims cannot contract, retain received under and must tender recited consideration before com mencing an action of the disaffirmance cont ract.45 The is an of the expression principle rule that "you your can’t have cake and eat it too.”
A requiring reason for is to prevent tender unjust enrichment: requirement
"The
party
that
the other
to the
placed
original posi
transaction should be
in his
tion
ing
prevent
exists to
enrichment
rescind
expense
party at the
[Carey
other.”
v
458,
Levy,
465;
(1951),
329 Mich
NW2d
quoting
Restitution,
2,
Restatement
ch
§ 65e.][46]
commentary
provides,
however:
rea-
"[T]he
son for the
rule
it.”47 The
limits
commen-
[tender]
tary
required
elaborates
is not
where
Huron,
Co,
413;
45 Randall v Port
St
C & M C R 215
184 NW
(1921).
express
theory
party
46 Other
cases
where
seeks to
ground
fraud,
rescind
upon
promptly
a contract on the
he should tender
fraud,
discovery of the
lest he be held to have ratified the
Crippen Hope,
(1878);
Reading
contract. See
was indebted
eration,”
disputed
requiring
her
to return the
disturb,
rather
than re-
would
"consideration”
establish,
quo.
be
Cranbrook would
the status
expense.49
unjustly enriched at Stefanac’s
authority that
tender be-
There is considerable
alleged
required
consid-
suit is not
where
fore
payment
arguably
was,
was,
for
eration either
or
48 Where,
seeking
transaction,
person
from
resti
aside
gave
as the
tution
result
even
net assets of the
be entitled to retain what
other
would
agreement,
does
enrich him
the transaction
though
things,
it
nor does
diminish the
he retains such
other ....
[Id.}
following example:
commentary
is illustrated with the
uncertain,
is not
A owes B a sum which is
but which
less
accept
By
representations A
B to
$100.
than
Blackacre with
fraudulent
induces
exchange
money,
for
$100
Whiteacre
B
release of the debt.
is entitled to rescission of
transac-
upon
a tender of
of a deed to Blackacre without
tion
$100,
[Id.,
upon
original
which
debt.
illus-
will
credited
8, pp
tration
261-262.]
Appeals
Circuit
States Court of
for
Second
United
with a similar circumstance
First Nat’l Bank of Cincinnati
faced
p
lawyer, wrongfully asserting
Pepper,
supra,
a lien
n 40
A
635.
records,
agree
they
a settlement
his clients’
demanded
they agreed
execute
legal
allegedly
due
ment within
him. The court found that the settlement contract was entered into
him
fees
which
Addressing
rule, the court
under duress.
the tender
said:
found,
goods
property
been
it has
or
has
Where duress
adjudicated
wrongfully
suggested
to have
never been
that one
goods
purposes
procuring
property
withheld another’s
extortionary
resulting
pay-
forced assent
to a contract
in an
upon
very property
ment
receive back
rescission
should
right.
extraordinary
which he
no
a result would be
had
Such
equity;-
contrary
logic,
decline to
indeed and
reason and
we
added.]
required
[Emphasis
that it would be
here.
assume
v Cranbrook Ed Comm
Dissenting Opinion by Levin,
*36
already existing
an
debt between the defendant
debtor and the
creditor:
party
attempts
who
to rescind a
[A]
transaction
fraud,
ground
mistake,
otherwise,
on the
of
or
is
not bound to restore that which he has received by
thereof, when,
event,
virtue
in any
ishe
entitled to
retain it as indisputably his
may
own whatever
the fate of his effort to rescind the transaction.
[12
(3d
Williston,
ed), §1530, pp
Contracts
646-648.]
agreement concerning
There is not universal
when recited consideration must be
It
tendered.50
exceptions
many
has been said that
there are
general
requiring
including
tender,51
rule
"that
50
require
precondition
Some cases do indeed
tender as a
to com
mencement
if
Cf.
tender
368;
recognized
of an action.
timely
Others have
that tender is
filing
plaintiff’s
reply
made with the
plea
of the
to a
of the release.
McGregor Mills,
1955).
(Ky,
v
280
161
SW2d
Others have allowed
during
Jefferson,
the course of the trial. Cf. Keefe v
151 Minn
(1922).
suggest
whether depends the rule in case on the facts CJS, Release, 37, p such case. [76 § 666.] Occasionally, judgment dismissing plaintiff’s trial court [a case for of circumstances .... requirement failure to is reversed tender] because the particular restitution is viewed as too burdensome Palmer, Restitution, 3.11, p [1 § 301.] 155 200 435 Mich Opinion by Dissenting Levin, re- necessary money where the restoration event and due him party ceived was v All Baker if could be recovered back.” returned Co, Life Ins 308, 312; States 96 NE2d 46 Ohio (1950).52 Court’s this underlying
The factual
scenarios
Marantette,
329, 335;
Fritz v
decisions
Bank,
Public
and Urben
(1978),
NW2d 425
(1961),
instruc-
are
NW2d
Fritz,
corn,
brought
plaintiff-seller
tive. In
on a
unpaid
to recover
balance
action
Marantette,
contract
defendant-
from
corn
The defendant
said that
purchaser.
inferior,
to a deduc-
agreed
had
*37
the
price,
tion
from the
contract
and
of the check endorsed "corn
plaintiff’s
acceptance
full”
the reduced
consti-
paid
price
contract
in
for
plaintiff
The
an accord and satisfaction.
tuted
the
depositing
crossed out the endorsement
before
"If,
parties
adjudication,
equities
the
the
of the
can
in
final
protected,
is
fatal to the
failure to make formal tenders
proceeding.”
