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01/07/76 ROWEN & BLAIR ELECTRIC COMPANY v. FLUSHING

January 7, 1976

ROWEN & BLAIR ELECTRIC COMPANY
v.
FLUSHING OPERATING CORPORATION



Appeal from Kalamazoo, Donald T. Anderson, J.

Leave to appeal granted, 396 Mich 853.

N. J. Kaufman, P. J., and R. B. Burns and G. R. Deneweth,* JJ.

SYLLABUS BY THE COURT

1. Mechanics' Liens -- Purposes -- Unjust Enrichment -- Proof -- Prerequisites.

One of the purposes of the mechanics' lien law is to prevent a property owner from being unjustly enriched, but the law does not make proof of actual enrichment a prerequisite to obtaining a lien (MCLA 570.1; MSA 26.281).

2. Mechanics' Liens -- Enhancement -- Presumptions.

Enhancement to an owner is presumed under the mechanics' lien law where material is actually used and work actually rendered on a building.

3. Mechanics' Liens -- Enhancement -- Decision of Owner -- Judgment.

Potential enhancement is a question which the owner of property decides for himself when he authorizes the improvements made, and he is bound by his own decision, so that it makes no difference, so far as a lien against the premises is concerned, whether his judgment is good or bad.

4. Principal and Agent -- Special Agent -- Single Transaction -- Series of Transactions -- Continuity of Service -- Scope of Authority.

A special agent is an agent authorized to conduct a single transaction or a series of transactions not involving continuity of service, and he can bind an undisclosed principal only with contracts made within the scope of his authority.

5. Principal and Agent -- Special Agents -- Power to Bind -- Authority -- Exceptions.

A special agent for an undisclosed principal has no power to bind his principal by contracts or conveyances which he is not authorized to make unless: (a) the agent's only departure from his authority is (i) in not disclosing his principal, or (ii) in having an improper motive, or (iii) in being negligent in determining the facts upon which his authority is based, or (iv) in making misrepresentations; or (b) the agent is given possession of goods or commercial documents with authority to deal with them.

6. Mechanics' Liens -- Contracts -- Agency -- Authority -- Departure from Authority -- Limitation of Recovery.

A mechanics' lien is based entirely on the contract between the parties and where a contract limited a special agent's authority to contract for improvements only to a value of $45,000, and that limit was reached before the debts claimed by a plaintiff seeking a mechanics' lien arose, the plaintiff is limited to recovery from the agent and cannot assert a mechanics' lien against the property of the principal.

The opinion of the court was delivered by: Kaufman

Complaint by Rowen & Blair Electric Company against Flushing Operating Corporation, Dutch Treat Bakers, Inc., and Sparrow Building, Inc., to foreclose a mechanics' lien. Judgment for defendants. Plaintiff appeals.

Plaintiff appeals a decision of the Kalamazoo County Circuit Court which, following a bench trial, refused to impose a mechanics' lien on a building owned by defendant Flushing Operating Corporation (Flushing). We affirm.

The building in question was leased by Flushing to Dutch Treat Bakers, Inc. (Dutch Treat). Dutch Treat desired to expand its operations by acquiring the property but could not finance the acquisition. As a result, Dutch Treat entered into negotiations with Flushing which decided to purchase the building and its plot of land and lease it to Dutch Treat. Flushing leased the realty to Dutch Treat on July 2, 1969, for a term of ten years, commencing October 1, 1969. During negotiations, Flushing and Dutch Treat determined that approximately $45,000 would be needed to renovate the building to serve as a wholesale bakery. As a result, the lease contained a provision for leasehold improvements:

"The landlord has agreed to expend the sum of forty-five thousand dollars ($45,000.00) for improvements to the leased property and for replacement of fixtures as may be required. The alterations, additions and improvements as made with the subject $45,000.00 shall be described in detail by the tenant and a list thereof attached to and made a part of this lease agreement as an exhibit hereto. Any alterations, additions and improvements made, whether from the funds advanced by the landlord or paid for by the tenant, as well as any fixtures, shall immediately become the property of the landlord and at the end or other termination of this lease shall be surrendered to the landlord, with the exception ...


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