McKinnon v. Benedict

Wisconsin Supreme Court · Contracts

ContractsSpecific performanceInjunctionsRestrictive land-use agreementsTrespassspecific performanceinjunctionequity

Facts

On August 31, 1960, the parties entered a letter agreement restricting the Benedicts' use of their resort property, including barring use as a trailer park or campsite and limiting construction near the McKinnon property. In exchange, McKinnon gave Benedict a $5,000 interest-free loan for seven months secured by a mortgage on Benedicts' Michigan cottage property, promised to try to help solve an occupancy problem involving a cottage lease, and promised to help generate business. Benedict later sought to construct a campsite and trailer camp to stabilize the resort financially, prompting McKinnon to seek injunctive enforcement of the agreement. The plaintiffs also alleged trespass on a point of land owned by McKinnon, where defendants had bulldozed an area and removed screening vegetation.

Issue

Was the August 31, 1960 agreement restricting the Benedicts' use of their land enforceable in equity by injunction against the Benedicts? Additionally, were the trailer-park ordinance and permits invalid so as to support injunctive relief, and was relief proper on the trespass claim?

Rule

Injunction and specific performance are discretionary equitable remedies, not granted as a matter of course. A court of equity may refuse enforcement where the contract is unfair or unreasonable, founded on grossly inadequate consideration, would cause unreasonable or disproportionate hardship or loss to the defendant, or is otherwise oppressive; and restrictions on the use of land are not favored and are construed in favor of the free use of property.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Traverse City, Michigan, Owen Mercer agreed in writing not to use his lakeside parcel for any short-term rentals, campsites, or new guest cabins for 22 years. In exchange, his neighbor, Dana Lyle, gave him a $6,000 interest-free loan for six months secured by a mortgage on Owen's separate condominium and promised to "try to send guests" to Owen's business. When Owen later began converting part of the property into lawful cabins to avoid foreclosure, Dana sued for an injunction.

Is Dana most likely entitled to an injunction enforcing the agreement?

Explanation. Injunction and specific performance are discretionary equitable remedies. The majority held that equity may refuse enforcement where the contract is unfair or unreasonable, founded on grossly inadequate consideration, and would impose unreasonable or disproportionate hardship on the defendant. Here, a short-term secured loan and vague promotional help are slight consideration for a 22-year restraint on lawful, economically important uses of land. That imbalance makes injunctive enforcement unlikely.