Price
v Cascade Natural Gas
Construction Co
[Ted
741,
(CA
Norman,
9, 1962),
Corp,
quoting
744
v
307 F2d
Cain
31;
(1926).]
find that the debt was find that the amount or the paid represented undisputed portion Id., pp implication, represented By 334-335. if the com contract. a com, check concerning compromise good-faith dispute of a the worth of negotiation of the check would consummate an accord satisfaction. Bank, plaintiff, employee, sued the Public his em bank responded plaintiff’s acceptance ployer. The bank that the of a final plaintiff. paycheck salary in full of all satisfaction owed "[s]alary pay claimed the check was endorsed and overtime defendant through August notice.” time he 1958, plus in lieu of weeks severance Urben, supra, p *38 283. The maintained that at the check, employer promised accepted his to settle for the the The also claimed that the check did balance at a later date. by contain the endorsement claimed the defendant. Court by its that the that the cases cited the defendant for contention said cashing all distin of the check was an accord and satisfaction were guishable because case, dispute
[ujnlike was no in the cases cited the instant there surrounding accep- respect its to the facts the check and with tance. [Id., p 284.] Mich by Levin, notwithstanding recognize that, Fritz and Urben release, where words of that a check contains by money dispute received whether the there is a liquidated payment aof the constituted question by defendant, the what owed debt payment deter cannot be were settled debts Sail indicates mined as a matter of law.56 dispute, prerequi a tender is not where there is commencement of an action. site to polarized legal em- issue, obfuscated posture employee ployer the issue which versus might plain- if decision, clearer arrives for employee tiff claiming wrongful and not were a businessman discharge. And the businessman plausibil- complaint, apparent asserted ity, his $25,000 to a that he had sold merchandise deadbeat, and turned out to be a defendant who strong-armed plain- had that defendant deadbeat sign- accepting $10,000 and tiff ing into businessman remaining $15,000. a release of the require the Court would busi I doubt that this returning $10,000 run the risk nessman precondition as a com to defendant deadbeat though mencing $15,000, even an action for responded plaintiff’s com defendant deadbeat plaint by denying $15,000 that he owed the or the denying $10,000, or that he that he was deadbeat plaintiff, by imploring strong-armed had importance of encour this Court to underscore protecting sanctity aging settlements and requiring the return of documents written precondition $10,000 to suit for the as a trusting $15,000, to be found and to deadbeat ultimately judgment find for should the Court plaintiff.57 Fritz, 334, Urben, p p 284. See 57 Fritz, supra. Cf. *39 Ed Stefanac v Cranbrook Comm Dissenting Opinion Levin, J.
IV extends Leahan majority beyond scope and, doing, of the decision in that case in so ignores well-recognized exception parol evidence rule.
A Appeals The Court of majority now Leahan out of Court, context,58 reading this inter it forth pret setting parol as some sort of evidence read Leahan They rule. erroneously precluding evidence, proving from by extrinsic be tender, that, fore being required to if the release aside, were set she would be entitled nevertheless to retain the consideration recited in the release because Cranbrook owes her that amount as vaca and, thus, tion there no need to tender discharge Brewery Company, fifty- At the time of his from Stroh four-year-old corporate president John Leahan was the senior vice of president receiving Stroh and of two Stroh subsidiaries compensation $250,000 plus annual excess other In benefits. December, 1978, summarily discharged presented Leahan was resignation prepared by with a letter of which had been Stroh and its legal counsel. Leahan was not allowed to consult with counsel and sign was told that he must compensation general the document or suffer the loss all signed and benefits. Leahan the letter that included a against promised release of all claims Stroh. The letter performed Leahan sizeable benefits. The release stated that if Leahan requested by president employment duties Stroh’s and refrained from elsewhere, month until Stroh for salary $10,355 per he would be continued at his base March, 1979, that Leahan would serve as consultant to $93,195, coverage and that Leahan’s medical and his mem bership at the Detroit Athletic Club would be continued. paragraph The final of the letter stated that further considera- "[i]n foregoing,” discharge tion Leahan would Stroh from all claims Subsequently, against and actions. Leahan commenced an action Stroh, age alleging employment discrimination and breach of con- Citing release, partial judg- tract. ment. Stroh Stroh moved for accelerated noted Leahan had failed to tender the consideration supporting responded the release. Leahan that the contract was void for duress and lack of consideration and that he should be excused tendering paid from because all the beneñts to him were in considera- agreement compete. tion of his not to Levin, against unjust guard enrich- amount suit to before ment. language argued letter
Leahan signed supported *40 claim that he tion recited change his considera- solely paid in the was in ex- letter performance "spe- by Leahan of for future obligations” no and that considera- cific tasks and paid he for the release of the claims tion was sought in The Court looked to assert the lawsuit. language ruled, at of the letter and language, matter recited consideration release construction of that of paid exchange was in for as well as for there of the claims described "specific obligations” the Leahan. tasks and undertaken merely in thus Leahan resolved a Court dispute concerning language of the how the letter only The Court that should construed.59 held concurring opinion, a In Chief Justice Williams said: only PQf proof part . and that of the had offered considera- . . if tion tendered back was for the release had he received release, part to the then attributable accel- [Leahan, judgment erated should have been denied .... su- pra, p 114.] Stroh, court, agreeing judg- ordered accelerated circuit grounds ment on received was fatal claim that the letter that Leahan’s failure to tender the consideration Leahan, appeal, reiterating to his his claim. On consideration, provide did for said: not agreement clearly A of the December 4 itself shows review speciñc paid to the for that all the consideration tasks and the Plaintiff was obligations agreed perform which the Plaintiff for provision. [Emphasis and not for the release Defendants added.] reply, language paragraph of In cited the the final of the Stroh foregoing” support of the further consideration its letter: “[i]n supported by contention the release was all the considerations paragraphs earlier of the letter. described Appeals, unpub- against background this that the It was Court of (Docket curiam, 56225), opinion per May lished said: decided No. Ed Comm v Cranbrook Dissenting Levin, that the consideration not established had Leahan "specific exchange paid solely tasks for the was obligations” the release in suit. claims
B
barring
evidence
read as
If Leahan were
payment
untrue,
was
of consideration
recitation
and thus
received,
then
no consideration
argument
benefits received
that none
Plaintiff’s
resignation agreement
pursuant
were
to the
him
for the release
language
express
directly contrary
agreement
to the
contract,
agreement
the release
within
merit.
