Palmer v. Fox

Supreme Court of Michigan · 1936 · Contracts

264 N.W. 361 (Mich. 1936)

Updated July 26, 2026

Contractsland contractdependent covenantsindependent covenantsconcurrent conditionssubstantial breachmaterial breachvendor improvements

Facts

A vendor sold defendant a lot in a Detroit subdivision under a 1925 land contract for $1,650, payable by an initial payment and monthly installments, with the entire amount due within five years. The contract required the vendor, at its own expense, to furnish sidewalks, grade streets, either cinderize or gravel the streets except Plymouth Avenue, and furnish water mains and lateral sewers. Defendant made payments through February 11, 1931, but the street on which his lot abutted, Westwood Avenue, although graded, was never cinderized or graveled. Plaintiff sued in 1933 for the unpaid balance, and defendant argued that the vendor's failure to make the promised street improvement was a material breach of a dependent covenant.

Issue

Was the vendor's covenant to make subdivision improvements, including cinderizing or graveling the streets, a dependent covenant running concurrently with the vendee's obligation to pay the purchase price? If so, did the vendor's failure to surface the street on which defendant's lot abutted constitute a material breach barring an action for the unpaid balance?

Rule

Covenants in a contract are construed as dependent or independent according to the intention of the parties and the good sense of the case, and courts will construe covenants to be dependent unless a contrary intention clearly appears. Where mutual covenants go to the whole consideration on both sides and are to be performed concurrently, or within a reasonable time when no exact time is stated, neither party may maintain an action without proving performance of his own material obligations. In a land contract, a vendor's covenant to make promised subdivision improvements is dependent when those improvements are an essential part of the consideration supporting the vendee's promise to pay.

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

In Grand Rapids, Nora Ellison agreed to buy a subdivision lot from Lakeview Terrace Development under a land contract payable in monthly installments over four years. The contract also required the seller, at its own expense, to install sidewalks, water lines, sewer laterals, and gravel the subdivision streets, but it set no exact date for those improvements. After Nora paid for three years, the seller sued for the unpaid balance even though the street abutting her lot remained unsurfaced.

Which is the strongest argument for Nora?

Explanation. The majority rule is that covenants are construed as dependent unless a contrary intention clearly appears. Where promised subdivision improvements are an essential part of what the buyer bargained for, the seller's improvement covenant and the buyer's payment covenant run concurrently, at least within a reasonable time if no exact date is stated. A material failure to perform that dependent covenant bars the seller's action for the unpaid balance.