Opinion
Docket No. 55021.
Decided October 6, 1982.
Henry H. Newlin, for plaintiff.
Hammond, Baker, Kralick Fraile (by Robert J. Fraile), for defendant.
Amicus Curiae:
Michigan Association of Realtors, by Dickinson, Wright, Moon, VanDusen Freeman (by Gregory L. McClelland and Charles J. Ten Brink).
Plaintiff sued defendant, alleging damages for breach of contract. Defendant, a real estate broker, and plaintiff, a salesperson, had entered into a contract under which plaintiff was entitled to commissions upon the sale of certain real estate. Defendant maintains that the contract was subsequently terminated, and plaintiff is not entitled to the commissions at issue. The parties stipulated that had the contract not been terminated and had plaintiff continued to act as a listing salesperson, she would have earned $1,803.29 on four real estate transactions. The district court, affirmed by the circuit court, found in favor of plaintiff and awarded her damages in the amount stipulated. Defendant appeals by leave granted.
The district court's conclusion that defendant had breached his contract with plaintiff was based upon the court's finding that plaintiff had not been given the notice of termination required by the contract. The contract provided, in pertinent part:
"1.8 This contract and the association created hereby may be terminated by either party hereto at any time upon notice given to the other; * * *." (Emphasis added.)
The court interpreted "upon notice" to mean "upon reasonable notice" and found that the defendant's failure to give plaintiff advance notice of termination constituted a breach of the contract. This interpretation was upheld by the circuit court.
On appeal, defendant first argues that the circuit court erred by rejecting defendant's contention that the district court improperly exercised equitable jurisdiction in considering plaintiff's claim. Defendant maintains that plaintiff sought to be relieved from the contract's termination clause on the basis that it constituted an impermissible forfeiture provision and thus, by refusing to apply the clause as written, the district court granted plaintiff equitable relief.
Defendant appears to misconstrue the respective holdings of the district and circuit courts. The district court did not construe the contract's termination clause to be a penalty and then grant plaintiff relief from its forfeiture effect. The district court's discussion of a penalty was part of its discussion of the proper interpretation to be given to the term "notice" in the termination clause, because the court stated that, if the term were to be construed in defendant's favor, a penalty would result. Properly noting that a contract is to be construed against its drafter, here the defendant, the court construed the contract to require "reasonable notice" and found the defendant in breach of such a requirement.
Since the contract was not construed to contain a penalty provision from which plaintiff was granted relief, the district court did not exceed its jurisdiction and exercise equitable powers. The district court granted plaintiff relief from defendant's breach of contract, and the circuit court clearly affirmed that holding only on the basis of a breach of contract. An action for damages for a breach of contract is historically an action at law, not in equity. Reith v University Housing Corp, 247 Mich. 104, 108; 225 N.W. 528 (1929). Therefore, the circuit court was correct in rejecting defendant's contention that the district court attempted to exercise equitable jurisdiction and grant plaintiff equitable relief.
Defendant also argues that the circuit court erred by affirming the district court's interpretation of the term "notice" in the contract. The question the district court had to answer was whether the term "upon notice" meant that defendant could terminate the contract immediately upon giving notice to plaintiff, or whether plaintiff was entitled to prior notice of defendant's intent to terminate the contract, with termination following after a reasonable interval.
As we previously noted, it is a fundamental principle of contract law that an ambiguous writing must be construed against the party who drafted it. Soloman v Western Hills Development Co, 88 Mich. App. 254, 256-257; 276 N.W.2d 577 (1979); Stark v Kent Products, Inc, 62 Mich. App. 546, 547-548; 233 N.W.2d 643 (1975). Where a contract is open to construction, it is the duty of the court to determine if possible the true intent of the parties. In determining true intent, a court should consider the language employed in the contract, its subject matter, and the circumstances surrounding the making of the agreement. It should attempt to effectuate the intent of the parties when the agreement was consummated. Gary Boat Club, Inc v Oselka, 31 Mich. App. 465; 188 N.W.2d 127 (1971).
The circuit court found that the trial court did not err in construing the term "upon notice" to mean "upon prior notice". The word "upon" is elastic in meaning and may mean "as soon as", "at the time of", or even "after", depending upon the context in which it is used. Sanford v Luce, 245 Iowa 74, 77; 60 N.W.2d 885, 886 (1953). See Kirk v United States, 185 F.2d 185 (CA 9, 1950). Since the term "upon notice" is ambiguous regarding the type of notice required, we find that the district and circuit courts correctly held that the contract's termination clause was subject to judicial interpretation. The district court's interpretation that the clause called for advance notice prior to termination of the contract may be reversed only if clearly erroneous. The circuit court affirmed the district court's interpretation, and we find no error of law in such affirmance.
Affirmed. Plaintiff may tax costs.
I concur in the result reached in this matter for the reason that, as I read the agreement between the plaintiff and the defendant, the plaintiff was entitled to her listing commissions once she obtained a listing and once a commission on the sale had been paid to the broker. I do not read the contract as requiring that plaintiff's employment continue through the date of sale or the date of collection of the commissions.