without
Appeals
in Leahan
decision
affirmed the Court
This Court
repeated
simply
opinion.
the factual observa-
per
This Court
curiam
express language
Appeals
to the effect that
of the Court of
tion
the release was
contrary
plaintiff’s
that the consider-
assertion
to the
*41
obligations
in suit:
than the claims
other
ation was for tasks and
courts,
not
appeal,
does
in the lower
On this
Carey Levy,
challenge
underlying principles
of
contends,
(1951),
He
and similar cases.
be shown given. no other consideration has been and that parol result not contravene the evidence This does prohibit the contradic- rule since this rule does Perillo, & Con- tion of a recital of fact. [Calamari (3d ed), 4-6, p Emphasis 198. tracts § added.] . [T|t by parol evidence . . that may be shown agreement impaired validity . render- by . . lack of or failure of consideration Williston, ing agreement void. voidable or [4 (3d ed), 634, pp Contracts § 1017-1018.] acknowledgment receipt ... is no more [T]he by party one than evidence paying certain action receiving party pay the other uniformly ment. The courts have decided that this conclusive, evidence is not relevant Corbin, Contracts, and that kind of it. testimony to rebut admissible [3 586, pp § 489-490.][61]_ 2d, Release, 52, pp 66 Am Jur 730-731. § Farnsworth, 7.4, Contracts, 464-465; Simpson, Similarly pp see § (2d ed), 214, 199-200; Contracts, 2d, pp Contracts p 132. 2 Restatement § § integrated agreement promises A A and B make an which complete building according plans
to and It had that he had not This evidence is tion for B’s new is an unfinished to certain $2,000 specifications, doing. promises B A so B, that, may previously A shown contract made *42 promised building $10,000; complete to erect and completed though paid price. fully it the whole to no considera- admissible show that there is promise, promising A no more than he since is original perform. his bound contract to Restatement [2 2d, Contracts, 214, 134, p illustration § 5.] Ed 207 Comm v Cranbrook Stefanac Levin, J. fully in are accord of this Court Decisions parol principle evidence is admissible that "Parol was received. that no consideration show always that a con- admissible to show is evidence nothing apparently although, valid, has tract, paid, support it,”62 no consideration a "failure of consideration.”63 thus there was parol principle Application evi- showing nonpayment/fail- not bar dence rule does precluded in the instant is not ure of consideration claiming "plaintiff is that she not case because ,”64 money any . . . not receive did sought money she introduce evidence that already her Such owed Cranbrook. received was evidence would tend to show no there was paid sense, and, in that to her consideration failure of consideration. Since evidence nonpay- always admissible, is ment/failure reading barring incor- such evidence is Leahan rect.
v
although
precondition
consideration,
Tender of
precondition
law,”
to an "action at
Detection,
Inc,
Chicago
Burglary
v
&
n 39
See also Baker
Fire
supra.
62
(1875).
Stone,
99, 101
33
Jennison v
Mich
63
(1884).
Fletcher,
484;
52
18
228
Maltz v
Mich
NW
(1930)
Moch,
Hagan
("[A]nd
Mich
629
v
NW
consideration,
receipt
though the lease recites a
of which is
lease,
consideration,
acknowledged by
confessed and
the true
consideration,
by parol.”),
may
want of
be shown
Bd of Control of
Burgess,
183, 185-186;
Michigan University
App
Eastern
(1973) ("A
acknowledgment
receipt
206 NW2d
written
merely
presumption
creates a rebuttable
that considera
consideration
tion
has,
fact, passed.
parol
rule nor the
Neither
evidence
estoppel
presentation
of evidence to contradict
doctrine
bars
acknowledgment.”). Similarly
see Madison Nat’l Bank v
such
(1975).
