## Facts

- Garden City Lodge No. 11 bought two lots in 1948 and constructed a meeting hall on an existing foundation.
- In 1985, Kratze obtained an option to buy adjacent lots for residential development and later planned a 62-unit apartment building.
- An initial survey suggested the lodge building merely touched the boundary line; a later survey showed the building encroached about 1.2 feet onto the lots Kratze intended to buy.
- Kratze purchased the property in 1986 on the original option terms despite knowing of the encroachment.
- Kratze’s engineer submitted, and the city approved, a site plan without awareness of the encroachment.
- The encroachment created a title defect; a title insurer refused to issue title insurance, preventing Kratze from obtaining construction financing.
- The lodge did not learn of the encroachment until after Kratze raised it.

## Issues

1. Whether a minor, innocent encroachment entitles the affected landowner to a mandatory injunction requiring removal, or instead requires a balancing of equities.
2. If removal is denied, what measure of damages properly compensates for losses caused by the encroachment and resulting title defect.
3. How the plaintiff’s knowledge of the encroachment before purchase affects entitlement to equitable relief and the scope of recoverable damages.

## Decision

- The Michigan Supreme Court held that courts must apply a balancing-of-equities test when deciding whether to order removal of a minor, innocent encroachment.
- The Court reversed the mandatory injunction requiring removal of the lodge’s encroachment.
- The Court rejected the damages approach approved by the Court of Appeals and remanded for recalculation under a proper compensatory standard.
- The Court affirmed that damages may be available, but only to the extent proven and consistent with compensatory principles.

## Legal Principles

- Mandatory injunctive relief for encroachments is not automatic; equity requires weighing hardship to the encroacher against benefit to the landowner.
- A relatively small, unintentional encroachment may warrant damages rather than structural removal when removal would be oppressive or disproportionate and money relief is adequate.
- A plaintiff who purchases property with knowledge of an encroachment may have a weaker claim to extraordinary equitable relief.
- Damages must be compensatory and tied to actual, provable loss (such as diminution in value and reasonably provable consequential losses), not speculative or inflated project-based claims.

## Conclusion

The court required equitable balancing before ordering removal of a slight, innocent encroachment, reversed the order compelling removal, and remanded for a recalculation of damages using a compensatory and non-speculative measure.


Kratze v. Indep. Ord. of Oddfellows, Garden City Lodge No. 11, 442 Mich. 136 (1993)