706, 721;
App
Lipin, Mich
commencement historical, for this distinction The reason lief.65 resting of rescission at theories on the different powers respective equity and in law of common law. and the courts chancellor power or re- to cancel had the The chancellor bring person could, therefore, A scind a contract. seeking or of a contract cancellation an action claiming distinguished from an action release, as had been rescinded. the contract or release This Court said: nor It neither restored is said property re offered to restore defendant seeking nec rescission. Neither was
ceived before
proceeds
equity praying
rescission
essary. A bill
on the
rescission,
has
no
theory that
there
been
already
has
been
theory
not on the
accomplished.
that rescission
Hobolth,
286, 290;
v
224 Mich
[Witte
(1923). Emphasis
195
82
NW
added.][66]
Practice, 85.22, p
Callaghan’s Michigan Pleading
77. See
&
§
65 11A
(1928)
Iden,
568, 571;
("[w]hile
242 Mich
219 NW
Maurer v
prerequisite
recovery
in a
tender of restoration is a
restoration or a
rescission,
precedent
ground
it is not a condition
suit at law on the
case,
sought by
type
or rescission is
bill
in this
in
(1939)
where cancellation
Hall,
200, 204;
equity”),
been
by
plaintiff.
It
compel
reconveyance
which
make his decree
equity,
could
since the Chancellor
otherwise
reconveyance and could
expressly
conditional
of restitution
plaintiff to
specifically
for the
enforce an order
also enter and
reconvey.
1116,
Contracts,
61,
p
Corbin,
ch
§
626.]
[5
equity
brought
suit is
that when
It is to be observed
necessary,
prior
since
no
a transaction
rescind
may
conditional
be made
the rescission and
itself effects
decree
upon
that has been received.
the return
agreements,
concerning
53
settlement
[Havighurst, Problems
283,
(1958).]
L
311
NW U R
prerequisite
holding
jurisdictions
tender is not
in other
Cases
require
may
surren
equity
decree
the court’s
because
to an action
rescinding party
as a condition
received
der of benefits
Knap
party include:
protect
other
the interests
rescission
Martin,
(1891);Early
331
Freeman,
491;
v
533
50 NW
pen
47 Minn
v
Inc,
Pedco,
(1947);
414 A2d
55;
Peaslee v
App
565
72 NE2d
Ill
Chisholm,
(Me,
55
1980);Minneapolis,
Co v
1206, 1209
St P & S S M R
Minn
Lion Oil
Albritton,
Refining
(1893);
21 F2d
374;
Co v
63
57 NW
Bell,
(CA 8, 1927);
A Style In Greenslade, NW2d (1961), Court, initiative, this on its own re- quired plaintiff begun who had an action at law in disaffirmance of a release to amend her com- plaint equity. to seek cancellation of the release in negligence The for accident. The claiming had commenced a action
personal injury sustained in an automobile
defendant, here, as moved to dismiss plaintiff, settlement and release. The responded procured here, through the release was misrepresen-
fraudulent inducements and jury tations. The demanded a trial of the *45 respecting factual issues the release.70_ 68 commonly given position A reason for the of the law courts they judgments. fact, was that early history, the the tions have been [1 did not enter conditional In judgments law, conditional were entered at but practice largely forgotten. addition, seems to have been In power stay specified of law courts to execution until condi ancient, though sparingly is satisfied exercised. Palmer, Restitution, 3.11, pp § 295-296.] 69 conception developed in the law courts was that plaintiff by rescinded his own act and then based his case on a perfected rescission that had been before the action was com perfect In menced. attempt order to the rescission he must return or capable to return an asset received which was specie. so, regularly return in If he failed to do courts held that [Id., p the action should be dismissed. 295.] 70 jury The trial court sepa ordered a trial of those factual issues personal injury rate from the trial of ap action. The pealed, claiming that the entire matter should be determined in one jury. trial one Ed Comm v Levin, Court, before abolition a few months
This equity,71 held that law and distinction between release, should to avoid a plaintiff, seeking action, and re- proceeded chancery have court, enjoining the circuit the case to manded bring and proceedings, may "until further chancery action appropriate determined have in accord herewith”:72 proceed- upheld chancery is in the If release If the release ing, that end the matter. should invalid, her plaintiff may proceed with then
held law negligence and involving questions of action damages. [Id.] briefs, it is clear From the records leave to amend circuit court with remand to the its this Court on own raised disposition was initiative.73 disposition by this Court in n 75 of whether the See for a discussion right by jury. Style to trial was consistent with the task, extending many deeply over involved The Court was proposing revising years, rules revisions the court surely adopted
judicature in 1961. The Court was act and enacted ante, 169-170, passé. pp law/equity See distinction was aware n 16. supra, p Style, 683. limiting Analogizing action in cases attack to direct to arbitration equity, the Court said: . respect pursued with a settlement That was the method Utley, 537 363 in Denton NW2d [86 and release (1957)]. v Norris, Indemnity Co & v In Hartford Accident procedure (1961)], was
Mich 279
NW2d 790
the same
[109
supra,
opinion
Utley,
in this Court’s
Denton
followed and
cited as
controlling.
[Id.]
equitable
of a
listed
cancellation
one
brief
Plaintiff’s
party may
by which a
seek relief
three conventional methods
Nonetheless,
appears
it
it
that was the Court that
from contract.
disposition
to seek
proposed the
remand
leave
amend
Style.
equitable relief in
*46
573, 574;
Metoyer,
App
In this Court thus held that the "law” abeyance action should be held in while complaint equitable amended her to add an claim only for cancellation of the release.74 The differ- Style ences between and the instant case are that Style personal injury action, was a not an action claiming wrongful discharge, and that this Court willing permit in that case was of the an amendment complaint.
B spirit generosity inspires The same permit plead Court Cranbrook to nontender year more than a after Stefanac had commenced this action should move it to allow Stefanac to complaint amend her release on the to seek cancellation of the
ground
of fraud or duress.
not,
indeed,
did
seek cancellation of the
separate
commencing
in
action before
separate
action,
this
or as a
count in this action.
Nor has she contended that
this Court should
apply
developed
in the instant case the rule
in
equity
required
courts of
that tender is not
where
suggestion
At the
of the trial court defendant’s motion was
abeyance pending
held in
equity
determination
a court of
toas whether or
asserting
not defendant should be barred from
[Emphasis
the defense of release.
added.]
validity
equitable
of a release has been decided in an
action
many
Utley,
332;
(1957),
cases. Denton v
350 Mich
menced
disposition
in
a
join
such
I could nevertheless
sup-
disposition
precedentially
Such a
is
this case.
Style
in
where the
decision
this Court’s
ported by
Alternatively,
initiative.
acted on its own
Court
require
further
appropriately
could
this Court
the Style
disposition
of whether
briefing
—remand-
and trial
seeking
a count
cancellation
ing to add
in
case.
be ordered
this
by the court75 —should
75
separate
sought,
in a
action or
If Stefanac had
either
release,
separate
respecting
issues
in this action to cancel the
the factual
count
probably
have been tried before
cancellation would
593, 604;
Eddy,
jury.
154 Mich
118
See Chamberlain v
court without
NW 499
348,
Co,
App
(1908);
Benjamin
Realty
Mich
v
Rich
55
Head
(1974).
354; 222
237
NW2d
jurisdiction
equity were said to have concurrent
Courts of law and
equitable.
prayed
especially
the relief
for
in cases of fraud where
(1952).
Ullmann,
66, 72;
335 Mich
VI with the importance is so smitten The Court cita- tender, that, briefing, argument, without new authority, appears it substitute tion protection of "settlements” gatekeeping rationale — long-established avoidance-of- —for the well- and require- rationale unjust-enrichment ment: *48 requires forth here tender set rule [T]he legal in raised
whenever a claim is contravention joined if agreement, even with an of a settlement equitable claim, precondition. Anything is a purpose the of the tender rule. nullify less would p 170. [Ante, Emphasis added.] Court’s foregoing expresses the The formulation the com- requiring tender before concern rule Michigan, practice involve In unlike the Federal with its Amendment, specific Congress acts and the ment of we equity’s jurisdiction, of Seventh properly of determine under our Constitution the extent powers. gov practice Our is duties and Vaughan Judge, by Wayne in v erned the rule set forth Circuit 478, (1908), Sibley 480 in F M 153 Mich NW followed [116 1086] 483, Wayne Judge, 243 Mich Co v NW Lumber Circuit [220 (1928). up application judicial calls of sound discre It 146] sequence jury right of tion with no constitutional trial of trial involved; unques jurisdiction equity whenever the tioned, in as here Wolf. preference may Michigan for It be that does not share federal Dairy Queen. jury In Brown v trials voiced Beacon Theatres (1889), 274, Judge, this Circuit 75 Mich NW 827 Kalamazoo rejected as a statute that have extended Court the unconstitutional would traditionally equitable, right jury trial said that to actions right by equitable equity to have controversies dealt with "[t]he thus, right by jury.” Michigan, as trial In methods is as sacred right may nonjury there trial on it be that is a constitutional to a note, sounding equity. right of fact in See issues actions (1961), trial, Honigman non-jury & 74 Harv LR and 2 Hawkins, supra, pp 449-450. Neal, 351, 353; App Finally, noted Farwell v (1972), Style yet . . . NW2d 801 subject decision has become "[t]he Supreme our . . . .” of 'scrutinous Court re-examination’ Ed Comm Levin, J. of a in disaffirmance of an action mencement commencing might be undermined release seeking, count, of the in one rescission action (tender being required), and, in an- of an under- on the merits other, a determination discharge. wrongful lying claim formulation, in the Court’s The statement purpose nullify "[a]nything would less any rule,” discussion is not followed with tender the purpose only purpose of the tender rule. recognized by other court is this or heretofore unjust that would enrichment avoidance keep separate consider- if the could result paid it is set aside. for a release after ation leading agree Many that, after authorities procedural law distinction between abolition of equity can, court whatever so that a trial sought, indisputably enter of action or relief form require judgment, no need to there is a conditional commencing precondition an action tender as a guard brought a release to in disaffirmance of plaintiff. against unjust enrichment resurrecting authority tender, on was found No precondi- gatekeeping rationale, as an absolute *49 a Michigan, persists appears if it that tion to suit. It by majority announced in the obiter dictum briefing, argument, today citation of or without requiring authority, tender on a be alone in will gatekeeping rationale. conjunction procedural reforms,76 in
Modern shall, equity proceedings as distinctions between law and 1963, 6, practicable, art § 5.] be abolished. [Const far as meetings recalling personal participation Honigman, in the 1958-1962, on Procedure the Joint Committee Civil deliberations of explained (the providing rule to Rule 12 in the Committee Notes ”): 'Civil Action’ 1 form of action known as a shall be "[t]here abolish, possible, the as far as are written to These rules Dissenting Levin, J. jurisdiction in one court of the consolidation claims, eliminate and law equitable of both to commence- prerequisite of tender as necessity seeking to rescission. obtain ment of an action enter a may a court proceedings, unified Under the return of conditioning rescission judgment effec- plaintiff, thus received rule, the avoid- of the tender tuating purpose rescinding party: unjust ance of enrichment rescinding party’s] failure equity, In his [the re- return what he has offer make such an [to for rescission did commencing a suit before ceived] could be made The decree preclude relief. however, law, an offer on an offer. At conditional regarded as a condition of traditionally based on rescission. right to commence an action proce- equity and modem merger of law and undesira- made this distinction dural reforms have ble, in this Section reñects and the rule stated If increasing at law. the court criticism of rule required return in power to assure the has the grants, it is not relief that it connection with the prior return or necessary there have been equity. attempt procedural No has between law and distinctions differences between law made to alter the substantive been observed, However, preface Pomeroy equity. in the Professor (1881), Pomeroy’s Equity Jurisprudence the first edition plainly tendency procedure . . . has "The under such unified and superiority giving prominence steadily an undue been towards rules, ignoring, forgetting, purely legal and the adoption equitable suppression of these notions.” The tendency. approving of this On is not to be construed as rules Pomeroy’s contrary, taken words are the warning Professor consequences may he describes. so that we avoid procedural this Only are abolished or minimized distinctions Hawkins, Michigan Honigman & Court Rules set of rules. [1 (2d Notes, ed), p Empha- 9. ch Rule Committee Annotated sis added.] 2.101(A). 12 is now embodied MCR Rule Practice, Moore, Pamphlet, 2.3[2], pp 12-13 Federal Rules See also analogous federal rule. comments on the *50 Ed Comm v Levin, 2d, Contracts, Restatement to return. offer [3 384, b, Emphasis p 245.77 comment added.] § juris- said, in other and courts have Textwriters requirement held, of tender that the have dictions longer no has of an action before commencement validity: require- apparent for this reason is No [tender] ment, the same under the codes have since courts possessed to render a power chancellor as the judgments authority was deemed to enter conditional 77 Judicial general requirement in exception Restatement for restitution to the Contracts, 2d, and the Restatement Restitution: (2), (1) party Except will not be in Subsection as stated granted restitution unless restitution, (a) return, or offers to conditional he returns exchange property in in any substantially in that he has received interest him, good as when it was received condition (b) in with the can assure such return connection the court Contracts, 2d, 384, p granted. § 244.] relief Restatement [3 restitution, ordinary actions at essential The offer law, only required decree cannot be is where conditional however, rendered; proceedings equity, at law in and in can be a conditional decree which statute or otherwise rendered, no to restore antecedent there need be offer accomplished by proceedings. can be The mutual restoration d, Restitution, §65, p 260. comment the decree. [Restatement Emphasis added.] Wahsner, Wahsner, supra, p n 11. In on facts similar See also (see 36), brought plaintiffs suit case n to those the instant plaintiffs employers did bad-faith termination. their against, releasing they their claims. return the consideration received for not The court denied summary judgment, motion for defendants’ explaining, Contracts, provides 384 of the Restatement 2d] This section [§ party required received in order to return benefits that a to be granted return in can assure such restitution if "the court 384(l)(b). granted.” relief § connection Thus, proceed they may if return . . . and Novin Wahsner equal they to the received. defendants an amount benefits *51 435 Dissenting Levin, J. upon a made conditional which can be judgment consideration, some courts which and return a conditional acquired power to render have otherwise, apply the by statute or either judgment legal actions. [McClintock, equitable procedure (2d ed), 6, Emphasis §86, pp 231-232. ch Equity added.] has retained the law courts The rule of hold Today a court should vitality.
undeserved actions, applies to all equity practice origins in law regard to their historical without fully justified where equity. Certainly this is equity between law and procedural distinctions general jurisdic- In a court have been abolished. tion, having powers, if the equity and both law problem mutual restitu- out the court can work tion in one action another, it and it do so in can pe- in an earlier no difference should make equity while the other was a suit riod one 3.11, Palmer, Restitution, p at law. § an action 297. [1 Emphasis added.] remedy gross such a It is error refuse [restitu powers of the court today, if it is within tion] existing procedure, merely be and accords with powers more limited earlier court with cause some grant it. procedure refused and less flexible [5 61, 1116, Corbin, Contracts, p Emphasis 626. ch § added.][78]_ special remedy power fit to make the of the courts reorganizations statutory modern is not extinct. Under case and Instead, power procedure, is not diminished. codes of single may procedure, very court now have flexible under complex systems powers of courts and all the earlier all the may equity, remedies of common law available all the have separately The decree of the or in combination. to be used court, therefore, the facts of each moulded to suit should be Contracts, 29, 613, Corbin, justice may require. ch § [3 case as pp equitable (discussing legal for mis remedies 709-710 take). Emphasis added.] Ed Comm Levin, long merged Wash have been equity
Law and
merged in the
courts.
now
Federal
ington; they
are
validity
the release
pass upon the
can
The court
action, and, if
the cause of
upon
validity
plaintiff,
offset
it
finds for
Price
all in one action.
judgment,
against
[Ted
Corp, 307
Co
Natural Gas
v Cascade
Construction
(CA
9, 1962).][79]
F2d
requiring
suggest
dictum
that the
I
obiter
seeking equitable relief, cancel-
a count
where
joined
count
release,
with a ”law”
lation of
*52
procedure has much more in common
modern courts the
In
law
the
than with that of the common
that of
chancellors
with
law, including those deter-
judges;
substantive
and
rules of
mining
and the circumstances
the remedies that are available
equity
granted,
they
are the rules
under which
wherever
will be
law,
they
they
unless
differ
those of the common
from
Corbin, Contracts,
1103, p
legislative
§
new
enactments. [5
are
amalgamation
equity
(discussing
and
the
law on the
552
effect of the
restitution). Emphasis
remedy of
added.]
common
Co,
124;
Corp
&
271 NY
ETC
Title Guarantee
Trust
But see
(1936),
(1936),
I further with the plaintiff is not to retain the of an entitled benefit agreement bring81 and at the time suit same agreement.”82 A contravention should not be permitted proceed action in contravention of a unless he can first If convince the court to aside the release. he set required does, he should then to return all paid finds for the consideration that the court underlying release of the claims. very not, therefore,
It would "undermine the plain- Carey” if rule announced this Court in tendering permitted tiff defer until after it is set aside. aside disaffirmance of the release. We all plaintiff the release will be decided whether *53 equity
Carey in was not an action to set release, in rather an action at but law agree that a permitted proceed in an should not be to action in disaffirmance of a release unless and paid until the he tenders consideration release underlying of the claims.
Recognizing, procedural now that the distinction nSee 16. "proceed "bring.” 81 Iwould substitute with” for n 16. See Ed Comm v Levin, J. equity abolished, has law and been between longer precondition suit is no to tender before not commencement of an action would mean that expense plaintiff may put the defendant to the a defending against plaintiff’s on the the claims underlying controversy before re- merits of the turning paid fact to avoid incur- ring expense. very person signed
A who has a release who wishes to commence an action disaffirmance of release required complaint to in his should be separate include seeking count to set aside the release. permit plaintiff The trial court should not to proceed seeking damages on counts or other relief plaintiff’s plaintiff underlying claims unless the prevails in effort to set the release.83 his aside
Disputed concerning issues of fact and law ordinarily validity of a release should be resolved plaintiff permitted, objection before the over the depose defendant, to witnesses otherwise respecting discovery underlying obtain claims plaintiff asserted in the "law” counts of the complaint. valid, If to is found be plaintiff’s action would be dismissed and the de- prevailed any discovery fendant would have on the meritorious before
questions underlying in the controversy. If, hand, on the other the release is plaintiff invalid, to found be should re- be quired equal to the defendant an amount to paid all consideration the court finds was fact litigating on the merits the avoid underlying defendant, thus, claims.84 The would put expense defending against Greenslade, Style supra, accompany- in n See discussed 70 and ing text. is, except That such amount as the court determines defendant negotiated, owed agreed upon, before the terms of the release were signed. and the release was *54 435 Mich Dissenting Opinion Levin, J. plaintiff’s underlying claims unless the release is paid aside, set and consideration therefor has been returned.85
VIII wrongful discharge, Stefanac’s claims of fraud obtaining signature and duress in her on a release pay may and for two weeks’ additional vacation wholly strong-armed may without merit. She not have been signing
into the release. Cranbrook may have acted with the utmost rectitude and justification. presumably so, If a court would so adjudicate hearing were there a merits. unjustified, sure,
To be there is considerable litigation costly brought by disgruntled employees discharged by forbearing who should have been indulgent long employers they in before were discharged. Unjustified litigation pall, fact is a manipulated by many plaintiffs far too and defen- hampers advocates, dants and their that both justice public administration of and undermines pall preceded in confidence the courts. It is a burgeoning wrongful discharge litigation in- dustry. provide The court rules remedies therefor implementing by assessing that some courts are costs where warranted. recognize person suing wrongful discharge may 85 I that a claim damages discharged that his instant release was arose at the moment he was the—in case, discharged when Stefanac was a few hours before the signed. necessary distinguish It would therefore be damages discharge
between that accrued after the and amounts that discharge. paid accrued for services rendered before the Amounts latter, respect although consideration, to the recited in the release as (but need not be returned if the release is set aside unless the Court 74) paid see n respect finds that the amount inwas fact to the underlying paid respect damages to an claim. Amounts discharge must, underlying that accrued after the or an claim how ever, be returned if the release is set aside before the defendant required underlying should be to defend on the merits of the contro versy. Ed Comm v Cranbrook Levin, J. complaints particularly employers vocal *55 gatekeep- justify do not a new and their advocates requirement, ing for the tender now that rationale inability justification, its historical a law court’s longer judgment, has enter a conditional no validity. question important only wrongful not
discharge personal injury cases, but also cases involving than a and in cases contracts other by fraud, release claimed to have been obtained overreaching entitling duress, or other duty think to rescind. This Court has the be- yond hand, rule law the case at expounding only employer/employee it is not litigation. civil cases but for all
IX
relinquish
legal
Contracts to
the enforcement of
rights
judicial
warrant at least as much
surveil-
lance as other contracts. This Court said Denton
Utley,
332, 333, 339;
We are not that all releases are vulnera- saying ble. are is that releases have no What we particular immunity of their own to attack ground of mistake or fraud. There is no form of words, instrument, formula, is no no there no transaction, scru- rises above chancellor’s justitia his ruat tiny or resists intervention. "Fiat coelum.” "If fraud mutual mistake has induced courts contract, making of an unconscionable ought granting relief, to be more concerned about clinching wrongs by than desirous of future mak-
ing such contracts incontestable.” [Emphasis added.] 435 Mich by Archer, to this Court both the
The constitution confides power chancellor. This and the conscience of the justify, on ceremo- Court cannot nial the basis inquire made, its failure to by relied on into bona fides of Cranbrook.
x disposi- majority’s issue, The real avoided case, tion in this is whether the release was ob- tained fraud or duress. judicially determined,
If it were to be determi- disposition precludes, majority’s nation which the strong-armed signing that release, into Stefanac was *56 the release should be set aside and she required $1,042.31 should be to return the before obtaining a determination on the merits of her wrongful discharge unless, claims of it were also so judicially determined, Cranbrook owes her that pay. amount as additional vacation dissent). (concurring agree in the I Archer, in with the basic rationale and result Justice separately, however, Levin’s dissent. I write slightly perspective. lend a different opinion dissent, Unlike I believe this Court’s Brewery Co, in 420 Leahan v Stroh Mich 359 (1984), NW2d offered a sound and consistent through persons perceiving method selves to be ments could them- which
aggrieved signed agree- repudiate. I further the rule is believe applicable my view, However, to the case at bar. in present the Leahan rule its state is neither complete nor fair. good- ñde,
In instances where there is a bona dispute regarding faith whether consideration re- "expressed language cited of the release Ed Comm v Cranbrook Archer, J. agreement” actually to that which is amounted "consideration,” the rule in Leahan defined " agree Accordingly, 'Where, I unworkable. person seeking transaction, from the aside entitled to retain what restitution would be gave agreement, other as the result of though him transaction does not enrich even he things, net retains such nor does it diminish the p 198, ante, 48, n assets of the other ....’” citing See Restitution, §65e; Restatement ch see Carey Levy, 458, 465; also NW2d (1951). practical purpose of the "tender challenging party first” rule is to ensure that the unjust validity of the release form receives no receiving exchanged. enrichment monies Id. Clearly, plaintiff sufficiency who contests the supporting agree- of the consideration a release tender of ment should be allowed to withhold alleged such judicial consideration until there is a de- paid. termination that was in fact If paid, it is found that the consideration was then plaintiff required should be to tender However, amount. if court determines that paid amount to the for the release was already plaintiff, owed then the pro- should be allowed to retain that amount and any legal generally, pp See, ante, ceed with action. part 196-202, hi. rights depth
The nature and sacrificed at *57 signing agreement the of a or settlement release mere, are of such hollow stature "recitation of consideration” should not be considered as a exchange. Indeed, sufficient basis for the the sufficiency context, consideration, in should this construction, execution, and be foremost in the surrounding review of the activities agreements. Any endeavor to balance settlement 435 Mich Archer, J. relinquishment equities in the involved rights clearly all, demands, fairness. defined above attempt my majority view, in In fails its justify inflexibility of the the harshness Leahan "tender back” rule with its assertion that parties contesting the fact and existence of consid- instituting prior should, eration in this context propriety dismissal, an action on the of their own bring agree- an action for rescission of the release equity. majority then, states, in ment For supported the issue whether valid consideration agreement preceding can be decided the institution wrongful discharge of a suit. my view, however,
In even in case that agreement challenged validity of the release is not preceding filing legal claims, no there is justice maintaining blindly in a rule that demands absolutely, back,” tender, "tender even when required. Williston, should not be See Contracts (3d ed), p p CJS, Release, 37, § § 666. It is the iron-clad feature the rule that sits at dispute. the center of this The "tender back” rule simply properly applied, cannot in fairness be every equitable case, is, unless there addition to rescission, some internal method which the sufficiency back, of that must be which tendered i.e., itself, can be "checked” as proposed Hence, rule, well. Justice Levin’s which merely reflects the standardization of Restatement provides Restitution, 2, §65, e, ch comment fairest all. solution of present unquestion- case,
In the
was
ably
wages,
owed her earned
as well as four weeks
pay. Thus,
of accrued vacation
she was not un-
justly
receipt
However,
enriched
of these.
dispute regarding
because there
whether additional
is a factual
owed,
I
vacation
be-
concededly
lieve,
amount over that which was
*58
Ed
v Cranbrook
Comm
Archer, J.
plaintiff
indeed,
should,
owed to
be tendered to
following
the defendant within a reasonable time
question
the resolution of this
of fact
the trial
urge
Accordingly,
plaintiff
court.
I would
complaint
request
be allowed to amend her
agreement.
Style
rescission of the release
See
(1961);
Greenslade,
679;
364 Mich
away price, espe- her sue at cially wronged if she felt she had been in her my Therefore, view, dismissal. there no actionable coercion this case.